March 4. 2024. 10:19

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Swedish pension company to lose billions amid US bank crash


Pension company Alecta risks losing billions after two US banks – Silicon Valley Bank and Signature Bank – collapsed over the weekend, risking the savings of Swedish pensioners.

The collapse of the two niche banks has already resulted in Alecta losing at least SEK 12 billion (€1.056 billion) in less than 48 hours. Alecta, a company with 2.4 million customers managing more than SEK 1,200 billion (€105 billion) had invested shares worth SEK 9 billion in SVB and SEK 3 billion in Signature Bank.

“It is a failure that we have invested in these two companies and ended up in this situation,” Alecta’s CEO Magnus Billing told Radio Ekot on Monday.

“This is not good for Alecta or confidence in what we do”, he added on SVT Nyheter.

According to Billing, it is still too early to say what happened. In 2022, discussions were held with Silicone Valley Bank about its problems when the outflow of deposits increased while the bank’s assets were held in long-term US government securities that dropped in value.

“We can certainly manage it easily. But it is clear that 12 billion is a lot of money. I have the utmost respect for the large amount, but in Alecta’s total portfolio and our commitments to customers, this is a relatively small matter,” he added.

At the same time, the Swedish Finance Inspection Office (FI) announced that it has called for an extraordinary meeting among insurance and occupational pension companies and banks. It aims to find out about the exposures that may exist to the US banks and the possible spillover onto the Swedish banking system.

“Today, FI will hold meetings with Alecta and other companies to discuss the investments they have in US banks and other exposures to the sector targeted by the US banks. FI will investigate the size of the companies’ holdings in the US banks, hear the companies’ analyses of the situation and how the companies will manage the situation going forward,” the authority stated in a press release on Monday.

FI’s acting Director General Susanna Grufman, commented on the authority’s sudden decision, stating that the Swedish financial system is unaffected by the US crisis.

“We see some drama and turbulence in the US banking market. However, our assessment is that the stability of the Swedish financial system is not affected by this, as it has considerable resilience,” she said.

However, she emphasised the importance of closely monitoring how the rapid changes in interest rates affect financial companies.

(Charles Szumski | EURACTIV.com)