Summary: Forex receives a warning and must pay SEK 50 million

SUMMARYDate 21 May 2013Forex receives a warning and must pay SEK 50 millionFinansinspektionenBox 7821SE-103 97 Stockholm[Brunnsgatan 3]Tel +46 8 787 80 00Fax +46 8 24 13 35finansinspektionen@fi.sewww.fi.seForex Bank Aktiebolag (Forex or the Bank) is a joint stock bank that hasreceived authorisation to conduct banking operations in accordance with theBanking and Financing Business Act (2004:297).During the autumn of 2012, as a result of the bankruptcies of the companies inthe Panaxia Group, Finansinspektionen initiated a review that specificallyfocused on Forex’s risk exposure to the Panaxia Group. The aim of theinvestigation was primarily to review Forex’s risk management and internalcontrol with regard to this risk exposure.The companies in the Panaxia Group provided cash management services toForex. At the time of the bankruptcies, funds totalling approximately SEK 180million that belonged to Forex were in the possession of companies in thePanaxia Group. Forex was also the majority shareholder in the parentcompany, Panaxia AB (publ).Finansinspektionen investigated how the bank fulfilled its obligation to managethe risks in its operations. The results show that Forex did not meet therequirements placed on the bank to identify, measure, steer, report internallyand maintain control over the risks associated with its business. Forex was alsodeficient in its obligation to maintain satisfactory internal control. Furthermore,Finansinspektionen has been able to determine that one of the members of theBank’s Board of Directors had a conflict of interest when the Bank’s Boarddecided on 31 July 2012 to guarantee a planned new share issue in PanaxiaAB. Company management, i.e. Forex’s Board of Directors and CEO, areultimately responsible for any operational deficiencies.The deficiencies identified by Finansinspektionen are serious and apply to rulesthat are central to a bank’s ability to fulfil its obligations. For this reason, astrong reaction is necessary. When determining the type of intervention,Finansinspektionen took into consideration, among other things, that Forex wasissued a warning and an administrative fine of SEK 50 million on 1 October2008.Forex has now implemented a number of measures to resolve the identifieddeficiencies. For example, the Bank’s Annual General Meeting replaced a large1(2)

FI Dnr Fel! Hittar inte referenskälla.number of the Bank’s earlier Board members. The Bank also implementedmeasures to improve the follow up of its cash management. Even though theBank had previously received a warning, Finansinspektionen chose tointervene with a warning instead of withdrawing the Bank’s authorisation. Thewarning is accompanied by an administrative fine of SEK 50 million.2