Lánamál ríkisins - Company Announcement

Central Bank of Iceland foreign currency auction 16 June 2016

The Central Bank of Iceland hereby offers to purchase krónur in exchange for
cash payment in foreign currency. More specifically, the Bank is offering to
buy krónur defined as offshore krónur according to Act no. 37/2016. The auction
will take place on Thursday 16 June 2016. It will begin at 10:00 hrs. and last
until 14:00 hrs. that same day. The auction is part of the comprehensive action
plan to lift the capital controls; cf. the Government and Central Bank’s
capital account liberalisation strategy of 8 June 2015. In instances where
Treasury bonds, Treasury bills, or Housing Financing Fund bonds are used as
payment for the foreign currency in the auction, the repurchase price will be
published on 10 June 2016. 

The auction is structured with a single-price format; i.e., all accepted offers
will be offered to investors at the same price. The price for euros sold in the
auction will be determined by auction participation, as is set forth in the
following table: 



Amount of offshore króna assets offered for sale:  Auction price:  
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0 kr. – 50,000,000,000 kr.                         210 kr. per euro
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50,000,000,001 kr. – 75,000,000,000 kr.            205 kr. per euro
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75,000,000,001 kr. – 125,000,000,000 kr.           200 kr. per euro
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125,000,000,001 kr. – 175,000,000,000 kr.          195 kr. per euro
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175,000,000,001 kr. or more                        190 kr. per euro
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Commercial banks and securities depositories that have deposit accounts with
the Central Bank of Iceland and have concluded an intermediation agreement with
the Central Bank will act as intermediaries for participation in the auction by
owners of offshore króna assets (a list of parties that have already concluded
intermediation agreements with the Central Bank can be found below). 

The deadline for submittal of offers is at 14:00 hrs. on 16 June 2016. Further
information on the auction can be found in the Terms of Auction. 

Settlement of auction transactions will take place on 29 June 2016.

It should be noted that the 16 June 2016 auction will be the last auction in
which owners of offshore krónur will be invited to purchase foreign currency
before the authorities begin lifting controls on residents: pension funds,
other legal entities, and individuals. 

Further information can be obtained from Már Guðmundsson, Governor of the
Central Bank of Iceland, at tel: +354 569-9600. 

Entities that have concluded intermediation agreements:
Landsbankinn hf.
Íslandsbanki hf.
Kvika banki hf.

Attachments:

Terms_of_FX_auction_25 05 2016.pdf