Sweden’s HQ Bank enters liquidation
STOCKHOLM: Swedish investment bank HQ Bank AB said it is entering liquidation after its licence was revoked over the weekend, with regulators citing gross breaches to Swedish law, sending its shares plunging.
The investment bank's shares traded 80% lower in midday trading in Stockholm.
The Swedish financial supervisory authority, Finansinspektionen ( FI), Saturday pulled the bank's licence, saying: "HQ Bank has demonstrated serious deficiencies in its trading operations. The bank has taken risks that were so large as to compromise its survival. The bank's board of directors and managing director have not limited its risk-taking as stipulated by Swedish law."
A liquidator has been appointed and has taken over the role of the bank's chief executive officer and board.
The bank said in a state- ment that it spent the weekend seeking a deal with a party holding an existing banking licence that would allow the continuation of operations. However, "an almost completely agreed solution with such a party has proven impossible to implement."
Maths Liljedahl at Nordea expects the liquidator to try and find buyers for their assets, but "the question will be if all their clients stay with them."
FI said HQ Bank has overvalued its trading portfolio and has inaccurately reported its financial position, believing a correct valuation would have shown that the bank has been undercapitalized since December 2008. "The bank is thereby in violation of both Swedish accounting and capital requirement regulations."
FI believes that the decision to revoke HQ's licence and the subsequent liquidation will have no impact on financial stability. -PB News