Swedish pension company Alecta has insisted that its financial position remains strong despite losing SEK 12.1bn on its investments in Silicon Valley Bank (SVB) and Signature Bank.

Earlier this week, the American banking supervisory authority took control of SVB and Signature Bank, meaning that Alecta now values the shares it holds in both banks at zero.

The pension company began investing in SVB in June 2019 and made its last investment in November 2022, with its investments in the bank totaling SEK 8.9bn.

It began investing in Signature Bank in January 2016 and made its last investment in July 2022, with its total investments in the bank amounting to SEK 3.2bn.

These investments totaled SEK 12.1bn, corresponding to approximately 1 per cent of Alecta’s total managed capital of SEK 1,200bn.

Despite the losses, Alecta stated that its financial position remained strong and its solvency ratio stood at 203 per cent as of 10 March 2023, after the value of its shares in the banks was set to zero.

Its portfolio of listed shares, after writing down the value of the banks, has increased by just over 3 per cent in 2023, corresponding to SEK 16.5bn.

Despite this, Alecta concedes that the lost value in the American banks would affect the pensions of its customers “to a small extent”.

While defined benefit customers will not be affected, ITP customers with a defined contribution pension would see a “small” impact.

The return on the defined premium product AOP in 2023 up to and including 10 March amounted to 1.4 per cent.

Alecta has also invested SEK 9.7bn in the American First Republic Bank, with its market value falling to SEK 7.3bn on 10 March, although it has rebounded somewhat since.

In an interview with Bloomberg, Alecta CEO, Magnus Billing, said the pension company’s investments in the American banks had been a “big failure”.

Alecta was not the only pension organisation to have invested in SVB, with Norway’s Government Pension Fund Global reportedly holding around NOK 1.7bn in the American Bank.

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