Highlights of 2018
Digital journey
Arion Bank was named marketing company of the year by Icelandic marketing association ÍMARK for its digital services.
In 2018, nine new digital solutions were launched, bringing the total to around 20 new digital products in the last two and a half years. In 2018 our customers used our services, in one way or another, 34 million times. 97% of interaction between the Bank and customers is now via digital channels, such as the Arion App, Online Banking or arionbanki.is, and digital sales increased by 125%. The Bank won three international awards during the year, BAI Global Innovation Awards and Retail Banker International, for the digital journey we have embarked on.
Developing the branch network
The branch network underwent substantial remodelling in response to the huge changes taking place in the financial services sector. Some branches were closed and others were relocated. Firstly, the aim is to enhance the Bank's core branches, where we offer a comprehensive range of services and financial advice, and secondly to develop smaller branches which are more conveniently located for our customers. In the smaller branches the focus is on providing assistance on digital channels and advising customers via video link. New service facilities were opened or remodelled in strategic locations in the Reykjavík area. Each occupy less than 40 square metres but provide 90% of the services of a traditional branch.
Strong position
Arion Bank continues to occupy a leading position on the mortgage market in Iceland. The Bank also has the largest market share in several key sectors on the Icelandic corporate market and the Bank's strategy is for loan growth to match economic growth. Arion Bank also has Iceland’s largest asset management operation and the Group, i.e. Arion Bank and Stefnir, manages a total of ISK 971 billion.
Arion Bank continues to occupy a leading position on the mortgage market in Iceland.
Arion Bank had the largest market share in terms of equities turnover on Nasdaq Iceland, the third year in succession it has held the top spot. The Bank arranged the two largest corporate transactions completed in the last 10 years, namely the acquisition by the real estate company Reginn of subsidiaries of Fast-1 for ISK 23 billion, and N1’s ISK 38 billion acquisition of Festir, in addition to the Arion Bank IPO and dual listing in Iceland and Sweden. The Bank furthermore arranged the year’s largest bond issue.
Arion Bank was named investment bank of the year 2018 in Iceland by Euromoney.
IPO and listing
At the beginning of the year several major shareholders increased their share in the Bank, including Kaupthing. Arion Bank acquired 9.5% of its own shares and the Icelandic government sold its entire interest in the Bank.
In the spring it was announced that the Bank and Kaupthing planned to hold an IPO and list the Bank on the main lists of Nasdaq Iceland and Nasdaq Stockholm. A total shareholding of 28.7% in the Bank was sold, with the main sellers being Kaupthing and Attestor. The IPO was heavily oversubscribed. Approximately 70% of investors in the IPO were from the United Kingdom, the United States, continental Europe and Scandinavia.
The IPO was heavily oversubscribed. Approximately 70% of investors in the IPO were from the United Kingdom, the United States, continental Europe and Scandinavia.
On 15 June Arion Bank shares were admitted to trading on Nasdaq Iceland and Nasdaq Stockholm. It represented a milestone for both the Bank and the Icelandic economy, being the second largest IPO in Iceland of all time. Furthermore, it was the first listing of a bank on the main list in Iceland for 10 years and the first dual listing on Nasdaq Nordic for a decade. The Bank’s market capitalization when listed was ISK 135 billion.
Responsible banking
In 2018 sustainability remained a key priority at Arion Bank. Numerous courses and presentations were held for employees, highlighting the importance of considering the Bank's entire value chain, the services the Bank offers its customers and the services obtained by the Bank from its suppliers.
In 2017 Arion Bank became a signatory to the United Nation Principles of Responsible Investments (PRI), an international organization of asset management companies and asset owners. 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.
During the year Institutional Asset Management introduced rules of procedure on responsible investment which incorporate the three basic criteria of sustainability: environmental, social and governance, when investing in the major asset classes. During the year we conducted a thorough analysis of the non-financial information relating to companies listed on the main market of Nasdaq Iceland. This analysis is a component of responsible investments and measures the performance of listed companies and the market as a whole in terms of sustainability.
The Bank’s credit rules were revised during the year and sustainability is now taken into consideration when loan decisions are made.
During the year Arion Bank became the first Icelandic bank to receive permission to use the Ministry of Welfare’s equal pay symbol after the Bank was awarded certification by the standards agency BSI á Íslandi. The Bank has been certified by BSÍ á Íslandi since 2015, when the Bank first received equal pay certification from the union VR. The Bank has undergone regular audits to maintain this certification.
During the year Arion Bank became the first Icelandic bank to receive permission to use the Ministry of Welfare’s equal pay symbol
Arion Bank has also been recognized by the Center for Corporate Governance at the University of Iceland as a company which has achieved excellence in corporate governance.
Further on responsible banking
Balance sheet
Arion Bank concluded its inaugural Tier 2 issuance in 2018, issuing floating rate notes in the amount of SEK 500 million. The Tier 2 bond issue strengthens the Bank’s own funds and is a milestone towards reaching a more optimal capital structure. In March Arion Bank issued 5-year bonds in the amount of €300 million. The issue was oversubscribed, attracting offers for €375 million from more than 40 investors.
In November the Bank announced that it had appointed Citi to advise on the planned sale of the Bank's subsidiary Valitor. Further updates on the sale can be expected in 2019.
In November the Bank announced that it had appointed Citi to advise on the planned sale of the Bank's subsidiary Valitor.
Arion Bank took over all the main assets of United Silicon when it foreclosed on collateral under an agreement with the company’s administrator. A new company, Stakksberg, was established in connection with the activities of the silicon plant at Helguvík and Arion Bank aims to make the required improvements and sell the plant as quickly as practicable.