BRUSSELS, Belgium (Reuters)—European investors whose money vanished in funds run by accused fraudster Bernard Madoff, plan to sue banks UBS, HSBC and Bank Medici and auditor Ernst & Young for hundreds of millions of euros in damages, according to investor activist group Deminor International.

"Only full compensation for our clients will be considered a satisfactory solution," said Erik Bomans, a partner at Deminor International which is launching the legal offensive.

The lawsuit will be filed in early March in a Luxembourg court, he told a news conference on Wednesday.

"We think the liability is at the level of the asset managers, the custodians, the auditors," said Mr. Bomans.

Damages for those being represented by Deminor are between €250 million and €300 million ($325 million and $390 million), Mr. Bomans said, but could rise to more than €1 billion ($1.3 billion) if one counts all investors who have contacted Deminor.

UBS and Bank Medici acted as investment managers in depositing money in funds exposed to the doomed Bernard Madoff Investment Securities, Deminor said, adding that UBS and HSBC also acted as custodians for the funds that invested in Madoff.

In all cases, Deminor said the financial institutions failed to safeguard investors' money as required by European laws.

After confessing, Madoff was charged last month with securities fraud in the alleged investment scam that has so far claimed about $50 billion in evaporated cash. European investors are estimated to have lost roughly €14 billion ($18.25 billion).

"We believe we have good defenses to the claims, and will continue to defend ourselves," said HSBC spokeswoman Ruth Lavelle.

"At this time any action for recovery of investors' funds is the responsibility of the funds," said a spokeswoman for Bank Medici.

UBS and Ernst & Young representatives declined to comment on Wednesday. UBS has said previously that Madoff products were not on its recommended list, but that it did help clients to set structures to invest in these products after they asked for it.

Before filing the lawsuit in March, Deminor will take legal action this week to obtain documents from Luxembourg funds which relate to its members' losses.

"We will demand that full transparency be given," Mr. Bomans said, adding that investors still have no information on what happened to their money and what's left in their accounts.