Íslandsbanki will become the first financial institution since the collapse in 2008 to complete a primary transaction on the NASDAQ OMX Iceland, when trading commences this morning on a covered bond issued by the Bank. This transaction marks an important step in rebuilding the capital markets in Iceland. The Bank has been almost solely funded by deposits since its establishment in October 2008, so this transaction represents an important diversification of funding sources for the Bank. The ISK 4bn issue, which is oversubscribed, was sold to a broad group of institutional investors.

The bonds are issued under Act 11/ 2008 on Covered Bonds which obliges the issuer to fulfil strict requirements; the underlying cover pool must withstand a weekly stress test with regards to interest rates and exchange rates. The issue is regulated by the Icelandic Financial Supervisory Authority which additionally appoints an independent inspector to monitor the issue.

Birna Einarsdóttir, CEO of Íslandsbanki

"We are thrilled to have reached this milestone which can be seen as an important part of resurrecting the domestic financial and capital markets. We were determined to issue the covered bonds in Iceland in order to be able to offer a new investment opportunity to domestic investors. The issue represents an important step in strengthening the Icelandic financial market and will contribute to its development."