Sweden bails out Carnegie

and its financial sector and becomes the latest country to pump billions into its financial sector. Financial Markets Minister Odell said Swedish banks are relatively stable but added the crisis could deepen. 

  • "..we cannot during the current turbulence exclude that the crisis deepens," said Financial Markets Minister Mats Odell.

  • Sweden became the latest country to pump billions into its financial sector when its parliament, the Riksdag, approved on Oct. 29 a 1.5 trillion kronor ($200 billion) rescue package for the nation's financial sector.
    The measure allows the government to give the money in credit guarantees to banks and mortgage lenders to improve liquidity amid the global financial turmoil. It also creates a 15 billion kronor ($2 billion) "stability fund" to bail out any Swedish banks that run into solvency problems.
    Lawmakers proposed bill after the U.S. government pumped $700 billion into the American banking system. The Swedish move is also part of a larger, coordinated effort among European countries to shore up the reeling global financial industry.
    Financial Markets Minister Mats Odell told Parliament that Swedish banks were relatively stable "but we cannot during the current turbulence exclude that the crisis deepens."
    The credit guarantee covers medium-term loans between 90 days and five years. It is set to expire on April 30 but can be extended through the rest of the year.
    Banks and mortgage lenders that want to join the program must pay a fee and agree to certain restrictions on compensation for their top executives.
    The move came a day after the Swedish Riksbank – its central bank – approved a 5 billion kronor ($630 million) bailout of troubled investment bank Carnegie AB. That announcement, just a day after the Riksbank granted a 1 billion kronor ($126 million) loan to boost Carnegie's liquidity, fueled concerns about the investment bank's financial health.
    Carnegie said it had requested the expanded loan to enhance its "financial flexibility." It added that it wouldn't necessarily use the entire credit facility.