Europe’s largest asset manager has warned that the tremors in the UK pensions market should be a “wake-up call” to investors and regulators about the dangers of hidden leverage in the financial system.

Vincent Mortier, chief investment officer at Amundi, which has €1.9tn in assets, said in an interview that the recent turmoil unleashed by the UK government’s “mini” Budget was “a reminder that shadow banking is a reality. I don’t believe that anyone before the crisis had any idea of the magnitude of this shadow banking in the pension fund industry”. 

Former chancellor Kwasi Kwarteng shocked markets with ￡45bn of unfunded tax cuts on September 23, driving up UK government bond yields and wreaking havoc on the country’s ￡1.4tn defined benefit pension industry, which uses specialised hedging strategies to help schemes better match their assets and liabilities.