Montana pension funds take a $3M loss in banking collapse
A Silicon Valley Bank sign is shown in San Francisco, March 13, 2023. A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn’t disclose the risks that future interest rate increases would have on its business. The lawsuit is looking for unspecified damages to be awarded to those who invested in SVB Financial Group between June 16, 2021 and March 10, 2023. (AP Photo/Jeff Chiu, file)
Montana, at least you’re not Ohio.
After last week’s collapse of Silicon Valley Bank and Signature Bank, public pension systems began reporting that they were part of the collateral damage done by the banks’ implosion.
Ohio topped the list at having nearly $40 million in holdings through Silicon Valley Bank that were likely wiped out when the bank failed. The Biden Administration said that those who deposited money in the bank were fully covered, but not those who were investors.
Montana’s Board of Investments, which manages pension funds for public employees, like teachers, said that it has $2.07 million invested with Silicon Valley Bank and $713,000 invested with Signature Bank for a total loss of $3 million, according to Board of Investment Executive Director Dan Villa. That represents a loss of one-ten thousandth of a percent of value for the overall fund. The pension holdings were in the form of exchange-traded funds.
Villa reports that the stock prices for the banks have been frozen and may be repriced if they trade again, but for Montana’s purpose, the stock has been priced at $.01 in order to track the investment as part of the portfolio mix.
Villa also told the Daily Montanan that the loss, which literally represents a fraction of the overall funds balance, doesn’t mean a change in the asset strategy for Montana heading forward.
“As a perpetual fund, we are well prepared for the long haul with a diversified portfolio,” Villa said. “The Board of Investments is, however, implementing extra security precautions as this is a higher risk era for large investors. When banks fail, particularly of this size and concentration, scammers emerge to try and take advantage of the necessary day-to-day business operational challenges.”
Montana is similarly situated to other states that may have experienced multi-million dollar losses as part of the banking collapse. The dollar figures can be shocking, but it makes up an overall small portion of the fund’s overall value.
For example, ABC News reports that the California Public Employees’ Retirement System, which covers 1.5 million people, had roughly $67 million in exposure to Silicon Valley Bank and $11 million in exposure to Signature Bank. The nation’s largest public pension fund with over $422 billion, CalPERS suffered a relatively small impact from the financial crisis.
That same ABC report said that Swedish pension firm Alecta, which represents 2.6 million people, lost more than $1.1 billion in Signature and Silicon Valley Bank.
Darrell Ehrlick is the editor-in-chief of the Daily Montanan, a nonprofit newsroom. To read the article as originally published, click here.