HQ Bank's License Revoked by Swedish Regulators for Breach of Legislation
Sweden’s Financial Supervisory Authority revoked HQ Bank’s license to operate and applied for its liquidation, saying the company broke regulations.
“HQ Bank has demonstrated serious deficiencies in its trading operations,” the FSA said today in a statement on its website. “HQ Bank has overvalued its trading portfolio for a long time” and reported its financial position inaccurately.
HQ Bank, owned by securities broker HQ AB, said in June it was selling its HQ Fonder Sverige AB fund unit to cover losses from its trading division, which was in the process of shutting down. Yesterday, HQ AB said it planned to raise as much as 1 billion kronor ($136 million) by selling stock to shareholders to buy back the unit and “assure financial stability.”
HQ Bank needs to find a partner “hastily” and is “working really hard” to attract a private buyer, Chairman Mikael Nachemson said today at a press briefing in Stockholm. The company doesn’t plan to appeal the FSA’s decision, he said.
The HQ case isn’t the first time Sweden has withdrawn a bank’s license. In 2008, D. Carnegie & Co. AB, the country’s largest publicly traded investment bank, lost its permit and was seized by the government following an investigation by the regulator into inadequate internal controls and handling of large loans.
Assets Safe
The FSA’s license ruling mainly relates to the discontinued trading operations, HQ AB said today in a statement. Assets held by HQ Bank customers won’t be affected by any potential liquidation because they’re separate from the bank’s assets, it said, adding that the bank is solvent.
HQ AB has a market capitalization of 1.55 billion kronor, according to data compiled by Bloomberg.
“It’s a sad day for our customers and staff,” Nachemson said. “We have done everything in the last three months to try to sort things out but we just have to conclude that despite resolute measures, owners who have supported us and staff who have fought it, it has not been enough.”
To contact the reporter on this story: Josiane Kremer in Oslo at Jkremer4@bloomberg.net
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