Board Chairman – Implementing NIB’s revised strategy a priority

Kaspars Āboliņš, Head of Latvia’s State Treasury and Director in NIB’s Board of Directors, has been appointed the Chairman of the Board for the next two years. As the top priority for the Bank in the next two years, he sees the implementation of NIB’s revised strategy. “The new products will help fill the market gaps that have been identified in dealing with smaller businesses”, he says.

You have been an alternate and a full member of NIB’s Board of Directors since 2008, how has the Bank evolved during this time?

“The Bank is not isolated from the rest of the world and has also been affected by the economic crises as the whole region in the past decade. Although NIB also suffered losses, it successfully coped with the crisis, and has for some years been increasing its lending volumes. NIB shows a good level of profit against well-balanced risks. Last year, we approved a revised strategy, which the Bank is currently putting into action.”

How do you see the status of the region in terms of competiveness and the environment? Where are the biggest challenges?

“The Nordic region has always been known for its responsible fiscal policies, moderate state debt and social welfare commitments. This helps create a favourable climate for business development. The Nordic countries have created a pattern for the rest of Europe to follow—and especially the Baltic countries. We in the Baltics are trying to catch up with the Nordic countries and get closer to the Nordic model. There is a lot to learn from the Nordic region in terms of the environment, too, in developing environmental projects and issuing green bonds to finance these projects.

Again, the region is not isolated from what happens in the rest of the world—and Europe, in particular, where the pace of economic growth has been very slow in recent years. Even the Nordic countries that are not part of the euro area need to adapt to the low-growth environment. The impact of geopolitical risks is also very strong. These are risks that are difficult to manage or hedge. Another challenge worth mentioning is the aging of the population, which is putting pressure on economies. The question is how we maintain the competitiveness of the region in these circumstances.”

NIB has recently concluded a strategy review. How are the results going to be reflected in the Bank’s activities?

“The Bank is introducing a number of new financing products aimed at small and medium-sized enterprises and mid-caps. NIB is cooperating and sharing risks with local banks in reaching out to this part of the economy. NIB will have to assess new risks associated with the increased lending to smaller businesses. It will also require new competences from the Bank’s staff and the Board of Directors.”

What are the priorities for the Bank in the next two years?

“Implementing the revised strategy is clearly a priority. This does not mean the Bank will be introducing a new business model; the new products will help fill gaps in the market that have been identified in dealing with smaller businesses. It complements the offering from private banks; it does not compete with them. Another important priority for the Bank would be to keep increasing the volume of lending to projects that fulfil NIB’s mandate.”

You are the Treasurer of Latvia. How do your roles in Latvia’s State Treasury and at NIB complement each other?

“There are certain similarities between the activities of the State Treasury in Latvia and NIB’s operations. Both institutions issue bonds in the international capital markets and deal with related risks. Latvia’s State Treasury also provides loans—to municipalities as well as state- and municipally owned companies to co-finance with EU funds. The Treasury takes care of loans received by state institutions, including a loan from NIB once agreed with Latvia’s state-owned and now restructured bank Hipoteku un Zemes Banka. It is possible that NIB has acquired bonds issued by Latvia’s Treasury. My role in Latvia helps me build a good understanding of NIB’s operations.

Besides NIB, I am a board member of airBaltic, Latvia’s national airline. Two years ago I was leading a project aimed at creating a development financial institution in Latvia. This new institution would in many ways shadow NIB’s experience of bridging market gaps in financing projects of critical importance for economic development.”

What have the Baltic countries gained from being NIB’s member countries and from cooperation with the Nordic countries?

“First of all, it is long-term financing for large infrastructure and energy projects. Lending to the power generation company Latvenergo, the largest state enterprise in Latvia, is one example. Apart from the money, it is also knowledge and good governance that the Baltic countries can learn from being part of this cooperation. NIB is an invaluable hub for the exchange of information between the countries in the region.”

How do you see the future of the Bank in the next ten years?

“The Bank has to grow; its lending volume and assets have to grow. The Bank’s capacity to manage this growth will also increase. Further development will be happening in a climate of high volatility and unpredictability. We’ll have to adapt and learn to deal with these risks.”

What is your message for NIB on its 40th anniversary?

“For individuals, this age is often associated with a midlife crisis. People feel like they must make a choice, determine which direction to go. It is not unheard of for forty-year old men to buy extravagant motorbikes or sports cars to feel young again. I want NIB not to buy a fancy porsche, but to draw on its vast experience and the competencies of its staff to brace itself for future challenges. This is the only way that NIB can live up to its mandate from the Bank’s owners and keep providing long-term resources to boost the region’s competitiveness and improve the environment.”