‘This is a big failure for us.’ Sweden’s largest pension fund invested in both Silicon Valley Bank and Signature Bank before it failed

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Sweden’s biggest pension fund, Elektra, has come under fire this week because it invested in now-defunct US regional banks. After collapse tech-startup-focused Silicon Valley Bank (SVB) on Friday and crypto-centric signature bank On Sunday—the second and third largest bank failures in US history, respectively—Sweden’s 2.6 million private pension managers are facing losses of more than $1 billion.

CEO Magnus Billing said, “Obviously what happened last week we think it’s a big failure for us as an investor.” Said Bloomberg Tuesday “And we need learn something from this and take action based on the lessons learned.”

Alecta began buying shares of Signature Bank and Silicon Valley Bank parent company, SVB Financial, as well as regional banks First Republic Bank In 2017, and their allocation increased in the next two years. By the end of 2022, Alecta was SVB Financial’s fourth-largest shareholder, Signature Bank’s sixth-largest and First Republic Bank’s fifth-largest shareholder — which saw its stock plunge nearly 70% on Monday along with other regional banks.

First Republic has recovered more than 50% at the time of publication on Tuesday after a massive selloff on Monday. company exposure over the weekend that it had arranged a $70 billion credit facility from JPMorgan and “additional borrowing capacity” from the Federal Reserve, but shares are still down more than 60%. Alecta’s total stake in these three failed or struggling US regional banks was 21 billion Swedish krona ($2.1 billion).

Billing sought reassure its Swedish clients on Tuesday after a rough start to the week at US banks, noting that Alecta’s investments in the three regional banks account for just 1% of its total capital.

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“From a customer point of view, there is no material impact. It will not affect the pensions that we are doing for our customers,” he said, calling the Swedish pension system “very robust”.

Sweden’s financial supervisory authority said this week that it also believes the local financial system will not be affected by issues with US regional banks, arguing that it has “significant resilience”. The Financial Times informed of Tuesday

Billing said on Tuesday that he “does not expect any value” from his firm’s $1.1 billion investment in SVB and Signature Bank, but in a Swedish radio interview on Monday he argued that First Republic was less profitable than its peers. I am in better condition.

“An important parameter here is trust in the bank. My judgment is that trust in First Republic Bank is stronger than in SVB and Signature Bank. I am confident that First Republic will manage this,” he said. market Watch,

On Tuesday, Billing said that the situation at First Republic Bank is still “very volatile” and that it has not made any “major decisions.”

Sweden’s financial regulator also called Aletta’s executive team into a meeting this week discuss its investments in Silicon Valley Bank, Signature Bank and First Republic Bank.

Billing and his team are facing pressure after selling more conservative Swedish banks – including shares in the country’s largest bank, Svenska Handelsbanken – high-flying tech, start-up and crypto-focused banks in the US. The CEO argued Tuesday that the Swedish bank sale was a “separate issue” and explained why Alecta first invested in SVB, Signature and First Republic.

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“What we liked about them was their market position. They are positioned when it comes transformation in the digital space. And the US market, generally speaking, its depth and its size,” he said .

Billing further said that he was aware of the problems at SVB in the last week before the collapse of the bank and that he had discussed them with management had put together an action plan turn things around.

“We thought the company had a plan of action — they were transparent about it — and we thought it was well thought out,” he said. “Then last week the company did not act according the action plan that we talked to them about and was presented to us and it shocked us. I think it was a big mistake on the part of the company.”

This was originally featured fortune.com

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