Arion Bank hf. - Company Announcement

Arion Bank and Kaupthing reach funding agreement

Arion Bank hf. has reached an agreement with Kaupthing ehf. under which Arion
Bank will issue a bond in the amount of $747,841,000 (ISK 97 billion). The bond
is being issued under Arion Bank’s EMTN programme. It is a 7-year instrument
and is callable on interest payment dates during the first two years. The bond
bears floating LIBOR plus 2.6% for the first two years and will be repriced
then at market terms. 

The bond will offset loans in foreign currency taken by Arion Bank from the
Central Bank of Iceland, which are now owned by Kaupthing, and Kaupthing
deposits in foreign currency at Arion Bank. 

The bond issue forms part of the arrangements for the liberalization of capital
controls in respect of Kaupthing, first announced by the Ministry of Finance
and Economic Affairs on 8 June 2015. 

For further information please contact Haraldur Gudni Eidsson of Arion Bank's
Communications division at haraldur.eidsson@arionbanki.is, or tel. +354 444
7108.