Comment from the CEO

When the European Central Bank, the ECB, introduced negative interest rates in June 2014, the intention was for this to be a temporary measure. Five years later, negative interest rates are more widespread than ever before, both geographically and in terms of maturity, while opinion is divided regarding the effects. In the long term, demand for bond investments may be affected.

For Swedish municipalities and regions, these interest levels partly explain why financing costs currently account for only a small share of the sector’s total expenditure. This is naturally welcome as other costs increase, partly due to rising personnel expenditure and many investments starting to be brought into operation. The local government sector’s financial situation has grown more strained of late, with earnings down and a weakened earnings trend. In our assessment, however, the sector’s greatest challenge is not debt, which is relatively stable compared with GDP, but skills supply and the impact of this on expenditure. The challenges stem largely from the demographic trend, with an increasing proportion of older and younger people in relation to the proportion of inhabitants of working age.

Kommuninvest’s lending growth during the first half of the year exceeded our expectations and is being driven by both a high level of investment in the local government sector, as well as an increase in the proportion of loans from Kommuninvest. The trend of more members arranging an increasing share of their total funding through Kommuninvest is continuing. Today, more than 200 members, mainly small and medium-sized municipalities, have arranged more than 95 percent of their funding through Kommuninvest. We are pleased to note, however, that the larger local government borrowers are also moving in a similar direction. This demonstrates that the local government debt office, the tool established by the sector for secure and efficient financing, is working.

One of the single most important events during the period was the publication of the EU’s new capital requirements regulation and directive (CRR/CRD). The introduction of a definition regarding public development credit institutions affords Kommuninvest more reasonable conditions and capital requirements, which we naturally welcome. At the same time, it can be noted that no corresponding change has occurred with regard to requirements on our reporting to government authorities, which is challenging since it drives up expenses.

It is gratifying that our members and customers continue to choose Green Loans to finance environmental and climate-related investment projects, particularly given the increasingly tangible consequences of climate change. More than 280 green investment projects are now being financed in some 125 municipalities and regions. As a result, Kommuninvest has been able to continue issuing Green Bonds and is Sweden’s largest player in this area.

Helping streamline and enhance municipalities and regions’ financial management processes is our primary task. This is expressed, for example, through the automation and digitalisation of our product and service offerings. One notable change is the introduction of digital signatures when raising loans, as is now possible for most customers.

Tomas Werngren

President and CEO


Interim report 2019

Kommuninvest is a municipal cooperation for efficient and sustainable financing of housing, infrastructure, schools, hospitals etc. Together, we get better loan terms than each one individually. Since its inception in 1986, the Kommuninvest collaboration has helped lower the local government sector’s borrowing costs by many billion kronor. Currently, 289 municipalities and regions are members of this voluntary cooperation. With total assets of around SEK 469 billion, Kommuninvest is the largest lender to the local government sector and the sixth largest credit institution in Sweden. The head office is located in Örebro.