NIB Nordic Investment Bank

Liquidity management

Liquidity management

The Bank's target is to ensure a sufficient level of liquidity to be able to continue disbursing new loans and fulfil all its payment obligations for at least one year ahead, without additional new funding.

At the end of August 2017, NIB’s total liquidity amounted to EUR 9,105 million, of which EUR 2,557 million (28% of the total) was in short-term money market instruments, and EUR 6,548 million (72% of the total) was invested in bonds with longer maturities.

Counterparty risk class distribution

as of 31 August 2017
Counterparty risk class distribution
AAA 56.7%
AA+ 12.2%
AA 10.3%
AA- 13.6%
A+ 3.4%
A 3.5%
A- 0.4%
Sub IG 0.0

Asset and liability management

During the first eight months of 2017, NIB's loan disbursements totalled EUR 1,813 million, and the Bank obtained EUR 4,027 million in new funding in 13 currencies. The EUR 2,557 million held in the short-term money market is used to manage the Bank's daily payment obligations. The instrument distribution is shown in the graph below.

Money market instruments. Distribution by instrument

as of 31 August 2017
Cash instruments. Distribution by instrument
Reverse repos* 65.9%
ECP/CP 18.8%
Deposits 12.3%
Cash accounts 2.6%
Bonds 0.4

*Reverse repos - repurchase agreements in which a bond is given as collateral for a cash deposit

The liquidity investments are limited by the counterparty and market risk framework that applies to Treasury operations.

Along with the counterparty and market risk framework, Treasury’s liquidity investments follow guidelines that will ensure the assets remain liquid even under stressed market conditions. At the end of August 2017, 81% of the liquidity was invested in accordance with the Basel III liquidity rules of being high-quality liquid assets (HQLA), and 89% of the liquidity was eligible as repo collateral in one or several central banks. NIB does not have direct access to central bank repos, but can repo its bond securities via intermediating banks.

Portfolio Management

The Portfolio Management unit manages the bond security portfolios. The market value of these portfolios amounted to EUR 6,548 million at the end of August 2017. The securities are held on both amortised cost and fair value bases, and include both floating-rate and fixed-coupon instruments. The instrument distribution of the portfolio can be seen in the graph below. 

Bond instruments. Distribution by instruments

as of 31 August 2017
Bond Group Bond instruments. Distribution by instrument
Covered bonds 40.6%
Financials 17.5%
Asset-backed securities 0.6%
Sovereign and sov. guaranteed agencies 23.2%
Non-sovereign public sector 18.0%

Links
Annual Report, Treasury
Risk Management Policies (403 KB)
Liquidity policy (74 kB) 
Capital structure
Financial reports
Risk management

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Contacts

Treasury