Bawag, owned by Austria’s trade union federation, was once a big investor in Refco and has a long history of issuing large loans to the beleaguered commodities trading firm. But its biggest loan by far, of $242 million (£136 million), was issued two weeks ago to Mr Bennett.

The decision to lend the money was made by Bawag’s board in an instant with little or no due diligence. Mr Bennett allegedly used the money to repay $430 million of debt owed to Refco by a company he controlled. The debt’s origin is still unknown but it is thought to have been accrued by a number of Refco’s clients, then misrepresented in the firm’s books as a receivable.

The day before Mr Bennett asked Bawag for the loan, he was suspended from the company because Refco had discovered the $430 million black hole in its accounts. It is understood that Bawag was unaware of his suspension. The day after the loan was issued, and Mr Bennett gave the proceeds to Refco, he was arrested and charged by US authorities. He denies any wrongdoing.

Since then, Refco has filed for Chapter 11 bankruptcy protection and put its futures trading arm up for sale. Bawag confirmed last night that it is in the final stages of completing a lawsuit over the Refco affair.

“Bawag is in close co-operation with top US lawyers and is about to finalise lawsuits regarding the Refco case,” the bank said. A spokesman said it would sue several parties, but declined to identify them. However, The Times has learnt that Mr Bennett, who is British, and Refco will be named in the action.

It also emerged that Refco will hold an open auction for its futures trading business, a part of the firm not under Chapter 11. The bid deadline for the regulated business is November 4 with an auction date of November 9. At least seven potential bidders have expressed interest. Interactive Brokers Group is understood to be the frontrunner, with a $858 million million bid.

Since Mr Bennett’s suspension, two more directors have been suspended and are said to be helping the authorities with their inquiries. Santo Maggio, president and chief executive of Refco Capital Markets, was still working at the firm despite having been put on notice by the SEC that he faced a year’s suspension from all supervisory work as part of a settlement of an inquiry into short-selling.

Last night, Inter Financial Services, listed as Refco’s seventh biggest creditor, said it would also sue for assets which it says are worth $158 million.

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