Straumur-Burðarás Fjárfestingabanki hf. - Corporate Action

An update on Straumur's position

Developments in the global financial markets have adversely impacted
most financial institutions, including Straumur, since 30 June.
Straumur has taken all reasonable steps to disclose information
concerning the impact upon it of these developments to its
shareholders and creditors.

Insofar as it has been possible, over the last four months, Straumur
has continued to follow its stated strategy of developing
client-driven revenue and de-risking its balance sheet.

Straumur's balance sheet and capital position has been adversely
affected by declining asset values (in respect of both financial
assets and loans). Although the Icelandic part of its business is
relatively small, only accounting for 26% of its client driven
revenue in the first half of the year and 22% of assets as at 30 June
2008, it has, in particular, been impacted adversely by recent events
in that market.

The bank has estimated its current capital position taking account of
the financial consequences of trading gains and losses, fair value
adjustments and impairment provisions arising from events in the
global and Icelandic markets. The bank estimates that, as at 31
October 2008, the Bank has a capital adequacy ratio to be in excess
of 20% and a Tier 1 ratio in excess of 18%

Straumur had a number of asset, liability and derivative balances
with Landsbanki Íslands hf., Glitnir banki hf. and Kaupthing banki
hf. at the date when these banks' operations were taken over by the
Icelandic Financial Supervisory Authority. Straumur believes that
after the settlement and set off process in respect of these balances
the net impact on its capital position is positive.

Straumur's reporting currency is Euros and the bank normally hedges
its net assets into Euros. The Bank also has, however, a number of
assets and liabilities denominated in other currencies including the
Icelandic Kroner. Over the last month due to an effective closure of
the foreign exchange market in Iceland, the bank has not been able to
carry out its normal hedging of net currency positions into Euros.
The bank has therefore been forced to carry positions in a number of
currencies. It will take steps to hedge these positions when market
conditions allow. Straumur can confirm that the weakness of the
Icelandic Kroner has not had a significant impact on its capital
position.

Straumur has relatively modest financing needs as it is not highly
leveraged (having a debt to equity ratio of 31% at 30 June 2008). It
has long term bank financing of less than €400m maturing over the
next 12 months. However, recent events in Iceland have put pressure
on Straumur's liquidity position. The bank has managed its cash and
liquidity position carefully over the last month and the position has
steadily improved. Throughout the last month the bank has met its
obligations as they have fallen due and is confident that this will
remain the case going forward. Nevertheless, as a result of concerns
about the situation in Iceland, Straumur's credit rating has been
steadily downgraded by Fitch to a current Long term Issuer Default
Rating of B. Importantly, Straumur has managed its relationship with
its funding banks proactively and positively through recent events
and is working with them on securing its liquidity position.

As a result of the events described above, Straumur has focused on
reducing its balance sheet and risk profile, protecting its capital
and improving its liquidity position. At 31 October, Straumur
currently had gross assets of less than €5bn and risk weighted assets
of less than €4bn. At the same time the Bank has taken opportunities,
to develop the revenue generating capability of the organization. At
the start of November recruiting a number of former Teather's staff
in London in order to enhance its Corporate Finance and Securities
platform in the UK.

Despite the difficult conditions which continue to prevail in most of
the markets in which Straumur operates the board and management of
the Bank are confident that the actions described above and its
strong capital position will enable it to develop its business in
line with its current strategy - focusing on client-driven revenues,
diversifying its sources of income and de-risking its balance sheet.

For further information contact:

Georg Andersen
Senior Vice President, Head of Corporate Communications
Tel: +354 858 6707
E-mail: georg@straumur.com

Ed Gasgoigne-Pees
Managing Director, Financial Dynamics
Tel: +44 (0)20 7269 7132
E-mail: ed.gascoigne-pees@fd.com

Felicity Murdoch
Associate Vice President, Financial Dynamics
Tel: +44 (0)20 7269 7243
E-mail: felicity.murdoch@fd.com