By Eva Odefalk

STOCKHOLM, Nov 10 (Reuters) - Sweden took over struggling investment bank Carnegie on Monday after a series of mishaps that drained the bank of liquidity and led regulators to revoke its licence.
The takeover is the state's first nationalisation of a major bank since a financial crisis in the early 1990s and marks the sudden decline of a once-distinguished name in Swedish investment banking circles.
The national debt office will own Carnegie after it offered loans of up to 5 billion Swedish crowns ($645 million) to the firm, replacing loans that the central bank had previously provided to keep the bank liquid.
Carnegie's shares were posted as collateral for the debt office loan.
"The decision has been taken in order to protect the financial stability and to preserve the value of the collateral," the debt office said in a statement.
This came as Sweden's financial watchdog announced it was revoking Carnegie's license.
The Financial Supervisory Authority (FSA) has been investigating the bank over possible shortcomings in internal management and controls, in part concerning the handling of credit exposure.
Erik Saers, deputy chief of the FSA, told a news conference there was little question about what to do: "The board was united in its decision to not allow the company to continue."
Saers said the debt office could now sell Carnegie as a whole or in parts.

OLD NAME, NEW PROBLEMS
The probe came a year after Carnegie was handed the FSA's maximum punishment, a 50 million crown fine, after some employees were alleged to have inflated profits at the firm.
That scandal, which led to a management overhaul, came after Carnegie had secured a prestigious mandate to help with Sweden's biggest-ever privatisation programme.
Carnegie's takeover not only highlights the problems facing the global banking industry but also runs directly counter to the goals of Sweden's Moderate-led government, which came to power in 2006 and pledged to sell off state assets.
The company, established as a trading house by Scotsman David Carnegie in 1803, has around 1,100 employees.
Carnegie had made a last-ditch effort to stay independent, announcing an action plan earlier on Monday which included two new share issues totalling about 1.2 billion crowns ($153 million).
The FSA said the revocation of the license could be changed to a warning based on the debt office's takeover.

(Additional reporting by Niklas Pollard and Anna Ringstrom, writing by Adam Cox)

(Editing by Will Waterman and Jon Loades-Carter) ($1=7.753 Swedish Crown) Keywords: FINANCIAL CARNEGIE/

(Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com)

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