Finansinspektionen has revoked HQ Bank AB's licence. The bank has grossly breached the most central provisions of Swedish legislation and FI will apply for the company to be entered into liquidation. FI believes that this decision will not have an impact on financial stability.
HQ Bank has demonstrated serious deficiencies in its trading operations. The bank has taken risks that were so large as to compromise its survival. The bank's Board of Directors and Managing Director have not limited its risk-taking as stipulated by Swedish law.
HQ Bank has overvalued its trading portfolio for a long time. The bank's financial position has also been reported inaccurately. A correct valuation would have shown that the bank was undercapitalised since December 2008. The bank is thereby in violation of both Swedish accounting and capital requirement regulations.
In practice, the bank has lacked effective risk management. Neither its Board of Directors nor its Managing Director has acquired sufficient knowledge and information about the trading operations and the risks associated with these operations. As a result, they cannot be considered to fulfil the suitability requirements stipulated for managing a financial company.
FI's decision entails that HQ Bank may no longer conduct banking and securities business. Furthermore, the bank's licences to conduct pensions savings business and be a registered fund manager are no longer valid. Finansinspektionen will submit an application to the District Court for the liquidation of the company. Following the courts decision FI will also withdraw the company's licence to conduct insurance mediation business.