Yesterday, the European Commission announced its approval, pursuant to EC state aid rules, of Sweden’s emergency liquidity assistance of SEK 2.4 billion to Carnegie Investment Bank AB (Carnegie), subsidiary of D. Carnegie & Co. AB, finding “the measure to be in line with its Guidance Communication on state aid to overcome the current financial crisis.” According to EC Competition Commissioner Neelie Kroes, the emergency support provided by the Swedish government “is proportionate and does not give rise to undue distortions of competition.”

Following the seizure of Carnegie in mid-November by the Riksgälden, the Swedish National Debt Office, Sveriges Riksbank, the Swedish central bank, announced that the Riksgälden had granted Carnegie a loan of up to SEK 5 billion (approximately $630 million), which replaced the SEK 5 billion of special liquidity assistance that the Riksbank had granted in October to Carnegie.

In the absence of the liquidity assistance provided by the Swedish government, the EC “found that there would have been a clear risk of failure of Carnegie Bank,” and that the “loans provided did not go beyond what was necessary to save the bank, [which] will refrain from any significant expansion.” The Swedish government has committed to establishing a liquidation plan or restructuring plan for Carnegie by April 25, 2009.