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Islandsbanki hf. : Íslandsbanki issues a EUR 500m benchmark 1.75% Fixed Rate Note, corresponding to a spread of 200 basis points over mid-swaps

Íslandsbanki has issued a 4-year EUR 500m (ISK 65bn) 1.75% Fixed Rate Note,
corresponding to a spread of 200 basis points over mid-swaps.

The transaction was more than twice oversubscribed and placed with investors
in the UK, Scandinavia and continental Europe. The bond is expected to be
listed on the Irish Stock Exchange on 7 September 2016.

The fixed rate note extends the Bank's maturity profile and will have a
positive effect on its funding costs. The proceeds of the transaction will
largely be used to refinance existing facilities, including a EUR 138m Tier 2
instrument maturing in December 2019. Based on end of June 2016 numbers, the
transaction will lead to a reduction in the Bank's total capital ratio from
28.9% to 27.1%, which is still considerably above regulatory requirements.

The bonds will be issued under Íslandsbanki's USD 1.5bn Global Medium Term
Note (GMTN) Programme. The GMTN Base Prospectus and its Supplements are

Joint lead managers on the transaction were Bank of America Merrill Lynch,
Citigroup, Deutsche Bank AG, and JP Morgan. DNB acted as a co-manager.

Birna Einarsdóttir, CEO of Íslandsbanki:

"This EUR 500m note marks Íslandsbanki's second EUR benchmark and third
foreign currency denominated issue this year. We have made great strides in
diversifying the Bank's funding structure in recent years.

Favourable spread development in recent weeks and good demand for the Bank's
bonds is a welcome sign of confidence in Íslandsbanki's strong fundamentals,
the positive outlook for the Icelandic economy, and the recent steps taken
towards lifting of capital controls.

This transaction enables us to refinance certain legacy debt instruments,
thereby making the Bank fully market funded. Improved access to international
funding at better rates will also benefit our customers who require foreign
currency financing."

For further information:

* Investor Relations - Tinna Molphy, and tel:
+354 440 3187.
* Media Relations - Edda Hermannsdóttir,
and tel: +354 440 4005.


This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Islandsbanki hf. via Globenewswire

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