Iceland Today (Week 7) - 10 February 2026

Iceland Today Icelandic business news in brief Tuesday, 10 February 2026

Introduction Below is a summary of the business news of relevance in Iceland in the past week.

This summary, which is based on publicly available information only, is prepared by the BBA//Fjeldco team for the benefit of clients and contacts of the firm and is subject to the disclaimer noted below.

BBA//Fjeldco is an Icelandic corporate law firm, with offices in Reykjavik and London, providing advice in relation to mergers and acquisitions, capital markets, banking and corporate finance, energy and PFI and PPP projects, as well as general corporate and commercial matters. If you have any questions about investments and developments in Iceland, please do not hesitate to contact a member of the BBA//Fjeldco team.

Tuesday, 10 February 2026 / Central Bank holds rates steady amid persistent inflation pressures / Fitch upgrades Iceland's rating from A to A+ / European Investment Bank and Arion Bank join forces in the Arctic / Foreign investors increase holdings in treasury bonds / Stodir CEO criticises Central Bank for maintaining 3-4% real interest rate / Embla Medical reports USD 83.6 million profit in 2025 / Investment company Stodir reports ISK 6.8 billion profit in 2025 / Icelandair calls for extension of exemption from EU ETS / Direct flights from China could boost tourism in Iceland

/ US Capital Group continues selling shares in Islandsbanki / Mid-sized companies struggle to grow in current economic climate

/ SPAR enters Icelandic retail market / New legislative proposal could deter foreign investment according to Icelandair CEO / Lithuanian subsidiary of Play declared bankrupt / Brunnur Ventures establishes new start-up fund / Icelandic authorities sign Brownstein to lobby in Washington / Government plans to reduce indexation in financial markets / Key figures as of 10 February 2026

Central Bank holds rates steady amid persistent inflation pressures With inflation having risen to 5.2% towards the end of January, the Central Bank of Iceland's (CBI) Monetary Policy Committee unanimously voted this week to hold interest rates at 7.25%. While the January increase has been attributed to changes in public levies on new motor vehicles, price hikes remain relatively widespread. Underlying inflationary pressures persist despite easing economic activity, and clear signs seem to indicate that the labour market is cooling. The CBI's newly published economic forecast indicates the positive output gap has closed, with weak GDP growth expected and inflation projected to taper off as the year progresses. Despite a temporary inflation spike at the start of this year, the long-term inflation outlook remains broadly unchanged. However, considerable uncertainty exists as pay rises remain sizeable and inflation expectations are still above target, according to the bank. According to news website Visir.is, the CBI's conclusion that rising inflation stems from increases in various public fees and services, as well as higher food prices, conflicts with Finance Minister Dadi Mar Kristofersson's position on the subject. He has rejected the idea that government fee hikes are responsible, instead pointing to pricing by oil companies and car dealerships.

Fitch upgrades Iceland's rating from A to A+ Fitch Ratings has upgraded Iceland's Long-Term Foreign-Currency Issuer Default Rating from A to A+, with a stable outlook, according to an announcement from the Ministry of Finance.

The upgrade recognises Iceland's improved public finances and expected reduction in government debt, backed by firm political commitment to fiscal discipline and moving towards balanced budgets. Better fiscal indicators and greater fiscal headroom were the main factors behind the rating increase. Careful fiscal management has significantly reduced Iceland's headline government deficit. Fitch anticipates further narrowing in 2026–2027, driven by the national stability rule, new revenue-raising measures, and widespread political commitment to reaching a balanced budget by 2027. The agency also forecasts a gradual decline in government debt over 2026–2027, following substantial debt reduction from settling the Housing Financing Fund's liabilities and the sale of the remaining stake in Islandsbanki. Shortly after this announcement, the Ministry of Finance decided to reduce the number of credit rating agencies assessing Iceland’s sovereign creditworthiness from three to two, ending its contractual relationship with Fitch Ratings following a tender process last autumn. Going forward, the Treasury will continue to be rated by Moody’s Ratings and S&P Global Ratings.

European Investment Bank and Arion Bank join forces in the Arctic Arion Bank has secured a EUR 100 million loan from the European Investment Bank (EIB) to support sustainable marine industries across Iceland, Greenland and the Faroe Islands, according to daily newspaper Morgunbladid. "For decades, Arion has been a steadfast

supporter of Iceland's fishing industry, financing Icelandic seafood companies and, more recently, enterprises across the Arctic…Our agreement with the EIB strengthens and accelerates this journey," said Arion Bank CEO Benedikt Gislason. The funding will go to small and medium-sized companies in fisheries, aquaculture and other ocean-related sectors, marking the EIB's first financing of this kind in the region. The initiative aims to strengthen environmental sustainability and long-term resilience within the Arctic "blue economy," with eligible projects required to meet recognised international sustainability standards. Running from 2026 to 2029, the programme supports broader EU climate and environmental goals while improving access to long-term financing for marine sector businesses.

Foreign investors increase holdings in treasury bonds Foreign investors boosted their treasury bond holdings last month to ISK 112.7 billion, according to the Government Debt Management agency at the Central Bank of Iceland, as reported by business publication Vidskiptabladid. Their holdings in treasury bills remained minimal at just ISK 468 million, indicating a clear preference for longer-term instruments.

Foreign treasury bond holdings rose by ISK 5.7 billion month-on-month, though the increase mainly reflected repositioning between different bond series. Foreign investors substantially increased their stake in series RIKB 38 while scaling back positions in other major categories.

RIKB 38 saw the largest inflow, with foreign investors adding ISK 7.6 billion in January.

Meanwhile, they trimmed their holdings in series RIKB 28 by ISK 3.9 billion and in series RIKB 31 by ISK 3.5 billion.

Stodir CEO criticises Central Bank for maintaining 3–4% real interest rate Jon Sigurdsson, CEO of Iceland's largest private investment company Stodir, has criticised the Central Bank of Iceland’s (CBI) real interest rate policy in a recent letter to shareholders, according to business publication Vidskiptabladid. Sigurdsson says the bank's continued focus on maintaining a 3-4% real interest rate shows it is on the wrong track. "It would be much more natural, at least when looking at the interest rate decisions of other central banks, for interest rates to be 1-1.5% lower than they are now, in light of the circumstances and outlook in the economy," he says. He adds that the bank remains constrained by its previous statements about a "normal" real interest rate level, pointing out that economic growth in 2025 was only about 1.3%, while the CBI's forecast of 2.0% for the current year is optimistic.

Embla Medical reports USD 83.6 million profit in 2025 Embla Medical, parent company of prosthetics provider Ossur, made a profit of USD 83.6 million (ISK 12.2 billion) last year, compared to USD 69 million in 2024. Total sales reached USD 929 million, up 9% from 2024, reports business publication Vidskiptabladid based on Embla Medical’s recently published annual report for 2025. The company’s assets at the end

of 2025 exceeded USD 1.7 billion, compared to over USD 1.5 billion in 2024. Equity stood at USD 896 million, compared to USD 781 million the previous year, bringing the equity ratio to 52%. In the fourth quarter of 2025 alone, the company reported a profit of USD 25 million, compared to USD 19 million in the same quarter the previous year.

Investment company Stodir reports ISK 6.8 billion profit in 2025 Investment company Stodir reported a profit of ISK 6.8 billion in 2025, up from just over ISK 4.1 billion the previous year, with shareholder returns reaching 13.1%, according to business publication Vidskiptabladid. Equity stood at ISK 58 billion at year-end, based on annual accounts sent to shareholders last week, and the company plans to distribute ISK 1.2 billion in dividends. Performance was driven by solid returns from listed holdings, including listed companies Arion Bank, Siminn and Kvika Bank, as well as upward revaluations of key unlisted assets such as First Water and Arctic Adventures. The investment company's listed assets totalled ISK 25.6 billion at the end of last year. The company continues to consider a potential stock market listing to support future growth and portfolio expansion, although no timeline has been set.

Icelandair calls for extension of exemption from EU ETS Icelandair CEO Bogi Nils Bogason says protecting Iceland's competitive position in aviation is vital, given the island nation's heavy reliance on air transport, according to daily newspaper Morgunbladid. There are concerns that full implementation of the EU Emissions Trading System (ETS) will seriously impact the airline's operations. Iceland secured a special exemption in 2023 based on its geographical location, but this arrangement runs out at the end of the year. Bogason stresses that the government must quickly produce clear findings on the system's impact and how to respond, with major national economic interests at risk.

Without a new agreement, the airline will need to buy all its emissions permits, whereas airlines have recently received most of these permits free of charge.

Direct flights from China could boost tourism in Iceland Chinese airline Air China is currently working on launching direct flights to Iceland, with scheduled services potentially beginning as early as this spring, according to daily newspaper Morgunbladid. Final confirmation is pending, but preparations are well underway. If successful, the new connection could increase tourism export revenues by billions of ISK, according to the report. Johannes Thor Skulason, Managing Director of the Icelandic Travel Industry Association, says the development would be very positive if it materialises. Last year, around 125,000 Chinese tourists visited Iceland, making China the fourth-largest market for Icelandic tourism after the United States, United Kingdom and Germany. "If Air China offers three flights per week, it would bring between 30,000 and 60,000 additional tourists from

China annually. If flights operate six days a week, we could see up to a 100% increase in the number of Chinese travellers," Skulason says.

US Capital Group continues selling shares in Islandsbanki Funds managed by US investment company Capital Group have sold more than seven million shares in Islandsbanki for ISK 1 billion, according to business news website Innherji. Capital Group, the bank's largest foreign investor, has cut its stake by over a fifth in just a few weeks.

Since mid-January, amid extensive share buybacks by the bank, the fund manager has reduced its position during that time by around 17.5 million shares worth approximately ISK 2.5 billion at market value.

Mid-sized companies struggle to grow in current economic climate Listed real estate company Eik reported stronger-than-expected results for 2025, with EBITDA at the top end of guidance and a robust growth outlook for 2026, supported by portfolio expansion and stable occupancy. The company also signalled a sizeable potential dividend and recently completed a long-term bond issuance to support refinancing plans. However, when presenting the company's 2025 financial results last week, both CEO Hreidar Mar Hermannson and CFO Lydur Gunnarsson noted that while performance remains solid, medium-sized companies are not currently entering a growth phase in the current economic climate, according to business news website Innherji. They added that credit impairments remain low overall, with payment difficulties largely confined to restaurants and entertainment businesses.

SPAR enters Icelandic retail market Drangar, parent company of retail group Samkaup, has signed an agreement with international retail chain SPAR International on the use of the brand in Iceland, according to business publication Vidskiptabladid. Under the agreement, stores currently operating under several brands will adopt the SPAR brand by the end of 2027, covering a total of 40 stores across Iceland. Following the transition, Samkaup will sell food products under the brands Pris, Netto and SPAR. SPAR was founded in the Netherlands in 1932 and today operates more than 13,800 stores in 50 countries.

New legislative proposal could deter foreign investment according to Icelandair CEO Directors at airline Icelandair have warned that a new bill on foreign investment reviews presented by the Minister of Industry could deter international companies from doing business in Iceland due to its complexity, according to business publication Vidskiptabladid. In their response to the proposal, concerns are raised about the bill's broad scope and the sheer number of measures it covers. There are also worries that provisions for two-phase

proceedings, multiple possible extensions, data collection requirements, and potential interim measures could cause major delays to normal business operations and create considerable uncertainty for both domestic and foreign parties. The directors at Icelandair are of the opinion that if passed in its current form, the legislation could substantially complicate operations for companies with international activities and deter foreign investment through overly burdensome procedures.

Lithuanian subsidiary of Play declared bankrupt The Lithuanian subsidiary of airline Play, originally founded in Iceland, has been declared bankrupt, and the Vilnius District Court has frozen the company's assets, according to business publication Vidskiptabladid. Play's board suspended the airline's operations in Iceland last September and subsequently filed for bankruptcy. However, the airline's subsidiaries in Malta and Lithuania continued operations, although their activities were connected to the Icelandic parent company. The Lithuanian company reportedly owes approximately EUR 83,000 in public fees, and employees are awaiting final salary payments.

Brunnur Ventures establishes new start-up fund Brunnur Ventures has established a new ISK 7.2 billion fund, Brunnur III, with participation from 11 Icelandic pension funds, the Innovation Fund Kria and Silfurberg ehf., according to business publication Vidskiptabladid. The fund has completed its subscription process but has permission to expand with participation from professional investors by up to ISK 10 billion by the end of February. Brunnur III will invest in start-up and growth companies, aiming to support strong teams building international companies from Iceland, according to the report.

Icelandic authorities sign Brownstein to lobby in Washington The Icelandic government has hired law and consulting firm Brownstein Hyatt Farber Schreck to represent Iceland's interests with the US government, reports daily newspaper Morgunbladid, based on an article on political news website Politico. The agreement includes a monthly retainer of USD 25,000 for six months. According to the report, Brownstein will work to strengthen relations with the US administration. The move comes after Billy Long, the US ambassador-designate to Iceland, flippantly suggested that Iceland should become the 52nd US state, remarks that reportedly caused concerns within Iceland's Ministry for Foreign Affairs. Long has since apologised, claimed his comments were a joke and should not have been taken seriously.

Government plans to reduce indexation in financial markets The first steps towards reducing indexation in the credit market could come towards the end of the year, according to daily newspaper Morgunbladid. Prime Minister Kristrun Frostadottir

said that while proposals are not yet fully developed, the issue could be discussed at the next Economic Council meeting. However, she stressed that no final decision has been made and declined to say when concrete proposals might be expected.

Key figures as of 10 February 2026* Inflation 5.2% Key interest rate 7.25% USD 121.99 GBP 166.65 EUR 145.00 *based on information from www.cb.is

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