Íslandsbanki hf. - Company Announcement

Islandsbanki hf. :Only ISK CPI-linked mortgages in covered bond pool

As Íslandsbanki has listed covered bonds on the NASDAQ OMX Iceland, the Bank
would, in light of the ruling on mortgage loans in foreign currencies by the
Supreme Court of Iceland 15 Feb 2012, like to make known:

As the underlying cover pool consists only of ISK CPI-linked mortgage loans, the
ruling won't affect Íslandsbanki's covered bond pool. Furthermore, the cover
pool must withstand a weekly stress test and is regulated by the Icelandic
Financial Supervisory Authority which additionally appoints an independent
inspector to monitor the issue.

Íslandsbanki will carefully review the Court's ruling and assess its possible
impact on the Bank.


[HUG#1586286]