Íslandsbanki hf. - Company Announcement

Islandsbanki hf. :MP bank market maker for covered bond ISLA CB 15

Íslandsbanki hf. has selected MP bank as market maker for the Bank's ISLA CB 15
covered bond.  The market maker is obligated to submit bid and ask offers for at
least ISK 20,000,000 nominal value, each day before the market opens.

The market maker is required to renew its bid and ask offers within 15 minutes
of them being accepted. These are valid only within the trading day.  The
maximum spread between the market maker's bid and ask prices can be no higher
than 0.8%.

If trading in one business day reaches ISK 60,000,000 nominal value, the market
maker may cease to present bids/offers until the next business day.

The market making is effective as of Thursday 25 October 2012.

For further information:

  * Investor Relations - Jóhann Wathne, johann.wathne@islandsbanki.is
    and tel: +354 440 4607.
  * Media Relations - Guðný Helga Herbertsdóttir,
    gudny.helga.herbertsdottir@islandsbanki.is and tel:
    +354 440 3678 / mob: +354 844 3678.

[HUG#1652058]