EU supports Carnegie takeover by government

The Swedish National Debt Office's (Riksgälden) controversial takeover of investment bank Carnegie in 2008 has been given the green light by the European Commission.

Many, including politicians and the disappointed owner, had critised how the state, through the Debt Office, took over ailing Carnegie Investment Bank.

However, the European Commission said on Wednesday that it has finally granted final clearance under EU state aid rules to Swedish aid for the restructuring of the bank. The Commission pointed out in particular the speed at which decisions were made and the fact that the owners had to bear the cost, according to a press release from Riksgälden.

It also highlighted the Debt Office’s prompt action and resolution of problems with Carnegie as an example of effective restructuring without creating undue distortions of competition.

“Sweden’s quick intervention and subsequent resolution of the problems of Carnegie is an example of effective restructuring, in terms of addressing the bank’s viability, the legitimate competition concerns of others and of ensuring that Carnegie’s former shareholders contributed to the cost of restructuring,” said Commission Vice President and Competition Commissioner Joaquín Almunia on Wednesday in a statement.

Carnegie fell into trouble following the eruption of the financial crisis in the autumn of 2008. Thanks to large exposures through transactions with financier Maths O. Sundqvist, Carnegie lost its license to conduct banking activities from the Financial Supervision Authority (Finansinspektion) on November 10th, 2008.

A few minutes after the announcement, the Debt Office said that through a deposit agreement linked to a 2.4 billion ($315.39 million) kronor loan, it had taken over the investment bank and at the same time won back its bank license.

After a lengthy auction process, the Debt Office sold Carnegie and its sister company Max Matthiesen to private equity firm Altor and investment company Bure in the spring of 2009 for 2.2 billion kronor.

The former owners of parent company D. Carnegie have not received any money from the purchase price. They believe the Debt Office’s takeover of Carnegie was handled improperly and have sued the state for 5 billion kronor.

According to the European Commission, it is hoped that the fact that Carnegie’s former shareholders had to bear some of the costs of restructuring will deter bank owners in the future from taking large risks knowing that the state can act as a guarantor in the event the bank fails.

“One cannot find a reason to doubt that the sale process was conducted through an open and non-discriminatory tender which resulted in the most advantageous bid being adopted,” the Debt Office said in a statement.

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EU ban ‘erases two-thirds of Swedish snuff’

The EU's new tobacco directive could threaten as much as 70 percent of existing sorts of snus on the market, snuff makers Swedish Match has warned.

EU ban 'erases two-thirds of Swedish snuff'

While the battle for Swedish snuff is not new, the National Food Agency (Livsmedelsverket) has now weighed into the debate by submitting its analysis of the suggested directive to the Swedish government.

“It is clear that many types of snus would be banned,” Food Agency inspector Christer Johansson told the TT news agency on Friday.

The European Commission has suggested that a panel of snus tasters rule whether a product has a clear enough “tobacco taste” to be allowed onto the market.

“It will be up to the panel to decided what a ‘clear taste’ is,” Johansson said.

The European Commission, meanwhile, has claimed that a ban on “non-tobacco” flavouring from tobacco products would knock out about ten percent of the Swedish snus sales.

Yet tobacco giant Swedish Match has said the directive could knock the air out of as much as 70 percent of its snus offering.

The peculiar Swedish snuff – inserted under the top lip by users – is sold in a variety of sizes, either prepacked in small pouches or loose. Aromas from licorice and spearmint to apple and eucalyptus have been added to the shelves in recent years. Vanilla, juniper and bergamot have also sneaked into the reportoire.

The lack of precision in a test panel’s subjective tasting has instilled fear and fostered irritation among snus makers.

“We think it could affect between 30 and 70 percent of our snus types,” said Swedish Match spokesman Patrik Hildingsson to TT. “That’s how big our uncertainty is.”

He dismissed the Commission’s analysis that the directive would deflate profits by ten percent. Hildingsson said it was comparing apples and oranges, as Swedish Match was not solely looking at sales income but the variety of their products. He also questioned the figure’s validity.

“That figures comes from one single analyst at one single bank,” Hildingsson said, further adding that a test panel would offer no guarantees of quality or consistency in its rulings.

“Surely there is no industry that wants that level of uncertainty?”

TT/The Local/at

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