Swedish pension fund Alecta dumps First Republic Bank shares after price plummets

Private Swedish pension money Alecta has sold its shares successful First Republic Bank, the American slope struggling to enactment afloat aft a superior driblet successful stock value, a slope spokesperson announced March 21. Alecta was the bank’s fifth-largest shareholder.

Alecta took a nonaccomplishment successful the woody aft losing funds successful the collapses of Silicon Valley Bank (SVB) and Signature Bank. First Republic Bank’s shares fell 87% aft SVB was forced to adjacent earlier this month. Regarding the latest developments, Alecta CEO Magnus Billing told Bloomberg:

“The uncertainty astir First Republic’s aboriginal was excessively great, partially owed to the information that the lender was downgraded to junk status.”

According to media reports, Alecta took a $728 cardinal nonaccomplishment connected the merchantability of its First Republic shares. That nonaccomplishment came connected apical of astir $862 cardinal Alecta had successful SVB and $310 cardinal successful Signature Bank earlier their closures.

The pension fund’s committee asked Billing to analyse whether its "investment strategy, hazard allocation and mandate for plus absorption is optimal” past week. The money was besides successful connection with the Swedish Financial Supervisory Authority connected its concern successful the U.S. banks.

Related: Yellen defends authorities involution to debar different SVB

Alecta has astir $116 cardinal successful assets nether management, representing the accounts of 2.6 cardinal individuals and 35,000 companies successful Sweden. The fund’s solvency ratio was unaffected by the losses from the U.S. banks.

The CEO of Alecta, the Sweden pension money that mislaid implicit $1 cardinal successful the SVB fallout, is acrophobic astir "breaking the markets" if cardinal slope tightening is "too aggressive" https://t.co/CHdP5OUDE5 pic.twitter.com/yQzD5Yj59m

— Bloomberg TV (@BloombergTV) March 14, 2023

After reaching a debased of $12.15 connected March 20, First Republic Bank’s shares were selling for $17.11 astatine the clip of writing.

Silicon Valley Bank, which mostly served the tech startup industry, filed for bankruptcy connected March 17 aft being forced to merchantability bonds astatine a nonaccomplishment to screen a slope run. Signature Bank was closed by New York state authorities connected March 12 successful an enactment supported by national regulators. The slope held deposits of respective crypto firms, including Coinbase, Celsius and Paxos, though a New York State Department of Financial Services spokesperson denied the closure was related to crypto.