WEBVTT - Surveillance: CS CEO Koerner Urges Patience 0:00:05.080 --> 0:00:08.440 This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:08.480 --> 0:00:12.280 with Jonathan Faroll and Lisa Abramowitz. Join us each day 0:00:12.320 --> 0:00:16.800 for insight from the best and economics, geopolitics, finance and investment. 0:00:17.239 --> 0:00:22.040 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.239 --> 0:00:26.560 anywhere you get your podcasts, and always I'm Bloomberg dot Com, 0:00:26.600 --> 0:00:30.280 the Bloomberg Terminal and the Bloomberg Business App. We can 0:00:30.280 --> 0:00:32.440 now head over to London to catch up with France, 0:00:32.440 --> 0:00:35.520 Saint Laqua and the kratiswee Thank you so much, John. 0:00:35.560 --> 0:00:37.840 We are delighted to be joined by of course Aldrich 0:00:37.880 --> 0:00:40.280 Corner of the the Kurti Sweet, chief executive officer. Thank you 0:00:40.320 --> 0:00:42.599 for joining us. It's a difficult day, another difficult day 0:00:42.600 --> 0:00:44.839 for Krati Sweeze. What can you tell us about the 0:00:44.880 --> 0:00:48.479 outflows in the wake of SEB so as we be 0:00:48.600 --> 0:00:52.440 As you know, it's a very recent saying which happened 0:00:52.520 --> 0:00:56.720 up a weekend and yesterday. So far it's pretty calm 0:00:57.120 --> 0:01:01.520 even so material good influence yesterday still Also, you know, 0:01:01.640 --> 0:01:03.640 I had a client meeting which was very positive on 0:01:03.680 --> 0:01:06.080 their one. So so far it's kind but I think 0:01:06.080 --> 0:01:08.520 it's early days to look at the calm. Are you 0:01:08.560 --> 0:01:11.640 suggesting that you could also actually get inflows. We got 0:01:11.680 --> 0:01:14.480 them yesterday, which is a positive sign, I would say, 0:01:15.440 --> 0:01:17.880 and you know, for us, and that is maybe a 0:01:17.920 --> 0:01:20.039 little bit if I may say so, unseeing in comparison 0:01:20.080 --> 0:01:22.360 to SVB. It's a very different situation. You know, we 0:01:22.400 --> 0:01:26.080 are GCIP as you know, we are following materially different 0:01:26.080 --> 0:01:29.080 and higher standards when it comes to capital funding, liquidity 0:01:29.120 --> 0:01:31.120 and so on. And that's why we said, you know, 0:01:31.160 --> 0:01:33.840 we gave I think this situation is important. We gave 0:01:34.440 --> 0:01:37.759 r capital ratio of like one hundred and forty forty 0:01:38.120 --> 0:01:39.720 at the at the end of Q four, which is 0:01:39.760 --> 0:01:43.200 strong ratio, which has improved as we went through this 0:01:43.280 --> 0:01:46.080 quarter to like hundred and fifty on average and spot 0:01:46.160 --> 0:01:50.600 being even high on that. But so outflows have not reversed, 0:01:50.760 --> 0:01:54.800 but they've actually lowered. Are they reversing? Look, they have 0:01:55.000 --> 0:01:58.000 significantly moderated, as I put it. We gave an update 0:01:58.040 --> 0:01:59.760 on February nine in terms of where we are on 0:01:59.880 --> 0:02:01.880 the passts and addu ascess and so on. We will 0:02:01.880 --> 0:02:04.800 give next update with the first quarter result. But this 0:02:04.960 --> 0:02:07.040 is also very clear. You know, if and we talked 0:02:07.040 --> 0:02:10.200 about that. What has happened in like Furce quarter. You know, 0:02:11.320 --> 0:02:13.920 we are fully focused on it, turn it around, but 0:02:13.960 --> 0:02:16.880 that takes longer than like just two months. But then 0:02:16.919 --> 0:02:19.799 you do you have this material weakness today? What happened there? 0:02:19.880 --> 0:02:23.280 There's concerned that actually almost every day there's some kind 0:02:23.320 --> 0:02:25.320 of bad news and you have your share price at 0:02:25.360 --> 0:02:28.000 a record low like that can't be a comfortable position, no, 0:02:28.160 --> 0:02:30.920 But we published our report today as we have seen 0:02:30.919 --> 0:02:33.360 the financial result. I think that's a key message. The 0:02:33.400 --> 0:02:38.240 financial result is unchanged for twenty twenty two and previous years. 0:02:38.840 --> 0:02:41.040 We delayed the reporters you have seen a couple of 0:02:41.160 --> 0:02:46.400 days to appropriately deal with you know, questions the SEC 0:02:46.600 --> 0:02:49.480 had and we did, and that is part of an 0:02:49.639 --> 0:02:53.440 longer ongoing dialogue. And we acknowledge that we have a 0:02:53.480 --> 0:02:57.720 material weakness in the financial in the financial reporting control, 0:02:57.800 --> 0:03:01.520 which we are addressing and immediating forcefully. How are you 0:03:01.520 --> 0:03:04.040 addressing that? So? Is that an auditor problem had PwC 0:03:04.200 --> 0:03:07.000 on the case? Is it their fault? No, it's absolutely 0:03:07.000 --> 0:03:09.679 not their fault. That is obviously you know that cause 0:03:09.760 --> 0:03:12.600 higher hand in hand as you work together with your auditor, 0:03:12.880 --> 0:03:15.080 but it's a collective fining and we are addressing it. 0:03:15.120 --> 0:03:17.800 We have remediation planner. We are addressing it. So you 0:03:17.880 --> 0:03:20.720 have an anchor investor that put one point five million 0:03:20.760 --> 0:03:23.560 in the bank, Now their share value has gone down 0:03:23.600 --> 0:03:26.200 by one third. Will they have to inject more? What 0:03:26.280 --> 0:03:29.000 kind of conversations are you having with them? Well, look, 0:03:29.080 --> 0:03:31.880 nobody's pleased devolve the SHAPERCE development, you know, but we 0:03:31.919 --> 0:03:34.239 match what we can match. And this is the execution 0:03:34.320 --> 0:03:36.480 of our plan. That's a white strategy. This is a 0:03:36.560 --> 0:03:39.560 white plan. We are executing at pace and even ahead 0:03:39.600 --> 0:03:41.720 of the plan. And I think I'll sharel to see 0:03:41.760 --> 0:03:44.520 that as well. That's an unpleasant situation. Chap Price or 0:03:44.560 --> 0:03:47.200 Dotcom match CHAPERCE. I can match the execution and I do. 0:03:47.600 --> 0:03:50.640 So you don't think you're getting pressure from shareholders. You're 0:03:50.680 --> 0:03:53.440 not getting pressure from you know, certain big shareholders to 0:03:53.560 --> 0:03:55.360 do more and actually to have all options on the 0:03:55.360 --> 0:03:58.000 table now. As I said, they are obviously they're obviously 0:03:58.040 --> 0:04:00.680 not pleased with the development. I'm not please developed the 0:04:00.760 --> 0:04:03.560 first hand, obviously, but you know, we are executing and 0:04:03.640 --> 0:04:05.640 once we are executing step by step, and we show 0:04:05.680 --> 0:04:07.480 the market and this is exactly why we said it's 0:04:07.480 --> 0:04:10.560 a three years process and we are executing and that 0:04:10.720 --> 0:04:12.600 is you know, the market will acknowledge that and the 0:04:12.600 --> 0:04:15.680 share process will follow. Do you think all options should 0:04:15.680 --> 0:04:17.520 be on the table? What about breaking up the bank? 0:04:17.560 --> 0:04:19.839 If you look and I know understand your frustration with 0:04:19.920 --> 0:04:21.920 the share price and saying, look, you're just executing. But 0:04:21.960 --> 0:04:24.360 when you look at the share price ninety seven percent 0:04:24.839 --> 0:04:27.880 below that two thousand and seven high, like how do 0:04:27.920 --> 0:04:30.479 you regain from that now? But that you can can't 0:04:30.480 --> 0:04:33.360 compare as you know, but you know, as I said, 0:04:33.480 --> 0:04:37.600 it's a right Swagi and fully fully convinced off the Swagi. 0:04:37.839 --> 0:04:40.200 We are executing at past. We have the right team 0:04:40.680 --> 0:04:42.880 and you know that's why we said in October it 0:04:42.920 --> 0:04:46.080 needs radical change. You know, the bank needs to be changed, 0:04:46.360 --> 0:04:48.320 and we said it's a three years transformation and you 0:04:48.360 --> 0:04:51.000 can't come after two months and Salo, why is not 0:04:51.080 --> 0:04:54.080 everything done? But radical change could be splitting off the bank. 0:04:54.200 --> 0:04:56.279 Is it something that you're you're valuing? Oh? Look, the 0:04:56.360 --> 0:04:59.120 new Creates visa is focused on the course lengths of 0:04:59.160 --> 0:05:01.679 the bank. This is welds management. The swis spend persons 0:05:01.720 --> 0:05:04.520 asset management. What we put the market either trading and 0:05:04.560 --> 0:05:09.279 sales business that makes entirely sense, entirely different risk profile, 0:05:09.760 --> 0:05:13.039 will be very profitable and we reward shareholders. And I 0:05:13.040 --> 0:05:15.800 think the sheilds understand it. When will you be able 0:05:15.839 --> 0:05:18.640 to say, like the worst is really behind us? But 0:05:18.800 --> 0:05:21.320 we said it's three years transformation. We said we are 0:05:21.360 --> 0:05:24.440 going to make a loss unfortunately this year because you know, 0:05:24.480 --> 0:05:26.440 and this is something which you need to understand, a 0:05:26.480 --> 0:05:29.640 lot of the restructuring courts, you know, baked into the 0:05:29.760 --> 0:05:33.080 transformation are coming in twenty twenty three before we see 0:05:33.120 --> 0:05:36.240 a lot of benefits out of that transformation, and that 0:05:36.400 --> 0:05:38.240 is something which happens. That's why we said it takes 0:05:38.240 --> 0:05:40.520 three years. Three years is a long time work. I 0:05:40.520 --> 0:05:42.480 mean a lot of but a lot of the shareholders 0:05:42.480 --> 0:05:45.040 will start asking questions. I mean, have you asked them 0:05:45.080 --> 0:05:47.600 for more money to make it faster for three years, 0:05:47.680 --> 0:05:49.919 especially in this banking world than anything could happen? No, 0:05:50.120 --> 0:05:52.520 But you know, as I said, our LCR ratio is 0:05:52.839 --> 0:05:56.760 strong and very strong, has has getting stronger as we speak. 0:05:57.080 --> 0:05:59.680 Our capital ratio is very strong at fourteen point one 0:06:00.000 --> 0:06:02.320 and as we gave it to Q four, so we 0:06:02.440 --> 0:06:05.040 have everything we need to go through the transformation. Mars 0:06:05.320 --> 0:06:07.359 or are you expecting, you know, the first quarter to 0:06:07.400 --> 0:06:10.520 be good enough to keep shareholders off your back. The 0:06:10.640 --> 0:06:13.320 first quarter is, as we said, and we put it 0:06:13.400 --> 0:06:15.880 very clearly, we will make a loss in the first quarter, 0:06:15.960 --> 0:06:18.120 but you will see progress in the first quarter numbers. 0:06:17.960 --> 0:06:22.680 It's not in terms of what outflows in certain business momentum. 0:06:22.800 --> 0:06:26.240 We're specifically businessman and the market business for example, which 0:06:26.400 --> 0:06:29.719 was as we all discussed for the for four reasons, 0:06:30.040 --> 0:06:33.440 clearly understandable reasons. A week in the Q four looks better. 0:06:33.760 --> 0:06:36.760 We else management, we are making progress, certainly not yet 0:06:36.800 --> 0:06:39.239 there where we should be, but we are making progress. 0:06:39.760 --> 0:06:42.080 Are you comfortable with the banking system as a whole. 0:06:42.120 --> 0:06:45.000 I mean, we've we've lived through a pretty incredible couple 0:06:45.040 --> 0:06:46.880 of days and if you look at the markets are 0:06:46.880 --> 0:06:49.440 all over the place. No, I think so. I mean 0:06:49.480 --> 0:06:52.760 this is somewhat an isolated problem. If you want tool 0:06:53.000 --> 0:06:54.680 and as I said, you know, if you are guzip 0:06:54.760 --> 0:06:56.800 it or if you look at the large banks, I 0:06:56.880 --> 0:06:58.920 see we will manage to it. Talk to me a 0:06:58.920 --> 0:07:01.200 little bit about Cratty sweet first, Boston. So, first of all, 0:07:01.240 --> 0:07:04.800 what's the timeline for the IPO. The timeline Fancy is unchanged, 0:07:04.839 --> 0:07:07.000 a discussed last time. So we have a very clear 0:07:07.040 --> 0:07:10.720 plan to put it into market creating liquidity event most 0:07:10.720 --> 0:07:14.480 likely in IPO. We are working against our internal plans forcefully, 0:07:14.880 --> 0:07:16.920 and I would expect such an event in like twenty 0:07:16.960 --> 0:07:19.400 twenty five. As I said earlier, Okay, any news, I 0:07:19.400 --> 0:07:21.920 mean today you had news about the twenty percent that 0:07:21.960 --> 0:07:24.920 would go to craze Piece first Boston Partners. What happens 0:07:24.920 --> 0:07:28.320 to the rest? The rest is owned by us and 0:07:29.480 --> 0:07:33.480 obviously also portioned by Michael as as as we announce 0:07:33.560 --> 0:07:36.160 it in like February, the rest is own past So 0:07:36.360 --> 0:07:39.880 this is this is our part of the bank, remains 0:07:39.920 --> 0:07:42.200 our part of the bank. We are going into liquidity 0:07:42.320 --> 0:07:45.360 and again most likely IPO you will be probably a 0:07:45.360 --> 0:07:47.640 majority shold and then we make decision you know how 0:07:47.680 --> 0:07:50.960 our holding develops over the next following years. So you're 0:07:50.960 --> 0:07:55.080 still looking for an anchor investor for Crazpiece first, Are 0:07:55.080 --> 0:07:57.200 you closer to finding well, I don't know. Yeah, we 0:07:57.240 --> 0:07:59.760 are close to, but I'm not sure if it's anchor. 0:07:59.800 --> 0:08:02.680 And so we have a lot of interest from SERTA 0:08:02.720 --> 0:08:05.520 parties to be invested into that. It tells you something 0:08:05.560 --> 0:08:08.520 about the Surgia. I would say and we are evaluating 0:08:08.560 --> 0:08:13.080 that Middle Eastern investors, different kinds of investors, different parts 0:08:13.080 --> 0:08:17.200 of the world, but large chunk investors decision. And I 0:08:17.240 --> 0:08:20.440 will inform you first as Okay, how far away are 0:08:20.440 --> 0:08:22.640 we from that? We are pretty close. I would say 0:08:22.840 --> 0:08:25.320 a couple of weeks will come before the first quarter. 0:08:25.560 --> 0:08:27.520 I will tell the market if we are there. What 0:08:27.600 --> 0:08:33.800 do you find most difficult about Your job is to 0:08:34.080 --> 0:08:36.680 make it understandable. I would say, you know that we 0:08:36.720 --> 0:08:40.560 are absolutely doing the right things that we need some 0:08:40.640 --> 0:08:44.640 time to get through. And and this is what all 0:08:44.720 --> 0:08:46.960 my colleagues and I try to do, you know, to 0:08:47.120 --> 0:08:50.080 regain the trust off the bank over the next couple 0:08:50.120 --> 0:08:53.040 of months. But is it more important to regain the 0:08:53.080 --> 0:08:58.000 trust of shareholders or or clients? It is look clients, 0:08:58.280 --> 0:09:01.920 is I told you last time? I would say one 0:09:01.960 --> 0:09:05.440 of the best experience, even in this very difficult months 0:09:05.559 --> 0:09:08.480 last year. I mean, they are so supportive of us, 0:09:08.960 --> 0:09:12.120 they are listening to us, they're doing active things to 0:09:12.240 --> 0:09:14.840 support they like to bank with create switch is a 0:09:14.880 --> 0:09:18.679 fantastic experience. But you know, the convincing of this is 0:09:18.720 --> 0:09:20.840 the right thing to do. We are executing at pace 0:09:20.920 --> 0:09:23.199 and the head of plan is with all different stakeholders, 0:09:23.280 --> 0:09:25.280 all different ones, But why are they taking money out? 0:09:25.280 --> 0:09:28.920 Then if your clients are happy, because and that's what 0:09:28.960 --> 0:09:30.840 I also said, if you are in a situation like 0:09:30.920 --> 0:09:33.839 we were in October, you know where you had malicious 0:09:33.840 --> 0:09:36.040 information out in the market. At the beginning of October, 0:09:36.120 --> 0:09:38.960 we were not able to speak, legally not able to speak. 0:09:39.320 --> 0:09:41.520 And that's why I said, like two thirds of the 0:09:41.559 --> 0:09:45.400 outflaw stemming from October alone, eighty five percent from October 0:09:45.400 --> 0:09:48.160 and November. And the moment we could reach out, we 0:09:48.240 --> 0:09:51.240 started that huge program talk to our clients. More than 0:09:51.280 --> 0:09:53.920 ten thousand clients in wealth managements since then, more than 0:09:54.000 --> 0:09:57.760 fifty thousand individual meetings in Switzerland, and that has created momentum. 0:09:58.080 --> 0:10:00.760 Are you frustrated though that the actually you haven't been 0:10:00.800 --> 0:10:03.600 able to get ahead of that quicker? No, I think 0:10:03.640 --> 0:10:06.440 we are really doing the utmost possible and I'm proud, 0:10:06.559 --> 0:10:10.080 not frustrated. I'm proud of what my colleagues, my people 0:10:10.440 --> 0:10:13.000 at the front units have done since months. I'm really 0:10:13.040 --> 0:10:15.520 proud of. But the message today, I mean, if you 0:10:15.520 --> 0:10:17.880 look at your share price, you're proud. You think you're 0:10:17.880 --> 0:10:19.440 executing You're on a three year ap plan, if you 0:10:19.440 --> 0:10:21.840 look at the share price at a record low, does 0:10:21.880 --> 0:10:23.440 your stomach sink a little bit when you look at 0:10:23.440 --> 0:10:26.600 the share price? Nothing, which I like obviously, But look, 0:10:26.679 --> 0:10:29.160 I can't control what I can control. I don't control 0:10:29.160 --> 0:10:32.400 a share price. I control the execution of the right strategy, 0:10:32.440 --> 0:10:34.720 and you think the share price will will catch up 0:10:34.920 --> 0:10:38.040 if you execute? All right, thank you so much for 0:10:38.080 --> 0:10:40.240 your time, But it was all recruiter. They're the Credit 0:10:40.280 --> 0:10:42.880 Swiss chief executive officer and with that, I'm going to 0:10:42.920 --> 0:10:46.440 send it back to you, a friend, saint, just absolutely fantastic. 0:10:56.200 --> 0:10:58.120 And now we're going to take a different perspective here 0:10:58.360 --> 0:11:04.080 Magnus Billing joining. He's the chief executive officer of Sweden's elector, 0:11:04.120 --> 0:11:07.000 and we're thrilled he could join us this morning here 0:11:07.240 --> 0:11:10.439 with perspective on the American banks and with the perspective 0:11:10.480 --> 0:11:15.720 on the pension responsibilities in his Sweden, across Europe and 0:11:15.840 --> 0:11:20.160 frankly at worldwide. Magnus, the path is this October of 0:11:20.280 --> 0:11:23.920 last year, a small matter of a busted shure thing 0:11:24.360 --> 0:11:28.040 in the United Kingdom, a ballot by the Bank of England, 0:11:28.120 --> 0:11:31.640 literally in hours. What we've all observed over the last 0:11:31.640 --> 0:11:34.880 four days and we look at Sweden as the bastion. 0:11:35.600 --> 0:11:39.920 What are the shadows within the Swedish pension system right now? 0:11:40.520 --> 0:11:44.880 Is it pricing commercial real estate is a different nuances 0:11:44.960 --> 0:11:53.319 of European banking. What are the shadows you confront this morning? Well, 0:11:53.800 --> 0:11:56.760 good morning, thank you for having me. I think first 0:11:56.760 --> 0:12:00.280 of all that the Swedish pension system it's very robot 0:12:00.520 --> 0:12:02.600 it's small, the robust that it's been in the last 0:12:02.640 --> 0:12:06.679 ten fifteen years. But having said at obviously end of 0:12:06.720 --> 0:12:09.280 the day, it's a lot about liquidity when the psychology 0:12:09.360 --> 0:12:11.679 kicks in the dugle market space, and I think the 0:12:12.440 --> 0:12:14.439 issue that you brought up about the UK event that 0:12:14.520 --> 0:12:16.800 took place last year and also what we see now 0:12:16.840 --> 0:12:19.160 in the past week or so, it's a lot of 0:12:19.840 --> 0:12:25.480 liquidity psycholity around liquidity and the easiness one can move 0:12:25.520 --> 0:12:28.840 capital today with the digital development that we've seen in 0:12:28.840 --> 0:12:33.120 the past number of years. But looking at just a 0:12:33.160 --> 0:12:36.880 balance sheet of basically across all the pension funds in 0:12:37.160 --> 0:12:39.760 Sweden and an order gredion, they are very robust today. 0:12:40.200 --> 0:12:43.480 Do you bring the money home? My experience on the 0:12:43.520 --> 0:12:48.760 geography of crisis is one endowed pollet home to Swedish 0:12:48.760 --> 0:12:53.360 pension plans and would you guess European continental plans do 0:12:53.440 --> 0:12:59.840 they just bring the assets home. I think the under 0:13:00.440 --> 0:13:03.200 the lying fundamentals of the US market is still very 0:13:03.240 --> 0:13:07.080 attractive for any investors, so I think in the mid 0:13:07.120 --> 0:13:10.720 to long term US will always be able to attract 0:13:10.720 --> 0:13:14.880 the investors to invest into the market space. That goes 0:13:14.920 --> 0:13:17.360 also for the pension funds, and I think looking at 0:13:17.400 --> 0:13:20.280 the size of many of the pension funds in the 0:13:20.320 --> 0:13:26.200 Nordics and the European space, they need to diversify into 0:13:26.200 --> 0:13:29.559 the US market and under regions around the globe. So 0:13:29.600 --> 0:13:33.520 I think I have at least a positive mid to 0:13:33.600 --> 0:13:36.520 long term view on the US markets capacity to deliver 0:13:36.679 --> 0:13:39.040 shareholder value to us. The magnets. You have a problem 0:13:39.160 --> 0:13:41.480 this morning, as most people know, so let's talk about 0:13:41.520 --> 0:13:45.480 that problem. Now. How does the Swedish pension fund end 0:13:45.520 --> 0:13:53.120 up allocated to Signature Bank First republic An SVP. Yeah, 0:13:53.200 --> 0:13:56.400 I mean we've been we invested in those companies starting 0:13:56.559 --> 0:14:01.040 twenty seventeen up until twenty nineteen, and we've been growing 0:14:01.080 --> 0:14:05.000 that allocation over the years. So obviously we thought that 0:14:05.600 --> 0:14:08.120 the initial year was good for US investing that, but 0:14:08.840 --> 0:14:11.560 with what's happened last week. Obviously we think it's a 0:14:11.559 --> 0:14:14.840 big failure for us as an investor, and we need 0:14:14.880 --> 0:14:17.240 to learn something from that and take actions based upon 0:14:17.480 --> 0:14:20.200 the lessons learned. So it's a failure. I just want 0:14:20.240 --> 0:14:22.840 to sort of put that in proportion to the total 0:14:22.880 --> 0:14:26.480 portfolio that we're managing. We're talking about one percent of 0:14:26.520 --> 0:14:30.520 a total capital that we manage. So from a customer 0:14:30.600 --> 0:14:33.320 point of view, this does not have a material impact 0:14:33.360 --> 0:14:35.480 at all. It will not impact the pensions that we 0:14:35.520 --> 0:14:38.960 are committing to our customers. I understand that, but it 0:14:39.000 --> 0:14:41.880 just speaks a weak internal controls and some odd decisions 0:14:41.880 --> 0:14:43.760 that we need to talk about. Magnus, the fact that 0:14:43.800 --> 0:14:45.760 you were allocated to those names, but some of the 0:14:45.840 --> 0:14:49.440 conservative Swedish lenders you ended up selling those positions in 0:14:49.480 --> 0:14:51.320 twenty twenty two. So I guess the question that will 0:14:51.360 --> 0:14:54.640 be repeatedly asked of you is just what happened? What 0:14:54.760 --> 0:14:57.560 happened and why did you buy more of those names 0:14:57.560 --> 0:15:04.200 and sound more conservative names. Well, those are two separate issues. 0:15:04.640 --> 0:15:09.480 The divestment of the Swedish banks is a standalone assessment 0:15:09.520 --> 0:15:12.720 and the decision made made at a different time. Talking 0:15:12.720 --> 0:15:16.560 about the US banks, what we liked about then was 0:15:16.560 --> 0:15:19.920 the market position, the position when it comes to transformation 0:15:20.080 --> 0:15:23.320 in the digital space and the US market generally speaking, 0:15:23.360 --> 0:15:26.920 the depth of that and the size of it. We 0:15:27.000 --> 0:15:30.080 had discussion with the Silicon Valley Bank during the fall 0:15:30.200 --> 0:15:32.720 because we also saw as many others, you know, the 0:15:33.080 --> 0:15:37.720 withdrawal of the post sits and the investments the company 0:15:37.720 --> 0:15:41.680 did in the long term government securities and what that 0:15:41.760 --> 0:15:46.800 led when it comes to durational liquidity aspects. We thought 0:15:46.800 --> 0:15:49.200 that the action plan that the company had was they 0:15:49.200 --> 0:15:51.720 were transparent about that, and we thought it was well 0:15:51.760 --> 0:15:55.960 fought through. Then last week the company acted not in 0:15:56.000 --> 0:15:58.480 accordance with the action plan we had discussed and talked 0:15:58.480 --> 0:16:01.160 with them about, and that we had been presentative, and 0:16:01.200 --> 0:16:04.080 that surprised us, and I think that was a big 0:16:04.120 --> 0:16:06.760 mistake from the company's side. Well, clearly, mcnus. It didn't 0:16:06.760 --> 0:16:09.040 just surprise you, It surprised many people, including the regulator 0:16:09.280 --> 0:16:10.800 here in the United States. So a lot of people 0:16:10.840 --> 0:16:13.160 have questions they'll need to answer as well. I want 0:16:13.200 --> 0:16:14.920 to understand how you responded to that in the last 0:16:14.960 --> 0:16:17.480 couple of days. So you've identified some banks that you 0:16:17.560 --> 0:16:21.160 hold that haven't managed their interest rate risk properly. Are 0:16:21.200 --> 0:16:24.600 you worried that you also hold some European banking names 0:16:24.640 --> 0:16:27.480 that maybe you're in the same position, perhaps even worse. 0:16:27.840 --> 0:16:30.000 Given what's happened with the bond market there over the 0:16:30.040 --> 0:16:35.480 last couple of years. We see in the European market 0:16:35.560 --> 0:16:39.080 as well withdraw all of deposits and it's increasing. So 0:16:39.120 --> 0:16:43.200 we're monitoring that very closely, and we're monitoring basically the 0:16:43.280 --> 0:16:45.640 whole exposure we have to the banking sector, which is 0:16:45.680 --> 0:16:48.440 in total two percent of the total portfolio. So I 0:16:48.480 --> 0:16:52.040 think we need the last few days has been you know, 0:16:52.600 --> 0:16:54.880 escalating a little bit in the European market, but we're 0:16:55.080 --> 0:16:59.480 monitoring that. I think the loss to equity ratio is 0:16:59.520 --> 0:17:03.120 completely different or very different in the European space compared 0:17:03.160 --> 0:17:05.439 to some of the banks in the US market that 0:17:05.440 --> 0:17:07.600 you mentioned earlier. Magis, Can we just focus on Europe 0:17:07.640 --> 0:17:12.480 just a little bit more. Do you hold credit suites? No, 0:17:12.600 --> 0:17:14.840 we don't have you sold any names in the last 0:17:14.880 --> 0:17:16.840 twenty four rounds the last four yeer hours. If you 0:17:16.920 --> 0:17:19.400 de risk around the European banks at all in any way, 0:17:19.400 --> 0:17:24.240 shape or form, we have not. We have we hold 0:17:24.359 --> 0:17:30.479 shares in two Nordic banks SCB and Nordia. You also, though, 0:17:30.520 --> 0:17:33.280 have taken on these credit risk transfers over the past 0:17:33.280 --> 0:17:36.200 few years, or basically you take on the risk associated 0:17:36.240 --> 0:17:40.560 with particularly European bank books tied to commercial loans to 0:17:40.640 --> 0:17:43.560 stress that how confident are you that those are going 0:17:43.600 --> 0:17:49.480 to be solid investments. I think the banking sector in 0:17:49.520 --> 0:17:53.639 Europe is stronger than whether we're in prior to the 0:17:53.800 --> 0:17:56.760 global financial crisis, so I think we're in a better 0:17:56.920 --> 0:18:00.280 starting position. Obviously, a lot of things are happening around now, 0:18:00.280 --> 0:18:03.119 and it's clearly a transition face that the market is 0:18:03.119 --> 0:18:06.439 going through with the enormous increase in the interest rate 0:18:06.480 --> 0:18:08.040 that we've seen in the past twelve months and the 0:18:08.119 --> 0:18:12.160 speed of that, and we haven't transitioned through that yet. 0:18:12.920 --> 0:18:15.280 But I think the banks, the Nordic banks that we 0:18:15.440 --> 0:18:18.560 hold chairs are in a solid position as of today. 0:18:19.160 --> 0:18:20.800 Given the bet that you made on some of the 0:18:20.880 --> 0:18:24.280 US banks, I'm wondering how you're handling the fallout, whether 0:18:24.440 --> 0:18:27.200 you're getting out of the positions, whether you're doubling down, 0:18:27.400 --> 0:18:30.960 whether you're buying more. What's been sort of the positioning 0:18:30.960 --> 0:18:35.520 over the past couple of days. Well, when you talk 0:18:35.560 --> 0:18:40.080 about the silicon value Bank and the signature bank being 0:18:40.119 --> 0:18:43.000 in a receivership. I think it's more a legal issue 0:18:43.040 --> 0:18:46.560 for us to ensure that we protect our legal rights there. 0:18:46.640 --> 0:18:48.600 I don't expect any value to come out with that 0:18:48.800 --> 0:18:52.560 ass of today when it comes to First Republic. Obviously, 0:18:53.040 --> 0:18:56.600 it's very volatile and it's day to day. Basically, yesterday 0:18:56.840 --> 0:19:01.560 it fell a lot, today it's up again. Well, we 0:19:01.680 --> 0:19:04.320 haven't taken any decision yet, but we are ready to 0:19:04.359 --> 0:19:07.760 take decisions as we see appropriate for us at any stage. 0:19:07.760 --> 0:19:10.200 But we haven't taken a major actions today which brought 0:19:10.240 --> 0:19:13.760 to that bank magus. Every crisis unfolds with a certain character. 0:19:14.040 --> 0:19:17.840 We make note of Sweden's wonderful work many many decades 0:19:17.880 --> 0:19:21.040 ago and inventing a whole bit of central bank theory 0:19:21.080 --> 0:19:26.120 with how Stockholm handled a crisis. The theme right now 0:19:26.200 --> 0:19:29.520 seems to be the shadows or the mysteries of private 0:19:29.520 --> 0:19:34.480 equity and venture capital in America. Conservative money is addicted 0:19:34.560 --> 0:19:38.360 to the potential return of that group. Are you exposed 0:19:38.400 --> 0:19:42.479 to private equity and venture capital long term locked in 0:19:42.680 --> 0:19:46.040 holdings and do you worry that there could be some 0:19:46.119 --> 0:19:52.320 real issues there with liquidity in our equity portfolio, our 0:19:52.359 --> 0:19:57.520 investment model is predominantly focused on more mature companies and 0:19:57.560 --> 0:20:01.280 we invest directly in those. So we're looking for strong 0:20:01.320 --> 0:20:06.040 cash flow RODDAM potential growth and future positive cash flow. 0:20:06.440 --> 0:20:08.880 With that set, that means that we don't we basically 0:20:08.880 --> 0:20:12.200 don't have any private equity exposure and VC exposure, not portfolio. 0:20:12.320 --> 0:20:14.040 You've been doing this for a few years. Do you 0:20:14.080 --> 0:20:17.439 assume in crisis, with the way yields are gyrating, the 0:20:17.560 --> 0:20:20.520 way all central banks have become more restrictive in the 0:20:20.600 --> 0:20:25.120 last four or five days, do you suggest that not 0:20:25.200 --> 0:20:30.040 the actual assumption, but just the expected return of pension 0:20:30.080 --> 0:20:36.000 portfolios will come down. Yes. I do think that the 0:20:36.040 --> 0:20:39.119 next ten years will be more difficult to generate return, 0:20:40.480 --> 0:20:44.360 and I think we will see changes in the investment 0:20:44.400 --> 0:20:48.840 models in the pension fund industry in order to secure 0:20:49.040 --> 0:20:52.800 adequate return for for the beneficiarcy. Sir, My great theme 0:20:52.840 --> 0:20:55.240 here is we've had interest rate come in as we've 0:20:55.240 --> 0:20:59.600 come back and normalized yield, certainly normalized yield. Within the 0:20:59.640 --> 0:21:03.280 europe p and sphere as well, is a troubled non 0:21:03.280 --> 0:21:07.400 profitable companies what we call in America zombies, that they 0:21:07.400 --> 0:21:11.080 will go away, whether they're banks or anything else. As well. 0:21:11.560 --> 0:21:16.040 Do you suggest that we will see combinations and transactions 0:21:16.119 --> 0:21:19.920 to clear out companies have had essentially a free lunch 0:21:20.000 --> 0:21:26.040 for sixteen years. Yeah, I do think some companies are 0:21:27.400 --> 0:21:32.960 have benefited too much or all the center banks put 0:21:33.359 --> 0:21:35.040 and the fact that we've been living in the world 0:21:35.119 --> 0:21:38.280 for many years where cost of capital has been basically zero, 0:21:39.240 --> 0:21:41.560 and I don't think that that is sustainable little long 0:21:41.680 --> 0:21:45.320 term and I would suspect that some businesses out there 0:21:45.320 --> 0:21:49.600 will struggle to adjust to more normalized interest rate level 0:21:49.760 --> 0:21:52.640 long term magnets as you and I talking, as we're 0:21:52.680 --> 0:21:55.359 all speaking, the first Deputy Governor of the Swedish Central 0:21:55.359 --> 0:21:57.919 Banks address in Parliament at the moment, suggesting that we 0:21:57.960 --> 0:22:00.880 need more timing despite well it's ability. There are people 0:22:00.880 --> 0:22:03.159 who believe that things are breaking now and these central 0:22:03.160 --> 0:22:05.320