British banks hit by Enron collapse

British banks are facing millions of pounds in losses as a result of the crisis that has crippled US energy giant Enron.

It is thought that Enron’s UK subsidiaries owe millions of pounds to banks including Barclays, Royal Bank of Scotland and Abbey National.

Abbey announced on Friday that it had loaned £115m to the group and it was expecting to lose up to £95m.

National Australia Bank, which owns Yorkshire Bank and Clydesdale Bank in the UK, also revealed it had secured and unsecured exposure to Enron totalling around 200 million dollars (£141m).

Both Barclays and RBS refused to comment on reports that they were owed cash by the troubled energy giant, but estimates put their potential exposure at around £140m for RBS and between £50m and £300m for Barclays.

Market watchdog the Financial Services Authority said it was in the process of assessing what UK banks’ likely exposure to the group was, though it stressed it was ‘‘far too early’’ to give an estimate.

A spokesman said: ‘‘It’s fair to expect that with a company of this size a lot of people will have a bit of exposure.’’

On Friday, accountants PricewaterhouseCoopers, appointed as administrators to Enron’s European holding company, announced that 1,100 staff had been made redundant across the UK.

PwC was appointed on Thursday as Enron Europe’s US parent, based in Houston, Texas, was pushed to the brink of bankruptcy.

Credit rating agencies downgraded its debt and a smaller rival, Dynegy, pulled out of a merger valued at around £6.7bn.

It is thought Enron could file for bankruptcy in the US today.

Meanwhile a host of bidders were thought to be lining up with a view to snapping up Enron’s UK divisions, including Wessex Water and power stations in Teesside, which have avoided administration.

Enron Metals, a commodity metals trading business bought by the US giant for £300m last year, is also being put up for sale.

RBS is thought to be among a number of bidders interested in Wessex Water, though the group would not comment on the speculation.