Íslandsbanki hf. - Company Announcement

Islandsbanki hf. : New covered bond issue

Íslandsbanki has issued a new covered bond. The issue is a 3-year non-indexed
issue, ISLA CB 16, for an amount of ISK 1,700,000,000 at a real yield of 6.35%.
The bonds pay 6.2523% semi-annual interest.

In total, Íslandsbanki has now issued five series of covered bonds amounting to
ISK 22.34bn since its inaugural issue in December 2011.

The bonds were sold to a broad group of investors. Trading is expected to
commence on 22 October 2013 on the NASDAQ OMX Iceland. Market making for all of
Íslandsbanki's covered bond issues is in the hands of MP bank.

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 issuances are regulated by the Icelandic Financial Supervisory
Authority which additionally appoints an independent inspector to monitor the
issuances. Special cover pool reports on the covered bond issuances are
published quarterly and can be found on Íslandsbanki's web.

For further information:

Investor Relations - Tinna Molphy, tinna.molphy@islandsbanki.is and tel:
+354 440 3187.

Media Relations - Dögg Hjaltalín, dogg.hjaltalin@islandsbanki.is and tel:
+354 440 3925.


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