The European Commission approved yesterday emergency liquidity assistance worth 225 million euros that the Swedish authorities have granted to Carnegie Investment Bank AB.

The commission found the measure to be in line with its Guidance Communication on state aid to overcome the current financial crisis, said a press release.

The measure constitutes an adequate means to remedy a serious disturbance in the Swedish economy while avoiding undue distortions of competition and is therefore compatible with EU regulations, said the commission.

"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," said Competition Commissioner Neelie Kroes.

"The commission is satisfied that the emergency support is proportionate and does not give rise to undue distortions of competition," she added.

The aid was approved as a temporary rescue measure and Sweden has made the commitment to provide a liquidation plan or a restructuring plan for Carnegie Bank by April 25, 2009.

In the end of October, the Swedish central bank granted 2.4 billion SEK (about 225 million euros) special liquidity assistance to Carnegie Bank which was facing urgent liquidity problems.

On Nov. 10, as Carnegie Bank's position had further deteriorated, the central bank's assistance was replaced by an emergency loan of equivalent size from the National Debt Office, which subsequently took over all of Carnegie Bank's shares.