Kaupthing completes the financing of the acquisition of NIBC and reduces exposure to structured credit

Kaupthing Bank ("Kaupthing") is today announcing the completion of
the financing of its acquisition of NIBC. Kaupthing is also
announcing that its exposure to structured credit will be reduced and
that the Bank expects to make a charge in the fourth quarter of EUR
85 million. Kaupthing is also providing an update on its funding and
liquidity position.

Financing of the acquisition of NIBC

- Kaupthing plans to issue new share capital in total of up to 210
million shares.
- A consortium of shareholders led by J.C. Flowers & Co ("the
Sellers" of NIBC) will receive 140 million of these shares at the
average price of SEK 105.67.
- Kaupthing plans to sell the remaining 70 million shares in a rights
issue following the closing of the NIBC transaction. The Sellers and
Exista have agreed in principle to underwrite the rights issue.
- The acquisition of NIBC is fully financed.
- Kaupthing expects the acquisition to be closed in January 2008.

Structured credit exposure

- Kaupthing has signed agreements to reduce its exposure to asset
backed securities (ABS) from EUR 1.6 billion to EUR 450 million. The
restructuring process is expected to close in mid December.
- Simultaneously the Bank plans to terminate the related EUR 1.3
billion liquidity line and will then have no such contingent
liabilities in relation to its structured credit exposure.
- Kaupthing has no direct exposure to US sub-prime assets or CDOs
containing such assets. Furthermore Kaupthing has decreased its
indirect exposure, related to the funding provided to the Sellers of
NIBC, to USD 136 million.
- Kaupthing expects to make a charge in the fourth quarter of EUR 85
million due to losses on its structured credit exposure.

Update on funding and liquidity

- Kaupthing (Parent) has only EUR 1.7 billion of long-term debt
maturing in 2008 and the Group has EUR 3.7 billion.
- Kaupthing (Group) as well as the parent company had more than 420
days of secured liquidity as of 15 November 2007 - expected cash
payment to the Sellers of NIBC is taken into account in secured
liquidity.

Financing of the NIBC acquisition
The board of directors of Kaupthing will seek approval at a
shareholders' meeting to issue and sell 70 million shares in the
first quarter of 2008 in a rights issue. The Sellers and Exista have
agreed in principle to underwrite the rights issue. The Sellers will
also receive 140 million shares in Kaupthing instead of the 110
million previously agreed at the average price of SEK 105.67. Also,
the cash payment to the Sellers will be reduced to EUR 1,392 million
from EUR 1,625 million. The Sellers of NIBC have agreed to a lock-up
period ending on 31 December 2008 for 110 million of the 140 million
shares.

After the share issue the Sellers will become the second largest
shareholder in Kaupthing with a share of approximately 15.9%.

Kaupthing is awaiting regulatory approval from the Dutch and
Icelandic financial authorities, and the Bank expects the acquisition
to be closed in January 2008.

Structured credit exposure and charge in fourth quarter
Kaupthing has taken actions to limit its exposure towards structured
credit. In this regard, Kaupthing has sold part of its ABS portfolio
and has signed an agreement to restructure the remainder.
Simultaneously the plan is to terminate the EUR 1.3 billion liquidity
line.

Subsequently Kaupthing has no direct exposure to US sub-prime
residential mortgage-backed securities (RMBS). Kaupthing has an
indirect exposure as the Bank funded the sub-prime portfolio divested
by NIBC to the Sellers with a senior loan facility. A part of the
amended agreement with the Sellers of NIBC is that the loan amount
will be decreased from USD 236 million to USD 136 million
collateralized with a portfolio of assets with an unchanged total
face amount of USD 689 million. As a result of that transaction, NIBC
does not have any US sub-prime exposure.

After the completion of the above restructuring the remaining ABS
exposure at Kaupthing will amount to EUR 450 million, thereof EUR 250
million in credit-linked loans and EUR 200 million in AAA rated ABS,
mostly in collateralized loan obligations (CLOs). The portfolio
referred to in the credit-linked loans is a diverse highly rated
portfolio of ABS mostly limited to CLOs and high yield collateralized
debt obligations (HY-CDOs), but excluding all sub-prime RMBS, CDO
squared or CDOs of sub-prime RMBS. All underlying assets are rated A
or higher with 86% rated AA or higher.

The above assets are the ABS assets that New Bond Street Asset
Management ("NBSAM") manages on behalf of Kaupthing. In addition to
this NBSAM manages a portfolio of corporate synthetic CDOs with a
total exposure of EUR 300 million and a portfolio of floating rate
notes (FRN) issued by financial institutions totalling EUR 1.2
billion. NBSAM is an FSA regulated asset management company that
makes credit investments on behalf of Kaupthing and also manages
assets for third party investors.

As a result of the restructuring and the recent unfavourable
development in the credit markets Kaupthing expects to make a charge
of EUR 85 million in the fourth quarter 2007.

Liquidity and funding of Kaupthing
Kaupthing is committed to its liquidity policy of maintaining
sufficient secured liquidity to repay all maturing obligations for at
least 360 days and at the same time maintain a stable level of
business without accessing the capital markets. The secured liquidity
of the Bank consists of cash, high grade international repo-able
bonds and back-up facilities with a maturity of over one year and
without MAC clauses. As of 15 November Kaupthing Bank had more than
420 days of secured liquidity. The cash payment due to the Sellers of
NIBC is taken into account when the Bank's liquidity position is
calculated.

The secured liquidity of NIBC calculated the same way is more than
720 days and pro-forma combined secured liquidity of Kaupthing group
and NIBC is more than 600 days.

Kaupthing funds itself through the parent company and its two
self-funded subsidiaries: FIH in Denmark and Kaupthing Singer &
Friedlander in the UK. Kaupthing (parent) has EUR 1.7 billion of
long-term debt maturing in 2008 and the Group has EUR 3.7 billion. In
comparison Kaupthing (parent) had as of 15 November raised close to
EUR 6 billion in long-term financing since the beginning of the year.
As part of the financing of the NIBC acquisition Kaupthing has also
issued USD 400 million in Tier 1 subordinated bonds and sold them to
investors in Asia.

In raising the funds, Kaupthing has, in line with its strategy of
diversification of its funding base, been using a variety of funding
sources, public issues and private placements including bilateral
lending. Kaupthing has furthermore not experienced an increase in
funding costs from 2006.

For further information please contact:
Hreidar Már Sigurdsson, CEO at +354 444 6101
Jónas Sigurgeirsson, Chief Communication Officer, at +354 444 6112 or
ir@kaupthing.com


About Kaupthing Bank
Kaupthing Bank offers comprehensive commercial and investment banking
services to individuals, companies and institutional investors. The
Bank is a leading player in all the main areas of the Icelandic
financial market, and in addition to Iceland, the Bank's key markets
are Denmark and the United Kingdom. The Bank focuses on the growth
and development of its international activities and aims to be one of
the leading investment banks in northern Europe.

Kaupthing Bank operates in twelve countries with its headquarters
located in Reykjavík. The Bank's main subsidiaries are FIH
Erhvervsbank in Denmark, Kaupthing Singer & Friedlander in the United
Kingdom, Kaupthing Bank Sverige, Kaupthing Bank Luxembourg, Kaupthing
Bank Oyj in Finland, Norvestia Oyj in Finland, Kaupthing New York,
Kaupthing Asset Management in Switzerland and Kaupthing Norge in
Norway. The Bank also has activities in the United Arab Emirates
(Dubai) and Qatar and operates a branch in the Faroe Islands. As of
30 September 2007 the number of full-time equivalent positions was
3,190 at Kaupthing Bank and its subsidiaries. www.kaupthing.com