Landsbanki Íslands hf. - Company Announcement

Moody's Downgrades Landsbanki's Credit Rating to Caa1/E/NP

Moody's Investors Service today downgraded the long-term foreign and
local currency deposit ratings of Landsbanki Islands hf
("Landsbanki") to Caa1 from A2 and its bank financial strength rating
("BFSR") to E from C-. The bank's Prime-1 short-term rating was also
downgraded to 'Not-Prime'. The outlook on all ratings is developing.

For further information on the rating action, please refer to the
attached press release from Moody's.

For further information please contact:
Brynjólfur Helgason, Alternate CEO and MD International Banking.
Media Relations - Andrew Walton, Financial Dynamics, tel: +44 20 7269
7204 / mob: +44 7711 264 157.

Attachments:

Moodys announcment - 8 Oct 2008.pdf