Corporate and Investment Banking
Corporate Banking and Corporate Finance, which previously constituted separate divisions at Arion Bank, were merged during the autumn to form a new division, Corporate & Investment Banking. The division provides companies and institutions with comprehensive services and advice on capital structure, planning, and mergers and acquisitions. The Managing Director of Corporate & Investment Banking is Ásgeir H. Reykfjörð Gylfason, Deputy CEO of Arion Bank.
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Corporate Banking provides comprehensive financial services and customized solutions to large and medium-sized companies. Many of Iceland’s most established companies have enjoyed prosperous business relationships with Corporate Banking dating back many years. The key to this success is having detailed knowledge and understanding of the customers’ business and their needs. Corporate Banking has a team of employees with a diverse range of education, expertise and decades of experience in the financial sector. The division is formed by two teams. The Seafood and Services team works with seafood and aquaculture companies and the Bank’s major clients in various sectors, including tourism, imports, retail, information technology, investment and insurance. The Real Estate and Infrastructure team provides specialized services to companies in the real estate and energy sectors and also services companies in the telecom, transportation, heavy industry and other sectors. The division also includes a special division in charge of complex recovery issues and legal documentation. The Head of Corporate Banking is Jón Finnbogason.
Many of Iceland’s most established companies have enjoyed prosperous business relationships with Corporate Banking dating back many years. The key to this success is having detailed knowledge and understanding of the customers’ business and their needs.
Corporate Finance provides M&A advisory services and is a leading arranger of stock market listings. Corporate Finance’s clients include some of the largest companies and major investors in Iceland. Our team has extensive experience with a variety of educational and professional backgrounds and a proven track record of success. The Head of Corporate Finance is Lýður Þór Þorgeirsson.
Organizational changes bring shift in focus
The organizational changes introduced in the autumn also brought a certain shift in focus within the division. Corporate Banking’s loan book has grown substantially in recent years in the generally positive economic climate. Under a new strategy Corporate Banking’s loan book will employ less of the Bank’s capital by reducing non-core assets. This shift in focus will be implemented by meticulously reviewing the structure of the loan book with respect to factors such as pricing and sector split. The Bank will also seek to divest assets or make greater use of market funding when it is beneficial to the Bank’s customers. Bringing Corporate Banking and Corporate Finance together in a single division has forged a more integrated unit within the Bank, better able to provide universal services on funding and corporate advisory.
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 the society and the environment. Our employees are guided by this policy in their work and informed discussion and responsible decision-making is integral to what we do. In 2018 the Bank’s credit rules were updated to included clauses stating that sustainability would be taken into account when making loan decisions. During the year the Bank participated in a syndicated loan to Landsvirkjun, where the interest rates were linked to Landsvirkjun’s success in meeting certain criteria on sustainability. The division’s commitment to sustainability and environmental issues is underscored by the fact that all Corporate Banking’s loans to the energy sector are connected to renewable energy. The Bank’s loans to the seafood sector are designed to facilitate the sustainable exploitation of resources and all properties financed by Corporate Banking use geothermal energy for heating. Furthermore, Corporate Finance has focused on acquiring more in-depth knowledge of sustainable bond markets.
The division’s commitment to sustainability and environmental issues is underscored by the fact that all Corporate Banking’s loans to the energy sector are connected to renewable energy. The Bank’s loans to the seafood sector are designed to facilitate the sustainable exploitation of resources and all properties financed by Corporate Banking use geothermal energy for heating.
Corporate & Investment Banking’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.
Operations in 2019, interest-bearing assets at year-end, loan book by sector
The division’s interest-bearing assets amounted to ISK 320 billion at year-end. Loans to customers amounted to ISK 312 billion, or 40% of the Bank’s total loans to customers and 77% of corporate loans.