Corporate customers

Arion Bank provides comprehensive financial services to companies. Although the impact of the global pandemic could be felt in some areas, it was business as usual in terms of the services we provided to corporate customers, and there was significant activity on both the lending and advisory sides of the business.

Eventful and successful year

There were no fewer than four initial public offerings on the Icelandic stock market in 2021. Arion Bank was involved in three of them, either as lead financial advisor or joint financial advisor with other Icelandic or international financial institutions. The Bank was co-manager with several international banks of the private placement of shares in an Icelandic salmon producer on the Norwegian stock market in February 2021. The Bank also advised and participated in a diverse range of other engagements, such as a bond issue by an international exporter and the corporate acquisition of an infrastructure company in the Arctic.

The strategic changes made to the corporate business towards the end of 2019 have for the most part had the desired effect. The success of this strategic shift can be seen by the fact that 80% of the Bank’s largest loans were meeting profitability targets at the end of 2021, compared with 20% in 2019.

In the spring corporate services were integrated into a single corporate division which now serves everything from the smallest businesses to Iceland’s biggest corporations. In the autumn, the corporate insurance business of the subsidiary Vörður was merged with the Bank’s corporate services, further expanding the range of products available to our customers.

Sustainability and environmental issues

Arion Bank has adopted a clear policy on sustainability and environmental and climate issues. The Bank’s sustainability policy is entitled Together we make good things happen which is epitomized by our commitment to working responsibly in harmony with society and the environment. The Bank’s policy is reflected in its lending, and all Arion Bank’s loans to the energy industry are in the field of renewable energy. The Bank’s loans to the seafood sector facilitate the sustainable exploitation of resources, and all real estate projects financed by the Bank use geothermal energy for heating.

Following an extensive period of preparation in 2020, the drafting of procedures for assessing green assets and the detailed analysis of the loan book, a special Green Financing Framework was issued in July 2021. The Green Financing Framework is a comprehensive financial framework which applies to the Bank’s financing and lending activities. It was prepared in collaboration with Deutsche Bank, and Cicero provided an opinion on the framework, which was rated medium green.

At the end of the year approved green loans to companies totalled ISK 72 billion and were split into the following categories:

Green loans

During the year the Bank signed an agreement with Norðurál on the green financing of a new production line in the casthouse at the company’s Grundartangi plant. This investment comes to approximately $120 million or around ISK 16 billion.

The Bank also offers a range of green loan products which meet the criteria of the framework. In the new year further assessments of our customers’ non-financial indicators will be carried out, and there will be an audit of the total emissions from the loan portfolio.

Arion Bank’s active role in the development of the economy aligns with UN Sustainable Development Goals number 7 on affordable and clean energy, number 8 on decent work and economic growth and number 9 on industry, innovation and infrastructure.

Loans to companies

Loans to companies amounted to ISK 410 billion, or 44% of the Bank’s total loans to customers.

The corporate banking loan portofolio