The MasterBlog: Swiss bank UBP: clients risk Madoff losses
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Monday, December 15, 2008

Swiss bank UBP: clients risk Madoff losses

A view of entrance of the headquarters of the Swiss Bank Benedict Hentsch Fairfield, in Geneva, Switzerland, Monday, Dec. 15, 2008. The private Swiss bank Banque Benedict Hentsch Fairfield Partners SA says it has 56 million Swiss francs (US$47.5 million) of client assets invested under the management of U.S. financier Bernard L. Madoff, who has been accused of securities fraud. (AP Photo/Keystone, Salvatore Di Nolfi)

Swiss bank UBP: clients risk Madoff losses

By ALEXANDER G. HIGGINS – 1 hour ago

GENEVA (AP) — Swiss bank Union Bancaire Privee indicated Monday it had hundreds of millions of dollars in client assets invested under the management of Bernard Madoff, who has been accused by U.S. authorities of investment fraud of at least $50 billion.

The Geneva bank, one of Switzerland's largest, did not disclose a total amount invested in Bernard L. Madoff Investment Securities LLC, which collapsed Thursday after the arrest in New York of Madoff, but did say the exposure of its clients "represents less than 1 percent of the total assets under management of the bank."

Earlier this year, the bank said it had 126.7 billion francs ($107.8 billion) in assets under management as of June 30. Less than 1 percent could still be just over $1 billion.

UBP's announcement Monday follows weekend disclosures by Swiss banks Reichmuth & Co of Lucerne, Benedict Hentsch of Geneva and Neue Privat Bank of Zurich that they had millions of dollars worth of client assets at risk in the case.

UBP said its exposure was limited to client assets and that it had none of its own funds invested in the Madoff group.

"The bank's financial robustness is of the highest order," the Geneva-based bank said, adding that it has twice as much reserves as legally required.

Clients of the Hyposwiss Private Bank in Geneva have $150 million directly and indirectly invested in Madoff funds, the bank said Monday. And the Geneva money manager Genevalor Benbassat said it was still examining the investments it was managing but didn't yet have a figure for the amount linked to Madoff.

The investment firm Horizon21 in Pfaeffikon near Zurich said it had exposure of $1 million.

Banque Benedict Hentsch & Cie SA, which said it was acting immediately to protect its clients' interests, said Monday it had canceled its three-month merger with Fairfield Greenwich Group, a U.S. investment fund linked to Madoff.

"The founding shareholders of the bank have terminated their partnership with the Fairfield Greenwich Group," Benedict Hentsch said a statement.

Benedict Hentsch, which linked with Fairfield Greenwich in September, disclosed Friday that it had 56 million Swiss francs ($47.5 million) of client assets at risk in the Madoff affair.

At the same time Fairfield Greenwich said it had 20 years of experience in working with Madoff and currently had $7.5 billion in investments linked to him, about half its total $14.1 billion under management.

Benedict Hentsch said its move to regain "its complete independence" is conditional upon approval by the Swiss Federal Banking Commission.

Reichmuth said it has 385 million Swiss francs ($327 million) at risk in the case, representing about 3.5 percent of the 11 billion francs under the bank's management.

And Neue Privat Bank said it had invested about $5 million, less than 1 percent of the client assets it is managing, and a further $250,000 of its own assets in a certificate linked to Madoff.

Madoff, a former chairman of Nasdaq stock market, was arrested Thursday in New York hours after the collapse of Bernard L. Madoff Investment Securities LLC.

Copyright © 2008 The Associated Press. All rights reserved. 

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