Carnegie granted multi-billion kronor loan
TT/The Local · 28 Oct 2008, 11:15
Published: 28 Oct 2008 11:15 GMT+01:00
- Swedish investment bank in freefall (27 Oct 08)
The decision was made following an application from Carnegie for extended credit in addition to the one billion kronor granted on October 27th, the Riksbank said in a statement.
Both Riksbank and Finansinspektionen (the Swedish Financial Supervisory Authority) have deemed Carnegie solvent.
"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. The Riksbank is prepared to provide the liquidity that is needed to safeguard the stability of the financial system," says Riksbank deputy governor Lars Nyberg.
The move follows a turbulent start to the week for the Swedish investment bank.
Shares in the bank shed more than half their value on Monday following news that the bank was under investigation by financial authorities and had received an emergency loan from the Riksbank.
Shortly after the announcement of a one billion kronor Riksbank loan, Carnegie also reported that it was under investigation by Finansinspektionen for deficits in internal management following the company's announcement last week that it lost 500 billion kronor in the third quarter.
The loan is granted by a clause in the Riksbank’s governing legislation which allows it to grant credit to banks on special terms for the purpose of supporting liquidity under exceptional circumstances.