A superior credit rating and financial acumen apparently have done little to help revive Enron Corp.’s collapsed energy trading operations. UBS Warburg Energy debuted early this year after taking over the trading business. However, the Houston-based unit has failed to produce, and 10 months later, the corporation’s president admits the “business outlook is very challenging.”

During a third-quarter earnings call from Zurich, Switzerland, UBS Group President Peter Wuffli told analysts that as far as energy trading goes, “we have seen a total collapse in the business.” UBS Warburg, the UBS securities arm, acquired Enron’s merchant trading unit through a bankruptcy auction earlier this year after agreeing to cover the payroll and pay Enron about one third of pre-tax profit — with no money down — in a deal that many at the time considered a coup (see Daily GPI, Jan. 14).

Any near-term success, however, is unlikely. UBS laid off about 130 of its 630-plus energy unit employees in August, and more lay-offs are rumored to be coming — although UBS has remained tight-lipped about its operation since it started. It has closed an office in Portland, OR, but a spokesman said no other jobs had been cut. Although most of the former U.S. heavyweights have pulled out of energy trading, Wuffli said UBS has no plans to exit.

“We have not succeeded to date,” said Wuffli. But he added, “We want to avoid exiting this business. We think at some stage that the U.S. will need the market.” Wuffli added that it was possible for the energy unit to turn a profit next year “if markets improve.”

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