Íslandsbanki hf. - Company Announcement

Islandsbanki hf. : Islandsbanki sells commercial paper

Islandsbanki  hf. has  today sold  1, 2, 4 ,5 and  6 month commercial paper. The
total  issuance in each series cannot exceed 1,500,000,000 ISK in nominal terms.
The auction was structured so that bidders submitted bids at predetermined rates
(prices).  The 1 month commercial paper  was offered at a  simple rate of 5.90%
(price: 99.5594), the 2 month commercial paper at a simple rate of 6.05% (price:
98.8373), the  4 month  commercial  paper  at  a  simple  rate  of 6.20% (price:
97.9917), the  5 month  commercial  paper  at  a  simple  rate  of 6.25% (price:
97.2809) and  the 6 month  commercial paper  at a  simple rate  of 6.30% (price:
96.9133).

Total  demand in the auction  was ISK 5.23bn. Total bids  for a nominal value of
ISK  130m were accepted  for the  1 month commercial  paper, ISK 530m for the 2
month  commercial, ISK 800m for the 4 month commercial paper, ISK 1,200m for the
5 month  commercial  and  ISK  1,500m for  the  6 month  commercial paper. Total
outstanding commercial paper amounts to ISK 8.81bn.

The commercial paper was sold to a broad group of investors. Trading is expected
to commence on 19 July on the Nasdaq OMX Iceland.

For further information:

* Investor Relations - Jóhann Ottó Wathne, johann.wathne@islandsbanki.is and
tel: +354 440 4607.

* Media Relations - Már Másson, mar.masson@islandsbanki.is, and tel:
+354 440 4990


[HUG#1716217]