US Edition Exposures totalling $25bn (£16.4bn) have so far been disclosed by hedge funds and banks against the $50bn Mr Madoff is alleged to have admitted losing. Among the major casualties are Swiss private banks, which have taken a $4bn hit, and Spanish banking giant Santander, which had €2.33bn (£2.1bn) of client money in Madoff Investment Securities.
In the UK, HSBC admitted lending $1bn to funds looking to leverage up their positions in Madoff. Similarly, Royal Bank of Scotland lent £400m. Both are thought to be expecting to write off their entire exposures, while Santander hinted that the losses will be borne by clients, with the Spanish bank saying it would "undertake the legal actions which may be needed to defend the interests of shareholders".
In the UK, RAB Capital, the hedge fund that lost millions investing in Northern Rock, revealed a $10m exposure. Man Group warned of £240m of potential losses. Bramdean Asset Management, run by City "superwoman" Nicola Horlick, has 10pc of one portfolio investeed in the fund.
Although creditors were consulting lawyers and investors preparing class action claims, insiders did not hold out much hope of recovering anything from what appears to be the largest alleged corporate fraud in history. Creditors were already writing off claims against the auditors after it emerged that the firm is a three-man partnership called Friehling & Horowitz that operates out of a single office in New York.
Creditors said they would consider pursuing credit rating agencies and the "feeder funds" that provided investors access to Madoff for a management fee and a performance-related share.
In court documents, Mr Madoff is alleged to have claimed there was just $200m-$300m left. Another source of capital might be the family's London-based investment fund, Madoff International, which had £113m of largely cash assets at the end of 2007 and ceased trading yesterday.
Madoff International, unrelated to the alleged fraud, only dealt in family money, making a trading profit of £7.6m in 2007 – at 6.7pc short of the double-digit returns investors had grown accustomed to in the US fund. The Financial Services Authority is believed to be speaking to both Madoff International and its prime broker Barclays Capital.
Meanwhile Mr Madoff's sons, Mark and Andrew, released their first statement since the alleged fraud was uncovered to say that neither knew of it before their father informed them of it last week. The pair will "continue to co-operate fully." They said they "were shocked" to learn of their father's actions and contacted the authorities immediately upon being told he had been defrauding clients. Mr Madoff is alleged to have admitted to the fraud on Wednesday, telling staff he was "finished" and that "it's all just one big lie".