U.S. Bank Failures May Affect Pension Funds in Japan, Elsewhere

Jiji Press

17:47 JST, March 16, 2023

WASHINGTON (Jiji Press)—The recent failures of Silicon Valley Bank and Signature Bank may prompt pension funds in Japan and elsewhere around the world to review their asset management schemes, observers say.

In addition to U.S. state pension funds, Japanese, South Korean, Swedish and other public pension funds have invested in assets linked to the two failed U.S. banks.

Japan’s Government Pension Investment Fund held about ¥23.8 billion and about ¥19.9 billion in SVB Financial Group shares and corporate bonds, respectively, as of the end of March last year, according to its reports.

It also held about ¥11.4 billion in Signature Bank shares.

The GPIF, one of the world’s largest institutional investors, manages assets worth a total of some ¥196 trillion. Its holdings of shares and other assets related to the two U.S. banks accounted for only 0.03 pct of the total.

But the failures of the two banks may put a damper on a plan by the administration of Japanese Prime Minister Fumio Kishida to utilize the GPIF to implement his signature “new capitalism” initiative.

Elsewhere in the world, South Korea’s National Pension Service is believed to hold some $23.2 million in shares linked to SVB as of the end of 2022. Alecta, Sweden’s biggest pension fund manager, is said to have invested a total of some $1.1 billion in the two failed banks. However, these investments represent only a small portion of their total assets under management, according to local media reports.