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August 18, 2009

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Swedish bank eyes rights issue

SWEDISH bank Swedbank said yesterday it is raising 15 billion Swedish kronor (US$2.1 billion) in a new share issue to strengthen its capital position, which has been tested by the global economic crisis, particularly in the Baltic countries.

Chief Executive Michael Wolf said the rights issue should help accelerate the troubled bank's recovery without relying on the Swedish state guarantee and "end any lingering perception that we will become a burden for the Swedish tax payers."

He said the bank's aim was to get out of the bank bailout program as soon as possible, but pointed out it hasn't changed its outlook for any of the markets where it operates.

Swedbank - one of Sweden's four largest banks - has suffered from its exposure to the troubled economies of the Baltic countries and Ukraine and in July posted a second-quarter net loss of 2 billion kronor. Yesterday's new share issue is the bank's second in less than a year and sent shares down 4.6 percent to 63 kronor in Stockholm.

It said 46.6 percent of the new share issue has been guaranteed by current shareholders, as well as pension firm Alecta and investment fund Nektar Fonden.

The remaining 53.4 percent has been guaranteed by investment firms Merrill Lynch and Credit Suisse.

Shareholders representing 31.3 percent of the total share capital have assured they will vote in favor of the share issue at an extraordinary shareholder meeting to be held on September 15, the bank said.

"The obtaining of capital will strengthen Swedbank's competitiveness in our four home markets - Sweden, Estonia, Latvia and Lithuania," Swedbank's Board Chairman Carl Eric Stalberg said in a statement.


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