HQ Bank has licence revoked
TT/The Local · 29 Aug 2010, 10:08
Published: 29 Aug 2010 10:08 GMT+02:00
The Swedish Financial Supervisory Authority (Finansinspektionen - FI) said HQ Bank had seriously overvalued its trading portfolio and had taken risks that threatened its survival.
FI said HQ Bank was in breach of Swedish accounting and capital requirement regulations as its financial position had been reported inaccurately, with a correct valuation indicating that the bank has been undercapitalised since 2008.
"A bank can not behave like this. The fact that they took action when they were caught does not mean there are extenuating circumstances. We see no other option but to revoke the licence," said FI's director general Martin Andersson.
The decision would not have an impact on financial stability, FI said. The authority added that the bank's managing director and its board of directors were not sufficiently knowledgeable about the risks attached to their trading operations.
"FI's decision entails that HQ Bank may no longer conduct banking and securities business. Furthermore, the bank's licences to conduct pensions savings business and be a registered fund manager are no longer valid," said FI in a statement released on Saturday.
The chairman of the bank's board, Mikael Nachemson, reacted with shock to news of the financial regulator's decision.
"It's a sad day. I thought, a bit naively perhaps, that the measures we had taken over the last three months would prove sufficient."
HQ Bank is now trying to find a financial actor willing to merge with the crisis-ridden bank. But time is running out, with FI primed to submit a liquidation application to the district court unless a solution can be found by Monday.
Mikael Nachemson was keen to stress that the bank remained solvent and remained in a position to pay back any money invested by customers.
"We're doing everything we can to ensure our customers aren't affected. Shares and options are also separate from the bank's own resources and will not be affected by a wind-up," he said.
FI's Martin Andersson echoed the bank's message to its customers.
"This is not an insolvent bank. The aim is for all customers to get their money bank, which is why the bank ought to be liquidated in an orderly manner."