STOCKHOLM- SWEDEN'S central bank, the Riksbank, will loan Carnegie Investment Bank one billion kronor (S$186 million) to ease its liquidity shortage, the two sides said on Monday.

Carnegie's share price went into freefall on the Stockholm stock exchange after the news, losing up to 62 per cent of its value before regaining some ground in midafternoon trading.

At 9.45pm, the share was down by 53.45 per cent in an overall market down by 3.00 per cent.

'Pending implementation of the Swedish government's guarantee scheme for banks, the Swedish central bank has granted Carnegie Investment Bank access to short-term liquidity in the form of a loan,' Carnegie said, specifying that it was a 'one billion kronor liquidity bridge loan.'

The central bank stressed that Carnegie was solvent but that the ongoing financial crisis had created liquidity problems for the bank.

Carnegie's operations consist of stockbroking, equity analysis and trading and asset management.

'The reasons behind Carnegie's liquidity problems include increased collateral requirements in the wake of the financial crisis,' the central bank said.

On Friday, Carnegie's share price plunged 34 per cent after it reported a worse-than-expected third quarter pre-tax loss of 517 million kronor and announced credit provisions of more than one billion kronor related to a single credit commitment.

Meanwhile, the Financial Supervisory Authority said it would conduct an investigation into Carnegie concerning 'possible deficits in internal management and control, in part concerning possible deficits in handling of large credit exposures.' -- AFP