Sweden’s biggest pension fund has fired its chief executive after a bet on failed US lenders Silicon Valley Bank and Signature Bank left it with losses of almost $2bn.
Alecta, which has $110bn of assets under management, said on Tuesday that Magnus Billing had left as chief executive with immediate effect as the losses had “seriously damaged confidence” in its investment strategy.
“We are in the business of providing comfort to our customers and that their money is safe with us. In the past few weeks it became evident there is a need to rebuilt trust,” chair Ingrid Bonde told the Financial Times.
Alecta has emerged as one of the biggest losers from the recent banking turmoil in the US, where the Swedish pension fund was a large shareholder in SVB and Signature. It was also a shareholder in First Republic, another regional US bank whose shares have plummeted as all three groups were hit by the sharp increase in interest rates.
The Swedish fund lost SKr19.6bn ($1.9bn) in the three banks and was forced last week to reassure savers that it remained financially sound.
Sweden’s financial regulator is investigating Alecta over the losses, which came after the pension fund boasted to local media that it had dropped a holding in a conservative Swedish lender and was focusing on US niche banks to boost returns.
Alecta’s board came under heavy pressure after initially only replacing its head of equities, Liselott Ledin, last week. She is being replaced by Ann Grevelius, an Alecta board member who was previously chief investment officer at large Swedish bank SEB, who will conduct a review of its equities business.
Bonde stressed that Alecta was “financially stable” but that a “very unfortunate business decision” had led to a drop in trust in the pension fund.
It will now examine whether it should move away from its current model of making concentrated investments in a few stocks — which has led to it being the best-performing pension fund in Sweden in recent years — or follow the index more closely, Bonde said.
“We need to look at the balance between improving returns and restoring trust,” she added.
In a statement, Alecta said the impact of the US banking collapse would only “marginally” impact pensions for some of its members. Beyond Sweden, around a dozen US public pension plans have also written off their stakes in SVB, which were typically less than 1 per cent of their total asset base.
Bonde said she had offered to resign herself several times in recent days but the board had “encouraged and asked” her to stay on. Both Alecta’s management and board believe the failed US investments fell within the mandate set by the board.
Alecta, a mutually-owned fund, is now searching for a successor to Billing and has appointed its deputy head Katarina Thorslund as his temporary replacement. Bonde said ousting Billing had “not been an easy decision by any means” and expressed her appreciation for his previous work.
Additional reporting by Josephine Cumbo
