Sweden’s Largest Pension Loses More Than $1 Billion to U.S. Banking Crisis

Alecta says it held talks with Silicon Valley Bank in 2022 about liquidity concerns.

Alecta, Sweden’s biggest pension fund, said it has lost 12.1 billion krona ($1.1 billion) from its investments in Silicon Valley Bank and Signature Bank, both of which collapsed recently and are now controlled by the Federal Deposit Insurance Corp. 

However, the pension fund said the impact on its customers would be small, as the loss accounts for approximately 1% of Alecta’s total managed capital of more than 1 trillion krona.

Alecta said it began investing in Silicon Valley Bank in June 2019 and made its last investment in November 2022 for a total investment of 8.9 billion krona. It made its first investment in Signature Bank in January 2016 and made the last investment in July 2022 for a total investment of 3.2 billion krona.

Alecta said it found out last year that rising interest rates were having an impact on Silicon Valley Bank’s liquidity, and it held a dialogue with the bank with other investors to inquire about its plan going forward. On March 9, the bank launched a share sale that was not underwritten by any major investors, which spooked investors and led to customers quickly withdrawing their money in droves.

“We believe that the measures were a mistake and caused what is known as a ‘bank run,’” an Alecta statement said.

The pension fund also has SEK 9.7 billion invested in American First Republic Bank, which it said has also been affected by the banking crisis, despite being “an old and stable bank with a completely different business model and low credit losses.” The bank received external funding late on March 13 after its stock fell sharply, and an Alecta statement said it expected shares to recover the following day.

Although American First Republic stock did rebound, it lost back those gains in March 15 trading and was trading at slightly less than $32 per share on that date, down from slightly more than $96 a share at the close of trading on March 9.

As for other Alecta investments, the pension fund said it currently sees “no spillover effects.”

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