The Nordic region is home to four financial institutions that serve as the backbone of local development and stability. Strong regional government is an important feature of the Nordics, unlike many other countries, where central government are stronger and more dominant.
This Nordic solution provides a stable and cost efficient source of financing and is clearly one of the reasons why the Nordics enjoy a strong and stable public sector that operates efficiently for the benefit of taxpayers.
Municipality Finance (Finland), Kommuninvest (Sweden), Norges Kommunalbank (Norway), and Kommunkredit (Denmark) stand as pillars of support, providing crucial financing solutions tailored to the investment needs of municipalities and regions.
All four maintain the highest ratings that are the same as their countries’ respective ratings. They are responsible for funding public infrastructure like schools, hospitals and healthcare centres, roads, public transport, water and sewage utilities, waste collection and recycling plants, social housing, heating and other similar services, as well as supporting local entrepreneurs.
They have been raising funds in the local and international markets with the highest levels of financial skills and enjoy incredibly good reputations amongst the world’s largest investors over the decades without any financial disruption.
They have these ratings because their position is recognised as being a direct part of each countries’ regional government, and thus are securely anchored within their respective constitutions as public entities.
Let’s explore each bank and their significant contributions to the Nordic economic landscape.
Municipality Finance (MuniFin)
MuniFin, based in Finland, has been a cornerstone of municipal financing since its inception in 1990. With a mission to promote the well-being of Finnish communities, MuniFin offers a wide range of financial services, including short- and long term loans and financial advisory services. Its commitment to sustainability is evident through its green financing initiatives, supporting projects that contribute to environmental protection and renewable energy development. MuniFin’s role extends beyond mere banking; it serves as a catalyst for local development, empowering municipalities to pursue projects that enhance infrastructure, education, and social welfare. Its debt is guaranteed by the Local Government Guarantee Board, a legal entity created for this purpose under special legislation.
Kommuninvest
In Sweden, Kommuninvest is a testament to collaboration and efficiency in municipal financing. Established in 1986, Kommuninvest operates as a cooperative owned by Swedish municipalities and county councils. By pooling resources and expertise, Kommuninvest offers cost-effective financing solutions to its members, enabling them to undertake essential infrastructure projects and invest in community development. The bank’s commitment to sustainability is exemplified through its issuance of green bonds, financing initiatives that promote environmental sustainability and resilience in Swedish municipalities.
Norges Kommunalbank (NOK)
Norway’s Norges Kommunalbank, founded in 1926, holds a venerable position as a provider of long-term financing to Norwegian municipalities and county authorities. With a focus on stability and reliability, NOK plays a vital role in ensuring the financial health of local governments across Norway. Its range of financing options includes loans for infrastructure projects, social housing, and public services. NOK’s dedication to social responsibility is reflected in its support for projects that foster community well-being and inclusivity, contributing to Norway’s reputation for quality of life and sustainable development.
Kommunekredit
Denmark’s Kommunekredit has been a cornerstone of municipal finance since its establishment in 1899. With a rich history spanning over a century, Kommunekredit has evolved to meet the changing needs of Danish municipalities, providing tailored financing solutions and expertise in public sector finance. The bank’s services encompass loans for infrastructure projects, social housing, and environmental initiatives, empowering municipalities to create thriving, resilient communities. Kommunekredit’s commitment to innovation and sustainability is evident through its involvement in green financing and support for projects that promote environmental stewardship and resource efficiency.
These four Nordic municipal banks stand strong in their respective countries, and even collaborate together in roadshow presentations to investors at home and abroad.
Their existence ensures that regional governments receive lower cost and longer funding than what local and foreign banks are ready to provide. Through their unwavering commitment to serving local communities, these banks play a vital role in driving economic growth, fostering social well-being, and shaping a brighter future for generations to come.
Here are the credit ratings of the four above banks:
- Municipality Finance (MuniFin):
- Long-term credit rating: Aa1 (Moody’s), AA+ (S&P Global), AA+ (Fitch)
- Short-term credit rating: P-1 (Moody’s), A-1+ (S&P Global), F1+ (Fitch)
- Kommuninvest:
- Long-term credit rating: Aaa (Moody’s), AAA (S&P Global), AAA (Fitch)
- Short-term credit rating: P-1 (Moody’s), A-1+ (S&P Global), F1+ (Fitch)
- Norges Kommunalbank (NOK):
- Long-term credit rating: Aaa (Moody’s), AAA (S&P Global), AAA (Fitch)
- Short-term credit rating: P-1 (Moody’s), A-1+ (S&P Global), F1+ (Fitch)
- Kommunekredit:
- Long-term credit rating: Aaa (Moody’s), AAA (S&P Global), AAA (Fitch)
- Short-term credit rating: P-1 (Moody’s), A-1+ (S&P Global), F1+ (Fitch)
These credit ratings reflect the high creditworthiness and stability of these municipal banks, making them reliable sources of financing for municipalities and local governments in their respective countries.
