BP fires UBS as pension fund manager over loan to Enron

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The Independent Online

BP has pulled nearly $1bn (£710m) from a pension fund managed by UBS after it emerged that the money managers had made an unsecured $55m loan to Enron shortly before its collapse.

The oil giant is understood to be furious about the loan, which saw those employee pensions that were invested in the fund lose up to $20m in the failure of Enron. BP was one of the investors in a $2.5bn fund managed by Brinson Partners, which is owned by UBS, the Swiss banking group.

Industry sources said the fund, in which BP's US employees had $970m, was supposed to pursue a "low-risk, low-return" investment strategy, in short-term bonds and cash, not lending money to corporations that were on the brink of collapse. The loan was made as late as October last year and BP was not informed until early December.

"They didn't even try and reduce the exposure after it became apparent what was going on at Enron," said one source.

BP declined to comment on the situation. A spokeswoman said: "We use a wide range of funds and we review them regularly."

It is believed that BP had been thinking about moving its pension money from the Brinson fund anyway, as the manager had been through personnel changes, including the retirement of its founder Gary Brinson. Swiss Bank Corporation, which later became UBS, took Brinson over in 1995.