Landsbankinn hf. - Company Announcement

Landsbankinn hf.: Landsbankinn and LBI reach an agreement on amendments of the terms of the bonds

Landsbankinn and the Winding up Board of LBI have reached an agreement on
amendments to the bonds of December 2009, with a total outstanding balance
equivalent to approximately 226 billion Icelandic Krona (ISK). The agreement is
conditional upon the Winding up Board of LBI obtaining certain exemptions from
the capital controls. 

The final maturity will be extended from October 2018 to October 2026 with bond
tranches maturing every second year throughout the period. Landsbankinn has an
option to make prepayments of the bonds without any additional costs. 

Interest rates will remain unchanged at 2.9% margin until October 2018.
Thereafter, the margin steps up to 3.5% for the 2020 maturity, increasing up to
4.05% for the 2026 maturity. Each of the maturities between 2020 and 2026 will
be equivalent to approximately 30 billion ISK. 

Steinthor Palsson, CEO of Landsbankinn says: “This agreement puts the bank in a
good position to meet the repayment obligations under the amended bonds and
facilitates access to international debt capital markets. Specific restrictions
on dividend payments have also been removed, enhancing shareholder value.
Moreover, the agreement will significantly improve Iceland's balance of
payments and pave the way for easing of the capital controls.  We therefore
consider this to be a significant step in the development of both the Icelandic
economy and Landsbankinn.” 

Initially, the bonds were issued on the basis of decisions of the Icelandic
Financial Supervisory Authority in accordance with provisions of the Emergency
Act from 2008. The Principal amount of the bonds was compensation for the net
assets and liabilities transferred to Landsbankinn. 

It is expected that final documentation will be finalised in the coming weeks.



For further information:
Kristján Kristjánsson - pr@landsbankinn.is, 410 4011 & 899 9352