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					ICEBANK´S CREDITORS' REPORT

       December 2010
                                                      Disclaimer

This Report (including all subsequent amendments and additions) has been prepared by the Resolution Committee
for the creditors of Icebank hf. (“Icebank” or the“Bank”) for information purposes only. It is intended to give creditors
an overview of the background and the current situation of Icebank and the potential steps going forward.

In preparing this Report, Icebank has not taken into account the interests of any particular creditor or group of
creditors or any other person. References to Icebank when relevant include the Moratorium Appointee, the
Resolution Committee, the Winding-up Board and Icebank’s directors, officers, employees and agents.

When information or opinions in this Report are based on or sourced from information or opinions from third parties,
Icebank believes such sources to be reliable. Icebank however accepts no responsibility for the accuracy of any of
such information or opinions and accepts no responsibility for the reliability or accuracy of the information or opinions.
Icebank is under no obligation to make amendments or changes to this Report if errors are found or opinions or
information change. The ability of the Bank to make additions or amendments does not create any obligation on the
Bank to make amendments or changes to this Report in respect of any other developments, errors or changes in
opinion or information, regardless of whether any such development, error or change occurs after or before the date
of publication of the revised Report. With regard to any additions and amendments made to this Report, the Bank is
under no obligation to draw such additions and/or amendments to the attention of the intended recipients of this
Report.

The actual realizable value of Icebank´s assets and liabilities may differ materially from the values set forth in this
Report. Factors which may lead to material differences include:

    (a)   Resolution of issues regarding the quantum of claims;
    (b)   Additional claims being made against Icebank;
    (c)   The realization method(s) used over time;
    (d)   The impact of set off and netting, including in connection with derivative contracts;
    (e)   Movements in currency exchange rates and interest rates;
    (f)   Prevailing market conditions when assets are sold.


A special reference is made to the supplemental disclaimer regarding Financial Information, see appendix 2 to this
Report.

The information or opinions in or extracted from this Report must not be relied upon by any person. None of Icebank,
the Winding-up Board, the Moratorium Appointee nor the Resolution Committee accepts any responsibility for any
such reliance.

Furthermore, no representation or warranty, expressed or implied, is or will be made by Icebank, the Winding-up
Board, the Moratorium Appointee, the Resolution Committee, Icebank’s directors, officers, employees, agents or any
other person as to the accuracy, completeness or fairness of the information or opinions contained in this Report and
any reliance by any person will be at that person’s own sole risk. Without prejudice to the foregoing, Icebank, the
Winding- up Board, the Moratorium Appointee, the Resolution Committee, Icebank´s directors, officers, employees or
agents accept no liability whatsoever for any loss howsoever arising, direct or indirect, from use of this Report or any
information or opinions or otherwise arising under or in connection therewith.

The use of Icebank’s material, works or trademarks is forbidden without prior written consent from Icebank.




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                                                                     Contents
1.          Background ...................................................................................................................... 1
     1.1.      World financial crisis ................................................................................................................ 1
     1.2.      History of Icebank..................................................................................................................... 1
2.          Timeline ............................................................................................................................ 2
3.          The Resolution Committee ............................................................................................... 4
     3.1.      Role of the Resolution Committee ............................................................................................ 4
     3.2.      Composition of the Resolution Committee ............................................................................... 4
     3.3.      Objectives and goals of the Resolution Committee ................................................................... 5
4.          The Organizational Structure of the Bank ......................................................................... 5
     4.1.      Asset Management .................................................................................................................. 5
     4.2.      Treasury and Risk Management................................................................................................ 6
     4.3.      Legal Division............................................................................................................................ 7
     4.4.      Creditor Management .............................................................................................................. 7
     4.5.      Internal committees ................................................................................................................. 8
     4.6.      External advisors ...................................................................................................................... 8
5.          Creditor relations .............................................................................................................. 9
6.          Financial Information ........................................................................................................ 9
     6.1.      Basis of preparation.................................................................................................................. 9
     6.2.      Estimated value of assets and computation of liabilities ......................................................... 10
     6.3.      Cash and cash equivalents ...................................................................................................... 10
     6.4.      Loans to credit institutions ..................................................................................................... 11
     6.5.      Loans and advances ................................................................................................................ 11
     6.6.      Old bank securities ................................................................................................................. 14
     6.7.      Securities................................................................................................................................ 14
     6.8.      Other assets ........................................................................................................................... 15
     6.9.      Liabilities ................................................................................................................................ 15
     6.10.        Central Bank and Ministry of Finance.................................................................................. 16
     6.11.        Projected Cash flow for 2010-2012 ..................................................................................... 17
     6.12.        Foreign currency ratio......................................................................................................... 17
     6.13.        Operational costs................................................................................................................ 18
7.          The Claiming Process ..................................................................................................... 19
     7.1.      The Winding-up Board ............................................................................................................ 19
     7.2.      The claim process and summary of lodged claims ................................................................... 19
     7.3.      Distribution to creditors ......................................................................................................... 20
     7.4.      Objections and dispute resolving ............................................................................................ 20
     7.5.      Other role of the Winding-up Board ....................................................................................... 21
8.          Moratorium ..................................................................................................................... 22
     8.1.      Introduction ........................................................................................................................... 22
     8.2.      Rationale for the Moratorium................................................................................................. 22
     8.3.      The Moratorium Appointee .................................................................................................... 23
     8.4.      Timeline for the Moratorium .................................................................................................. 23
     8.5.      Analysis of the Moratorium legislation ................................................................................... 23
     8.6.      Potential closing of the moratorium process........................................................................... 24
9.          Icelandic composition legislation overview ...................................................................... 26
     9.1.      Introduction ........................................................................................................................... 26
     9.2.      Legal effect of composition..................................................................................................... 26
     9.3.      Composition proposal ............................................................................................................ 27
     9.4.      Voting .................................................................................................................................... 27
10.         Creditors’ meetings ......................................................................................................... 28
Appendix 1 ................................................................................................................................ 29
Appendix 2 ................................................................................................................................ 30




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1. Background
    1.1. World financial crisis

The world banking system became a centre stage of the current world financial crisis which started with the
collapse of the US housing mortgage market.

Credit markets started to deteriorate significantly in 2007 and the trend continued in 2008. The business
environment worldwide was extremely difficult for banks in general and financial institutions became very
reluctant to lend to each other. The situation led to the fall of Lehman Brothers.

On 29 September 2008, the Icelandic authorities announced their plan to acquire a 75% stake in Glitnir
bank, which had been encountering severe funding problems.

The financial markets had no confidence in the approach taken by the Icelandic government which resulted
in a freeze in interbank lines and withdrawal of deposits.

Financial markets were also sceptical of the ability of the Central Bank of Iceland to provide necessary
support to the Icelandic banking system.

On 7 October 2008, the Icelandic Parliament passed Act no. 125/2008 on the Authority for Treasury
Disbursement due to Unusual Financial Market Circumstances etc. In the following week the FME took
control of the three big Icelandic banks and decided to split each bank up, into the old and a new bank. Most
claims on the banks were left in the old banks but domestic deposits were transferred to the new banks.

Icebank’s largest assets were bonds issued by Glitnir, Kaupthing and Landsbanki.

The collapse of the major Icelandic banks had significant effect on Icebank's assets since most of its assets
were investments in securities issued by Glitnir, Kaupthing and Landsbanki. Icebank had entered in to loan
agreements, using the securities of Glitnir, Kaupthing and Landsbanki as collateral, with the Central Bank of
Iceland. When Glitnir, Kaupthing and Landsbanki collapsed, Icebank´s collateral devalued significantly,
which eventually resulted in a margin call by the Central Bank of Iceland and a consequent collapse of
Icebank.

    1.2. History of Icebank

Icebank was established in 1986 by the savings banks in Iceland. It was wholly owned by the savings banks
until October 2007 when ownership was opened up to several local investors and the Bank's top
management.

The original purpose of the Bank was to act as a central institution for the savings banks providing them with
a range of services. In 2006, Icebank's owners agreed on a new strategic vision for the Bank. This was
considered necessary because of the fundamental changes occurring in the Icelandic banking sector, not
least the rapid and successful overseas expansion of the bigger Icelandic banks and the continuous growth
of the larger savings banks, which made them more and more willing to act on their own rather than require
the services of Icebank.

From 2006 until mid 2008 the Bank prospered and its balance sheet expanded significantly. Due to the
significant business relationships with the biggest Icelandic banks the Bank did not manage to withstand
their collapse and by a decision made on 21 March 2009 the Financial Supervisory Authority (FME) assumed
the powers of a shareholders´ meeting of Icebank and made decisions which the FME deemed necessary.
On 27 March 2009 the FME appointed a Resolution Committee for Icebank, which took over all powers and



                                                      1
authority of the Board of Directors in accordance with the articles of Company Law - Act No. 2/1995
Respecting Public Limited Companies, in accordance with Article 100 a of the Act on Financial Undertakings.

To comply with the decisions of the Financial Supervisory Authority (FME) the Resolution Committee was
obliged to transfer deposits to Byr, New Kaupthing and the Central Bank of Iceland. The decision to move
deposits of savings bank to Byr, New Kaupthing and the Central Bank of Iceland has minimum effect on
other creditors, as the savings banks would have been able to set off most of their liabilities against the
Bank.



2. Timeline
September 2008 – February 2009

           o   Icelandic Parliament passes Act. 125/2008.

               Its Key features include:
                        FME has powers to assume control of distressed financial institutions;
                        Resolution Committees can be appointed to take executive control of distressed
                        financial institutions; and
                        Insolvency proceedings cannot be brought against those institutions that operate
                        under the Act.

           o   FME takes control of Glitnir, Landsbanki and Kaupthing.

           o   Bills and bonds issued by the banks remain in the old banks.

           o   Icebank´s largest assets are bills and bonds issued by the old banks, the value of which
               decreased significantly.

           o   Central Bank of Iceland announces rules to limit currency outflow.

           o   In November, 2008 Icebank starts negotiating financial restructuring with key creditors.

March 2009

           o   The evaluation of the Central Bank of Iceland is that the position of Icebank is unacceptable
               and could have a negative domino effect on other financial undertakings; not least as
               Icebank is a clearing house for savings banks in Iceland.

           o   FME takes control over Icebank on 21 March 2009.

           o   On 23 March Icebank is granted Moratorium until 15 June 2009. Tómas Jónsson is
               appointed Moratorium Appointee.

           o   FME appoints a Resolution Committee on 27 March 2009. Appointed to the Resolution
               Committee were:
                      Þorvarður Gunnarsson (Chairperson) – Certified Public Accountant. Managing
                      Director of Deloitte Iceland;
                      Erling Tómasson – Certified Public Accountant. Partner at Deloitte Iceland;
                      Hjördís Edda Harðardóttir – Supreme Court Attorney. Partner at Acta law firm;
                      Jón Ármann Guðjónsson – District Court Attorney. Partner at Lögborg law firm;
                      Áslaug Björgvinsdóttir - Associate Professor at Reykjavík University.



                                                     2
April 2009 – April 2010

           o   On 22 April 2009 the Icelandic Parliament amends Act. 44/2009.
               Their Key features include:
                  - provisions for the creation of a Winding-up Board
                  - Winding-up procedure begins when the Act is passed by the Parliament.

           o   Þorvarður Gunnarsson commissioner and chairman of the Resolution Committee, Erling
               Tómasson commissioner of the Resolution Committee and Áslaug Björgvinsdóttir
               commissioner of the Resolution Committee resign.

           o   In April 2009 the Resolution Committee agrees on processes and strategies for workout
               cases.

           o   The District Court appoints a Winding-up Board for Icebank. Appointed to the Winding up
               Committee are:
                       Andri Árnason, Supreme Court Attorney, chairman
                       Berglind Svavarsdóttir, Supreme Court Attorney
                       Tómas Jónsson, Supreme Court Attorney

           o   In May 2009, the Resolution Committee, at the request of the FME, engaged the
               international accounting firm Pricewaterhouse Coopers to investigate whether the Bank or
               parties connected to it, had before the collapse of the Bank deviated from its internal rules or
               violated the rules governing the activities of financial undertakings takings, the securities
               transactions act or the general penal code. A report was submitted to the FME on 19
               November 2009.

           o   On 9 June 2009 a meeting was held with Creditors of Icebank to inform them of the status of
               the bank’s assets and discuss the extension of the Moratorium. The meeting was held in
               accordance with Article 13 and 15 of Act No. 21/1991, in advance of the hearing at the
               District Court of Reykjavik on 15 June 2009.

           o   On 18 June 2009 the District Court of Reykjavík granted an extension of Icebank´s
               Moratorium until 15 December 2009.

           o   On 3 November 2009 the deadline for submitting claims expired.

           o   On 19 November 2009, the report which the Resolution Committee, at the request of the
               FME, engaged the international accounting firm Pricewaterhouse Coopers to work on was
               submitted to the FME.

           o   On 27 November 2009 a meeting was held with Creditors of Icebank. The purpose of the
               meeting was twofold, to discuss list of claims which at that meeting was made available to
               creditors and the decisions of the Winding-up Board and give the creditors their final
               opportunity to oppose these decisions. The meeting was also convened by the Moratorium
               Appointee of Icebank in accordance with Article 13 and 15 of Act No. 21/1991, in advance of
               the hearing at the District Court of Reykjavik on 15 December 2009.

           o   On 16 December 2009 the District court of Reykjavik extended Icebank´s Moratorium until
               15 September 2010.

           o   On 18 December 2009 Hjördís E. Harðardóttir, Supreme Court attorney and a member of
               the Resolution Committee of Icebank, was appointed by the Icelandic Financial Supervisory
               Authority (FME) as the chairman of the Resolution Committee.



                                                      3
             o   On 21 January 2010 the Winding-up Board held a second meeting with Creditors of Icebank
                 to discuss an updated list of claims.

             o   On 31 March 2010 an updated version of the Creditors Report was launched on the same
                 date the Resolution Committee and the Winding-up Board signed Icebank’s audited balance
                 sheet with certain qualifications, reservations and explanations stipulated therein.

             o   On 12 April 2010 the Special Investigate Commission delivered a report on events leading
                 to, and the causes of, the downfall of the Icelandic banks in October 2008.
                          The Resolution Committee and the Winding-up Board have thoroughly reviewed the
                          report in terms of findings in relation to Icebank and have decided to assign.
                          PricewaterhouseCoopers to investigate if there are any potential litigation recoveries
                          relating to Icebank´s pre-collapse operations.

May – September 2010

             o   On 7 May 2010 Deloitte delivered its report, requested by the Resolution Committee, on
                 internal procedures.
                          There were no major findings or recommendations on internal procedures.
                          All internal rules and regulations have been updated to reflect Icebank current
                          status.

             o   On 18 July 2010 PricewaterhouseCoopers was assigned to conduct a forensic investigation
                 and to view all revocable agreements on behalf of the Winding-Up Board.

             o   On 7 September 2010 a Creditors´ meeting of Icebank was held in Reykjavík, to discuss an
                 updated list of claims and to provide updated information on the status of the Bank.

             o   On 15 September 2010 the moratorium of the Bank was extended until 15 March 2011.
                 Moratorium will not be further extended unless changes will be made to the relevant
                 legislation.

Next steps

             o   In March 2011 a meeting will be held with the Creditors of the Bank.

             o   On 15 March 2011 the Bank’s Moratorium ends and the Bank will automatically enter into
                 winding-up proceedings.



3. The Resolution Committee
   3.1. Role of the Resolution Committee

The Resolution Committee has control of all matters concerning the assets of Icebank. It operates the Bank
in co-operation with the Moratorium Appointee: Tómas Jónsson, Supreme Court Attorney, partner at
Lögfræðistofa Reykjavíkur law firm.

   3.2. Composition of the Resolution Committee

The members of the Resolution Committee have been appointed by the FME.

The current members of the Resolution Committee are:
    Hjördís Edda Harðardóttir, Supreme Court Attorney. Partner at Megin law firm;
    Jón Ármann Guðjónsson, District Court Attorney. Partner at Lögborg law firm;

                                                       4
    3.3. Objectives and goals of the Resolution Committee

The Resolution Committee is focused on the protection of Icebank´s assets and, ultimately, the maximisation
of the realisation of those assets.

In light of current market conditions, the Resolution Committee does believe it is not necessarily in the best
interest of stakeholders to sell assets and it has therefore avoided the possibility of a fire sale of assets. The
Moratorium ensures that the Resolution Committee has time to build an effective and suitable asset
realisation strategy.

The Resolution Committee has been systematically assessing the assets of Icebank in order to prepare a
future strategy to maximise value by reviewing and analysing the potential strategic options available. The
Resolution Committee has engaged teams of experts, both internally and externally, to inter alia, assist with
the analysis and preparation of a future strategy and to provide a case by case evaluation of Icebank's
assets with the aim of maximizing the realisation of the Bank’s relevant assets.



4. The Organizational Structure of the Bank




The Resolution Committee’s main aim is to maximize the value of the Bank’s assets. In order to achieve this
goal, the Resolution Committee must possess the necessary expertise to manage the assets. The
Resolution Committee has therefore engaged experts in various fields to manage the Bank’s assets, which
include the loan portfolio, bonds, shares and derivative contracts. The Bank operates today as an asset
management company for which long term goals are dominant. It is apparent from discussions with several
creditors that the main focus of creditors is to recover as much of their claims as possible, but the time frame
for getting reimbursed is more flexible.

The Resolution Committee has established four divisions in the Bank which report directly to the Resolution
Committee and each division has a managing director responsible for the operation of that division.


    4.1. Asset Management

Asset management is the core function of Icebank. The Asset Management is divided into two functions,
Asset recovery and Daily operations relating to the Asset recovery. Belonging to the Asset management are
all employees of the bank, except the General Counsel and the Head of Treasury and risk. The number of
people in Asset Management is 13.

The main focus for Icebank Asset recovery has been on the bank’s balance sheet. As of now the Asset
recovery team has initiated processes on all items in the balance sheet and due to those measures the
number of employees has been reduced from what has been reported earlier. The Asset recovery team has
enforced collaterals in number of cases and in chapter six there is a list of securities that are currently on
Icebank balance sheet as well as real estate’s that are listed as other assets on the balance sheet. It is the
policy of Icebank that the operation is transparent. It is also the policy of Icebank to follow all rules and

                                                        5
general guidelines published by the authorities. Assets are to be sold in a transparent procedure that will be
managed by a third party on behalf of Icebank.

General guidelines towards non-performing loans have been implemented as well as General rules
regarding responses towards debtors that are facing short time payment problems. The General guidelines
towards non-performing loans are a step by step plan empowering employees with the sufficient tools
needed for the work out of non-performing loans in order to secure and maximize the bank’s assets and
recovery. The General rules regarding responses towards debtors that are facing short term liquidity
difficulties have been set in order to meet the needs of a growing number of small businesses with funding in
foreign currency that can lead to bankruptcy without payment reschedule. In these cases the payment profile
of the loans are set as it was on the 2 May 2008 fixed for 12 months and the surplus is added to the total
loan amount. Then a Loans Overdue Committee has been created focusing on non-performing loans as well
as to monitor collection. This active work with the non-performing loans as well as the debt collecting control
will lead to better recovery for the creditors of Icebank.

The asset management team has assigned number of external advisors to uphold professional standards. In
majority of cases agreements are signed with advisors on a case by case basis. The general process for
each workout case is that Icebank has at least one specialized advisor within the sector to assist but in most
cases the advisors are more than one. Icebank has signed a long-term partnership agreement with two
parties in terms of Asset management. An Investment Management Agreement has been signed with Arev
Securities, a securities firm regulated by the Financial Supervisory Authority of Iceland and specializing in
retail sector-specific asset management and advisory services. Arev Securities is monitoring and taking
supervisory management of all retail and retail related assets that Icebank either owns 100% or has
controlling interest. Icebank has obtained 100% ownership in six operating companies, four in Iceland and
two in the Baltic’s. This management agreement will secure that the retail assets of the Bank are monitored
and managed by industry specialists. Icebank receives weekly reports from Arev Securities enabling the
Bank to stay focused on the recovery. Icebank and Arev Securities structure a 90 day turnaround plan for the
enforced asset. This turnaround plan is then implemented by Arev Securities with the goal to make the
enforced asset self fundable and self standing with the ultimate goal to generate value so that the asset can
be sold at a reasonable price in order to recover the loan. The minimum workout period for these enforced
asset turnaround cases is estimated 12-18 months.

Icebank has also signed an agreement with Kalan Capital, an investment management company regulated
by the Financial Supervisory Authority of England. Kalan Capital monitors and manages the LBO and LP
portfolios as well as to work on liquidating these portfolios. The portfolios have been valued by KPMG and
Kalan Capital both in terms of value and liquidity and in terms of estimating when it is appropriate to sell
those assets. Kalan Securities is also working with assets belonging to other Icelandic banks trying to
assemble portfolios that can be sold to investors.

The Daily operations have been focused on how to improve the operations of Icebank. The operational costs
of Icebank are reported in chapter six. The focus has been set on downsizing all operational costs by
renegotiating with service suppliers as well as viewing new possibilities in the operations. The possibility of
outsourcing the whole operations to a third party was examined thoroughly this summer when the Asset
recovery team had reached the milestone of processing all balance sheet items. Three offers from highly
skilled and competitive parties that are specialized within asset management/workout were viewed, domestic
as well as foreign. The joint conclusion of the Resolution Committee and the Winding-up Board was that the
current operational model should not be changed.

    4.2. Treasury and Risk Management

The current Treasury objective is to manage all liquid assets with regards to interest, counterparty and
currency risk. The overall aim is to preserve value and minimise the risk taken with the underlying liquidity
position. Also, the objective is to support the Asset Management in all transactions needed in the
management of the asset portfolio, mostly receiving payments from performing loans. Additionally, the
Treasury is responsible for managing the foreign bond portfolio. It is emphasized that all decisions regarding
sale of assets must be approved beforehand by the Resolution Committee and the Moratorium Appointee.

                                                      6
    -   Treasury has implemented liquidity management guidelines. The Bank’s policy is to maximise
        interest levels in each currency and, at the same time, minimising the risk by holding liquid cash with
        the Central Bank of Iceland and with financial institutions with a minimum credit rating from Moody’s
        of Aa3 or higher. The Bank has some deposits with domestic financial institutions for its day to day
        operation which is not bound by the restrictions above. Total maximum amount deposited with
        domestic financial institutions is limited to ISK500m.

    -   The Bank’s strategy is to broadly match the foreign currency risk of its assets and accepted claims.
        However, the Bank is restricted in the level to which it can match its assets and claims due to the
        currency restrictions. When the claim from the Central Bank of Iceland is settled it could have
        significant impact on the asset/claim foreign currency ratio, and therefore potentially on the Bank’s
        currency balance according to its strategy.

Treasury also manages various other projects such as:

    •   Final settlement of ISDA derivative contracts in cooperation with the Legal Division and an external
        consultant.
    •   Systematic closing of international bank accounts (nostro accounts).
    •   Final settlements with the Savings Banks in cooperation with the Resolution Committee.
    •   Reviewing claims on Icebank originated from the funding part of the Treasury.

The Risk Management is still active within the Resolution Committee framework. The main objective of the
Risk Management function can be categorised as follows.

    •   Maintain active Risk Management Report function This involves keeping up to date the
        comprehensive databases and reports regarding all major risk factors, loan positions, securities,
        internal limits, FX balances etc.
    •   Consulting other committees, e.g. Asset Management Committee, Loans Overdue Committee, Set-
        off and Netting Committee, and on a case-by-case basis in projects lead by the Asset Management.
    •   Responsibility for regular valuation of assets. Valuation is performed every three months on all and
        includes thorough overview of all assets in the asset portfolio in cooperation with Asset Management
        Team and Finance Department.
    •   Various other projects in cooperation with Finance, Legal, Asset Management and Resolution
        Committee in relation to tying up "loose ends“ regarding the "winding down“ process.

    4.3. Legal Division

The Legal Division provides support and legal advice to the Resolution Committee, the Winding-up Board
and other divisions of the Bank as needed. The General Counsel also provides consultant role in two
committees, Asset management Committee, and the Set-off and Netting Committee. The Legal Division
supervises the hiring of outside legal experts, both in Iceland and abroad, and the work they provide, inter
alia, in close cooperation with the Asset Management. The Legal Division provides assistance in historical
analysis on the Bank‘s activities before and after the collapse which involves various requests from
authorities or related to the investigations on the fallen banks. Finally, the Legal Division oversees final
settlement with banks which have terminated bilateral ISDA contracts, in cooperation with external experts
and the Treasury and Risk management, as well as preventing any freezing orders of the Bank’s assets
and/or to facilitate the retrieval of the Bank’s assets.

    4.4. Creditor Management

Creditor Management is responsible for relations with creditors. The division supervises information
distributed to creditors. In addition, it maintains the online information centre for creditors at www.icebank.is,
which is a source where creditors, the media, authorities and other parties can access regular updated
information about the Bank.


                                                        7
    4.5. Internal committees

Three committees have been established with the aim of further strengthening the operations of the Bank.
The committees meet regularly to address current issues which fall under each committee’s scope.

Asset Committee

The Asset Committee’s (former Credit committee) role both comprises credit and investment matters of the
Bank. The Asset Committee meets at least once a week. The Asset Committee includes members of the
Resolution Committee, the Moratorium Appointee and certain employees of the Bank: The General Counsel,
the Head of Finance and Risk management and the Managing Director of the Asset Management. Each
case is presented by a memo prepared by the employees responsible and can range from simple request for
a waiver to a more complex request for a debt restructuring. All drawdown requests or requests for disposal
of assets which the Asset Committee wishes to approve are passed to the Moratorium Appointee for
approval.

Loans Overdue Committee

The Loans Overdue Committee is a sub-committee of the Asset Committee. Its role is to review loans and
claims which are overdue and recommend or initiate action on a case by case basis, in accordance with the
Bank‘s internal rules. The committee, which is comprised of the Head of Finance and Risk management,
Senior Legal Adviser from the Asset Management and a Manager from the Loan administration, provides
monthly update to the Resolution Committee. Prior to all meetings, the committee receives comments and
suggestions from Asset Managers on individual cases. Loans which are overdue are managed in
accordance with internal rules of the Bank.

Set-off and Netting Committee

The Set-off and Netting Committee consists of a member from the Resolution Committee, a member from
the Winding-Up Committee, the General Counsel and the Head of Finance and Risk Management. This
committee’s role is to evaluate Icebank´s claims and claims brought against the Bank, that might be eligible
for a set-off or netting. The participation of the Winding-up Board relates to its role of evaluating all claims
against the Bank.


    4.6. External advisors

The Resolution Committee has hired various external experts for advice on numerous on-going or stand-
alone projects. These advisors are financial advisors, real estate consultants, retail experts, accountants,
auditors and lawyers. This is done to preserve the utmost professional standards and is in line with wishes
from many of the Bank´s largest creditors.




                                                       8
5. Creditor relations
The aim is to update this report regularly and by that provide necessary information to the creditors. The
Resolution Committee also welcomes questions about the Bank´s affairs. All queries should be sent to
creditorcontact@icebank.is.




6. Financial Information

    6.1. Basis of preparation

The financial information in this Creditors´ Report (the “Financial Information”) is subject to the qualifications
and explanations set out in the Disclaimer and in the appendices. The Financial Information provided is
presented in ISK throughout, with values translated at the mid rates published by the Central Bank of Iceland
for 30 September 2010. The source of the liabilities is the accounting records of the Bank adjusted to reflect
changes made during the claim registration process. Liabilities that were a part of the accounting records of
the Bank but no claims were received are eliminated.

There is considerable uncertainty regarding the ultimate realisable value of the Bank's assets. The Financial
Information has been prepared on the basis that the Bank is able to manage the realisation of its assets and
transact its ongoing business having appropriate regard to the interests of all its creditors. Accordingly, the
estimate of value attributed to each asset is dependent on the realisation strategy presently adopted for
assets, which vary between available for sale, manage to sale, or hold to maturity. As such, the estimated
values for certain asset classes represented in the Financial Information are not necessarily intended to
represent prices at which an orderly transaction could take place between market participants as at 30
September 2010. Rather, it is intended to represent the value of assets based on a longer term estimate of
recoverable value.

Set-off included in the financial information 30 September 2010 represents estimate of the effect of both
legal netting and creditor offset based on an interpretation of the potential rights of Icebank and its
counterparties. The largest creditor of Icebank is the Central Bank of Iceland and the Icelandic Ministry of
Finance. In the Financial Information Icebank has valued the underlying collaterals based on quoted market
prices as at 30 September 2010 and set off against the liability to the Central Bank of Iceland. The Central
Bank of Iceland has claimed penalty interests on their claim from October 2008 to 3 November 2009.

The Bank has produced Financial Statements for the period 1 January to 30 September 2010.

Reference is made to further financial disclaimers in the appendices of the Report.




                                                        9
    6.2. Estimated value of assets and computation of liabilities

Assets
ISKm                                            30.9.2010 Set-off                     30.9.2010         30.6.2010
Cash and cash equivalents                             19.337                              19.337           19.368
Loans to credit institutions                          29.474            -28.587             887              887
Loans and advances                                    17.632                              17.632           18.708
Old bank securities                                   25.435            -25.435               0                0
Securities                                            24.986            -21.755            3.565            3.595
Other assets                                            547                                 547              547
Assets totals                                        117.411            -75.777           41.968           43.105


Liabilities
                                                Claim
ISKM                                         registration             22.4.2009 Set-off                 22.4.2009
Central bank                                       225.426              196.560         -47.190           149.370
Loans from credit institutions                      49.568               28.527         -27.144             1.383
Deposits                                             6.596                  388                               388
Borrowings                                          82.563               82.614          -1.443            81.171
Subordinated loans                                   1.658                1.605                             1.605
Other debt                                           3.277                  206                               206
Liabilities total                                  369.088              309.900         -75.777           234.123

-    Total decrease in assets amounts to ISK 1,1bn. Strengthening of the ISK has decreased foreign assets
     estimated value by approximately ISK1,4bn. Reversal of impairment amounts to ISK 0,2bn and other
     changes are increase of ISK 0,1bn.
-    Decrease in Loans and advances are driven by movements in FX and repayments.
-    The total amount of claims lodged is unlikely to reflect Icebank's actual liabilities, since this is the
     maximum amount conceivably claimed by creditors.
-    Disclaimers concerning Financial information can be seen in the Appendix.


    6.3. Cash and cash equivalents

Cash and balances                        30.9.2010                                         30.6.2010
ISKm                              ISK           FX              Total              ISK             FX                Total

Central bank                     6.703       2.241              8.944             5.980            2.198             8.178
International credit
institutions                       109      10.284             10.393               279        10.911               11.190
                Total            6.812      12.525             19.337             6.259        13.109               19.368

-    Cash is approx. 46% of the Bank’s net assets after set-off.
-    Currency breakdown of Cash and cash balances is: ISK 36%, EUR 30%, USD 20% and other 14%.
-    ISK has strengthened against USD in Q3 by 11%, resulting in approx ISK 0,5bn decrease in foreign
     currency cash balances.
-    Liquidity can be split in deposits in Iceland, dominantly with the Central Bank of Iceland and deposits
     with foreign credit institutions with Moody’s Aa3 rating or higher.




                                                                 10
       6.4. Loans to credit institutions

   Loans to credit institutions                                      30.9.2010     30.6.2010
   ISKm                                        Orig. Currency


   Frozen assets                               EUR                       1.422          1.443
   Domestic credit institutions                ISK                       1.342          1.293
   International credit institutions           USD                         412            461
   Icelandic banks in Moratorium               ISK                      26.298         26.298
                                                                        29.474         29.495
   Set-off                                                             -28.587        -28.608
                                               Total                       887            887

   -      Frozen assets are Nostro accounts and securities payments seized by foreign credit institutions. There
          is a legal uncertainty on the entitlement of the foreign credit institution to net those assets against
          Icebank´s liabilities. Icebank has been evaluating whether to initiate legal actions against those credit
          institutions or whether these amounts will be withheld when Icebank distributes funds to its creditors.
   -      Domestic credit institutions are mainly claims on Icelandic savings banks.
   -      Changes in International credit institutions are due to increased provisions.
   -      Based on an interpretation of the potential rights of Icebank and its counterparties, Icebank has
          declared netting against Glitnir, Kaupthing and Landsbanki. Netting of asset with liabilities with BYR is
          also included.


       6.5. Loans and advances

   -      The estimated values of Loans and advances have been derived after consideration of the Bank’s
          present asset realisation strategy. The measurement methodology is designed on the assumption that
          the loan portfolio will not be subject to forced market sales in the near-term and loans will be held to
          maturity or worked out over the relevant timeframe. As such, the estimated values represented in the
          Financial Information are not necessarily intended to represent prices at which an orderly transaction
          could take place between market participants as at 30 September 2010. Rather, such values are
          intended to represent the value of assets based on a longer term estimate of recoverable values.
   -      The Bank has segregated Loans and advances in accordance to the loan status. Within each category
          the portfolio was subject to a review of borrower performance, collateral quality and subordination levels
          as well as a review of more general information about the economic outlook of each underlying sector.

Loans and advances                                   30.9.2010                               30.6.2010
                                           Origin of risk                           Origin of risk
ISKm                                     Domestic   International       Total    Dom estic   International      Total


Recorded balance sheet amount              21.158           17.714    38.872       22.436            18.507    40.943
Impairment                                -12.475           -8.765   -21.240      -13.166            -9.070   -22.235
                                            8.683            8.950    17.632        9.270             9.437    18.708

Performing                                  3.753            7.029    10.782        4.850             7.185   12.034
Restructuring                               4.795            1.288     6.084        4.280             1.550    5.829
Liquidation                                   135              632       767          141               703      844
                                            8.683            8.950    17.632        9.270             9.437   18.708
  -       Provisions changes between quarters are marginal.
  -       Impairments on the loan portfolio are approximately 55%.
  -       61% of the loan portfolio after impairment is performing.


                                                               11
Movements 30.06.2010-30.09.2010

ISKm
Change in valuation                                 189
Repayments                                         -590
Moved to Securities                                   0
FX movements                                       -675
                                                 -1.076


-      Movements during the period from 30.06.2010 to 30.09.2010 are mainly due to payments of loans (ISK
       590m), and FX movements (ISK 675m).

                                                            30.9.2010                                        30.6.2010
ISKm                                           Domestic    International            Total       Dom estic    International    Total
Performing 1                                      1.675           4.696             6.371           2.429           4.784     7.214
Performing 2                                      2.078           2.333             4.411           2.420           2.400     4.821
Restructuring 1                                   2.039             468             2.507           1.553             676     2.229
Restructuring 2                                   2.756             821             3.577           2.726             874     3.600
Liquidation                                         135             632               767             141             703       844
                                                  8.683           8.950            17.633           9.270           9.437    18.708



Risk weighting     Indicative categorisation factors
Performing 1       - Performing both on principal and interest payments. No breach of convenants.
Performing 2       - Loans conventants have been modified.
Restructuring 1    - Loans subject to restructuring as consequence of not meeting interest and debt repayments.
Restructuring 2    - Loans that have been resturctured. When appropriate loans will be transrferred to Performing.
Liquidation        - Companies in bankruptcy proceedings. Status not likely to change within 2-3 years.

FX breakdown
                               30.9.2010                                           30.6.2010
ISKm               Domestic          Intern.              Total        Dom estic        Intern.             Total


EUR                      949         3.568            4.516               1.179             3.527        4.706
GBP                       83         3.645            3.729                  91             3.857        3.949
ISK                    3.327           180            3.506               3.298               131        3.429
USD                      238         1.323            1.561                 321             1.482        1.803
CHF                    2.186            23            2.209               2.293                23        2.316
JPY                    1.900            31            1.931               2.039                33        2.072
Other                      0           180              180                  48               385          433
                       8.683         8.950           17.633               9.270             9.437       18.708
-      81% of the loan portfolio is in foreign currency.
-      Approximately ISK6bn of loans to domestic counterparties are denominated in foreign currency
-      On 16 June 2010 the Supreme Court of Iceland deemed certain loan contracts in foreign currencies
       illegal. A ruling on how to re-calculate certain loan contracts was made by the Supreme Court in
       September 2010.
-      If all foreign domestic loans of Icebank would be deemed illegal the worst case effect would lower the
       carrying value of the loan portfolio by approximately ISK 1bn. A more probable scenario in the
       Resolution Committee´s view would lead to the possibility of the carrying value of the loan portfolio to
       decrease by approximately 150 ISKm.



                                                                  12
Loan concentration by Carrying value (per loan)
ISKm                              Carrying   Carrying pct
Top 10                              5.290            30%
Top 20                              7.553            43%
Top 30                              9.304            53%
Top 50                             11.778            67%
Top 100                            15.278            87%
Top 200                            17.299            98%
All Loans                          17.633           100%

-      Top 50 loans by carrying value count for 67% of the total loan portfolio.
-      Top 100 loans by carrying value count for over 87% of the total loan portfolio.

Loan concentration by Carrying value (per lender)
ISKm                          Carrying         Carrying pct
Top 10                             7.144              41%
Top 20                            11.392              65%
Top 30                            13.859              79%
Top 50                            16.245              92%
Top 100                           17.612             100%
All Lenders                       17.632             100%

Top 50 borrowers account for more than 92% of the total carrying value of the loan portfolio.


Sector                                             30.9.2010                   30.6.2010
ISKm                                         Total value        value    Total value        value

International LBO                                 3.464         2.945        3.683          3.149
Other international                               8.555         4.498        8.760          4.652
Domestic other                                   10.462         3.737       11.021          3.817
International real estate                         4.372         1.507        4.686          1.636
Domestic fisheries                                2.516         1.882        2.628          1.939
Domestic real estate dev.                         6.429         1.557        6.540          1.589
Domestic collat. by real estate                   1.647         1.433        2.140          1.849
Individuals                                         104             73          107           77
LBO - Frozen by Landsbanki Íslands                1.324             0        1.378              0
                                                 38.872        17.633       40.943         18.708

   - Following are the details of each sector:
International LBO
Loans to international LBO syndications. In all cases Icebank is holding a minority stake. Icebank has
assigned external advisors to manage this portfolio.
Other international
Loans to Icelandic holdings with underlying international operational assets. Majority of them have gone
through restructuring and are currently being monitored by external advisors.
Domestic other
Loans to Icelandic holdings. Mostly Icelandic LBO projects. Given the economical changes in Iceland and
the poor operational performance as well as underlying collateral this portfolio is not performing as
expected.

                                                               13
International real estate
Real estate development projects in the United Kingdom and United States. Poor level of collateral is
leading to the poor performance of this portfolio. In majority of cases Icebank is holding a mezzanine part.
Domestic fisheries
Good level of underlying collateral (i.e. fishing quota and vessels). Performance reflects a good recovery
rate of this portfolio. The majority of the loans are in foreign currency.
Domestic real estate development
Mostly Icelandic development projects. Given the current economical environment in Iceland, numbers of
these projects have been postponed. The projects are currently being restructured so they can be held until
the domestic real estate market regains momentum.
Domestic collateralised by real estate
Funding to Icelandic cash flow real estates. The underlying assets, location and vacancy rate are reflecting
the recovery for this portfolio.
Individuals
This is a very small portfolio as this type of funding was not core operation for Icebank.
LBO – Frozen by Landsbanki Íslands
Group of foreign LBO funding, where Icebank was participating in syndications, that were lead by
Landsbanki Íslands which is now in a moratorium and a winding-up proceedings. Icebank has lodged claims
towards Landsbanki Íslands for these loans and the recovery is likely to be decided by courts. For
precaution measures, this group has been fully provisioned.


    6.6. Old bank securities

    Old bank securities are itemised in section 6.9.


    6.7. Securities

Securities
ISKm                    30.9.2010      30.6.2010

Type of security
Icelandic sovereign        21.539         21.874
Corporate bonds             1.199          1.221
International bonds           219            223
Equities                    2.029          2.033
                           24.986         25.351

Unpledged                   3.565          3.595


-   Icelandic sovereign are pledged to the Central Bank of Iceland. Increase is due to increase in market
    value.
-   Equities consist of both listed and un-listed.
-   Key assets are: A4 skrifstofa og skóli ehf (100%), Arev N1 Slhf. (40,00%), Stoðir (1,25%), Saga Capital
    (10,73%), Spron Factoring (5%), Bláa Lónið hf. (3,37%), Fasteignafélag Suðurnesja ehf. (40%),
    Fasteignafélagið Teigur (Háskólavellir) (8,68%), FSP Holding ehf. (10,7%), Icelandair Group hf. (2,4%),
    Officeday Estonia OU (100%), Officeday Latvia SIA (100%), S. Helgason ehf. (100%), Whistles Holding
    Ltd. (22,78%), Teris hf. (5,31%), Margt Smátt ehf. (65%), Skemmuvegur 34a ehf. (100%), Hagalind ehf.
    (100%), Lindberg ehf. (100%) and Fasteignafélag spb ehf. (100%)

                                                       14
     6.8. Other assets

      Other assets consist mostly of property and fixed assets, the Banks headquarters at Rauðarárstígur 27
      in Reykjavík is the single largest asset.


     6.9. Liabilities

Following is a reconciliation of the claim registry and the book value of liabilities.


                                                                    Estimated
  Liabilities                                      Claim            liabilities
  ISKm                                             registration     22.4.2009
  Central Bank                                         225.426          196.560
  Loans from credit institutions                        49.568           28.527
  Deposits                                                6.596              388
  Borrowings                                            82.563           82.614
  Subordinated loans                                      1.658            1.605
  Other debt                                              3.277              206
  Liabilities and equity total                         369.088          309.900
  Set-off                                                               -75.443

  Liabilities and equity total                         369.088         234.4573


 -    The source of liabilities is the accounting records of the Bank adjusted to reflect changes made during
      the claim registration process. Liabilities are eliminated from the accounting records if no claim is
      received for the relevant liability.
 -    Set-off of Book value of liabilities is estimated to be ISK 75,4bn.

      Liabilities

      ISKm                         Article         Declared       Rejected       Withdraw n     Recognised


      Third party assets                     109         20.927         19.710          1.217             0
      Approved costs                         110            182            119              0            63
      Secured                                111        225.429        206.604              0        18.825
      Priority                               112          3.013          2.734            193            85
      Unsecured                              113        117.373         33.381             11        83.982
      Deffered                               114          2.164            707             22         1.674
                           Total                        369.088        263.255          1.443       104.629


 -    The Winding-up Board has made decision on all claims received. The Bank´s ultimate liabilities are
      however not yet known since there are several decisions of the Winding-up Board being disputed.
      Therefore the Bank’s liabilities might be different than set out here above depending on decisions in
      meetings on matters in dispute and the outcome of disputes referred to the courts.




                                                                  15
            6.10.      Central Bank and Ministry of Finance

        -   The Central Bank of Iceland is the largest creditor of the Bank. Following is an itemisation of the liability
            according to the general ledger of the Bank and the claim received from the Central Bank.

Claim from the Central Bank of Iceland
ISKm

Claim I                               Nominal     Pen.int.      Total       Winding-up Board decision
Loans against sec.(due 22.10.
2008)                                  131.237      28.981    160.219       Rejected
Overnight loan due 31.12.2008           10.556       1.956     12.512       Rejected
Securities lending due 17.10.2009       23.914       3.557     27.471       ISK 4.935 in acc. with art. 111 (Collateral)
Legal claim fee                          1.003           0      1.003       ISK 0,25 in acc. with art. 111 (Collateral)
Total                                  166.710      34.494    201.204       ISK 4.935 (art. 111)

Claim II                              Nominal     Pen.int.      Total       Winding-up Board decision
Loans against sec.(due 25.3.2009)      13.273        617       13.890       ISK 13.890 in acc. with art. 111 (Collateral)
                                                                            ISK 2,5 as a general claim in acc. with art.
Other claims                                 16          1         17       113
Legal claim fee                             278          0        278       ISK 0,25 in acc. with art. 111 (Collateral)
Total                                    13.568        618     14.185       ISK 13.890 (art. 111) & ISK 2,5 (art. 113)

Claim III                             Nominal     Pen.int.      Total       Winding-up Board decision
Transfer of deposits to CBI             9.537        499       10.036       Rejected

Total                                  189.815      35.611    225.426       ISK 18.825 (art. 111) & ISK 2,5 (art. 113)


        Bonds pledged at the Central Bank of Iceland
                                                                    Nominal
        ISKm                                                          value     Netting    Pledged

        Glitnir                                                       55.245          0     55.245
        Kaupthing                                                     40.000      4.350     35.650
        Landsbanki                                                    65.000     10.775     54.225
                                                     Total           160.245     15.125    145.120

        Estimated value of Glitnir, Kaupthing and Landsbanki bonds                           25.435
        Sovereign bonds                                                                      21.421
                                                                                             46.856


        -   Set off shown in the below table are amounts that have been set-off against claims on Icebank from
            those banks. Remaining balances are pledged to the Central Bank of Iceland and will be netted against
            the Banks liability to the Central Bank of Iceland.




                                                              16
    6.11.         Projected Cash flow for 2010-2012

Projected cash flow            Carrying

ISKm                              value    Q4 2010     2011      2012    Later


Individuals                         73          3       24        13        33
International real estate        1.507        483                350       674
International LBO                2.945        647      430     1.743       125
Other international              4.498        376      938       100     3.084
Financial Institutions             887        140      140       140       467
Equities                         2.024                                   2.024
Sovereign bonds                    106                                     106
Domestic real estate dev.        1.557                                   1.557
Dom. collat. by real estate      1.433         25        90              1.318
Domestic other                   3.737        140       630      150     2.817
Domestic fisheries               1.882         67       185      186     1.444
International Bonds                219         10        40       40       129
Corporate Bonds                  1.216                1.050                166
Other assets                       547                                     547
                                22.631      1.891     3.527    2.722    14.491

Accumulated                     19.337     21.228    24.755   27.477    41.968




-      The cash flow is based on recovery of principals excluding interest payments.
-      Clear indication on incoming cash for Q4 can be seen in the projected cash flow table.
-      It is estimated from the projected cash flow that 51% of the recoverable assets will be materialised
       before year end 2010 and more than 65% before year end 2012.


    6.12.         Foreign currency ratio

-      Following table shows the split between domestic and foreign denominated assets.

Assets                                               Foreign curr.                 Foreign curr.
ISKm                                       30.9.2010 ratio               30.6.2010 ratio
Cash and cash equivalents                     19.337          64%           19.368          68%
Loans to credit institutions                     887          46%              887          52%
Loans and advances                            17.632          81%           18.708          82%
Old bank securities                                0           0%                0           0%
Securities                                     3.565           8%            3.595           9%
Other assets                                     547           0%              547           0%
Assets totals                                 41.968                        43.105

-      The Bank’s strategy is to broadly match the foreign currency risk of its assets and accepted claims.
       However, the Bank is restricted in the level to which it can match its assets and claims due to the
       currency restrictions.
-      65,4% of the Bank´s assets, including cash and cash equivalents, are held in non-ISK currencies as of
       30.9.2010.
-      97% of the current accepted claims are from non-Icelandic creditors, excluding the accepted proportion
       of the Central Bank´s claim as the underlying collateral covers the claim.


                                                      17
-      The Central Bank of Iceland claim, which is still under dispute, could potentially have a significant
       impact on the asset/claim foreign currency ratio, and therefore also on the balance between domestic
       and foreign currency according to the Bank’s strategy.

    6.13.         Operational costs

    Below are estimated operational costs for 2010 with Q1-Q3 actuals.

Operational Costs
                                          Actual amount                           Revised
ISKm                                             Q1-Q3 Q1-Q3 budget Difference Q4 Budget


Staff costs                                        231         222           -9       72
Resolution Committee and Winding-up Board          101          69         -32        28
External advisors                                  167         122         -46        78
  Domestic                                          91          51        -40         51
  International                                     76          71          -6        26
IT Costs                                           168          89         -79        34
Other Costs                                          7          77          70         3
                                                   674         578         -96       215

-      The above table sets out the operating costs of the Bank (i.e. for the activities of both the Resolution
       Committee and the Winding-up Board).
-      Key trends include:
         o Staff costs increased due to statutory pay rises and settlements of terminated employee
             contracts. Total number of employees is 15 compared to 31 at the beginning of the year.
         o External advisors’ costs increased in 2010 as a result of the high volume of work associated with
             the winding up proceedings of the Bank.




                                                          18
7. The Claiming Process
    7.1. The Winding-up Board

According to Act no. 44/2009 amending the Act no. 161/2002 on Financial Undertakings, the Bank entered
into a Winding-up procedure on the 22 April 2009. In accordance with the provisions of Act no. 44/2009, the
District Court of Reykjavik appointed a Winding-up Board for the Bank. The Winding-up Board comprises of
three attorneys of the Supreme Court and one of them being the Bank’s Moratorium Appointee. The
Winding-up Board does not hold any power over the Resolution Committee or vice-versa. Both are however
committed to work together in the best interests of the Bank and its creditors.

The role of the Winding-up Board is to, among other things, call upon any creditors who have a claim against
the Bank and take a position regarding their recognition. The Winding-up Board calls for claims to be made
and sets the deadline for filing claims, which can be no longer than six months, counting from the day when a
call for claims is announced. The Winding-up Board makes a register of filed claims and decides how they
are ranked in the order of priority of payment of claims. It also deals with the payment of claims following the
first creditors’ meeting, which will be held upon expiry of the time limit for the filing of claims.

As discussed in paragraph 3.3. of this Report, relating to the main tasks of the Resolution Committee today,
the Resolution Committee engaged PwC to investigate the Bank's decisions in the months before the
collapse of the Bank.

The Report has been sent to the FME. The Special Prosecutor's office and a Parliamentary Investigation
Committee will also be granted access to the report. In addition to the aforementioned report, the Resolution
Committee and its employees have worked extensively to gather information which will be used in the
preparation of the Winding-up Board's rescission action – which is the equivalent of proceedings relating to
transactions at an undervalue or preferences.

The Bank's Winding-up Board has engaged PwC to investigate further and in more details measures taken
by the Bank before it was granted a Moratorium, focusing particularly on the possible rescission, on the basis
of the Icelandic Bankruptcy Act, of actions taken by a bankrupt party.


    7.2. The claim process and summary of lodged claims

The deadline for submitting claims against Icebank was 3 November 2009. This time limit was notified to all
know creditors of the bank and published in the local newspapers and the Icelandic Legal Gazette
(Lögbirtingablaðið).

Claims, which are not filed within the abovementioned timeframe, will be regarded as cancelled with respect
to the Bank, unless the requirements for an exception are fulfilled (cf. art. 118 of the Bankruptcy Act).

At the creditor meeting on the 27 November 2009 the Winding-up Board presented the first version of the list
of claims. The purpose of the meeting was to discuss list of claims and the decisions of the Winding-up
Board and give the creditors the opportunity to oppose these decisions. A follow up meeting was held on the
   st
21 of January 2010. On these meetings it was introduced that a total of 245 claims were lodged against the
Bank, which were itemized as follows (all amounts are in ISK):

Total amount   of claims lodged pursuant to Art. 109:        ISK 20.926.645.765
Total amount   of claims lodged pursuant to Art. 110:        ISK 181.986.602
Total amount   of claims lodged pursuant to Art. 111:        ISK 225.428.879.941
Total amount   of claims lodged pursuant to Art. 112:        ISK 3.012.835.986

                                                        19
Total amount of claims lodged pursuant to Art. 113:        ISK 117.310.970.774
Total amount of claims lodged pursuant to Art. 114:        ISK 2.163.886.824
Total amount of claims lodged:                             ISK 369.087.605.893


The total amount of claims lodged is ISK 369,1 billion, at the ISK exchange rates of the Central Bank of
Iceland on 22 April 2009. The aggregate amount of claims exceeds the Bank's liabilities as recognised in its
balance sheet of ISK 309,9 billion.

According to the claim list issued at the creditor meeting on the 7 September 2010 the Winding-up Board had
accepted claims at the amount of 104,6 billion (thereof 1,7 billion as deferred), claims at the amount of 264,5
billion are being handled in a mediate and dispute process, most evidently the claims of the Central Bank of
Iceland, the Icelandic Ministry of Finance and from the old banks, at the amount of 239,3 billion ISK.

The Winding-up Board has taken positions to all the lodged claims.

A follow-up creditors’ meeting to continue discussion of lodged claims was held on 7 September 2010. Next
meeting with creditors will be held in March 2011.

It is difficult to gauge how long it will take to conclude the validity of all the lodged claims due to the
complexity of many of the disputed claims.


    7.3. Distribution to creditors

Winding-up Board is authorized to pay the recognized claims in one lump sum or several payments and in
part or in whole after the first creditors’ meeting. If this is done, care has to be taken to ensure that the
Bank’s assets are sufficient to at least equally cover all the other claims, which are included in the same rank
and which have not been rejected in the winding-up process.

The Winding-up Board shall also ensure that all creditors with recognized claims in the same rank are paid at
the same time, although it is possible to deviate from this with the approval of those who do not get paid or
by a decision made by the Winding-up Board if a creditor offers to relinquish a claim in exchange for a partial
payment, which is deemed to be a proportionally lower amount than that which other claimants in the same
rank would ultimately receive, taking into consideration, among other things, whether the claim bears interest
until payment.

The main underlying principle of the Bankruptcy Act is the principle of equality of creditors. The Winding-up
Board shall, however, also have to consider certain exceptions to that principle, such as the order of priority
of payment of claims.

Due to uncertainty regarding the amount of recognized claims the appropriate time to pay partially the
recognized claims has not yet arrived. It is foreseeable that this permission of the Winding-up Board will not
be used until the validity of the large majority of the lodged claims has have been concluded.


    7.4. Objections and dispute resolving

If disputes on objections raised by creditors cannot be resolved at a separate meeting, the dispute will be
referred to the Reykjavík District Court in accordance with the rules of the Bankruptcy Act. Handling of
disputes shall be as provided for in Chapter XXIV of the Bankruptcy Act and legal provisions on handling of
civil cases as appropriate.

There are three parties to such disputes: the creditor against whom an objection is raised; creditor(s) who
have raised the objection; and the Winding-Up Board. Parties will be given the opportunity of submitting a


                                                      20
summary to the court, together with supporting evidence, but the time limits are generally brief. Arguments
are generally presented orally in the District Court.

Rulings by the District Court may be appealed to the Supreme Court of Iceland. Handling of appeals by the
Supreme Court is generally in writing unless otherwise decided by the Court

The Winding-up Board has received 55 objections against its decisions. Some disputes have already been
solved and others are being handled in the dispute resolution process. It is estimated that at least 20
disputed claims will be referred to the district court. The district court proceedings might take up to 18
months.

At this moment 13 disputed claims have been referred to the district court. The district court has ruled in two
of these cases and both in favour of the Bank.

The verdict of the district court may be appealed to the Supreme Court, which will prolong the court
proceedings.

Court resolution of a dispute comprises a final outcome on the amount of claim and its priority and will serve
as the basis for the disbursement.



    7.5. Other role of the Winding-up Board

The Winding-up Board may not make any decisions regarding the sale of assets for the payment of claims.
It is only the Resolution Committee that may make decisions regarding the sale of the Bank’s assets, in
accordance with Act no. 161/2002 on Financial Undertakings and subsequent amendments in Act no.
44/2009.

The Winding-up Board can also challenge and claim rescission of actions of the Bank in accordance with the
rules on rescission in the Bankruptcy Act. In simple terms, the Winding-up Board can rescind certain unusual
                                                                            th
actions of the Bank which took place up to two years prior to December 15 , 2008 and can claim damages
or repayment from parties benefiting from such actions. The Winding-up Board has already taken steps in
investigating actions which may be subject to rescission.

The Winding-up Board shall also oversee possible composition negotiations, following an evaluation of the
Resolution Committee as to whether the Bank has sufficient assets to meet its obligations. This entails,
among other things, the Winding-up Board having to prepare a composition proposal, submitting it to a
creditors’ meeting and obtaining the creditors’ approval of it and having the composition agreement
confirmed by the District Court of Reykjavik if it has been approved by the required number of creditors. If
the composition proposal is approved by the creditors and it is confirmed by the District Court of Reykjavik,
the Winding-up Board must ensure that the agreement is performed.




                                                      21
8. Moratorium
    8.1. Introduction

On 23 March 2009 the Bank filed an application with the District Court of Reykjavik, pursuant to Bankruptcy
Act to stay creditor actions in order to facilitate the financial reorganization of the Bank. On the same date
the Bank was first granted a Moratorium on payments until 15 June 2009.

The Moratorium Appointee convened a meeting of the Bank's creditors on 9 June, 2009 and sought the
opinion of the attendees regarding the Bank's position.

Matters were not voted on nor were any formal decisions made as such actions are not provided for under
the Bankruptcy Act. The meeting was thus held for informational purposes for creditors in light of the court
hearing of 15 June 2009 at which a petition was filed by the Moratorium Appointee on behalf of the Bank for
an extension to the Moratorium. On 18 June 2009 the District Court of Reykjavík agreed to the request for
the extension of the Moratorium until 15 December, 2009. Another creditor meeting was held on 27 of
November 2009 where no creditor objected to the Bank’s intention of seeking further extension of the
Moratorium. On 16 December 2009 the District court of Reykjavík agreed to that request and extended the
Moratorium until 15 September 2010. On the 15 September 2010 the District court of Reykjavik agreed to
extend the Moratorium until 15 March 2011 when the bank enters into a general winding-up proceedings.

The Moratorium is a procedure under Icelandic law which has provided the Bank with appropriate protection
from legal actions, such as the freezing of assets, and ensures that it is able to maintain a banking license
sufficient to support its assets.

The maximum time period for the Moratorium is 24 months. According to a new Act no. 44/2009 amending
Act no. 161/2002 on Financial Undertakings the Moratorium can end in three ways; i) winding-up
proceedings, ii) an insolvent liquidation or iii) a scheme of arrangement between the Bank and its creditors.

For further details of these options see discussion in section 8.6.

    8.2. Rationale for the Moratorium

One of the main tasks of the Resolution Committee and its employees has been to protect assets and
safeguard the interests of creditors. The Bank's Resolution Committee believes that the interests of the
creditors are best served by restructuring the Bank's operations and delaying the sale of assets until the
market conditions improve, as previously mentioned.

The Resolution Committee is of the opinion that a sale of assets is usually a poor option under the current
market circumstances, since, as a result of the economic downturn and difficulties affecting most western
economies, there are few meaningful potential buyers. Although some of the Bank´s assets value has been
improving for the last few months it is still close to historical all-time low and access to credit for potential
buyers is restricted, to give but a few reasons.

The Resolution Committee believes that the interests of the creditors are better served if the Bank's assets
are held to maturity or sold over a longer period. The creditors and the experts consulted by the Resolution
Committee are in agreement on this approach. This should mean that creditors recover a higher proportion
of the claims than they would if assets were sold under the present circumstances.

Applying for the Moratorium was, in the opinion of the Resolution Committee, a necessary step to ensure
that all creditors of the Bank are treated fairly and appropriately in accordance with Icelandic law through the
protection of the Bank’s assets.

                                                       22
The Resolution Committee is committed to protecting the interests of creditors by preventing the provisional
attachment or freezing of assets. The Moratorium has provided the Bank with appropriate protection from
legal actions, such as the freezing of assets, and ensured that it maintains a banking license sufficient to
support its assets. In the European Economic Area the Bank can seek recognition of the Moratorium on a
case-by-case basis on grounds of the EU Winding-up Directive No. 2001/24/EC.

The Moratorium has and will continue to provide the “breathing space” needed for the Resolution Committee
to concentrate on the tasks at hand within the Bank so that it can achieve its objectives to protect creditors'
interests, maximize the recovery rate of claims and ensure equal treatment of creditors.

While protecting the Bank from certain actions by creditors, restrictions are also placed on the Bank in
regards to its authorization to dispose of assets, to discharge liabilities and to assume new liabilities.

Upon conclusion of the Moratorium the Bank will automatically enter into winding-up proceedings and it is the
view of the Moratorium Appointee and the Resolution committee that the bank will enjoy the same protection
in winding-up process as it does in Moratorium.

As a precaution however, the Resolution Committee has decided to request an extension of Moratorium
throughout the maximum period in order to safeguard the interests of the Bank.


    8.3. The Moratorium Appointee

As discussed above, Tómas Jónsson, Attorney to the Supreme Court of Iceland and a partner of the
Reykjavik Law Firm, was appointed as the Moratorium Appointee. He has been a Supreme Court Attorney
since 1997 and his areas of expertise include bankruptcy law and company law.

The Moratorium Appointee has the power to oversee the distribution of assets of the Bank and the payment
of claims during the Moratorium. He will work with the Resolution Committee, which will continue to wield the
powers of the Board of Directors of Icebank and will as such continue to have decision making powers in
accordance with Icelandic law. His aims are consistent with those of the Resolution Committee, namely to
preserve assets and to optimize recoveries for the creditor body. He assists the Bank in its efforts to
restructure its finances and to decide how best to achieve any reorganization.

    8.4. Timeline for the Moratorium

According to Act No. 161/2002 on Financial Undertakings, the District Court can currently not authorize a
Moratorium lasting longer than a total of 24 months from the court hearing of 23 March 2009 and the
Moratorium can only be extended for a maximum of 9 months each time an extension is granted. The Bank
has been granted extension until 15 March, 2010 when the Bank´s status will no longer be described as in
moratorium but rather as being in a general winding-up proceedings.

    8.5. Analysis of the Moratorium legislation

The provisions governing a moratorium have been amended by Act no. 44/2009 which came into force on 22
April 2009. The Bank remains under the direction of the Resolution Committee which is responsible for the
daily operations of the Bank in accordance with Act no. 44/2009 but remains also under the supervision of
the Moratorium Supervisor. The Resolution Committee holds the powers of the board of directors as well the
powers of the Bank's shareholders' meeting according to new provisions. The Bank remains subject to Act
No. 161/2002 on Financial Undertakings and the general supervision of the FME.

The District Court of Reykjavik however has exclusive jurisdiction over the enforcement of the Moratorium, its
extension and termination.



                                                      23
The provisions of Act no. 44/2009 stipulate that the Resolution Committee shall manage the interests of the
Bank according to the same rules as a trustee would be subject to according to the Bankruptcy Act, although
with some exceptions. The exceptions mainly concern the objective of the Resolution Committee to
maximize the value of the Bank's assets which includes waiting for the Bank's outstanding claims to mature,
instead of realizing them immediately. To this end, the Resolution Committee is allowed to disregard a
decision of a creditors' meeting if the Resolution Committee deems such a decision contrary to its objective.
This means that the Resolution Committee has ample time to safeguard the interests of the Bank and its
creditors.

The reference to provisions governing the actions of a trustee under the Bankruptcy Act entail that the
Resolution Committee has the capacity to manage the Bank's assets and it alone can dispose of its assets
and answer for its obligations. The Resolution Committee acts for the Bank in court and executes
agreements on behalf of the Bank as before. The Resolution Committee shall make sure that all assets are
disposed of in the most efficient manner possible and shall enforce all claims owned by the Bank. The
Resolution Committee furthermore takes such actions as necessary to prevent damage to the Bank.

The Resolution Committee can convene creditors' meetings as appropriate to explain measures taken in
regard to the Bank's interests. In such meetings suggestions or decisions may be sought from creditors in
regard to measures which have yet to be taken and suggestions may be sought on matters regarding the
management of the Bank's interests. The creditors' meeting cannot affect measures which have already
been taken by the Resolution Committee, only such measures which have yet to be realised. The
Resolution Committee is allowed to consult with individual creditors in matters concerning the relevant
creditor's interests.

A creditor´s petition for the Bank to enter insolvent liquidation cannot be filed nor can its assets become
subject to an attachment, an execution or a forced sale while the Moratorium remains in effect. No law suit
can be commenced against the Bank while the Moratorium is in effect unless such action is specifically
provided for by law or relates to criminal proceedings.

    8.6. Potential closing of the moratorium process

As explained in more details in section 7 the bank entered into a Winding-up process on the 22 April 2009.
All the rules governing the Moratorium, and which are mentioned above, will continue to apply in the
Winding-up procedure. The Resolution Committee continues to operate under a Winding-up process with
the same aim as before to maximize the value of assets. That includes waiting for the maturity of assets
rather than disposing of them immediately.

According to Act no. 44/2009, there are three possibilities to conclude the Moratorium process of the bank:.

    i)         Winding-up procedure (see section 7)
    ii)        Scheme of Arrangement (see section 9)
    iii)       Insolvent liquidation

           If the Moratorium period is not extended on 15 September, 2010 and the Bank is forced into
           insolvent liquidation, the Moratorium Appointee and the Resolution Committee firmly believe that
           further value will be lost.

           In a state of insolvency liquidation, the management of the assets of the Bank would vest in a
           liquidator as a trustee in bankruptcy. Claims against a bankruptcy estate denominated in foreign
           currency shall be converted into the Icelandic currency at the selling rate posted on the day when the
           bankruptcy order was issued and it is very likely that a trustee in bankruptcy will convert all liquid
           assets into the Icelandic currency in the event of insolvency in order to transfer the currency risk from
           the estate to the Bank's creditors. Such a measure would be understandable from the point of view
           of the trustee of the estate, but it is unlikely to be in the interests of the Bank's creditors.




                                                          24
According to the Bankruptcy Act, the trustee in bankruptcy shall ensure that the liquidation is
concluded without undue delay. As stated above the Resolution Committee and the Moratorium
Appointee believe that the interests of the creditors are best served by restructuring the Bank's
operations and delaying the sale of assets until the market conditions improve. It is therefore clear
that the obligations of the trustee in bankruptcy according to the relevant law may prevent this from
happening. In addition, a bank in insolvent liquidation would forfeit its banking license, face forced
asset sales and have less flexibility to support its assets and prevent freezing of its assets. It is likely
that performing loans to customers as well as listed and unlisted assets would be sold at a
substantial discount.

It is the opinion of the Moratorium Appointee and the Resolution Committee that this option would
minimize debt recovery for the creditors of the Bank and it would not be in their best interests.




                                                25
9. Icelandic composition legislation overview
    9.1. Introduction

Composition (scheme of arrangement) has the same objective as a Moratorium: to react to financial
difficulties of a debtor. Unlike composition, a Moratorium gives the debtor a certain grace period for financial
reorganization with the long term goal of increasing, or at least preserving the value of the debtor's financial
interests. Composition on the other hand, seeks to redress the negative asset position or insolvency of a
debtor through an agreement with his creditors with general terms that equally apply to all creditors that have
composition claims against the debtor.

The new Act no. 44/2009 amending Act no. 161/2002 on Financial Undertakings, which came into effect 22
April 2009, contains rules governing composition negotiations for financial undertakings that are in a Winding
- up process.

According to these rules, the Winding-up Board of a financial undertaking may seek composition if it
considers that the assets of the undertaking are not sufficient to fully satisfy all claims that have not been
finally rejected in the winding-up process.

The general rule is that prior to seeking composition, a request must be submitted to a district court for its
approval. However, that does not apply to financial undertakings in a winding-up process. When a financial
undertaking in a winding up process seeks composition, the Winding-up Board serves the same role as a
supervisor of composition negotiations or a liquidator of an estate would normally do and is responsible for
holding creditor meetings.

If the Winding-up Board decides to seek composition, it prepares a composition proposal. It must state to
what extent the debtor offers payment of the composition claims and the form of payments, the dates of the
payments, whether interest, and if so, at what rate, will be paid on the composition claims from the date a
composition agreement is concluded and until the date of payment, if deferred payment is envisaged,
whether security, and if so of what kind, will be placed to secure performance of the composition agreement.


    9.2. Legal effect of composition

A composition agreement only affects claims against the debtor which are referred to as composition claims.
The term is defined in a negative manner and applies to all the claims against the debtor which are not
exempted from the composition.

Composition agreement does not affect the following claims:

• Claims originating after a court order has been issued granting a debtor license to seek composition;

• Claims for performance, other than payment of money, which can be performed in substance;

• Claims that would be ranked as provided for in Articles 109, 110 or 112 of Act no. 21/1991 on insolvency
etc. if the debtor had been declared bankrupt at the date when a court order providing the debtor with a
license to seek composition was issued;

• Claims that could have been settled by set-off had the debtor been declared bankrupt; and

• Any claims particularly exempted from composition under the terms of the composition agreement by
reason of their full payment, cf. Paragraph 2 of Article 36 of Act no. 21/1991 on insolvency etc.

A creditor, who has claims against the debtor which the composition agreement does not affect, can
relinquish that right, so that the composition agreement does affect its claims. Composition also cancels any

                                                      26
debts that would be ranked as provided for in Article 114 of Act no. 21/1991 on insolvency etc. if the debtor’s
estate had been declared bankrupt.

    9.3. Composition proposal

The Resolution Committee, the Winding-up Board and the Moratorium Appointee are considering a solution
whereby the restructuring of the Bank will be completed by a scheme of arrangement with creditors in order
to prevent the Bank from entering insolvency proceedings.

When a Winding-up Board decides that voting shall take place on the composition proposal, it convenes a
meeting of creditors for that purpose. The meeting shall be convened with a notification in the “Legal
Gazette” with at least two weeks´ notice.

    9.4. Voting

The Winding-up Board shall prepare a register of the rights to vote on the proposal, specifying the voting
rights attached to each claim, both by number of creditors and by the value of their claims. The register shall
include only the claims that have been recognized and to which voting rights are attached in the opinion of
the Winding-up Board.

Each creditor with a composition claim against the debtor shall have one vote in number and a voting power
proportionate to the value of his composition claim against the total value of all the composition claims. If a
creditor has two composition claims or more, they shall be added together and counted as one claim and
one vote in number will be attached to the claims as a whole. One vote in number can also be divided
between more than one creditor, if an assignment of a composition claim has taken place in the three
months prior to the reference date. Voting creditors may vote on a composition proposal in writing, and such
votes shall be taken into account if received by the Winding-up Board no later than when the voting is
completed and no one is in attendance on the relevant creditor’s behalf. A vote in writing shall only be valid
if it expresses the stand the voting creditor has taken with respect to the proposal unequivocally and
unconditionally, and the creditor's signature is confirmed by two witnesses, a district court or Supreme Court
lawyer, or a public notary.

A composition proposal shall be deemed approved if supported by the same proportion of votes by creditors
in number and by value of their claims, as the proportion of composition claims to be relinquished according
to the proposal, provided this reaches 60 per cent. at a minimum. If the composition agreement stipulates
something other than relinquishment, e.g. the exchange of debt claims for shares, it requires approval of 60
per cent. of the creditors in number and by value of their claims.

If the composition proposal is approved by the creditors, the Winding-up Board must obtain a confirmation of
the District Court of Reykjavik of the composition agreement. If it obtains this confirmation a composition
settlement is considered to be concluded.

The settlement will only be binding for creditors that have composition claims as defined above. If the
composition settlement is confirmed, the Winding-up Board shall, as necessary, fulfil any obligations to
creditors in accordance with the settlement and then conclude the winding-up proceedings. The settlement
of a composition claim shall have the same effect as its settlement in its original form.

If, on the other hand, the composition proposal is not approved by the creditors or its confirmation has been
rejected, the Winding-up Board shall request that the undertaking be declared bankrupt. A creditor may do
the same if its claim has been recognized in the winding-up proceedings and either the composition
negotiations have not yielded any results or the creditor demonstrates that the legal requirements for
composition negotiations to take place are not fulfilled or that such a large number of creditors are opposed
to composition that there is no possibility of achieving composition based on available information on the
undertaking's financial situation. In order to uphold this claim, the creditor must, however, establish a
legitimate interest for the insolvency proceedings to go ahead rather than continuing the winding-up
proceedings.

                                                      27
10. Creditors’ meetings
According to the Act no. 44/2009 the matters considered at creditors' meetings are mainly threefold, first,
there are matters concerning the management of the Resolution Committee of the interests of the Bank,
secondly, the recognition of claims by the Winding-up Board, and thirdly, to seek the creditors views on the
further extension of the Moratorium.

The Resolution Committee can convene creditors' meetings, as it deems appropriate, to explain measures
taken in regard to the Bank's interests. The Resolution Committee may seek proposals or decisions
regarding measures that have yet to be taken, and provide for opportunities for making such proposals.

The creditors' meeting cannot affect measures already carried out by the Resolution Committee. The
Resolution Committee is allowed to confer with individual creditors in matters concerning the relevant
creditors' interests.

A creditor is entitled to attend a creditors' meeting if the creditor has filed a claim against the Bank with the
Winding-up Board and if such claim has not been finally dismissed by the Winding-up Board.

Voting rights are determined by the amount of each creditors claim if matters regarding the management of
the Bank's interests are put to a vote. For a creditors' meeting to be quorate, creditors holding at least a third
of the total voting rights must be present at the meeting.

To disregard a decision of the majority of creditors, the Resolution Committee must in most cases have
specific reasons. The Resolution Committee can thus disregard decisions of a creditors' meeting if they are
contrary to law, dishonest, cannot be executed, contrary to interests of creditors not attending, discriminate
against the minority or if the decisions are contrary to the goal of maximizing the value of the Bank's assets.

The Winding-up Board handles creditors' meetings which have to do with the recognition of claims.

The Winding-up Board has submitted the list of claims to the creditors' meeting as well as any objections
which the Winding-up Board may have received in regard to submitted claims. The Winding-up Board has
offered explanations as to the recognition of claims and any objections which have been made against
recognition of specific claims.

If a creditor does not attend a meeting, the relevant creditor may lose the right to oppose matters or present
claims regarding matters which were decided or presented at the meeting.

If a protest is made with regard to the recognition of claims at a creditors' meeting, the Winding-up Board will
endeavour to resolve the dispute. If such a dispute cannot be resolved at the creditors' meeting, the
Winding-up Board shall convene a separate meeting between the disputing parties. Many such meetings
have already been held. If the dispute cannot be resolved at such separate meetings, then the dispute will be
referred to the District Court of Reykjavík. So far as protests are not made against the recognition of claims,
then such recognition shall be considered as accepted.

In addition, the Moratorium Appointee shall convene meetings as appropriate to consider applications to the
District Court of Reykjavík for the extension of the Moratorium.

Creditor’s meetings held jointly by the Resolution Committee, the Winding-up board and the Moratorium
Appointee, for the purposes mentioned in this section, have already been held on 9 June 2009, 27
November 2009, 21 January 2010, 7 September 2010 and the next meeting is scheduled to be held in March
2011.




                                                       28
Appendix 1
Glossary of term

CBI                    Central Bank of Iceland

CDO                    Collateralised Debt Obligation

CEO                    Collateralised Equity Obligation

FME                    The Icelandic Financial Supervisory Authority

ISDA                   International Swaps and Derivatives Association Master
                       Agreement

ISK                    Icelandic Krona

The Bank / Icebank     Icebank hf.

LBO                    Leveraged Buy Out

LP                     Limited Partnerships

Resolution Committee   The Resolution Committee of Icebank hf.

Winding-up Board       The Winding-up Board of Icebank hf.




                                  29
Appendix 2
Disclaimer to Financial Information

The Financial Information in this Creditors´ Report is, in addition to those qualifications and explanations
described in the Report, also subject to the following qualifications and explanations:

    1. The computation of liabilities as at the reference date, 22 April 2009, may not be complete or
       accurate as a number of the existing and potential liabilities are subject to legal uncertainty. As a
       result, the computation of liabilities included in the Financial Information has been estimated and will
       be subject to change and clarification over time.

    2. The Act No. 125 / 2008 provides for claims for ‘deposits’ to have priority when distributing the assets
       of a bankrupt financial undertaking. It remains to be resolved which liabilities or deposits of the Bank
       this provision applies to, and how this Act should be implemented. It is possible that certain deposit
       creditors of the Bank will have an entitlement to be paid out in full, and that there will be a
       corresponding decrease in the assets available to make distributions to other unsecured creditors.
       No consideration of this has been included in Financial Information.

    3. The computation of liabilities as at the Reference Date may not be complete or accurate as a
       number of the existing and potential liabilities are subject to legal uncertainty. As a result, the
       computation of liabilities included in the Financial Information has been estimated and will be subject
       to change and clarification over time.

    4. The methodology used to estimate the values of assets within each asset class has been based on
       the application of the Bank’s present asset realisation strategy. The methodology does not
       represent an exhaustive attempt to take into account all factors that the Bank or other market
       participants would consider when performing an in-depth valuation exercise.

    5. The asset realisation strategy and valuation methodology are likely to change over time as the Bank
       continues its systematic assessment and categorisation of each asset class and refines its approach
       to realisation having appropriate regard to the interests of all its creditors.

    6. The assumptions used to estimate value of assets are sensitive to changes in market conditions
       (including interest rates, currency rates, equity prices, market indices and counterparty credit
       worthiness) and, as such, the values presented are preliminary estimates based on the application of
       a high level asset realisation strategy at a point in time.

    7. Given the current economic climate, particularly the financial and liquidity crisis, there are no active
       markets by reference to which many of the financial instruments held by the Bank can be valued. To
       the extent that the estimated asset values and computation of liabilities are based on inputs that are
       less observable or unobservable in a market, the estimation of value requires more than normal
       internal judgement rather than mark to market valuation. Accordingly, the Bank has applied
       considerable internal judgement in determining the estimate of values for certain assets and
       liabilities, notably those relating to loans to customers, unlisted equity instruments and complex
       derivative products.

    8. The determination of the ownership of certain assets is not complete and in particular current
       estimates of the Bank’s collateral will be subject to subsequent legal findings including rights of set-
       off and other claims. If the ownership of the Bank’s collateral changes, the estimate of value of the
       Bank’s assets and the computation of its liabilities may be materially impacted.

    9. The estimated value of derivative positions is based on high level assumptions as to which of the
       Bank’s counterparties have issued legal default notices. The Bank has applied assumptions
       regarding the issuance of legal default notices but these may not be complete or accurate, and it is
       likely that information regarding the issuance of legal default notices will be amended or otherwise

                                                      30
    changed. Therefore, the actual realisable value of the Bank’s assets and the amount of its liabilities
    may be different than the value set forth in this Financial Information.

10. This Financial Information was prepared using the Bank’s information, based on current data and
    assumptions, which are subject to confirmation and change. The Bank may amend, supplement or
    otherwise change the information it provided for the preparation of this Financial information. Due to
    the related uncertainties, the actual realisable value of the Bank’s assets and the amount of its
    liabilities may differ materially from the values set forth in this Financial Information.




                                                 31

				
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