The Nordic Investment Bank (NIB) has just announced that it will be cooperating with Iceland’s largest bank, Landsbankinn, to create a five-year loan facility totaling EUR 30 million for the purpose of financing small and medium-sized enterprises (SMEs) and environmental projects in Iceland. NIB is an international bank that is comprised of eight member countries, including all of Scandinavia, as well as Iceland, Estonia, Lithuania, and Latvia.
According to the president and CEO of NIB, Henrik Normann, the institution “considers this facility to be an important step to encourage SME investments in Iceland. We believe that lifting capital controls will further boost the recovery of Iceland’s economy. We think that the country’s financial authorities have taken the necessary steps to ensure the banking system will be able to withstand pressures when the controls are removed.”
This facility will mark the first loan to an Icelandic bank since the government began to relax the capital controls that were imposed on banks after the financial collapse in 2008.
Steinþór Pálsson, CEO of Landsbankinn, says of the agreement that it is a “positive step towards building trust in international financial markets. The terms of the loan from NIB are favorable for Landsbankinn and support the bank’s aim of decreasing financing costs and diversifying its foreign currency lender base. The Icelandic economy as a whole benefits from increased attention from international investors and access to foreign credit at favorable terms.”
Which businesses and industries receive the benefit of the credit line from NIB will be determined by how they conform to the criteria put down by NIB’s member countries. That is to say, they must benefit in some way the competitiveness and environment of said member countries. The probable candidates in Iceland for receiving the loan are to be found in various sectors such as the fishing industry, agriculture, and information technology.