The European Investment Bank (EIB) and the DNB Bank ASA are providing SMEs and mid-caps in Nordic countries with enhanced access to affordable loans and leasing for zero-emission vehicles and equipment. Through a green synthetic securitisation operation, the programme enables DNB to offer SMEs more favourable loan terms, including lower interest rates and flexible repayment options. It aims to accelerate the adoption of sustainable technologies, making it easier for businesses to invest in green solutions. The initiative prioritises projects with clear environmental benefits. It aligns with EU sustainability standards and draws on DNB’s experience in green lending.
DNB and the European Investment Bank Group ‑ green synthetic securitisation in the Nordics
Abstract
The European Investment Bank (EIB) Group and Norwegian DNB Bank ASA are collaborating in a financing initiative that will provide NOK 2.2 billion (EUR 190 million) for SME’s and Mid-Caps in Norway, Sweden, Denmark and Finland.1
This collaboration, backed by the European Commission’s InvestEU programme, includes credit protection from the EIB Group and enhances access to more affordable financing for climate-related projects. By unlocking capital that would otherwise be unavailable, this initiative helps businesses invest in sustainable solutions. The main objective is to speed up the transition to green technologies, supporting funding – through both loans and leasing – for zero-emission vehicles and equipment, such as:
Electric cars and vans;
Electric buses and trucks;
Electrical construction machinery and equipment;
Electric bicycles and other micro mobility.
This operation is the first green securitisation in Norway and DNB’s first synthetic securitisation2, as well as the first collaboration between EIB and DNB groups. The transaction involves a Significant Risk Transfer aligned with Simple, Transparent, and Standardised securitisation criteria.3
The EIB Group provides credit protection on a NOK 17.6 billion (EUR 1.5 billion) portfolio of SME and small Mid-Cap loans held by DNB, allowing the bank to free up capital for climate-friendly lending. The European Investment Fund (EIF) covers credit risk on the NOK 1.1 billion (EUR 95 million) mezzanine tranche, which is counter-guaranteed by the EIB—ensuring the EIB Group assumes the risk. Key features of the transaction include:
Synthetic excess spread is a built-in risk buffer in synthetic securitisation, where the interest income from the securitised loans exceeds the costs of the transaction. This excess spread is used as the first line of defense to absorb potential credit losses before they impact investors or guarantors. In the EIB-DNB deal, if some SME loans default, the excess spread helps cover these losses, reducing the likelihood of drawing on the EIB’s guarantee;
A replenishment period which allows the securitised loan portfolio to be partially renewed by adding new loans to replace those that have been repaid. Instead of the portfolio shrinking over time, the originating bank can continue issuing new loans—ensuring that financing remains available for climate-friendly projects like zero-emission vehicles;
Pro-rata amortisation of senior and mezzanine tranches, subject to performance triggers. This means that, if the loan performance is solid, repayments are distributed proportionally across both senior and mezzanine tranches instead of prioritising one over the other. However, if the loan portfolio underperforms (e.g., high defaults or deteriorating credit quality), performance triggers may activate a switch to sequential amortisation, where senior tranches are repaid first to protect lower-risk investors. This feature balances risk-sharing while maintaining investor confidence.
The scheme can be best understood in seven steps:
DNB has a portfolio of existing SME and mid-cap loans (NOK 17.6 billion), covering various sectors, not necessarily related to green investments.
EIB Group provides credit protection on this loan portfolio, reducing the risk for DNB.
This allows DNB to reduce the amount of capital it must hold under regulatory capital rules, freeing up funds that can now be used to issue new loans.
The EIF provides risk coverage on the mezzanine tranche (NOK 1.1 billion), which is counter-guaranteed by the EIB, ensuring a risk-sharing mechanism that makes the securitisation structure more secure.
With this additional lending capacity, DNB can issue new loans specifically for green projects, such as financing zero-emission vehicles and equipment. This is ensured through conditions set by the EIB, which require the freed-up capital to be used for climate-friendly investments.
As a result, more loans should be forthcoming, and possibly under better financing conditions (e.g., lower interest rates, longer repayment terms, or improved accessibility for SMEs).
If loan defaults occur, a risk-sharing structure (synthetic excess spread and guarantees) helps absorb the losses before they impact DNB
This collaboration between the EIB Group and Norwegian DNB Bank is part of the InvestEU programme, which aims to mobilise private investment in key policy areas, including sustainability, innovation, and SME financing. The EIB Group plays a central role in channeling InvestEU funding, supporting a wide range of securitisation transactions to enhance access to finance. While many of these initiatives focus on green and sustainable investments, others address broader economic objectives such as digitalisation, infrastructure development, and financial inclusion.
Through synthetic securitisation, this initiative leverages EIB financial guarantees to increase access to finance for climate-related investments, particularly in zero-emission transport and construction equipment.
Norway’s participation in EU financial mechanisms allows it to benefit from EU-backed sustainability initiatives, ensuring that this transaction aligns with EU sustainability objectives and the EU Taxonomy for Sustainable Finance. Furthermore, the Nordic regulatory environment provides strong support for green financing, with a policy focus on electrification and emissions reduction.
Identifying green assets may not be straightforward: One of the primary challenges in implementing the programme has been ensuring that the financing is genuinely directed towards green investments. Given the complexity of determining whether an SME qualifies as "green," the programme takes a project-based approach, focusing on the sustainability of specific assets rather than company-wide assessments. In that respect, the EU Taxonomy for Sustainable Activities, a classification system that defines what counts as environmentally sustainable economic activities under EU law, helps in delineating what sort of investments should qualify for support. Nonetheless, there are grey zones. The current financing model has been particularly effective in supporting investments in electric vehicles and zero-emission machinery, areas that are unambiguously sustainable by nature. Even then, this focus requires robust monitoring and due diligence to ensure compliance with green finance criteria.
Financial institutions need expertise in green lending: From a financial structuring perspective, the synthetic securitisation model provides capital relief to participating banks while maintaining financial discipline through contractual safeguards. EIB removes risk from DNB’s balance sheet through a financial guarantee with a 0% risk weight, complemented by counter-guarantees via the European Investment Fund (EIF) backed by the InvestEU programme. The process includes rigorous reporting requirements, retrocession mechanisms, and structured financial flows that ensure SMEs benefit from better financing conditions. This structured approach ensures that funds are deployed effectively and in line with policy objectives, but it also requires banks to have strong internal expertise in green lending and to comply with reporting requirements to prove that the operation has indeed unlocked additional lending to SMEs, according to the contractual arrangements.
Importance of a clear policy contribution: EIB's involvement ensures that the programme is not just about financial optimisation but also about achieving measurable environmental impact. The programme benefits from alignment with national and EU sustainability strategies and therefore requires some tailoring from market to market. For example, the adoption of electric vehicles in Norway and other Nordic countries is at a relatively mature stage, and therefore there is a sufficient critical mass of new lending that can be unlocked. This situation is different across other jurisdictions.
As this is a new initiative, any appraisal of its success and impact is preliminary. This section outlines likely factors that can contribute to the success, beyond the EIB’s extensive experience in securitisation operations.
Better financing conditions for SMEs: A key strength of the approach lies in the collaboration between a private financial institution and public organisations. Banks, with their long-established client relationships, are well positioned to channel funding effectively while ensuring alignment with sustainability objectives. As part of the agreement, the EIB charges DNB a gross guarantee fee to cover the risk of the securitised loan portfolio. However, if DNB offers SMEs a concessional interest rate on their green loans (with an interest rate reduction of around 25 basis points), the EIB refunds a part of the guarantee fee back to the bank. This ensures that the financial benefits of the risk-sharing arrangement are partly passed on to SMEs, making green loans more affordable compared to conventional financing.
Intermediary banks’ experience with green lending: The programme also benefits from DNB’s extensive experience in green lending, which has streamlined implementation and facilitated a smooth rollout. Additionally, Norway’s well-established market for electric vehicles and sustainable machinery has helped accelerate adoption. A key strength of the programme lies in its flexibility, allowing it to adapt to the diverse financing needs of SMEs and mid-caps. However, navigating EU taxonomy compliance can be challenging for some businesses, particularly those lacking the resources to conduct a full assessment. In this regard, banks play a crucial role in guiding companies through the process, ensuring that they meet sustainability criteria and making implementation more efficient.
Looking forward, the scalability of this model to other green investments beyond mobility remains an open question. While asset-based financing for vehicles is relatively straightforward, extending the approach to other types of green projects may require additional assessment criteria. The experience gained in Norway, however, provides a strong foundation for future green finance initiatives and the extensive experience of the EIB in a wide range of securitisation operations (beyond sustainable finance for SMEs) suggests ample potential.
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← 1. https://www.interregeurope.eu/sites/default/files/2022-07/220511-Zlozenka-vavcerji-eng_0.pdf
Norway: Nordic businesses to get €190 million green-investment boost as EIB Group and Norwegian DNB Bank ASA team up in first-of-its-kind deal for region
← 2. In the context of securitisation, the term "synthetic" refers to a risk transfer mechanism where the originating bank retains ownership of the underlying loans but shifts the credit risk to external investors through financing instruments such as credit default swaps (CDS) or guarantees. Unlike traditional securitisation, where assets are sold to a Special Purpose Vehicle (SPV), synthetic securitisation allows banks to free up regulatory capital while keeping the loans on their balance sheet. This method is commonly used to increase lending capacity without affecting customer relationships or funding structures.
← 3. The Simple, Transparent, and Standardised (STS) criteria are a set of regulatory standards established by the EU Securitisation Regulation (Regulation (EU) 2017/2402) to promote high-quality securitisation within the European financial system. These criteria ensure that securitised products are less complex, more predictable, and easier to understand, making them safer for investors and financial institutions.
