Íslandsbanki hf. - Company Announcement

Islandsbanki hf. : Glitnir hf. creditor group submits amended proposal for stability contribution

The Ministry of Finance and Economic Affairs announced this morning that a group
of Glitnir's hf. creditors has submitted amendments to its previous proposal
concerning Glitnir's stability contributions to the State announced on June
8(th) 2015, in relations to the government's plan of lifting of the capital
controls.

The main changes from  the already proposed stability contribution is that
Glitnir will relinquish to the authorities all of its shares in ISB Holding
ehf., which owns 95% of shares in Íslandsbanki hf. Íslandsbanki's equity
totalled about ISK 185 bn. at the end of June 2015.

On July 16(th), Glitnir and Íslandsbanki entered into Heads of Agreement
regarding certain measures to facilitate the composition of Glitnir. The main
change from the existing Agreement is that the total equity ratio will not be
reduced, as the current proposal does not entail a special dividend from the
bank. Glitnir will purchase from the Government  the existing Tier 2 notes
issued by Íslandsbanki.  Deposits in FX are to be termed out, whilerepayment of
ISK deposits is subject to an agreement with the Central Bank.

The above described measures are subject to the same assumptions as were
specified in the proposals of 8 June 2015, including an exemption from the
Foreign Exchange Act, no. 87/1992, which will authorise Glitnir to conclude its
composition agreements.Glitnir's composition agreement is not expected to be
concluded before year end.

These changes will not impact Íslandsbanki's daily operations and will leave the
bank with very strong capital ratios.

The announcement from the Ministry of Finance and Economic Affairs can be found
here: http://www.ministryoffinance.is/news/nr/20164


For further information:
Investor Relations - Guðbjörg Birna Björnsdóttir, ir@islandsbanki.is and tel:
+354 844 4752.
Media Relations - Edda Hermannsdóttir, pr@islandsbanki.is and tel:
+354 844 4005.







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