Alecta has fired its equities chief, replacing her temporarily with one of its board members, and vowed to cut the risks of holding large stakes in foreign companies in a series of measures announced this morning as the Swedish pensions giant grapples with a bank-losses scandal.
The SEK1.2trn (€105bn) Stockholm-based pensions institution has also brought in a former AP3 chief investment officer to take command of investment operations until its permanent CIO Henrik Gade Jepsen recovers from COVID complications.
Alecta, which is known for its equities strategy of maintaining a very concentrated portfolio – some SEK480bn invested across around 100 stocks – had to book losses of SEK19.6bn on its investments in Silicon Valley Bank, Signature Bank and First Republic Bank during the US bank crisis in March.
In the announcement today, Alecta said Magnus Billing, its chief executive officer, had decided to make changes within the organisation because of the losses.
Ann Grevelius, currently a member of Alecta’s board of directors, will take the position of temporary head of equities, Alecta said, and replace the current head of equity portfolio management, Liselott Ledin.
Asked whether Ledin had been dismissed, a spokesman for Alecta told IPE that Ledin was “exempted from work from today”.
Grevelius had previously been CIO at SEB, Alecta said, and would start work in her new role on 20 April, recusing herself from the board of directors while head of equities to avoid any conflicts of interest.
Alecta said it had started recruiting for a permanent head of equities.
The Stockholm-based firm also said it is bringing in Kerim Kaskal, who was CIO of Swedish national pensions buffer fund AP3 for two years from September 2013, to take over Gade Jepsen’s CIO role until he returns from long-term sick leave.
Alecta revealed that Gade Jepsen, taken ill just a month after coming to the firm on 1 December as CIO, was suffering from ”severe complications following a COVID infection”, but added that he was expected to be fully recovered and back at work after the summer.
Billing, who has been acting CIO since January alongside his CEO role, has also decided to make changes to Alecta’s asset management strategy, “within the limits of his mandate”, the firm said in today’s announcement.
“Within the current investment guidelines, Alecta will immediately begin a reduction of the risk with large stakes within companies far from our home market,” it said, adding that this process would focus on Alecta’s holdings in the US.
Billing said: “The losses in US banks make up a small amount of the total capital under management, and the effects on our customers’ pensions are very limited.
“The losses in US banks make up a small amount of the total capital under management, and the effects on our customers’ pensions are very limited”
Magnus Billing, Alecta’s CEO
“However, the outcome of the investments has harmed our stakeholders’ trust in us and our asset management,” he said, adding that it was Alecta’s “sincere aim” to rebuild that trust.
“Our asset management needs a fresh start and new management. I have therefore, following discussion with the board of directors, decided on the actions presented today,” he said.
Last week Alecta had its mandate as the default provider of traditional pension insurance for private-sector employees in the ITP scheme renewed for a further five years following a tender process, but pensions administration organisation Collectum, which carried out the tender process, said when the result was announced that it could not ignore “recent events” at Alecta.
The ITP committee, it warned, was always able to reconsider an award – for example, if the Financial Supervisory Authority were to intervene in a selected company.
According to her LinkedIn profile, Ledin has worked at Alecta for her entire 28-year career before being forced out today.
Three years ago, when Alecta’s long-term head of equities Bo Selling left for another job, the firm decided that rather than replace him, it would instead change the reporting structure so that Ledin and the other manager under Selling – Jesper Wilgodt, head of equity research – would work directly under its then CIO Hans Sterte.
Regarding the internal probe into the US bank losses ordered by Alecta’s board in mid-March, Alecta’s spokesman told IPE the results of that investigation would be presented “in good time before summer”.