Sweden's largest pension fund has all stepped on the thunder just exposed by three small banks in the United States, without exception.
On Monday morning local time, Swedish pension fund Alecta held a crisis response meeting to reflect on why a huge sum of 21.8 billion Swedish kronor ($2.1 billion) was invested in small US banks embroiled in the Silicon Valley banking crisis.
Alecta spokesman Jacob Lapidus saidIn the past six years, Alecta has invested SEK 8.9 billion, SEK 9.7 billion and SEK 3.2 billion in Silicon Valley Bank, first Republic Bank and Signature respectively, totaling SEK 21.8 billion.
The three investments make the Swedish pension giant the largest shareholder in the three banks.
Why would Alecta, Sweden's largest pension fund, make such a big bet on small American banks? Especially given that Alecta sold the last holdings of domestic Swedish banks and Swedish commercial banks in 2022.
"to outsiders, Alecta's decision seems very strange," Joakim Bornold, founder of Levler, a savings platform, said in an interview. He called the fund "the foundation of the Swedish pension system".
Alecta's Lapidus says betting on small US banks is not an alternative strategy. "there is no connection between them, we do fundamental analysis and evaluate each company separately," he told the media in an email comment.
Investors are more concerned about the impact of the crisis on Alecta than the reasons for investing in small banks.
Alecta said in a statement on Friday that the fund's bank investments in the US would not affect their solvency ratio, which was 218 per cent at the end of 2022.
Almost all Alecta customers who retire in the next 20 years have fixed welfare insurance, and future payments are not affected by the return on capital.
Alecta is the fourth largest shareholder of Silicon Valley Bank.Since Silicon Valley Bank's shares tumbled 60 per cent last Thursday, the value of Alecta's stake in the bank has been wiped 54 per cent off to $279 million.Over the past year, Alecta has doubled its stake in Silicon Valley Bank, valued at $609 million by 2022.
Shares of first Republic Bank plunged 70% before trading on Monday, which could have another big impact on Alecta's stake.
Founded in 1917, Alecta now manages 2.6 million private depositors in Sweden, with assets under management of 1.2 trillion Swedish kronor.
Edit / irisz