The Bank of England has signalled privately to bankers that it could extend its emergency bond-buying programme past this Friday’s deadline, according to people briefed on the discussions, even as Governor Andrew Bailey warned pension funds that they “have three days left” before the support ends.
Bailey’s comments late on Tuesday came as pension funds raced to shore up their derivative strategies before Friday’s “cliff edge”. The industry has said it needs more time to avoid a repeat of the forced selling that prompted the BoE to launch the emergency support scheme.
Several bankers who have been briefed by the BoE said officials are watching whether so-called liability-driven investment managers, which help pension funds manage risks in their portfolios, have been able to build up enough cash reserves to enable their clients to meet margin calls.