FT. The biggest victim of last month’s US banking crisis comes from an unlikely location: Sweden.
The Scandinavian country’s largest pension fund Alecta fired its chief executive on Tuesday after a bet on niche US banks went spectacularly wrong, leading to $2bn in losses and a huge blow to its reputation in a nation where trust is foremost of all virtues.
Alecta, consistently ranked Sweden’s best-performing pension fund, has pursued a strategy of concentrating its equity portfolio on a few, large investments — about 100 at the last count. But three of them were US lenders that collapsed last month or whose shares plummeted.
The pension fund was the fourth-largest shareholder in Silicon Valley Bank, the fifth-largest in First Republic Bank and the sixth-biggest in Signature Bank. The losses prompted an outcry in Sweden, where Alecta manages $100bn of assets for 2.6mn savers, and where pressure from local media often leads to executive bloodletting.
The fund’s chair, Ingrid Bonde, faced one of the biggest dilemmas of a glittering career that has included stints at the top of Sweden’s financial regulator, its debt office, and three of its biggest companies.
Should she chalk up the loss of less than 2 per cent of the fund’s assets as part of the risk-reward dynamic of a hitherto successful investment strategy, or respond to the public outrage and bring in fresh leadership to replace Magnus Billing as chief executive?