Sweden's National Debt Office said today it had taken over the troubled investment bank Carnegie after authorities threatened to withdraw the firm's operating licence for risky lending.
The debt office said it had taken over a credit facility to Carnegie of up to five billion kronor (€501m), given last month by the central bank, and, as of this afternoon, had taken over all the shares posted as collateral.
This means that the debt office now controls Carnegie Investment Bank AB and Max Matthiessen Holding AB - two subsidiaries that are directly or indirectly responsible for all business operations in the Carnegie group.
The move came after the Swedish Financial Supervisory Authority announced that it had decided to revoke the firm's operating licences following a probe into Carnegie's internal managerial control.
'Carnegie has for a long period of time taken exceptional risks by lending large sums to a single client. To in this way expose one's business to great risks is against the law,' the FSA said in a statement.
'Carnegie has also broken the law by not informing FSA about this credit line to a single individual,' it added.
The regulatory body however said that since the debt office had taken over Carnegie's operations it would change its decision to revoke its licences into a warning.
'After the ownership transition, the bank's licences and the operations can continue as usual,' Carnegie said today, stressing that 'clients' assets and securities are safe.'
Carnegie, which conducts stockbroking, equity analysis and trading and asset management in eight countries, has been heavily criticised in recent years.
A year ago, the FSA for the first time ever imposed the maximum Swedish fine of 50 million kronor on the investment bank and sacked its chief executive and board after a trading scandal.
The firm has also been criticised for a lofty bonus system said to have encouraged excessive risk taking.
The debt office said it aimed to be 'a responsible owner,' but said 'we do not have the ambition to remain as owner for an extended period of time'.
While it seeks out buyers for Carnegie, the debt office said it would appoint a new board, with the current head of a state pension fund taking over as chairman of the board.
