© Reuters. Ronald O’Hanley President and CEO of State Street Global Advisory; Vice Chairman State Street , speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 2, 2017. REUTERS/Mike Blake
LONDON (Reuters) – State Street (NYSE:) said on Tuesday it was unaware how much leverage was tied to liability-driven investment (LDI) funds which came under extreme stress last year after UK government bond yields rocketed.
LDI funds are used by UK pension funds to help ensure they can pay pensions.
“We had no idea how much leverage was in the system,” State Street CEO Ronald O’Hanley told a panel at the World Economic Forum in Davos.
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