Bank of England report: ’Need to improve’ private equity risk management

A Bank of England (BOE) report warned of private equity risk management deficiencies as interest rates remain stagnant, with international coordination important.

The BOE’s biannual Financial Stability Report, issued Thursday, said risk management practices in private equity “need to improve,” including among lenders to banks. The BOE’s Financial Policy Committee will consider regulatory work from the Financial Conduct Authority and Prudential Regulatory Authority to address these issues, with international coordination important, the bank noted.

The report found that U.K.-based private equity-backed corporates are susceptible to international shocks due to a large portion of funding coming from U.S. markets.