The new Norwegian Local Government Act, debt management and KBN Finans

We travelled far and wide across Norway delivering these seminars in order to provide our customers with a space in which to keep up-to-date with developments in the field and to share experiences with one another.

This autumn KBN visited locations including Svolvær, Larkollen, Namsos, Kristiansand and Førde. Over 170 people attended our seminars, and the feedback received was extremely positive.

The following are examples of the feedback KBN received on the seminars it organised in Sandnessjøen and Svolvær:

Large customer seminar in Oslo

KBN held its final seminar of the autumn in Oslo specifically for large customers, and the event attracted attendees from Lier, Bergen, Larvik, Trondheim, Haram/Nye Ålesund and Eidsvoll, for example.

The President and CEO of KBN, Kristine Falkgård, opened the large customer seminar by explaining how KBN is investing in its large customer team. She then handed over to the large customer team, which comprises Lars M. Bekkelund and Terje F. Pedersen.

Lars M. Bekkelund opened the large customer team’s presentation by saying, with a smile, “We can offer you everything you ask for”. They then talked in their introduction to the day about KBN’s new website that is being launched in November, the KBN Finans customer portal, KBN’s customer satisfaction survey and forward rate agreement rates.

The next speaker was Jo Frofang from Nordic Trustee who was there to talk about the new Local Government Act and what it will mean for the local government sector and investors. The new act states that loans must be taken out for lawful purposes and within the limits set by the municipal council or county council. At the same time,  investors may be held liable if they understood or should have understood that the loan involved material financial risk.

Guttorm Egge, a Senior Analyst at KBN, then delivered a presentation on budget rates, spreads and black swans, lightened by some humorous observations. Interest rates have risen somewhat lately - what does this mean for municipalities? Black swans are risk factors that we knew nothing about, such as central banks buying bonds to keep interest rates low, or negative interest rates in many countries. He also referred a number of times to KBN’s webpage on 2020-2023 budget rates, which sets out KBN’s proposed budget rates taking into account Norges Bank having increased its key policy rate.

A separate presentation on climate risk was also on the agenda. In summary, its message was that it is important to distinguish between climate issues and climate risk. Climate issues are a question of the scale of a municipality’s emissions and how they can be cut. Climate risk is how climate change and climate policies affect emitters. The climate as a financial risk can also be split into three categories: physical risk, transition risk, and liability risk. Do you want to learn more about your municipality’s climate risk? Click here to try out KBN’s new tool.

All KBN’s finance seminars ended with the attendees working on specific cases in groups followed by a social event with dinner.

Good feedback

Geir Ove Misje, the CFO of Bergen Municipality, summarised his experience of the finance seminar in three points:

• The topics discussed were relevant
• They were presented in a comprehensive manner
• It was great to meet others in the same situation and to exchange experiences and ideas with them

– The whole thing was good. No one's presentation stands out as the most interesting. It was important that the presentations covered a wide range of issues. The event was properly run and carefully planned, commented Geir Ove Misje when asked what he thought was the most interesting aspect of the seminar.

What will you take away and use in your work?

– I found the presentation by Nordic Trustee very interesting and will follow up on it. I asked about how the documentation requirement contained in the new Local Government Act can be co-ordinated such that the same requirement applies for all borrowers. I hope that a standardised documentation requirement will be introduced in good time before 1 January 2020, and that KBN takes this on board in its future work.

Hilde Aunvåg, who is a specialist financial manager at Trondheim Municipality, agreed with Geir Ove Misje. She also thinks that the finance seminar was very good.

– I liked the fact that it was an event for KBN’s large customers so that those of us who work on the same things could meet one another, she comments.

Which presentation was the best?

– There was a lot that was very good. Everything was useful and relevant to what we do on a day-to-day basis. The discussion of implicit interest rates was fun and different. There was also a lot of useful information on green loans and the new Local Government Act. The group work also resulted in some good dialogue between attendees.

What will you take away and use in your work?

– The information on green loans. We think that we have potential projects that could be financed by green loans. It was useful to see how KBN prices its green loans. Also, it was interesting to learn that KBN is prioritising this area, and we are looking forward to being in closer dialogue with KBN about green loans.

We at KBN also look forward to continuing this dialogue. Many thanks to everyone who attended our finance seminars this autumn. We are already looking forward to the next series.

Are you interested in attending KBN’s seminars? KBN’s next seminars will be part of its KBN School, which will be held in spring 2020. More information will be available in the new year. You can also contact your customer contact for more information on our finance seminars and KBN School.