Glitnir Banki Hf

OFFERING CIRCULAR

Glitnir banki hf. (incorporated in Iceland as a public limited company) €15,000,000,000 Global Medium Term Note Programme

Under this €15,000,000,000 Global Medium Term Note Programme (the “Programme”), Glitnir banki hf. (the “Issuer” or the “Bank”) may from time to time issue notes (the “Notes”) denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below). The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed €15,000,000,000 (or its equivalent in other currencies calculated as described herein), subject to increase as described herein. This Offering Circular is issued in replacement of the Issuer’s offering circular dated 5th July, 2007 and accordingly supersedes that document in its entirety. The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time by the Issuer (each a “Dealer” and together the “Dealers”), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes. An investment in Notes issued under the Programme involves certain risks. For discussion of these risks see “Risk Factors” beginning on page 6. Application has been made to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 (the “UK Listing Authority”) for Notes issued under the Programme during the period of 12 months from the date of this Offering Circular to be admitted to the official list of the UK Listing Authority (the “Official List”) and to the London Stock Exchange plc (the “London Stock Exchange”) for such Notes to be admitted to trading on the London Stock Exchange’s Regulated Market. References in this Offering Circular to Notes being “listed” (and all related references) shall mean that such Notes have been admitted to trading on the London Stock Exchange’s Regulated Market and have been admitted to the Official List. The London Stock Exchange’s Regulated Market is a regulated market for the purposes of Directive 2004/39/EC (the “Markets in Financial Instruments Directive”). The Notes will be offered in the United States to qualified institutional buyers (“QIBs”) in reliance on Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”) who are qualified purchasers (“Qualified Purchasers”) within the meaning of Section 2(a)(51)(A) of the United States Investment Company Act of 1940, as amended (the “Investment Company Act”) and the rules and regulations thereunder. In addition, the Notes may be offered outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The Notes will not be registered under the Securities Act. The Issuer has not registered and does not intend to register as an investment company under the Investment Company Act, in reliance on an exclusion from the definition of “investment company” pursuant to Section 3(c)(7) of the Investment Company Act. The Notes may not be offered or sold within the United States or to U.S. persons, except to QIBs in reliance on the exemption from registration provided by Rule 144A who are Qualified Purchasers, and in offshore transactions in reliance on Regulation S. See “Notice to Investors” on page 21 Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein that are applicable to each Tranche (as defined under “Terms and Conditions of the Notes”) of Notes will be set out in a final terms document (the “Final Terms”) which, with respect to Notes to be listed on the London Stock Exchange, will be delivered to the UK Listing Authority and the London Stock Exchange. The Programme provides that Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchanges or markets as may be agreed between the Issuer and the relevant Dealer. The Issuer also may issue unlisted Notes and/or Notes not admitted to trading on any market. The Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event a supplemental Offering Circular, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes. Any person (an “Investor”) intending to acquire or acquiring any securities from any person (an “Offeror”) should be aware that, in the context of an offer to the public as defined in section 102B of the Financial Services and Markets Act 2000 (“FSMA”), the Issuer may be responsible to the Investor for the Offering Circular under section 90 of FSMA, only if the Issuer has authorised that Offeror to make the offer to the Investor. Each Investor should therefore enquire whether the Offeror is so authorised by the Issuer. If the Offeror is not authorised by the Issuer, the Investor should check with the Offeror whether anyone is responsible for the Offering Circular for the purposes of section 90 of FSMA in the context of the offer to the public, and, if so, who that person is. If the Investor is in any doubt about whether it can rely on the Offering Circular and/or who is responsible for its contents it should take legal advice. Such information would be provided to an investor at the time of any sub-offer. Arranger Glitnir banki hf. Dealers Barclays Capital BNP PARIBAS Citi Daiwa Securities SMBC Europe Deutsche Bank Glitnir banki hf. JPMorgan Merrill Lynch International UniCredit (HVB)

The date of this Offering Circular is 23rd June, 2008.

This Offering Circular comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC (the “Prospectus Directive”).

The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Offering Circular is in accordance with the facts and does not omit anything likely to affect the import of such information.

The previous paragraph should be read in conjunction with the 14th paragraph on the first page.

Certain information in the sections entitled “The Republic of Iceland” and “Financial Markets in Iceland” has been extracted from publications by the National Economic Institute, the Ministry of Finance and the Central Bank of Iceland. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by such sources, no facts have been omitted which would render the reproduced inaccurate or misleading.

This Offering Circular is to be read in conjunction with all documents which are incorporated herein by reference (see “Documents Incorporated by Reference”). This Offering Circular shall be read and construed on the basis that such documents are incorporated and form part of this Offering Circular.

The Dealers have not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Dealers as to the accuracy or completeness of the information contained or incorporated in this Offering Circular or any other information provided by the Issuer in connection with the Programme. No Dealer accepts any liability in relation to the information contained or incorporated by reference in this Offering Circular or any other information provided by the Issuer in connection with the Programme.

Subject as provided in the applicable Final Terms, the only persons authorised to use this Offering Circular in connection with an offer of Notes are the persons named in the applicable Final Terms as the relevant Dealer, the Managers or the Financial Intermediaries, as the case may be.

No person is or has been authorised by the Issuer to give any information or to make any representation not contained in or not consistent with this Offering Circular or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer or any of the Dealers.

Neither this Offering Circular nor any other information supplied in connection with the Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation by the Issuer or any of the Dealers that any recipient of this Offering Circular or any other information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Offering Circular nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of the Issuer or any of the Dealers to any person to subscribe for or to purchase any Notes.

Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Dealers expressly do not undertake to review the financial condition or affairs of the Issuer during the life of the Programme or to advise any investor in the Notes of any information coming to their attention.

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The Notes (as defined under “Form of the Notes”) have not been and will not be registered under the Securities Act, or the state securities laws of any state of the United States, and the Issuer has not registered under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”).

Unless otherwise specified in any supplement to this Offering Circular, each Series of Rule 144A Global Notes is initially being privately placed exclusively to persons reasonably believed by the Dealers to be QIBs that also are Qualified Purchasers. After their initial private placement, Rule 144A Global Notes may be resold to QIBs that also are Qualified Purchasers in a transaction satisfying the requirements of Rule 144A or in a transaction exempt from the registration requirements of the Securities Act. For a description of certain restrictions on resale or transfer of the Rule 144A Global Notes, see “Subscription and Sale” and “Notice to Investors” below.

This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuer and the Dealers do not represent that this Offering Circular may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, unless specifically indicated to the contrary in the applicable Final Terms, no action has been taken by the Issuer or the Dealers which is intended to permit a public offering of any Notes or distribution of this document in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Offering Circular and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Offering Circular and the offer or sale of Notes in the United States, the European Economic Area (including the United Kingdom and Iceland) and Japan, see “Subscription and Sale”.

All references in this document to “U.S. dollars”, “U.S.$” and “$” refer to the currency of the United States of America, to “ISK”, “krona” or “krónur” refer to the currency of Iceland, to “Japanese Yen” and “Yen” refer to the currency of Japan, to “Swiss francs” refer to the currency of Switzerland, to “Sterling” and “£” refer to the currency of the United Kingdom and to “euro” and “€” refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended.

Nothing herein should be considered to impose on the recipient of this Offering Circular any limitation on disclosure of the tax treatment or tax structure of the transaction or matters described herein.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

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AVAILABLE INFORMATION

To permit compliance with Rule 144A in connection with any resales or other transfers of Notes that are “restricted securities” within the meaning of the Securities Act, the Issuer has undertaken in a deed poll dated 28th July, 2005 (the “Deed Poll”) to furnish, upon the request of a holder of such Notes or any beneficial interest therein, to such holder or to a prospective purchaser designated by him, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if, at the time of the request, the Issuer is neither a reporting company under Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder.

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SUMMARY OF THE PROGRAMME ...... 1 RISK FACTORS ...... 6 DOCUMENTS INCORPORATED BY REFERENCE ...... 16 OVERVIEW OF THE PROGRAMME ...... 18 NOTICE TO INVESTORS ...... 21 FORM OF THE NOTES ...... 23 FORM OF FINAL TERMS...... 26 TERMS AND CONDITIONS OF THE NOTES ...... 40 USE OF PROCEEDS ...... 64 THE ISSUER...... 65 THE REPUBLIC OF ICELAND...... 81 FINANCIAL MARKETS IN ICELAND...... 84 ICELANDIC TAXATION ...... 86 UNITED STATES FEDERAL INCOME TAXATION...... 87 ERISA MATTERS...... 95 SUBSCRIPTION AND SALE ...... 97 GENERAL INFORMATION...... 101

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

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SUMMARY OF THE PROGRAMME

This summary must be read as an introduction to this Offering Circular and any decision to invest in any Notes should be based on a consideration of this Offering Circular as a whole, including the documents incorporated by reference. Following the implementation of the relevant provisions of the Prospectus Directive in each Member State of the European Economic Area no civil liability will attach to the Issuer in any such Member State in respect of this Summary, including any translation hereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this Offering Circular. Where a claim relating to information contained in this Offering Circular is brought before a court in a Member State of the European Economic Area, the plaintiff may, under the national legislation of the Member State where the claim is brought, be required to bear the costs of translating the Offering Circular before the legal proceedings are initiated.

Words and expressions defined in “Form of the Notes” and “Terms and Conditions of the Notes” shall have the same meanings in this summary.

Issuer: The Group is a leading financial group in Iceland and, as of the date hereof, the Bank is the third largest bank in Iceland by market capitalisation. The Bank provides universal banking services in its home markets of Iceland and Norway, offering a broad range of financial services to individuals, institutional investors and corporations. In addition, the Bank provides specialised financial services outside of its home markets. In early 2007, Glitnir implemented certain changes to its organizational structure. The intention of the organizational changes was to facilitate strong and profitable integration of all of its business units and to accommodate further growth. The resulting organizational structure was a combination of business, geographical and support units. The business units are Retail Banking, Markets, Investment Banking, Investment Management and Corporate Banking, the geographical units are Iceland, Nordic and International, and the support units are Finance & Risk Management, Treasury & Corporate Centre, Corporate Communications and Legal & Compliance.

In late January, 2008, the Bank announced additional changes to its organizational structure to reflect an increased regional focus on three geographical business regions: Iceland, Nordic and International. In Iceland, the Bank intends to continue to provide full universal banking services with a focus on the following business lines: Retail Banking, Corporate Banking, Investment Banking, Investment Management and Markets. In the Nordic countries, the Bank intends to focus on the activities of its Corporate Banking and Investment Banking business lines and continue to leverage its market share in equity brokerage services. The Bank has retail banking licenses in Norway and Finland where it intends to continue to provide asset management services and savings products. Internationally, the Bank intends to focus on its niche strategy in the renewable energy and seafood sectors through its Corporate Banking and Investment Banking business lines, as well as support its home market clients in their international expansion.

The Bank operates 21 branches in Iceland, along with a branch in London and Canada, and a representative office in China. The Bank currently has 21 wholly-owned subsidiaries, including Glitnir Bank ASA (formerly Kredittbanken ASA) and Bolig- og Næringsbanken ASA (“BNbank”) in Norway, Glitnir Capital Corporation in New York and Glitnir Luxembourg SA. Other subsidiaries consist of brokerage companies in Norway and Sweden, holding companies for investments of Glitnir banki hf., a real estate management company, and projects sponsored by members of the Group. In addition, the Bank has substantial shareholdings in other investment and

financial services companies, including a 55.0 per cent. stake in Borgun hf. (the Mastercard franchise in Iceland). As of 31st December, 2007, its total assets were ISK 2,949 billion and its net profit was ISK 28 billion.

The following tables summarize the Bank’s profit and loss accounts and balance sheets and provide certain key ratios as at 31st December in each of 2007 and 2006. This financial information was extracted without material adjustment from the audited consolidated financial statements of the Issuer, prepared in accordance with International Financial Reporting Standards (“IFRS”).

Profit and loss account 31st 31st December, December, 2007 2006 Amounts in millions of ISK Net interest income 39,082 37,084 Net fees and commissions income 37,644 26,459 Net (loss) gains on financial instruments held -879 6,010 for trading Net gains on financial instruments designated at fair value through profit/loss 5,202 2,097 Fair value adjustments in hedge accounting -448 -185 Net foreign exchange gains 280 581 Other net operating income 4,214 555

Net operating income 85,095 72,601

Salaries and salary-related expenses -27,896 -15,747 Depreciation and amortization -1,889 -662 Other operating expenses -18,359 -10,892

Administrative expenses -48,144 -27,301

Impairment losses -5,516 -4,759 Share of (loss) profit of associates -54 1,470 Net gains on non-current assets held for sale 2,523 4,244

Profit before income tax 33,904 46,255

Income tax -6,253 8,024

Net profit 27,651 38,231

Balance Sheet

Average total assets 2,478,326 1,845,648 Total assets at end of period 2,948,910 2,246,340 Equity at end of period 169,969 146,119 Outstanding shares 14,730 14,161

Key ratios

Return on equity before tax 23.7% 47.7% Return on equity after tax 19.3% 39.4% CAD ratio (end of period) 11.2% 15.0% Tier 1 capital (end of period) 8.1% 10.8% Cost/income ratio in banking activities 56.6% 37.6% Impairment Losses/loans and guarantees at end of period 0.2% 0.3% Earnings per share (ISK) 1.86 2.68 Average number of full-time employees 1,976 1,392 Employees at year-end 2,248 1,518

Percentage of average total assets:

Net interest margin 1.6% 2.0% Net fees and commissions income 1.5% 1.4% Other income 0.3% 0.3% Administrative expenses 1.9% 1.5% Impairment losses 0.2% 0.3% Profit 1.1% 2.1%

For further information on the financial results of the Bank, please see the consolidated financial statements of the Bank contained in the Annual Financial Statements for the year ended 31st December, 2006 and 2007, incorporated by reference into this Offering Circular.

Risk Factors: There are certain factors that may affect the Issuer’s ability to fulfil its obligations under Notes issued under the Programme. These are set out under “Risk Factors” and include: (i) the risk that the Issuer’s results can be adversely affected by general economic conditions and other business conditions, (ii) the risk that the substantial competitive pressures which the Issuer faces could adversely affect its results of operations, (iii) the risk that regulatory change or enforcement initiatives could adversely affect the Issuer’s business and (iv) a range of standard banking risks including changes in interest rates and foreign exchange rates and operational, credit, market and liquidity risk, any of which may have an adverse affect on the Issuer’s credit ratings and its cost of funds. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme. These are set out under “Risk Factors” and include the risk that the Notes may not be a suitable investment for all investors, certain risks relating to the structure of particular Series of Notes and certain market risks.

Description: Global Medium Term Note Programme

Arranger: Glitnir banki hf.

Dealers: Barclays Bank PLC Bayerische Hypo- and Vereinsbank AG BNP PARIBAS Citigroup Global Markets Limited Daiwa Securities SMBC Europe Limited Deutsche Bank AG, London Branch Glitnir banki hf. J.P. Morgan Securities Ltd. Merrill Lynch International

and any other Dealers appointed in accordance with the Programme Agreement.

Principal Paying Agent: The Bank of New York

Registrar: The Bank of New York

Programme Size: Up to €15,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement) outstanding at any time. The Issuer may increase the amount of the Programme in accordance with the terms of the Programme Agreement.

Notes issued under The Issuer may issue fully or partly paid Notes, denominated in any the Programme currency agreed between the Issuer and the relevant Dealer, at an issue price which is at par or at a discount to, or premium over, par.

Senior Notes or Subordinated Notes may be issued under the Programme. Notes may be issued as Fixed Rate Notes, Floating Rate Notes, Index Linked Notes, Dual Currency Notes or Zero Coupon Notes.

Notes may be distributed by way of private or public placement, subject to the restrictions set out under “Subscription and Sale”, and in each case on a syndicated or non-syndicated basis.

Notes may be issued for any maturity greater than one month or such other minimum or maximum maturity as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant Specified Currency.

Notes may be issued which cannot be redeemed prior to their stated maturity (other than in specified instalments, if applicable, or for taxation reasons or following an Event of Default) or which are redeemable at the option of the Issuer and/or the holders of the Notes upon giving notice to the holders of the Notes or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the Issuer and the relevant Dealer.

The Notes will be issued on a continuing basis to one or more Programme Dealers and any Dealer appointed under the Programme from time to time by the Issuer, which appointment may be for a specific issue or on an ongoing basis.

RISK FACTORS

The Issuer believes that the following factors may affect its ability to fulfil its obligations under Notes issued under the Programme. Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.

In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.

The Issuer believes that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons and the Issuer does not represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular and reach their own views prior to making any investment decision.

Factors that may affect the Issuer’s ability to fulfil its obligations under Notes issued under the Programme Set forth below are certain risk factors that could materially adversely affect the Issuer’s future business, operating results or financial condition. Each potential investor should carefully consider these risk factors and the other information in this Offering Circular before making investment decisions involving the Notes. Additional risks not currently known to the Issuer or that the Issuer now deems immaterial also may harm the Issuer and affect any investment in the Notes.

The Issuer’s results may be adversely affected by general economic conditions and other business conditions

The Issuer’s results are affected by general economic and other business conditions. These conditions include changing economic cycles that affect demand for investment and banking products. These cycles are also influenced by global political events, such as terrorist acts, war and other hostilities as well as by market specific events, such as shifts in consumer confidence and consumer spending, the rate of unemployment, industrial output, labour or social unrest and political uncertainty.

In particular, the Issuer’s business, financial condition and results of operations are affected directly by economic and political conditions in Iceland. Although the Icelandic economy has experienced high growth rates in recent years, there can be no assurance that these growth rates will continue or that there will not be a downturn in the Icelandic economy. Recently, interest rates and the rate of inflation in Iceland have been rising. The Central Bank of Iceland’s policy interest rate has increased from 14.25 per cent. at 31st December, 2006 to 15.25 per cent. at 31st December, 2007 and 15.5 per cent. at 20th May, 2008. Inflation has decreased from 6.8 per cent. in 2006 to 5.8 per cent. in 2007. In addition, Iceland’s current account deficit at 31st December, 2006 was about 25.6 per cent. gross domestic product for 2006, adversely affecting the value of the Icelandic krona, which fell in value against the U.S. dollar during 2006. At 31st December, 2006, the krona had declined 14.7 per cent. against the U.S. dollar to ISK 71.83 to $1.00 from its high of ISK 60.56 to $1.00 at 12th January, 2006. In 2007, the krona rebounded to 62.0 to $1.00 as of 31st December, 2007, as the current account deficit declined to 15.6 per cent. of gross domestic product at 31st December, 2007. However, in 2008 the krona’s value has declined by 16.0 per cent. versus the U.S. dollar to 73.5 to $1.00 as of 20th May, 2008. These developments and others may have a material adverse effect on the Issuer’s business, financial condition and results of operations.

The Issuer’s commercial and consumer banking business will also be affected during recessionary conditions as there may be less demand for loan products or certain customers may face financial problems. Interest rate increases may also impact the demand for mortgages and other loan products and credit quality.

The Issuer’s investment banking, securities trading, asset management and private banking services, as well as the Issuer’s investments in, and sales of products linked to, financial assets, will be impacted by several factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor sentiment, inflation and the availability and cost of credit which are related to the economic cycle.

The impact of the economy and business climate on the credit quality of borrowers and counterparties can affect the recoverability of loans and amounts due from counterparties.

The availability of funding in global financial markets may materially impact the Issuer’s borrowing costs and affect its liquidity, and thus have a material adverse effect on its ability to engage in business transactions and retain customers.

For a discussion of how credit and market risk is managed see “Credit Approval Policy” and “Risk Management” under “The Issuer”.

Changes in interest rates and foreign exchange rates may impact the Issuer’s results

The results of the Issuer’s banking operations are affected by the Issuer’s management of interest rate sensitivity. Interest rate sensitivity refers to the relationship between changes in market interest rates and changes in net interest income and investment income. The composition of the Issuer’s assets and liabilities, and any gap position resulting from the composition, causes the interest income to vary with changes in interest rates. In addition, variations in interest rate sensitivity may exist within the re-pricing periods or between the different currencies in which the Issuer holds interest rate positions. A mismatch of interest-earning assets and interest-bearing liabilities in any given period may, in the event of changes in interest rates, have a material effect on the financial condition or result from operations of the Issuer’s business.

The Issuer publishes its consolidated financial statements in ISK. Currency mismatch between assets and liabilities is negligible but net income may be subject to exchange rate risk. A large part of the Issuer’s loan portfolio is in foreign currency and income from this portfolio is, thus, subject to exchange rate risk. In addition, income from certain subsidiaries, including those operating in Norway, is in foreign currency.

The Issuer’s management of interest rate risk and foreign exchange risk does not completely eliminate the effect of those factors on its performance. For a discussion of how interest rate risk and foreign exchange rate fluctuation risk is managed see “Risk Management” under “The Issuer”.

The Issuer’s performance is subject to substantial competitive pressures that could adversely affect its results of operations

There is substantial competition for the types of banking and other products and services that the Issuer provides in the regions in which it conducts its business, including Iceland and Norway. Such competition is affected by consumer demand, technological changes, the impact of consolidation, regulatory actions and other factors. The Issuer expects competition to intensify as continued merger activity in the financial services industry produces larger, better-capitalised companies that are capable of offering a wider array of products and services, and at more competitive prices. If the Issuer is unable to provide attractive products and services that are profitable, it may lose market share or incur losses on some or all activities.

Regulatory changes or enforcement initiatives could adversely affect the Issuer’s business

The Issuer is subject to banking and financial services laws and government regulation in each of the jurisdictions in which it conducts business. Regulatory agencies have broad administrative power over many aspects of the financial services business, which may include liquidity, capital adequacy and

permitted investments, ethical issues, money laundering, privacy, record keeping, and marketing and selling practices. Banking and financial services laws, regulations and policies currently governing the Issuer and its subsidiaries may change at any time in ways which have an adverse effect on the Issuer’s business. Furthermore, the Issuer cannot predict the timing or form of any future regulatory initiatives. Changes in existing banking and financial services laws and regulations may materially affect the way in which it conducts business, the products or services it may offer and the value of its assets. If it fails to address, or appears to fail to address, appropriately these changes or initiatives, its reputation could be harmed and it could be subject to additional legal risk, which could, in turn, increase the size and number of claims and damages asserted against it or subject it to enforcement actions, fines and penalties. Regulatory agencies have the power to bring administrative or judicial proceedings against the Issuer, which could result, among other things, in suspension or revocation of its licenses, cease and desist orders, fines, civil penalties, criminal penalties or other disciplinary action which could materially harm its results of operations and financial condition.

There is operational risk associated with the Issuer’s industry which, when realised, may have an adverse impact on its results

The Issuer, like all financial institutions, is exposed to many types of operational risk, including the risk of fraud or other misconduct by employees or outsiders, unauthorised transactions by employees or operational errors, including clerical or record keeping errors or errors resulting from faulty computer or telecommunications systems. Given the Issuer’s high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. In addition, its dependence upon automated systems to record and process its transactions may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect. The Issuer may also be subject to disruptions of its operating systems, arising from events that are wholly or partially beyond its control (including, for example, computer viruses or electrical or telecommunication outages), which may give rise to suspension of services to customers and loss to or liability to the Issuer. The Issuer is further exposed to the risk that external vendors may be unable to fulfil their contractual obligations to the Issuer (or will be subject to the same risk of fraud or operational errors by their respective employees as the Issuer), and to the risk that its (or its vendors’) business continuity and data security systems prove not to be sufficiently adequate. The Issuer also faces the risk that the design of its controls and procedures prove inadequate, or are circumvented, thereby causing delays in detection of errors in information. Although the Issuer maintains a system of controls designed to keep operational risk at appropriate levels it has suffered losses from operational risk and there can be no assurance that it will not suffer losses from operational risks in the future that may be material in amount. For a discussion of how operational risk is managed see “Risk Management” under “The Issuer”.

Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that either the Issuer or the Group will be unable to comply with its obligations as a company with securities admitted to the Official List.

The Issuer is subject to credit, market and liquidity risk which may have an adverse effect on its credit ratings and its cost of funds

To the extent that any of the instruments and strategies the Issuer uses to hedge or otherwise manage its exposure to market or credit risk are not effective, it may not be able to mitigate effectively its risk exposures in particular market environments or against particular types of risk. Balance sheet growth will depend upon the economic conditions described above, as well as on the Issuer’s determination to sell, purchase or syndicate particular loans or loan portfolios. The Issuer’s trading revenues and interest rate risk depend upon its ability to identify properly, and mark to market, changes in the value of its financial instruments caused by changes in market prices or rates. Its earnings will also depend upon how effectively its critical accounting estimates prove accurate and upon how effectively it determines and assesses the cost of credit and manages its risk concentrations. To the extent its assessments of migrations in credit quality and of risk concentrations, or its assumptions or estimates used in establishing its valuation models for the fair value of its assets and liabilities or for its loan loss reserves, prove inaccurate or not predictive of actual results, it could suffer higher-than-anticipated losses. The successful management of credit, market and

operational risk is an important consideration in managing its liquidity risk, as evaluation by rating agencies of the management of these risks affects their determinations as to the Issuer’s credit ratings. Rating agencies may reduce or indicate their intention to reduce the ratings at any time. The rating agencies can also decide to withdraw their ratings altogether, which may have the same effect as a reduction in the Issuer’s ratings. Any reduction in the Issuer’s ratings may increase its borrowing costs, limit its access to capital markets and adversely affect the ability of its businesses to sell or market their products, engage in business transactions – particularly longer-term and derivatives transactions – and retain their current customers. This, in turn, could reduce the Issuer’s liquidity and have a negative impact on its operating results and financial condition.

Systemic risk could adversely affect the Issuer’s business

Concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships between institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearinghouses, banks, securities firms and exchanges with which the Issuer interacts on a daily basis, and could adversely affect the Issuer.

Increases in the Issuer’s loan losses or allowances for loan losses may have an adverse effect on its results

The Issuer’s banking businesses establish provisions for loan losses, which are reflected in the provision for credit losses on its income statement, in order to maintain its allowance for loan losses at a level which is deemed to be appropriate by management based upon an assessment of prior loss experience, the volume and type of lending being conducted by each bank, industry standards, past due loans, economic conditions and other factors related to the collectibles of each entity’s loan portfolio. For further information on the Issuer’s credit risk management, refer to “Credit Approval Policy” and “Risk Management” under “The Issuer”. Although management uses its best efforts to establish the provision for loan losses, that determination is subject to significant judgment, and the Issuer’s banking businesses may have to increase or decrease their provisions for loan losses in the future as a result of increases or decreases in non-performing assets or for other reasons, see “Allowance for Losses on Loans and Receivables” under “The Issuer”. Any increase in the provision for loan losses, any loan losses in excess of the previously determined provisions with respect thereto or changes in the estimate of the risk of loss inherent in the portfolio of non-impaired loans could have an adverse effect on the Issuer’s results of operations and financial condition.

The Issuer depends on the accuracy and completeness of information about customers and counterparties

In deciding whether to extend credit or enter into other transactions with customers and counterparties, the Issuer may rely on information furnished to it by or on behalf of customers and counterparties, including financial statements and other financial information. It may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit, it may assume that a customer’s audited financial statements conform with generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. It also may rely on the audit report covering those financial statements. The Issuer’s financial condition and results of operations could be negatively affected by relying on financial statements that do not comply with generally accepted accounting principles or that are materially misleading.

The Issuer is subject to legal risk which may have an adverse impact on its results

It is inherently difficult to predict the outcome of possible litigation, regulatory proceedings and other adversarial proceedings involving the Issuer’s businesses, particularly cases in which the matters may

be brought on behalf of various classes of claimants, seeking damages of unspecified or indeterminate amounts or involving novel legal claims. In presenting the Issuer’s consolidated financial statements, its management makes estimates regarding the outcome of legal, regulatory and arbitration matters and takes a charge to income when losses with respect to such matters are deemed probable and can be reasonably estimated. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including but not limited to the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel and other advisers, possible defenses and previous experience in similar cases or proceedings. Changes in these estimates may have an adverse effect on the Issuer’s results.

Factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme

The Issuer is subject to credit risk which may have an adverse effect on its credit ratings and cost of funds

Risks arising from changes in credit quality and the recoverability of loans and amounts due from counterparties are inherent in a wide range of the Issuer’s businesses.

Adverse changes in the credit quality of the Issuer’s borrowers and counterparties or a general deterioration in the Icelandic economy or global economic conditions, or arising from systematic risks in the financial markets, could affect the recoverability and value of the Issuer’s assets and require an increase in its provision for bad and doubtful debts and other provisions. Counterparty risk covers situations where a counterparty is unable to make full payment of amounts when due. The Issuer makes provisions to cover possible losses. The Issuer constantly monitors these risks and reviews them.

A decline in the value or illiquidity of the collateral securing the Issuer’s loans may adversely affect its loan portfolios

A substantial portion of the Issuer’s loans to corporate and individual borrowers are secured by collateral such as real estate, securities, ships, and in the case of fishing vessels, together with their non- transferable fishing quotas, receivables, raw materials and inventories. Downturns in the relevant markets or general deterioration of economic conditions in the industries in which these borrowers operate, or in Iceland, the United Kingdom or Norway generally, or other markets in which the collateral is located, may result in declines in the value of collateral securing loans to levels below the outstanding principal balance on those loans. A decline in the value of collateral securing these loans or the inability to obtain additional collateral may, in some cases, require the Issuer to reclassify the relevant loans, establish additional provisions for loan losses and increase reserve requirements. In addition, a failure to recover the expected value of collateral in the case of foreclosure may expose the Issuer to losses which could have a material adverse effect on the Issuer’s business, financial condition and results of operations.

The Notes may not be a suitable investment for all investors

Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Offering Circular or any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor’s currency;

(iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor’s overall investment portfolio.

Risks related to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:

Notes subject to optional redemption by the Issuer

An optional redemption feature of Notes is likely to limit their market value. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.

The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

Index Linked Notes and Dual Currency Notes

The Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a “Relevant Factor”). In addition, the Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency than expected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor, the effect of changes in the Relevant Factor on principal or interest payable likely will be magnified;

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the average level is consistent with their expectations. In general, the earlier the change in the Relevant Factor, the greater the effect on yield;

(viii) a direct investment in the shares, commodities or other assets underlying an index or in a fund that invests in those assets, or in the currencies comprised in a Dual Currency Note, might give rise to different, and potentially higher returns, than an investment in the Index Linked Notes or Dual Currency Notes; and

(ix) no statutory, judicial, or administrative authority directly addresses the characterisation of Index Linked Notes or securities similar to Index Linked Notes for United States federal income tax purposes. As a result, significant United States federal income tax consequences of an investment in such Notes are not certain. The Issuer has not requested a ruling from the United States Internal Revenue Service for any such Notes and gives no assurance that the Internal Revenue Service will agree with the statements made in this document or the applicable Final Terms relating to those Notes.

The historical experience of an index should not be viewed as an indication of the future performance of such index during the term of any Index Linked Notes. Accordingly, potential investors should consult their own financial and legal advisers about the risk entailed by an investment in any Index Linked Notes and the suitability of such Notes in light of their particular circumstances.

Partly-paid Notes

The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of his investment.

Variable rate Notes with a multiplier or other leverage factor

Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include those features.

Inverse Floating Rate Notes

Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate, such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.

Fixed/Floating Rate Notes

Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of the Notes since the Issuer may be expected to

convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes.

Notes issued at a substantial discount or premium

The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

The Issuer’s obligations under Subordinated Notes are subordinated

The Issuer’s obligations under Subordinated Notes will be unsecured and subordinated and will rank junior in priority of payment to Senior Liabilities. “Senior Liabilities” means any unconditional, unsubordinated and unsecured obligations of the Issuer. Although Subordinated Notes may pay a higher rate of interest than comparable Notes which are not subordinated, there is a real risk that an investor in Subordinated Notes will lose all or some of his investment should the Issuer become insolvent.

Risks related to Notes generally

Set out below is a brief description of certain risks relating to the Notes generally:

Modification and Waivers

The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

EU Savings Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories including Switzerland have agreed to adopt similar measures (a withholding system in the case of Switzerland).

If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of tax were to be withheld from that payment, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in a Member State that is not obliged to withhold or deduct tax pursuant to the Directive.

Change of law

The conditions of the Notes are based on English law in effect as at the date of this Offering Circular. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of this Offering Circular.

Notes where denominations involve integral multiples of a Specified Denomination: Notes in definitive form

In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a Note in definitive form in respect of such holding (should Notes in definitive form be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.

If Notes in definitive form are issued, holders should be aware that Notes in definitive form which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.

Risks related to the market generally

Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

The secondary market generally

Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severe adverse effect on the market value of Notes.

Exchange rate risks and exchange controls

The Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to the Specified Currency would decrease (1) the Investor’s Currency-equivalent yield on the Notes, (2) the Investor’s Currency-equivalent value of the principal payable on the Notes and (3) the Investor’s Currency-equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.

Interest rate risks

Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes.

Credit ratings may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

Legal investment considerations may restrict certain investments

The investment activities of certain investors maybe subject to law or review or regulation by certain authorities. Each potential investor should determine for itself, on the basis of professional advice where appropriate, whether and to what extent (1) Notes are lawful investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

Unless otherwise specified in any supplement to this Offering Circular, each Series of Rule 144A Global Notes is initially being privately placed exclusively to persons reasonably believed by the Dealers to be QIBs that also are Qualified Purchasers. After their initial private placement, Rule 144A Global Notes may be resold to QIBs that also are Qualified Purchasers in transactions satisfying the requirements of Rule 144A or in transactions exempt from the registration requirements of the Securities Act. For a description of certain restrictions on resale or transfer of the Rule 144A Global Notes, see “Subscription and Sale” and “Notice to Investors” below.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents which have previously been published or are published simultaneously with this Offering Circular and have been filed with the Financial Services Authority shall be incorporated in, and form part of, this Offering Circular:

(a) the auditor’s report and audited consolidated annual financial statements for each of the financial years ended 31st December, 2006 and 31st December, 2007 respectively; and

(b) the unaudited condensed consolidated interim financial statements for the three months ended 31st March, 2008 of the Issuer, provided that for the purposes of the prospectus rules enacted under Section 73A of the Financial Services and Markets Act 2000, any documents incorporated by reference into the above documents do not form part of this Offering Circular. For ease of reference the documents incorporated by reference into this Offering Circular can be found on the following pages of each of the following documents:

Consolidated Annual Financial Statements for year ended 31st December, 2006 Auditor’s Report page 4 Balance Sheet page 6 Income Statement page 5 Statement of Cash Flows page 8 Notes to the Accounts page 9 Consolidated Annual Financial Statements for year ended 31st December, 2007 Auditor’s Report page 4 Balance Sheet page 6 Income Statement page 5 Statement of Cash Flows page 8 Notes to the Accounts page 9 Condensed consolidated interim financial statements for the three months ended 31st March, 2008 Balance Sheet page 6 Income Statement page 5 Statement of Cash Flows page 8 Notes to the Accounts page 9

Following the publication of this Offering Circular a supplement may be prepared by the Issuer and approved by the UK Listing Authority in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement (or contained in any document which is incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Offering Circular or in a document which is incorporated by reference in this Offering Circular. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Offering Circular.

Copies of documents incorporated by reference in this Offering Circular can be obtained from Glitnir banki hf. at Kirkjusandur 2, 155 Reykjavík, Iceland.

Any documents themselves incorporated by reference in the documents incorporated by reference in this Offering Circular shall not form part of this Offering Circular.

The Issuer will, in the event of any significant new factor, material mistake or inaccuracy relating to information included in this Offering Circular which is capable of affecting the assessment of any Notes, prepare a supplement to this Offering Circular or publish a new Offering Circular for use in connection with any subsequent issue of Notes. The Issuer has undertaken to the Dealers in the Programme Agreement (as defined in “Subscription and Sale”) that it will comply with Section 87G of the Financial Services and Markets Act 2000.

OVERVIEW OF THE PROGRAMME

The following overview does not purport to be complete and is taken from, and is qualified in its entirety by, the Summary and the remainder of this Offering Circular and, in relation to the terms and conditions of any particular Tranche of Notes, the applicable Final Terms. The Issuer and any relevant Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions, in which event, in the case of listed Notes only and if appropriate, a supplemental Offering Circular will be published.

This Overview constitutes a general description of the Programme for the purposes of Article 22.5(3) of Commission Regulation (EC) No 809/2004 implementing the Prospectus Directive. Words and expressions defined in "Form of the Notes" and "Terms and Conditions of the Notes" shall have the same meanings in this Overview. Form of Notes: Notes issued in bearer form outside of the United States may be issued in NGN form and will be issued as described in “Form of the Notes.” Notes to be issued in registered form and sold in reliance on Rule 144A will be issued in the form of one or more fully registered global Notes, without coupons, registered in the name of a nominee of DTC and deposited with a custodian for DTC. Notes in registered form will not be exchangeable for Notes in bearer form and Notes in bearer form will not be exchangeable for Notes in registered form. Currencies: Subject to any applicable legal or regulatory restrictions, any currency agreed between the Issuer and the relevant Dealer. Redenomination: The applicable Final Terms may provide that certain Notes may be redenominated in euro. The relevant provisions applicable to any such payments and redenomination are contained in Condition 4. Maturities: Such maturities as may be agreed between the Issuer and the relevant Dealer, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant Specified Currency. Issue Price: Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at par or at a discount to, or premium over, par. Fixed Rate Notes: Fixed interest will be payable on such date or dates as may be agreed between the Issuer and the relevant Dealer and on redemption and will be calculated on the basis of such Day Count Fraction as may be agreed between the Issuer and the relevant Dealer. Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined: (i) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc., and as amended and updated as at the Issue Date of the First Tranche of the Notes of the relevant Series); or (ii) on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service; or (iii) on such other basis as may be agreed between the Issuer and the relevant Dealer. The margin (if any) relating to such floating rate will be agreed between the Issuer and the relevant Dealer for each Series of Floating Rate Notes.

Index Linked Notes: Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer may agree. Other provisions in relation to Floating Rate Notes and Index Linked Interest Notes may also have a Floating Rate Notes and Index maximum interest rate, a minimum interest rate or both. Linked Interest Notes: Interest on Floating Rate Notes and Index Linked Interest Notes in respect of each Interest Period, as agreed prior to issue by the Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the Issuer and the relevant Dealer. Dual Currency Notes: Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as the Issuer and the relevant Dealer may agree. Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominal amount and will not bear interest other than in the case of late payment. Redemption: The applicable Final Terms will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than in specified instalments, if applicable, or for taxation reasons or following an Event of Default) or that such Notes will be redeemable at the option of the Issuer and/or the Noteholders upon giving notice to the Noteholders or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the Issuer and the relevant Dealer. The applicable Final Terms may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Final Terms. Denomination of Notes: The Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer save that the minimum denomination of each Note will be such amount as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency and save that the minimum denomination of each Note admitted to trading on a regulated market in the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive will be €1,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency). Taxation: All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by Iceland or the United States, subject as provided in Condition 8. In the event that any such deduction is made, the Issuer will, save in certain limited circumstances provided in Condition 8, be required to pay additional amounts to cover the amounts so deducted. Negative Pledge: The terms of the Senior Notes will contain a negative pledge provision as further described in Condition 3. Cross Default: The terms of the Senior Notes will contain a cross default provision as further described in Condition 10.

Status of the Senior Notes: The Senior Notes will constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 3, unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding. Subordination: Payments in respect of the Subordinated Notes will be subordinated as described in Condition 2(b). Rating: The rating of certain series of Notes to be issued under the Programme may be specified in the applicable Final Terms. Listing and admission to Application has been made to the UK Listing Authority for Notes issued under trading: the Programme to be admitted to the Official List and to the London Stock Exchange for such Notes to be admitted to trading on the London Stock Exchange’s Regulated Market. Notes may be listed or admitted to trading, as the case may be, on other or further stock exchanges or markets agreed between the Issuer and the relevant Dealer in relation to the Series. Notes which are neither listed nor admitted to trading on any market may also be issued. The applicable Final Terms will state whether or not the relevant Notes are to be listed and/or admitted to trading and, if so, on which stock exchanges and/or markets. Governing Law: The Notes will be governed by, and construed in accordance with, English law, except the provisions in Condition 2(b) which will be governed by Icelandic law. Selling Restrictions: There are restrictions on the offer, sale and transfer of the Notes in the United States, the European Economic Area (including the United Kingdom and Iceland) and Japan and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes, see “Subscription and Sale”.

NOTICE TO INVESTORS

Because of the following restrictions on the Rule 144A Global Notes, investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of any Rule 144A Global Notes.

The Issuer has not been registered under the Investment Company Act, in reliance on an exclusion from the definition of “investment company” pursuant to Section 3(c)(7) of the Investment Company Act, and the Rule 144A Global Notes have not been, and will not be, registered under the Securities Act or the state securities laws of any state of the United States or the securities laws of any other jurisdiction and may not be offered, sold, pledged or otherwise transferred except in reliance on Rule 144A to QIBs that also are Qualified Purchasers as discussed below.

Each U.S. holder and beneficial owner of Rule 144A Global Notes acquired in connection with their initial distribution and each transferee of Rule 144A Global Notes from any such holder or beneficial owner will be deemed to have represented and agreed with the Issuer regarding such Notes as follows (terms used in this paragraph that are defined in Rule 144A are used herein as defined therein):

(1) It (i) is a U.S. (within the meaning of Regulation S of the Securities Act), (ii) is a QIB that also is a Qualified Purchaser, (iii) is not a broker-dealer that owns and invests on a discretionary basis less than $25 million in securities of issuers that are not affiliated persons of the agent and is not a plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, (iv) is aware that the sale of the Notes to it is being made in reliance on Rule 144A, (v) is acquiring such Notes for its own account or the account of a QIB that also is a Qualified Purchaser, (vi) has not been formed for the purpose of investing in the Issuer or the Notes and (vii) concurrently with its purchase is executing and delivering a transferee’s certificate as required by the Agency Agreement (as defined in the “Terms and Conditions of the Notes”).

(2) It understands and acknowledges that the Issuer has not been registered under the Investment Company Act, in reliance on an exclusion from the definition of “investment company” pursuant to Section 3(c)(7) of the Investment Company Act and that the Notes have not been, and will not be, registered under the Securities Act and may not be offered, resold, pledged or otherwise transferred by it except to a QIB that also is a Qualified Purchaser, purchasing for its own account or the account of a QIB that also is a Qualified Purchaser that is not a broker-dealer that owns and invests on a discretionary basis less than $25 million in securities of issuers that are not affiliated persons of the agent and is not a plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, whom the seller has informed, in each case, that the offer, resale, pledge or other transfer is being made in reliance on Rule 144A, in accordance with all applicable securities laws of the states of the United States and foreign jurisdictions and that is concurrently with its purchase executing and delivering a transferee’s certificate in accordance with the provisions of the Agency Agreement and any applicable securities laws of the states of the United States and foreign jurisdictions.

(3) It will, and each subsequent holder or beneficial owner is required to, notify any subsequent purchaser of the Notes from it of the resale restrictions referred to in paragraph (2) above.

(4) On each day from the date on which it acquires an interest in a Rule 144A Global Note through and including the date on which it disposes of such interests, either (a) it is not an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), subject to Title I of ERISA, a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), an entity whose underlying assets include the assets of any Plan (as defined in “ERISA Matters”), or a governmental or church plan which is subject to any federal, state or local law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code or (b) its purchase,

holding and disposition of its interest in a Rule 144A Global Note will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code (or, in the case of a governmental or church plan, any substantially similar federal, state or local law) unless an exemption is available with respect to such transactions and all the conditions of such exemption have been satisfied.

The certificates representing the Rule 144A Global Notes will bear a legend to the following effect, unless the Issuer determines otherwise in compliance with applicable law:

“THE ISSUER OF THE NOTES EVIDENCED HEREBY (THE “NOTES”) HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”) IN RELIANCE ON AN EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PURSUANT TO SECTION 3(C)(7) OF THE INVESTMENT COMPANY ACT, AND THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE NOTES MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH THE AMENDED AND RESTATED AGENCY AGREEMENT BY AND BETWEEN THE ISSUER AND THE BANK OF NEW YORK AND OTHERS, DATED 23rd JUNE, 2008 AND IN COMPLIANCE WITH THE SECURITIES ACT AND ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND FOREIGN JURISDICTIONS AND ONLY PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A U.S. PERSON WITHIN THE MEANING OF REGULATION S OF THE SECURITIES ACT THAT ALSO (1) IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), (2) IS A QUALIFIED PURCHASER (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT AND THE RULES THEREUNDER) (A “QUALIFIED PURCHASER”) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB THAT ALSO IS A QUALIFIED PURCHASER, (3) IS NOT A BROKER-DEALER THAT OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN $25 MILLION IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED PERSONS OF THE AGENT AND (4) IS NOT A PLAN REFERRED TO IN PARAGRAPH (A)(1)(i)(D) OR (A)(1)(i)(E) OF RULE 144A OR A TRUST FUND REFERRED TO IN PARAGRAPH (A)(1)(i)(F) OF RULE 144A THAT HOLDS THE ASSETS OF SUCH A PLAN, IF INVESTMENT DECISIONS WITH RESPECT TO THE PLAN ARE MADE BY BENEFICIARIES OF THE PLAN, WHOM THE SELLER HAS INFORMED, IN EACH CASE, THAT THE OFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND FOREIGN JURISDICTIONS. THE HOLDER OR BENEFICIAL OWNER OF THE NOTES WILL, AND EACH SUBSEQUENT HOLDER OR BENEFICIAL OWNER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF NOTES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.

THE ISSUER HAS THE RIGHT TO FORCE ANY BENEFICIAL OWNER OF THE NOTES WHO WAS NOT A QUALIFIED PURCHASER AT THE TIME IT ACQUIRED THE NOTES TO TRANSFER SUCH BENEFICIAL INTEREST OR TO HAVE SUCH NOTE REDEEMED”

FORM OF THE NOTES

Each Tranche of Notes issued outside the United States in reliance on Regulation S or otherwise will be in bearer form (“Bearer Notes”) and will be initially issued in the form of either a temporary global note (a “Temporary Global Note”) or a permanent global note (a “Permanent Global Note”) as indicated in the applicable Final Terms, which, in either case, will:

(i) if the Global Notes are intended to be issued in new global note (“NGN”) form, as stated in the applicable Final Terms, be delivered on or prior to the original issue date of the Tranche to a common safekeeper for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”); or

(ii) if the Global Notes are not intended to be issued in NGN form, be delivered on or prior to the original issue date of the Tranche to a common depositary for Euroclear and Clearstream, Luxembourg.

While any Note is represented by a Temporary Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made (against presentation of the Temporary Global Note if the Temporary Global Note is not intended to be issued in NGN form) only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in such Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream, Luxembourg and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it has received) to the Principal Paying Agent.

On and after the date (the “Exchange Date”) which, in respect of each Tranche in respect of which a Temporary Global Note is issued, is the later of 40 days after (i) the Temporary Global Note is issued and (ii) the completion of the distribution of the relevant Tranche, as certified by the relevant Dealer (in the case of a non- syndicated issue) or the relevant lead manager (in the case of a syndicated issue) (the “Distribution Compliance Period”), interests in such Temporary Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Global Note of the same Series or (ii) for definitive Notes of the same Series with, where applicable, receipts, interest coupons and talons attached (as indicated in the applicable Final Terms and subject, in the case of definitive Notes, to such notice period as is specified in the applicable Final Terms), in each case against certification of beneficial ownership as described above unless such certification has already been given, provided that purchasers in the United States and certain U.S. persons will not be able to receive definitive Notes. The holder of a Temporary Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Global Note for an interest in a Permanent Global Note or for definitive Notes is improperly withheld or refused.

Payments of principal, interest (if any) or any other amounts on a Permanent Global Note will be made through Euroclear and/or Clearstream, Luxembourg (against presentation or surrender (as the case may be) of the Permanent Global Note, if the Permanent Global Note is not intended to be issued in NGN form) without any requirement for certification.

Each tranche of Notes issued in registered form (“Registered Notes”) will, if issued in reliance on Rule 144A, be represented by a single permanent global note in fully registered form without coupons (the “Rule 144A Global Note”) and, if issued in reliance on Regulation S, will be represented by a single permanent global note in fully registered form without coupons (the “Regulation S Global Note” and, together with Temporary Global Notes, Permanent Global Notes and Rule 144A Global Notes, the “Global Notes”). Rule 144A Global Notes and Regulation S Global Notes (together, the “Registered Global Notes”) will, as indicated in the applicable Final Terms, on or prior to the original issue date of the Tranche be deposited with a custodian for, and registered in the name of a nominee of, the Depositary Trust Company (and any of its successors) (“DTC”).

The Issuer will apply to DTC for acceptance in its book-entry settlement system of Registered Notes. Upon issuance of each Registered Global Note deposited with a custodian for DTC, DTC or its custodian will credit, on its

internal system, the respective principal amounts of the individual beneficial interests represented by the Registered Global Note to the accounts of persons who have accounts with DTC (“DTC Participants”).

Ownership of beneficial interests in a Registered Global Note deposited with a custodian for DTC will be limited to DTC Participants and persons who hold interests through DTC Participants. Ownership of beneficial interests in such Registered Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee and the records of DTC Participants.

Payments of the principal of, and interest on, each Registered Global Note held on behalf of DTC will be to or to the order of its nominee, Cede & Co., as the registered owner of such Registered Global Note. The Issuer expects that the nominee, upon receipt of payment from the principal paying bank, will credit DTC Participants’ accounts immediately with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant Registered Global Note as shown on the records of DTC or the nominee. The Issuer also expects that payments by DTC Participants to owners of beneficial interests in a Registered Global Note held through the DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held in bearer form or registered in “street name” for the accounts of customers. These payments will be the responsibility of such DTC Participants. Neither the Issuer nor any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of ownership interests in Registered Global Notes or for maintaining, supervising or reviewing any records relating to such ownership interests.

The applicable Final Terms will specify that a Permanent Global Note or a Registered Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Notes with, where applicable, receipts, interest coupons and talons attached upon either (i) not less than 60 days’ written notice from Euroclear and/or Clearstream, Luxembourg or DTC, as the case may be (acting on the instructions of any holder of an interest in such Global Note) to the Principal Paying Agent as described therein or (ii) only upon the occurrence of an Exchange Event. For these purposes, “Exchange Event” means that (i) an Event of Default (as defined in Condition 10) has occurred and is continuing, (ii) in the case of a Permanent Global Note only, the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no alternative clearing system is available, (iii) if so specified in the applicable Final Terms (in the case of a Permanent Global Note), the Issuer has or will become obliged to pay additional amounts as provided for or referred to in Condition 8 which would not be required were the Notes in definitive form, (iv) in the case of a Registered Global Note, DTC has notified the Issuer that it is unwilling or unable to continue as depositary for the Registered Global Note and no alternative clearing system is available; or (v) in the case of a Registered Global Note, DTC has ceased to be a clearing agency registered under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and no alternative clearing system is available. The Issuer will promptly give notice to Noteholders in accordance with Condition 14 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, DTC, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note or Registered Global Note, as the case may be) may give notice to the Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Principal Paying Agent requesting exchange. Any such exchange shall occur not later than 60 days after the date of receipt of the first relevant notice by the Principal Paying Agent.

The following legend will appear on all Bearer Notes which have an original maturity in excess of 365 days and on all receipts and interest coupons relating to such Bearer Notes:

“ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.”

The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes, receipts or interest coupons.

Transfers of interests in a Permanent Global Note will be made in accordance with the rules and procedures of Euroclear or Clearstream, Luxembourg, as the case may be. Transfers of interests in a Registered Global Note within DTC will be made in accordance with the rules and procedures of DTC.

Pursuant to the Agency Agreement (as defined under “Terms and Conditions of the Notes”), the Principal Paying Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of Notes, the Notes of such further Tranche shall be assigned a common code and ISIN and, where applicable, a CUSIP or other security number, which are different from the common code, ISIN, CUSIP or other security number assigned to Notes of any other Tranche of the same Series until at least the expiry of the Distribution Compliance Period applicable to the Notes of such Tranche.

For so long as any of the Bearer Notes is represented by a Global Note held on behalf of Euroclear and/or Clearstream, Luxembourg each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Bearer Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer and its agents as the holder of such nominal amount of such Bearer Notes for all purposes other than with respect to the payment of principal or interest and additional amounts which may be payable with respect to principal under Condition 8 on such nominal amount of such Bearer Notes, for which purpose the bearer of the relevant Global Note shall be treated by the Issuer and its agents as the holder of such nominal amount of such Bearer Notes in accordance with and subject to the terms of the relevant Global Note. For so long as DTC, or its nominee, is the registered owner or holder of a Registered Global Note, DTC or its nominee, as the case may be, shall be treated by the Issuer and its agents as the holder of such nominal amount of such Registered Global Note for all purposes. The expressions “Noteholder” and “holder of Notes” mean, in the case of a Registered Global Note, the person in whose name such Note is registered and, in the case of a Bearer Note, the bearer of such Note.

Any reference herein to DTC, Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits except in relation to Notes issued in NGN form, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms.

DTC has advised the Issuer as follows: DTC is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the U.S. Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and Dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to others, such as banks, brokers, Dealers and trust companies, which clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly.

A Note may be accelerated by the holder thereof in certain circumstances described in Condition 10. In such circumstances, where any Note is still represented by a Global Note and the Global Note (or any part thereof) has become due and repayable in accordance with the Terms and Conditions of such Notes and payment in full of the amount due has not been made in accordance with the provisions of the Global Note then, unless within the period of seven days commencing on the relevant due date payment in full of the amount due in respect of the Global Note is received by the bearer or registered holder in accordance with the provisions of the Global Note holders of interests in such Global Note credited to their accounts with DTC, Euroclear and/or Clearstream, Luxembourg, as the case may be, will become entitled to proceed directly against the Issuer on the basis of statements of account provided by DTC, Euroclear and Clearstream, Luxembourg on and subject to the terms of a deed of covenant (the “Deed of Covenant”) dated 28th July, 2005 and executed by the Issuer. In addition, holders of interests in such Global Note credited to their accounts with DTC may require DTC to deliver definitive Notes in registered form in exchange for their interest in such Global Note in accordance with DTC’s standard operating procedures.

FORM OF FINAL TERMS

Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued under the Programme.

[Date] Final Terms dated •

Glitnir banki hf.

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] under the €15,000,000,000 Global Medium Term Note Programme

[The Offering Circular referred to below (as completed by these Final Terms) has been prepared on the basis that, except as provided in sub-paragraph (ii) below, any offer of Notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a Relevant Member State) will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of the Notes. Accordingly any person making or intending to make an offer of the Notes may only do so: (i) in circumstances in which no obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer; or (ii) in those Public Offer Jurisdictions mentioned in Paragraph 36 of Part A below, provided such person is one of the persons mentioned in Paragraph 36 of Part A below and that such offer is made during the Offer Period specified for such purpose therein. Neither the Issuer nor any Dealer has authorised, nor do they authorise, the making of any offer of Notes in any other circumstances]1. [The Offering Circular referred to below (as completed by these Final Terms) has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a Relevant Member State) will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of the Notes. Accordingly any person making or intending to make an offer in that Relevant Member State of the Notes may only do so in circumstances in which no obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor any Dealer has authorised, nor do they authorise, the making of any offer of notes in any other circumstances]2. PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Offering Circular dated 23rd June, 2008, which constitutes a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Offering Circular. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circular. The Offering Circular is available for viewing during normal business hours at the office of the Issuer at Kirkjusandur 2, 155 Reykjavík, Iceland and copies may be obtained from the Principal Paying Agent at One Canada Square, London E14 5AL.

1 Include this legend where a non-exempt offer of Notes is anticipated. 2 Include this legend where only an exempt offer of Notes is anticipated.

[The following alternative language applies if the first tranche of an issue which is being increased was issued under an Offering Circular with an earlier date.] Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”) set forth in the Offering Circular dated [original date]. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”) and must be read in conjunction with the Offering Circular dated 23rd June, 2008, as supplemented from time to time, which constitutes a base prospectus for the purposes of the Prospectus Directive, save in respect of the Conditions which are extracted from the Offering Circular dated [original date] and are attached hereto. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circulars dated [original date] and [current date], as supplemented from time to time. Copies of such Offering Circulars are available for viewing during normal business hours at the office of the Issuer at Kirkjusandur 2, 155 Reykjavík, Iceland and copies may be obtained from the Principal Paying Agent at One Canada Square, London E14 5AL. [Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.] [When completing any final terms or adding any other final terms or information consideration should be given as to whether such terms or information constitute “significant new factors” and consequently trigger the need for a supplement to the Offering Circular under Article 16 of the Prospectus Directive.] 1. Issuer: Glitnir banki hf. 2. (i) Series Number: [ ] (ii) Tranche Number: [ ] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible) 3. Specified Currency or Currencies: [ ] 4. Aggregate Nominal Amount: [ ] [(i)] Series: [ ] [(ii)] Tranche: [ ] 5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)] 6. (i) Specified Denominations: [ ] [(Note – For Bearer Notes where multiple denominations above €50,000 or equivalent are being used the following sample wording should be followed: "€50,000 and integral multiples of €1,000 in excess thereof up to and including €99,000. No Notes in definitive form will be issued with a denomination above €99,000.") (The minimum denomination of a Note shall not be less than €1,000 or its equivalent. N.B. If an issue of Notes is (i) NOT admitted to trading on an European Economic Area exchange; and (ii) only offered in the European Economic Area in circumstances where a prospectus is not required to be published under the Prospectus Directive, the €1,000 minimum denomination is not required.)] (ii) Calculation Amount [(If only one Specified Denomination, insert the

Specified Denomination. If more than one Specified Denomination, insert the highest common factor. Note: There must be a common factor in the case of two or more Specified Denominations.)] 7. (i) Issue Date: [ ] (ii) Interest Commencement Date: [Specify/Issue Date/Not Applicable]

(N.B. An Interest Commencement Date will not be relevant for certain Notes, for example Zero Coupon Notes.)

8. Maturity Date: [Fixed Rate - specify date] [Floating Rate – Interest Payment Date falling in or nearest to [specify the relevant month and year]] 9. Interest Basis: [[ ] per cent. Fixed Rate] [[LIBOR/EURIBOR/specify other reference rate] [+/- [ ] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Dual Currency Interest] [specify other] [(further particulars specified below)] 10. Redemption/Payment Basis: [Redemption at par] [Index Linked Redemption] [Dual Currency Redemption] [Partly Paid] [Instalment] [specify other]

(N.B. If the Final Redemption Amount is or may be other than 100 per cent. of the nominal value, the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply.) 11. Change of Interest Basis or Redemption/Payment [Specify details of any provision for change of Notes Basis: into another Interest Basis or Redemption/Payment Basis] 12. Put/Call Options: [Investor Put] [Issuer Call] [(further particulars specified below)] 13. (i) Status of Notes: [Senior/Subordinated] (ii) Date Board approval for issuance of [ ] (N.B. Only relevant for an issue of Subordinated Notes obtained: Notes or Notes to be listed on a Stock Exchange outside the EEA) 14. Method of distribution: [Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

15. Fixed Rate Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Rate(s) of Interest: [ ] per cent. per annum [payable [annually/ semi- annually/quarterly] in arrear] (If payable other than annual, consider amending Condition 5(a)) (ii) Interest Payment Date(s): [ ] in each year up to and including the Maturity Date [specify other] (N.B: amend in the case of long or short coupons) (iii) Fixed Coupon Amount(s): [ ] per Calculation Amount (Applicable to Notes in definitive form) (iv) Broken Amount(s): [ ] per Calculation Amount, payable on the Interest (Applicable to Notes in definitive form) Payment Date falling [in/on] [ ]

(v) Day Count Fraction: [30/360/Actual/Actual (ICMA)/specify other] (vi) [Determination Date(s): [ ] in each year [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon. (NB: This will need to be amended in the case of regular interest payment dates which are not of equal duration. Only relevant where Day Count Fraction is Actual/Actual (ICMA))]. (vii) Other terms relating to the method of [Not Applicable/give details] calculating interest for Fixed Rate Notes: 16. Floating Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Specified Period(s)/Specified Interest [ ] Payment Dates: (ii) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day Convention [specify other]] (iii) Additional Business Centre(s): [ ] (iv) Manner in which the Rate of Interest and [Screen Rate Determination/ISDA Interest Amount is to be determined: Determination/specify other] (v) Party responsible for calculating the Rate [ ] of Interest and Interest Amount (if not the Principal Paying Agent): (vi) Screen Rate Determination: [Applicable/Not Applicable] – Reference Rate: [ ] (Either LIBOR, EURIBOR or other, although additional information is required if other, including fall back provisions in the Agency Agreement)

– Interest Determination Date(s): [ ] (Second London business day prior to the start of each Interest Period if LIBOR (other than Sterling or Euro LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET 2 System is open prior to the start of each Interest Period if EURIBOR or Euro LIBOR) – Relevant Screen Page: [ ] (In the case of EURIBOR, if not Reuters EURIBOR01 ensure it is a page which shows a composite rate or amend fall back provisions appropriately) (vii) ISDA Determination: [Applicable/Not Applicable] – Floating Rate Option: [ ] – Designated Maturity: [ ] – Reset Date: [ ] (viii) Margin(s): [+/-] [ ] per cent. per annum (ix) Minimum Rate of Interest: [ ] per cent. per annum (x) Maximum Rate of Interest: [ ] per cent. per annum (xi) Day Count Fraction: [Actual/Actual (ISDA)] [Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360] [360/360] [Bond Basis] [30E/360] [Eurobond Basis] [30E/360 (ISDA)] [specify other] (See Condition 5(b) for alternatives) (xii) Fall back provisions, rounding provisions [ ] and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions: 17. Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Accrual Yield: [ ] per cent. per annum (ii) Reference Price: [ ] (iii) Any other formula/basis of determining [ ] amount payable: (iv) Day Count Fraction in relation to Early [Conditions 7(e)(iii) and 7(j) apply/specify other] Redemption Amount and late payment: (Consider applicable day count fraction if not U.S. dollar denominated) 18. Index Linked Interest Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (N.B. If the Final Redemption Amount is or may be

other than 100 per cent. of the nominal value, the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply. If interest, but not the Final Redemption Amount, is linked to an underlying consider treating the Notes as if they were derivative securities.) (i) Index/Formula: [give or annex details] (ii) Calculation Agent: [give name (and, if the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies, address)] (iii) Party responsible for calculating the [ ] Rate(s) of Interest (if not the Calculation Agent): (iv) Provisions for determining interest where [need to include a description of market disruption or calculation by reference to Index and/or settlement disruption events and adjustment Formula and/or other variable is provisions] impossible or impracticable or otherwise disrupted: (v) Specified Period(s)/Specified Interest [ ] Payment Dates: (vi) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day Convention/specify other] (vii) Additional Business Centre(s): [ ] (viii) Minimum Rate of Interest: [ ] per cent. per annum (ix) Maximum Rate of Interest: [ ] per cent. per annum (x) Day Count Fraction: [ ] 19. Dual Currency Interest Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (N.B. If the Final Redemption Amount is or may be other than 100 per cent. of the nominal value, the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply. If interest, but not the Final Redemption Amount, is linked to an underlying consider treating the Notes as if they were derivative securities.) (i) Rate of Exchange/method of calculating [give or annex details] Rate of Exchange: (ii) Party, if any, responsible for calculating [ ] the interest payable: (iii) Provisions applicable where calculation [need to include a description of market disruption or by reference to Rate of Exchange settlement disruption events and adjustment impossible or impracticable: provisions]

(iv) Person at whose option Specified [ ] Currency(ies) is/are payable: PROVISIONS RELATING TO REDEMPTION 20. Issuer Call [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (N.B. If the Final Redemption Amount is or may be other than 100 per cent. of the nominal value, the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply.) (i) Optional Redemption Date(s): [ ] (ii) Optional Redemption Amount(s) and [[ ] per Calculation Amount/specify other/see method, if any, of calculation of such Appendix] amount(s): (iii) If redeemable in part: (a) Minimum Redemption Amount: [ ] per Calculation Amount (b) Higher Redemption Amount: [ ] per Calculation Amount (iv) Notice period (if other than as set out in [ ] the Conditions): (N.B. If setting notice periods which are different to those provided in the Conditions, the Issuer is advised to consider the practicalities of distribution of information through intermediaries, for example, clearing systems and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Principal Paying Agent.) 21. Investor Put [Applicable/Not Applicable] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Optional Redemption Date(s): [ ] (ii) Optional Redemption Amount(s) and [[ ] per Calculation Amount/specify other/see method, if any, of calculation of such Appendix] amount(s): (iii) Notice period (if other than as set out in [ ] the Conditions): (N.B. If setting notice periods which are different to those provided in the Conditions, the Issuer is advised to consider the practicalities of distribution of information through intermediaries, for example, clearing systems and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Principal Paying Agent.) 22. Final Redemption Amount [[ ] per Calculation Amount/specify other/see Appendix]

(N.B. If the Final Redemption Amount is or may be other than 100 per cent. of the nominal value the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex

XII to the Prospectus Directive Regulation will apply.) 23. Early Redemption Amount: [ ] per Calculation Amount/specify other/see Appendix Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method of calculating the same (if required or if different from that set out in Condition 7(e)): GENERAL PROVISIONS APPLICABLE TO THE NOTES 24. Form of Notes: Bearer Notes: [Applicable/Not Applicable] [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes [on 60 days’ notice given at any time/only upon an Exchange Event]] [Temporary Global Note exchangeable for Definitive Notes on and after the Exchange Date] [Permanent Global Note exchangeable for Definitive Notes [on 60 days’ notice given at any time/only upon an Exchange Event]] (N.B. The exchange upon notice/at any time options should not be expressed to be applicable if the Specified Denomination of the Notes in paragraph 6 includes language substantially to the following effect: "€50,000 and integral multiples of €1,000 in excess thereof up to and including €99,000.") Registered Notes: [Applicable/Not Applicable] [Rule 144A Global Note (U.S.$ [ ] nominal amount) registered in the name of a nominee for DTC] [Regulation S Global Note (U.S.$ [ ] nominal amount) registered in the name of a nominee for DTC] 25. New Global Note: [Yes][No] (In the case of a Registered Note, this must be No) 26. Additional Financial Centre(s) or other special [Not Applicable/give details] provisions relating to payment dates: (Note that this item relates to the date and place of payment and not Interest Period end dates to which items 15(ii), 16(iii) and 18(vii) relate) 27. Talons for future Coupons or Receipts to be [Yes/No. If yes, give details] attached to Definitive Notes (and dates on which such Talons mature): 28. Details relating to Partly Paid Notes: amount of [Not Applicable/give details] (NB: a new form of each payment comprising the Issue Price and date Temporary Global Note and/or Permanent Global on which each payment is to be made and Note may be required for Partly Paid issues) consequences (if any) of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment: 29. Details relating to Instalment Notes, including the [Applicable/Not Applicable/give details] amount of each instalment (each an “Instalment

Amount”) and the date on which each payment is to be made (each an “Instalment Date”): 30. Redenomination applicable: Redenomination [Not] Applicable (If Redenomination is applicable, specify the applicable Day Count Fraction and any provisions necessary to deal with floating rate interest calculation (including alternative reference rates))

31. Other final terms: [Not Applicable/give details] [(When adding any other final terms consideration should be given as to whether such terms constitute “significant new factors” and consequently trigger the need for a supplement to the Offering Circular under Article 16 of the Prospectus Directive)] DISTRIBUTION 32. (i) If syndicated, names [and addresses]** of [Not Applicable/give names [and addresses and Managers [and underwriting underwriting commitments]**] commitments]**: (Include names and addresses of entities agreeing to underwrite the issue on a firm commitment basis and names and addresses of entities agreeing to place the issue without a firm commitment or on a “best efforts” basis if such entities are not the same as the Managers)** (ii) Date of [Subscription] Agreement:** [ ]** (iii) Stabilising Manager (if any): [Not Applicable/give name] 33. If non-syndicated, name and address of relevant [Not Applicable/give name and address]** Dealer: 34. Total commission and concession: [ ] per cent. of the Aggregate Nominal Amount. 35. US Selling Restrictions: [Reg. S Compliance Category; TEFRA C/TEFRA D/TEFRA not applicable] 36. Non-exempt Offer: [Not Applicable] [An offer of the Notes may be made by the Managers [and [specify, if applicable (together, with the Managers, the Financial Intermediaries)]] other than pursuant to Article 3(2) of the Prospectus Directive in [specify relevant Member State(s) – which must be jurisdictions where the Offering Circular and any supplements have been passported] (Public Offer Jurisdictions) during the period from [specify date] until [specify date] (Offer Period). See further Paragraph 10 of Part B below. 37. Additional selling restrictions: [Not Applicable/give details] 38. ERISA Restrictions: [Not Applicable] [specify]

PURPOSE OF FINAL TERMS

These Final Terms comprise the final terms required for issue [and] [public offer in the Public Offer Jurisdictions] [and] [admission to trading on the London Stock Exchange’s Regulated Market and, if relevant, listing

on the Official List of the UK Listing Authority of the Notes described herein] pursuant to the Global Medium Term Note Programme of Glitnir banki hf. RESPONSIBILITY

The Issuer accepts responsibility for the information contained in these Final Terms. [(Relevant third party information, for example in compliance with Annex XII of the Prospectus Directive Regulation in relation to an index or its components)] has been extracted from [specify source]. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading]. Signed on behalf of Glitnir banki hf:

By: ...... Duly authorised

PART B – OTHER INFORMATION 1. LISTING (i) Listing: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [London/Luxembourg/other (specify)/] with effect from [•].] [Not Applicable.] (Where documenting a fungible issue need to indicate that original Notes are already admitted to trading.) (ii) Estimate of total expenses related to [ ]* admission to trading:* 2. RATINGS Ratings: The Notes to be issued have been rated: [S & P: [ ]] [Moody’s: [ ]] [Fitch: [ ]] [[Other]: [ ]] [Need to include a brief explanation of the meaning of the ratings if this has previously been published by the rating provider.] (The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating.) 3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE/OFFER] Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement: “Save as discussed in [“Subscription and Sale”] [and save for any fees payable to the Dealers], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.”] [(When adding any other description, consideration should be given as to whether such matters described constitute “significant new factors” and consequently trigger the need for a supplement to the Offering Circular under Article 16 of the Prospectus Directive.)] 4. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES [(i) Reasons for the offer: [ ] (See [“Use of Proceeds”] wording in Offering Circular – if reasons for offer different from making profit and/or hedging certain risks will need to include those reasons here.)] [(ii)] Estimated net proceeds: [ ] (If proceeds are intended for more than one use, will need to split out and present in order of priority. If

proceeds insufficient to fund all proposed uses, state amount and sources of other funding.) [(iii)] Estimated total expenses: [ ] (Expenses are required to be broken down into each principal intended “use” and presented in order of priority of such “uses”.)

(If the Notes have a denomination of less than €50,000 or equivalent and if the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies (i) above is required where the reasons for the offer are different from making profit and/or hedging certain risks and, where such reasons are inserted in (i), disclosure of net proceeds and total expenses at (ii) and (iii) above are also required.)

(If the Notes have a denomination greater than €50,000 or equivalent, delete this paragraph 4 unless the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies, in which case (i) above is required where the reasons for the offer are different from making profit and/or hedging certain risks and, where such reasons are inserted in (i), disclosure of net proceeds and total expenses at (ii) and (iii) above are also required.)

5. [Fixed Rate Notes only – YIELD Indication of yield: [ ]

Calculated as [include details of method of calculation in summary form] on the Issue Date.

[As set out above, the yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.] 6. Floating Rate Notes only – HISTORIC INTEREST RATES (Floating Rate Notes only)** Details of historic [LIBOR/EURIBOR/other] rates can be obtained from [Reuters].] 7. [Index-Linked or other variable-linked Notes Need to include details of where past and future only – PERFORMANCE OF performance and volatility of the index/formula/other INDEX/FORMULA/OTHER VARIABLE AND variable can be obtained and, if the Notes have a OTHER INFORMATION CONCERNING denomination less than €50,000 or equivalent a clear THE UNDERLYING comprehensive explanation of how the value of the investment is affected by the underlying and the circumstances when the risks are most evident. Where the underlying is an index need to include the name of the index and a description if composed by the Issuer and if the index is not composed by the Issuer need to include details of where the information about the index can be obtained. Where the underlying is not an index need to include equivalent information. Include other information concerning the underlying required by Paragraph 4.2 of Annex XII of the PD

Regulation.]***

The Issuer [intends to provide post-issuance information [specify what information will be reported and where it can be obtained]] [does not intend to provide post-issuance information]. 8. [Dual Currency Notes only – PERFORMANCE Need to include details of where past and future OF RATE[S] OF EXCHANGE performance and volatility of the relevant rate[s] can be obtained and, if the Notes have a denomination less than €50,000 or equivalent a clear and comprehensive explanation of how the value of the investment is affected by the underlying and the circumstances when the risks are most evident.]

[(When completing this paragraph, consideration should be given as to whether such matters described constitute “significant new factors” and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.)] 9. OPERATIONAL INFORMATION ISIN Code: [ ] Common Code: [ ] CUSIP: [ ] Any clearing system(s) other than DTC, Euroclear [Not Applicable/give name(s) and number(s)] Bank S.A./N.V. and Clearstream Banking, société anonyme and the relevant identification number(s): Delivery: Delivery [against/free of] payment(s)] Names and addresses of additional Paying [ ] Agent(s) and Transfer Agent(s) (if any): Intended to be held in a manner which would [Yes] [No] [Not Applicable] allow Eurosystem eligibility: [Note that the designation “yes” simply means that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper and does not necessarily mean that the Notes will be recognized as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the satisfaction of the Eurosystem eligibility criteria .][Include this text if “yes” selected in which case the Notes must be issued in NGN form] 10. TERMS AND CONDITIONS OF THE OFFER**** Offer Price: [Issue Price] [specify]

Conditions to which the offer is subject: [Not Applicable/give details] Description of the application process: [Not Applicable/give details] Description of possibility to reduce subscriptions [Not Applicable/give details] and manner for refunding excess amount paid by applicants: Details of the minimum and/or maximum amount [Not Applicable/give details] of application: Details of the method and time limits for paying [Not Applicable/give details] up and delivering the Notes: Manner in and date on which results of the offer [Not Applicable/give details] are to be made public: Procedure for exercise of any right of pre-emption, [Not Applicable/give details] negotiability of subscription rights and treatment of subscription rights not exercised: Categories of potential investors to which the [None/give details] Notes are offered and whether tranche(s) have been reserved for certain countries: Process for notification to applicants of the amount [Not Applicable/give details] allotted and the indication whether dealing may begin before notification is made: Amount of any expenses and taxes specifically [Not Applicable/give details] charged to the subscriber or purchaser: Name(s) and address(es), to the extent known to [None/give details] the Issuer, of the placers in the various countries where the offer takes place.

Notes: * Delete if the minimum denomination is less than €50,000 ** Note, provisions as to addresses and commitments of dealers, date of Subscription Agreement, commission and concession fees, explanation of ratings, historic interest rates and explanation of how the value of an investment is affected by the underlying are only required where the minimum denomination is less than €50,000 *** If the Final Redemption Amount is or may be other than the nominal value of a Note, the Notes will be derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply. **** Note, relevant only in relation to Notes with a minimum denomination of less than €50,000 or where the Final Redemption Amount may be more or less than the nominal value of a Note.

TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes which will be incorporated by reference into each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevant stock exchange or other relevant authority (if any) and agreed by the Issuer and the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms in relation to any Tranche of Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Final Terms (or the relevant provisions thereof will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should be made to “Form of the Notes” for a description of the content of Final Terms which will sped which of such terms are to apply in relation to the relevant Notes.

This Note is one of a Series (as defined below) of Notes issued by Glitnir banki hf. (the “Issuer”) pursuant to the Agency Agreement (as defined below). References herein to the “Notes” shall be references to the Notes of this Series and shall mean: (i) in relation to any Notes represented by a global Note (a “Global Note”), units of each Specified Denomination in the Specified Currency; (ii) any Global Note; (iii) any definitive Notes in bearer form (“Bearer Notes”) issued in exchange for a Global Note in bearer form; and (iv) any definitive Notes in registered form (“Registered Notes”) (whether or not issued in exchange for a Global Note in registered form (“Registered Global Notes”)). The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of an amended and restated agency agreement dated 23rd June, 2008 (the “Agency Agreement”, which expression shall include any amendment and/or supplement and/or restatement from time to time) and made between the Issuer, The Bank of New York as issuing and principal paying agent (the “Principal Paying Agent”, which expression shall include any successor principal paying agent), the other paying agent named therein (together with the Principal Paying Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents), The Bank of New York as registrar (the “Registrar”, which expression shall include any successor registrar) and a transfer agent and the other transfer agents named therein (together with the Registrar, the “Transfer Agents”, which expression shall include any additional or successor transfer agents). The Paying Agents and the Transfer Agents are together referred to as the “Agents”. Interest bearing definitive Bearer Notes (unless otherwise indicated in the applicable Final Terms) have interest coupons (“Coupons”) and, if indicated in the applicable Final Terms, talons for further Coupons (“Talons”) attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Definitive Bearer Notes repayable in instalments have receipts (“Receipts”) for the payment of the instalments of principal (other than the final instalment) attached on issue. Global Notes do not have Receipts, Coupons or Talons attached on issue. The final terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms attached to or endorsed on this Note which supplement these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note. References to the “applicable Final Terms” are to Part A of the Final Terms (or the relevant provisions thereof) attached to or endorsed on this Note. Any reference to “Noteholders” or “holders” in relation to any Notes shall mean (in the case of Bearer Notes) the holders of the Notes and (in the case of Registered Notes) the persons in whose name the Notes are registered and shall, in relation to any Notes represented by a Global Note, be construed as provided below. Any reference herein to “Receiptholders” shall mean the holders of the Receipts and any reference herein to “Couponholders” shall mean the holders of the Coupons and shall, unless the context otherwise requires, include the holders of the Talons. As used herein, “Tranche” means Notes which are identical in all respects (including as to listing and admission to trading) and “Series” means a Tranche of Notes together with any further Tranche or Tranches of Notes which are

(i) expressed to be consolidated and form a single Series and (ii) identical in all respects (including as to listing and admission to trading) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices. The Noteholders, the Receiptholders and the Couponholders are entitled to the benefit of the Deed of Covenant (the “Deed of Covenant”) dated 28th July, 2005 and made by the Issuer. The original of the Deed of Covenant is held by the common depositary for Euroclear (as defined below) and Clearstream, Luxembourg (as defined below). Copies of the Agency Agreement and the Deed of Covenant are available for inspection during normal business hours at the specified office of each of the Agents. Copies of the applicable Final Terms are available for viewing at the office of the Issuer at Kirkjusandur 2, 155 Reykjavík, Iceland and copies may be obtained from the Principal Paying Agent at One Canada Square, London E14 5AL. The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Agency Agreement, the Deed of Covenant and the applicable Final Terms which are applicable to them. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Agency Agreement. Words and expressions defined in the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail. 1. Form, Denomination and Title The Notes are in bearer form or in registered form as specified in the applicable Final Terms and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa. The Notes are Senior Notes or Subordinated Notes as indicated in the applicable Final Terms. The Notes may be Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes, Index Linked Interest Notes, Dual Currency Interest Notes or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms. The Notes may be Index Linked Redemption Notes, Instalment Notes, Dual Currency Redemption Notes, Partly Paid Notes or a combination of any of the foregoing, depending upon the Redemption/Payment Basis shown in the applicable Final Terms. Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable. Subject as set out below, title to the Bearer Notes, Receipts and Coupons will pass by delivery and title to the Registered Notes will pass upon registration of transfers in accordance with the provisions of the Agency Agreement. The Issuer and any Agent will (except as otherwise required by law) deem and treat the bearer of any Bearer Note, Receipt or Coupon and the registered holder of any Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any of the Notes is represented by a Global Note held by or on behalf of Euroclear Bank S.A./N.V. (“Euroclear”) and/or Clearstream Banking, societe anonyme (“Clearstream, Luxembourg”), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer and the Agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer Global Note shall be treated by the Issuer and any Agent as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note. The expressions “Noteholder” and “holder of Notes” mean, in the case of a Bearer Note, the bearer of such Note.

For so long as DTC, or its nominee, is the registered owner or holder of a Registered Global Note, DTC or its nominee, as the case may be, shall be treated by the Issuer and the Agents as the holder of such nominal amount of such Registered Global Notes for all purposes. Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of DTC, Euroclear and Clearstream, Luxembourg, as the case may be. Upon the terms and subject to the conditions set forth in the Agency Agreement, a Registered Note in definitive form may be transferred in whole or in part (in the authorised denominations set out in the applicable Final Terms). In order to effect any such transfer (i) the holder or holders must (A) surrender the Registered Note for registration of the transfer of the Registered Note (or the relevant part of the Registered Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing and (B) complete and deposit such other certifications as may be required by the Registrar or, as the case may be, the relevant Transfer Agent and (ii) the Registrar or, as the case may be, the relevant Transfer Agent must, after due and careful enquiry, be satisfied with the documents of title and the identity of the person making the request. Any such transfer will be subject to such reasonable regulations as the Issuer and the Registrar may from time to time prescribe (the initial such regulations being set out in Schedule 9 to the Agency Agreement). Subject as provided above, the Registrar or, as the case may be, the relevant Transfer Agent will, within three business days (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar or, as the case may be, the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations), authenticate and deliver, or procure the authentication and delivery of, at its specified office to the transferee or (at the risk of the transferee) send by uninsured mail, to such address as the transferee may request, a new Registered Note in definitive form of a like aggregate nominal amount to the Registered Note (or the relevant part of the Registered Note) transferred. In the case of the transfer of part only of a Registered Note in definitive form, a new Registered Note in definitive form in respect of the balance of the Registered Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to the transferor. In the event of a partial redemption of Notes under Condition 7, the Issuer shall not be required to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption. Noteholders will not be required to bear the costs and expenses of effecting any registration of transfer as provided above, except for any costs or expenses of delivery other than by regular uninsured mail and except that the Issuer may require the payment of a sum sufficient to cover any stamp duty, tax or other governmental charge that may be imposed in relation to the registration. References to DTC, Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms. 2. Status of the Notes and Subordination (a) Status of the Senior Notes The Senior Notes and any relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 3) unsecured obligations of the Issuer and rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding.

(b) Subordination The Subordinated Notes and any relative Receipts and Coupons are unsecured and unconditional obligations of the Issuer, subordinated in accordance with and for the purposes of Chapter X; Liquid Assets and Own Funds; Article 84 of the Act on Financial Undertakings No. 161/2002 (the “Act”) of the Icelandic Parliament, and rank pari passu and rateably and without any preference among themselves and accordingly, on the insolvency or liquidation of the Issuer, the Subordinated Notes rank in right of payment:

(i) after payment of all obligations of the Issuer which are not expressed to be subordinated in accordance with and for the purposes of Chapter X; Liquid Assets and Own Funds; Article 84 of

the Act (or any provision in any other Act of the Icelandic Parliament which modifies or replaces those provisions); (ii) at least pari passu with all other obligations of the Issuer which are expressed to be subordinated in accordance with and for the purposes of Chapter X; Liquid Assets and Own Funds; Article 84 of the Act (or any provision in any other Act of the Icelandic Parliament which modifies or replaces those provisions); and (iii) before the refund of any share capital (hlutafe) and/or comparable capital and reserves (sambaerilegt eigid fe) of the Issuer. The Issuer undertakes that for so long as any of the Subordinated Notes, Receipts or Coupons remain outstanding (as defined in the Agency Agreement) it will not create any subordinated obligation other than in accordance with and for the purposes of Chapter X; Liquid Asset and Own Funds; Article 84 of the Act (or any provision in any other Act of the Icelandic Parliament which modifies or replaces these provisions). The provisions of this Condition 2(b) shall be governed by, and construed in accordance with, Icelandic law. 3. Negative Pledge This Condition 3 only applies to Senior Notes. The Issuer will not, and will ensure that none of its subsidiaries will, create or have outstanding any mortgage, charge, pledge, lien or other security interest, each a “security interest” other than a permitted security interest (as defined below), upon the whole or any part of the Issuer’s undertakings, assets or revenues (including any uncalled capital), present or future, in order to secure any Relevant Indebtedness (as defined below) or to secure any guarantee of or indemnity in respect of any Relevant Indebtedness unless (1) all amounts payable by it under the Senior Notes are equally and rateably secured by the security interest or (2) the other security interest or other arrangement (whether or not it includes the giving of a security interest) is in the form to be approved by a majority of the holders of outstanding Senior Notes. “Excluded Indebtedness” means any Relevant Indebtedness in respect of which the person or persons to whom any Relevant Indebtedness is or may be owed by the relevant borrower has or have no recourse whatsoever to the Issuer or any subsidiary (whether or not also the relevant borrower) for the repayment thereof other than: (i) recourse to the borrower for amounts limited to the cash flow or net cash flow (other than historic cash flow or historic net cash flow) from a Specified Asset (as defined below), except for our asset or an asset of any subsidiary over which security is given in connection with the issuance of covered bonds; and/or (ii) recourse to the borrower for the purpose only of enabling amounts to be claimed in respect of the Relevant Indebtedness in an enforcement of any encumbrance given by the borrower over a Specified Asset or the income, cash flow or other proceeds deriving from the Specified Asset (or given by a shareholder or the like in the borrower over its shares or the like in the capital of the borrower) to secure the Relevant Indebtedness, provided that (a) the extent of the recourse to the borrower is limited solely to the amount of any recoveries made on any such enforcement, and (b) the person or persons is/are not entitled, by virtue of any right or claim arising out of or in connection with the Relevant Indebtedness, to commence proceedings for the winding up or dissolution of the borrower or to appoint or procure the appointment of any receiver, trustee or similar person or officer in respect of the borrower or any of its assets (save for the assets the subject of such encumbrance); and/or (iii) recourse of the borrower generally, or directly or indirectly to us or any subsidiary, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for breach of an obligation (not being a payment obligation or an obligation to procure payment by another or an indemnity in respect to such obligation or any obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the person against which such recourse is available;

“Government entities” means any body, agency, ministry, department, authority, statutory corporation or other entity of or pertaining to a member state of the European Economic Area or the government thereof or any political subdivision, municipality or local government thereof (whether autonomous or not). “Permitted security interest” means any security interest created by the Issuer or its subsidiaries over the whole or any part of their present or future assets or revenues where such assets or revenues are comprised of the following (or are otherwise qualifying collateral for issues of covered bonds pursuant to any relevant contractual arrangements and/or specific provisions of laws of Iceland relating to covered bonds): (1) mortgage receivables; (2) receivables against government entities; (3) asset-backed securities backed by any of the assets under paragraph (1) or (2); or (4) any other assets permitted by Icelandic law to collateralize the covered bonds, in each case provided that the creation of the securities interest is pursuant to the relevant contractual arrangements or, as the case may be, specific provisions of the laws of Iceland relating to covered bonds applicable at the time of creation of the security interest. “Relevant Indebtedness” means any present or future indebtedness (which term shall be construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent) in the form of, or represented or evidenced by, bonds, debentures, notes or other securities which are, or are intended to be, with the agreement of the Issuer, quoted, listed, dealt in or traded on any stock exchange or over-the-counter or other securities market other than indebtedness which by its terms will mature within a period of one year from its date of issue and other than excluded indebtedness. “Specified Asset” means our asset or an asset of any subsidiary over which security is given in connection with any limited recourse securitisation or other asset-backed financing, including the issuance of covered bonds. “Subsidiary” means any entity whose affairs are required by law or in accordance with generally accepted accounting principles applicable to Iceland to be consolidated in the Issuer’s consolidated accounts. 4. Redenomination (a) Redenomination Where redenomination is specified in the applicable Final Terms as being applicable, the Issuer may, without the consent of the Noteholders, the Receiptholders and the Couponholders, on giving prior notice to the Principal Paying Agent, DTC (if applicable), Euroclear and Clearstream, Luxembourg and at least 30 days’ prior notice to the Noteholders in accordance with Condition 14 elect that, with effect from the Redenomination Date specified in the notice, the Notes shall be redenominated in euro.

The election will have effect as follows:

(i) the Notes and the Receipts shall be deemed to be redenominated into euro in the denomination of €0.01 with a nominal amount for each Note and Receipt equal to the nominal amount of that Note or Receipt in the Specified Currency, converted into euro at the Established Rate, provided that, if the Issuer determines, with the agreement of the Principal Paying Agent, that the then market practice in respect of the redenomination in euro of internationally offered securities is different from the provisions specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Noteholders, the stock exchange (if any) on which the Notes may be listed (or any other relevant authority) and the Agents of such deemed amendments; (ii) save to the extent that an Exchange Notice has been given in accordance with paragraph (iv) below, the amount of interest due in respect of the Notes will be calculated by reference to the aggregate nominal amount of Notes presented (or, as the case may be, in respect of which Coupons are presented) for payment by the relevant holder and the amount of such payment shall be rounded down to the nearest €0.01; (iii) if definitive Notes are required to be issued after the Redenomination Date, they shall be issued at the expense of the Issuer in the denominations of €1,000, €10,000, €100,000 and (but only to the extent of any remaining amounts less than €1,000 or such smaller denominations as the Principal Paying Agent may approve) €0.01 and such other denominations as the Principal Paying Agent shall determine and notify to the Noteholders;

(iv) if issued prior to the Redenomination Date, all unmatured Coupons denominated in the Specified Currency (whether or not attached to the Notes) will become void with effect from the date on which the Issuer gives notice (the “Exchange Notice”) that replacement euro-denominated Notes, Receipts and Coupons are available for exchange (provided that such securities are so available) and no payments will be made in respect of them. The payment obligations contained in any Notes and Receipts so issued will also become void on that date although those Notes and Receipts will continue to constitute valid exchange obligations of the Issuer. New euro-denominated Notes, Receipts and Coupons will be issued in exchange for Notes, Receipts and Coupons denominated in the Specified Currency in such manner as the Principal Paying Agent may specify and as shall be notified to the Noteholders in the Exchange Notice. No Exchange Notice may be given less than 15 days prior to any date for payment of principal or interest on the Notes; (v) after the Redenomination Date, all payments in respect of the Notes, the Receipts and the Coupons, other than payments of interest in respect of periods commencing before the Redenomination Date, will be made solely in euro as though references in the Notes to the Specified Currency were to euro. Payments will be made in euro by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque; (vi) if the Notes are Fixed Rate Notes and interest for any period ending on or after the Redenomination Date is required to be calculated for a period ending other than on an Interest Payment Date, it will be calculated: (a) in the case of the Notes represented by a Global Note, by applying the Rate of Interest to the aggregate outstanding nominal amount of the Notes; and (b) in the case of Notes in definitive form, by applying the Rate of Interest to the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction specified in the applicable Final Terms, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amounts (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding; and (vii) if the Notes are Floating Rate Notes, the applicable Final Terms will specify any relevant changes to the provisions relating to interest. (b) Definitions In these Conditions, the following expressions have the following meanings:

“Established Rate” means the rate for the conversion of the Specified Currency (including compliance with rules relating to roundings in accordance with applicable European Community regulations) into euro established by the Council of the European Union pursuant to Article 123 of the Treaty;

“euro” means the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty;

“Redenomination Date” means (in the case of interest bearing Notes) any date for payment of interest under the Notes or (in the case of Zero Coupon Notes) any date, in each case specified by the Issuer in the notice given to the Noteholders pursuant to paragraph (a) above and which falls on or after the date on which the country of the Specified Currency first participates in the third stage of European economic and monetary union; and

“Treaty” means the Treaty establishing the European Community, as amended.

5. Interest (a) Interest on Fixed Rate Notes Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date.

If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.

Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:

(a) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (b) in the case of Fixed Rate Notes in definitive form, the Calculation Amount; and, in each case,

multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amounts (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.

“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 5(a): (i) if “Actual/Actual (ICMA)” is specified in the applicable Final Terms: (a) in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates that would occur in one calendar year; or (b) in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of (1) the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and (2) the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and

(ii) if “30/360” is specified in the applicable Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360. In these Conditions: “Determination Period” means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date); “Fixed Interest Period” means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date; and “sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent. (b) Interest on Floating Rate Notes and Index Linked Interest Notes (i) Interest Payment Dates Each Floating Rate Note and Index Linked Interest Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either: (A) the Specified Interest Payment Date(s) (each an “Interest Payment Date”) in each year specified in the applicable Final Terms; or (B) if no express Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. Such interest will be payable in respect of each Interest Period (which expression shall, in these Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date). If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is: (1) in any case where Specified Periods are specified in accordance with Condition 5(b)(i)(B) above, the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or (2) the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or (3) the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or

(4) the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. In these Conditions, “Business Day” means a day which is both: (A) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the applicable Final Terms; and (B) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (if other than London and any Additional Business Centre and which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney and Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET 2) System (the “TARGET 2 System”) is open. (ii) Rate of Interest The Rate of Interest payable from time to time in respect of Floating Rate Notes and Index Linked Interest Notes will be determined in the manner specified in the applicable Final Terms. (A) ISDA Determination for Floating Rate Notes Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Principal Paying Agent under an interest rate swap transaction if the Principal Paying Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes (the “ISDA Definitions”) and under which: (1) the Floating Rate Option is as specified in the applicable Final Terms; (2) the Designated Maturity is a period specified in the applicable Final Terms; and (3) the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the London inter-bank offered rate (“LIBOR”) or on the Euro-zone inter-bank offered rate (“EURIBOR”), the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms. For the purposes of this sub-paragraph (A), (i) “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions. (B) Screen Rate Determination for Floating Rate Notes Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either: (1) the offered quotation; or (2) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations (expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date in question plus or

minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Principal Paying Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Principal Paying Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations. The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is not available or if, in the case of (1) above, no such offered quotation appears or, in the case of (2) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph. If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Final Terms. (iii) Minimum and/or Maximum Rate of Interest If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest. (iv) Determination of Rate of Interest and calculation of Interest Amounts The Principal Paying Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of Index Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. In the case of Index Linked Interest Notes, the Calculation Agent will notify the Principal Paying Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same. The Principal Paying Agent will calculate the amount of interest (the Interest Amount) payable on the Floating Rate Notes or Index Linked Interest Notes for the relevant Interest Period by applying the Rate of Interest to: (a) in the case of Floating Rate Notes or Index Linked Interest Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (b) in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note or an Index Linked Interest Note in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amounts (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding. “Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 5(b):

(i) if “Actual/Actual (ISDA)” or “Actual/Actual” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365); (ii) if “Actual/365 (Sterling)” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; (iii) if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365; (iv) if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 360; (v) if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1)

Day Count Fraction = 360 where:

"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;

"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number is 31, in which case D1 will be 30; and

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30; and (vi) if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula as follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) Day Count Fraction = 360 where:

"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;

"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30;

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30; (vii) if “30E/360 (ISDA)” is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) Day Count Fraction = 360 where:

"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;

"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;

"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

"D1" is the first calendar day, expressed as a number, of the Interest Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and

"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30. (viii) Notification of Rate of Interest and Interest Amounts The Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange or other relevant authority on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed or by which they have been admitted to listing and notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange or other relevant authority on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed or by which they have been admitted to listing and to the Noteholders in accordance with Condition 14. For the purposes of this paragraph, the expression “London Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London. (ix) Certificates to be final All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 5(b), whether by the Principal Paying Agent or, if applicable, the Calculation Agent, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Principal Paying Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or the Couponholders shall attach to the Principal Paying Agent or the Calculation Agent (if applicable) in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. (c) Interest on Dual Currency Interest Notes The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be determined in the manner specified in the applicable Final Terms.

(d) Interest on Partly Paid Notes In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified in the applicable Final Terms. (e) Accrual of interest Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of (1) the date on which all amounts due in respect of such Note have been paid; and (2) five days after the date on which the full amount of the moneys payable in respect of such Note has been received by the Principal Paying Agent and notice to that effect has been given to the Noteholders in accordance with Condition 14. 6. Payments (a) Method of payment Subject as provided below: (i) payments in a Specified Currency other than euro will be made by credit or transfer to an account in the relevant Specified Currency maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively); and (ii) payments in euro will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque. Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8. (b) Presentation of definitive Bearer Notes, Receipts and Coupons Payments of principal in respect of definitive Bearer Notes will (subject as provided below) be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of definitive Bearer Notes, and payments of interest in respect of definitive Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)). Payments of instalments of principal (if any) in respect of definitive Bearer Notes, other than the final instalments will (subject as provided below) be made in the manner provided in paragraph (a) above against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the final instalment will be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Bearer Note in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant instalment together with the definitive Bearer Note to which it appertains. Receipts presented without the definitive Bearer Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any definitive Bearer Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof. Fixed Rate Notes in definitive bearer form (other than Dual Currency Notes, Index Linked Notes or Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons

appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 8) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 9) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter. Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof. Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note or Long Maturity Note in definitive bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A “Long Maturity Note” is a Fixed Rate Note (other than a Fixed Rate Note which on issue has a talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note. If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note. (c) Payments in respect of Bearer Global Notes Payments of principal and interest (if any) in respect of Notes represented by any Global Note in bearer form will (subject as provided below) be made in the manner specified above in relation to definitive Bearer Notes and otherwise in the manner specified in the relevant Global Note against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made against presentation or surrender of any Global Note in bearer form, distinguishing between any payment of principal and any payment of interest, will be made on such Global Note by the Paying Agent to which it was presented and such record shall be prima facie evidence that the payment in question has been made. (d) Payments in respect of Registered Notes Payments of principal (other than instalments of principal prior to the final instalment) in respect of each Registered Note (whether or not in global form) will be made against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the Registered Note at the specified office of the Registrar or any of the Paying Agents. Such payments will be made by transfer to the Designated Account (as defined below) of the holder (or the first named of joint holders) of the Registered Note appearing in the register of holders of the Registered Notes maintained by the Registrar (the “Register”) at the close of business on the third business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) before the relevant due date. Notwithstanding the previous sentence, if (i) a holder does not have a Designated Account or (ii) the principal amount of the Notes held by a holder is less than U.S.$250,000 (or its approximate equivalent in any other Specified Currency), payment will instead be made by a cheque in the Specified Currency drawn on a Designated Bank (as defined below). For these purposes, “Designated Account” means the account (which, in the case of a payment in Japanese yen to a non-resident of Japan, shall be a non-resident account) maintained by a holder with a Designated Bank and identified as such in the Register and “Designated Bank” means (in the case of payment in a Specified Currency other than euro) a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Auckland, respectively) and (in the case of a payment in euro) any bank which processes payments in euro.

Payments of interest and payments of instalments of principal (other than the final instalment) in respect of each Registered Note (whether or not in global form) will be made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by uninsured mail on the business day in the city where the specified office of the Registrar is located immediately preceding the relevant due date to the holder (or the first named of joint holders) of the Registered Note appearing in the Register at the close of business on the fifteenth day (whether or not such fifteenth day is a business day) before the relevant due date (the “Record Date”) at his address shown in the Register on the Record Date and at his risk. Upon application of the holder to the specified office of the Registrar not less than three business days in the city where the specified office of the Registrar is located before the due date for any payment of interest in respect of a Registered Note, the payment may be made by transfer on the due date in the manner provided in the preceding paragraph. Any such application for transfer shall be deemed to relate to all future payments of interest (other than interest due on redemption) and instalments of principal (other than the final instalment) in respect of the Registered Notes which become payable to the holder who has made the initial application until such time as the Registrar is notified in writing to the contrary by such holder. Payment of the interest due in respect of each Registered Note on redemption and the final instalment of principal will be made in the same manner as payment of the principal amount of such Registered Note. Holders of Registered Notes will not be entitled to any interest or other payment for any delay in receiving any amount due in respect of any Registered Note as a result of a cheque posted in accordance with this Condition arriving after the due date for payment or being lost in the post. No commissions or expenses shall be charged to such holders by the Registrar in respect of any payments of principal or interest in respect of the Registered Notes. None of the Issuer or the Agents will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. (e) General provisions applicable to payments The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of DTC, Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes represented by such Global Note must look solely to DTC, Euroclear or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the Issuer to, or to the order of, the holder of such Global Note. Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Bearer Notes will be made at the specified office of a Paying Agent in the United States if: (i) the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Bearer Notes in the manner provided above when due; (ii) payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and (iii) such payment is then permitted under United States law without involving, in the opinion of the Issuer, adverse tax consequences to the Issuer. (f) Payment Day If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which (subject to Condition 9) is:

(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in each of (A) the relevant place of presentation; (B) London; and (C) any Additional Financial Centre specified in the applicable Final Terms; and (ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (if other than the place of presentation, London and any Additional Financial Centre and which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which the TARGET 2 System is open. (g) Interpretation of principal and interest Any reference in these Conditions to principal in respect of the Notes shall be deemed to include, as applicable: (i) any additional amounts which may be payable with respect to principal under Condition 8; (ii) the Final Redemption Amount of the Notes; (iii) the Early Redemption Amount of the Notes; (iv) the Optional Redemption Amount(s) (if any) of the Notes; (v) in relation to Notes redeemable in instalments, the Instalment Amounts; (vi) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 7(e)); and (vii) any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes. Any reference in these Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 8. 7. Redemption and Purchase (a) Redemption at maturity Unless previously redeemed or purchased and cancelled as specified below, each Note (including each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency on the Maturity Date. (b) Redemption for tax reasons The Notes may be redeemed at the option of the Issuer (but, in the case of Subordinated Notes, only after having obtained the approval of the Financial Supervisory Authority) in whole, but not in part, at any time (if this Note is neither a Floating Rate Note, an Index Linked Note nor a Dual Currency Interest Note) or on any Interest Payment Date (if this Note is either a Floating Rate Note, an Index Linked Note or a Dual Currency Interest Note), on giving not less than 30 nor more than 60 days’ notice to the Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable), if: (i) on the occasion of the next payment due under the Notes, the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 8 as a result of any change in, or amendment to, the laws or regulations of a Tax Jurisdiction (as defined in Condition 8) or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and (ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Principal Paying Agent a certificate signed by two Directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment. Each Note redeemed pursuant to this Condition 7(b) will be redeemed at its Early Redemption Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption. (c) Redemption at the option of the Issuer (Issuer Call) If Issuer Call is specified in the applicable Final Terms, the Issuer may (but, in the case of Subordinated Notes, only after having obtained the approval of the Financial Supervisory Authority), having given: (i) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition 14; and (ii) not less than 15 days before the giving of the notice referred to in (i), notice to the Principal Paying Agent; (which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date. Any such redemption must be of a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption Amount, in each case as specified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of DTC, Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion), as the case may be, in the case of Redeemed Notes represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 14 not less than 15 days prior to the date fixed for redemption. No exchange of the relevant Global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 14 at least five days prior to the Selection Date. (d) Redemption at the option of the Noteholders (Investor Put) If Investor Put is specified in the applicable Final Terms, upon the holder of any Senior Note giving to the Issuer in accordance with Condition 14 not less than 15 nor more than 30 days’ notice the Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date. It may be that before an Investor Put can be exercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, the provisions will be set out in the applicable Final Terms. To exercise the right to require redemption of this Senior Note the holder of this Senior Note must, if this Note is in definitive form and held outside DTC, Euroclear and Clearstream, Luxembourg, deliver such Senior Note at the specified office of any Paying Agent at any time during normal business hours of such Paying Agent falling within the notice period, a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent (a “Put Notice”) and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an

address) to which payment is to be made under this Condition accompanied by this Note or evidence satisfactory to the Paying Agent concerned that this Note will, following delivery of the Put Notice, be held to its order or under its control. If this Note is represented by a Global Note or is in definitive form and held through DTC, Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption of this Note the holder of this Note must, within the notice period, give notice to the Principal Paying Agent of such exercise in accordance with the standard procedures of DTC, Euroclear or Clearstream, Luxembourg, as the case may be, (which may include notice being given on his instruction by DTC, Euroclear or Clearstream, Luxembourg or any common depositary for them to the Principal Paying Agent by electronic means) in a form acceptable to DTC, Euroclear or Clearstream, Luxembourg, as the case may be, from time to time and, if this Note is represented by a Global Note, at the same time present or procure the presentation of the relevant Global Note to the Principal Paying Agent for notation accordingly. Any Put Notice given by a holder of any Senior Note pursuant to this paragraph (d) shall be irrevocable except where prior to the due date of redemption an Event of Default shall have occurred and be continuing in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this paragraph (d) and instead to declare such Senior Note forthwith due and payable pursuant to Condition 10. (e) Early Redemption Amounts For the purpose of paragraph (b) above and Condition 10, each Note will be redeemed at its Early Redemption Amount calculated as follows: (i) in the case of a Note with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; (ii) in the case of a Note (other than a Zero Coupon Note but including an Instalment Note and a Partly Paid Note) with a Final Redemption Amount which is or may be less or greater than the Issue Price or which is payable in a Specified Currency other than that in which the Note is denominated, at the amount specified in, or determined in the manner specified in, the applicable Final Terms or, if no such amount or manner is so specified in the applicable Final Terms, at its nominal amount; or (iii) in the case of a Zero Coupon Note, at an amount (the “Amortised Face Amount”) calculated in accordance with the following formula: Early Redemption Amount = RP x (1+AY)y Where: “RP” means the Reference Price; “AY” means the Accrual Yield expressed as a decimal; and “y” is a fraction the numerator of which is equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator of which is 360, or on such other calculation basis as may be specified in the applicable Final Terms. (f) Instalments Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to paragraph (e) above. (g) Partly Paid Notes Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition and the applicable Final Terms. (h) Purchases

The Issuer or any subsidiary of the Issuer may at any time purchase Notes but, in the case of Subordinated Notes, only after having obtained the approval of the Financial Supervisory Authority (provided that, in the case of definitive Bearer Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. If purchases are made by tender, tenders must be available to all Noteholders alike. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Agent for cancellation. (i) Cancellation All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and the Notes purchased and cancelled pursuant to paragraph (h) above (together with all unmatured Receipts, Coupons and Talons cancelled therewith) shall be forwarded to the Principal Paying Agent and cannot be reissued or resold. (j) Late payment on Zero Coupon Notes If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (d) above or upon its becoming due and repayable as provided in Condition 10 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (e)(iii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of: (i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and (ii) five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Notes has been received by the Principal Paying Agent and notice to that effect has been given to the Noteholders in accordance with Condition 14. 8. Taxation All payments of principal and interest in respect of the Notes, Receipts and Coupons by the Issuer will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of Iceland or the United States unless such withholding or deduction is required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon: (i) presented for payment by or on behalf of a holder who is liable for such taxes or duties in respect of such Note, Receipt or Coupon by reason of such holder (or a fiduciary, settlor, beneficiary, member, or stockholder of, or a person holding a power over, such holder, if such holder is an estate, trust, partnership or corporation) having some present or former connection with Iceland or the United States other than the mere holding of such Note, Receipt or Coupon; or (ii) presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Payment Day (as defined in Condition 6(f)); or (iii) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive; or (iv) presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note, Receipt or Coupon to another Paying Agent in a Member State of the European Union; or

(v) in respect of taxes, duties, assessment or governmental charges that would not have been imposed but for the failure of the Noteholder or beneficial owner of such Note to comply with any certification, identification, information, documentation or other reporting requirement if such compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of, deduction or withholding; or (vi) any combination of (i), (ii), (iii), (iv) or (v) above. Additionally, the obligation of the Issuer to pay additional amounts shall not apply with respect to (i) any estate, inheritance, gift, sales, transfer or personal property tax or any similar taxes, duties, assessments or other changes, (ii) any taxes, duties, assessments or other governmental charges that are payable otherwise than by deduction or withholding from payments on the Notes or (iii) any taxes, duties, assessments or other governmental charges that are payable in any jurisdiction other than Iceland or the United States. In the event that additional amounts actually paid with respect to the Notes are based on rates of deduction or withholding of any taxes, duties, assessments or governmental charges in excess of the appropriate rate applicable to the Noteholder or beneficial owners of such Notes, and, as a result thereof, such Noteholder or beneficial owner is entitled to make a claim to the appropriate taxing authority for a refund or credit of such excess, then such Noteholder or beneficial owner shall, by accepting the Notes, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to the Issuer. However, by making such assignment, the Noteholder or beneficial owner makes no representation or warranty that the Issuer will be entitled to receive such claim for a refund or credit and incurs no other obligation with respect thereto. As used herein: (A) “Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Principal Paying Agent or the Registrar on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 14. 9. Prescription The Notes (whether in bearer or registered form), Receipts and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 8) therefor. There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 6(b) or any Talon which would be void pursuant to Condition 6(b). 10. Events of Default (a) Events of Default relating to Senior Notes If any one or more of the following events (each an “Event of Default”) shall occur with respect to any Senior Note: (i) if default is made in the payment of any principal, premium (if any) or interest due in respect of the Senior Notes or any of them and the default continues for a period of three days in the case of principal or premium (if any) and seven days in the case of interest; or (ii) if the Issuer fails to perform or observe any of its other obligations under these Conditions and (except in any case where the failure is incapable of remedy when no such continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days next following the service by a Noteholder on the Issuer of notice requiring the same to be remedied; or (iii) if any Borrowed Money of the Issuer or any of its Principal Subsidiaries is not paid when due or becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due or any creditor of the Issuer or any of its Principal Subsidiaries becomes entitled to declare any such Borrowed Money due and payable or any facility or commitment available to the

Issuer or any of its Principal Subsidiaries relating to Borrowed Money is withdrawn, suspended or cancelled by reason of any default (however described) of the company concerned, provided that, for the purposes of this sub-clause (iii), the Borrowed Money must, when aggregated with all other Borrowed Money to which any part of this Condition 10(a)(iii) applies, exceed U.S.$5,000,000 (or its equivalent in any other currency); or (iv) if any order is made by any competent court or resolution passed for the winding up or dissolution of the Issuer or any of its Principal Subsidiaries, save for the purposes of reorganisation on terms approved by an Extraordinary Resolution of the Noteholders; or (v) if the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on the whole or a substantial part of its business, save for the purposes of reorganisation on terms approved by an Extraordinary Resolution of the Noteholders, or the Issuer or any of its Principal Subsidiaries stops or threatens to stop payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due, or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law, or is adjudicated or found bankrupt or insolvent; or (vi) if (A) proceedings are initiated against the Issuer or any of its Principal Subsidiaries under any applicable liquidation, insolvency, composition, reorganisation or other similar laws, or an application is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator or other similar official, or an administrative or other receiver, manager, administrator or other similar official is appointed, in relation to the Issuer or any of its Principal Subsidiaries or, as the case may be, in relation to the whole or a part of the undertaking or assets of any of them, or an encumbrancer takes possession of the whole or a part of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or a part of the undertaking or assets of any of them and (B) in any case (other than the appointment of an administrator) the same is not discharged within 14 days; or (vii) if the Issuer or any of its Principal Subsidiaries initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or makes a conveyance or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors), then any holder of a Senior Note may, by written notice to the Issuer at the specified office of the Principal Paying Agent, effective upon the date of receipt thereof by the Principal Paying Agent, declare any Senior Notes held by the holder to be forthwith due and payable whereupon the same shall become forthwith due and payable at its Early Redemption Amount (as described in Condition 7(e)), together with accrued interest (if any) to the date of repayment, without presentment, demand, protest or other notice of any kind. For the purposes of this Condition: “Principal Subsidiary” at any time shall mean a Subsidiary of the Issuer inter alia: (A) whose sales (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent not less than five per cent. of the consolidated sales, or, as the case may be, consolidated total assets, of the Issuer and its Subsidiaries taken as a whole, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of the Subsidiary and the then latest audited consolidated accounts of the Issuer and its Subsidiaries; or (B) to which is transferred the whole or substantially the whole of the undertaking and assets of a Subsidiary of the Issuer which immediately before the transfer is a Principal Subsidiary, all as more particularly defined in the Agency Agreement. A certificate by two Directors of the Issuer that in their opinion a Subsidiary of the Issuer is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties, provided that in giving such certificate

the Directors must act reasonably and in good faith, and on the basis of the latest audited, and, in the case of the Issuer, consolidated, financial statements for the entities concerned. (b) Enforcement relating to Subordinated Notes (i) If the Issuer fails to meet its obligations under the Subordinated Notes, any Noteholder may, at its own discretion and without further notice, institute proceedings in Iceland for the compulsory winding-up of the Issuer in accordance with the Act on Financial Undertakings No. 161/2002. (ii) Any Noteholder may at its discretion and without further notice institute such proceedings against the Issuer as it may think fit to enforce any obligation, condition or provision binding on the Issuer under the Subordinated Notes provided that the Issuer shall not by virtue of the institution of any such proceedings be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it. (iii) If an order is made or an effective resolution is passed for the winding-up or liquidation of the Issuer, then the Subordinated Notes shall become due and payable at the Early Redemption Amount together with interest accrued to the date of repayment, without presentment, demand, pretext or other notice of any kind. 11. Replacement of Notes, Receipts, Coupons and Talons Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Principal Paying Agent (in the case of Bearer Notes, Receipts or Coupons) or the Registrar (in the case of Registered Notes) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued. 12. Agents The names of the initial Agents and their initial specified offices are set out below. The Issuer is entitled to vary or terminate the appointment of any Agent and/or appoint additional or other Agents and/or approve any change in the specified office through which any Agent acts, provided that: (i) there will at all times be a Principal Paying Agent and a Registrar; (ii) so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant authority, there will at all times be a Paying Agent (in the case of Bearer Notes) and a Transfer Agent (in the case of Registered Notes) with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or such other relevant authority; and (iii) there will at all times be a paying agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to such Directive. In addition, the Issuer shall forthwith appoint an Agent having a specified office in New York City in the circumstances described in Condition 6(e). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 14. In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and do not assume any obligation to, or relationship of agency or trust with, any Noteholders, Receiptholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor agent. 13. Exchange of Talons On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 9.

14. Notices All notices regarding the Bearer Notes will be deemed to be validly given if published in a leading English language newspaper of general circulation in London. It is expected that such publication will be made in the Financial Times in London. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Bearer Notes are for the time being listed or by which they have been admitted to listing. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers. All notices to holders of the Registered Notes will be deemed to be validly given if sent by first class mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) at their respective addresses recorded in the Register and will be deemed to have been given on the fourth day after mailing and, in addition, for so long as any Registered Notes are listed on a stock exchange and the rules of that stock exchange (or any other relevant authority) so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. Notwithstanding the foregoing until such time as any definitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of DTC, Euroclear and/or Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant notice to DTC, Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or admitted to trading by any other listing authority and the rules of that stock exchange or other relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by that stock exchange. Any such notice shall be deemed to have been given to the holders of the Notes on the seventh day after the day on which the said notice was given to DTC, Euroclear and/or Clearstream, Luxembourg. Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Principal Paying Agent or the Registrar through DTC, Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Principal Paying Agent, the Registrar and DTC, Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose. 15. Meetings of Noteholders, Modification and Waiver The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Agency Agreement. Such a meeting may be convened by the Issuer or Noteholders holding not less than five per cent in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, the Receipts or the Coupons (including modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes, the Receipts or the Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than one-third in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on all Receiptholders and Couponholders. The Principal Paying Agent and the Issuer may agree, without the consent of the Noteholders, Receiptholders or Couponholders, to: (i) any modification (except as mentioned above) of the Notes, the Receipts, the Coupons or the Agency Agreement which is not prejudicial to the interests of the Noteholders; or

(ii) any modification of the Notes, the Receipts, the Coupons or the Agency Agreement which is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of the law. Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 14 as soon as practicable thereafter. 16. Further Issues The Issuer shall be at liberty from time to time without the consent of the Noteholders, the Receiptholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes. 17. Contracts (Rights of Third Parties) Act 1999 No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term or condition of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act. 18. Governing Law and Submission to Jurisdiction (a) Governing law The Agency Agreement, the Deed of Covenant, the Notes (other than Condition 2(b)), the Receipts and the Coupons are governed by, and shall be construed in accordance with, English law. Condition 2(b) of the Notes is governed by, and shall be construed in accordance with, Icelandic law. (b) Submission to jurisdiction The Issuer agrees, for the exclusive benefit of the Noteholders, the Receiptholders and the Couponholders, that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Notes, the Receipts and/or the Coupons and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with the Notes, the Receipts and the Coupons may be brought in such courts. The Issuer hereby irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an inconvenient forum and hereby further irrevocably agrees that a judgment in any such Proceedings brought in the English courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction. Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not. (c) Appointment of Process Agent The Issuer appoints its London branch at 7th Floor, 41 Lothbury, London EC2R7HF as its agent for service of process, and undertakes that, in the event of it ceasing so to act or ceasing to be registered in England, it will appoint another person as its agent for service of process in England in respect of any Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner permitted by law. (d) Other documents The Issuer has in the Agency Agreement and the Deed of Covenant submitted to the jurisdiction of the English courts, waived any right it may have to claim sovereign or other immunity from jurisdiction or execution and appointed an agent for service of process in terms substantially similar to those set out above.

USE OF PROCEEDS

The net proceeds from each issue of Notes will be applied by the Issuer for its general corporate purposes (which include making a profit). If, in respect of any particular issue, there is a particular identified use of proceeds, this will be stated in the applicable Final Terms.

THE ISSUER

Introduction The Group is a leading financial group in Iceland and the Bank is the third largest bank listed in Iceland by market capitalisation. The Bank provides universal banking services in its home markets of Iceland and Norway, offering a broad range of financial services in its home markets, including corporate banking, investment banking, capital markets, investment management and retail banking, to a broad range of customers. The Bank operates 21 branches in Iceland, along with a branch in London and Canada, and a representative office in China. The Bank currently has 21 wholly-owned subsidiaries, including Glitnir Bank ASA (formerly Kredittbanken ASA) and Bolig- og Næringsbanken ASA (“BNbank”) in Norway, Glitnir Capital Corporation in New York and Glitnir Luxembourg SA. Other subsidiaries consist of brokerage companies in Norway and Sweden, holding companies for investments of Glitnir banki hf., a real estate management company, and projects sponsored by members of the Group. In addition, the Bank has substantial shareholdings in other investment and financial services companies, including a 55.0 per cent. stake in Europay Iceland (or Borgun hf.), which is the Mastercard franchise in Iceland. As of 31st December, 2007, its total assets were ISK 2,949 billion and its net profit was ISK 28 billion.

In Iceland, the Issuer is one of the three leading banks with a market share of approximately one third in terms of loan volume as of 31st December, 2007. In Norway, the Issuer is the eighth largest bank with a market share of approximately 2 per cent. in terms of loan volume. Outside of the Issuer’s home markets, its main activities are capital markets in the rest of the Nordic region, corporate banking and investment banking in the rest of the Nordic region, Europe and other international markets, and investment management services, which the Issuer offers in Finland, Sweden, Luxembourg and Russia. The Issuer derived 47 per cent., 22 per cent., 27 per cent. and 5 per cent. of its profit before taxes from Iceland, the Nordic region, Europe and the Issuer’s international operations, respectively, in 2007.

Background History The Bank can trace its history back to 1904 when the first privately owned bank in Iceland, Íslandsbanki hf., was established. Since then, the Bank has undergone a number of mergers with banks and investment credit funds in Iceland, grown through strategic acquisitions in Norway, Sweden and Finland, and grown internationally through organic development. The Bank has played a key role in Iceland’s economic progress in the twentieth century. As of 31st December, 2007, the Bank had over 2,200 employees based in eleven countries.

In May 2000, Íslandsbanki and The Icelandic Investment Bank (“FBA”) merged to create a leading financial services company in Iceland. Prior to the merger, Íslandsbanki was the second largest commercial bank in Iceland and the only privately owned bank in Iceland. FBA was at that time the leading investment bank in Iceland, established in 1998 through a merger of four state-owned investment credit funds which were the main providers of long-term credit to Icelandic industries for most of the twentieth century.

Since the merger of Íslandsbanki and FBA in 2000, the Bank has undergone steady and significant growth and expanded its operations considerably. In late 2004, the Bank acquired KredittBanken ASA (now Glitnir Bank ASA), a niche bank located in Norway with a focus on the seafood and the offshore service vessel industries. In the first quarter of 2005, the Bank acquired BNbank in Norway, a commercial bank focused on mortgage loans. These two acquisitions gave the Bank a significant position in the Norwegian market.

Through the Bank’s acquisitions and organic growth initiatives, the Bank has expanded its international presence in the past few years. The Bank now has offices in London (2001), Luxembourg (2003), Halifax (2006), Shanghai (2006), Stockholm (2006), Helsinki (2007), Moscow (2007) and St. Petersburg (2007). The Bank’s international expansion has been driven by its desire to serve its Nordic customers in their own global expansion, to reach potential customers in its specialized industry sectors located worldwide and to diversify and balance its growth.

Recent Developments On 1st March, 2008 Glitnir merged its two banks in Norway, Glitnir Bank ASA and BNbank into one bank Glitnir Bank ASA. The Bank’s focus in the first quarter of 2008 has been on streamlining its operations both in terms of cost and its business model. On 21st December, 2007, the Issuer signed an agreement to sell 12 per cent. of Glitnir Property Holding (“GPH”), one of the Issuer’s subsidiaries, to Bjarni Ármannsson, its former chief executive officer, for ISK 970 million. The agreement is subject to the approval of the remaining shareholders of GPH and the board of directors of GPH. The Issuer’s remaining share in GPH after completion of the transaction will be 48.8 per cent. Glitnir’s gain from the sale upon completion of the transaction will be approximately ISK 300 million. In addition, previously deferred capital gains of ISK 1.5 billion will be realised as GPH will no longer be included in the Issuer’s consolidated accounts. On 5th September, 2007, the Issuer established a subsidiary corporation in New York. The main function of the corporation will be to support businesses in North America, particularly within the renewable energy and seafood sectors. On 30th April, 2007, the Bank announced that Lárus Welding had been appointed Chief Executive Officer of the Bank, replacing Bjarni Ármannsson, who had served as Chief Executive Officer for the past ten years.

On 17th April, 2007, the Bank created the leading Nordic commercial real estate adviser, Glitnir Property Holding, through the combination of the Norwegian Glitnir Property Group (the parent company of Glitnir Næringsmegling AS, Glitnir Real Estate AS and UNION Eiendomskapital AS, formerly UNION GRUPPEN) based in Oslo and the Swedish real estate adviser Leimdörfer with offices in Stockholm and Helsinki, Finland. This is one important step in the strategy to become the leading commercial real estate advisor in the Nordic market. The new entity will be owned by the Bank (70 per cent.) and the former partners of UNION Gruppen, Union Eiendomskapital and Leimdörfer (30 per cent.). The combined pro forma value of the transactions by Glitnir Property Group and Leimdörfer in 2006 was approximately EUR 5.0 billion.

On 16th March, 2007 the Bank acquired 68.1 per cent. of the shares in FIM and on 16th May, 2007 the Bank closed its tender offer on all issued and outstanding shares and option rights in FIM Group and now holds total of 98.28 per cent. of FIM shares. FIM is a leading asset management firm in Finland with a strategy to grow internationally in the fund management, brokerage and corporate advisory segments. FIM and the Bank will have a total of EUR 8.5 billion in assets under management in 46 different mutual and investment funds internationally. Combined the Bank and FIM will be the third largest broker, as ranked by market share of total trading turnover, in the aggregate Nordic equity market. Together there will be 36 research analysts covering 216 companies. The Bank will have 40 per cent. of its employees outside of Iceland, after this transaction, counting FIM’s 284 employees. On 2nd February, 2007, the Bank announced changes to its organizational structure. The intention of the organizational changes is to facilitate strong and profitable integration of all of the Bank’s business units and to accommodate further growth. The Bank’s new organizational structure is a combination of business, geographical and support units. The business units are Markets, Investment Banking, Investment Management and Corporate Banking, the geographical units are Iceland, Nordic, Europe and International, and the support units are Finance & Risk Management, Shared Services and Corporate Development. Legal Status and Legislative Background The legal and commercial name of the Bank is Glitnir banki hf. The Bank is a public limited company incorporated in Iceland and operating under Icelandic law. The Bank was incorporated on 4th May, 2000 for an unlimited duration. The Bank is registered with the Registrar of Companies in Iceland since 15th May, 2000, and its registration number is 550500-3530. The registered office and place of business of the Bank is Kirkjusandur 2, IS- 155 Reykjavik, Iceland and its telephone number is +354 440 4500.

The operations of the Bank are subject to the provisions of Act no. 2/1995 on Public Limited Companies and Act on Financial Undertakings No. 161/2002. The Bank is authorised to provide all financial services stipulated in the latter Act as further specified in the Articles of Association of the Bank, which means that it is subject to all EU directives on commercial banks and savings banks and its activities are under the supervision of the Icelandic Financial Supervisory Authority.

Financial Information The financial information set out in the tables on pages 67 to 70 inclusive of this Offering Circular for the twelve months ended 31st December, 2007 and for the three months ended 31st March, 2008 has been extracted from the audited consolidated financial statements of the Group and the unaudited consolidated financial report of the Group, respectively prepared in accordance with International Financial Reporting Standards (“IFRS”).

Sources of funds The Bank’s main funding sources are customer deposits, the domestic bond market and the international loan and bond markets.

In the domestic market, the Bank has registered a number of issues on the Iceland Stock Exchange, including issues of commercial paper, non-indexed notes and indexed bonds.

The table below sets out a breakdown of the Group’s sources of funds as at 31st December, 2007 and 31st March, 2008:

As at 31st December, 2007 As at 31st March, 2008 (ISK millions) (per cent.) (ISK millions) (per cent.) Equity ...... 169,969 6.1 188,690 5.2% Subordinated loans...... 101,669 3.6 147,338 4.1% Deposits from customers ...... 725,349 25.9 814,857 22.6% Core funding...... 996,987 35.6 1,150,885 32.0%

Market issues and borrowings ...... 1,746,199 62.4 2,371,776 65.9% Interbank short-term funding (credit institutions)...... 55,177 2.0 76,212 2.1% Finance in the market...... 1,801,376 64.4 2,447,988 68.0% Total funds...... 2,798,363 100% 3,598,873 100%

Equity As of 31st December, 2007 the equity of the Group was ISK 169,969 million, and as of 31st March, 2008, the equity of the Group was ISK 188,690 million. As of 4th February, 2008, the ten largest shareholders in the Group were:

Percentage Ownership FL Group Holding Netherlands B.V...... 17.7 FL GLB Holding B.V...... 13.1 Thattur International ehf...... 7.0 Glitnir banki hf...... 5.4 Saxbygg Invest ehf. (investment company)...... 5.0 Jötunn Holding ehf. (investment company)...... 4.8 LÍ-Hedge (an entity owned by Landsbanki Íslands hf.)...... 4.6 Stím ehf...... 4.3 GLB Hedge...... 2.8 Salt Investments ehf. (investment company)...... 2.3 Total...... 67.0

Subordinated Loans The Bank has borrowed funds by issuing subordinated bonds. The bonds have one characteristic of equity in that they are subordinated to other liabilities of the Bank. In the calculation of the capital ratio, the bonds are

included with equity. Total subordinated loans amounted to ISK 101,669 million at the end of 2007. The figure was ISK 147,338 million at 31st March, 2008 comprising ISK 69,114 million in subordinated loans with no maturity date, which the Bank may not repay until 2010 having received the approval of the Financial Services Authority (these loans qualify as Tier I capital in the calculation of the Bank’s capital ratio) and subordinated loans amounting to ISK 78,224 million, with dates of maturity until 2021 which qualify as Tier II capital in the calculation of the Bank’s capital ratio.

Capital Adequacy Under the Act on Financial Undertakings, No. 161/2002, as amended, the capital adequacy ratio may not be less than 8.0 per cent. In the case of the Group, this ratio as at 31st December, 2007 was 11.2 per cent. and at 31st March, 2008 it was 11.0 per cent. The ratio was calculated as follows:

(All figures in ISK millions) 31st December, 2007 31st March, 2008 Book Weighted Book Value Weighted Value Value Value

Assets recorded in the balance sheet...... 2,948,910 3,864,876 Not included in trading portfolio ...... 1,929,818 2,423,804 With market risk in trading portfolio...... 87,652 61,306 Risk base, total...... 2,017,470 2,485,110

Tier I Capital...... 163,959 191,361 Tier II Capital 61,617 82,724 225,576 274,085 Capital adequacy ratio ...... 11.2% 11.0%

Deposits On 31st December, 2007 the Bank had approximately 363,000 customer deposit accounts (including current accounts, savings accounts and currency accounts) and on 31st March, 2008 the Bank had approximately 356,000 customer deposit accounts. As at 31st December, 2007, the Bank’s total deposits amounted to 26 per cent. of the total deposits in all of Iceland’s commercial banks and savings banks.

Most of the Bank’s deposits bear interest at floating rates.

The following table sets out a breakdown of the Group’s deposits as at 31st December, 2006 and 31st December, 2007:

31st December, 2006 31st December, 2007 (ISK millions) (ISK millions) Demand deposits...... 259,156 350,227 Time deposits...... 179,116 375,122 Total...... 438,272 725,349

Time deposits mature as follows: Up to 3 months ...... 261,366 658,694 Over 3 months and up to 1 year...... 41,859 54,067 Over 1 year and up to 5 years ...... 23,860 9,591 Over 5 years...... 4,641 2,997 Undefined maturity...... 106,546 - Total...... 438,272 725,349

Finance in the market The domestic funding of the Bank consists of deposits from commercial customers as well as the issuance of ISK denominated commercial paper and bonds. The international funding of the Bank is a mixture of bilateral and syndicated loans as well as the issuance of commercial paper and bonds under the Bank’s ECP, Covered Bond and GMTN Programmes. Also, the Bank has access to money market lines from relationship banks. The international bonds and loans generally have maturities up to seven years to match assets.

The following table sets out a breakdown of the Group’s borrowings from bonds and notes issued, as well as borrowings from other credit institutions as at 31st December, 2006 and 31st December, 2007:

31st December, 2006 31st December, 2007 (ISK millions) (ISK millions) Issued bonds ...... 976,701 967,672 Issued bonds from banks ...... 101,073 380,158 Other debt securities ...... 26,800 8,375 Hedged borrowings...... 273,213 389,994 Total...... 1,377,787 1,746,199

Use of Funds The major part of the Group’s assets comprises loans. The table below sets out a breakdown of the Group’s assets as at 31st December, 2007 and 31st March, 2008:

31st December, 2007 31st March, 2008 (ISK millions) (ISK millions) Loans to banks and customers ...... 2,253,376 2,913,034 Cash and cash balances with Central Banks...... 55,500 26,893 Investments in associates...... 2,820 587 Derivatives...... 118,706 295,351 Bonds and debt instruments...... 181,764 212,278 Shares and equity instruments ...... 38,438 54,164 Securities used for hedging...... 164,339 176,302 Other assets...... 133,967 186,267 Total...... 2,948,910 3,864,876

Loan Portfolio The principal lending activity of the Group consists of loans to corporate customers and private individuals. The Group has endeavoured to diversify its loan portfolio to minimise the risk in lending and the Group generally requires its customers to provide collateral. The collateral taken by the Group will depend on the circumstances, the main types of collateral comprising pledged deposits and securities, real estate and fishing vessels (including the related fishing quota). Decisions regarding the adequacy of collateral are made as part of the process by which the relevant loan is authorised.

The following table lists the Group’s lending (including leasing) by customer categories as a percentage of total lending as at 31st December, 2007:

31st December, 2007 (per cent.)

Agriculture...... 0.18% Fishing industry...... 5.36% Commerce...... 2.33% Industry and contractors ...... 5.68%

Offshore vessels...... 2.03% Financial institutions...... 15.69% Services ...... 27.00% Real estate...... 15.50% Other...... 0.38% Total business enterprises ...... 74.15

Individuals ...... 19.38% Central government and State owned enterprises...... 6,08% Municipalities...... 0.39% Total assets ...... 100.0%

For a breakdown of geographical sector risk concentrations within the Bank’s customer loan portfolio, see Note 6 to the Bank’s 2007 financial statements.

The following table sets out a maturity breakdown by remaining maturity of loans to customers (including leasing contracts) as at 31st December, 2007:

31st December, 2007 (ISK millions) Up to 1 month...... 953,050 Over 1 month and up to 3 months ...... 262,051 Over 3 months and up to 6 months...... 120,923 Over 6 months and up to 1 year...... 211,940 Over 1 year and up to 2 years ...... 290,427 Over 2 years and up to 5 years...... 772,526 Over 5 years...... 109,997 Total...... 2,720,914

Allowance for Losses on Loans and Receivables In evaluating its non-performing loans, the Bank, following directives from the FME, has introduced the EU Directive regarding rules on the annual accounts of commercial banks. Iceland fully complies with the Directive.

The following table provides a breakdown of the Group’s non-performing loans and provisions for non- performing loans as at 31st December, 2007 and 31st March, 2008. Loans are classified as non-performing whenever a payment is 90 days past due.

31st December, 2007 31st March, 2008 (ISK millions) (ISK millions) Balance at the beginning of the year...... 12,462 14,371 Transferred into the Group ...... - Transferred out of the Group ...... Provision for loan impairment charge to income statement ...... 5,516 3,714 Loans written off during the year as uncollectible...... (3,534) -14 Amounts recovered during the period ...... 94 10 Translation difference...... -167 1,565 Total at period end ...... 14,371 19,646

In calculating the necessary provisions to be made for non-performing loans the Group makes both specific provisions and a general provision to meet the general risk of lending operations. A specific provision is made for credits that have been assessed at risk on the day of settlement. The general provision is intended to meet losses

which are deemed likely in terms of circumstances for credits other than those at particular risk on the day of settlement.

Specific provisions are established on an individual facility basis to recognise the expected credit losses on all types of exposure. The branches prepare lists twice a year for suggested specific provisions, which the credit department then evaluates and reports to the Risk Committee. The Risk Committee makes suggestions to the Board of Directors, which makes the final decision after the certified accountant of the Bank has given an independent evaluation of the loan portfolio.

General provisions are established to absorb credit losses that are not met by specific provisions. General provisions are determined by an evaluation of the quality of the loan portfolio. As at 31st December, 2007, general provisions amounted to 0.4 per cent. of loans and guarantees as at that date.

Credit Approval Policy Credit evaluation

The Board of Directors decides on loan policies for the Bank. Authority to approve loans is delegated to the Risk Committee which is appointed by the CEO. The Risk Committee is responsible for supervising and monitoring the Bank’s credit, market and counterparty risk on a consolidated basis. The Risk Committee governs the Bank’s credit policies and procedures. The Risk Committee can delegate authorization power to its sub-committees, based on a formal authorization table determined by the Board of Directors.

Credit sub-committees

The Risk Committee has established sub-committees that handle credit cases based on their origination, e.g. the Icelandic Credit Committee handles cases originating within the Icelandic Commercial Bank, the Corporate Committee handles cases originating with Corporate Banking and the Nordic Credit Committee handles cases originating within the Nordic operations. As a general rule, cases are dealt with by the bank’s credit committees, however decisions that exceed respective credit committee limits are referred to the Risk Committee. Credit decisions involving “Related Parties”, are always reverted to the Risk Committee. Subsidiaries can delegate the handling of their credit cases to the parent company’s credit process, based on approval by the respective Board of Directors. However, cases that involve exposures that exceed 20 per cent. of the Bank’s CAD equity must always be handled by the Board of Directors.

Two committee members are needed for the approval of each decision. Each committee member has the right to veto a decision.

Collateral

For short-term loans to customers within the highest credit rating categories the Bank does not generally require any security if they are within predetermined limits. For some short and medium-term loans the Bank demands financial covenants and negative pledges or formal collateral. For most medium and long-term loans the Bank requires collateral.

Collateral is valued when loans are granted and revised when there are indications of significant changes in specific markets that can affect collateral value, as well as when loans have defaulted and/or have been identified as problem loans.

Risk Management Organisation and Procedures Overview

The Board of Directors has granted decision making authority for the Group over risk management decision making to specially appointed committees. These committees issue specific guidelines and targets regarding acceptable risk limits and decide on individual positions depending on size and risk level. Credit and

market risk positions are reported to the Risk Committee, which sets guidelines and rules on credit and market risk evaluation. The Risk Committee reports to the Board of Directors. Credit and market risk management and supervision are further delegated by the Risk Committee to three sub-committees: the Credit Committees, Risk Model Committee and Market Risk Committee.

Risk with respect to asset and liability management and operational risk is monitored and supervised by the Executive Board pursuant to general limits and rules set by the Board of Directors. The Executive Board has delegated risk management with respect to asset and liability management and operational risk to the Asset and Liability Committee (“ALCO”) and the Operational Risk Committee, which reports directly to the Executive Board. ALCO monitors risk positions relating to refinancing risk, liquidity risk, interest rate risk, asset and liability management and capital management. The Operational Risk Committee is responsible for the supervision of all operational risk, including reputational and strategic risk and is comprised of representatives from Finance and Risk Management, Legal and Compliance, Shared Services and Corporate Communications departments, as well as the Nordic business segment.

The credit approval process follows a hierarchical structure with final approval residing with the Risk Committee. The Board of Directors determines the general credit rules and guidelines that apply for all business units, both at the parent and subsidiary level, with specific guidelines, rules and limits established by the Risk Committee. The boards of directors of each of the Bank’s subsidiaries determines subsidiary-specific credit policies and rules that reflect the nature of the subsidiary’s business model, customer segmentation and general operating environment. These rules must conform to the general credit policies and rules established by the Board of Directors as well as the specific guidelines, limits and rules set by the Risk Committee. Each subsidiary may have its own local credit committee, that is authorized to approve extensions of credit up to a certain limit. Subsidiaries also may delegate authorization of local credit to the Credit Committees. Credit applications exceeding the local authorization limit are referred to the Credit Committees, which in turn report to the Risk Committee.

The Credit Committees at the parent company level and subsidiary level review and determine approval of extensions of credit by the parent company or the subsidiary, as the case may be, exceeding individual employee authorization limits and customer credit limits. Credit applications exceeding local authorization amounts at the subsidiary level are referred to credit committees at the parent company level, which in turn refer applications to the Risk Committee if the amount involved exceeds their pre-approved lending limits. In determining whether to approve a credit application, the Credit Committees at both the parent company level and the subsidiary level follow the guidelines and rules established by the Risk Committee relating to credit risk evaluation. At the subsidiary level, these guidelines and rules are adapted in relation to the specific activities of the relevant subsidiary.

The Risk Model Committee approves any risk assessment, VaR, sensitivity and other models used by the Group. Any models to be used by the Group must be submitted to this committee for review and approval.

The Market Risk Committee is responsible for monitoring exposures and limits for equity trading in the trading book and banking book, fixed income securities in the trading portfolio, non-ISK currency trading positions, non-ISK currency and equity options and other derivative instruments and investments in funds. The Bank imposes limits on trading on the basis of size of the trading position, such as limits on market value, nominal amount and sensitivity, and operational limits, such as concentration limits and stop loss limits. The Group monitors risk on a daily basis and any such risk is reported to management.

In addition to the risk committees, Risk Management, as part of the Finance and Risk division, is an organizationally independent unit that monitors risk within the business units on a group-wide basis. Risk Management includes the following sub-units:

• Credit Risk Control. Credit Risk Control is responsible for the implementation, enforcement and monitoring of the Bank’s consolidated credit risk policies and procedures as set by the Risk Committee. Credit Risk Control’s goal is to evaluate and assess credit risk and to take measures to mitigate such risk whenever possible. Credit Risk Control coordinates and controls underwriting processes, monitors credit control functions in the business units and manages and coordinates group credit policies. This sub-unit also monitors the credit portfolio strategy by managing and monitoring

the credit portfolio, including concentration risk and large exposures. Credit Risk Control monitors defaults and issues guidelines on default monitoring and provisioning on a consolidated basis. Provisioning guidelines are determined for each subsidiary and reflect their diversified risk profiles and historical losses within each portfolio. Credit Risk Control is responsible for the overall management of non-performing assets and must endeavour to proactively and responsibly take measures to minimize the Bank’s losses whenever possible.

• Risk Analytics and Modeling. Risk Analytics and Modeling focuses on model development and maintenance, including credit risk assessment models, calculation models and development and maintenance of a stress testing framework. Risk Analytics and Modeling also provides quantitative support for other units within Finance and Risk Management.

• Market Risk. Market Risk monitors and manages the Bank’s risk positions in equity securities, currencies and fixed income instruments. Market Risk is charged with monitoring the currency balance on a consolidated basis and reporting on risks for the Investment Management business segment.

• Asset and Liabilities Management (ALM) and Capital Management. ALM and Capital Management is responsible for monitoring and controlling risk positions regarding refinancing risk, liquidity, interest rate risk and capital management.

• Operational Risk. Operational Risk is responsible for implementation of the Bank’s operational risk framework and coordinates policies, processes, procedures and infrastructure within the Group in relation to operational risk management and loss event reporting.

Capital Allocation

Allocation of economic capital across business units as well as individual positions is a key element in the Bank’s operation, pricing and performance measurement. ALCO is responsible for capital allocation mechanisms and methodologies.

For credit exposures, capital is allocated to individual positions based on the Bank’s risk classification system. Each credit decision is influenced by capital allocation, since the return on allocated capital is the main output from the pricing model. Capital is also allocated to market risk exposures. Each business unit, therefore, is capitalized according to its exposure and risk profile, and its performance is measured against that capital usage.

The Bank’s target capital ratios are among the financial targets set. This ensures that the risk profile is linked with other financial targets, such as growth rate, profit and dividend policy. Return on allocated capital is calculated for each business unit as a risk-adjusted performance measure. Financial targets, including capital ratios, are assessed by ALCO at least annually. Any changes in capital ratios affect the behaviour of the business units, since return on economic capital is a key performance measure for each investment. The Bank’s financial targets include a minimum CAD ratio of 11 per cent. and a Tier I ratio of 8 per cent. on a Group level.

Credit Risk

Credit risk is a dominant element in the Bank’s operations. The Bank seeks to maintain the quality of its credit portfolio by actively diversifying credit risk within the portfolio and by prudently managing concentration risk. The Bank emphasizes the distribution of credit risk within its consolidated portfolio by counterparties, sectors and country, as well as within sectors and country for individual portfolios.

Credit risk evaluation is based on the financial strength of the customer and its ability to repay the commitment, which can be influenced by operational sector, country and the nature of the transaction. Credit risk is reported regularly to the Risk Committee. The Bank uses specially designed credit risk assessment models for the different types of credit risk assessments in the portfolio to ensure that the risk evaluation measures used capture and reflect the underlying credit risk elements in the transactions involved. The Bank places particular emphasis on evaluating a customer’s creditworthiness, the quality of pledged collateral and other potential credit risk mitigates.

The Bank seeks to ensure the quality of the credit portfolio by diversifying credit risk by counterparty, sector and country, as well as sectors within each country. No single exposure may exceed 20 per cent. of CAD equity. Aggregated consolidated large exposures, defined as exposures exceeding 10 per cent. of CAD equity measured on a risk-adjusted basis, may not exceed 200 per cent. of CAD equity, which is within the regulatory limit of 800 per cent. These internal and regulatory limits are applied on a Group-wide basis.

The Bank has an Internal Rating Based (IRB) risk assessment model framework in place that is in line with the Basel II accord and has processes in place that focus on predicting customers’ probability of default. The Bank applies different risk assessment models according to particular business segments and sub-segments, employing both probability default (“PD”) models and loss given default (“LGD”) models. PD models are used to predict the probability that a counterparty will default within one year, based on assessments of the counterparty’s financial information, qualitative information on the counterparty’s business, projections on future cash flows and general economic conditions. LGD models use similar inputs as PD models, but include other factors such as how a loan is secured in assessing the potential loss if a default were to occur. LGD models are applied to analyze particular material aspects of the Bank’s loan portfolio, such as leveraged financings and commercial real estate loans.

The Bank’s mortgage portfolio in Iceland consists primarily of fixed rate CPI-linked ISK-denominated loans with interest rates reset five years from the date of issuance of the loan. Floating rate non-ISK currency loans linked to a basket of foreign currencies comprise approximately 10 per cent. of the Icelandic mortgage portfolio. The loan to value (“LTV”) ratio for these loans, that is floating rate non-ISK currency loans, is generally less than 50 per cent. The Bank has instituted strict lending rules in Iceland based on the financial strength and credit history of its customers. In Norway, the Bank’s mortgage portfolio consists of loans denominated in NOK, the majority of which have LTV ratios of less than 60 per cent. These are high quality loans with individuals that have high credit scores. In Iceland and Norway, the Bank requires a LTV ratio of less than 80 per cent. for new loans and uses credit scoring in evaluating an applicant’s creditworthiness.

Operational Risk

The Bank is required to assess the effect of operational risk on its operations. The main risk factors that affect operations are losses due to technical failures or inaccuracies, ineffective procedures or processes, human error and unforeseen external factors that are outside the Bank’s control. Major sources of operational risk are adherence to internal procedures, processes and guidelines, information security, fraud, error, legal and regulatory compliance as well as business risk. The Bank’s operational risk policy is based on four principles: (i) accept no unnecessary risk, (ii) make risk management decisions at the appropriate level, (iii) accept risk when the benefits outweigh the costs and (iv) reduce the impact of operational risk.

The Bank has implemented an Operational Risk Management (“ORM”) framework aimed to satisfy the requirements for the Standardized Approach under the Basel II Accord. All business units have the means to assess, monitor and record operational risk and loss events in accordance with the business-line/loss-event matrix defined in the Basel II rules. The primary responsibility for the monitoring, recording and control of operational loss events resides with each business unit. Operational risk and control assessments are carried out regularly and not less than annually for each business unit. Key risk indicators are monitored on a regular basis.

Currency Risk

A large part of the Bank’s assets and liabilities is denominated in foreign currencies. The Bank keeps a close balance between assets and liabilities in each currency. Any mismatch thereof is managed within strict limits.

As the Bank’s equity is denominated in ISK but the assets are predominantly denominated in currencies other than the ISK. Capital ratios are sensitive to fluctuations in exchange rates. Accordingly, the Bank maintains long positions in non-ISK currencies in order to hedge the sensitivity of its capital ratios to changes in exchange rates. These positions are managed within limits set by ALCO.

Interest Rate Risk

It is the Bank’s policy to minimize non-ISK interest rate risk in its banking book. Assets and liabilities with fixed terms are hedged with interest rate swaps or other derivatives and hedge accounting is used where possible to minimize the impact on the Bank’s income statement. Interest rate exposures in ISK are not hedged to the same extent and the banking book is therefore exposed to fluctuations in ISK interest rates.

The Bank is exposed to interest rate risk with respect to its investment and proprietary trading portfolios, as movements in short- and long-term interest rates cause gains and losses on debt securities held in these portfolios. An increase in market interest rates generally has a negative effect on the value of fixed rate instruments. Conversely, a decrease in market interest rates generally has a positive effect on the value of fixed rate instruments. VaR methods are used to assess risk related to the fixed income debt securities in the trading portfolio. Trading portfolio limits are based on basis point value. Interest rate risk in the trading book is reported to the Market Risk Committee.

Inflation Risk

The Bank is exposed to Icelandic inflation as its CPI-linked assets exceed its CPI-linked liabilities. All indexed assets and liabilities are valued according to the CPI measure at any given time and changes in the CPI are therefore recognized in the income statement. This exposure is limited to the parent company and does not affect the results of operations of the Bank’s non-Icelandic subsidiaries.

The most common form of mortgage lending in Iceland is CPI-linked with a term of 25-40 years. Interest rates for the majority of the mortgages in the Bank’s Icelandic CPI-linked mortgage portfolio are reset 5 years after origination of the loan. Each month, the principal amount of each mortgage is recalculated according to the new CPI and the adjusted principal amount is distributed throughout the remaining payments on the loan. Thus the annuity payments gradually increase in line with the increasing CPI.

To the extent that the Bank’s CPI-linked assets exceed its CPI-linked liabilities, increases in the rate of inflation in Iceland will result in increased net interest income. Conversely, to the extent CPI-linked liabilities exceed CPI-linked assets; increases in the rate of inflation in Iceland will result in decreased net interest income. Any mismatch in CPI-linked assets and CPI-linked liabilities is reported to ALCO.

Liquidity Risk

Liquidity risk management is an important element in the Bank’s operations. Liquidity risk is monitored by Risk Management and reported to ALCO.

To limit liquidity risk, the Bank actively diversifies its funding sources with respect to types of funding instruments, maturities and counterparties. Mismatches in the timing of cash flows are monitored closely and backup funding sources are held to cover obligations when they fall due, even under stressed market conditions.

The Bank’s liquidity sources are generally split in two parts: immediately available funds that include cash, money market deposits, committed credit facilities and assets that can readily be used as collateral for secure borrowing or easily liquidated. Other liquid assets include loans or securities that can be sold or used as collateral for secure borrowing but where formal borrowing agreements have not yet been established.

The Bank’s liquidity policy assumes that immediately available funds cover all financial liabilities expected to mature for the following six months. In addition, all financial liabilities expected to mature within the following 12 months must be covered with immediately available funds and other liquid assets.

Market Risk

Market risk is the risk of loss due to changes in interest rates, foreign exchange and equity prices. The Bank has trading positions in bonds, currencies and equities and is therefore exposed to fluctuations in the market prices of these instruments. The Bank’s primary sources of market risk are:

• Equities: the trading book and banking book portfolios include equity securities;

• Fixed income: fixed income trading activities include trading and market making in bonds issued by the Icelandic government and the Icelandic Housing Financing Fund;

• Foreign exchange: the trading portfolio in Iceland includes a mix of non-ISK positions; and

• Other: the Bank has trading positions in derivatives (currency and equity options), swaps and fund investments.

All positions are marked to market and all resulting changes are immediately recognized in the income statement.

For trading positions, the Bank uses a daily VaR method to measure market risk on an aggregate basis and in individual portfolios. VaR assessments provide a means for evaluating the Icelandic market, which has been unique in terms of volatility. A historical VaR method is used based on the previous 250 days using end of day exposures. Reporting is based on a probability level of 99 per cent. and a one-day holding period. Back testing is used to assess the effectiveness of the VaR model.

Stress tests are carried out to provide an indication for potential loss in extreme conditions. Stress tests consist of three 10-day VaR assessments applied to the entire trading portfolio. The FME carries out stress tests bi- annually. Banking book, non-trading and unlisted equity positions that are not part of the VaR measure are covered under stress testing as well.

Basel II

The Basel II rules are new, more risk-sensitive rules for capital requirement calculations intended to be available for implementation as of year-end 2006 (with the rules concerning the most advanced approaches being available for implementation as of year-end 2007), although the implementation of the rules has been delayed in certain countries. The Basel II rules define the minimum capital that a financial institution must hold for unexpected events. These rules also provide minimum qualitative standards and risk management practices that a financial institution should have in place. The Basel II rules include capital requirements for operational risk in addition to credit risk and market risk, which were already covered in the previous rules, known as Basel I.

The Basel II rules were developed by the Basel Committee for Banking Supervision to revise the 1988 Basel I Accord. The Committee’s first proposal for revising the capital adequacy framework was published in June 1999. The revised framework, the International Convergence of Capital Measurement and Capital Standards, was published in June 2004. Further to the revised framework on June 14, 2006, the European Parliament and the EU Council adopted the Capital Requirements Directive, which introduced an updated supervisory framework in the EU reflecting the Basel II rules on capital standards. The Capital Requirement Directive, comprising Directive 2006/48/EC and Directive 2006/49/EC recast Directive 2000/12/EC.

The Basel II framework is based on three “pillars”. Pillar I addresses the calculation of minimum regulatory capital requirements for credit, market and operational risk. Pillar II addresses the supervisory review process, a bank’s assessment of its own capital adequacy (including in connection with other risks not addressed under Pillar I) and the role of the supervisory authorities in reviewing and evaluating banks’ internal assessment. Pillar III addresses market discipline and requirements regarding market disclosure of risk-related information.

As the Bank has elected to implement the advanced internal ratings-based (“Advanced-IRB”) approach in calculating its minimum regulatory capital requirements for credit, market and operational risk under Pillar I, the Bank is required to receive FME approval of its use of the Advanced-IRB approach. The Bank submitted its initial application document to be eligible for the entry and on-going use of the Advanced-IRB approach to the FME on February 1, 2006 and has worked with the FME to finalize the application. On November 7, 2007, the Bank submitted the final supplement to the application and expects final approval from the FME in 2008. Once approval is received, the Bank intends to implement the Advanced-IRB approach in stages across the Group, beginning at the parent company level. The Bank expects its Norwegian operations to be in a position to meet the requirements for the Advanced-IRB approach by the third quarter of 2008. Other subsidiaries are likely to be allowed to use less sophisticated methods of determining and reporting capital requirements. The Bank will not be able to assess the full impact of the adoption of Advanced-IRB methods on its capital ratios until the fourth quarter of 2008, when Advanced-IRB reporting methods are expected to be implemented on a Group-wide basis. The Bank expects implementation of Advanced-IRB methods for the Norwegian operations to substantially lower the risk-weighted assets of the Norwegian operations; however this decrease will be offset by a Pillar I operational risk charge such that the overall impact on the Bank’s capital ratios is expected to be modest.

The Bank has adopted a comprehensive approach to both the internal governance and supervisory components of Pillar II. Internal governance policies are meant to ensure that risk management, which is critical for an effective assessment of a bank’s capital position, is based on sound and effective risk governance processes with clearly defined roles and responsibilities for monitoring, controlling and reporting risks. Pillar II requires banks to put in place a process for assessing their capital adequacy (Internal Adequacy Assessment Process, or “ICAAP”) and ensure that all material risks are adequately identified and assessed and adequate internal capital is set in relation to the relevant risk profile. Supervisors are then responsible for reviewing and assessing a bank’s ICAAP and the results of such process. The Bank is now awaiting the FME’s response to its first annual ICAAP report that was submitted in December 2007.

Competition The Bank operates in a financial market that has been changing rapidly in recent years, with increased competition and competitors that are increasing in strength. The Bank competes with other banks and financial services firms in providing banking, capital markets and advisory services. Internationally, the bank competes with banks and financial services firms of varying sizes and geographic scope. In Iceland, the bank's principal competitors are Kaupthing Bank hf., Landsbanki Íslands hf. and the Icelandic savings banks. In Norway, the bank's principal competitor is DnBNor. Other competitors in Norway include Fokus Bank, Nordea, the Sparebank 1 Group and a number of local Sparebanks, as well as Svenska Handelsbanken, SEB and Skandiabanken, a bank focused on internet banking.

The Bank monitors market developments closely and continues to take advantage of any potential opportunities as and when they arise. Both domestic and foreign competitors provide financial services that have affected the Bank’s net interest margin and require the Bank to be internationally competitive. Other domestic competitors include Straumur-Burðarás and the Housing Financing Fund. Competition in Iceland from foreign banks remains limited. There is always a risk of new entrants to the market, or that smaller competitors may merger and increase in strength. Competition may intensify in selected sectors, or in the market as a whole.

Board of Directors The Annual Shareholders’ Meeting elects the Board of Directors which consists of seven members and seven deputies. The Board of Directors appoints the Bank’s chief executive officer (“CEO”) and internal auditor. The CEO appoints the managing directors. Members of the Board of Directors are as follows: Þorsteinn M. Baldvinsson (Chairman) Mr. Baldvinsson is Chairman of Sildarvinnslan Ltd. (SVN) (fish processing company). Jón Sigurðsson

Mr. Sigurðsson is CEO of FL Group hf. (investment company).

Hans Kristian Hustad Mr. Hustad is Chairman of Booker Ltd. (cash and carry company). Sigurður G. Guðjónsson Mr. Guðjónsson is Chairman of Farice hf., Farice ehf. (cable company) and Sökkull ehf. (importer). Kristín Edwald Ms. Edwald is a senior partner at Lex Law Offices (law firm). Haukur Guðjónsson

Mr. Guðjónsson is CEO of Ingvar Helgason ehf. (auto and machine retailer). Björn Ingi Sveinsson

Mr. Sveinsson is CEO of Saxbygg Investments ehf. (investment company).

The business address of these directors is Glitnir banki hf., Kirkjusandur 2, 155 Reykjavik, Iceland. No director has any actual or potential conflict of interest between his or her duties to the Issuer and his or her private interests or other duties. Senior Management The Executive Board consists of the following thirteen members:

Lárus Welding – Chief Executive Officer. Mr. Welding was appointed Chief Executive Officer of the Bank in May 2007. He first joined the Bank (then the Icelandic Investment Bank FBA hf.) in 1999. In 2003, Mr. Welding joined Landsbanki Íslands hf. as General Manager for the London Branch with operations primarily in Corporate and Investment Banking. He previously worked for the accounting firm, JHR ehf., and the Central Bank of Iceland. Mr. Welding holds a degree in business administration from the University of Iceland, is a licensed securities broker and is a graduate in corporate finance from the UK Securities Institute.

Rósant Már Torfason – Chief Financial Officer (CFO). Mr. Torfason joined Glitnir (then Ìslandsbanki) in 1996. He has a comprehensive experience from working for the Bank for the past 12 years in different positions within Capital Markets, Proprietary Trading, CEO Office, Business Development and for the last two years as a Managing Director in Investment Banking. Mr. Torfason holds Cand. Oecon Degree in Business Administration from the University of Iceland with focus on finance, and is a licensed securities broker.

Vilhelm Már Thorsteinsson - Executive Vice President, Treasury & Corporate Centre. Mr. Thorsteinsson joined Glitnir (then Ìslandsbanki) in 1999. He has an extensive experience having held various positions in Capital Markets, Leverage Finance and CEO’s Office working on different types of transactions and projects in Iceland, Europe and the Nordics. Since 2005 Mr. Thorsteinsson has led the Strategic Development team, responsible for the Group’s external growth, strategy and relationships with financial institutions, leading many of Glitnir’s acquisitions in the Nordics. Mr. Thorsteinsson holds a B.Sc. in Business Administration from the Icelandic College of Engineering and Technology. He is a licensed securities broker and has an MBA degree from Pace University in New York, New York.

Kristinn Þór Geirsson – Chief Operating Officer and Executive Vice President. Mr. Geirrson was appointed to the Executive Board in April 2008 after having been elected to the board of directors of Glitnir at the annual meeting in February 2008. He previously served as Active Chairman of Ingvar Helgason ehf. and Bifreiðar og landbúnaðarvélar hf., Managing Director of Sund ehf., Chief Executive Officer of Ingvar Helgason ehf. and Chief Executive Officer of Íslenska Sjónvarpsfélagið hf. Mr. Geirsson received a Cand. Oecon degree from the University of Iceland and a MBA degree from the Wharton School of the University of Pennsylvania.

Magnús Bjarnason – Executive Vice President, International Banking. Mr. Bjarnason was appointed to the Executive Board in February 2007. He joined the Bank in 2005 as Managing Director of the Asia and America Region in Corporate Banking. Prior to joining the Bank, Mr. Bjarnason served as minister counselor and deputy chief of mission at the Icelandic Embassy in China, as acting consul general in New York and as trade commissioner for Iceland in the United States and Canada. He also has worked previously in the banking and airline industries. Mr. Bjarnason holds an MBA degree from Thunderbird, the Garvin School of International Management.

Morten Bjørnsen – Executive Vice President, Nordic Banking Operations. Mr. Bjørnsen was appointed to the Executive Board in August 2007. Prior to joining the Bank, he was a member of the senior management of Fokus Bank ASA from 1999 to 2007, heading operations in Western Norway and later activities in Oslo and Eastern Norway. For several years he served as Executive Vice President and Head of Corporate and Institutional Banking, with nationwide responsibility for SME’s, large corporates, shipping/offshore industry, structured finance and financial institutions. From 1986 to 1999, Mr. Bjørnsen held various positions with DnB NOR ASA focusing on the energy and large corporate segments in Norway and the United States. He holds an MBA degree from the Norwegian School of Management.

Birna Einarsdóttir – Executive Vice President, Iceland Commercial Banking. Ms. Einarsdóttir was appointed to the Executive Board in February 2007. She first joined the Bank (then Iðnaðarbankinn) in 1987 and served as a director of marketing and sales. After working for the Royal Bank of Scotland for six years, Ms. Einarsdóttir rejoined the Bank in 2004. She has headed the Bank’s marketing and sales teams and corporate development unit, directed the Bank’s successful re-branding in 2006 and became the head of the commercial bank in June 2007. She holds a B.Sc. degree in business administration from the University of Iceland and an MBA degree from Edinburgh University.

Helgi Anton Eiríksson – Executive Vice President, Europe. Mr. Eiríksson was appointed to the Executive Board in February 2007. He joined the Bank in 2004 as Global Seafood Director with responsibility for overall management of the Bank’s international seafood activities. In January 2007, he became Executive Vice President for Investment Banking. Prior to joining Glitnir, Mr. Eiríksson worked with Coldwater Seafood (UK) Ltd. as a director within the executive management team from 1995 to 2004. He holds a Cand. Oecon degree in business administration from the University of Iceland.

Sveinung Hartvedt – Executive Vice President Capital Markets and Corporate Finance in Norway and Sweden. Mr. Hartvedt was appointed to the Executive Board in May 2007. Prior to joining the Bank, Mr. Hartvedt was Head of Equities for DnB NOR ASA for ten years. Previously he worked as Head of Sales and Deputy Chief Executive Officer for FIBA Nordic Securities AS. From 1989 to 1994, Mr. Hartvedt was a broker and served as Head of Research at Carnegie ASA. He began his professional career as a journalist for the leading Norwegian business magazine, Kapital. Mr. Hartvedt holds a Bachelor of Commerce degree (Siviløkonom) from the Norwegian School of Economics and Business Administration in Bergen, Norway.

Eggert Thór Kristófersson – Executive Vice President, Investment Management - Iceland. Mr. Kristófersson joined Glitnir in 1995 (then Islandsbanki) and has gained varied experience in many different positions. From 1998 to the beginning of 2000 he worked in funding for National Debt Management Agency in Iceland. In 2000 he rejoined Glitnir as the head of Proprietary Fixed Income Trading. In 2005 he took on the position as a Managing Director for Glitnir Funds, Ltd., the fund management company of Glitnir. Since 2007, he has been a Managing Director of Glitnir Asset Management in Iceland. Eggert is a board member of Glitnir Bank Finland, a board member of Glitnir Bank Luxembourg S.A., the Chairman of Glitnir Asset Management S.A. and the Chairman of Glitnir Funds Ltd. Mr. Kristófersson holds a Cand. Oecon degree in Business Administration from the University of Iceland.

Einar Örn Ólafsson – Executive Vice President, Investment Banking - Iceland. Mr. Ólafsson joined Glitnir (then FBA) in 1997 and has held several positions within the Bank since. His first position was a currency, interest rate and derivatives broker in a team which Mr. Ólafsson eventually led. He subsequently took on a position in asset management before joining the Corporate Finance unit in Reykjavík in 2003. He became the head of that unit and a Managing Director in 2006 and has led many of the larger M&A transactions in Iceland for the past few years. Mr. Ólafsson holds a B.Sc. in Industrial Engineering from the University of Iceland and an MBA degree from New York University, Stern School of Business.

Jóhannes Baldursson – Executive Vice President, Capital Markets - Iceland. Mr. Baldursson joined Glitnir (then VÍB Securities, a subsidiary of Ìslandsbanki) in 1996. He started as a securities broker, then moved over to Treasury and later joined Capital Markets, where he has been instrumental in building up Glitnir’s strong Capital Markets team. Mr. Baldursson headed the FX sales unit for many years and was appointed a Managing Director for Capital Markets in Iceland in 2007. Mr. Baldursson holds a B.Sc. in Economics from the University of Iceland, an M.Sc. degree in Economics from UPF (Universitat Pompeu Fabra) in Barcelona, Spain, an ACI Diploma and is a licensed securities broker.

Magnús A. Arngrímsson – Executive Vice President, Corporate Banking - Iceland. Mr. Arngrímsson joined Glitnir (then Ìslandsbanki) in 1999. In 2004 he joined Landsbanki Islands as a Director for the London branch, with operations primarily in Corporate and Investment Banking. He rejoined Glitnir in 2007 where he took on the Managing Director position in Corporate Banking in Iceland. Mr. Arngrímsson holds a B.Sc. in Business Administration from the University of Iceland.

The business address of the Executive Board members is Glitnir banki hf., Kirkjusandur 2, 155 Reykjavik, Iceland.

No member of the Executive Board has any actual or potential conflict of interest between his or her duties to the Issuer and his or her private interests or other duties.

THE REPUBLIC OF ICELAND

About Iceland Iceland is one of the Nordic countries, located in the North Atlantic between Norway, Scotland and Greenland. Iceland is the second largest island in Europe and the third largest in the Atlantic Ocean with a land area of some 103,000 square kilometres and an exclusive 200 nautical mile economic zone of 758,000 square kilometres in the surrounding waters. Because of the Gulf Stream, Iceland enjoys a warmer climate than its northerly location would indicate.

The population of Iceland is about 300,000. Iceland was first settled late in the 9th century. The majority of the settlers were undoubtedly of Norse origin, but it is generally assumed that a certain element of the early settlers were of Celtic origin. In 930, a general legislative and judicial assembly, the Althing, was established, and a uniform code of laws for the country was adopted. In 1262, Iceland entered a treaty, which established a union with the Norwegian monarchy. When Norway came under the rule of Denmark in 1380, Iceland became a Danish dominion. Iceland was granted limited home rule in 1874, which was extended in 1904. With the act of Union in 1918, Iceland became an autonomous state in monarchical union with Denmark. In 1944 Iceland terminated its union with Denmark and became an independent republic.

Iceland is a member of the United Nations and its affiliates, the International Monetary Fund (IMF) and the World Bank. Iceland is also a member of the Organisation for Economic Co-operation and Development (OECD) and a number of other multinational organisations, including the Nordic Council and the Council of Europe. Iceland joined the European Free Trade Association (EFTA) in 1970 and is a member of the European Economic Area (EEA), a 30-nation free-trade zone of the European Union (EU) and three out of four EFTA countries. Iceland is a contracting party to the General Agreement on Tariffs and Trade (GATT) and ratified the agreement establishing the World Trade Organisation (WTO) in December 1994, thus becoming a founding member of the WTO.

Economy Iceland’s modern economic history spans about one century. In the early years of industrialisation the economy was based mainly on fisheries and agriculture. Rapid developments in these areas formed the basis for improved living standards and a fundamental change in the economic structure. In recent decades the economy has diversified into the export of manufactured goods, process industries and a range of services for export and domestic use. At the same time the marine sector has diversified significantly. Hence, the Icelandic economy has taken the shape of a modern industrial state.

With gross domestic product (“GDP”) of approximately U.S.$11.89 billion in 2007, the size of the economy is relatively small. However, the per capita GDP is very high by international standards, being approximately U.S.$54,764 in 2006. The economy relies on foreign trade and services in maintaining the high standard of living.

Recently, interest rates and the rate of inflation in Iceland have been rising. The Central Bank of Iceland’s policy interest rate has increased from 14.25 per cent. at 31st December, 2006 to 15.25 per cent. at 31st December, 2007 and 15.5 per cent. at 20th May, 2008. Inflation has decreased from 6.8 per cent. in 2006 to 5.8 per cent. in 2007. In addition, Iceland’s current account deficit at 31st December, 2006 was about 25.6 per cent. gross domestic product for 2006, adversely affecting the value of the Icelandic krona, which fell in value against the U.S. dollar during 2006. At 31st December, 2006, the krona had declined 14.7 per cent. against the U.S. dollar to ISK 71.83 to $1.00 from its high of ISK 60.56 to $1.00 at 12th January, 2006. In 2007, the krona rebounded to 62.0 to $1.00 as of 31st December, 2007, as the current account deficit declined to approximately 15.6 per cent. of gross domestic product at 31st December 2007. However, in 2008 the krona’s value has declined by 16 per cent. versus the U.S. dollar to 73.5 to $1.00 as of 20th May, 2008.

Iceland is endowed with rich fishing grounds in its exclusive 200 nautical mile economic zone. The marine sector, including fishing and fish processing, is of fundamental importance to the Icelandic economy. Iceland has developed a comprehensive fisheries management policy in order to manage the fish stocks, based on biological estimates of the status of the fish stocks and forecasts for their development in the near future. The fish processing industry employs modern technology and management techniques. The production systems are flexible and the

processing methods are, to a large extent, interchangeable. The fishing fleet is technologically advanced and includes vessels designed to perform high-quality processing at sea. The diversification in the marine sector extends not only to the species and methods of processing, but also to marketing. Icelandic marine products have developed established brand names in the United States, Europe and Japan.

Iceland is also richly endowed with energy resources consisting of hydro and geothermal energy. Almost all of the electricity consumed in Iceland is produced from indigenous energy resources. Hot water from geothermal sources and natural steam are extensively used for residential heating. Only a small fraction of the country’s vast hydro and geothermal resources has been exploited so far. Hence, the potential for large-scale development of power-intensive industry is substantial.

Industrial expansion in Iceland is, to a considerable extent, based on the abundant energy resources and their attractiveness for power-intensive industries, and is aided by tariff-free access to the European market. Among the largest manufacturing enterprises in Iceland are two aluminum smelters and a ferro-silicon plant. Large projects in power-intensive industries are planned for the future including the construction of a new aluminum smelter and the possible enlargement of existing plants. Smaller-scale manufacturing is also important and growing. This includes production of high technology and heavy equipment for fishing and fish processing, largely for exports. With the development of the economy, the share of services in GDP has grown rapidly. The tourism sector has been one of the fastest growing industries in recent years, due to a rapid increase in the number of foreign visitors to Iceland.

The following table shows certain economic indicators relating to Iceland in the years 2001-2007:

2001 2002 2003 2004 2005 2006 2007 Volume changes on previous year, per cent. Real GDP ...... 3.9 0.1 2.4 7.7 7.1 4.2 3.8 Real exports of goods and services...... 7.4 3.8 1.6 8.4 7.2 (5.1) 18.1 Real imports of goods and services ...... (9.1) (2.5) 10.7 14.4 29.4 10.1 (1.4) Percentage changes on previous year Consumer price index (Y/Y) change ...... 6.7 4.8 2.1 3.2 4.0 6.8 5.8 Effective price of foreign currency...... 20.1 (3.0) (6.0) (2.0) (10.3) 11.7 (6.8) Real exchange rate...... (12.7) 5.1 4.7 2.2 13.5 (6.4) 6.3 Unemployment rate ...... 1.4 2.5 3.4 3.1 2.1 1.3 1.0 Percentage of GDP Current account balance ...... (4.3) 1.5 (4.8) (9.8) (16.2) (25.7) (15.6)* Treasury revenue balance ...... (0.5) (1.3) (1.8) 1.0 4.5 5.3 5.5*

Sources: National Economic Institute, Ministry of Finance, Central Bank of Iceland and Glitnir. In particular, the Issuer’s business, financial condition and results of operations are affected directly by economic and political conditions in Iceland. Although the Icelandic economy has experienced high growth rates in recent years, there can be no assurance that these growth rates will continue or that there will not be a downturn in the Icelandic economy. Recently, interest rates and the rate of inflation in Iceland have been rising. The Central Bank of Iceland’s policy interest rate has increased from 14.25 per cent. at 31st December, 2006 to 15.25 per cent. at 31st December, 2007 and 15.5 per cent. at 20th May, 2008. Inflation has decreased from 6.8 per cent. in 2006 to 5.8 per cent. in 2007. In addition, Iceland’s current account deficit at 31st December, 2006 was about 25.6 per cent. gross domestic product for 2006, adversely affecting the value of the Icelandic krona, which fell in value against the U.S. dollar during 2006. At 31st December, 2006, the krona had declined 14.7 per cent. against the U.S. dollar to ISK 71.83 to $1.00 from its high of ISK 60.56 to $1.00 at 12th January, 2006. In 2007, the krona rebounded to 62.0

to $1.00 as of 31st December, 2007, as the current account deficit declined to approximately 15.6 per cent. of gross domestic product at 31st December 2007. However, in 2008 the krona’s value has declined by 16 per cent. versus the U.S. dollar to 73.5 to $1.00 as of 20th May, 2008. These developments and others may have a material adverse effect on the Issuer’s business, financial condition and results of operations.

FINANCIAL MARKETS IN ICELAND

The Icelandic financial system has undergone an important transition over the last decade, generated by liberalization and legislative reforms. In connection with the agreement on the European Economic Area, Icelandic legislation and regulations regarding credit institutions and other financial undertakings and the financial market have been adopted to implement various regulations and directives of the European Union.

Currently there are four commercial banks in Iceland. The three largest, Glitnir banki hf, Landsbanki Ìslands hf., and Kaupthing Bank hf., provide all conventional banking and securities services. Glitnir, Landsbanki, and Kaupthing are all privately held credit institutions. There are 18 savings banks in Iceland, which mutually run a clearing bank, Icebank hf. Total assets of commercial and savings banks groups amounted to ISK 9,682 billion at the end of 2007.

In addition to the commercial banks, there are five investment banks, four investment funds and two leasing companies, as well as the Housing Financing Fund (the “HFF”), that operate in Iceland. The HFF is a state- owned investment fund that provides financing for residential housing in Iceland. The bulk of mortgage lending to households was historically provided by the HFF, but the market share of the banks has risen since the last quarter of 2004 to approximately 43 per cent. at the end of 2007.

There are 15 insurance companies licensed to operate in Iceland, three of which are the main players in the insurance market. Insurance companies are becoming active in the financial market through their investment activities and increasingly through their lending operations. Pension funds receive payments from employers and employees and are the most important source of long term finance in the country. Membership in a pension fund is obligatory for wage earners and self-employed people. The pension funds are independent non-government entities. They invest mainly in domestic bond issues, equity capital and foreign securities.

OMX Nordic Exchange Iceland operates under legislation adopted in 1998, which converted OMX Nordic Exchange Iceland into a limited liability company. At the same time, its monopoly on exchange activities was abolished. Currently there are 31 members of OMX Nordic Exchange Iceland. Shares of 27 companies are listed on OMX Nordic Exchange Iceland, as well as government securities and corporate bonds. OMX Nordic Exchange Iceland joined the NOREX Alliance of Nordic exchanges in 2000, which included the adoption of the SAXESS trading system. Eignarhaldsfélagið Verðbréfaþing hf., the owner of OMX Nordic Exchange Iceland and Verðbréfaskráning Íslands hf. (Icelandic Securities Depository), is currently fully owned by OMX AB, a Nordic securities exchange group, currently operating exchanges in Copenhagen, Stockholm, Helsinki, Iceland, Riga, Tallinn and Vilnius. OMX Nordic Exchange Iceland was previously known as the Iceland Stock Exchange. Pension funds represent the largest part of the financial system in Iceland. The pension fund system is fully funded and at the end of 2007 the total assets of the system amounted to approximately 130 per cent. of GDP for that year. The pension funds receive payments from employers and employees and are the single most important source of long term finance in the country. Membership in a pension fund is obligatory for wage earners and the self- employed. The pension funds are independent non-governmental entities and invest mainly in domestic bond issues, equity capital and foreign securities.

Since 1999, the FSA has handled the task of supervising commercial banks, savings banks and other credit institutions, insurance companies, companies and individuals acting as insurance brokers, undertakings engaged in securities services, Undertakings for Collective Investment in Transferable Securities (“UCITS”), management companies, stock exchanges and other regulated markets, central securities depositories and pension funds. The FSA is charged with ensuring that the activities of these institutions are conducted in accordance with the laws and regulations of Iceland.

The Central Bank of Iceland is responsible for implementing monetary policy consistent with the goal of maintaining price stability. The Central Bank imposes a reserve requirement on all the commercial banks and savings banks, at present 2 per cent. of total disposable funds with maturity less than two years. As of 1st April, 2003, the use of reserves as collateral in payments systems is limited to half the negotiated collateral amount. The purpose of this limitation is to ensure that credit institutions have sufficient margin on the reserve requirement account to meet fluctuations in their liquidity positions.

The Central Bank of Iceland raised its policy rate seven times during 2006 from 10.00 per cent. to 13.30 per cent., bringing to 18 the total number of policy rate increases since interest rates began to rise in May 2004. In 2007, the Central Bank of Iceland raised its policy rate once and in 2008, the rate has been raised twice so far and such rate now stands at 15.50 per cent.

ICELANDIC TAXATION

The comments below are of a general nature based on the Issuer’s understanding of current law and practice in Iceland. They relate only to the position of persons who are the absolute beneficial owners of the Notes, Receipts and/or Coupons. They may not apply to certain classes of person such as dealers. Prospective holders of the Notes who are in any doubt as to their personal tax position or who may be subject to tax in any other jurisdiction, should consult their professional advisers.

1. There are no taxes or other governmental charges payable under the laws of Iceland or any authority of, or in, Iceland in respect of the principal or interest on the Notes by a holder who is not a resident of Iceland, or in respect of any amount payable under the Programme Agreement or the Agency Agreement. 2. There are no estate or inheritance taxes, succession duties, gift taxes or capital gains taxes imposed by Iceland or any authority of, or in, Iceland in respect of the Notes if, at the time of the death of the holder or the transfer of the Notes, such holder or transferor is not a tax resident of Iceland. 3. The Issuer is required by the current laws of Iceland to withhold a 10 per cent. tax on any payment of interest paid to a holder of the Notes that is a tax resident of Iceland. 4. The Issuer is not required by the current laws of Iceland to make any deductions or withholding from any payment of principal or interest due or to become due under the Notes or from any amount payable under the Programme Agreement or the Agency Agreement, if the recipient is not a tax resident of Iceland. It is the responsibility of the Issuer to provide to the relevant Icelandic tax authorities proof that the payments under the Notes are to persons who are non-residents of Iceland and to obtain from the Icelandic tax authorities any exemptions with respect to any withholding requirements. Furthermore it is the responsibility of the Issuer to apply for an exemption from withholding tax on any principal, premium (if any) and interest payments made to the Agents and the Dealers in connection with the Notes. After the Icelandic Internal Revenue Directorate has granted such an exemption, all amounts payable by the Issuer in connection with the Notes to the Agents or the Dealers may be made free and clear of and without deduction or withholding tax for or on account of any Icelandic law.

UNITED STATES FEDERAL INCOME TAXATION

TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT CIRCULAR 230, NOTEHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS OFFERING CIRCULAR IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY NOTEHOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON NOTEHOLDERS UNDER THE U.S. INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER AND DEALERS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) NOTEHOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. The following summary of some of the United States federal income tax consequences of the purchase, ownership, and disposition of registered Notes issued pursuant to rule 144A (the “Rule 144A Notes”) is based upon laws, regulations, rulings, and decisions now in effect, all of which are subject to change (including changes in effective dates) or possible differing interpretations. It deals only with Rule 144A Notes held as capital assets and does not purport to deal with persons in special tax situations, including financial institutions, insurance companies, regulated investment companies, partnerships, tax-exempt entities, dealers in securities or currencies, persons holding Rule 144A Notes in a tax-deferred or tax-advantaged account, persons holding Rule 144A Notes as a hedge against currency risks or as a position in a “straddle” or as part of a “conversion” transaction for tax purposes, or persons who are required to mark-to-market for tax purposes. It also does not deal with holders other than original purchasers, except where otherwise specifically noted. Persons considering the purchase of the Rule 144A Notes should consult their own tax advisors concerning the application of United States federal income tax laws to their particular situations as well as any consequences of the purchase, ownership, and disposition of the Rule 144A Notes arising under the laws of any other taxing jurisdiction.

As used in this Offering Circular, the term “United States Holder” means a beneficial owner of a Rule 144A Note that is for United States federal income tax purposes:

(1) a citizen or resident of the United States; (2) a corporation (including an entity treated as a corporation for United States federal income tax purposes) created or organised in or under the laws of the United States, or any state of the United States or the District of Columbia; (3) an estate whose income is subject to United States federal income tax regardless of its source; or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. To the extent provided in regulations, some types of trusts in existence on 20th August, 1996 and treated as United States persons prior to that date which elect to continue to be so treated will also be considered United States Holders. As used in this section, the term “non-United States Holder” means a beneficial owner of a Rule 144A Note that is not a United States Holder.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds the Rule 144A Notes, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership and accordingly, this summary does not apply to partnerships. A partner of a partnership holding the Rule 144A Notes should consult its own tax advisor regarding the U.S. federal income tax consequences to the partner of the acquisition, ownership and disposition by the partnership of the Rule 144A Notes.

The Issuer has assumed for purposes of the discussion below that the Rule 144A Notes are issued in a currency other than the U.S. dollar and that the functional currency of a United States Holder is the U.S. dollar. As used in this section, “Foreign Currency” means a currency other than U.S. dollars.

Depending on the relevant economic terms of the Rule 144A Notes, including whether a holder of a Rule 144A Note has principal protection, the Rule 144A Note may be characterised for U.S. federal income tax purposes as indebtedness, a forward contract or another type of financial derivative. The following discussion assumes that the Notes will be characterised as indebtedness for U.S. federal income tax purposes and that holders agree to treat the Rule 144A Notes as such, unless an alternate characterisation of the Rule 144A Notes is specified in the applicable Final Terms. Any special U.S. federal income tax considerations relevant to a particular issue of Notes, including any Index Linked Notes or Dual Currency Notes, will be provided in the applicable Final Terms.

United States Holders The following is a summary of certain United States federal income tax consequences of the ownership of Rule 144A Notes, other than Index Linked Notes and Dual Currency Notes.

Payments of Interest

Cash Method. If the Noteholder is a United States Holder who uses the cash method of accounting for United States federal income tax purposes, when it receives a payment of interest on a Rule 144A Note, it will be required to include in income the U.S. dollar value of the Foreign Currency payment (determined on the date such payment is received) regardless of whether the payment is in fact converted to U.S. dollars at that time. This U.S. dollar value will be its tax basis in the Foreign Currency.

Accrual Method. If the Noteholder is a United States Holder who uses the accrual method of accounting for United States federal income tax purposes, or who otherwise is required to accrue interest prior to receipt, it will be required to include in income the U.S. dollar value of the amount of interest income that has accrued or is otherwise required to be taken into account with respect to a Rule 144A Note during an accrual period. The U.S. dollar value of that accrued income will be determined by translating that income at the average rate of exchange for the accrual period or, with respect to an accrual period that spans two taxable years, at the average rate for the partial period within the taxable year. The Noteholder may elect, however, to translate the accrued interest income using the rate of exchange on the last day of the accrual period or, for an accrual period that spans two taxable years, using the rate of exchange on the last day of the taxable year. If the last day of an accrual period is within five business days of the date of receipt of the accrued interest, the Noteholder may translate the interest using the rate of exchange on the date of receipt. This election will apply to all other debt obligations held by the Noteholder and may not be changed without the consent of the U.S. Internal Revenue Service (“IRS”). The Noteholder should consult a tax advisor before making this election.

In addition to the interest income described above, because the Rule 144A Notes are denominated and interest will be paid in a Foreign Currency, the Noteholder will be required to recognise currency gain or loss. This gain or loss will be treated as ordinary income or loss. The currency gain or loss will be recognised on the date interest is received or the Rule 144A Notes are disposed of and will equal the difference, if any, between the U.S. dollar value of the Foreign Currency payment received (determined on the date the payment is received) in respect of the related accrual period and the U.S. dollar value of interest income that has accrued during that accrual period (as determined above).

Purchase, Sale, Exchange, and Retirement of Notes

If the Noteholder purchases a Rule 144A Note with previously owned Foreign Currency, it will recognise currency gain or loss (which will be treated as ordinary income or loss) in an amount equal to the difference, if any, between its tax basis in the Foreign Currency and the U.S. dollar fair market value of the Foreign Currency used to purchase the Rule 144A Note, determined on the date of purchase.

Upon the sale, exchange, or retirement of a Rule 144A Note, the Noteholder will recognise taxable gain or loss equal to the difference between the amount realised on the sale, exchange, or retirement and its adjusted tax basis in the Rule 144A Note. This gain or loss generally will be capital gain or loss (except to the extent of any accrued market discount the Noteholder did not previously include in income and the amount of any currency gain or loss as described below) and will be long-term capital gain or loss if at the time of sale, exchange, or retirement the Noteholder has held the Rule 144A Note for more than one year. To the extent the amount realised represents

accrued but unpaid interest (including original issue discount), however, these amounts must be taken into account as interest income, with currency gain or loss computed as described in “United States Holders - Payments of Interest.” If the Noteholder receives Foreign Currency on such a sale, exchange, or retirement, the amount realised will be based on the U.S. dollar value of the Foreign Currency on the date the payment is received or the Rule 144A Note is disposed of (or deemed disposed of as a result of a material change in the terms of the Rule 144A Note). If, however, a Rule 144A Note is traded on an established securities market and the Noteholder is a cash basis taxpayer (or an accrual basis taxpayer that has made an appropriate election), the U.S. dollar value of the amount realised will be determined by translating the Foreign Currency payment at the spot rate of exchange on the settlement date of the sale. The Noteholder’s adjusted tax basis in a Rule 144A Note will equal the amount it paid for the Rule 144A Note, increased by the amounts of any market discount or original issue discount it previously included in income with respect to such Rule 144A Note and reduced by any amortised acquisition or other premium and any principal payments it received in respect of the Rule 144A Note. For purposes of the previous sentence, the amount of any payment in or adjustments measured by Foreign Currency will be equal to the U.S. dollar value of that Foreign Currency on the date of the purchase or adjustment. Gain or loss realised upon the sale, exchange, or retirement of a Rule 144A Note that is attributable to fluctuations in currency exchange rates will be ordinary income or loss which will not be treated as interest income or expense. Gain or loss attributable to fluctuations in exchange rates will equal the difference between the U.S. dollar value of the Foreign Currency principal amount of the Rule 144A Note, determined on the date the payment is received or the Rule 144A Note is disposed of, and the U.S. dollar value of the Foreign Currency principal amount of the Rule 144A Note, determined on the date the Noteholder acquired the Rule 144A Note. This Foreign Currency gain or loss will be recognised only to the extent of the total gain or loss the Noteholder realised on the sale, exchange, or retirement of the Rule 144A Note.

Premium

If the Noteholder purchases a Rule 144A Note at a cost greater than the Rule 144A Note’s remaining redemption amount, it will be considered to have purchased the Rule 144A Note at a premium, and it may elect to amortise the premium as an offset to interest income, using a constant yield method, over the remaining term of the Rule 144A Note. If the Noteholder makes this election, it generally will apply to all debt instruments that it holds at the time of the election, as well as any debt instruments that it subsequently acquires. In addition, it may not revoke the election without the consent of the IRS. If it elects to amortise the premium, it will be required to reduce its tax basis in the Rule 144A Note by the amount of the premium amortised during its holding period. Because the Rule 144A Notes are denominated in a Foreign Currency, it should calculate the amortisation of the premium in the Foreign Currency. Premium amortisation deductions attributable to a period reduce interest income in respect of that period, and therefore are translated into U.S. dollars at the rate that it uses for interest payments in respect of that period. Currency gain or loss will be realised with respect to amortised premium based on the difference between the exchange rate computed on the date or dates the premium is amortised against interest payments on the Rule 144A Note and the exchange rate on the date it acquired the Rule 144A Note. If the Noteholder does not elect to amortise premium, the amount of premium will be included in its tax basis in the Rule 144A Note. Therefore, if it does not elect to amortise premium and it holds the Rule 144A Note to maturity, it will generally be required to treat the premium as capital loss when the Rule 144A Note matures.

Market Discount

If the Noteholder purchases a Rule 144A Note at a price that is lower than the Rule 144A Note’s remaining redemption amount by 0.25 per cent. or more of the remaining redemption amount (or adjusted issue price), multiplied by the number of remaining whole years to maturity, the Rule 144A Note will be considered to bear “market discount” in its hands. In this case, any gain that it realises on the disposition of the Rule 144A Note generally will be treated as ordinary interest income to the extent of the market discount that accrued on the Rule 144A Note during its holding period. In addition, it may be required to defer the deduction of a portion of the interest paid on any indebtedness that it incurred or maintained to purchase or carry the Rule 144A Note. In general, market discount will be treated as accruing ratably over the term of the Rule 144A Note, or, at its election, under a constant yield method. The Noteholder must accrue market discount on a Rule 144A Note denominated in a Foreign Currency in the specified currency. The amount that it will be required to include in income in respect of accrued market discount will be the U.S. dollar value of the accrued amount, generally calculated at the exchange rate in

effect on the date that it disposes of the Rule 144A Note. No part of this accrued market discount will be treated as currency gain or loss.

The Noteholder may elect to include market discount in gross income currently as it accrues (on either a ratable or constant yield basis), in lieu of treating a portion of any gain realised on a sale of the Rule 144A Note as ordinary income. If it elects to include market discount on a current basis, the interest deduction deferral rule described above will not apply. If it does make such an election, it will apply to all market discount debt instruments that it acquires on or after the first day of the first taxable year to which the election applies. The election may not be revoked without the consent of the IRS. Any accrued market discount on a Rule 144A Note denominated in a Foreign Currency that is currently includible in income will be translated into U.S. dollars at the average exchange rate for the accrual period (or portion of the accrual period within the holder’s taxable year). Currency gain or loss with respect to accrued market discount currently includable in income is determined in the manner described above in “United States Holders - Payments of Interest” with respect to the computation of currency gain or loss on accrued interest.

Exchange of Foreign Currencies

The Noteholder will have a tax basis in any Foreign Currency received as interest or on the sale, exchange, or retirement of a Rule 144A Note equal to the U.S. dollar value of such Foreign Currency, determined at the time the interest is received or at the time of the sale, exchange, or retirement. Any gain or loss that it realises on a sale or other disposition of Foreign Currency (including its exchange for U.S. dollars or its use to purchase Rule 144A Notes) will be ordinary income or loss.

Zero Coupon Notes

The following is a summary of certain United States federal income tax consequences of the ownership of Zero Coupon Notes.

A Rule 144A Note that is issued at an issue price that is less than its stated redemption price at maturity (i.e., the sum of all payments to be made on the Rule 144A Note other than “qualified stated interest”) is treated as issued at original issue discount, or “OID,” if the difference between the stated redemption price at maturity of the Rule 144A Note and its issue price exceeds a statutorily defined de minimis amount. In the case of OID Notes where the OID does not exceed a de minimis amount, a United States Holder who acquires the OID Notes at the time they are issued is required to include the de minimis OID in income as stated principal payments are made. As discussed below, United States Holders of OID Notes with a maturity in excess of one year must, in general, include OID in income on a daily basis as the OID accrues. In general, the “issue price” of each Rule 144A Note is the first price at which a substantial amount of the issue of which the Rule 144A Notes is a part is sold to purchasers other than underwriters, placement agents, or wholesalers. “Qualified stated interest” is stated interest that is unconditionally payable in cash or in property, other than our debt instruments, at least annually and, with respect to a fixed rate Rule 144A Note, at a single fixed rate. Interest is payable at a single fixed rate only if the rate appropriately takes into account the length of the interval between payments, subject to a special rule for first and final interest payments.

Notes that may be redeemed prior to their maturity date at our option, or that may be prepaid prior to their maturity date at holder’s option, will be treated from the time of issuance as having a maturity date for certain United States federal income tax purposes on the redemption or prepayment date if

• in the case of a redemption at our option, the redemption would minimise yield to maturity; or

• in the case of a prepayment at the holder’s option, the prepayment would maximise yield to maturity.

Notes whose term can be extended on fixed terms and conditions at our or the holder’s option will be treated as having a maturity date on the latest date on which it could be repaid if

• in the case of an option held by the Issuer, the extension would minimise yield to maturity; or

• in the case of an option held by the holder, the extension would maximise yield to maturity.

The applicable Final Terms will indicate when the Issuer determines that a particular Rule 144A Note will be deemed to have a maturity date for United States federal income tax purposes prior to or later than its maturity date.

In some cases, Rule 144A Notes that bear stated interest and are issued at par may be treated as having been issued with OID for United States federal income tax purposes, and all or a portion of the stated interest would be recharacterised as OID. This could affect the amount of interest income on the Rule 144A Notes that would be includable in income by United States Holders for any tax year for United States federal income tax purposes. In addition, the amount may vary from the actual cash payments of interest made on the Rule 144A Notes received during the tax year, which could affect the timing of income recognition with respect to taxpayers owning the Rule 144A Notes.

The applicable Final Terms will indicate when the Issuer determines that a particular Rule 144A Note will be an OID Note.

United States Holders of OID Notes with a maturity upon issuance of more than one year must, in general, include OID in income in advance of the receipt of some or all of the related cash payments. The amount of OID includable in income by the initial United States Holder of an OID Note is the sum of the “daily portions” of OID with respect to the OID Note for each day during the taxable year or portion of the taxable year in which the United States Holder held the OID Note. This is referred to as “accrued OID.” The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. The “accrual period” for an OID Note may be of any length and may vary in length over the term of an OID Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the first or final day of an accrual period. In general, the computation of OID is simplest if accrual periods correspond to the intervals between interest payment dates provided by the terms of an OID Note. The amount of OID allocable to any accrual period is an amount equal to the excess, if any, of (a) the product of the Rule 144A Note’s adjusted issue price at the beginning of the accrual period and its yield to maturity, determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period, over (b) the sum of any qualified stated interest allocable to the accrual period. In determining OID allocable to an accrual period, if an interval between payments of qualified stated interest contains more than one accrual period, the amount of qualified stated interest payable at the end of the interval is allocated on a pro rata basis to each accrual period in the interval, and the adjusted issue price at the beginning of each accrual period must be increased by the amount of any qualified stated interest that has accrued prior to the beginning of the accrual period but is not payable until a later date. OID allocable to a final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. If all accrual periods are of equal length, except for an initial short accrual period, the amount of OID allocable to the initial short accrual period may be computed under any reasonable method. The “adjusted issue price” of an OID Note at the beginning of any accrual period is equal to its issue price increased by the accrued OID for each prior accrual period and reduced by any prior payments with respect to the OID Note that were not qualified stated interest. Under the OID rules, a United States Holder of a non-amortising OID Note will generally have to include in its taxable income increasingly greater amounts of OID in successive accrual periods. The Issuer is required to report to the IRS the amount of OID accrued on OID Notes held of record by persons other than corporations and certain other exempt persons.

OID Notes having a term of one year or less are called “short-term OID Notes.” In the case of short-term OID Notes, all payments, including all stated interest, will be included in the stated redemption price at maturity. As a result, United States Holders generally will be taxable on OID in lieu of stated interest. The amount of OID will be equal to the excess of the stated redemption price at maturity over the issue price of the short-term OID Note, unless the United States Holder elects to compute acquisition discount using tax basis with appropriate adjustments to reflect the difference between OID and acquisition discount. In general, individuals and certain other cash method United States Holders of a short-term OID Note are not required to include accrued OID or acquisition discount in their income currently, but they may elect to do so, and they may be required to include in income any payments actually received. United States Holders who report income for United States federal income tax purposes on the accrual method and certain other United States Holders are required to accrue OID or acquisition discount on the

short-term OID Notes, as ordinary income, on a straight-line basis, unless an election is made to accrue the OID or acquisition discount using a constant yield method, compounded on a daily basis. In the case of a United States Holder who is not required, and does not elect, to include OID or acquisition discount in income currently, any gain realised on the sale, exchange, or retirement of the short-term OID Note will be ordinary income to the extent of the OID or acquisition discount accrued through the date of sale, exchange, or retirement. In addition, United States Holders who do not elect to currently include accrued OID or acquisition discount in income may be required to defer deductions for a portion of the United States Holder’s interest expense with respect to any indebtedness incurred or continued to purchase or carry the short-term OID Note.

Floating Rate Notes generally will be treated as “variable rate debt instruments” under the OID regulations. The OID regulations generally convert a variable rate debt instrument into a fixed rate instrument and then apply the general OID rules to such deemed fixed rate instrument. The application of the OID regulations to a variable rate debt instrument is not described in this Offering Circular. In the event a Floating Rate Note would be treated as an OID Note, a description of the tax considerations relevant to the United States Holders of any such Notes will be provided in the applicable Final Terms. If a Floating Rate note does not qualify as a “variable rate debt instrument,” such Note will be subject to special rules (the “Contingent Payment Regulations”) that govern the tax treatment of debt obligations that provide for contingent payments.

A description of the tax considerations relevant to the United States Holders of any such Note will be provided in the applicable Final Terms. A United States Holder should determine the U.S. dollar amount includable in income as OID for each accrual period by (a) calculating the amount of OID allocable to each accrual period in the Foreign Currency using the constant-yield method described above, and (b) translating the amount of the Foreign Currency so derived at the average exchange rate in effect during that accrual period (or portion thereof within a United States Holder’s taxable year) or, at the United States Holder’s election (as described above under “Payments of Interest”), at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year within such accrual period if the accrual period spans more than one taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five business days of the last day of the accrual period. Because exchange rates may fluctuate, a United States Holder of an OID Note may recognise a different amount of OID income in each accrual period than would the holder of an otherwise similar OID Note denominated in U.S. dollars. Upon the receipt of an amount attributable to OID (whether in connection with a payment of an amount that is not qualified stated interest or the sale or retirement of the OID Note), a United States Holder will recognise ordinary income or loss measured by the difference between the amount received (translated into U.S. dollars at the exchange rate in effect on the date of receipt or on the date of disposition of the OID Note, as the case may be) and the amount accrued (using the exchange rate applicable to such previous accrual).

U.S. Foreign Tax Credit

If withholding taxes are imposed on OID or stated interest (or additional amounts) paid on the Notes, United States Holders will be treated as having actually received an amount equal to the amount of such taxes and as having paid such amount to the relevant taxing authority. As a result, the amount of interest income included in gross income by a United States Holder will be greater than the amount of cash actually received by the United States Holder. A United States Holder may be able, subject to applicable limitations, to claim a foreign tax credit or deduction for withholding taxes imposed. The calculation of United States foreign tax credits and, in the case of a United States Holder that elects to deduct foreign taxes, the availability of deductions, involves the application of complex rules that depend on a United States Holder’s particular circumstances. United States Holders should, therefore, consult their own tax advisors regarding the application of the United States foreign tax credit rules.

Index Linked Notes, Dual Currency Notes and Other Notes

The applicable Final Terms will discuss any special United States federal income tax rules with respect to Index Linked Notes, Dual Currency Notes and other Rule 144A Notes that are subject to U.S. federal income tax consequences different from those set forth herein.

Reportable Transactions

Applicable Treasury regulations require taxpayers that participate in “reportable transactions” to disclose that participation to the IRS by attaching Form 8886 to their tax returns and to retain a copy of all documents and records related to the transaction. In addition, “material advisers” with respect to a reportable transaction may be required to file returns and maintain records, including the lists identifying investors in the transaction, and to furnish those records to the IRS upon demand. A transaction may be a “reportable transaction” based on any of several criteria, one or more of which may be present with respect to an investment in the Rule 144A Notes. Whether an investment in the Rule 144A Notes constitutes a “reportable transaction” for any investor depends on that investor’s particular circumstances. The regulations provide that, in addition to certain other transactions, a “loss transaction” constitutes a “reportable transaction.” A “loss transaction” is any transaction resulting in the taxpayer claiming a loss under Section 165 of the Code in an amount equal to or in excess of certain threshold amounts. The regulations specifically provide that a loss resulting from a “Section 988 transaction” will constitute a Section 165 loss. In general, a Rule 144A Note will be subject to the rules governing foreign currency exchange gain or loss. Therefore, losses realised with respect to a Rule 144A Note may constitute a Section 988 transaction, and a holder of Rule 144A Notes that recognises exchange loss in an amount that exceeds the loss threshold amount applicable to that holder may be required to file Form 8886. Investors should consult their own tax advisors concerning any possible disclosure obligation they may have with respect to their investment in the Rule 144A Notes and should be aware that, should any “material adviser” determine that the return filing or investor list maintenance requirements apply to this transaction, they would be required to comply with this requirement.

Non-United States Holders Except as noted in the applicable Final Terms, under current United States federal income tax law, and subject to the backup withholding rules discussed below under “Information Reporting And Backup Withholding”), a Non-United States Holder of a Rule 144A Note will generally be exempt from United States federal income withholding tax on payments of interest on a note and gain realised in connection with the sale, retirement or other disposition of a note, although to gain this exemption the Non-United States Holder may need to provide the appropriate party with an IRS Form W-8 BEN (or substitute form) attesting to the holder’s status as a Non-United States person.

A Non-United States Holder of a Rule 144A Note generally will be subject to regular U.S. income tax on interest (including stated interest, additional amounts, OID and market discount, as adjusted by amortizable bond premium and acquisition premium) and gain realised in connection with the sale, retirement or other disposition of a note in the same manner as if it were a United States Holder if such Non-United States Holder is (a) engaged in a trade or business in the United States or, if an income tax treaty applies, has a United States permanent establishment, and the interest or gain on the note, as the case may be, is effectively connected with the conduct of such trade or business or is attributable to such permanent establishment, respectively; (b) in the case of gain realised by a Non-United States Holder who is an individual, such holder is present in the United States for 183 days or more in the taxable year of disposition and other conditions are satisfied; (c) the Non-United States Holder is subject to tax pursuant to the provisions of the Code applicable to United States expatriates; or (d) the Non-United States Holder is otherwise subject to United States federal income taxation on a net basis in respect of income attributable to the Note. In addition, if such Non-United States Holder is a foreign corporation that is engaged in a U.S. trade or business, it may be subject to a branch profits tax equal to 30 per cent. (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to adjustments.

Information Reporting and Backup Withholding Payments of principal and interest, as well as payments of proceeds from the sale, retirement or other disposition of a note, may be subject to a “backup withholding” tax (currently at a 28 per cent. rate but scheduled to be increased to 31 per cent. after 2010) if the recipient of such payments fails to furnish to the payor identifying information or fails to establish its status as a Non-United States Holder. Any amounts deducted and withheld would be allowed as a credit against such recipient’s U.S. federal income tax, provided that appropriate proof is provided under rules established by the IRS. Furthermore, penalties may be imposed by the IRS on a recipient of payments that is required to supply information but that does not do so in the proper manner. Backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and financial institutions. Information may also be required to be provided to the IRS concerning payments on the notes, unless an exemption

applies. Holders of Rule 144A Notes are cautioned to consult their own tax advisors regarding their qualification for an exemption from backup withholding and information reporting, and the procedure for obtaining such an exemption.

ERISA MATTERS

The U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), imposes certain restrictions on employee benefit plans (“ERISA Plans”) subject to ERISA and on persons who are fiduciaries with respect to these ERISA Plans. In accordance with ERISA’s general fiduciary requirements, a fiduciary with respect to an ERISA Plan who is considering the purchase of Notes on behalf of the ERISA Plan should determine whether the purchase is permitted under the governing ERISA Plan documents and is prudent and appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio. Other provisions of ERISA and Section 4975 of the Code, prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with any entities whose underlying assets include the assets of any such plans and with ERISA Plans, “Plans”)) and persons who have certain specified relationships to the Plan (“parties in interest’ ‘within the meaning of ERISA or “disqualified persons” within the meaning of Section 4975 of the Code). Thus, a Plan fiduciary considering the purchase of the Notes should consider whether such a purchase might constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code.

Treatment of the Issuer’s Underlying Assets Under ERISA and the Code As discussed above, provisions of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of Plans. The U.S. Department of Labor has issued regulations concerning the definition of what constitutes the assets of an ERISA Plan (“the plan asset regulations”). These regulations provide that, as a general rule, the underlying assets and properties of corporations, partnerships, trusts and certain other entities in which a plan purchases an “equity interest” will be deemed, for purposes of ERISA, to be assets of the investing plan unless certain exceptions apply. The plan asset regulations define an “equity interest” as any interest in an entity other than an instrument that is treated as indebtedness under applicable local law and which has no substantial equity features. Debt-related instruments incorporating substantial equity features are generally subject to the plan assets regulations to the same extent as equity interests. Although some of the Notes that may be offered hereunder will be regarded as indebtedness lacking substantial equity features, certain of the Notes (including Index Linked Notes) may instead be regarded as incorporating substantial equity features (“Restricted Notes”).

An investing plan’s assets will not include any of the underlying assets of an entity if at all times less than 25 per cent. of each class of “equity” interests in the entity is held by “benefit plan investors,” which is defined to include plans that are not subject to ERISA such as governmental pension plans and individual retirement accounts as well as plans that are subject to ERISA. For purposes of this determination, equity interests held by a person who has discretionary authority or control over the entity’s assets, and affiliates of such persons, are disregarded.

Another exception under the plan asset regulations provides that an investing plan’s assets will not include any of the underlying assets of an entity if the class of “equity” interests in question is a “publicly-offered security.” In order to qualify for this exception, an equity interest must be (1) widely held (i.e., held by 100 or more investors who are independent of the Issuer and each other), (2) freely transferable, and (3) part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act. Another exception is provided for an investment in an “operating company,” which is defined in the plan assets regulations to include a “venture capital operating company” and a “real estate operating company.” The Issuer does not intend to register the Notes under the Exchange Act nor does it anticipate that the acquisition of Restricted Notes will be considered to be an investment in an “operating company” for purposes of the plan assets regulations.

The Issuer will take such steps as may be necessary to qualify for one or more of the exceptions available under the plan asset regulations and thereby prevent its assets from being treated as assets of any investing plan. More specifically, the Issuer will limit the acquisition of any class of Restricted Notes by benefit plan investors to less than 25 per cent. of the value of that class of equity securities issued by it unless and until it complies with another available exception under the plan asset regulations.

If none of the exceptions under the plan asset regulations were applicable and the Issuer were deemed to hold plan assets by reason of a plan’s investment in the Restricted Notes, such plan’s assets would include an undivided interest in the assets held by the Issuer. In such event, such assets, transactions involving such assets and the persons with authority or control over and otherwise providing services with respect to such assets would be

subject to the fiduciary responsibility provisions of Title I of ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the Code, and there is no assurance that any statutory or administrative exemption from the application of such rules would be available. Accordingly, the Final Terms relating to any Restricted Notes will prohibit their sale, transfer or disposition unless, following such sale, transfer or disposition, less than 25 per cent. of the value of such Restricted Notes and any other class of security that is treated as an equity interests in the Issuer for purposes of the plan asset regulations is held by (a) employee benefit plans (as defined in Section 3(3) of ERISA), whether or not it is subject to Title I of ERISA; (b) plans described in Section 4975 of the Code; (c) entities whose underlying assets include plan assets by reason of a plan’s investment in such entities; or (d) entities that otherwise constitute “benefit plan investors” within the meaning of the plan asset regulations determined without regard to the value of any such interests held by persons with authority or control with respect to the Issuer’s assets (other than benefit plan investors).

Treatment of “Parties in Interest” and “Disqualified Persons” The Issuer, directly or through its affiliates, may be considered a “party in interest” or a “disqualified person” with respect to many Plans. The purchase of the Notes by a Plan with respect to which the Issuer is a party in interest or a disqualified person may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless the Notes are acquired pursuant to and in accordance with an applicable exemption, such as Prohibited Transaction Class Exemption (“PTCE”) 84-14 (an exemption for certain transactions determined by an independent qualified professional asset manager), PTCE 91-38 (an exemption for certain transactions involving bank collective investment funds), PTCE 90-1 (an exemption for certain transactions involving insurance company pooled separate accounts), PTCE 95-60 (an exemption for certain transactions involving insurance company general accounts), or PTCE 96-23 (an exemption for certain transactions determined by an in-house asset manager). Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to local, state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN, INCLUDING ANY SUCH GOVERNMENTAL OR CHURCH PLAN, PROPOSING TO ACQUIRE ANY NOTES SHOULD CONSULT WITH ITS COUNSEL.

By its purchase of any offered Note, the purchaser or transferee thereof will be deemed to represent, on each day from the date on which the purchaser or transferee acquires the offered Note through and including the date on which the purchaser or transferee disposes of its interest in such offered Note, either that (a) it is not a Plan, an entity whose underlying assets include the assets of any Plan, or a governmental or church plan which is subject to any federal, state or local law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or (b) its purchase, holding and disposition of such offered Note will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or in the case of a governmental or church plan, any substantially similar federal, state or local law) unless an exemption is available with respect to such transactions and all the conditions of such exemption have been satisfied.

The above discussion may be modified or supplemented with respect to a particular offering of Notes, including the addition of further ERISA restrictions on purchase and transfer. Please consult the applicable Final Terms for such additional information.

SUBSCRIPTION AND SALE

The Dealers have entered into an amended and restated programme agreement dated 23rd June, 2008 (the “Programme Agreement”, which expression shall include any amendment and/or supplement and/or restatement from time to time) in which they have agreed with the Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under “Form of the Notes” and “Terms and Conditions of the Notes”. In the Programme Agreement, the Issuer has agreed to reimburse the Dealers for certain of their expenses in connection with the establishment of the Programme and the issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred by them in connection therewith.

Selling Restrictions United States

The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in reliance on an exemption from the Securities Act, including, without limitation, Regulation S. The Notes are being offered and sold (1) outside the United States to or for the account of non-U.S. persons in reliance upon Regulation S, and (2) in the United States to QIBs that are Qualified Purchasers in accordance with Rule 144A who are purchasing notes for their own account or for the account of one or more QIBs who are Qualified Purchasers.

In connection with any Notes which are offered or sold outside the United States in reliance on an exemption from the registration requirements of the Securities Act provided under Regulation S (“Regulation S Notes”), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer, sell or deliver such Regulation S Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Regulation S Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed under the Programme will be required to agree, that it will send to each dealer to which it sells any Regulation S Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Regulation S Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.

Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.

Notes may also be offered to persons reasonably believed by the Dealers to be QIBs within the meaning of Rule 144A that also are Qualified Purchasers. After their initial private placement, Notes may be resold to QIBs that also are Qualified Purchasers in a transaction satisfying the requirements of Rule 144A.

Each purchaser of 144A Notes will be required to acknowledge, represent and agree as set out in “Notice to Investors”.

In compliance with United States federal tax laws and regulations, Bearer Notes may not be offered or sold during any applicable restricted period (as defined in United States Treasury Regulation Section 1.163- 5(c)(2)(i)(D)(7)) within the United States or its possessions or to United States Persons (each as defined below), other than to an office of a United States financial institution (as defined in United States Treasury Regulation Section 1.165-12(c)(1)(v)) located outside the United States and its possessions, purchasing for its own account or for resale or for the account of certain customers, that provides a certificate stating that it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the United States Treasury Regulations thereunder, or to certain other persons described in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(1)(iii)(B).

Accordingly, each Dealer has represented and agreed, and each further Dealer appointed under the programme will be required to represent and agree:

(a) except to the extent permitted under United States Treasury Regulation Section 1.163- 5(c)(2)(i)(D) (the “TEFRA D Rules”), it has not offered or sold, and agrees that during the restricted period it will not offer or sell, Bearer Notes to a person who is within the United States or its possessions or to a United States person, and (b) it has not delivered and agrees that it will not deliver within the United States or its possessions definitive Bearer Notes that are sold during the restricted period; (b) it has and throughout the restricted period will have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Bearer Notes are aware that such Notes may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the TEFRA D Rules; (c) if it is a United States person, that it is acquiring Bearer Notes for purposes of resale in connection with their original issuance and if it retains such Notes for its own account, it will only do so in accordance with the requirements of United States Treasury Regulation Section 1.163- 5(c)(2)(i)(D)(6); and (d) with respect to each affiliate that acquires Bearer Notes from such Dealer for the purpose of offering or selling such Notes during the restricted period, to repeat and confirm the representations and agreements contained in clauses (a), (b) and (c) above on such affiliate’s behalf. The Bearer Notes may not be delivered in definitive form in connection with their sale during the restricted period within the United States or its possessions. In addition, if applicable, an interest in a Permanent Global Note or coupon appertaining thereto may not be delivered in exchange for an interest in a Temporary Global Note, nor may any interest be paid with respect to any Permanent Global Note, until the person entitled to receive such interest or coupon furnishes a certificate of non-U.S. beneficial ownership.

Bearer Notes and any Coupons will bear the following legend:

“ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUE CODE.” For purposes of this paragraph, “United States” means the United States of America (including the States and the District of Columbia), and “possessions” of the United States means Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. As used in this paragraph, the term “United States Person” means (a) a beneficial owner of a bearer Note that is (i) an individual who is a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision of the United States, or (iii) an estate (other than a foreign estate within the meaning of Section 7701(a)(31) of the Code) or trust that is otherwise subject to U.S. federal income tax on a net basis with respect to its worldwide income, or (b) a beneficial owner who is not a United States Person but whose income from a bearer Note is effectively connected with such owner’s conduct of a United States trade or business. The term also includes certain former citizens of the United States whose income and gain on bearer Notes will be subject to United States federal income taxation.

Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in the applicable Final Terms.

Public Offer Selling Restriction under the Prospectus Directive

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer has represented and agreed, and each further Dealer

appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the final terms in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:

(i) if the final terms in relation to the Notes specify that an offer of those Notes may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a “Non-exempt Offer”), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus has subsequently been completed by the final terms contemplating such Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates specified in such prospectus or final terms, as applicable; (ii) at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (iii) at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or (iv) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or (v) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive. provided that no such offer of Notes referred to in (b) to (e) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorised person, apply to the Issuer; and (ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom. Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended: the “FIEL”) and each Dealer has agreed and each further Dealer appointed

under the Programme will be required to agree that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan to, or for the benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, FIEL and any other applicable laws, regulations and ministerial guidelines of Japan.

Iceland

Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that, during the period up to but excluding the date on which the Prospectus Directive is implemented in Iceland, it will not offer Notes to the public in Iceland, except in compliance with the Icelandic Securities Transaction Law and any applicable laws or regulations of Iceland.

General

Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Offering Circular and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuer nor any of the other Dealers shall have any responsibility therefor.

Neither the Issuer nor any of the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale.

With regard to each Tranche, the relevant Dealer will be required to comply with such other restrictions as the Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Final Terms.

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GENERAL INFORMATION

Authorisation The update of the Programme and the issue of Notes have been duly authorised in accordance with the Articles of Association of the Issuer.

Admission of Notes to the Official List The admission of Notes to the Official List will be expressed as a percentage of their nominal amount (excluding accrued interest). It is expected that each Tranche of Notes which is to be admitted to the Official List and to trading on the London Stock Exchange’s Regulated Market will be admitted separately as and when issued, subject only to the issue of a Global Note or Notes initially representing the Notes of such Tranche. Application has been made to the UK Listing Authority for Notes issued under the Programme to be admitted to the Official List and to the London Stock Exchange for such Notes to be admitted to trading on the London Stock Exchange’s Regulated Market. The renewed listing of the Programme in respect of Notes is expected to be granted on or about 24th June, 2008.

Documents Available For the period of 12 months following the date of this Offering Circular, copies of the following documents will, when published, be available from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London:

(i) the Articles of Association (with an English translation thereof) of the Issuer; (ii) the audited financial statements of the Issuer in respect of the financial years ended 31st December, 2007 and 2006 (with an English translation thereof) together with the audit reports prepared in connection therewith; (iii) the most recently published audited annual financial statements of the Issuer and the most recently published unaudited interim financial statements (if any) of the Issuer (in each case with an English translation thereof), in each case together with any audit or review reports prepared in connection therewith; (iv) the Programme Agreement, the Agency Agreement, the Deed of Covenant and the forms of the Global Notes, the Notes in definitive form, the Receipts, the Coupons and the Talons; (v) a copy of this Offering Circular; (vi) any future offering circulars, prospectuses, information memoranda and supplements including Final Terms (save that, a Final Terms relating to a Note which is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the Issuer and the Paying Agent as to its holding of Notes and identity) to this Offering Circular and any other documents incorporated herein or therein by reference; and (vii) in the case of each issue of Notes admitted to trading on the London Stock Exchange’s Regulated Market subscribed pursuant to a subscription agreement, the subscription agreement (or equivalent document). Clearing Systems The Notes have been accepted for clearance through DTC, Euroclear and Clearstream, Luxembourg (which are the entities in charge of keeping the records). The appropriate CUSIP number, Common Code, ISIN and/or any other security number for each Tranche of Notes allocated by DTC, Euroclear and/or Clearstream, Luxembourg will be specified in the applicable Final Terms. If the Notes are to clear through an additional or alternative clearing system the appropriate information will be specified in the applicable Final Terms.

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The address of DTC is 55 Water Street, New York, New York, 10041, Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855, Luxembourg.

The Issuer will apply to DTC for acceptance in its book-entry settlement system of Notes represented by the Registered Global Notes. Upon issuance of the relevant Registered Global Note, DTC or its custodian will credit, on its internal system, the respective principal amounts of the individual beneficial interests represented by the Registered Global Note to the accounts of DTC Participants.

Conditions for determining price The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer at the time of issue in accordance with prevailing market conditions.

Significant or Material Change There has been no significant change in the financial or trading position of the Issuer and its subsidiaries, taken as a whole, since 31st March, 2008 and there has been no material adverse change in the prospects of the Issuer and its subsidiaries, taken as a whole, since 31st December, 2007.

Litigation The Issuer is not and has not been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 months preceding the date of this document which may have or have in such period had a significant effect on the financial position or profitability of the Issuer or the Group.

Auditor The auditor of the Issuer is PricewaterhouseCoopers hf., State Authorised Public Accountants, who were appointed at the Annual General Meeting of the Issuer, held on 21st February, 2006, to replace KPMG hf. The address of PricewaterhouseCoopers hf. is Skógarhlid 12, 105 Reykjavik, Iceland. The consolidated financial statements of Glitnir banki hf. as of 31st December, 2007 and for the years then ended, incorporated by reference in this Offering Circular, have been audited by PricewaterhouseCoopers LLP, as stated in their report appearing herein.

Post-Issuance Information The Issuer does not intend to provide any post-issuance information in relation to any issues of Notes.

Dealers transacting with the Issuer Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services to the Issuer and its affiliates in the ordinary course of business.

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THE ISSUER Glitnir banki hf. Kirkjusandur 2 155 Reykjavík Iceland

PRINCIPAL PAYING AGENT AND REGISTRAR AND TRANSFER AGENT TRANSFER AGENT The Bank of New York The Bank of New York One Canada Square One Canada Square London E14 5AL London E14 5AL England England

OTHER PAYING AND TRANSFER AGENT The Bank of New York (Luxembourg), S.A. Aerogolf Center 1A Hoehenhof L - 1736 Senningerberg Luxembourg LEGAL ADVISERS To the Dealers as to Icelandic law To the Dealers as to English law LOGOS Allen & Overy LLP Efstaleiti 5 One Bishops Square 103 Reykjavík London E1 6AD Iceland

To the Issuer Morrison & Foerster LLP 1290 Avenue of the Americas CityPoint New York, NY 10104 One Ropemaker Street London EC2Y 9AW

AUDITOR To the Issuer

PricewaterhouseCoopers hf. Skógarhlid 12 105 Reykjavík Iceland

DEALERS

Barclays Bank PLC Bayerische Hypo- und Vereinsbank AG 5 The North Colonnade Arabellastr. 12 Canary Wharf 81925 Munich London E14 4BB

BNP PARIBAS Citigroup Global Markets Limited 10 Harewood Avenue Citigroup Centre London NW1 6AA Canada Square Canary Wharf London E14 5LB

Daiwa Securities SMBC Europe Deutsche Bank AG, London Branch Limited Winchester House 5 King William Street 1 Great Winchester Street London EC4N 7AX London EC2N 2DB

Glitnir banki hf. J.P. Morgan Securities Ltd. Kirkjusandur 2 125 London Wall 155 Reykjavíik London EC2Y 5AJ

Merrill Lynch International Merrill Lynch Financial Centre 2 King Edward Street London EC1A 1 HQ