Islandsbanki hf

As Agent Bank, please be advised of the following rate determined on: 06-Jul-06

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           : 05-Sep-2006 to 04-Dec-2006       Payment Date   04-Dec-2006
Number of Days   : 90
Rate             : 5.79063                        
Denomination US  : 1,000.00     75,000,000.00
Amount Payable
per Denomination : 14.48        1,085,743.13

JPMorgan Chase Bank
Rate Fix Desk                       Telephone   44(0) 1202 32 8226
Institutional Trust Services        Facsimile   44(0) 1202 34 7939

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