Soaring stock and real estate prices attracted frantic speculative activity by banks, private companies and individual investors.
The banks started to actively participate in profit-seeking, high-risk operations such as company takeovers and foreign investments, for which they had little experience.
Some of SKOP's operations were very large compared to the bank's equity, and would later cause great losses: in 1987 it acquired Tampella (a Finnish heavy industry manufacturer that went bankrupt in 1990), and in 1988 it granted 400 million FIM of credit to a Virgin Islands hotel project.
This was often highly profitable during the boom, but also caused increasing losses when interest rates rose (Helibor exceeding 15% at times), the stock market turned down, and debtors started defaulting on their loans.
With approval by STS management, well-connected trade union and socialist party politicians could borrow money without criteria, and reinvest in various ventures, many of which ultimately failed.
Ulf Sundqvist, who was chairman of the SDP until resignation in 1993, was held financially responsible for these loose policies that contributed to the downfall of STS Bank, along with other members of the board.
[4] On several occasions during 1990, SKOP had to resort to overnight debt from the Bank of Finland to cover its liquidity position, as it was unable to raise sufficient funds from the interbank market.