Swedbank to appy for Swedish stability plan

STOCKHOLM — Swedbank AB on Tuesday became the first of the Nordic country's four main banks to announce plans to ask for guarantees under the government's bank bailout package on new debt it is issuing.

In a brief statement the bank said it would send its application "shortly."

Last week, Swedish lawmakers approved the government's plans to set up a 1.5 trillion kronor ($195 billion) rescue package for the country's financial sector.

The government guarantees the institutions' new issues of debt instruments in exchange for a fee.

Two days before the package was approved in parliament, Swedbank had unveiled plans to raise 12.4 billion kronor (US$1.6 billion) in a new share issue, in a "prudent" move to strengthen its capital position, given the uncertainty in the broader economy.

The move underscored that the global credit crunch has hit the Scandinavian country, which had long said its banks were healthy and relatively well-positioned to cope with the financial crisis.

Swedbank shares, which had already been pressured for some time due to concerns of its exposure to the volatile Baltic countries and the bankrupt U.S. investment bank Lehman Brothers, plunged some 13 percent that day.

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