The manager of Norway’s sovereign wealth fund says the three years of litigation it and Sweden’s largest pension fund AP7 pursued against the auditor of failed US bank Silicon Valley Bank (SVB) have helped bolster legal safeguards for investors.
Norges Bank Investment Management (NBIM), which runs the NOK21.2trn (€2.0trn) Government Pension Fund Global (GPFG), announced on Friday that it and AP7, as co-lead plaintiffs in a class action, had reached a settlement in principle of $224.5m with KPMG, SVB’s former external auditor, after the bank’s March 2023 collapse.
Nicolai Tangen, NBIM’s chief executive officer, said: “The settlement is an important first step toward recovering investor losses from one of the largest bank failures in US history.
“It was reached after more than three years of litigation that has helped strengthen legal protections for investors,” he said.
In its statement, NBIM said the GPFG and other SVB investors suffered significant losses on their investments in SVB securities.
Just before SVB was closed by California regulators in mid-March 2023, the Norwegian SWF held NOK2.8bn of the bank’s equities and bonds, NBIM has previously told IPE.
Tangen said on Friday: “Investor confidence depends on well-functioning markets and on investors’ ability to enforce their rights.”
The SVB collapse was part of a string of US niche bank failures in early 2023 precipitated by depositor runs on banks already weakened by losses on bond holdings after US interest rates climbed.
Losses on SVB, Signature Bank and First Republic Bank played a key role in a crisis of confidence at Swedish occupational pensions giant Alecta in 2023.
Explaining the case against SVB, AP7 said back in 2023 that some SVB executive officers had allegedly misrepresented and concealed the significant financial and liquidity pressure the bank faced from increasing interest rates and a reduction in mergers and acquisitions activity, which led to the bank’s collapse.
NBIM said the settlement was subject to court approval, and that the case continued against the other defendants in SVB securities litigation.
AP7 remains in the process of litigation against Signature Bank, having been named as lead plaintiff in that class action in August 2023.
A spokesman for Alecta confirmed to IPE that the SEK1.5trn (€140bn) pension fund was a member of the SVB class action. Alecta was named lead plaintiff in December 2023 in a class action in the US related to First Republic Bank.
