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Brussels, 16th December 2008

State aid: Commission approves Swedish rescue aid for Carnegie Bank

The European Commission has approved, under EC Treaty state aid rules, emergency liquidity assistance worth €225 million (SEK 2.4 billion) that the Swedish authorities have granted to Carnegie Investment Bank AB. The Commission found the measure to be in line with its Guidance Communication on state aid to overcome the current financial crisis (see IP/08/1495). The measure constitutes an adequate means to remedy a serious disturbance in the Swedish economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty. In particular, the measures are limited in time and scope and contain sufficient safeguards to avoid abuses.

Competition Commissioner Neelie Kroes said: "The liquidity assistance was necessary to avoid the failure of Carnegie Bank which would have entailed a real risk for the stability of the Swedish financial system. The Commission is satisfied that the emergency support is proportionate and does not give rise to undue distortions of competition."

On 27 and 28 October 2008 the Swedish central bank granted SEK 2.4 billion special liquidity assistance to Carnegie Bank which was facing urgent liquidity problems. On 10 November 2008, as Carnegie Bank’s position had further deteriorated, the central bank’s assistance was replaced by an emergency loan of equivalent size from the National Debt Office (“Riksgälden”). The National Debt Office subsequently took over all of Carnegie Bank's shares, which had been pledged as collateral.

The Commission found that there would have been a clear risk of failure of Carnegie Bank in the absence of the Central Bank's liquidity assistance and the emergency loan from the National Debt Office.

The measures taken by the Swedish authorities were appropriate to remedy Carnegie Bank’s liquidity problems and restore confidence in the Swedish financial markets. In particular, the loans provided did not go beyond what was necessary to save the bank and the bank will refrain from any significant expansion. The aid is approved as a temporary rescue measure and Sweden has made the commitment to provide a liquidation plan or a restructuring plan for Carnegie Bank by 25 April 2009.

The non-confidential version of the decision will be made available under the case number NN 64/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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