HSBC refuses comment on report of $1.5 bn Madoff exposure

HONG KONG: Global banking giant HSBC on Monday declined to comment on a report it had a potential exposure of 1.5 billion US dollars to an alleged fraud scam by New York trader Bernard Madoff.

An HSBC spokesman in Hong Kong said he had "no comment" to make on a report in the Financial Times that quoted "people close to the situation" as saying the bank could face huge losses in the collapse of giant pyramid scheme.

HSBC's exposure stemmed from loans it provided to large clients, such as hedge funds of funds, that wanted to invest with Madoff, who is alleged to have lost 50 billion dollars of investors' money.

Major international investors such as Spain's Santander, French bank BNP Paribas and Japan's Nomura have all revealed they face potential losses from the collapse of the fund. Hong Kong-traded shares in HSBC appeared unfazed by the report, rising 3.4 percent by midday (0400 GMT).

US authorities announced the arrest Thursday of Madoff, a brokerage veteran who once epitomised the massive profit-making on Wall Street but has quickly become a symbol of the sector's even more spectacular decline.

According to prosecutors, the 70-year-old confessed to employees at his brokerage that he had been running a so-called Ponzi scheme, or pyramid fraud, which had collapsed with the enormous losses.