Pension funds, banks and “every business involved in managing these funds” have three days to get their portfolios in order, said Andrew Bailey.
“You only have three days left now. » Andrew Bailey, the Governor of the Bank of England, said last night that the British central bank would end purchases of UK bonds (Gilt) on Friday, October 14, as planned. Pension funds, banks and “all companies involved in the management of these funds” must therefore quickly put their portfolios in order before this deadline.
On these remarks, the course of the pound sterling suddenly fell against the dollar, below 1.1.
The British Association of Pension Funds (PLSA), for its part, has asked the BoE to give them more time. “The shopping period should not end so quickly […] many believe it should extend to October 31 or even later”we read in a press release.
At the end of September, the Bank of England had to intervene urgently, by buying Gilts on the debt market, to avoid a tightening of credit conditions for the real economy, while pension funds, which had extensive recourse to derivatives, lacked collateral to meet their margin calls, in a context of soaring rates.
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