Building Norwegian society for 90 years
September 1st we celebrated KBN having helped finance welfare service provision by the Norwegian local government sector for 90 years. It is a history of which we are proud.
KBN is an organisation that is close to the markets and the local government sector as well as to the opportunities and challenges facing them. Celebrating KBN’s 90th anniversary gives us energy and a sense of purpose, reminding us that what we do is based on a long and proud tradition”, comments Kristine Falkgård, President and CEO of KBN.
From debt crisis to building Norwegian society
Initially KBN primarily provided loans to refinance local government sector debt. The 1920s were characterised by economic challenges with prices falling and investments plummeting, and many municipalities struggled to meet the instalments on the significant borrowings they had built up. As the debt crisis gradually subsided, KBN transitioned to providing municipalities with normal loans, and therefore came to play a key role in financing municipal Norway’s role in society and its construction of the welfare state following World War II.
“The construction of the Norwegian welfare state is in many ways the history of KBN, as our customers have played an absolutely central role in its development. Via municipalities and county authorities, we have helped finance the construction of power stations before and after World War II, the construction of schools in the 50s and 60s, and a range of reforms including the HVPU Reform [deinstitutionalisation of people with intellectual disabilities], the Nursery Reform and the Coordination Reform [coordination between primary and secondary healthcare]. In short, we have been part of the creation of the modern welfare society”, comments Kristine Falkgård.
Norwegian and international capital
KBN first issued debt in 1927 in the form of a USD 6 million bond. The international market has been an important source of capital for KBN, but from 1986 to 1999 it was only able to borrow in Norwegian kroner. KBN also took deposits from Norwegian municipalities, electricity companies and municipal pension funds for a short period, but since 1974 it has financed its lending activities exclusively via the capital markets.
Conversion to Kommunalbanken AS
KBN was a state bank until 1999, and was until this point called Norges Kommunalbanken. As Norges Kommunalbank it had an explicit state guarantee, and there were quotas on its funding and limits on its lending. Norges Kommunalbank was converted to KBN as it exists today on 1 November 1999, at which point it officially changed its name to Kommunalbanken AS. Following the conversion, KBN’s funding quotas and lending limits were removed, and KBN could once more borrow in foreign currencies.
KBN has grown significantly since its conversion to Kommunalbanken AS to the extent that now in 2017 almost all municipalities, county authorities, municipal companies and other organisations with municipal guarantees have loans from KBN.