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Ananova - Royal Bank of Scotland says it is facing a potential loss of £400m after a Wall Street banker was charged with a massive alleged fraud.
US prosecutors say Bernard Madoff has confessed to defrauding investors of $50bn (£33bn) in a giant pyramid scheme that collapsed in the global financial crisis.
RBS, in which the British government now has a majority stake, says it has exposure through investments in hedge funds that invested with Mr Madoff.
It is one of a number of banks that face big losses in the suspected fraud.
Santander, the Spanish bank that owns Abbey and Alliance and Leicester, said it had more than 2.3bn euros (£2.08bn) worth of exposure.
Reuters – Shares in BH Macro, a listed feeder fund to the Brevan Howard global macro fund, Europe’s biggest hedge fund with assets of $20 billion, have sunk to a 13 percent discount to net asset value as a wave of selling has swept through European financial markets.
The fund was down 2 percent at 1255 pence in afternoon trading. Earlier Tuesday, BH Macro reported in a regulatory filing that its NAV at the close of business on Oct 3 was 1411 pence per share.
"The whole sector has moved to quite considerable discounts," said Mark James, executive director at RBS. "BH Macro is trading on its widest ever discount."
BH Macro has about $1.6 billion in capital. It came to market in early 2006 to provide access to Brevan Howard’s global macro hedge fund, which was and has continued to be closed to new investors.
Bloomberg- Royal Bank of Scotland Group Plc has been sued by London-based hedge fund Merebis Capital Management LLP for reversing a 250 million-euro ($395 million) investment in Merebis by ABN Amro shortly after RBS acquired the Dutch bank, the Financial Times reported.
Merebis claims in a case filed in London’s High Court that it is owed a penalty fee of 17.8 million pounds ($35 million) for the early withdrawal by ABN, which was repaid most of its investment this month, leading to the closing of the hedge fund, the newspaper said.
