Kommuninvest finances the development of Sweden’s local and regional sectors, as well as investments for a sound and sustainable society. The Company and its employees shall adhere to the legislation, regulations and rules applicable to the operations and shall always behave in an ethically correct manner, with transparency, integrity and honesty.
The Company applies zero tolerance to all kinds of corruption; no employee may provide or receive benefits that may be considered unfair and therefore criminal. The Company is required to identify and manage potential or emerging conflicts of interest.
Local government debt office
Continuing to provide the Swedish local government sector with stable and efficient financing at the lowest possible expense is an important contribution to our sustainability efforts. Accordingly, Kommuninvest fulfils a similar role for the local government sector as the Swedish National Debt Office does for the central government and its authorities.
Financing at lower expense means that tax funds stretch further. The fact that Kommuninvest has been able to continue offering financing during periods of financial unease, contributes to the security of the local government sector and the stability of the financial system. Accordingly, an indirect effect of Kommuninvest’s work is the strengthening of financial sustainability among the members, by ensuring the most effective possible financing, and by providing advice and support during the funding process.
Kommuninvest was established in 1986 to provide municipalities with access to an additional source of funding, as a complement to loans through the banking system. Our lending operations are limited to Swedish municipalities and regions, including their majority owned companies and foundations. The operations are to be characterised by the lowest risk exposure possible and lacks a profit-making purpose. To ensure high creditworthiness and low funding expenses, the members of Kommuninvest Cooperative Society have entered into a joint-and-several guarantee undertaking for the Company’s commitments.
Partnership on behalf of members
One of Kommuninvest’s main objectives is to reduce local government funding expenses. Large volumes and a relatively small organisation mean that operating expenses can be kept at a low level. In 2018, the Group’s operating expenses, excluding the resolution fee, amounted to 6.1 (7.1) basis points in relation to the lending volume. The Company’s operating expenses were 5.7 (6.5) basis points of lending.
The profits generated in the operations are returned to the members in the form of interest on contribution capital and refunds in relation to business volume. In 2018, SEK 969.8 (445.4) million was transferred in this way to the members of the Society, due to the high financial outcome in 2017. Profit is expected to decrease in the future, following decisions by members in 2018 regarding a changed and more transparent pricing model. This means that the prices offered by Kommuninvest have been reduced.
Anti-corruption and anti-money laundering measures
Kommuninvest strives for its transactions and relationships to be pervaded by good business ethics, as evident in both the Company’s Code of Conduct and its Sustainability Policy. The Company’s employees shall adhere to the legislation, regulations and rules applicable to the operations and shall always behave in an ethically correct manner, with transparency, integrity and honesty. Zero tolerance of all forms of corruption applies.
A risk-based approach is applied to ensure that the Company’s products and services are not used for money laundering or terrorist financing. Suspicions of serious irregularities that could entail or lead to a breach of law are to be reported. Such violations can also be reported anonymously via a whistleblower function handled by an external party. No matters related to anti-corruption or guidelines on money laundering were investigated during the year.
Lowest funding expenses
Kommuninvest continuously analyses its capacity to secure low funding expenses in the fixed-income market. The analysis shows that Kommuninvest is consistently the local government actor (municipalities and regions) that raises funding at the lowest expense, although the difference compared with other players decreased during the year.
In-depth knowledge of conditions in the sector
Through in-house research and reports, Kommuninvest seeks to increase knowledge of the local government sector’s long-term financial conditions. Since 2012, Kommuninvest has, among other things, maintained an in-depth partnership with the University of Örebro, promoting, for example, research on the local government sector’s debt management and financial conditions, and financing a chair and post-graduate studies.
Kommuninvest has been part of the reference group associated with the University’s Master’s programme in Sustainable Business which commenced in the autumn of 2018, and participated with guest lecturers at the special Finance Day arranged during the first term of the programme. Kommuninvest will also be offering internships for programme participants during 2019.
Each year, we publish reports describing developments in local government investment and its funding, and we analyse trends and phenomena associated with local government funding, debt and investment.
Generating financial value – Kommuninvest Group
|Interest revenues||SEK, million||505.3||452.3||621.4|
|Other operating income||SEK, million||7.6||6.2||7.2|
|Interest expenses||SEK, million||367.2||426.4||140.5|
|Commission expenses||SEK, million||-8.2||-7.3||-5.2|
|Salaries and emoluments||SEK, million||-73.9||-70.4||-68.1|
|Pension expenses, training expenses and other payroll expenses||SEK, million||-23.2||-26.6||-29.4|
|Social security contributions and payroll tax on pension expenses||SEK, million||-26.9||-25.3||-23.7|
|Resolution fee||SEK, million||-69.1||-66.3||-31.4|
|Other operating expenses||SEK, million||-94.1||-97.1||-93.2|
|Transferred to the members of the Society during the year,
refunds based on business volumes and interest on members’ contribution capital for the previous financial year
|Operating expenses, excluding the resolution fee, as % of balance sheet total||%||0.052||0.061||0.059|
|In this note, revenues are recognised as positive and expenses as negative.|