12 Dec 2019
EUR 17.5 million
Infrastructure, transportation and telecom
In recent years, NIB’s lending has been growing on a strong market demand and thanks to the effort made by the Bank’s personnel, says Kaspars Āboliņš, a member of NIB’s Board of Directors for Latvia, who chaired the Board for two years until 31 May 2018.
NIB Newsletter met with Mr Āboliņš shortly before the end of his term as chairman to discuss the success of the past two years and what it takes to sustain the growth.
It was during Mr Āboliņš’s term as chairman that NIB achieved all-time high lending volumes: EUR 4.2 billion in 2016 and EUR 3.7 billion in 2017. Loans were allocated to projects, which improve the productivity and environment of the Nordic–Baltic region.
Answering the question of what has driven this growth, Mr Āboliņš underscores both the deliberate effort and the favourable market conditions:
“The Bank’s staff are doing a good job at implementing the strategic initiatives adopted by the Board of Directors in 2015, without changing NIB’s business model. Loan originators show good results in identifying potential customers and projects, which they present later on to the Board of Directors.”
“Secondly, there is also demand for NIB’s long-term financing. For many borrowers, this is a way of diversifying their debt portfolios.”
“This is being facilitated by the current economic growth and investment opportunities in the member countries”, says Mr Āboliņš.
He also points at the additionality NIB loans can provide to customers:
“Many may take advantage of NIB financing as an anchor loan or a stamp of quality to further attract quality financing for their investments. It verifies the project’s merits and endorses it from the point of view of NIB’s mandate, which measures all projects against the priorities of the sustainable growth of the Nordic–Baltic region.”
Mr Āboliņš adds that the Bank has been increasing its lending volumes also by reaching out to small and medium-sized enterprises and midcaps through local intermediary banks in member countries.
Sustaining the growth is always a challenge. “The costs of innovation, particularly if it involves the introduction of digital solutions, are high, both in money and in time”, Mr Āboliņš continues. In order to keep growing, “the Bank will be keeping its eyes on both at the same time: expanding lending operations and introducing new technologies”.
Mr Āboliņš believes that NIB’s relevance for the economy lies in its ability to cater quickly and precisely to the growing consciousness of sustainability issues.
“For instance, NIB both buys green bonds to support the issuers’ environmental projects and issues its own green bonds. In doing so, the Bank has an important role in the development of the green bond market in the region.”
Implementing the strategic initiatives and the new mandate rating framework adopted by the Board also contributes to the relevance and, subsequently, further growth. Mr Āboliņš says that identifying priorities in the Bank’s operations helps increase the added value of NIB’s financing.
“Each of the Board members comes to the Bank with an understanding of these priorities as they are seen from each member country’s perspective. The Bank has to respond to these priorities and come up with a solution or a product. The new initiatives are now clearly taking off, which means that the Bank has made an effort to adapt to new challenges and changing needs.”
He points to the increased lending volumes to the Baltic countries last year. The Bank made its first investment in a green bond issued in the Baltics, buying into an issue from Lietuvos Energija.
“The number of projects financed in the Baltic countries is not large, due to the size of the Baltic economies. This limitation, however, can be addressed by financing smaller-scale investments through intermediaries. As we see, both approaches—large corporate financing and facilities for onlending to SMEs—are functioning and have potential for future growth”, says Mr Āboliņš.