Mikael König, CEO of Swedish investment bank HQ Bank steps down after trading operations fiasco.

• Sweden's HQ Bank dumps trading to raise cash

In a move to conquer financial turmoil HQ Bank said last week it would dump its loss-making trading operations and ask shareholders for 559 million kronor ($78 million) in a guaranteed right issue. The stock dived 25 percent in Stockholm after the announcement.

On Monday the troubled investment bank said its chief operating officer Mikael König is stepping down.

”During my three years as chief executive, the conditions for conducting financial operations have markedly changed as a consequence of new regulations and directives, while the market climate has been highly challenging. This has required a great deal of strength and energy", Mikael König said.

He will instead be operating the banks affairs outside of Sweden's boarders.

The search for a new CEO has already begun. Stefan Dahlbo, member of the board, will run the show until a new chief executive has been found. Dahlbo will take time off from his ordinary position as CEO of investment company Öresund.

”Stefan has excellent knowledge of HQ's business, clients and personnel and the financial markets in general, which makes him the best suited to lead HQ for a period with no loss of tempo,” said Mats Qviberg, Chairman of HQ.

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.