As Agent Bank, please be advised of the following rate determined            on: 28-Nov-2008
 Issue                             � Islandsbanki hf - Series 186
                                   USD 75,000,000.00 Step UP Callable FRN Due 02-Mar-2015
 ISIN Number                       � XS0213269094
 Common Code / 144A ISIN           � 21326909
 Issue Nomin USD                   � 75,000,000.00
 Period                            � 02-Dec-2008 to 02-Mar-2009              Payment Date 02-Mar-2009
 Number of Days                    � 90
 Rate                              � 2.61688
 Denomination USD                  � 1,000.00              � 75,000,000.00                      �
                                                                                                     
 Amount Payable per Denomination   � 6.54                  � 490,665.00                         �
                                                                                                     
 Bank of New York
 Rate Fix Desk                                             Telephone         � 44 1202 689580
 Corporate Trust Services                                  Facsimile         � 44 1202 689601
    
    


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