Alecta, one of the Sweden's largest pension funds, has announced it intends to replace its chief executive after a bitter loss of nearly SEK 20Bln ($1.9Bln) because of investments in several crisis-hit US banks.
Alecta's chief executive Magnus Billing is to step down with "immediate effect" and his deputy Katarina Thorslund will step in as a temporary replacement while a permanent solution is sought. Judging by Billings' most recently reported annual salary, this would mean a golden parachute of around SEK 10Mln (nearly $1Mln).
"The Board has now concluded that Alecta needs new leadership to implement the necessary changes in asset management and restore trust," the fund said in a statement.
Earlier in March, the fund admitted major losses as a result of its holdings in three crisis-hit US banks: Silicon Valley Bank (SVB), Signature Bank and First Republic. Tellingly, just days before the collapse of SVB, Alecta said it had sold off its assets in two of Sweden's largest banks to increase its investments in US niche banks, becoming the fourth-largest owner in SVB.
Nevertheless, the Swedish authorities have toned down the threat to the country's financial institutions, with the Financial Supervisory Authority (FI) notably assuring that neither the stability of the system nor future pensions had been affected by any noteworthy degree.
Now, Finance Minister Elisabeth Svantesson of the Moderate Party, says that the change in Alecta's management is "proof that something has gone wrong".
"It is extremely important that administrators do not take unnecessary risks with other people's money," Svantesson told Swedish media. "Everyone who manages other people's money has a big responsibility. It can go fast. The economy is changing rapidly. For many years, money has been free. No more. Inflation with high interest rates places other demands on stewardship."
Alecta has 2.6Mln private customers and 35,000 business customers in Sweden - a nation of 10.4Mln. Earlier this spring, Billing said he had "the ultimate responsibility" yet ventured that he enjoyed the "full confidence" of the board.