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Sweden expands loan to Carnegie to $630 million

Sweden expands loan to Carnegie to $630 million

Sweden's central bank on Tuesday made a fivefold increase in its loan to troubled investment bank Carnegie AB, to a maximum of 5 billion kronor ($630 million), to avert "serious disruptions" to the crisis-strained financial system.
The announcement, just a day after the Riksbank granted a 1 billion kronor ($126 million) loan to boost Carnegie's liquidity, fueled concerns about the investment bank's financial health.
Carnegie shares nosedived over 50 percent on Monday and continued to fall after Tuesday's announcement, dropping nearly 6 percent to 12.90 kronor (US$1.63).
The Riksbank insisted Carnegie is solvent and that the move to expand the loan was precautionary.
"Against the background of the prevailing unease in the financial system, the Riksbank has decided to grant Carnegie increased liquidity assistance in order to reduce the risk of serious disruptions to the financial system," Deputy Governor Lars Nyberg said in a statement.
Carnegie said it had requested the expanded loan to enhance its "financial flexibility." It added that it wouldn't necessarily use the entire credit facility.
Carnegie's operations include brokerage services, equity analysis, equity trading, asset management and advice on corporate acquisitions.
Its chief executive, Mikael Ericson, said Monday 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.


Updated : 2021-05-17 09:07 GMT+08:00