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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 more than 50 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."
Spokesman Andreas Koch said the bank would not exclude any options in its strategic review, including the sale of Carnegie.
"It is a turbulent situation and we don't have a very strong ownership," he said.
Meanwhile, Sweden's main financial watchdog said it has launched an investigation into the investment bank's practices.
Koch said the investigation concerned a 1 billion kronor ($126 million) writedown related to "an individual credit commitment" that Carnegie revealed in its third-quarter report Friday. He declined to provide details, although the watchdog said 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, which fell more than 40 percent after the disappointing report Friday, plunged a further 58 percent to 12.25 kronor ($1.54) in Stockholm.
Koch denied speculation that the large commercial banks SEB AB and Handelsbanken AB had cut their lending to Carnegie.
"We have spoken to both of them and we have not received any such a message," he said.
Riksbank Governor Stefan Ingves said Carnegie was having trouble to finance its payments due to the credit crunch.
"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," he said in a statement.
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 : 2021-05-15 22:50 GMT+08:00