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 $2 billion (€1.8 billion).
Alecta, which has $110 billion 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.
“Alecta now needs to look ahead and forcefully implement the necessary changes,” said chair Ingrid Bonde.
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.
The Swedish fund lost SKr19.6 billion (€1.74 billion) 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.
Grevelius will conduct a review of Alecta’s equities business, the fund said on Tuesday.
Alecta’s management and non-executive directors both believe that the failed US investments fell within the mandate set by the board.
The fund is searching for a successor to Billing and has appointed its deputy head Katarina Thorslund as his temporary replacement.
The global banking system was rocked last month by the collapse of SVB and Signature as well as a rescue deal for Credit Suisse by UBS. The two US banks and First Republic, which is exploring strategic options including a sale, were hit hard by the rapid rise in interest rates.
In the aftermath, Alecta decided to scale back the level of risk in its big investments outside Sweden, reversing its recent strategy. It repeatedly stated the losses did not affect its financial position but has acknowledged that trust has been damaged.
“The board has now come to the conclusion that Alecta needs new leadership to implement the necessary changes in asset management and restore trust,” it added. – Copyright The Financial Times Limited 2023
