Swedish pension fund Alecta sells its stake in First Republic Bank at a loss of $728 mn

Sweden's biggest pension fund Alecta has sold all its shares in troubled US lender First Republic Bank at a loss of $728 million, the company's spokesperson Jacob Lapidus said on Tuesday. Alecta has been hit hard by the American banking crisis as it was invested in three banks that all face a liquidity crunch. The pension fund has lost almost $2 billion from its investments in First Republic Bank, Silicon Valley Bank, and Signature Bank.  

First Republic Bank has plunged into a crisis due to depleting liquidity following the quick meltdown of Silicon Valley Bank and Signature Bank. The bank's shares have fallen nearly 90 per cent in two weeks triggering fears that it may also collapse. 

Also read: JPMorgan CEO leading talks for new First Republic rescue plan

First Republic Bank has secured $30 billion from some major American banks, but few think it may not be enough. Earlier in the day it was reported that JPMorgan Chase CEO Jamie Dimon was leading talks with the chiefs of other big banks about fresh efforts to stabilise First Republic.

On Monday, shares of First Republic fell 46 per cent to $12.41 as investors feared that the deposits by several big banks into the lender would not be enough to ease its troubles. However, today, the stocks jumped nearly 40 per cent to over $17.06.

Last week, as the San Francisco-based lender slipped into crisis, America's some of largest banks came together to infuse capital. In a statement on March 16, First Republic said it had secured deposits totaling $30 billion. The banks that pumped the money into the troubled lender included Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, PNC Bank, State Street, Truist, and US Bank.

The quick collapse of SVB and Signature Bank sparked fears among the investors, who ran to withdraw their deposits. This, in turn, roiled the markets, and share prices of some banks like First Republic Bank, PacWest Bancorp, and Western Alliance Bancorp crashed nearly 60 to 80 per cent.

On Sunday, a US official said the deposit outflows that left many regional banks reeling had slowed and in some cases reversed. According to Reuters, many of the regional banks said that their deposit base had stabilised. However, some of them have been seeking to raise capital privately, amid concerns from peers and private equity firms about potential losses in their investment portfolios and loan books, sources told Reuters.