Lánamál ríkisins - Company Announcement

Central Bank of Iceland offers to purchase euros

for long-term investment in the Icelandic economy, or in exchange for payment
in Treasury bond series RIKS 30 0701. 

The Central Bank of Iceland is offering to purchase euros in exchange for
Icelandic krónur for long-term investment in the Icelandic economy, or in
exchange for payment in Treasury bond series RIKS 30 0701. The two auctions are
an element in the removal of restrictions on movement of capital as set forth
in the Bank's capital account liberalisation strategy of 25 March 2011, and in
the Bank's Terms of foreign exchange transactions according to the Investment
Programme for capital account liberalisation, dated 18 November 2011. 

The Central Bank is offering to purchase up to a maximum of 100 million euros
in the two auctions combined. The auction amount is subject to the reservation
that it is a joint amount for both auctions and may change accordingly. The
Central Bank reserves the right to raise or lower the auction amount. 

Specified primary dealers in the bond market will act as intermediaries for
transactions in the auction involving payment in Treasury bonds. A list of
these primary dealers can be found on the Central Bank website. 

Financial institutions that have concluded a collaboration agreement with the
Central Bank of Iceland may act as intermediaries (see list below) and will
handle investors' applications for proposed participation in the auction
according to the Investment Programme. The auction is open to investors whose
applications for participation in the Investment Programme have been approved. 

Bids shall be submitted no later than 15 February 2012. Further information on
the auctions can be found in the Terms of Auction. 

The objective of these measures is to sell Icelandic krónur for foreign
currency to parties that have decided to invest in the Icelandic economy or in
Icelandic Treasury bonds for at least five (5) years. As such, they contribute
to the acquisition of economical long-term Treasury financing and thereby
reduce the Treasury's refinancing need, as well as attracting foreign capital
to the country for long-term investment, thus facilitating the removal of the
capital controls.

Attachments:

Terms of Auction_TreasurySec15Feb2012.pdf

Terms of Auction_Investm.Program15Feb2012.pdf