Swedish bank aims to raise 1.5 billion dollars by issuing new shares

STOCKHOLM: Swedbank, the Swedish bank which appears to be hardest hit by the global financial crisis, said on Monday it would try to raise 12.4 billion kronor with a share issue.

"Swedbank's board of directors has resolved to raise 12.4 billion kronor through a rights issue of preference shares," the bank said in a statement, adding that the issue would be directed at existing shareholders.

The preference shares would be sold for 48 kronor a piece, which is 19 percent lower than the closing price on Friday, and would be available between December 2 and 16, the bank said.

"It is important to stress that Swedbank is a profitable bank with sound capitalisation," company chief executive Carl Eric Staalberg said in the statement.

"The market environment has changed dramatically over the last few months. All banks are affected by the turbulence in the global financial markets and the worsening macroeconomic situation, leading to a re-evaluation of capital requirements among the leading banks," he said.

"This transaction will result in our capitalisation comparing very favourably to other large European banks," he added.

Investors did not appear to be convinced however. Following the announcement, Swedbank saw its stock price tumble 9.66 percent in early afternoon trading to 53.75 kronor in an overall Stockholm market down 5.43 percent.