Juha Sipilä, Prime Minister of Finland. Photo: Jouni Harala
The speech was delivered at NIB's 40th Anniversary Seminar "Financing the Future" held in Copenhagen on 2 November 2016
***check against delivery***
Today, we are celebrating the 40th anniversary of Nordic Investment Bank. And as with all such celebrations, this gives us a good opportunity to take stock of the past. But since this is a birthday and not a funeral, we should also do our very best to look into the future.
Nordic Investment Bank, or “NIB” as we call it, is a child of Nordic co-operation – although this childbirth was, back in time, a rather long one. In fact, the first attempt to establish the Bank was made already in the 1950s in connection with the unrealised plans for a Nordic customs union.
The second attempt came as part of the preparations for the Nordic Economic Union, Nordek, which also failed. Well, even we Nordics can’t always succeed.
After the collapse of Nordek, it took another five years for the Nordic countries to make a third attempt. This time, against the backdrop of the oil crisis, the negotiations proceeded rather rapidly. And finally, the Ministers for Nordic Cooperation signed the agreement establishing the bank. In 1976, the Bank started its operations.
But this didn’t happen without some heated debates. Among others, some representatives from the right wing of the political spectrum in Norway and Denmark thought that the Bank was too left-wing – whereas the Finnish communists were against the Bank for exactly the opposite reason.
Another issue debated at the time was the location of the Bank’s headquarters. Finns were eager to have the Bank in Helsinki, which was still lacking an important Nordic institution. It is said that it was thanks to the Swedish Prime Minister, Olof Palme, that Helsinki was finally chosen. He saw that Nordic Investment Bank would bring Finland closer to the Nordic community.
From then on, the headquarters has been located in Helsinki. And by the way, that’s not the only presence the Bank has in Helsinki. Today, if you arrive at the airport in Helsinki for a meeting at the Bank’s headquarters, much of the infrastructure around you has received NIB funding: the airport, the ring road, the ring rail, metro, the university library, and so on. NIB may not be very visible – but the projects it finances are. Since 1976, NIB has agreed over 600 loans totalling over 10 billion euro in my country.
The world has changed dramatically since 1970s. Most importantly for us, the Baltic countries restored their independence in 1991. At that time, their economies were rather weak, and there were some serious environmental concerns, too. After years of increased co-operation, the Baltic countries joined Nordic Investment Bank in 2005. That was a truly important milestone.
Earlier today, when I met my colleagues from the Nordic and Baltic countries, we all agreed that NIB is not only a child of Nordic co-operation; today it is also the most tangible institution of the Nordic–Baltic co-operation.
For many years, regional co-operation in Northern Europe seemed to be overshadowed by deepening integration in the European Union. But as we all know, recent years have shown that the European process is not without its hiccups. An important note to take for us policy-makers is that the different aspects of regional co-operation are not substitutes but complementary to each other. In fact, the importance of the Nordic-Baltic co-operation seems to be only growing right now.
When NIB was established, financial markets were not functioning as well as they are today. Back then, NIB was a tool for raising capital to speed up investments in the Nordic region. It was also a tool to facilitate the integration of our economies by, for example, financing cross-border mergers and acquisitions.
Later, this approach was complemented by environmental considerations. Nordic Investment Bank’s contribution to financing St. Petersburg’s wastewater treatment facilities is a good example of that. Since 2006, the mission of the Bank has been formalised as: financing projects that improve competitiveness and the environment of its member countries.
What is NIB today? It is an international financial institution owned by the Nordic and Baltic countries. The Bank has a strong standing in international financial markets, which is supported by the strength of its member countries. The Bank’s outstanding lending is about 16 billion euro. This is a large portfolio for a bank with less than 200 employees. Unlike many other international financial institutions, its operations are based on sound banking principles and it pays a healthy dividend to its owners.
NIB’s added value for its customers is long-term lending, as the Bank may extend loans up to 30 years. Professor Mazzucato, who will speak later this evening, has called this kind of funding source “patient capital”. It is a good phrase, since many long-term investments need long-term money. The commercial sector is often “impatient”, and innovations that move society forward often require a push from the state. In an ideal situation “the state” and the “commercial sector” work together. NIB is one of the platforms where this kind of co-operation takes place.
The Bank’s member countries are well-off European countries. It is good to remember that our wellbeing is based on the decisions and achievements of the past. But the biggest risk for our region would be to rest on those past achievements. Changes in the global economy will transform us very quickly into heroes of yesterday if we do not react in time.
This brings me to why NIB is so valuable to us, the member countries. NIB is a tool for us to move our societies forward through long-term financing. With only eight members, each of the owners has an equally significant impact, which is less the case in bigger multinational organisations.
However, we could ask ourselves: are we bold enough as owners? Are we really financing the next step? Should we use NIB more, for example, by accepting a bit more risk for bigger societal gain?
NIB needs to develop all the time, it needs to be agile and provide value-added in the region. And also we, the member countries, have to keep evolving all the time. As Professor Mazzucato will show us, we are facing many unprecedented challenges in terms of smart, sustainable and inclusive growth.
Ladies and Gentlemen,
With these words I would like to congratulate Nordic Investment Bank, our Bank, on its 40th anniversary and give the floor to Henrik Normann, the President of NIB.
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