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Swedish pension giant loses $1.1B from US banks’ collapse
- Overtonwindow 4y agohttps://archive.is/oOhQH https://archive.is/oOhQH
- jc_811 4y agoNote this is about SVB and Signature bank's collapse, not a collapse of US Bank
- ant6n 4y agoUS banks’ collapse, not US Bank’s collapse. Obvious.
- seydor 4y agoIs there a US Bank? Will this comment trigger a bank run?
- strictnein 4y agoIt's the #7 bank in the US. https://en.wikipedia.org/wiki/List_of_largest_banks_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_banks_in_the_U...
- jameshart 4y agoYes there is (https://en.m.wikipedia.org/wiki/U.S._Bancorp https://en.m.wikipedia.org/wiki/U.S._Bancorp). No it will not.
- moffkalast 4y agoCan banks run? Can they jump?
- Out_of_Characte 4y agoThey can bank, but not too hard or they'll fall over
- fdsafdsavad 4y ago> US banks’ collapse, not US Bank’s collapse. Obvious. Why add the "Obvious" bit when it's clearly not obvious to the original poster?
- kyrra 4y agoI don't understand how this pension fund manager will lose any money if the FDIC will be making all depositors whole. The article doesn't seem to cover this (unless I missed it).
- aprao 4y agoThe pension fund probably owns shares in the bank, which are now worthless.
- matthewbauer 4y agoPresumably they own equity in these banks.
- coev 4y agoThe pension fund plays the role of investor here, not depositor.
- kyrra 4y agoGot it, thanks
- kneebonian 4y agoIt seems like at some point in the past few decades money stopped becoming a useful abstraction for the values of goods and services and instead turned into a some numbers game played by by finances and tech bros looking to play the game rather than do anything good. I mean ultimately the value of the money went like this Some VC thought they could make money off a dog walking AI/ML self cleaning mapping proposotion. Not that they believed it would produce that much value but merely believed they could make a return. The startup put money in SVB which held the funds that represented the supposed value of the startup. The pension fund saw SVB had money (that represents the abstract value of a couple of dozen startups) and decided that would be a good place for them to put/invest more money. All of this undergirded by the idea that the value was in the 100s of millions of dollars for an AI/ML Dog Walking Mapping Startup platform. Which everyone knew was never worth that much to begin with, but was just following the numbers game because the hope was it would be able to be pawned off on other suckers. With the suckers being either a) The general public through an IPO or b) The tech giants who would acquire it. It just seems something broke somewhere and we need a correction.
- zwieback 4y agoSure but the question to ask is whether our financial systems have gotten better or worse since the time of tulip panics, railroad stocks, etc. I would argue that they have gotten better but there's always possible improvements.
- ant6n 4y agoThat doesn’t seem a problem, if the depositors go bankrupt, the banks shouldn’t be affected unless the bank lent them money. But the VCs gave the money, not the bank. I think the problem is really that the bank grew too quickly, so it only recently bought a bunch of low interest long term debt that was now worth much less. Could happen to other banks, too.
- hjalle 4y ago4th largest shareholder in SVB 4th largest shareholder in Signature Bank 5th largest shareholder in First Republic bank. Lets call it 3 out of 3.
- Ekaros 4y agoDo they own any other banks? Time to short?
- radicaldreamer 4y agoDo you think any of these large holders are hedged?
- TacticalCoder 4y agoThat question comes out often but... Apparently the $2bn realized loss that SIVB took was only about 1/10th of their total unrealized gains. Numbers are floating around now saying there's about $620 billion of unrealized losses among the various banks at the moment (due to the same issue of rates going up after trillions were printed). Which institution can honestly offer any kind of product hedging against $620 billions of losses without, itself, going bankrupt should people try to exercise their hedge? Basically the headlines, instead of being: "SVB goes down for it has $20 bn of unrealized losses" would be, instead, "SVB goes down for it has $20 bn of hedged unrealized losses, but the institution which is supposed to cover the hedge is bankrupt for it miscalculated and cannot cover $620 bn".
- sidewndr46 4y agoHow would you short a pension fund?
- deleted 4y ago[deleted]
- simse 4y agoShort the other banks they might have stocks in, is what I think they mean
- pklausler 4y agoThe link brought me to a story entitled "Ericsson to pay $200m fine for breaching US deal over Iraq graft".
- mulmen 4y agoThese aren’t lost deposits. This is a result of the shares in these banks going to zero.
- tom-thistime 4y agoAccording to the article, the pension fund's exposure is because it owns shares of stock in SVB. That's bad, but bank stocks can be tricky. They're not saying they lost money as a depositor.
- Analemma_ 4y agoI mean, that's worse. The depositors at SVB are being made whole, the shareholders are getting wiped out. EDIT: I think a lot of people misunderstood me. Wiping out the shareholders was absolutely the correct thing to do; I just meant worse from the perspective of people whose value is in the equity.
- lordnacho 4y agoWell someone had to be holding the shares. The article is unclear though, you might think it was due to them having deposited cash.
- Someone 4y ago$1.1 billion sounds like a lot, but compared to that pension fund’s total holdings it’s only about 1% (https://www.cnbctv18.com/business/silicon-valley-bank-alecta-sweden-pension-fund-stake-54-percent-wiped-out-16141121.htm https://www.cnbctv18.com/business/silicon-valley-bank-alecta...) I would think/guess a pension fund should diversify its investments a bit more, but not the end of the world.
- rcme 4y ago1% is a lot for a single holding. And this is a realized loss as well.
- BaseballPhysics 4y agoWhich makes you wonder about their diversification strategy. 1% of their fund in a single, highly specialized banking entity seems pretty damn over-concentrated.
- reducesuffering 4y agoWell 1.2% of your SP500 fund is in JP Morgan and 1.36% is in Tesla.
- rcme 4y agoExactly. 1.2% in JP Morgan is a lot different than 1% is Silicon Valley Bank.
- MichaelZuo 4y agoAnd of 1.36% in Tesla?
- BaseballPhysics 4y agoI agree, Tesla is massively overvalued and is over-represented in the S&P 500 as a consequence, resulting in excessive concentration in an asset that's already significantly declined. JPM, by contrast, isn't a "highly specialized banking entity", and so doesn't earn the same level of criticism.
- expertentipp 4y agoSome of the pensioners or fund managers will have to downgrade their yachts anchored at Gran Canaria, cry me a river....
- sshine 4y agoPensioners are normal people.
- bidirectional 4y agoFund managers at a Swedish pension firm don't have yachts. The teachers/train drivers/policemen etc. they manage pensions for definitely don't.
- Ekaros 4y agoMaybe not in Canary islands, but I have no doubt some of them have sail boats in Sweden. They are not that poorly paid or altruists...
- expertentipp 4y agoThey could be effective altruists though!
- fallingfrog 4y agoIt almost seems like it might be a good idea to create a wall between personal banking and investment banking.
- yesfitz 4y agoIf you're referring to Glass-Steagall, I don't think it would have helped with Silicon Valley Bank. Commercial banks were allowed to "to buy, sell, underwrite, and distribute US government and general obligation state and local government securities."[^1] And Silicon Valley Bank was underwater on US Treasury Bonds.[^2] 1: https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall:_legislation,_limits_and_loopholes#Section_16 https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall:_legisl... 2: https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank#Losses https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban...
- fnordpiglet 4y ago“Asset manager makes bad investment loses money.” Slow news day.
- jug 4y agoAs a Swede I'm kind of upset Alecta, a pension fund manager, invested in a god damn crypto bank. I can excuse Silicon Valley Bank, but... that...
- alecco 4y agoThey had high ESG rating.
- say_it_as_it_is 4y agoMy impression is that Sweden doesn't care about the credentials of its pension managers. These people don't even conduct due diligence beyond asking their finance buddies for their advice.
- communism 4y agoOne reason more against capital-backed rent. Abolish capitalism.