Providing Financing Solutions for Finland’s Municipalities

Pekka Averio, President and CEO
Pekka Averio, President and CEO

Municipality Finance Plc (Kuntarahoitus Oyj in Finnish) has been providing high quality financial services for the past two decades. Its specialty is to obtain funds from international capital markets and then grant loans to municipalities or entities owned by municipalities. “We serve as the middle man between investors and municipalities,” explains Pekka Averio, President and CEO.

Maintaining AAA rating

Municipality Finance has already raised nearly €6 billion in funding this year. The company achieved a turnover of around €285 million with profits of around €34 million in 2009, and Pekka Averio anticipates even better results for 2010 since mid year profits had already reached €31 million. “We have been really successful in our funding this year because of our AAA rating, and Finland is still a very good economy compared to other European countries,” he points out.

During the recent financial crisis, Municipality Finance had a market share of up to 90%. “We have probably been the only provider of financing for Finland’s municipal sector since the crisis started,” Pekka Averio says. He adds that some municipalities are too small to access the kind of funding that Municipality Finance can obtain for them, and many are also facing problems because of an aging population and a shrinking banking sector. “Where 10 to 15 banks operated only five to 10 years ago, today there are only four or five, and only one of them is Finnish. Our mission is to safeguard funding for our clients,” he says.

EU support needed

Pekka Averio believes that companies like Municipality Finance merit more EU support. He says, “We operate in a very low risk profile and feel that in many cases, we should have more understanding from the EU, because we are not as much of a commercial bank as others, so the sanctions these banks are about to face should not be applicable to companies like ours.”

Municipality Finance has proven to be very cost effective, managing to maintain a balance of around €20 billion with only 50 employees, and Pekka Averio anticipates continued success. He says, “Unlike our competitors, we are a niche player and we know our customers really well. Finnish municipalities’ total debt should be around 6% to 7% in 2015, but since they are small we do not see a problem for them. The banking sector does not seem to be interested in the public sector, so our projects will be growing stronger.”

FI-00101 Helsinki
Tel.: +358 9 6803 5666
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