US banks' collapse sparks fears in Sweden that pension fund could lose over $1 billion

US banks' collapse sparks fears in Sweden that pension fund could lose over $1 billion
Credit: Belga

The fall of a number of banks in the USA has led to fears in Sweden that Alecta, the country's largest pension fund, could lose $1.1 billion (€1.03 billion).

The Swedish giant invested some 21.8 billion krona ($2.1 billion) in Signature Bank, First Republic Bank and Silicon Valley Bank (SVB) in 2017, making it one of their largest shareholders.

“The investments in SVB and Signature are likely to be lost,” spokesman Jacob Lapidus acknowledged.

SVB, a California-based lender, collapsed on Friday morning after a disastrous 48 hours in which a run on deposits and a capital crisis led to the second-largest failure of a financial institution in US history.

California regulators closed down SVB and put it under the control of the US Federal Deposit Insurance Corporation, FDIC. The FDIC is acting as a receiver; in such cases, it usually liquidates the bank’s assets to pay back its customers, including depositors and creditors.

In the fallout of the SVB crisis, the FDIC also took over Signature Bank, after a run on deposits by some of its clients.

Observers in Sweden are questioning why Alecta exposed itself to such a risk with the savings of 2.6 million savers, and angry reactions have been building up on social networks.

However, the pension fund, which manages 1.2 billion krona, says the losses in the US will have little impact on its clients’ pensions.

The FDIC had originally said clients with deposits of up to $250,000 would have access to them. Then, on Monday it announced that clients of both the SVB and Signature would have full access to their deposits, even if they exceed $250,000.

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