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Barclays bank may have lost up to £130m it invested in a hedge fund run by a German man who has been arrested.

Helmut Kiener, founder of the K1 Group, was detained on Thursday in a multi-million-pound corruption probe.

The 50-year-old was held in Germany on suspicion of fraud and breach of trust relating to a Caribbean-registered fund.

The British bank's investment was fed into the K1 Global Sub Trust hedge fund between 2006 and 2009.

An arrest warrant said: "If Barclays had known of the suspect's plans, it would not have provided the...trust any funds for investment.

It added that the funds "are mostly lost as far as we now know".

The warrant went on to say that France's BNP Paribas bank invested £36m with K1 between 2007 and 2008.

Barclays has said it was co-operating fully with authorities, while BNP Paribas declined to comment.

Another French bank Societe Generale said it had a "negligible" exposure to K1, and JP Morgan Chase may have also been hit.

The total losses to banks could be £240m. Mr Kiener and K1 are also being investigated by the FBI.

Prosecutors said the case spans the Atlantic and features lavish personal spending on planes, a helicopter and luxury properties.

Kiener's lawyers said they would file an appeal against his arrest and detention.

"The man has two children and is married. He had a private audience with the Pope this year and has a ?60m (£36m) jet at Frankfurt airport. This man is not insignificant," a spokeswoman for Munich law firm Lutz Libbertz said.

Regulators in the US and Europe are looking at the hedge fund industry more closely following high-profile scandals such as the conviction of Bernard Madoff.