Landsbankinn hf. - Company Announcement

Landsbankinn hf. : Landsbankinn concludes a market-making agreement for its covered bonds

Today,  Landsbankinn hf.  signed market-making  agreements with  Arion bank hf.,
Islandsbanki  hf. and Kvika hf. regarding  covered bonds issued by Landsbankinn.
The  covered  bonds  are  listed  on  NASDAQ  Iceland  and  the  market  makers'
obligations  in accordance with the agreement will become effective on 4 October
2016.

Prior  to market opening each business day, the market makers will place bid and
ask  orders for covered bonds issued by Landsbankinn. The minimum nominal amount
of  orders in benchmark  series shall be  ISK 80m or ISK  60m if the size of the
benchmark  series is  less than  ISK 10bn. Benchmark  series are LBANK CB 19 and
LBANK CBI 22. The minimum nominal amount of orders in other series is ISK 20m.

Individual  market  makers  are  released  of  their obligations on a particular
trading  day once the trading volume (specified  as "AUTO") of that market maker
totals ISK 500m for all series of covered bonds issued by Landsbankinn.

The  maximum spread between bid and ask orders is determined by time to maturity
on a given day, in accordance with the following table:

+---------------------------------+
| Time to maturity  Maximum spread|
+---------------------------------+
|   0 - 6 months     Unspecified  |
|                                 |
|6 months - 2 years     0.20%     |
|                                 |
|   2 - 4 years         0.30%     |
|                                 |
|   4 - 6 years         0.35%     |
|                                 |
|   6 - 9 years         0.60%     |
|                                 |
|   9 - 12 years        0.70%     |
|                                 |
|  12 - 18 years        1.00%     |
|                                 |
|18 years or longer     1.15%     |
+---------------------------------+

In  conjunction with the market-making  agreements Landsbankinn will provide the
market  makers with  bond lending  facilities under  which each market maker can
borrow up to 320m in each benchmark series and 80m in other series.


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