Arion bank has set up a 1 billion euro programme for the issuance of covered bonds. On 25 November 2011, Arion Bank was licensed by the Icelandic Financial Supervisory Authority to issue covered bonds in accordance with the Icelandic Act on Covered Bonds, No. 11/2008, and Rules on Covered Bonds, No. 528/2008. The issue is regulated by the Icelandic Financial Supervisory Authority which also appoints an independent inspector to monitor the issues.
At the end of 2011 Arion Bank took over the issuance of covered bonds which had originally been issued by Kaupthing hf. in 2006 to 2008 amounting to ISK 119.8 billion net outstanding.