Sweden had previously approved a 200 billion dollar rescue package for the finance sector, including credit guarantees to banks.
”Getting the credit markets working again is essential to avoid a worsening of the economic downturn,” Finance Minister Anders Borg and Financial Markets Minister Mats Odell said in a statement.
In exchange for providing cash to the banks, the Swedish state would be able to take up to 70 percent of a new share issue under prevailing market conditions.
The capital injection programme would be financed through a 15-billion-kronor (1.5-billion-euro, 2.04-billion-dollar) ”stability fund” created by the government and approved by the Swedish parliament last October.
Any banks participating in the programme would also need to agree to freeze executive and board salaries and halt all bonuses over a period of two years.