Madoff fraud costs Portuguese banking system 85 million euro

THE FINANCIAL fallout from the world’s largest ever pyramid scheme fraud has cost Portuguese banks indirect losses of 85 million euros.

The breathtaking fraud engineered in the United States by Bernard Madoff, which wiped billions of US dollars off the balance sheets of major banks, has cost Portuguese financial institutions close to 100 million euros, according to a statement issued by the Bank of Portugal last week.

“The Portuguese banking system’s exposure to the Madoff Group is extremely minimal and is directly worth around 18 million euros,” said the Bank of Portugal in a communiqué.

“To this amount can be added a further 67 million euros relative to client exposure whose investment portfolios are managed by those (affected) groups and institutions,” it added.

In total, according to the BdP, the Portuguese banking sector is likely to have lost 85 million euros.

This evaluation includes direct investment in assets (residual) issued by Bernard Madoff and investments in foreign investment funds (the majority), which held funds or assets created by the US investor based on his pyramid scheme.

According to the Portuguese financial regulator and supervisory authority, the CMVM, Comissão do Mercado de Valores Mobiliários, “the exposure of Portuguese investment funds and investment portfolio management to Madoff Investment Securities assets by December 16 had topped 75 million euros, of which 11 million euros were in investment funds (0.07 per cent of its total value) and 65 million euros were in individual investment portfolios invested and managed by fund managers (0.11 per cent of the total value).

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