Austria appoints supervisor to Bank Medici after Madoff scandal

It is the first known case where a government has had to step in to help a bank cope with the alleged $50 billion Madoff fraud.

Austria appoints supervisor to Bank Medici after Madoff scandal

Austria has appointed a supervisor to the board of the Vienna-based Bank Medici after the Bernard Madoff scandal hurt the private bank, a spokesman for the financial regulator (FMA) confirmed on Friday.

A supervisor, appointed by the FMA, would mean the bank cannot take important decisions without state consent. The spokesman said more information from the FMA would follow shortly.

It is the first known case where a government has had to step in to help a bank cope with the alleged $50 billion Madoff fraud.

The bank -- founded and largely owned by high-profile banker Sonja Kohn, who media say has close ties to Madoff -- said earlier on Friday they had not yet been informed of the FMA's decision but will cooperate fully.

"Bank Medici will in every way cooperate with the government supervisor and take all measures to ensure the most transparency and efficiency possible in solving the current challenges," it said in a statement.

It said the bank, which is 25 percent owned by UniCredit's Bank Austria, said it remains solid, has good liquidity and will present a new business model in the coming weeks.

Bank Medici earlier this month said it held products affected by the alleged fraud, but that it was not at risk because of its solid capital base.

It has said two of its funds -- Herald USA Fund and Herald Luxemburg Fund, with a total volume of $2.1 billion -- were exposed to the alleged fraud, but did not say by how much.

Banks across the globe have unveiled billions of dollars in damage from the scandal, with a number of private banks catering to rich clients and fund-of-fund businesses particularly prominent victims.

Reuters
Last Mod: 02 Ocak 2009, 14:01
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