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Carnegie, Swedbank shares tumble in Sweden

Carnegie, Swedbank shares tumble in Sweden

Swedish bank stocks plunged Monday after Swedbank AB and investment bank Carnegie AB announced emergency plans to counter the turmoil on financial markets.
Swedbank _ one of Sweden's four largest banks _ said it would raise 12.4 billion kronor (US$1.56 billion) in a new share issue, while Carnegie said it received a 1 billion kronor ($126 million) loan from Sweden's central bank to boost its liquidity. Carnegie also said it would evaluate its "strategic alternatives," including a possible sale.
The moves underscored that the global credit crunch has hit the Scandinavian country, which for long said its banks were healthy and relatively well-positioned to cope with the financial crisis.
Swedbank shares were down 9 percent to 54 kronor ($6.79) while Carnegie stocks plummeted 53 percent to 13.5 kronor ($1.70) in Stockholm. Shares in other Swedish banks also took hits, with SEB AB and Nordea AB falling between 5 and 11 percent.
Swedbank said that although its finances are sound, it believed it would be "prudent" to strengthen its capital position, given the uncertainty in the broader economy.
Its shares have been under pressure for some time amid concerns over its exposure to the volatile Baltic countries and bankrupt U.S. investment bank Lehman Brothers.
Investors have been particularly concerned about a potential increase of the bank's loan losses in the Baltic countries, which are faced with slowing growth and a surge in inflation.
Ohman analyst Francis Dallaire said the share issue should provide enough capital for Swedbank to weather an increase in loan losses in the Baltics. However, he said the situation could become more difficult if the Baltic states were forced to devalue their currencies.
Swedbank Chairman Carl Eric Stalberg said the new issue should not been seen as a way to cover up for expected losses in the Baltics.
"There is no big dark hole that we need to cover up, this is a prudent move," he said. "We have a very strong position and a strong result."
The situation was worse for Carnegie, which Friday reported a 1 billion kronor ($126 million) writedown related to "an individual credit commitment" in its third-quarter results.
The write-down prompted the Swedish financial watchdog to start an investigation into possible oversight in Carnegie's internal management and control, as well as the bank's handling of large credit exposures.
Carnegie 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.
The central bank said Carnegie is solvent but that the ongoing financial crisis has created liquidity problems for the bank.
Investment firm Boos Enblad AB, which owns a 9 percent stake in Carnegie, called for the management to resign.
"I notice that the stock market completely lacks confidence in the company at the moment," Boos Enblad representative Patrik Enblad told Swedish news agency TT.
Carnegie's operations include stockbroking, equity analysis, equity trading, asset management and advice on corporate acquisitions.


Updated : 2020-12-05 04:22 GMT+08:00