- Pension funds around the world lost millions of dollars due to the failure of Silicon Valley Bank.
- The California Civil Servants Retirement Fund, California Teachers’ Retirement System, South Korea’s National Pension Service, and Sweden’s Alekta Pension Fund had invested in the bank.
- The Federal Reserve promised depositors that their money would be safe, but this did little to allay concerns about the stability of the banking system.
Pensions around the world lost millions of dollars due to the failure of Silicon Valley Bank (SVB).
After the SVB closed on Friday, several US pension funds and two overseas pension funds have invested in SVB stocks, which are likely to suffer losses as banks are closed by federal regulators. confirmed.
Just before the weekend, a bank run threw the San Francisco-based financial institution into a crisis as depositors made massive withdrawals. Another small New York bank, Signature Bank, was shut down by regulators on Sunday after being turned over to the Federal Deposit Insurance Corporation (FDIC). The failure was the second-worst bank failure in U.S. history and his third-worst, second only to the 2008 Washington Mutual crisis.
The shutdown is likely to affect the rest of America’s banking system, despite federal officials’ plans to stem the impact. Maybe, but it also includes pension plans that add up to millions of dollars.
For example, the California Civil Servants Retirement Fund (Cal PERS) manages the nation’s largest public pension fund with more than 1.5 million members, and lost $67 million to SVB and about $11 million to Signature when it failed. was investing in With assets of over $440 billion at the end of last year, these investments represent just a fraction of Cal PERS’ portfolio.
A Cal Purse spokesperson said, “These will be highly at-risk and loss-prone assets, but they represent only a small portion of our overall portfolio.” Newsweek“We will continue to monitor the situation over the coming days and weeks and remain strategic, agile and patient as a long-term investor.”
The California Teacher Retirement System, the nation’s largest teacher retirement fund, also states: Newsweek As of last Thursday, the pension held $11 million in SVB stock and no bonds. As of January 31, its assets totaled $311.5 billion.
It also has exposure to banks and loans through partners and advisors, but said the pension was “encouraged” by the Federal Reserve’s promise that all depositors would be protected.
The Federal Reserve has pledged to bank customers that their money is “safe” and should have confidence in the system despite growing concerns among those in the financial sector. Many speculate that other mid-sized banks may soon go bankrupt as depositors rush to withdraw more money.
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There are also other state pensions investing in SVB.
Rhode Island’s Employee Retirement Plan, which benefits thousands of retired state and local workers, is SVB, Signature and two other banks at risk of collapse, First Republic and It had just over $2.6 million invested in Silvergate Capital. These investments represent only a small portion of the total fund valued at over $10.3 billion.
In the Indo-Pacific, Korea National Pension Service (NPS), which manages the world’s third largest public pension fund with assets of $800 billion, owns approximately 100,000 shares in SVB, valued at approximately $23.2 million in the second half of 2022 doing. for this incident.
Alecta, Sweden’s largest pension fund, overseeing more than $104 billion in assets across the Atlantic, has invested approximately $848.7 million in SVB and $282.9 million in Signature.
However, the fund said in a statement that “for Alecta individual pension savers, the impact of this investment on future occupational pension payments will be very small.”
