The board of Swedish pension fund Alecta, Stockholm, has asked its CEO to launch an investigation into its about $2 billion exposure to beleaguered U.S. banks, including collapsed Silicon Valley Bank.
Magnus Billing has been tasked with investigating whether Alecta's "investment strategy, risk allocation and mandate for asset management is optimal," a statement posted on the pension fund's website said. The investigation will begin immediately and management will draw on external resources for support.
Alecta had a total 12 billion Swedish kronor ($1.1 billion) exposure to collapsed banks SVB and Signature Bank. The investments are likely to be written down to zero, the statement added.
Alecta said in a Q&A document published on its website on the subject of U.S. bank investments that, in 2022, it discovered that interest-rate hikes had impacted on SVB's liquidity. Together with other investors, Alecta "held a dialogue with the bank to inquire whether the bank had a plan going forward," the document said.
Alecta also has a 9.7 billion kronor exposure to U.S. bank First Republic, which has seen its share price plummet 77% since the March 8 close. "Another American bank that Alecta invested in has fallen sharply in value and there is a risk that this investment will also be completely lost," Thursday's statement said.
The conclusions of the investigation will be made public, Alecta added. A spokesman declined to comment beyond the statement.
Alecta has about 1.12 trillion kronor in assets. According to its most recent asset allocation breakdown, as of Sept. 30 when assets totaled 907 billion kronor, the pension fund had a 43.7% allocation to fixed income, 34.8% exposure to equities, and 21.5% allocation to real estate.