HSBC has emerged as one the largest victims of Bernard Madoff’s alleged fraud with potential exposure of about $1bn to the investment manager’s collapsed venture,  people close to the situation told the FT. These people said HSBC’s exposure stemmed from loans it provided to institutional clients, mainly hedge funds of funds, that wanted to invest with Mr Madoff.  Under the typical terms of these deals, if the US authorities recover any funds from Mr Madoff, HSBC will be paid first, with its clients suffering the first tranche of losses. HSBC on Sunday said it was “carefully reviewing” its position but expected its final exposure to Mr Madoff’s firm not to be “material”. Clients and shareholders of Spain’s Grupo Santander and France’s BNP Paribas also face billions of euros of losses on investments with Madoff, the banks said.

This entry was posted by Stacy-Marie Ishmael on Monday, December 15th, 2008 at 5:37 and is filed under Capital markets, Hedge funds. Tagged with Bernard Madoff, bnp paribas, hsbc, santander. Edit this entry.