In a move to conquer financial turmoil HQ Bank dumps its loss-making trading operations and asks shareholders for more cash.

• Sweden a ‘safe harbor’ during eurozone chaos
• Swedish top banker boycotts secret meeting

Swedish investment bank HQ Bank is bleeding. It now plans to sell its loss-making trading operation and conducts a 559 million kronor ($78 million) guaranteed right issue in a move to strengthen its capital base.

“As a consequence of the intensified financial turmoil and therefore markedly changed market conditions, the board of HQ AB has decided to conduct an accelerated closure, but in an orderly manner, of the group's trading operations”, the bank wrote in a statement Wednesday.

The stock dived 25 percent in Stockholm after the announcement.

The trading operations have during the fourth quarter of 2009 and the first quarter of 2010 reported losses totalling 74 million kronor ($10 million). Selling its trading operation would “tangibly lower the total level of risk” for the bank, it said.

“It is the opinion of the board that that the loss in the trading operations may increase further during the second quarter of 2010 and the remainder of 2010”, the company said.

Therefore, the board has also decided to propose a rights issue of 559 million kronor to provide a capital injection and strengthen the bank’s capital base.

HQ Bank, formerly known as Hagströmer & Qviberg AB, is listed on the Stockholm stock exchange and describes it self as an “ideas-driven bank for major investors”.