Alecta Pensionsforsakring, Stockholm, said its losses resulting from its 1% exposure to Silicon Valley Bank and Signature Bank will have a small impact on its investments.
Following the decision by the Federal Deposit Insurance Corp. to take control of Silicon Valley Bank and Signature Bank, the depositors' assets are guaranteed and Alecta now values its shares in both banks at zero, it said in a statement Monday.
Alecta, has been an investor in Silicon Valley Bank since 2019 and had a total exposure of 8.9 billion Swedish kronor ($830 million) as of March 10. It also invested 3.2 billion kronor in Signature Bank as of March 10.
The investments in those two banks amounted to about 1% of Alecta's total assets, which are about 1.2 trillion Swedish kronor, including about 200 billion Swedish kronor in the defined contribution segment.
Despite the losses, its listed equity portfolio increased by 3% or 16.5 billion Swedish kroner as of March 10 since the start of 2023. Equities are about 34.8% of Alecta's total assets. Alecta remains invested in the financial services sector with exposures to American First Republic Bank, SEB and Nordea."
Following the collapse of Silicon Valley Bank last week, European markets watchdogs are also taking action.
In Germany, financial regulator BaFin on Monday issued a ban on the Silicon Valley Bank Germany branch on disposals and payments, and said the institution is at risk of being unable to meet its obligations toward its creditors. The bank was ordered to be closed for business with customers.
Also on Monday, HSBC UK Bank acquired the U.K. arm of Silicon Valley Bank for £1. The Bank of England arranged the sale in consultation with the U.K. Prudential Regulation Authority, Treasury and the Financial Conduct Authority.
Commenting on the deal, Susannah Streeter, head of money and markets at U.K. fund platform Hargreaves Lansdown, said in an emailed comment: "After a number of offers from smaller banks, HSBC has agreed to scoop up the beleaguered U.K. arm of SVB, which should end the nightmare thousands of tech firms had been experiencing over the past few days. HSBC shareholders may have some concerns about the bank snapping up assets which have been under such a cloud of uncertainty, particularly the exposure to bonds, but HSBC says it expects a gain to arise from the acquisition."
Iain Cunningham, portfolio manager at Ninety One, said in a separate emailed comment: "U.S. authorities have announced the full backstopping of depositors at SVB Financial, while also implementing a new system-wide lending program to ensure that banks can meet requests to withdraw deposits. Many will remember from the global financial crisis that it was full deposit insurance that was ultimately required to halt deposit flight and, as a result, this action should stem the emergence of systemic risk for the time being."
