Responsible and profitable business practices
At Arion Bank we aim to be a role model as a company which employs sound and responsible business practices. In all the decisions we make, we assess the various interests at stake, and the long-term view is just as important as any short-term considerations. We assess the possible gains and risks involved in the decisions and loans we make, with many different interests at stake.
Every year we collaborate on a wide range of exciting investment projects with our customers with the aim of strengthening the business sector in this country. The Underwriting and Investment Committee makes decisions on investments and the sale of assets. We have focused, wherever possible, on divesting the non-banking companies we own. One of our strategic objectives has been to list companies on the stock market and we have been involved the majority of IPOs on recent years. This has been an integral part of the process of regenerating the Icelandic stock market and increasing the number of investment opportunities on the general market.
We contribute to the informed debate on financial and economic issues in Iceland. We issue numerous reports and research on key issues and organize conferences and events. We seek to examine issues from all sides and to create the basis for professional and informed decision-making. We want to encourage better financial literacy, improve understanding of the role of money, how best to take responsibility for one's own finances and how best to organize them in the short and long term. We offer a range of courses and seminars on different financial issues and we share our expertise with our customers on a daily basis. Better public financial literacy promotes more responsible and better informed decisions by people and companies and results in a healthier economy.
Arion Bank is an active participant in shaping and developing responsible investment in Iceland and has representatives in the board and working groups in IcelandSIF, Iceland Sustainable Investment Forum. Arion Bank was also one of the founder members of the organization in 2017.
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Arion Bank is a signatory to the United Nations Principles on Responsible Investment (UN PRI). By becoming a signatory to PRI, Asset Management abides by the PRI’s six key criteria on responsible investment and prepares a transparency report setting out how it makes responsible investments. See the Asset Management section for more information.
A secure financial system – for the benefit of society
The Icelandic economy relies on a well-functioning and secure financial system, and Arion Bank is a key component in the infrastructure of the Icelandic financial system and therefore bears great responsibility. Our stakeholders also expect a great deal from the Bank in terms of security.
Ensuring secure movements of capital and safeguarding the assets and information entrusted to us are duties the Bank takes very seriously. The Bank is also alert to all kinds of financial crimes and takes every precaution to minimize the damage such crimes can have on customers, the Bank's operations and society as a whole. The Bank is aware of the risk of conflicts of interest which inevitably occur in our business and takes special measures to prevent conflicts of interest from negatively affecting our customers' interests.
We need to have in place well-functioning internal structures, qualified employees, secure systems and effective monitoring and close cooperation with the authorities.
We prioritize measures to prevent:
- Money laundering, terrorist financing, corruption and business with people subject to international sanctions
- Conflicts of interest
- Market manipulation and insider misconduct
- Fraud and cyber crime
We try to ensure that we do not do business with anyone conducting illegal activities. It is vital that we know our customers and other people we are working with. The Bank monitors financial transactions in order to identify any patterns indicating illegal activities. The Bank is also vigilant towards cyber-attacks and online scams, which are increasing threats as digital banking gains popularity.
No form of monitoring is as effective as an alert and vigilant employee who receives regular training to learn to recognize and respond to suspicious behaviour. Once a year employees take tests to ensure that their knowledge of anti-money laundering measures and the handling of confidential information is up to standard.
Any suspicions of illegal activities by our customers are reported to the police without exception, and the Bank does its utmost to help the authorities with their enquiries.
Arion Bank has also established a policy on whistleblowing, whereby employees are encouraged to report any suspicion of inappropriate or illegal activity by the Bank, its employees or partners. The Bank keeps the source of all such tip-offs confidential and protects the identity of anyone coming forward to make their suspicions known. Employees can also make anonymous tip-offs. All reports of potentially illegal conduct are investigated by the Bank's internal control units and referred to the relevant law enforcement authorities as required. People can also send tip-offs directly to the Financial Supervisory Authority via its website.
Internal rules and controls
Arion Bank employees are well aware that the Bank’s activities have an impact on different groups and on society as a whole. We have established procedures, a code of ethics and policies on different aspects of operations, including disclosure, information security, money laundering and equal opportunities.
Further on rules and terms on our website
The Bank’s code of ethics is designed to promote responsible decision-making. The code applies equally to the Board of Directors, management and other employees, and it is the responsibility of the CEO to ensure that the code of ethics is enforced. The code of ethics is approved by the Board of Directors and should be reviewed at least annually.
Managing risk and taking informed decisions is a crucial component of the Bank's activities and its responsibility towards society. Risk management is therefore a core activity within the Bank. The Bank’s policy is to have in place an active risk management function which analyzes and measures risk and takes action if it exceeds defined limits. Simultaneous to the Annual Report the Bank publishes Pillar 3 Risk Disclosures which address the main risks and how to manage them.
Corporate governance
Having in place clear decision-making procedures is the key to responsible corporate governance and we follow set procedures throughout the Bank to ensure that everything is handled professionally. In December 2015 Arion Bank was recognized as a company which had achieved excellence in corporate governance following a formal assessment based on guidelines on corporate governance issued by the Icelandic Chamber of Commerce, the Confederation of Icelandic Employers, and Nasdaq Iceland. Arion Bank received this recognition following an in-depth survey of corporate governance at the Bank, including governance by the Board of Directors, sub-committees and management, performed by KPMG ehf. in the autumn of 2015. It applies for three years.