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. The survival horizon takes into account a severe stress scenario in markets. There are also separate requirements for three-month cash flows, as well as the quality of the securities investments in terms of credit rating, central bank eligibility and classification as high-quality liquid assets (HQLA).
Liquidity buffer
The minimum size of the liquidity buffer depends on outgoing and incoming cash flow levels during the survival horizon. The stress scenario assumes the acceleration of outflows and the disruption of inflows, as well as adverse market developments that affect the value of securities in the liquidity buffer and derivatives. The liquidity buffer consists of cash, money market instruments and securities, and it has the target survival horizon of one year.
At the end of March 2025, NIB’s total liquidity amounted to EUR 18,600 million, of which EUR 7,899 million (42% of the total) was in short-term money market instruments, and EUR 10,701 million (58% of the total) was invested in bonds with longer maturities.
Asset and liability management
From January to March 2025, NIB’s loan disbursements and Lending bond investments totaled EUR 458 million, and the Bank obtained EUR 3,150 million in new funding in 10 currencies. The EUR 7,898 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.
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 March 2025, 92% of the liquidity was invested in accordance with the Basel III liquidity rules of being high-quality liquid assets (HQLA), and 90% 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.
* Reverse repos are repurchase agreements in which a bond is received as collateral for a cash deposit.
Portfolio management
The Portfolio Management team manages the bond security portfolios. The market value of these portfolios amounted to EUR 10,701 million at the end of March 2025. 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.
Responsible investments
As a means to contributing to sustainable development and good business conduct, Treasury considers environmental, social and governance (“ESG”) related factors when making investment decisions and selecting transaction counterparties.
The principles for integrating these aspects into Treasury operations are laid out in NIB’s Responsible Investment Framework. The responsible investment approach covers all assets and activities of the Bank’s Treasury and aims at strengthening the Treasury’s objectives of mitigating risk and generating stable earnings.
ESG integration approaches:
- Exclusion list
- Best-in-class approach
- Sustainable thematic investments
- Counterparty selection and controversaries monitoring
- Active engagement
ESG in treasury portfolio
Sustainable bond investments are part of the normal liquidity portfolio investments, and they follow the same portfolio guidelines for credit, liquidity and ESG requirements as the rest of the portfolio.
Risk management
NIB’s risk management takes into account risk-bearing capacity, willingness to take risks, and minimum quantitative requirements for capital, leverage and liquidity.
