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Company history – From crisis til welfare

KBN has provided financing on favourable terms to the local government sector for over ninety years.

During the depression in the 1920’s prices fell and investments plummeted. Municipal debt had grown to unprecedented proportions and the sector had problems repaying. The Norwegian parliament passed a bill in 1926 to establish a local government funding agency providing long-term financing to the local government sector.

From crisis til welfare

In 1927 Norges Kommunalbank was established. In the beginning KBN provided mainly refinancing of loans to heavily indebted municipalities. As the debt crisis subsided, regular lending to municipalities was given priority.

During the first decades following the second world war the number of electric power plants to be financed grew. In the 1960’s infrastructure and local welfare production was most important.

Financing local government lending

Norges Kommunalbank was organised as a state administrative body until 1999 with an explicit state guarantee and quotas on funding and limits on lending. In 1927 KBN signed its first loan in foreign currency. Between 1986 and 1999 KBN could only borrow in Norwegian kroner.

From 1954 KBN could receive deposits from municipalities, electricity boards and municipal pension funds. As a county executive or the municipal executive board resolution was pre-requisite to any deposit, deposits never became an important source of financing. Since 1974 KBN has not received any deposits, financing its lending exclusively in the capital market.

Conversion to state company 

KBN was organised into its present form 1 November 1999. The state guarantee was substituted by a "maintenance obligation". Following the conversion KBN’s funding quotas and lending limits were removed and KBN could once more borrow in foreign currency.

Since 1999, Kommunalbanken has shown solid balance sheet growth, becoming the largest credit provider to local authorities, with a market share of approximately 50 per cent. Furthermore, all of Norway's municipalities and counties have taken out loans with Kommunalbanken. Under varying framework conditions and changing customer needs, the goal has remained constant: We finance the local communities of tomorrow.