UBS hedge fund exposure

UBS, the Swiss bank whose chairman quit two weeks ago over losses arising from a $1bn investment in Long-Term Capital Management, is believed to have major exposure to Ellington, a $1bn hedge fund that has been severely hit by this week's fall in values of US-mortgage based bonds.

UBS last night refused to comment on reports that it had liquidated $250m of bonds held as collateral after Ellington allegedly missed a margin call this week.

Ellington is run by former Kidder Peabody trader Michael Vranos out of Greenwich Connecticut where Long-Term Capital Management is based. Mr Vranos has told investors that it is liquidating some of its bond portfolio in order to reduce borrowings and stay in business.