UK - UK pension funds' "insularity" has spared them from severe losses in wake of the collapse of US energy giant Enron, industry experts claim.
Enron declared itself bankrupt with debts of $13bn – despite receiving some breathing space with loans from creditors.
But William M Mercer senior consultant Dennis Bastin believes the energy giant’s problems will not overly trouble UK pension funds.
He said: “It will have an impact at the margins. But the level of investments in the US is relatively small. By the time that you get down to the stocks that are directly impacted by this I don’t think it is going to have a major impact on pension funds.”
A spokesman from the National Association of Pension Funds said: “There has been criticism in the past that not enough of UK pension fund money has been invested abroad. But for once this seems to have benefited pension funds. We think it is unlikely that UK pension funds will have been affected by Enron.”
Enron received $1.5bn in credit lines on December 3 from its creditors Citibank and JP Morgan – allowing the energy giant some breathing space after it filed for Chapter 11 bankruptcy on December 2.
It has also sold European subsidiary Enron direct to Centrica for £96.4m.But UK banks are believed to have significant exposure to Enron.
Abbey National has already admitted to loans provided to Enron, while Royal Bank of Scotland and Barclays are also thought to have lent funds to the US energy giant.
By Paul Sanderson
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