Alecta’s non-executive board has told the Swedish pension fund’s executive leader to launch an immediate probe into how the huge losses on US bank investments it announced this week were able to happen – as the firm warned of further losses on another precarious US bank holding.

In a statement published yesterday, Alecta said: “Alecta’s board has tasked chief executive officer Magnus Billing with immediately beginning an investigation into the situation that has arisen.

“The investigation must focus on whether the current investment strategy, risk allocation and mandate for asset management is optimal,” the SEK1.2trn (€105bn) Stockholm-based pensions institution said.

On Monday, Alecta revealed it had lost billions of Swedish kroner on its holdings in three US banks after Silicon Valley Bank (SVB) collapsed last Friday, followed by Signature Bank.

The Swedish firm said it had lost around 1% of its total managed capital after writing down its holdings in the two banks to zero, but insisted its financial position remained very strong.

In yesterday’s announcement, Alecta said its management would use external resources for the upcoming investigation, and that the conclusions from that work would be made public.

“US authorities had taken control of two banks Alecta invested in, and the value of Alecta’s investment of a total of SEK12bn (€1.1bn) is most likely judged to be zero,” the firm said.

It added, probably referring to its holding in the troubled First Republic Bank: “Another US bank that Alecta invested in has fallen sharply in value and there is a risk that this investment will also be completely lost.”

The Swedish firm has already said the SEK9.7bn it invested in First Republic Bank was only worth SEK7.3bn at Friday’s market close.

Yesterday evening, it was announced in the US that banks had agreed shore up First Republic Bank by making a $30bn (€28bn) capital injection into First Republic Bank.

But shares in the bank failed to gain ground in early trading in the US today, and are currently priced at less than half the level they traded at a week ago.

Swedish pensions newsletter Pensionsnyheterna reported yesterday that Alecta said it has engaged lawyers in the US with a view to recouping money from the failed bank SVB, and claiming compensation for the losses incurred.

IPE has asked Alecta to confirm this.

Alecta has a relatively concentrated equities portfolio, only holding the stock of around 100 companies in its equities allocation, which makes up 40% of its total managed capital.

The investment strategy crisis has hit Alecta at a time when its new chief investment officer, Henrik Gade Jepsen, is absent on long-term sick leave.

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