EU approves Sweden’s Carnegie package

Sweden on Tuesday received approval from the European Commission to move forward with its planned bailout of the troubled Carnegie investment bank.

The Commission ruled that the aid package would not distort competition.

Europe’s state aid watchdog said that a liquidity facility of €225 million ($307 million) granted to the bank in October, as it struggled with the financial crisis, was in line with EU rules for rescuing troubled banks.

“The liquidity assistance was necessary to avoid the failure of Carnegie Bank which would have entailed a real risk for the stability of the Swedish financial system,” Competition Commissioner Neelie Kroes said.

“The commission is satisfied that the emergency support is proportionate and does not give rise to undue distortions of competition,” she added.

After the liquidity line was extended to the bank, Sweden’s National Debt Office in November decided to take over Carnegie after authorities threatened to withdraw the firm’s operating licence for risky lending.