HSBC, Royal Bank of Scotland, Nomura and BNP Paribas lent the money without spotting a fraud, in at least one case without due diligence teams visiting Mr Madoff's brokerage, which actually held the assets.

Banks including Nomura and Spain's BBVA also helped create special “notes”, structured products that allow small investors or those barred from investing in offshore vehicles to put as little as $50,000 (€35,000) into Madoff feeder funds. BBVA – which raised €300m through these products – offered a guaranteed return of capital, while Nomura provided leverage.

Madoff's alleged $50bn fraud also hit some fully regulated onshore funds accessible by small investors, with shares in several feeder funds listed on Irish and Luxembourg stock exchanges.