Arion Bank Seeks Merger With Íslandsbanki

The board of Arion Bank has announced its interest in initiating merger talks with Íslandsbanki, reports mbl.is. A formal letter has been sent to the chairman and CEO of Íslandsbanki, expressing the bank’s vision for a combined financial institution.

In a statement to the Icelandic Stock Exchange, Arion Bank highlighted the significant benefits of a potential merger for customers, shareholders, and the Icelandic economy.

“We see a unique opportunity in merging Arion Bank and Íslandsbanki. The result would be a more efficient and powerful bank, better positioned to meet customer needs, invest in innovation, and support the growth of the Icelandic economy.”

The bank claims that the merger would generate substantial synergies, leading to cost reductions within the Icelandic financial system, benefiting both consumers and shareholders.

Arion Bank has pledged to work closely with Iceland’s Competition Authority to ensure that at least 5 billion ISK (approximately €33 million) in annual savings from the merger will directly benefit consumers. Over a ten-year period, this would amount to 50 billion ISK (€330 million) in household savings, in addition to other financial benefits.

The bank is also offering Íslandsbanki shareholders — including the Icelandic government, which owns a 42.5% stake — a 5% premium based on the average closing price of the last 30 days. In the merged entity, the state’s ownership would exceed 20%.

“Through the state and pension funds, the Icelandic public would indirectly hold a majority stake in the new bank,” the statement reads.

Arion Bank asserts that the merger would meet the three key criteria set by the European Commission for horizontal mergers: clear consumer benefits, measurable economic gains, and an outcome that cannot be achieved through other means.