WEB SPECIAL: NIB a force to be reckoned with

While the Baltic economies are regularly overlooked in the financial pages of the world's press or derided as too small to be significant, they do play a crucial part in directing the significant financial muscle of the Helsinki-based organization.

NIB was established as an International Financial Institution (IFA) in 1976 and is owned by Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden, the Baltic states having joined in 2005. Though there are similarities with other IFAs such as the World Bank and European Bank for Reconstruction and Development (EBRD), it differs slightly in important respects. For a start, it applies the sort of criteria to its projects that are more often found in the private sector, even paying a dividend to its shareholders (which amounted 25 million euros this year). Its hard-nosed commercial approach has resulted in best-possible ratings from Standard & Poor's and Moody's of AAA/Aaa.

Member countries subscribe authorized capital according to a distribution system based on their gross national income. NIB aims to promote sustainable growth of its member countries by providing long-term complementary financing, based on sound banking principles, to projects that strengthen competitiveness and enhance the environment.

NIB is not restricted to projects within member countries and currently is backing projects in Asia (including several in China), South America and Africa as well as its Nordic/Baltic heartland. It has provided co-financing on over 1,000 projects so far, but its constitution prevents it providing more than 50 percent of the capital for any individual project. and Nevertheless, its unusual supra-national status and understated Nordic character means it remains off the radar of many investors who might do well to follow its activities more closely.

The bank's 2007 figures reveal the amount of new loan agreements signed for the year totalled 2.2bn euros. Loan disbursements in 2007 surged to an all-time high of 2.4bn euros while the portfolio of loans outstanding and guarantees increased by 7% to 12.3 billion euros.

NIB was a major backer of the Via Baltica highway project, and could play a significant role in construction of the proposed new nuclear power plant at Ignalina, Lithuania 's if anyone actually bothers to ask.

"We can finance the project then there isa project. We are following the situation as closely as we can," Gunnar Okk, Vice-President of NIB told The Baltic Times recently.

At a presentation of its current strategy and investment priorities, NIB dropped a series of hints that it was ready and willing to play a key role in funding the new nuclear plant which will supply the Baltic's future energy needs. That will come as a fillip to the politicians, regulators and businessmen who continue to wrangle over ownership and energy shares.

Not only is NIB ready to back 'Ignalina II' in principle but it may already have laid some of the groundwork for doing so. Lars Selenius, NIB's head of 'Area II' covering the Baltic states, told TBT that NIB's investment in Lithuania is at a lower level than most NIB member countries, within seconds of talking about projects involving cross-border transmission cables, power grid investment and electricity generation as priority areas. Ignalina and its satellite projects would tick all of those boxes while raising NIB's investment in Lithuania markedly.

"There is nothing in the project as such that would prevent us being involved," Selenius said. "If it would materialise in a form that would make sense then of course we would be interested."

Selenius also provided a reminder that one of the first loans NIB ever issued was to help finance the huge Olkiluoto nuclear power facility in Finland. The bank's lending terms include a strong element of environmental monitoring, but it thinks of nuclear power has a positive role to play.

"This is the only possibility to markedly cut CO2 emissions in cases where we can't replace those investments with other, renewable, technologies. It is hard to believe the world can face its future needs without nuclear power. We will finance such projects," said Gunnar Okk.