Carnegie takes over HQ Bank

Investment bank Carnegie has signed a deal to take over crisis-hit sector colleague HQ Bank, with payment amounting to 268 million kronor ($36.8 million) to settle employee stock options and client obligations.

Carnegie takes over HQ Bank
Liquidator Björn Riese announces HQ's deal with Carnegie on Friday

The deal, reportedly signed late on Thursday evening, was confirmed in statements issued by both Carnegie and HQ on Friday morning.

“The takeover of HQ Bank means that the bank’s liquidity and client obligations are immediately secured, that the workforce can be kept intact and that the operations can be quickly resumed,” Carnegie CEO and president Frans Lindelöw said in a statement.

“This is a transaction that will benefit both clients and employees.”

Sweden’s Financial Supervisory Authority (Finansinspektionen – FI), “has approved Carnegie Investment Bank’s purchase of HQ Bank and HQ Funds,” the agency said in a statement, insisting the sale would help secure funds belonging to the beleaguered bank’s approximately 20,000 depositors.

The agency stressed however that HQ for the time being officially remained in liquidation.

Carnegie meanwhile said the operations of HQ Bank, which manages about 60 billion kronor, would be integrated into its own and that HQ Fonder (funds) would become a subsidiary, adding that all of HQ’s some 300 employees would move over to Carnegie.

“The merged company becomes the Nordic region’s clearly leading independent investment bank,” Carnegie said in a statement, adding that it would guarantee HQ Bank’s liquidity and its clients’ deposited funds.

As part of the deal, Carnegie will buy all issued shares in HQ Bank for 268 million kronor, which corresponds to outstanding convertible bonds held by the bank’s employees that, if HQ had declared bankruptcy, would have become worthless.

“Payment is in the form of a promissory note to HQ AB, pledged to the benefit of holders of the personnel convertibles,” Carnegie said.

Carnegie said it would also buy all issued shares in HQ Fonder from investment company Öresund for 850 million kronor, allowing it to convert the shares to its own.

Following the transaction, Carnegie said its total equity, on a pro forma basis, stood at 2.7 billion kronor.

HQ’s equity, also according to pro forma calculation would amount to “approximately 60 million kronor, comprising mainly of available cash and short-term receivables,” HQ said.

Carnegie, which was taken over by Sweden’s National Debt Office in late 2008 after the authorities threatened to withdraw its operating licence over risky dealings, had tried to purchase HQ on Sunday, a day after all that bank’s licences were revoked for breach of banking regulations.

FI had however stopped Carnegie’s initial plan to buy HQ, and the bank was on Monday forced into involuntary liquidation.

HQ, currently headed by liquidator Bioern Riese, has remained closed all week after cautioning that “opening the bank without having found (a new buyer) has been calculated to lead to such liquidity pressure that the bank would not be able to meet it.”

Despite fears of a run on the bank, the decision to lock in customers’

money met harsh criticism.

Late Thursday however, HQ announced it planned to open for business again starting Monday.

Trading of the bank’s shares was halted on Tuesday, after its share price plummeted nearly 84 percent during a single day of trading on the Stockholm stock exchange a day earlier.

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Five questions before buying a Sweden home

The Swedish financial watchdog recently scrapped plans for new mortgage rules, meaning you can still buy a home in Sweden and never pay off the full loan. Here's The Local's guide to the five main things you need to know before taking your first step on to the property ladder in the Nordic country.

Five questions before buying a Sweden home
Here's what you need to know before buying a home in Sweden. Photo: Fredrik Sandberg/SCANPIX

1. Can I afford a home in Sweden?

With its chilly winter climate and famously expensive restaurants, Sweden might not seem like the obvious place to move to or buy a holiday home in. But Johan Vesterberg, head of press for Sweden's largest estate agent, Fastighetsbyrån recently told The Local that with just a €100,000 budget (£72,000, $106,009, 933,210 kronor) “you can find a decent property in most parts of the country, it will just be a question of size”, especially if you stay away from the coast and avoid the nation's major cities. And with record-low interest rates, now is the time to strike.

While in many other countries the rules of borrowing are quite simple (letting you borrow, say, up to five times your salary), in Sweden it's a bit more complicated with many factors involved.

Here's a quick example though, according to SBAB's (the nation's state-owned mortgage broker) mortgage calculator. Say you wanted to buy a 50-130 square metre house in Stockholm municipality and were able to pay 10,000 kronor towards it a month (including paying off your mortgage, housing association fees and utilities costs), you would be able to borrow 1,812,254 kronor (85 percent of the property's value) to buy a home for approximately 2,132,064 kronor, paying a cash deposit for the remaining 15 percent.

However, it is not an exact science and you should always discuss potential property purchases with your bank manager or lawyer first.

Swedish dream homes are cheaper than you think. Photo: Johan Willner/

2. How does the viewing process work?

If you're looking for a home in the Gothenburg, Malmö or Stockholm areas, make sure you approach estate agents as soon as you're thinking of buying. Rising prices and high demand for apartments in Sweden's three largest cities have led to a growing number of properties being sold without public viewings, according to a survey carried out by SBAB.

The shift brings Sweden closer to the approach favoured in other European countries such as the UK, where customers in property hotspots are often granted private viewings. However, the most common approach in Sweden is still for potential customers to attend an open house viewing before they submit their bids for the property.

3. How do I win the bidding war?

Via text message. Yes, you read that right. In tech-savvy Sweden, the bidding process is often done by sending the amount you're willing to pay for the property in an SMS to the property agent until your fellow prospective buyers back out and a price is agreed on.

Rent a home in Sweden with The Local

In many parts of the world, the seller sets the price and then negotiates with potential buyers, with the final price landing somewhere in the middle. In Sweden, buyers try to outbid each other – often resulting in a windfall for the seller. Make sure you meet with your bank beforehand to agree on how high you are able to go as there are no legal regulations on these bidding wars, which tend to push costs well above the asking price – especially in attractive city regions. Tor Borg, chief economist at SBAB told The Local that his main advice for customers was to “keep your head calm and don't get engaged in offering a price that you cannot afford”.

READ MORE: One in five flats sold before viewing starts

The whole process is usually lightning fast. Bidding starts just days after the public viewing and, if the final price is satisfactory to the seller, the deal can be closed within the week. Before you know it, you're a home owner and a member of a 'bostadsrättsförening', a Swedish housing association.

4. What exactly does a housing association do?

When you buy a home in Sweden, especially if it is an apartment, you are likely to become a member of the tenant-owner association which formally owns the building. You have to pay a monthly fee to the association, which can have a huge effect on your living costs, so don't forget to check how much it is before you buy.

The housing association manages things like maintenance, the building's finances and other issues that might arise. It appoints a board of directors to represent the organization at the annual meeting of members, which are notorious for their wild debates on everything from large building renovations to finding out who forgot to remove the fluff from the dryer in the common laundry room.

The process from finding a home to buying it is lightning fast. Photo: Pontus Lundahl/SCANPIX

5. How do I pay off my mortgage?

In Sweden, house buyers usually need to be able to pay at least 15 percent of the cost up front, with mortgage providers offering a loan of up to 85 percent of the value of the property. You can choose how fast you would like to pay off your loan. 

Mortgages account for 95 percent of Swedes' total debt, and borrowers currently hold a mortgage debt 3.7 times higher than their annual income. Up until recently mortgage holders did not have to pay off their loan, but Sweden has now created a rule that they must 'amortize', as the concept of repaying your loan in increments is known, after concerns that Swedes were accumulating debts they could never repay.

Let The Local help you find an apartment in Sweden.

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