Italy's biggest bank Unicredit said on Monday that it has 75 million euros invested with Bernard L. Madoff, whose investment firm collapsed last week.
A statement from the bank added that several funds in its asset management division, Pioneer Investment Unicredit, and involved in alternative investments were also exposed to Madoff indirectly through feeder funds.
However, the bank added, none of these involved Italian-registered hedge funds and the exposure for Italian clients was ''next to zero''.
News of Unicredit's involvement with the US firm, which imploded when it was discovered that Madoff was, effectively, running a Ponzi Scheme, sent the bank's shares tumbling by some 3.5% on the Milan stock exchange.
American financial wheeler-dealer and former Nasdaq Stock Exchange chairman 'Bernie' Madoff, 70, ran both a successful investment company, Bernard L. Madoff Investment Securities LLC, and a secretive hedge fund, officially an investment management business, and it was the latter activity which investigator discovered was operated as a Ponzi Scheme.
This scam, named after an Italian immigrant to New York in the early 20th century, involves using capital taken from new investors to pay high returns to old investors without producing any wealth.
An estimated $50 billion is said to have disappeared through Madoff's hedge fund.
Madoff was arrested by the FBI on fraud charges on December 12.
Unicredit's potential losses were much lower than the those expected for Spain's Santander group (2.33 billion euros), Britain's Royal Bank of Scotland (450 million euros) and France's BNP Paribas (350 million euros).
