Bank Medici reports not on brink of shutting down - Madoff : Bank Medici , Austria : Sonja Kohn

Madoff-Hit Medici Says It’s Not on Verge Of Shutdown
JANUARY 23, 2009, 7:09 AM

Bank Medici of Austria, one of the biggest victims of Bernard L. Madoff’s alleged $50 billion Ponzi scheme, said Thursday it is not on the brink of shutting down and sees no reason why it should forfeit its banking license.

Vienna-based Medici, in which UniCredit holds a 25 percent stake, was put under state supervision and its chief executive resigned after it sold over $3 billion of Madoff-exposed funds to investors.

“Rumors about an imminent shutdown of Bank Medici are unfounded. The bank still has its banking license,” Medici said in a short statement.

“The management maintains that there are no reasons for the banking license to be withdrawn.” It repeated that it had adequate liquidity to carry on with its activities.

But Reuters reported that a financial source with knowledge of the bank’s operations voiced doubt over whether Medici could continue after having lost its customer base and business model.

“The business model of the bank was to manage a Madoff feeder (fund). Ninety percent of their clients were Madoff customers, 80 percent of their revenues came from Madoff products,” the source told the news service. “If the endgame is that this is the end of Bank Medici, it would hardly surprise me.”

Medici said in its statement that its new management was cooperating with Austrian financial authorities and putting together a new business plan for the bank.

UniCredit’s Pioneer Investments was one of Medici’s biggest clients and has said it has an 805-million-euro ($1.1 billion) exposure to Mr. Madoff, most of it through money invested in the Medici-run Herald USA Fund. Eight private investors also invested in the funds, Medici has said.

“Bank Medici’s management is, as before, shocked about being a direct and indirect victim of the fraudulent activities of Mr. Madoff,” the bank said in the statement.