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SVB loss National Pension Service, fear of additional loss of 40 billion from serial bankruptcy of local banks

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It was found that the National Pension Service was not free from the aftermath of the bankruptcy of the second and third U.S. provincial banks after investing in SVB Group, the parent company of Silicon Valley Venture Bank in the U.S., and receiving about 30 billion won. Fortunately, the stake in Signature Bank, which went bankrupt following SVB, was liquidated last year, but shares in First Republic, which are mentioned as the next hitter, hold about 40 billion won as of the end of last year.

According to the US Securities and Exchange Commission (SEC) on the 13th, the National Pension Service reported that it owned 252,427 shares of the US First Republic Bank as of the end of December last year. As of the end of last year, the appraisal amount is 30.77 million dollars, or 40.4 billion won in Korean money. This is the size of the direct management investment, not including the entrusted management fund.

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First Republic Bank is one of the small and medium-sized regional banks with a lot of exposure to real estate loans, and it has been pointed out as one of the banks with the highest probability of bankruptcy, following SVB and Signature Bank. The stock price plunged about 30% in two days.

It is estimated that the National Pension Service is already losing about 30 billion won by investing in the SVB group. According to the SEC, the National Pension Service reported that it owned 100,795 shares of the SVB Group as of the end of last year. This is the scale of direct management excluding consignment management.

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As of the end of 2021, as announced on the National Pension Service website, the valuation of SVB stock investment was 362.4 billion won, which is the total investment size of the fund, which includes both direct and consigned management. An official from the National Pension Service explained, “We are not disclosing investment details other than disclosure, and it is understood that the holdings, including direct and consignment, have decreased compared to the end of 2021.”

SVB shares plummeted to $106.04 as of the 9th, and trading was suspended. On the 10th, when the California Department of Financial Protection and Innovation decided to close SVB, the stock price plunged from $ 267 in one day.

It was confirmed that the National Pension Service also held shares in Signature Bank, which was news of its closure one after another in the aftermath of SVB bankruptcy, until the end of 2021. According to the public notice on the website of the National Pension Service, as of the end of 2021, the valuation of signature bank stocks is 6.2 billion won, including both direct and consigned management. It is estimated that he owned about 14,000 shares based on the market price at the time.

However, according to the SEC announcement, as of the end of last year, the name was missing from the holdings. Signature Bank shares fell from $323.47 at the end of 2021 to $70.0 on the 9th.

Meanwhile, the National Pension Service recorded a negative (-) 8.22% rate of return last year due to the global financial market crunch caused by monetary tightening and the war between Russia and Ukraine. As of the end of last year, the fund reserve was 890.4 trillion won, down 58 trillion won from the previous year.

The National Pension Service announced that it would increase the portion of overseas stocks to improve the rate of return. Last year, the Fund Management Committee deliberated and voted on a mid-term asset allocation plan to reduce the proportion of domestic stocks to 14% by 2027 and increase the proportion of overseas stocks to 40.3% by 2027.

An official from the National Pension Service said, “We are closely monitoring the bankruptcy of the SBV and will do our best to manage risks.”

Source: Donga

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