Concern grows over RBS exposure to Enron

Royal Bank of Scotland is thought to have around £300m of loan exposure to Enron, the beleaguered US energy trading giant that is on the verge of bankruptcy.

The bank is coming under mounting pressure to quantify its exposure but was indicating yesterday that it is unlikely to update investors on its position until it publishes an end-of-year trading statement. A date for that update, which is due this month, has yet to be fixed.

The Financial Services Authority said yesterday that it had started to investigate the fall-out from the Enron débâcle, saying: "We're keeping a watching brief on the situation. We're monitoring it very carefully for any potential wider consequences of the collapse."

The FSA is thought to be keeping in close touch with banks and energy traders as well as the London Metal Exchange, where Enron's metals business traded contracts, and the London Clearing House, which guarantees contracts.

Enron is expected to file for bankruptcy this week after its rival Dynegy walked away from rescue merger talks, leaving the group in chaos. The bankruptcy move, which will make Enron the biggest corporate failure in history, comes after the administrators were called in at its European arm last Thursday.

At the end of the week, Abbey National warned it had a £115m exposure to the company, which would require it to take a £95m provision to cover possible losses. Similarly, National Australia Bank, owners of Yorkshire Bank and Clydesdale Bank, as well as the French bank Credit Lyonnais and the Dutch bank ABN Amro have all admitted having multimillion-pound exposure. RBS shares came under pressure at the end of last week as concern over the extent of its exposure mounted. Figures as wide apart as £60m and £600m have been heard in the market. A spokesperson for the bank would not be drawn, saying: "We never comment on the affairs of our customers."

Barclays, which has also still to unveil its Enron exposure, is due to release its pre-close trading statement this week. While that statement is expected to detail that Barclays is comfortable with its position with regard to Enron, it is unlikely to outline its precise exposure. That figure is not, however, thought to be material and is believed to be south of £50m.

Enron's collapse left 1,100 staff at its offices in Victoria, central London, without jobs and with little prospect of receiving any redundancy payments. PricewaterhouseCoopers, the administrator, said it would keep 250 staff to help with the administration of Enron Europe.

Meanwhile, bidders are lining up to buy some of Enron's UK assets, including Wessex Water. Pennon Group, owner of South West Water, is said to be in talks with the industry regulator about relaxing regulations.