In what was described as a "unique move," Stockholm-based Carnegie Investment Bank AB lost its operating license Monday and was taken over by the Swedish National Debt Office, according to dpa. The move was "not due to lack of capital but lack of confidence for the bank," Financial Markets Minister Mats Odell told reporters. Earlier, the Swedish Financial Supervisory Authority (FSA) said Carnegie during a long period of time had taken "exceptional risks" by giving large loans to a single client. "Exposing operations to such great risks in this way is a violation of the law," the financial watchdog said, noting that Carnegie had also failed to notify the agency over individual credit. Carnegie has been under review by the FSA since it recently disclosed a writedown of 1 billion kronor (126 million dollars) over "an individual credit commitment" in its third-quarter report. "The state has to ensure that rules are abided to," Odell said at a joint news conference with Bo Lundgren, head of the National Debt Office, noting it was key to uphold financial stability. Odell said the move was part of a recent stability package approved by parliament and the executive European Commission. The National Debt Office took over the shares posted as collateral for a loan Carnegie received earlier Monday, replacing a 5-billion- kronor (630-million-dollar) loan it had with the central bank. Lundgren said the state ownership could last "weeks, months or half a year," but the key was to ensure that the bank gets a good owner. Peter Norman, chief executive of the pension fund, Seventh AP fund, was named new chairman of the board. An extraordinary general meeting was to be held in the near future to elect a new board. The Debt Office said it did not aim to "remain as owner for an extended period of time. The intention is to sell the companies involved on commercial terms to buyers that obtain the Financial Supervisory Authority's approval." With the state as owner, the clients' assets were "safe," the statement said. Carnegie, founded in 1803, has advised several Swedish governments in various deals.
