Monday, November 10, 2008

Swedish bank, Carnegie at brink of collapse upon failing internal controls

The FSA has been investigating Carnegie since a trading scandal last year, after which the regulator gave Carnegie a record fine and ordered the replacement of its entire board because of the failure of its internal controls.

Carnegie took a SKr1bn loan facility from the Swedish central bank last month after it suffered a liquidity crisis. It increased the facility to SKr5bn after the announcement of the FSA investigation sent its share price into freefall.

The National Debt Office has now taken over the central bank loan, secured with the bank’s shares as collateral. The FSA has also restored Carnegie’s licence, improving the chance of attracting potential bidders.

Carnegie had already appointed Goldman Sachs to examine strategic possibilities, including a potential sale. Max Matthiessen, the group’s asset management subsidiary, is seen as particularly attractive.

Carnegie’s largest shareholder is Moderna Finance, the Swedish insurer formerly known as Invik, that is in turn owned by Milestone, an Icelandic financial company controlled by Karl and Steingrimur Wernersson.


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