Arion Bank provides diverse services to clients in capital markets, fund management and asset management. The Bank’s asset management service incorporates private banking, institutional asset management and pension fund administration. Stefnir, a subsidiary of Arion Bank, is an independent financial institution and manages a diverse range of UCITS and alternative investment funds. Arion Bank and its subsidiaries are leading players in Iceland, both in capital markets and the asset management market, with assets under management of ISK 1,352 billion.

Capital Markets

Arion Bank brokers securities for the Bank’s international and Icelandic clients. The Bank’s team of professionals advise on and broker securities transactions on all the world's major securities markets. Arion Bank also helps clients to invest in Stefnir funds and funds operated by leading international fund companies.

An increasing number of clients are engaging with the Bank for their capital markets transactions, and in recent years the Bank has enjoyed a strong position in terms of securities turnover on the main market of Nasdaq Iceland and First North. In 2021, Arion Bank had the highest market share in equities trading on Nasdaq Iceland for the sixth successive year. Arion Bank also had the largest market share on the First North market and ranked second on the Nasdaq Iceland fixed income market.

Turnover and market share of Arion Bank in domestic equity market

Robust securities market

The equities turnover on Nasdaq Iceland increased by 77% between years, whereas the fixed income turnover dropped 30%. The total market capitalization of listed equities on Nasdaq Iceland increased by almost ISK 1,000 billion in 2021, share prices rose sharply and the IPOs of Íslandsbanki, Síldarvinnslan, Play and Solid Clouds left their mark on the year.

The market value of listed bonds increased by 6% during the year. Public sector borrowing needs were unusually high in 2021 and they were largely met with issues of market securities, and key milestones were reached in the development of the corporate bond market. June saw the first unsecured issue by an operating company in more than a decade when Arion Bank managed an issue by Iceland Seafood International. The sustainable bond market is also establishing itself.

Focus on product development and securities trading in the Arion app

Public interest in the stock market is growing rapidly. In 2021, trading with securities and funds became possible via the Arion app, proving a big hit with customers. An ever growing number of investors are making use of this convenient way to make investments.

In 2021, trading with securities and funds became possible via the Arion app, proving a big hit with customers. An ever growing number of investors are making use of this convenient way to make investments.

Retail and corporate customers of Arion Bank can now open custody accounts simply and securely by signing agreements and other documents electronically. This makes it far easier for our clients to sign documents anywhere and anytime, if they have the necessary electronic ID. Digital solutions such as these proved absolutely invaluable to customers during the year.

Arion Bank’s main objective when it comes to securities and fund transactions is to provide our growing clientele with first class service and access to outstanding expertise and solutions. Product development remains highly important in order to create more opportunities for our customers to invest and diversify risk. During the year the MiFID II Directive and MiFIR regulation were introduced on to the Icelandic securities market, resulting in a number of changes for participants in the securities market. The Bank’s objective was to utilize these changes for the benefit of our clients, e.g. through digital solutions.

Fund Management

Customers enjoyed good investment returns

Domestic equities funds generated outstanding returns, both for the public and institutional investors. Stefnir Icelandic Growth Fund was the year’s best performer of those alternative investment funds marketed towards the public which do not use loans or derivatives, yielding a return of 49%. KF Global Value, an international equities fund managed by Stefnir, also had a very strong year, generating a return of 35.5%, which is 6.2% more than MSCI World.

Stefnir – Balanced Fund, which is one of the oldest and largest funds in Iceland, celebrated its 25th anniversary during the autumn of 2021. The fund has had an excellent track record ever since it was founded. 2021 was the second best year in the  fund’s history, yielding returns of 33% to its 4,600 fund members. The performance on the bond markets was satisfactory in an environment of rising interest rates.

New funds at Stefnir

Stefnir established five new funds during the year. This included the fourth SÍA private equity fund, which was oversubscribed by investors, making it necessary to reduce subscriptions. The first SÍL 1 credit fund was set up which issues listed bonds on Nasdaq Iceland.

The company also established Stefnir – Dividend Fund, the first fund of its kind in Iceland. It invests solely in those companies in Iceland which pay or are expected to pay dividends. The fund then pays out accumulated dividends to fund members.

The company also established two funds in the responsible investment category, namely Stefnir – Green Selection and Stefnir - Sustainable Fixed Income Fund. In addition, there was a shift in focus at Stefnir – Scandinavian Fund ESG towards management using responsible investment methodology. Investments in these funds were excellent during the year.

Asset Management

The Bank manages financial assets on behalf of our clients in accordance with pre-agreed investment strategies for each client. Asset management builds on trust and responsibility towards the clients, stakeholders and society as a whole.

Total assets under management at Arion Bank and subsidiaries
ISK bn.
Asset classes

Sustainability and responsible investments

As a leading player on the domestic financial market, the Bank takes its responsibilities seriously and is committed to continuing to build its knowledge of sustainability and responsible investments. In 2018, Arion Bank introduced rules of procedure on responsible investment which incorporate the three basic criteria of sustainability: environmental, social and governance. These criteria are used along with financial criteria to evaluate investments and inform all investment decisions.

In recent years Arion Bank has strived to enhance non-financial reporting of domestic companies listed on Nasdaq Iceland by engaging in active dialogue with the companies. Arion Bank is an active participant in shaping and developing responsible investment in Iceland and has representatives in working groups for IcelandSIF, Iceland Sustainable Investment Forum, and was also a founding member of the organization. The Bank is a signatory to the United Nation Principles for Responsible Investments (PRI), an international organization of asset management companies and asset owners. By becoming a signatory to PRI, the Bank abides by the PRI’s six key criteria on responsible investment and submits a transparency report on its performance in terms of responsible investment to the organization.




The actions taken by Arion Bank on responsible investment are closely aligned with the Bank’s sustainability policy and the UN Sustainable Development Goals gender equality, decent work and economic growth, industry, innovation and infrastructure, and climate action.

Private Banking – personal service

Private Banking at Arion Bank offers a broad range of personalized financial services for high net worth retail and corporate clients, funds and institutions. Private Banking offers financial services which are personalized to the needs of each and every client. Each client has their own account manager who manages and invests the asset portfolio according to the client’s investment goals. Account managers closely monitor activity on the financial markets and make changes in accordance with a pre-agreed investment strategy designed to meet the client’s financial needs.

Clients of Private Banking are in close contact with their account managers by phone, e-mail and regular meetings. Detailed account statements are issued on a quarterly basis and clients can also get a clear overview of their investments via their online bank account. Clients of Private Banking are members of Arion Premia and are offered the Bank’s premium rates and terms at any given time.

2021 was a prosperous year for clients of Private Banking and they enjoyed solid investment returns. The circumstances created by the Covid-19 pandemic meant that we had to adapt the way we dealt with our clients to whatever suited them best, whether it was by phone, video meetings or normal face-to-face meetings. We also welcomed many new clients, both retail and corporate, to Private Banking during the year.

Institutional Asset Management

Arion Bank provides comprehensive and personal service to institutional investors. Arion Bank’s client base includes a number of Iceland’s largest institutional investors, with the Bank managing either some of their investments or their entire investment portfolios.

The Bank applies disciplined and professional working methods, with active asset management between and within the different asset categories. The service is customized to the needs and requirements of each institutional investor. The focuses of each portfolio are adapted to changes on the market, following the investment strategy defined by the client.

The Bank applies disciplined and professional working methods, with active asset management between and within the different asset categories. The service is customized to the needs and requirements of each institutional investor.

The Bank’s services to institutional investors involve contacting the clients on a regular basis to discuss key transactions, trends and the outlook. The Bank also helps investors create an investment strategy, policy on responsible investment strategy, a shareholders’ policy and helps them implement and report on the policies.

Last year the management of asset portfolios of institutional investors yielded excellent results. The global pandemic posed certain challenges, but the Bank enjoyed constructive dialogue with its clients.

Pension fund administration and management – digital service and enhanced access to information

Arion Bank specializes in pension fund administration, managing assets for pension funds and other institutional investors.

  • Frjálsi Pension Fund, Iceland’s largest independent pension fund, has enjoyed a thriving partnership with Arion Bank and its predecessors since 2001. Frjálsi offers both mandatory and supplementary savings and the fund’s unique selling points are the general freedom of choice and the way in which mandatory savings accrue in the private pension, resulting in greater inheritability and more flexibility in payments from the fund. Frjálsi has enjoyed great success in recent years, receiving 13 international awards from the respected publication IPE, more awards than any other Icelandic pension fund. Frjálsi had an excellent year in 2021, with nominal returns on the fund’s investment plans ranging from 7.4% to 20.7%, with Frjálsi Risk being the year’s top performer. Approximately 23,000 fund members pay into Frjálsi and the fund totalled ISK 400 billion at year-end.
  • Lífeyrisauki, Arion Bank’s supplementary savings scheme, and the largest defined contribution fund in Iceland which exclusively receives supplementary pension contributions, was established by Arion Bank’s predecessor in 1999. The fund’s unique selling point is the wide selection of investment plans, a total of seven different plans plus Life Line. Returns on Lífeyrisauki’s investment plans were decent in 2021, with nominal returns ranging from 4.2% to 19.8%. Approximately 23,000 fund members pay into Lífeyrisauki and the fund totalled ISK 125 billion at year-end.
  • Other pension funds administered and managed by Arion Bank Asset Management include EFÍA, Lífeyrissjóður Rangæinga and LSBÍ.
  • Other asset management clients include Vörður and other institutional investors.

Self-service and other digital services are gaining ever greater importance when it comes to pensions. Self-service is largely via the Arion app and the funds’ My Pages feature. The Arion app offers customers a clear overview of their pension savings and customers can use self-service options to enter into pension savings agreements and perform all key actions. Our customers responded very positively and the number of new pension agreements in the app exceeded all expectations in 2021. The Arion app makes pension savings more tangible for customers and makes them more interested and knowledgeable about savings. Other digital services include chatbots and more detailed investor information on the funds’ websites. New features will be added in the future.

During normal business hours our customers can contact pension advisors by webchat, phone and e-mail. Meetings can be held at the headquarters or via video, and customers are encouraged to book meetings in advance to make the best use of their and the advisors’ time. Increased automation and the use of video meetings have proven invaluable in this time of pandemic.

Continued benefits for our customers

Arion Bank’s and Stefnir’s employees will continue to seek ways to create and identify the best possible investment opportunities for our clients. We will continue to strive to create benefits for our customers by providing excellent service, solid investment returns, a professional approach and focused risk management.