Madoff scam could cost BBVA EUR 300 mn

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Spain's second-largest bank says its own exposure amounted to up to EUR 300 million through indirect investments linked to Madoff, while its clients stand to lose another EUR 30 million.

MADRID – The second-biggest Spanish bank, BBVA, said on Monday it could potentially lose EUR 300 million in the alleged scam run by New York trader Bernard Madoff.

"BBVA acted as an organiser, exclusively for other financial entities and institutional investors, for products linked to investment funds of third parties through Madoff Investment Securities," it said.

"If, as a consequence of the fraud alleged by the SEC (Securities and Exchange Commission), the value of these funds was zero, the maximum potential loss for BBVA linked to coverage of this activity would be around EUR 300 million," it said in a statement issued to Spain's stock market regulator.

BBVA reiterated that the bank itself had no direct investments in Madoff, but said its international customers had EUR 30 million of exposure to Madoff.

The newspaper El Pais had earlier said BBVA is exposed "for several hundred million euros through its purchases made through its treasury department" and "some managers put the figure at around 500 million."

BBVA shares were down 0.12 percent at EUR 8.31 at around 11am (1000 GMT) on the Madrid stock market following the news.

Spain's largest bank, Santander, said late on Sunday its investment fund Optimal had an exposure of EUR 2.33 billion euros  to the Madoff scandal.

The bank said it had also invested EUR 17 million of its own funds in Madoff products.

Economy Minister Pedro Solbes said Monday that nine Spanish pension funds and three insurers had a total of EUR 38 million of exposure in the alleged scam.

The nine pension funds invested a total of EUR 36 million in Madoff's company while the three insurers have exposure worth EUR 2 million, he told a news conference.

The EUR 36 million represents 0.04 percent of all pension funds in Spain, a ministry spokesman said.

"The impact is not something of great concern" in Spain, Solbes said.

Madoff, a 70-year-old Wall Street veteran who was arrested on Thursday, is alleged by US prosecutors to have confessed to having defrauded investors of USD 50 billion in a giant pyramid scheme that collapsed in the global financial crisis.

[AFP / Expatica]

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