Íslandsbanki hf. - Company Announcement

Islandsbanki hf. : Two new covered bond issues on NASDAQ OMX Iceland

Íslandsbanki has listed two new covered bonds issuances on NASDAQ OMX Iceland
hf. This follows on the back of Íslandsbanki's successful covered bond issue in
2011, the first securities listed in the Icelandic stock exchange after the
financial crisis in 2008.

The two issues, which are both CPI-linked,  are on the one hand a 7 year
issuance, ISLA CBI 19, for an amount of ISK 1,830,000,000 at a real yield of
2.84%, and on the other hand a 12 year issuance, ISLA CBI 24, for an amount of
ISK 1,500,000,000 at a real yield of 3.45%. The bonds will commence trading on
Wednesday 7 March 2012.

Sold to a broad group of institutional investors, total appetite amounted to ISK
4,950,000,000 but only 67% of offers were accepted, or for ISK 3,330,000,000. No
offers were accepted for the non-indexed linked 3 year issue. Market making for
all of Íslandsbanki's covered bond issues is in the hands of MP banki.

Covered bonds are considered more secure for investors than conventional bonds.
The bonds are issued under Act 11/ 2008 on Covered Bonds which obliges the
issuer to fulfil strict requirements, whereby the underlying cover pool must
withstand a weekly stress test with regards to interest rates and exchange
rates. The issue is regulated by the Icelandic Financial Supervisory Authority
which additionally appoints an independent inspector to monitor the issue.


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