Bloomberg – Bank of England Deputy Governor John Gieve said investors are still facing “acute” stress as market declines force hedge funds to sell assets.

“The financial system remains under acute strain,” Gieve said in a speech in London today. “The falls in equity markets, corporate bond prices and the prices for leveraged loans is hitting both long-term institutional investors and leveraged investors, including hedge funds.”

The Bank of England said in a semi-annual report that $2.8 trillion in banking losses and the threat of a global recession are increasing risks to financial stability. Meanwhile, Prime Minister Gordon Brown yesterday suggested he may scrap decade- old fiscal rules to prop up the banking system as the nation faces its first recession since 1991.

Investment losses at hedge funds and insurers pose further risks to the system, the central bank’s report said, as insurers may fall short of capital requirements and face credit rating downgrades, while hedge funds may be forced to sell assets.

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Reuters- Antonio Borges, a former senior banker at Goldman Sachs, has been appointed chairman of the Hedge Fund Standards Board (HFSB), the custodian of the voluntary standards scheme devised by leading members of the sector.

Borges, vice chairman of Goldman Sachs International until February and a former dean of the European business school Insead and vice governor of Banco de Portugal, will assume the role on July 1.

The HFSB will oversee the code of practice devised by the Hedge Fund Working Group, which comprised 14 leading hedge fund executives mainly based in London and was led by Andrew Large, a former deputy governor of the Bank of England.

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