Sweden’s greatest pension fund has fired its chief govt after a guess on failed US lenders Silicon Valley Financial institution and Signature Financial institution left it with losses of just about $2bn.
Alecta, which has $110bn of belongings beneath administration, stated on Tuesday that Magnus Billing had left as chief govt with speedy impact because the losses had “severely broken confidence” in its funding technique.
“We’re within the enterprise of offering consolation to our clients and that their cash is protected with us. Previously few weeks it grew to become evident there’s a must rebuilt belief,” chair Ingrid Bonde advised the Monetary Instances.
Alecta has emerged as one of many greatest losers from the current banking turmoil within the US, the place the Swedish pension fund was a big shareholder in SVB and Signature. It was additionally a shareholder in First Republic, one other regional US financial institution whose shares have plummeted as all three teams had been hit by the sharp improve in rates of interest.
The Swedish fund misplaced SKr19.6bn ($1.9bn) within the three banks and was pressured final week to reassure savers that it remained financially sound.
Sweden’s monetary regulator is investigating Alecta over the losses, which got here after the pension fund boasted to native media that it had dropped a holding in a conservative Swedish lender and was specializing in US area of interest banks to spice up returns.
Alecta’s board got here beneath heavy stress after initially solely changing its head of equities, Liselott Ledin, final week. She is being changed by Ann Grevelius, an Alecta board member who was beforehand chief funding officer at massive Swedish financial institution SEB, who will conduct a evaluate of its equities enterprise.
Bonde harassed that Alecta was “financially secure” however {that a} “very unlucky enterprise determination” had led to a drop in belief within the pension fund.
It’s going to now study whether or not it ought to transfer away from its present mannequin of constructing concentrated investments in a number of shares — which has led to it being the best-performing pension fund in Sweden lately — or observe the index extra carefully, Bonde stated.
“We have to have a look at the steadiness between bettering returns and restoring belief,” she added.
Bonde stated she had supplied to resign herself a number of occasions in current days however the board had “inspired and requested” her to remain on. Each Alecta’s administration and board imagine the failed US investments fell inside the mandate set by the board.
Alecta, a mutually-owned fund, is now trying to find a successor to Billing and has appointed its deputy head Katarina Thorslund as his short-term alternative. Bonde stated ousting Billing had “not been a straightforward determination by any means” and expressed her appreciation for his earlier work.
