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NIB Boosts Nordic Infrastructure Lending as Banks Retrench

The Nordic Investment Bank is increasing funding for infrastructure projects in countries surrounding the Baltic Sea as banks pare back corporate lending.

NIB paid out 2.4 billion euros ($3.1 billion) to projects boosting competitiveness and preserving the environment last year, the most in five years, the Helsinki-based supranational infrastructure lender said on its website today.

“There’s still a credit crunch and there’s a need for a long-term credit,” Chief Executive Officer Henrik Normann said in an interview at the bank’s Helsinki headquarters. “We are more relevant than ever amid slow economic growth.”

The AAA rated investment bank, backed by Nordic and Baltic governments, funds infrastructure projects from port expansions to wastewater treatment facilities and renewable energy generation. Bank loans have become scarcer as tighter regulation for the industry prompts deleveraging and increases the cost of credit.

Waertsilae Oyj, which makes ship engines and power plants, borrowed 50 million euros last month to further develop medium- speed marine engines. Volvo AB is also tapping the lender’s coffers for research and development funds to make engines complying with emission rules.

“Some companies have more difficulties in getting financing for R&D projects, more intangible projects,” Normann said. “Our mandate is to improve competitiveness in the region and R&D is one of the most important drivers to improve competitiveness. We can see that the corporates have seen that and are coming to us now.”

Dividend Resumed

NIB sold bonds worth about 4.4 billion euros last year, an increase from 2.9 billion in 2011. Its full-year profit rose 7.7 percent to 209 million euros, allowing a payout to owners after four years of no dividend payments.

The bank plans to return 52 million euros to its eight government owners, of whom Sweden, Denmark, Norway and Finland represent 95 percent of share capital. The bank’s last dividend payment was 25 million euros paid for 2007. The rest of its profit will be used to bolster the balance sheet.

“We are discounting uncertainty in our balance sheet,” Normann said. “We have set aside reserves and increased provisioning, not that we have lost money, but so that we have funds if something goes wrong.”

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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