Madoff costs Europe’s second largest bank $3.1 billion


Madoff bilked $3.1 billion from Europe’s second largest bank, according to Bloomberg.

Banco Santander SA, Europe’s second- biggest bank by market value, fell in Madrid trading after saying its hedge fund unit invested 2.33 billion euros ($3.1 billion) of client funds with Bernard Madoff, who allegedly ran a Ponzi scheme that cost investors $50 billion.

Santander dropped as much as 4.9 percent, and was down 15 cents, or 2.3 percent, to 6.39 euros by 9:26 a.m. The Bloomberg Europe Banks and Financial Services Index, a capitalization- weighted index of 69 companies, rose 0.6 percent.

Santander’s Optimal Investment Services unit placed money with Madoff through its Optimal Strategic U.S. Equity fund, the Spanish lender said yesterday. France’s BNP Paribas SA and Natixis SA, Britain’s Royal Bank of Scotland Group Plc and Man Group Plc, and Swiss bank Reichmuth & Co. are among firms that may also face losses as Madoff’s scheme reaches victims across the Atlantic Ocean.

Several other European banks were affected, according to the story.

Paris-based BNP Paribas, Europe’s third-largest bank, said it may lose as much as 350 million euros through indirect exposure to Madoff’s investment advisory business. Natixis, also based in Paris, said today it has as much as 450 million euros of at risk because of ties to Madoff.

RBS of Edinburgh could lose as much as 400 million pounds ($601 million) on investments linked to Madoff. The U.K.’s second-largest bank, which is 58 percent owned by the government, had “exposure” through trading and collateralized lending to funds of hedge funds invested with Bernard L. Madoff Investment Securities LLC, the London-based bank said today.

Man Group, Europe’s largest publicly traded hedge-fund company, has about $360 million invested directly or indirectly in funds linked to Madoff. The investments in two Madoff funds represent 0.5 percent of Man’s total assets under management, the London-based company said in a Regulatory News Service statement.

Reichmuth told investors in its Reichmuth Matterhorn fund of hedge funds that they face losses of as much as $330 million.

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