Top Swedish Pension Fund Fires CEO After Big Losses On US Banks

Sweden’s largest pension fund fired its Chief Executive Officer on Tuesday after a bad bet on US banks led to billions of dollars in losses, reported Bloomberg. 

Alecta, which has $115 billion of assets under management and oversees the savings of 2.6 million Swedes, published a statement on Tuesday that the board decided CEO Magnus Billing would leave immediately to “restore trust” after his investment strategy “seriously damaged confidence.” 

Deputy CEO Katarina Thorslund has been appointed acting CEO, and the Swedish fund has started the process of finding a new leader. 

The firing of Billing comes as the pension had “investments in three American niche banks led to large losses,” the fund said. It had large positions in Silicon Valley Bank parent SVB Financial Group, Signature Bank, and First Republic Bank. As a result of the bank failures, it lost SKr19.6bn ($1.9bn), or about 2% of its capital. 

“No other pension fund had bet on the three niche US banks to the extent that Alecta had,” Bloomberg pointed out. 

Last week, the fund’s head of equity portfolio management, Liselott Ledin, was placed on leave. Alecta said it would reduce stakes in companies “far away from home.” 

Chairman Ingrid Bonde called Ledin’s overseas investment strategies “unusually inept.” Sweden’s financial regulator is looking into the losses. 

Billing has admitted the investment in the US banks was a “big failure,” but he’s responded to critics by saying the losses were only 2% of the fund’s capital. However, the Swedish National Pensioners’ Organization wasn’t happy with his comments, saying the money is “people’s wages,” implying that every loss ought to be treated with seriousness.