This simple error in Excel cost a Norwegian sovereign wealth fund huge sums of money

A very small mistake can sometimes be very costly. In any case, Norway’s sovereign wealth fund experienced this last year. The world’s largest fund lost 980 million Norwegian kroner, or more than 86 million euros, due to a simple error related to a benchmark index in an Excel spreadsheet. Financial Times On 9 February.

Thus, Norges Bank Investment Management (NBIM), which manages the sovereign fund, declared that this was a mistake “ This resulted in a marginal overweighting of US fixed income relative to global fixed income “

” When this error was discovered we immediately decided to correct it, but the return was 0.7 basis points due to the size of the fund. As a result, the positive return of NOK 118 billion that we announced earlier fell to NOK 117 billion. », explained the fund in particular.

A small operational error that is not new. A Norwegian investment bank also made about 52 million euros in 2021, after a blunder in financial markets, the British daily reports. A mistake that, this time, was favorable to him compared to this one.

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cell error

But what happened to the Norwegian fund to make such a mistake last February? An employee of a Norwegian bank named “ Simon », described the origins of awkwardness: “My worst nightmare. It was a manual error. My mistake. I got the date wrong, December 1st instead of November 1st. “

While a year ago during a workshop “ Errors and how to deal with them “, the employee has classified this type of error in the category “ Unforgivable “, Less than a year later, he made a mistake, he says. The mistake was disclosed by the Finance Ministry only a few months later. By redoing all the calculations, the employee realized his mistake: “ I was hurt and I was ready to suffer the consequences », he adds.

Shortly after the fund management was informed, Managing Director of NBIM Nikolai Tangen assured “ Simon » as well as the bank’s global head of risk monitoring.

” These are the things that happen! We do complex operations and I am even more surprised that historically we have had very few or no incidents of this nature. Both of you are very professional and contribute a lot to the success of NBIM », he specifically wrote to them.

A mistake that still needs to be put into perspective considering the size of the fund. As a reminder, the Norwegian sovereign wealth fund is worth 15,765 billion kroner or 1,395.5 billion euros at the end of 2023. It is supposed to increase Norway’s oil and gas revenues, especially to finance welfare state spending.

Placed primarily in stocks and bonds, the fund also experienced a record return of 197 billion euros in 2023, driven by technology stocks and the weakness of the Norwegian currency. So it has shares in more than 8,000 companies in 72 countries of the world.

(with AFP)