HSBC 'faces fundraiser' after Madoff scam losses'

HSBC's massive exposure to the alleged Ponzi scheme run by Bernard Madoff will add to the pressure on the bank to seek a major fundraising, analysts said today.

The banking giant has admitted it was exposed to Madoff to the tune of $1 billion (£667 million), making it one of the worst-hit of the big European banks.

CLSA Asia-Pacific Markets said in a note to clients today that the bank may seek to raise $14 billion as the scandal added to the problems it faces of rising loan defaults in the US and the UK.

So far, HSBC has avoided the funding crisis that engulfed fellow British banks, leading to part-nationalisations of HBOS, Lloyds and Royal Bank of Scotland, and to Barclays' controversial fundraiser in the Middle East.

But CLSA said the bank's diverse geographical spread in Asia has shielded it from much of the downturn in Western banking. But the spread eastward of the contagion, added to the likely loss of money to Madoff's alleged fraud, casts serious doubts over the bank's funding.

It added that the collapse of Spanish property group Metrovacesa's purchase of its Canary Wharf tower would add to its problems.

HSBC had sold the building last year but had to buy it back last week, albeit for far less than it sold it for in 2007 after Metrovacesa's funding collapsed.

HSBC declined to comment on the report.