EU approves Swedish bailout of troubled investment bank

BRUSSELS: The European Commission approved on Tuesday Sweden's bailout of troubled Swedish investment bank Carnegie, ruling that the aid would not distort competition.

Europe's state aid watchdog said that a liquidity facility of 225 million euros (307 million dollars) granted to the bank in October, as it struggled with the financial crisis, was in line with EU rules for rescuing troubled banks.

"The liquidity assistance was necessary to avoid the failure of Carnegie Bank which would have entailed a real risk for the stability of the Swedish financial system," Competition Commissioner Neelie Kroes said: "The commission is satisfied that the emergency support is proportionate and does not give rise to undue distortions of competition," she added.

After the liquidity line was extended to the bank, Sweden's National Debt Office in November decided to take over Carnegie after authorities threatened to withdraw the firm's operating licence for risky lending.