Kaupþing banki hf. - Company Announcement

Offering of structured covered bonds

Kaupthing Bank hf. hereby announces the offering of structured
covered bonds, rated Aaa by Moody's, to professional investors for
the funding of new housing loans. This is in line with the bank's
policy of making an offering of structured covered bonds for the
funding of new housing loans at least once every quarter. The bonds
are CPI-indexed with fixed interest for the duration of the loan,
maturing in 2033 and 2048, and listed on the OMX Nordic Exchange in
Iceland.

Interest on new housing loans at Kaupthing is determined by the
result of the offering, plus an additional 90 basis points. The
objective of the bank with this process is to increase transparency
with regards to the bank's interest rates on housing loans.

The offering will be through a book building process and will finish
at 4 pm (Icelandic time) on Friday 26 September 2008. Offers shall be
directed to Kaupthing's Capital Markets.

For further information please contact:
Jónas Sigurgeirsson, Chief Communications Officer, tel. + 354 444
6112 or ir@kaupthing.com