Carnegie buys troubled Swedish bank

Stockholm: Swedish bank Carnegie said yesterday it was buying HQ Bank, which was closed by authorities last weekend for breaking risk rules, for 268 million crowns ($37 million) in a deal cleared by the financial watchdog.

HQ Bank, owned by holding company HQ, was put into liquidation on Monday after the Swedish Financial Supervisory Authority revoked its banking licence for grossly breaching financial regulations.

The FSA said investment bank Carnegie's purchase of HQ Bank meant the unit could resume banking operations while the merger was being finalised.

Carnegie said the deal included an additional agreement to buy the funds arm of the bank, HQ Fonder, for 850 million crowns in covertible debentures and preferred Carnegie stock.

"The combined company is financially strong," Carnegie said, adding: "With the acquisition of HQ Bank and HQ Fonder, Carnegie creates the clearly leading independent investment bank in the Nordic region".

Carnegie said HQ Bank would be merged with Carnegie while HQ Fonder, currently owned by HQ part-owner Oresund, would become a subsidiary of the bank. The FSA pulled HQ Bank's licence after finding a lack of oversight in its trading operation, saying the bank had taken such large risks it endangered its own survival. The prosecutor's office has opened a separate investigation.

It was the second time in two years Sweden acted forcibly against a financial group. In 2008, the FSA withdrew the licence for Carnegie itself, which was then taken over by the state and sold in 2009 to investment company Bure and private equity firm Altor.