German bank among new shareholders of Búnaðarbanki Íslands hf.

1/16/03

Joint Press Release from the Seller and Buyer regarding the Sale of Búnaðarbanki Íslands hf.

16. January 2003

Mrs. Valgerður Sverrisdóttir, Minister of Commerce and Mr. Geir H.Haarde, Minister of Finance, have signed on behalf of the Icelandic state an agreement with Egla holding, the Iceland Insurance Company hf. (VÍS), the Co-operative Pension Fund and Samvinnutryggingar Mutual Holdings concerning the purchase by the latter of a 45.8% share in Búnaðarbanki Íslands hf.

Egla is a limited liability company owned by the German bank Hauck & Aufhäuser Privatbankiers KGaA, Ker hf. and the Iceland Insurance Company hf.

The agreement was signed at the Búnaðarbanki headquarters in Reykjavík. It is based on a prior agreement from the 15th of November 2002. The price of this 45.8% share was slightly over ISK 11.9 billion.

• Delivery and payments of the shares will take place in two stages. On the one hand, 27.48% of the shares following the signing of the agreement, given the consent of the Icelandic Financial Supervisory Authority, and, on the other hand, 18.32% no later than on the 20th of December 2003.
• The average net present price of share in the transaction is 4.81.
• Two thirds of the purchase price will be paid in USD and will mainly go towards reducing the Icelandic Treasury ' s foreign debt.
• The buyers are required to hold a minimum 33% stake in the bank for at least 21 month from the signing of the agreement, unless the seller relaeses the buyer from this obligation. According to agreement}s the buyers are to be considered as one shareholder.
• Following the transaction, the State' s holding in Búnaðarbanki Íslands hf. amounts to approximately 9%.

According to the agreement, the shares of individual buyers are as such:

The Executive Committee on Privatisation managed the transaction on behalf of the State. Its primary consultant was the English Bank HSBC. The primary consultant of the buyers was the French Bank Société Générale.