Islandsbanki hf

As Agent Bank, please be advised of the following rate determined on:31-May-2006

Issue               : Islandsbanki hf - Series 186
                      USD 75,000,000 Step UP Callable FRN due 2 Mar 2015
ISIN Number         : XS0213269094
Common Code/
144A ISIN           : 21326909
Issue Nomin     USD : 75,000,000.00
Period              : 02-Jun-2006 to 05-Sep-2006      Payment Date 05-Sep-2006
Number of Days      : 95
Rate                : 5.63813
Denomination    US  : 1,000.00      75,000,000.0
Amount Payable 
per Denomination    : 14.88         1,115,879.90

Institutional       Telephone   44(0) 1202 34 1286
Trust Services      Facsimile   44(0) 1202 34 1267

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