Stockholm: Alecta’s CEO Magnus Billing was forced to step down after Sweden’s biggest pension fund became one of the largest overseas casualties of the meltdown at Silicon Valley Bank.
The fund decided to let Billing go with immediate effect as it grapples with the fallout from almost $2 billion of losses, according to a statement on Tuesday. The board took the decision after a discussion about the right path and “how to restore trust” in the fund, it said.
Deputy CEO Katarina Thorslund has been appointed as acting CEO, and the recruitment process to find a new leader for Alecta begins immediately.
The ousting of Billing, who has been at the firm since 2016, is the most dramatic personnel fallout yet from the scandal, which saw the fund take losses on investments in Silicon Valley Bank parent SVB Financial Group, Signature Bank and First Republic Bank. No other pension fund had bet on the three niche US banks to the extent that Alecta had.
The fund last week put head of equity portfolio management, Liselott Ledin, on leave and said it would scale back large stakes in companies “far away from home.” Chairman Ingrid Bonde then called Ledin’s investment decisions “unusually inept,” only to face sharp criticism from lawyers representing Unionen, one of Sweden’s largest trade unions, who called it “like an act in some kind of panic to show that you’re doing something and this person gets stuck in the middle.”
Billing, who had admitted the foray into the US was “a big failure,” has repeatedly sought to downplay its significance, saying the losses were equal to less than 2 per cent of the fund’s capital. Still, the Swedish National Pensioners’ Organization pointed out the money is “people’s wages,” indicating any losses should be taken seriously.
The fallout from the failed bets had already led to a summons from the country’s financial watchdog while both the government and central bank have said they are monitoring the situation closely. Last week, Dagens Industri reported that the FSA had extended a review of Alecta’s investments to also include other trades than the three US banks.
Bonde will support the organization as working chairman of the board, the fund said.
Ann Grevelius, a member of Alecta’s board of directors, is taking over the position of temporary head of equities, to replace Ledin. She is set to oversee a strategic review of how to manage the equities portfolio in the future, with a target to conclude the main parts of the work “in good time before the summer.”
