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Sweden's Riksbank grants US$126M loan to Carnegie

Sweden's Riksbank grants US$126M loan to Carnegie

Shares in Carnegie AB plunged almost 40 percent Monday after the Swedish investment bank said it received a 1 billion kronor ($126 million) loan from Sweden's central bank to boost its liquidity. Carnegie said it will now evaluate its "strategic alternatives."
The central bank said Carnegie is solvent but that the ongoing financial crisis has caused it liquidity problems.
Carnegie's board said it has hired Goldman Sachs International as financial advisor "to evaluate strategic alternatives for the company." It didn't disclose further details.
Meanwhile, Sweden's main financial watchdog said it has launched an investigation into the investment bank's practices. It will look into possible oversight in internal management and control as well as the bank's handling of large credit exposures.
Shares in Carnegie fell 38.97 percent to 17.7 kronor (US$ 2.23) in Stockholm.
"Conditions in the bank sector have recently made it difficult for Carnegie to finance its payments. The bank has suffered liquidity problems," Riksbank Governor Stefan Ingves said in a statement. "Given the currently prevailing anxiety, the Riksbank has decided to grant liquidity assistance to Carnegie to reduce the risk of a serious disruption to the financial system."
Carnegie's operations include stockbroking, equity analysis, equity trading, asset management and advice on corporate acquisitions.
Its chief executive, Mikael Ericson, said the nature of its business means it depends on the interbank market for short-term financing and does not have access to financing from the central bank through repurchase agreements.
"In recent weeks access to liquidity in the market has been increasingly constrained," he said in a statement.
Carnegie also said it aims to join the Swedish government's bank guarantee scheme, which is expected to be launched shortly, to secure medium-term financing.


Updated : 2021-04-11 09:35 GMT+08:00