The turmoil surrounding the collapse of Silicon Valley Bank showed that some banks weren’t ready for the rapid increase in interest rates, according to Norway’s sovereign wealth fund.
(Bloomberg) — The turmoil surrounding the collapse of Silicon Valley Bank showed that some banks weren’t ready for the rapid increase in interest rates, according to Norway’s sovereign wealth fund.
“Not everyone is prepared for that,” Trond Grande, Deputy CEO at Norges Bank Investment Management, said in an interview Friday. “What we saw wasn’t really a credit event in any shape or form, it was more liquidity and poor risk management,” he said.
The Nordic nation’s $1.4 trillion sovereign wealth fund is focused on minimizing its exposure to companies whose finances aren’t as robust as they appear after it took a hit on the collapse of Silicon Valley Bank.
Built on the back of Norway’s fossil fuel wealth, the fund is the world’s biggest single owner of equities, largely tracking a benchmark index based on a framework handed down by parliament, making it difficult to avoid some investments actively.
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