Arion Bank takes over mortgage portfolio of Kaupthing's bankruptcy estate

Arion Bank and Kaupthing Resolution Committee have reached an agreement according to which Arion Bank will acquire a mortgage portfolio which has been managed in a special fund owned by the bankruptcy estate of Kaupthing. The agreement also specifies that the deal will be funded by the acquisition of covered bonds.

The mortgage portfolio which Arion Bank is acquiring is valued at ISK 120 billion. The deal will make Arion Bank a strong participant in the mortgage market in Iceland, with a loan portfolio of ISK 200 billion. It also consolidates the Bank's position with assets of more than ISK 900 billion.

Under the agreement Arion Bank will replace Kaupthing as an issuer of covered bonds. Kaupthing issued covered bonds from 2006 to 2008 to finance its mortgage loans. By issuing covered bonds Arion Bank will increase its long-term funding by more than ISK 120 billion (EUR 750 Million equivalent). The covered bonds will be listed on the Icelandic stock market later this year.

Höskuldur H. Ólafsson, CEO of Arion Bank:
“Acquiring this mortgage portfolio is a significant step for the Bank. It is a good quality portfolio which represents an important addition to the Bank’s other assets. Until now we have been providing services to borrowers without having control over the loans; these loans are now entirely owned by Arion Bank. This acquisition further consolidates Arion Bank’s position on the Icelandic banking market. The agreement gives us a helping hand as we strive to further develop our business and to improve the level of service and the products we offer our personal customers.”