Troubled Swedish pensions giant Alecta is in deeper water today after the country’s financial supervisor launched an investigation into whether risk management rules were followed in the lead up to huge US bank losses.
A spokesman for Alecta told IPE: “We have full respect for the Financial Supervisory Authority starting this investigation as part of their mission, and Alecta will naturally cooperate fully with the authority.”
Finansinspektionen, the Swedish Financial Supervisory Authority (FSA), announced this morning it is launching an investigation into the SEK1.2trn (€105bn) occupational pensions provider – Sweden’s largest pension fund.
In March, Stockholm-based Alecta revealed huge losses on three US niche banks – investments that were made after selling a holding in Handelsbanken, one of Sweden’s main consumer banks. The losses were later stated at SEK19.6bn.
Since then, its head of equity portfolio management and chief executive officer have been fired and an internal investigation is under way.
The FSA said today: “The investigation concerns Alecta’s risk management with a focus on measuring investment risks.
“The purpose of the investigation is to review whether Alecta has complied with external and internal rules based on the investments in Silicon Valley Bank, First Republic Bank and Signature Bank,” the authority said.
As a general explanation of why it was conducting the probe, the FSA said its supervision included investigating and assessing whether the occupational pension companies followed rules that applied to investments and management of the risks that investments gave rise to – rules it said were central to the protection of the policyholders and others entitled to compensation.
The new investigation comes less than a year after the FSA concluded a previous probe into Alecta’s equity management.
Back in June 2022, the FSA said it had examined Alecta’s internal control and risk management within asset management between 2020 and 2022, regarding equities, and was writing off the case.
IPE asked the FSA whether, given the disaster over the US bank losses at Alecta, the authority was now asking itself questions about that investigation.
A spokesman for the FSA replied that the previous investigation had been about completely different things.
“Then the Financial Supervisory Authority looked at Alecta’s internal control and we focused on how they handled incidents and conflicts of interest,” he said.
“That investigation was based on a different perspective and regulatory framework to what is current now,” he said.
Soon after the revelations about the US bank losses in March, came the news that Alecta’s contract to provide the default option for traditional pensions in Sweden’s huge ITP occupational pension system had been renewed for another five years following a tender.
However, Collectum, the body responsible for choosing providers for the ITP scheme, cautioned at the time of the award that it could not ignore “recent events” at the company, and that the ITP committee could always reconsider an award.
Asked today whether the FSA’s decision to investigate Alecta’s risk management could prompt such a reassessment, Pehr Östberg, head of procurement at Collectum, told IPE: “Collectum will follow the process closely, but no measures will be taken until we have the outcome of the investigation.”
Were the contract to be reconsidered, that decision would be in the hands of the ITP board rather than Collectum’s board, he said.
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