Íslandsbanki raises new equity

Íslandsbanki raises new equity for ISK 19 billion (EUR 252 million)

10.01.2006, After sourcing for interest among institutional investors, Íslandsbanki’s board of directors approved, after the close of markets yesterday, to issue one billion new shares. With this the board fully uses the authorization it had from Íslandsbanki´s AGM on February 22, 2005. The price per share was ISK 18.6 and value of the shares ISK 18.6 billion or EUR 252 millions.

Eighty institutional investors indicated interest for new shares worth a total of ISK 29 billion, which is a 56% oversubscription. Settlement day for the buyers is Monday 16th January. After the issue there are 14.1 billion shares outstanding in Íslandsbanki.

Íslandsbanki also sold on Monday outstanding shares in Íslandsbanki for ISK 10 billion. Those were shares the bank had previously bought from Straumur Burdaras Investment Bank as per an announcement to the ICEX yesterday.

While increasing the overall financial strength of the bank, the issue strengthens Íslandsbanki´s equity base substantially which gives the bank adequate room for growth.

The board of directors also approved to propose to the annual meeting of Íslandsbanki, to be held February 21, 2006, that shareholders be given the option to receive up to half of the dividend in the form of shares in the bank, at a price no higher than ISK 18.6 per share.

Furthermore, the board approved that the bonus for all employees for 2005 would be paid in shares in the bank at a price no higher than ISK 18.6 per share.

Dividend amount and employee bonus will be decided at a board meeting to be held on January 31, 2006, when the financial result of 2005 will be presented to the board of directors.

Bjarni Ármannsson CEO of Íslandsbanki: “I am very pleased with the investor appetite for the new share issue. The increased equity gives the bank the opportunity to grow at a faster pace as well as strengthening our financial position substantially. The large number of investors that participated is a vote of confidence in the bank, the board of directors, the staff and the direction in which we are heading.”

A new list of Íslandsbanki´s largest shareholders will be published once the issue has been finalized.

About Íslandsbanki:
Íslandsbanki (ISB) is a leading Iceland-based financial group that offers universal banking. The bank has an office in Denmark, a branch in London and is the sole owner of two banks in Norway (BNbank and KredittBanken) and one in Luxembourg. KredittBanken owns FactoNor, which is a leading West Norwegian factoring company, and the investment company Sydvestor. Íslandsbanki is listed on the Iceland Stock Exchange. Íslandsbanki has a market capitalization of approximately EUR 3 billion. Total assets at the end of September 2005 were EUR 17.7 billion, and ISB announced record profits of EUR 244 million for the first three quarters of 2005, while ROE for the period was 34%.

Contact Information

Vala Pálsdóttir

Corporate Communications and Investor Relations

Íslandsbanki (ISB)

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