As the world recoiled at the size and simplicity of Bernard Madoff's fraud, banks in Europe were one by one admitting to potentially being on the hook for millions through their exposure to the Wall Street money manager's scheme.

HSBC (nyse: HBC - news - people ), Royal Bank of Scotland (nyse: RBS - news - people ) and Banco Santander are some of the most exposed lenders, in some cases having indirectly invested in Madoff's funds through hedge funds, or directly through a private banking arm. Since news of his fraud broke last Thursday, banks have been scrambling to calculate their exposure to his firm and are now waiting for receivers to provide further information on the total value of assets in Madoff's portfolio.

Unfortunately, there appears to be little hope that banks who invested in Bernard Madoff Investment Securities will see much or any of their money again. Madoff was arrested on Thursday after reportedly confessing to running a "giant Ponzi scheme" in which he lost $50.0 billion of his investors' money. His two sons contacted authorities on the evening of Dec.10 after their father admitted to the fraud. (See "Madoff's Money.")

RBS said Monday that it could lose as much as 400.0 million pounds ($599.4 million) because of "trading and collateralized lending to funds of hedge funds that invested with [Madoff's] firm," the bank said, without giving further details. British hedge fund Man Group said it had approximately $360.0 million invested in two funds that were "directly or indirectly sub-advised by Madoff Securities," representing about 0.5% of its funds under management. Reports say that HSBC could lose as much as $1.0 billion through its exposure.

Banco Santander (nyse: STD - news - people ), one of Europe's most well-regarded banks for having largely avoided investing in the American subprime mortgage market, said on Sunday that one of its investment funds had exposure of 2.3 billion euros ($3.1 billion) to Madoff Securities. Most of this was invested directly by the bank's investment fund, Optimal, on behalf of Santander's overseas institutional investors and private banking clients. Spain's Banco Bilbao Vizcaya Argentaria (nyse: BBV - news - people ) had approximately 500.0 million euros ($673.3 million) of exposure to funds run by Madoff.

Investment bank Natixis (other-otc: NTXFF - news - people ) appears to be one of the worst hit so far in France, after it said Monday that it had exposure of up to 450.0 million euros ($600.3 million), while BNP Paribas (other-otc: BNPQY - news - people ) said its clients could lose up to 350.0 million euros ($471.3 million). Societe Generale (other-otc: SCGLY - news - people ) said Monday that it had less than 10.0 million euros ($13.5 million) in exposure to Madoff. Credit Agricole (other-otc: CRARF - news - people ) was scheduled to release details of its exposure to the fraud later on Monday, but this was expected to be negligible.

Sharply lower consumer spending in the United States and other high-income countries is stalling global trade, causing a surprise downturn in exports from China that is dramatically slowing its economy and rippling through other countries that rely on international commerce.

Asian stocks were mixed Friday, as rate cuts in Europe counterbalanced the negative lead of a fall on Wall Street.

A drop in oil prices to a nearly four-year low helped shares of energy-intensive companies.

In Japan, the Nikkei 225 average was up 0.5% at 7,960.13 points in midafternoon trade. Tech companies were mostly higher, with Sony (nyse: SNE - news - people ) gaining 1.1% to 1,743 yen ($18.88) and Toshiba (other-otc: TOSBF.PK - news - people ) climbing 0.7% to 301 yen ($3.26).

The automakers traded in a narrow range, with Honda Motor (nyse: HMC - news - people ) dropping 1.3% to 1,664 yen ($18.02) after it announced that it was pulling out of Formula One auto racing due to the weakening business environment. Honda said the move would save it at least 10 billion yen ($108 million) a year.

Banking stocks were soft after Goldman Sachs cut its price targets for the sector. Mitsubishi UFJ Financial Group (nyse: MTU - news - people ) fell 5.2% to 536 yen ($5.81) and Mizuho Financial Group (nyse: MFG - news - people ) dropped 6.5% to 211,300 yen ($2,290).

In Hong Kong, the Hang Seng index rose 1.9% to 13,771.05 on optimism over government stimulus measures and falling energy prices. U.S. light sweet crude was trading at $44.03 on the Nymex in Asian trading hours, after closing in New York at $43.67, the lowest settlement price since January 2005.

Insurers rose smartly on expectations that they will benefit from a new policy encouraging them to invest in infrastructure. Ping An Insurance jumped 8.4% and China Life rose 4.4%.

SHANGHAI, Oct. 25 -- Leaders from Asia and Europe on Saturday called for new rules and stronger regulation of the global monetary and financial system at the close of a two-day summit in Beijing as China assumed a new leadership role in the crisis.

Chinese Prime Minister Wen Jiabao said the world's economic problems had become so massive that measures beyond the many billion-dollar bailout packages already announced might be necessary to avert further damage.

"We are very glad to see that many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and more needs to be done," Wen said Saturday, a day after dire corporate earnings reports from all corners of the world pushed Wall Street to a five-year low.

Wen also said stricter regulation might be key to recovery. "Lessons should be learned from the financial crisis, and the responsibilities should be clarified for governments, companies and supervision, respectively," he said.

The Asia-Europe Meeting, last held in 2006, traditionally does not result in any policymaking. This year's gathering, however, had taken on a new urgency as the world teeters on the edge of a global recession.

In a joint statement, the more than 40 world leaders in attendance -- including Japanese Prime Minister Taro Aso, German Chancellor Angela Merkel and French President Nicolas Sarkozy -- said they recognized "the need to improve the supervision and regulation of all financial actors, in particular their accountability" and pledged "to undertake effective and comprehensive reform of the international monetary and financial systems."

Although the leaders spoke only of broad principles and did not offer details on specific proposals, it was clear the groundwork was being laid for a Nov. 15 meeting on the crisis that President Bush is hosting in Washington.

The Beijing meeting appeared to be a victory for Sarkozy, who has taken the lead in representing his European Union colleagues in pushing for an overhaul of the world's financial systems and the creation of a new "regulated capitalism" as soon as possible. Sarkozy has said such steps cannot wait until a new U.S. president takes office.

President Bush has said, however, that enacting ideas into law "must be a top priority for the next president and the next Congress."

Sarkozy said Asian leaders have joined their European counterparts in expressing a "willingness for the Washington summit to be a place where we make some decisions, and we have all understood that it would not be possible to simply meet and have a discussion. We need to turn it into a decision-making forum."

The major issues expected to be addressed by world leaders in the coming months and years include the future role of the International Monetary Fund in stabilizing economies, currency reform and measures to help prop up cross-border banks.

The participants in the summit said the IMF "should play a critical role in assisting countries seriously affected by the crisis." Merkel called for the IMF to become a "guard for the stability of the international finance system" but it did not offer further guidance.

PARIS/WASHINGTON, Oct 12 (Reuters) - European leaders hoped to agree on a detailed plan in Paris on Sunday to prevent market panic and stave off what the International Monetary Fund warned could be a global financial meltdown.

In Britain, banks were in crisis talks with the government and regulators that could see the government take multi-billion-pound stakes in several lenders.

Across the globe, Australia and New Zealand said they would guarantee bank deposits, and Gulf Arab states took emergency measures to boost confidence in the financial system.

The IMF said it backed a plan by the Group of Seven leading industrialised nations to stabilise markets. Bold action was needed to persuade banks to resume lending and bring an end to a credit crunch that has pushed global stocks to five-year lows, it said.

"Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," IMF chief Dominique Strauss-Kahn said late on Saturday.

In Washington, U.S. President George W. Bush met G7 economic chiefs and officials from the IMF and World Bank over Friday and Saturday, but they failed to agree on concrete measures to end the crisis.

Bush said he was confident the countries could overcome the challenges, and that Washington was working as fast as possible to implement a $700 billion financial bailout package.

The American Standard & Poor's 500 index tumbled more than 18 percent last week, its worst weekly fall on record, while European stocks plunged 22 percent and Tokyo's Nikkei crashed 24 percent.

Coordinated interest rate cuts from central banks failed to soothe investors' nerves and credit markets remained logjammed.

MUSCLES ON BONES

The scene shifted from Washington to Paris on Sunday.

French Economy Minister Christine Lagarde said before leaving Washington that the summit of euro zone leaders would go beyond talking about remedies to "put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it".

French President Nicolas Sarkozy and German Chancellor Angela Merkel said they had prepared a number of decisions to present to the meeting to try to restore normal flows.

A source close to the French presidency said leaders of the euro zone countries would discuss the possible creation of a bank rescue package that would take Britain's initiative as a reference.

EU Commission president Jose Manuel Barroso said he was hopeful the meeting would take an important step forward.

"We must show European citizens and the markets Europe's capacity and determination to act in concert," he said.

Sarkozy was to meet British Prime Minister Gordon Brown -- whose country is not in the euro zone -- European Central Bank President Jean-Claude Trichet and European Commission President Jose Manuel Barroso at 3:30 p.m. (1330 GMT), before the summit of euro zone leaders kicked off 90 minutes later.

In an interview with Britain's Observer newspaper, Brown said he would try to broker a Europe-wide bailout of banks modelled on Britain's intervention, and that the "stakes could not be higher" for jobs, mortgages and the economy.

In London, big British banks were likely to announce plans to recapitalise early on Monday, a person familiar with the matter said.

The banks were in talks with the government and regulators to determine how much capital each needs from the 50 billion pounds ($86 billion) offered by Britain on Wednesday.

The source, who declined to be identified, said an announcement was likely before British markets open on Monday.

GULF ARABS AND PORTUGAL ALSO ACT

The Sunday Times said Royal Bank of Scotland (nyse: RBS - news - people ), HBOS, Lloyds TSB (nyse: LYG - news - people ) and Barclays (nyse: BCS - news - people ) could ask for a combined 35 billion pounds. Spokespeople for all four banks declined to comment.

Analysts say the government could become the biggest shareholder -- and even a majority investor -- in RBS and HBOS.

Earlier this year RBS shareholders had told Chief Executive Fred Goodwin he would need to step down if the bank sought to raise more cash.

A government source said on Saturday the government could take seats on the boards of banks where it took a substantial equity stake, something it was not originally planning.

Media reports on Saturday said Germany was preparing a rescue package that could be worth up to $549 billion, including an injection of equity capital worth "double digit" billions into its banks, and guarantees for interbank lending.

Under Australia's plan, all deposits in the country's banks, building societies and credit unions, would be guaranteed by the Australian government for the next three years, Prime Minister Kevin Rudd said.

In India, a major emerging market, mutual funds have asked the central bank to lend them short-term cash via a repurchase facility after the global crisis virtually paralysed the country's money markets, fund executives said.

Gulf Arab states also took measures, including a rare Saudi interest rate cut and a pledge by the United Arab Emirates to protect national banks and guarantee deposits.

Portugal said it will offer a financing line worth up to 20 billion euros ($27.45 billion) to guarantee liquidity of its banks. (Reporting by Reuters bureaux; Writing by Angus MacSwan; Editing by Kevin Liffey)