Sept 20 (Reuters) – Sweden’s financial markets regulator has asked pension fund provider Alecta whether it took interest rate and currency risks into account over its stake in a unit of property group Heimstaden (HEIMpref.ST), emails from the watchdog show.

The Swedish Financial Supervisory Authority (FSA) said last week it would investigate whether Alecta – Sweden’s biggest pension fund provider – complied with regulations when it invested 50 billion crowns ($4.5 billion) in Heimstaden Bostad.

Alecta, one of the largest shareholders in Heimstaden Bostad with a 38% stake, has said the property company was in need of more cash, and that it may contribute additional capital.

Heimstaden’s difficulties are the latest blow in a worsening property crisis in Sweden where developers are grappling with large debts, rising interest rates and a wilting economy.

Correspondence between the FSA and Alecta obtained by Reuters via a freedom of information request show the regulator questioning whether Alecta took all the relevant risks into consideration when calculating capital requirements.

In an email exchange, the FSA said answers from Alecta pointed to indirect exposure to market risks, for example from interest rates and currency exchange rates.

“However, the company (Alecta) has only applied property price risk in the calculation of the risk sensitive capital requirement,” the watchdog wrote.
It also noted that Heimstaden Bostad had “significant property holdings” located outside of Sweden, and questioned whether this would create currency exposure.

The correspondence between Alecta and the FSA was first reported by Swedish daily Svenska Dagbladet.

Alecta did not immediately respond to a request for comment on Wednesday.

The pension fund provider said last week it would fully comply with the FSA investigation and that its investment in Heimstaden Bostad amounted to around 4% of its assets.

($1 = 11.1670 Swedish crowns)

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