NIB Business Strategy Review 2021

The Nordic Investment Bank’s (NIB) Board of Directors has recently completed a business strategy review. The review, which was conducted between August and December 2021, focused on the opportunities to accelerate delivery of the Bank’s mission in the context of the changing economic conditions, the development of sustainable finance markets and the challenge of climate change. The strategy described herein replaces the previous business strategy announced in 2015.

Mission & Mandate

NIB’s Board re-confirmed the Bank’s mission – to finance projects that improve productivity and benefit the environment of the Nordic and Baltic countries. The twin environment and productivity mandates remain equally relevant. NIB will target a good or excellent mandate rating in at least 90% of new lending.

COP26 has further highlighted the urgency of climate action, and the important role of IFIs and the private sector in mobilising climate finance. NIB will increase its climate finance activities, focusing on financing high-impact transitions in hard-to-abate sectors.

NIB will also support the development of sustainable finance and capital markets in its member countries by broadening its product offering and promoting high quality standards.

Client Value Proposition

NIB will enhance its value proposition to clients by developing its product offering, localising and digitalising services, and combining sustainability expertise with its investment products. NIB will further develop its product offering, in particular (i) mainstreaming sustainability-linked lending, (ii) growing activity in the sub-investment grade and mid-cap market segments, (iii) expanding its bond investments, (iv) developing risk-sharing models such as InvestEU, and (v) providing MREL (minimum requirement for own funds and eligible liabilities) lending to financial institutions for SME financing. In addition, the Bank will re-design its non-member country lending business model.

Owner Value Proposition

NIB will develop its value proposition for its member countries, with a focus on topics that are of high common interest, contributing to decarbonisation plans and sustainable finance. In addition, there is potential for NIB to amplify its impact through partnerships with official agencies and institutions. NIB will maintain capital headroom for counter-cyclical lending and financing projects of special importance to its owners.

Additionality

NIB will continue to act as a complementary long-term lender and increase its activity in under-served market segments. To this end, it will (i) increase sub-investment grade lending, (ii) lend more to small and medium-sized and mid-cap companies, (iii) diversify its product offering, and (iv) promote sustainable finance and capital market development.

AAA rating and capital accumulation

The AAA credit rating continues to be the cornerstone of NIB’s business model. The Bank will sustain profitability by broadening its engagement across client segments, reducing concentrations in low return market segments, moderately increasing risk-taking in line with its Risk Appetite Statement, managing the balance sheet actively, and improving its business process efficiency.