Lánamál ríkisins - Company Announcement

Authorization for pension funds to invest abroad this year

The Central Bank of Iceland intends to grant pension funds operating under
licences as per Sections V or XI of Act no. 129/1997, together with other
domestic providers of personal pension savings schemes, an exemption from the
Foreign Exchange Act, no. 87/1992, for investments in financial instruments
issued in foreign currencies.  The total authorised for such investments will
amount to ISK 10 billion and the investment mandate will be allocated between
parties with regard to size, which will be given a weighting of 70%, and to net
inflow, with a weighting of 30%.  The calculation will be based on data from
the latest Financial Supervisory Authority annual report on the pension funds,
viz. the figures for the year 2013.  The exemption to each party will expire at
the end of the current calendar year. 

Recent inflows of foreign currency and reduced uncertainty over the prospects
for the balance of payments following Acts passed by the Icelandic parliament
regarding the settlement of the estates of failed commercial and savings banks
and the announcement of measures regarding so-called offshore kronur later in
the current calendar year will create scope for investments by pension funds
and other providers of personal savings schemes in financial instruments issued
in foreign currencies.  Such investments represent a benefit to the national
economy in that they will enable the pension funds to achieve a better spread
of risk in their asset portfolios while reducing the build-up in pension funds'
foreign investment requirements once capital controls are lifted.  By this the
risk of instability in the wake of the lifting of capital controls will be
reduced. 

Pension funds and providers of personal pension savings schemes interested in
applying for exemptions outlined above are directed to send their application
to the Capital Controls Surveillance Unit of the Central Bank of Iceland.  An
application form for exemptions can be found online at
http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=9087. 

Applications should be sent in writing to the Central Bank at the following
address: 

Central Bank of Iceland
attn. Capital Controls Surveillance Unit
Kalkofnsvegur 1
150 Reykjavík
Iceland

For further information, please contact Már Guðmundsson, Governor of the
Central Bank of Iceland, on telephone +354 569 9600.