Annual General Meeting of Arion Bank 2016
The 2016 Annual General Meeting of Arion Bank was held today, Thursday 17 March, at the Bank's headquarters in Borgartún, Reykjavík. The agenda of the meeting contained typical AGM business and the Bank's annual financial statement was approved. Changes to the Board’s salaries were approved. The salaries increased by 3.5% on average. The Bank’s remuneration policy, unchanged from last year, was also approved. It was also decided that Deloitte ehf. would continue to serve as the Bank’s auditors in accordance with a resolution passed at a shareholders’ meeting on 6 February 2015 and at the Annual General Meeting on 19 March 2015. The Board's proposal, not to pay a dividend, was accepted.
The following people were re-elected on to the Board of Directors at the meeting: Benedikt Olgeirsson, Brynjólfur Bjarnason, Gudrún Johnsen, Kirstín Th. Flygenring, Måns Höglund, Monica Caneman and Thóra Hallgrímsdóttir. The majority of Directors, or four out of seven, are women. Kirstín is the representative of Icelandic State Financial Investments on the Board, and the others were nominated by Kaupskil.
The Alternates were also re-elected at the AGM and they are: Björg Arnardóttir, Sigurbjörg Ásta Jónsdóttir and Ólafur Örn Svansson.
The report of the Board of Directors for 2015
Monica Caneman, Chairman of the Board of Directors of Arion Bank, presented the report of the Board of Directors and highlighted that the year 2015 was a good year for Arion Bank. Return on equity was 28.1% which was a result of the Bank's solid core operations and the positive impact of irregular items. She said that regular operations were consistently strong and yielded a satisfactory return on equity of 10.4%, with high shareholders’ equity, at ISK 193 billion.
Monica discussed that in recent years the task of Arion Bank’s employees and board of directors had been to develop a good Bank that was a viable investment option for long-term owners. She said it had been a complex venture but the results were clear for all to see. And Monica added that today Arion Bank is a robust bank, with a solid client base, a dedicated team of employees and it occupies a strong position on its chosen markets. The Bank is on a strong financial footing with a capital ratio of 24.2% and a leverage ratio of 16.7%. She also discussed the fact that the Icelandic economy had become stronger during this period. Economic growth in recent years has been good, purchasing power has grown and unemployment has decreased significantly. Furthermore, household, corporate and government debt has decreased substantially as a percentage of GDP. In her opinion positive achievements have been made in the financial and economic environment in recent years.
Monica talked about measures that were taken within the Bank, partly due to initiative from the Board of Directors, following criticism of the Bank from the FME as well as the general public. These measures were designed to strengthen the decision-making process within the Bank. The compliance function at the Bank was also reinforced, procedures improved, assignments and functions reviewed. And the measures ensure that the Board of Directors will be directly involved should similar circumstances arise again. Monica stated that it was absolutely clear that Arion Bank and the financial sector as a whole must exercise caution in everything it does in order to regain trust that has been seriously tarnished in the past years.
Monica also spoke about the capital controls, which have been in place for the past seven years, and the fact that they will in all likelihood be successfully removed this year – at least for the most part – thereby closing one of the most important chapters relating to post-crisis legacy issues. Monica said that one of the tasks Arion Bank and its employees and Board of Directors had been working on since 2010 was to prepare the Bank for the capital control liberalization. It was obvious to us, she said, that Arion Bank would need to be financially robust so that the Bank would never be put at risk by the lifting of the controls. Therefore, Monica said, Arion Bank has been ready for this next phase for several years.
An eventful year
Höskuldur H. Ólafsson, CEO of Arion Bank, discussed the annual financial statements for 2015. The Bank’s earnings were good but strongly influenced by irregular items. Core operations continued to gain strength and the Bank consolidated its position on all its key markets. Corporate loans demonstrated strong growth, as did assets under management. Höskuldur also talked about positive developments in retail banking as the Bank opened a new branch in Siglufjördur and won the tender to provide financial services at Keflavík International Airport, where the Bank will open for business this spring.
Höskuldur discussed the irregular items that had the most influence on the Bank’s earnings and stated that the year marked a certain turning point in the operations of Arion Bank, as several major debt recovery cases were brought to a conclusion. These were mainly the sale of shares in five companies: Reitir fasteignafélag hf., Eik fasteignafélag hf., Síminn hf., Refresco Gerber and Bakkavor Group Ltd. All these companies were listed on the stock market in Iceland or markets overseas, with the exception of the holding in Bakkavor Group, which was sold following a sale process arranged by Barclays in the UK. Arion Bank was a minority shareholder in all of these companies. The IPOs of Reitir, Eik and Síminn were arranged by Arion Bank and they were the only new listings on Nasdaq Iceland in 2015. Höskuldur emphasized that it has been the Bank’s strategy to encourage IPOs in Iceland and thereby give the general public the opportunity to participate in the growth of the economy via an active equity market. Höskuldur added that Arion Bank had been involved in 60% of all new listings in Iceland in recent years.
Höskuldur went on to discuss the progress made in diversifying the Bank’s funding profile. Deposits remain Arion Bank’s main source of funding, but with bond issuances in 2015 in euros, NOK and ISK the proportion of other sources of funding has increased. During 2015 Arion Bank became the first Icelandic bank for several years to issue a benchmark euro bond to a broad group of investors. Höskuldur also mentioned the positive development in the Bank’s ratings. In 2015 Standard and Poor’s upgraded Arion Bank’s credit rating to investment grade.
In his report Höskuldur said that 2015 had been an unusually eventful year in many ways, and that The Banker, which is published by The Financial Times, named Arion Bank as the bank of the year in Iceland for 2015.