Nordic Investment BankEU SBSR, June 2010

IcelandIceland

NorwayNorway

DenmarkDenmarkLithuaniaLithuania

LatviaLatvia

EstoniaEstonia

FinlandFinland

SwedenSweden

Northern Europe's International Financial Institution

Nordic and Baltic countries as owners

Started activities in 1976

Baltic countries joined in 2005

AAA/Aaa credit rating

Lending in member countries and emerging markets

Headquarted in Helsinki

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Strengthening competitiveness

Projects in the following sectors and areas of economy:

Environmental investments

Energy

Transport, logistics and communication

R&D and innovation

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Enhancing the environment

Significant business potential in the environmental sector.

The environment is a global concern.

All projects considered forfinancing undergo assessmentof potential environmental impact.

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Key figures in EUR million

Highlights 2009• Strong demand for NIB loans

• Profit grows to EUR 178 million due to positive valuation on treasury portfolios

• Loans outstanding up 5% to EUR 13.8 billion

• 70% of disbursements are in priority sectors: the environment, energy, transport and innovation

0

3 000

6 000

9 000

12 000

15 000

2005 2006 2007 2008 2009

Loans outstanding and guarantees

Non-member countries

Member countries

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009

Core earnings and net interest income

Core earnings

Net interest income

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Long-term financing

Co-financing normally up to 50% of the total project cost

Close cooperation with other international financial institutions as well as commercial banks, export credit institutions and development assistance organisations

Long-term lending instruments:

• Sovereign loans or against state guarantees (15-25 years)

• Subsovereign loans directly to municipalities (10-20 years)

• Corporate loans (5-15 years)

• Limited recourse financing including PPP-financing (5-15 years)

• SME financing through financial intermediaries (5-12 years)

• Grace period up to 5 years

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EU STRATEGY for the BALTIC SEA REGION

A "PROSPEROUS" BSR

A "SAFE AND SECURE "

BSR

AN "ENVIRONMENTALLY

SUSTAINABLE " BSR

AN "ACCESSIBLE AND ATTRACTIVE"

BSR- competitiveness

-transport, logistics- energy - HELCOM BSAP

- climate change

NIB STRATEGY

COMPETETIVENESS ENVIRONMENT

INNOVATION ENERGY TRANSLOG & COMMUNICATIONS

ENVIRONMENT

NIB "CLEERE"

2000 MEUR

NIB "BASE"

500 MEUR

NDEPNDPTL

- maritime safety- cross-border crime

NIB's strategy correlates with the EU SBSR

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Disbursed 2007 2008 2009Denmark 90 315 235Estonia 54 90 83Finland 272 415 510Latvia 36 107 111Lithuania 6 15 67Poland 76 62 96Sweden 783 588 287       Iceland 139 - -Norway 339 226 336       Russia 142 114 121TOTAL 1938 1933 1846

NIB disbursed loans in the Baltic Sea Region 2007-2009 (million EUR)

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In order for investments to emerge as a result of the EU SBSR there is a need for:

Priority setting ► Political support (regulatory framework, legislative action, concessions, permitting, tariff setting etc)

Resource allocation

Clear project ownership and active participation by owners (public and/or private sector)

From Strategy to Projects

Loans A loan = Distributing the capital cost over time

Debt service must be covered with local resources Operating revenues and/or budgetary funds

Access to borrowing depends on:Creditworthiness and/orProject quality (profitability = capacity to

generate money for debt service)

Bankable projects

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Security

GuaranteesSovereign, Regional, Local authoritiesProject owners

Mortgages and or pledges of property

Control over payment streams

Bankable projects

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Bankable projects -What is needed ?

In order to lend banks need: Willing and able borrowers

• Willing = Prepared to take loans at prevailing interest rates to finance part of their investments

• Able = Creditworthy enough to be able to service the loan/s and with the other part of the financing secured – banks never (should) provide loans for a 100 % of the project cost

Good quality (feasible) projects

• Financiers are focused on all aspects of project feasibilityEconomicFinancialTechnicalInstitutionalEnvironmental

• Adequate studies are necessary – the BSAP Fund can help for Baltic Sea projects

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Priority areas which are likely to include investment components:

1. To reduce nutrient inputs to the sea to acceptable levels

3. To reduce the use and impact of hazardous substances

4. To become a model region for clean shipping

5. To mitigate and adapt to climate change

7. To exploit the full potential of the region in research and innovation

10. To improve the access to and the efficiency and security of the energy markets

11. To improve internal and external transport links

14. To reinforce protection from major emergencies at the sea and on land

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EU SBSR Priority Areas of immediate interest to IFIs

Baltic Sea Environment lending facility (BASE)

The facility, alongside national budgets and EU funds, is aimed at assisting in the implementation of the Baltic Sea Action Plan

Allocation of EUR 500 million for financing projects with a positive effect of the Baltic Sea

NIB's facility will provide valuable input to projects that mobilise loan financing

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Projects

Sparbanken Finn, Sweden (EUR 15 million)

On-lending for small-scale environmental investments in Sweden. Reduction of diffuse emissions to both air and water in the southern parts of Sweden.

AS Tallinna Vesi, Estonia (EUR 20 million )

Maintenance and extension of the water supply and sewage networks.

UAB Vilniaus vandenys, Lithuania (EUR 10.3 million)

Construction of a sludge treatment facility at a wastewater treatment plant in Vilnius

Vodokanal of St. Petersburg, Russia (EUR 25 million)

Construction of a pumping station in a sewage collection tunnel as well as the partial upgrading of the Northern Wastewater Treatment Plant in St. Petersburg.

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The Climate Change, Energy Efficiency and Renewable Energy (CLEERE)

Facility supports actions for combating and adapting to climate change  

In 2008-2009 years, the initially allocated EUR 1 billion was fully deployed, and, in spring 2010, the facility was extended by another EUR 1 billion 

Under the CLEERE facility, NIB finances projects:

in renewable energy

in energy efficiency

using cleaner production technologies that reduce greenhouse gas emissions in industries

dealing with the adaptation of power networks and infrastructure to climate change, such as extreme weather conditions

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Projects

Kemijoki Oy, Finland (EUR 25 million)

Upgrading and refurbishment of hydropower plants

E.ON Sverige AB, Sweden (EUR 100 million)

Financing of the Rødsand II wind farm (200 MW) south of the island of Lolland in Denmark

Latvenergo A/S, Latvia (EUR 50 million)

Modernization of hydropower plants on the Daugava river, energy efficiency investments in transmission and distribution networks

Republic of Lithuania (EUR 100 million)

Public sector efficiency project and housing renovation programme.

Energa SA, Poland (EUR 50 million)

Modernization and construction of low- and medium-voltage electricity networks, including a component of high-voltage lines aimed at connecting renewable energy sources, primarily wind farms

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The Baltic sea action plan (BSAP) Fund

NIB & NEFCO took the initiative to set up a targeted technical assistance fund

NIB and NEFCO are jointly acting as fund managers

The BSAP Fund has EUR 10, 6 million available

The financing is provided as grants

In addition to NIB and NEFCO, applications can also me made through other international and national finance institutions, which are active in relation to the BSAP

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Eligible purposes: Project Implementation

• Support to project owners for improved efficiency and quality in the project implementation, and for disseminating experience

Institutional Support

- Training and support related to project development, preparation and implementation

Demonstration purposes

- Purchase of equipment for demonstration purposes

Project Development and Preparation

-In particular with a view to making projects "bankable"

Eligible Recipients

Public or private entities in need of technical assistance and investment grants for implementing the BSAP goals

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Project pipeline under preparation

• Business plan development for poultry farms

• Preparation of manual for biogas projects

• Test project for phosphorus removal

• Improvement of small and medium-sized WWTPs

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PROJECT OWNERS

PUBLIC SUPPORT, DONORS

LENDERS,

FINANCIAL INVESTORS

IDENTIFICATION

PREPARATION

The project cycle

OPERATION

IMPLEMENTATION

SUPERVISION

EVALUATION

Concreteprojects

Concreteprojects

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Thank you !

Nordic Investment BankLending Department

Vilius Girkontas Fabianinkatu 34, Helsinki

+358 10 618 0240

www.nib.int

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