Sweden's central bank, the Riksbank, said Tuesday it would extend its liquidity aid to troubled Carnegie Investment Bank to five billion kronor (500 million euros, 630 million dollars). The announcement came just a day after the Riksbank announced a loan of one billion kronor to Carnegie to resolve its "temporary liquidity problems" and after the Financial Supervisory Authority (FSA) said it would probe Carnegie's internal management and control.
The extra liquidity also came amid calls for the resignation of Carnegie's management, as the group's share price has plunged by 90 percent on the Stockholm stock exchange since the beginning of the year. "The Riksbank has decided to increase the liquidity assistance provided to Carnegie Investment Bank to a maximum sum of five billion kronor," it said. The central bank reiterated that Carnegie was solvent but that the ongoing financial crisis had created liquidity problems for the bank.
The central bank and the FSA "have gone through the assets and debts and our assessment is that the company has more assets than debts," the head of the Riksbank's financial stability division, Mattias Persson, told Swedish news agency TT. Carnegie's operations consist of stockbroking, equity analysis and trading and asset management, and has operations in eight countries. On Monday, the FSA said it would conduct an investigation into Carnegie concerning "possible deficits in internal management and control, in part concerning possible deficits in handling of large credit exposures."
Last week Carnegie announced credit provisions of more than one billion kronor related to a single credit commitment. "One of the things we are looking at is the large exposure to a single customer ... as well as their internal management and controls," FSA lawyer Joakim Schaaf told TT on Monday.
Two of Carnegie's main shareholders, Patrik Enblad and Anders Boeoes who together acquired 10 percent of shares last week, have called for management to be ousted. "The market has a total lack of confidence in the company right now. The stock market doesn't want Anders Faellman and Mikael Ericson to stay on," Enblad told TT in a reference to the respective chairman and chief executive. Carnegie's share price shed a further 2.19 percent on Tuesday as the overall market was up by 2.11 percent.
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