European shareholder group Deminor said Friday it may take legal action against European banks HSBC Holdings PLC (HBC) and UBS AG (UBS) on behalf of investors who bought products from disgraced asset manager Bernard Madoff.

Deminor has sent both banks a letter after being contacted by investors in France, Belgium, Luxembourg and Switzerland, the firm said,

"We have let them know on the basis of our analysis they have a liability in this case," Erik Bomans, Brussels-based partner with Deminorm, said. The group may file legal action to recover losses, Bomans said.

Deminor is looking at investment managers, depository banks, and auditors of so-called feeder funds invested in Madoff. Particular focus is on Zurich-based UBS as an investment manager and a custodian, while U.K.'s HSBC is being looked at for its custodian role only, Bomans said.

UBS wasn't immediately available for comment, while HSBC declined to elaborate on a mid-December statement, where it pegged its exposure to Madoff at roughly $1 billion, including financing for institutional clients invested in Madoff funds.

UBS has admitted to producing and selling funds containing products from Madoff, who is alleged to have lost $50 billion in a pyramid scam that collapsed amid the global financial crisis. The bank has maintained Madoff products weren't formally recommended to clients for investment.

Group Web site: http://www.deminor.com

-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com

(Vladimir Guevarra in London contributed to this story.)

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