Proactive Investors - The Bank of England made a £3.8bn profit from the pension market intervention that helped bring down Liz Truss's government, according to The Daily Telegraph.
The central bank bought more than £19bn of long-term gilts as part of a market support operation, saying it stepped in to prevent a shock in the gilt market from turning into a wider economic crisis.
The proceeds profit will be handed back to the Treasury as part of the Bank’s quarterly transfer process.
The gilt purchases were made in two weeks through the middle of October and BoE started selling them at the end of November.
An obscure strategy known as liability-driven investment (LDI) was at the centre of the crisis in financial markets, which prompted fears that many British retirement funds could implode and forced the Bank to intervene, the paper said.
Soaring bond yields in the wake of Truss's mini-Budget led to large cash calls on pension funds in relation to LDIs, which are derivatives meant to help insulate pension funds from the impact of inflation.
The falling value of bonds led to funds being asked to put up more capital to backstop their investment positions.