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					ICEBANK´S CREDITORS' REPORT

         March 2011
                                                 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 former
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 former 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 former 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 former 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.


                                                        1
                                                                     Contents
1.          Background ...................................................................................................................... 1
     1.1.      World financial crisis ................................................................................................................ 1
     1.2.      History of Icebank..................................................................................................................... 1
2.          Timeline ............................................................................................................................ 2
3.          The Resolution Committee ............................................................................................... 5
     3.1.      Role of the Resolution Committee ............................................................................................ 5
     3.2.      Composition of the Resolution Committee ............................................................................... 5
     3.3.      Objectives and goals of the Resolution Committee ................................................................... 5
4.          The Organizational Structure of the Bank ......................................................................... 5
     4.1.      Asset Management .................................................................................................................. 6
     4.2.      Treasury and Risk Management................................................................................................ 7
     4.3.      Legal Division............................................................................................................................ 7
     4.4.      Creditor Management .............................................................................................................. 8
     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 ................................................................................................................. 15
     6.7.      Securities................................................................................................................................ 15
     6.8.      Other assets ........................................................................................................................... 15
     6.9.      Liabilities ................................................................................................................................ 16
     6.10.        Central Bank and the Ministry of Finance............................................................................ 17
     6.11.        Projected Cash flow for 2010-2012 ..................................................................................... 18
     6.12.        Foreign currency ratio......................................................................................................... 18
     6.13.        Operational costs................................................................................................................ 19
7.          The Claiming Process ..................................................................................................... 20
     7.1.      The Winding-up Board ............................................................................................................ 20
     7.2.      The claim process and summary of lodged claims ................................................................... 20
     7.3.      Distribution to creditors ......................................................................................................... 21
     7.4.      Objections and dispute resolving ............................................................................................ 22
     7.5.      Other role of the Winding-up Board ....................................................................................... 22
     7.6.      Investigations ......................................................................................................................... 22
     7.7.      Transfers of claims.................................................................................................................. 23
8.          From Moratorium to winding-up proceedings .................................................................. 24
     8.1.      Introduction ........................................................................................................................... 24
     8.2.      The winding-up proceedings and applicable legislation........................................................... 24
     8.3.      Closing of the winding-up proceedings ................................................................................... 25
     8.4.      FME´s revocation of the operating banking licence ................................................................. 25
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




                                                                             2
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 and bills 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 proceedings 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.

October 2010 – March 2011

             o   On 19.10.2010 Grant Thornton were appointed as auditors for the Bank.

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

             o   On 15 March 2011 a meeting is held with the Creditors of the Bank.


Next steps

             o   In September 2011 a meeting may be held with the Creditors of the Bank.




                                                       4
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 Winding-up Board.

    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;


    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 ensured that the Resolution Committee has time to build an effective and suitable asset
realisation strategy and that protection is still available while the Bank is in winding-up proceedings.

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.


                                                        5
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. 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 11.

The Asset Management team focuses on asset recovery and daily operations. Processes have been initiated
on all items in the balance sheet and majority of the assets have been restructured. The main goal of the
asset management team going forward will be as before to monitor and maximize the recovery. Collaterals
have been enforced and due to that, Icebank is currently operating several business units that are being held
for sale. All assets held for sale are to be sold in a transparent procedure that will be managed by a third
party on behalf of Icebank.

In all cases 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. In December 2010 the Ministry and Economic Affairs and the Ministry of Finance, the
Confederation of Icelandic Employers, the Icelandic Federation of Trade, the Icelandic Chamber of
Commerce and the Icelandic Financial Services Association signed an extensive agreement regarding debt
restructuring of small and medium sized enterprises. This agreement speeds ups the process of debt
restructuring of many cases that have been on hold for the aim is that a review of the companies shall be
finalized before June 2011, offering viable enterprises debt restructuring. Restructuring work is well on track
in all Icebank cases.

As has been previously reported 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. An Investment Management
Agreement has been signed with Arev Securities, a securities firm regulated by the Financial Supervisory
Authority of Iceland, 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 currently holds 100% ownership in four operating
companies, two in Iceland and two in the Baltic’s. This management agreement will secure that the retail
assets of Icebank are monitored and managed by industry specialists. Icebank receives weekly reports from
Arev Securities enabling Icebank to stay focused on the recovery. The minimum workout period for these
enforced asset turnaround cases is estimated 12-18 months.

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 last 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. The possibility of outsourcing was revisited in November
2010. As before a detailed analysis was made on the operational cost and possibilities of cutting the cost
even further. After several discussions and meetings it was the joint conclusion of the Resolution Committee
and the Winding-up Board that the current operational model should not be changed. The Resolution
Committee and the Winding-up Board along with the asset management team will continue to seek
improvements in relation to Icebank’s operations.


                                                      6
    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.

    -   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) (now completed).
    •   Final settlements with the Savings Banks in cooperation with the Resolution Committee (now
        completed).
    •   Reviewing claims on Icebank originated from the funding part of the Treasury (now completed).

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 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 Division, 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


                                                       7
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.

    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, a representative from the Winding-up Board and certain employees of the Bank: The
General Counsel, the Head of Treasury 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.

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 31 December 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 31
December 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 31 December 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 31
December 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 31 December 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                                          31.12.2010 Set-off                   31.12.2010   30.9.2010
Cash and cash equivalents                         21.292                              21.292       19.337
Loans to credit institutions                      20.246           -19.555               691             887
Loans and advances                                16.324                              16.324       17.632
Old bank securities                               30.263           -30.263                 0              0
Securities                                        26.957           -22.756             4.201        3.565
Other assets                                         298                                 298             547
Assets totals                                    115.380           -72.574            42.805       41.968


Liabilities
                                               Claim
                                            registration         22.4.2009 Set-off              22.4.2009
Central bank                                      225.426          197.216         -53.019        144.197
Claims from banks in moratorium                    49.568           19.373         -18.144          1.229
Deposits                                            6.596              207                            207
Borrowings                                         82.563           81.509          -1.411         80.098
Subordinated loans                                  1.658              539                            539
Other debt                                          3.277              202                            202
Liabilities total                                 369.088          299.046         -72.574        226.472

-    Total increase in assets amounts to ISK 837m. Weakening of the ISK has increased foreign assets
     estimated value by approximately ISK 250m. Other changes are increase of ISK 587m.
-    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                           31.12.2010                              30.9.2010
ISKm                                 ISK            FX       Total           ISK           FX    Total

Central bank                        7.262        2.669       9.931       6.703          2.241    8.944
International credit institutions      46       11.315      11.361         109         10.284   10.393

                          Total     7.308       13.984      21.292       6.812         12.525   19.337

-    Cash is approx. 50% of the Bank’s net assets after set-off.
-    Currency breakdown of Cash and cash balances is: ISK 34%, EUR 33%, USD 20% and other 13%.
-    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                                   31.12.2010        30.9.2010
ISKm                                       Orig. Currency


Frozen assets                              EUR                       1.411           1.443
Domestic credit institutions               ISK                         374           1.293
International credit institutions          USD                         317             461
Icelandic banks in Moratorium              ISK                      18.144          26.298
                                                                    20.246          29.495
Set-off                                                            -19.555         -28.608
                                           Total                       691             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. Reclassification has been
    made from Domestic credit institutions to Icelandic banks in Moratorium amounting to approx. ISK
    800m. This amount was also included in Set-off at 30.09 2010.
-   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, Landsbanki and Savings Banks in moratorium.

Estimated set-off                                                    Total Total lodged claims
                                                   Lodged estimated setoff after estimated setoff
ISKm                                                claims and provisions           and provision

Claims against Old Banks                            50.937          -34.510               16.426
Claims from Old Banks                              -43.594           26.001              -17.593
                                                     7.343           -8.510               -1.166

Claims against other banks in moratorium           10.093            -8.375                   1.718
Claims from other banks in moratorium              -5.163             3.383                  -1.780
                                                    4.929            -4.992                     -62

-   The Bank has filed claims for setoff against lodged claims from other banks in moratorium. There have
    been discussions between parties regarding set-off without solutions or agreements. These claims
    (assets and liabilities) are measured at an amount that the bank estimates that parties will agree upon.
    If parties cannot agree on the final outcome, the dispute will likely be settled in Icelandic court. The
    Bank is therefore not estimating any payments from Icelandic banks in moratorium.

    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 31 December 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.


                                                        11
Loans and advances                                   31.12.2010                                     30.9.2010
                                             Origin of risk                                Origin of risk
ISKm                                     Domestic     International         Total       Dom estic   International         Total


Recorded balance sheet amount               21.489            15.962       37.451         21.158            17.714       38.872
Impairment                                 -12.446            -8.681      -21.127        -12.475            -8.765      -21.240
                                             9.043             7.281       16.324          8.683             8.950       17.632

Performing                                   4.215             5.681       9.896           3.753             7.029      10.782
Restructuring                                4.689             1.031       5.719           4.795             1.288       6.084
Liquidation                                    139               570         709             135               632         767
                                             9.043             7.281      16.324           8.683             8.950      17.632
  -     Provisions changes between quarters are marginal.
  -     Impairments on the loan portfolio are approximately 56%.
  -     61% of the loan portfolio after impairment is performing.

   Movements 30.09.2010-31.12.2010

   ISKm
   Change in valuation                               26
   Repayments                                    -1.362
   Moved to Securities                             -362
   Moved from Securities                            171
   FX movements                                     218
                                                 -1.309


  -     Movements during the period from 30.09.2010 to 31.12.2010 are mainly due to payments of loans (ISK
        1.362m), and FX movements (ISK 218m). Net transfer from and to Securities is ISK 191m.

                                                          31.12.2010                                    30.9.2010
   ISKm                                      Domestic International             Total      Domestic International             Total

   Performing 1                                  2.311            3.867        6.178           1.675            4.696        6.371
   Performing 2                                  1.904            1.814        3.718           2.078            2.333        4.411
   Restructuring 1                               2.241              270        2.512           2.039              468        2.507
   Restructuring 2                               2.447              760        3.207           2.756              821        3.577
   Liquidation                                     139              570          709             135              632          767
                                                 9.043            7.281       16.324           8.683            8.950       17.632

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




                                                                 12
FX breakdown
                            31.12.2010                                  30.9.2010
ISKm            Dom estic        Intern.          Total     Dom estic         Intern.          Total


EUR                  976         2.277           3.253            949          3.568          4.516
GBP                   80         3.482           3.561             83          3.645          3.729
ISK                3.417            59           3.476          3.327            180          3.506
USD                  199         1.232           1.431            238          1.323          1.561
CHF                2.407            20           2.427          2.186             23          2.209
JPY                1.964            27           1.990          1.900             31          1.931
Other                  0           185             185              0            180            180
                   9.043         7.281          16.324          8.683          8.950         17.633
-   80% of the loan portfolio is in foreign currency.
-   Approximately ISK 5,7bn 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.

Loan Concentration by Carrying value (per loan)
ISKm                                       Carrying   Carrying pct
Top 10                                       5.148           32%
Top 20                                       7.400           45%
Top 30                                       9.082           56%
Top 50                                      11.445           70%
Top 100                                     14.599           89%
Top 200                                     16.148           99%
All Loans                                   16.324          100%

-   Top 50 loans by carrying value count for 70% of the total loan portfolio.
-   Top 100 loans by carrying value count for over 89% of the total loan portfolio.

Loan Concentration by Carrying value (per lender)
ISKm
Top 10                                       7.229           44%
Top 20                                      11.296           69%
Top 30                                      13.454           82%
Top 50                                      15.381           94%
Top 100                                     16.312          100%
All Loans                                   16.324          100%

-   Top 50 borrowers account for more than 94% of the total carrying value of the loan portfolio.




                                                          13
Sector                                      31.12.2010                   30.9.2010
ISKm                                   Total value        value    Total value        value

International LBO                           2.614         2.238         3.464         2.945
Other international                         7.729         3.712         8.555         4.498
Domestic other                             10.720         3.656        10.462         3.737
International real estate                   4.317         1.330         4.372         1.507
Domestic fisheries                          2.489         1.903         2.516         1.882
Domestic real estate dev.                   6.571         2.020         6.429         1.557
Domestic collat. by real estate             1.607         1.403         1.647         1.433
Individuals                                   101             60          104           73
LBO - Frozen by Landsbanki Íslands          1.303             0         1.324             0
                                           37.451        16.324        38.872        17.633

   -     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.
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.
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.



                                                         14
    6.6. Old bank securities

    Old bank securities are itemised in section 6.9.


    6.7. Securities

Securities
ISKm                                31.12.2010 30.9.2010

Type of security
Icelandic sovereign                    21.616    21.874
Corporate bonds                         1.001     1.221
International bonds                       145       223
Equities                                2.946     2.033
Cash from disputed pledged assets       1.249         0
                                       26.957    25.351

Unpledged                                4.201    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.
    (1,87%), 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. (90%), Kambaland (100%), Lindberg ehf. (90%), Wine Holding ehf. (100%) and
    Fasteignafélag spb ehf. (100%)
-   Cash from pledged assets are due to repayments on securities that the Central Bank of Iceland has
    claimed that they took over to fulfil their claims against the Bank. The Winding-up Board of Icebank has
    disputed this action of the Central Bank of Iceland.
-
    6.8. Other assets

    Other assets consist mostly of property and fixed assets




                                                       15
     6.9. Liabilities

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

 Liabilities                                                     Estimated
                                                 Claim            liabilites
 ISKm                                       registration         22.04 2009

 Central Bank                                   225.426              197.216
 Loans from Credit institutions                  49.568               19.373
 Deposits                                         6.596                  207
 Borrowings                                      82.563               81.509
 Subordinated loans                               1.658                  539
 Other Debt                                       3.277                  202
 Liabilities                                    369.088              299.046

 Set-off                                                             -72.574

 Liabilites                                     369.088              226.472

 -    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 72,6bn.

        Liabilities
                               Article         Declared           Rejected Withdrawn Recognised

        Third party assets           109          20.927            19.710        1.217         0
        Approved costs               110             182               119            0        63
        Secured claims               111         225.429           206.604            0    18.825
        Priority claims              112           3.013             2.734          193        85
        General claims               113         117.373            33.362           32    83.980
        Deferred claims              114           2.164               685           22     1.695
        Liabilities total                        369.088           263.214        1.465   104.648


 -    The Winding-up Board has made a 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.




                                                           16
            6.10.         Central Bank and the Ministry of Finance

        -      The Central Bank of Iceland and the Ministry of Finance are the largest creditors of the Bank. Following
               is an itemisation of the liability according to the general ledger of the Bank and the claims received from
               the Central Bank and the Ministry of Finance.

Claim from the Central Bank of Iceland and the Ministry of Finance
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 disputedly pledged at the Central Bank of Iceland and Ministry of Finance
                                                           Nominal                          Disputed
        ISKm                                                 value        Netting             pledge

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

        Estimated value of Glitnir, Kaupthing and Landsbanki bonds                            30.263
        Sovereign bonds                                                                       22.756
                                                                                              53.019

        -      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.
        -      The Central Bank of Iceland has indicated that in July 2009 some of the Banks securities were taken to
               fulfil their claims against the Bank. The Central Bank of Iceland has not notified the Bank formally of this
               action. Estimated nominal value of the securities that were taken over in July 2009 amounts to ISK
               3,7bn. The Bank has no information on the value that the Central Bank of Iceland took the securities
               over at that time.



                                                                     17
-   According to an announcement from Central Bank of Iceland they took over the remaining part of the
    securities in May 2010 to fulfil their claims against the Bank. According to the Central Bank of Iceland
    they took those securities over on a lower price than the market value was at the time. These securities
    are estimated at a ISK 654m higher value in the financial statement 31.12 2010 than they were valued
    when taken over by the Central Bank of Iceland.. The nominal value of the securities is ISK 11,2bn. The
    Winding-up Board has disputed this action.
-   Despite of the above information, the Bank is valuing the securities at fair value at the end of year 2010
    and no impairment has been recognized.


    6.11.        Projected Cash flow for 2010-2012

Projected cash flow
                              Carrying                       2011                     Total
ISKm                             value            Q1        Q2         Q3       Q4      2011     2012    Later


Individuals                        60              4         4          4       12        24       13       23
International real estate       1.330            483                                   1.448      350      498
International LBO               2.238            520        118        58      196       892    1.064      282
Other international             3.712             50         50        50      472       622    1.042    2.049
Financial Institutions            691             35         35        35       35       140      140      411
Equities                        2.946                                                                    2.946
Sovereign bonds                   109                                                              1     2.019
Domestic real estate dev.       2.020             17        107        17       17      158       68     1.177
Dom. collat. by real estate     1.403             50         50       455      190      745      150     2.761
Domestic other                  3.656             46         44        43       46      179      194     1.530
Domestic fisheries              1.903             10         10        10       10       40       40        65
International Bonds               145                       495                         515                506
Corporate Bonds                   990                                                                      109
Other assets                      298                                                                      298
                               21.503          1.215        913       672      978     3.777    3.062   14.674

Accumulated                    21.292         22.507    23.420      24.092   25.069   25.069   28.131   42.805




-   The cash flow is based on recovery of principals excluding interest payments.
-   It is estimated from the projected cash flow that 59% of the recoverable assets will be materialised
    before year end 2011 and more than 66% before year end 2012.


    6.12.        Foreign currency ratio

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




                                                       18
Assets                                            Foreign curr.            Foreign curr.
ISKm                             31.12 2010               ratio 30.09 2010         ratio

Cash and cash equivalents               21.292             66%      19.337         64%
Loans to credit institutions               691             54%         887         46%
Loans and advances                      16.324             80%      17.632         81%
Old bank securities                          0              0%           0          0%
Securities                               4.201             12%       3.565          8%
Other assets                               298              0%         547          0%
                Assets total            42.805                      41.968

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.

-    65,1% of the Bank´s assets, including cash and cash equivalents, are held in non-ISK currencies as of
     31.12.2010.
-    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.
-    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 2011 with January and February actuals.

Operational Costs
ISKm                                             2010 Actual


Staff costs                                             292
Resolution Commitee and Winding-up Board                134
External advisors                                       211
IT Costs                                                105
Other Costs                                             184
                                                        926

-    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).
-    Included in Other cost in year 2010 are one off costs amounting to ISK 83,5m.




                                                               19
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 proceedings 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 former 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. as well as paragraph 7.6. 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 have also beeen granted access to the report. In addition to the aforementioned report, the
Resolution Committee and its employees have worked extensively to gather information which have been
used in the preparation of the Winding-up Board's rescission action described in more detail in paragraph
7.6.


    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
known 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 246 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
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




                                                        20
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.

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

Liabilities
                         Article     Declared      Rejected Withdrawn Recognised

Third party assets             109     20.927         19.710      1.217           0
Approved costs                 110        182            119          0          63
Secured claims                 111    225.429        206.604          0      18.825
Priority claims                112      3.013          2.734        193          85
General claims                 113    117.373         33.362         32      83.980
Deferred claims                114      2.164            685         22       1.695
Liabilities total                     369.088        263.214      1.465     104.648

Total without Deferred                366.924        262.528      1.443     102.953

A follow-up creditors’ meeting to continue discussion of lodged claims was held on 15 March 2011. Next
meeting with creditors may be held in September 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 proceedings.

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 been concluded.




                                                      21
    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
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
three of these cases and all in favour of the Bank. Two of those cases have been appealed to the Supreme
Court who confirmed the rulings of the district court. 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.

As of now there are 37 open cases, including the 13 disputed claims that have already been referred to the
district court. Other cases are either in a settlement process or being prepared for a referral to the district
court.


    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 (see further paragraph 7.6.).

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.

    7.6. Investigations

In accordance with instructions by the Icelandic Financial Supervisory Authority (FME), the Resolution
Committee of Icebank contracted PricewaterhouseCoopers ehf. ( PwC) in May 2009 to conduct an inquiry
into internal controls and affairs of Icebank. The scope of that engagement was confined to a six month

                                                      22
period leading up to the takeover of the bank by the FME, and was compatible to engagements that were
performed in other fallen Icelandic financial institutions.

In May 2010 the Winding-up Board of Icebank contracted PwC to expand on the previous work and conduct
a detailed investigation into certain transactions that may be relevant for safeguarding the Bank´s assets.
Although PwC had already gained insight into some of the relevant transactions the scope of the project was
different and involved a more specialised investigation and potential litigation assistance.

The objective of the project is to determine if any transactions have taken place at undervalue or were
otherwise in breach of the requirements of the Icelandic Bankruptcy Act, especially potential instances where
contract terms were rescinded or transactions made void during the timeframe leading up to the reference
date defined as December 15th 2008. PWC assisted the Winding-up Board with the definition of the
appropriate scope.

The choice of transactions to investigate was based on:
    • the experience of the previous PwC assignment
    • a list of the Bank’s largest exposures and write-offs
    • a list of related parties and counterparties in various transactions
    • other publicly available information such as the report from the Parliamentary Investigation
        Commission.

The list reflected the priorities of the Winding-up Board and assessment of potential recovery and rescission
possibilities on the basis of the Icelandic Bankruptcy act. Initially around 70 separate issues were identified
for review. Those issues created the original scope of the project, although it was clear from the outset that
the investigation might give rise to investigation into other issues.

PwC has worked on individual subject matters throughout the autumn of 2010 and in November 2010 the
initial list of subject matters was close to completion. In December 2010 the Winding-up Board approved to
use electronic search and investigation software to review emails as a part of the investigation. PwC
performed that task in December 2010 and into January 2011. Each subject matter is resolved in a separate
report, where findings have been presented in separate documents. The level of detail of the deliverable and
amount of work put into the work-stream differs considerably depending on the nature of the underlying
cases. In all, PwC has presented the Winding-up Board with more than 50 deliverables, and some of them
are extensive reports based on detailed investigation and review of available documentation. At the present
PwC has completed the initial list of subject matters with a report, apart from a few open issues where PwC
is following up on specific issues and providing the Winding-up Board with additional detailed information
based on their requests.

It is expected that PwC´s work will be finalized in the year 2011.


    7.7. Transfers of claims

As provided for in the Act on Bankruptcy etc., generally speaking, claims may be transferred. The Winding-
up Board has introduced a special transfer process which is available on the Bank’s website. Special transfer
forms are also available on the website. Extensive work has been required concerning transfers of claims
and a fee must be paid for a transfer.

After a notification of transfer is submitted, the Winding-up Board sends notification to the parties involved in
a transfer if further information is required. If all information is in place, transfer parties receive notification
following the submission of the transfer wherein the Winding-up Board confirms that the transfer has been
registered in the claim list. The Winding-up Board is not responsible for the validity of a transferred claim nor
of the validity of the transfer itself. Confirmation by the Winding-up Board of the transfer and its recording
does not comprise a decision by the Winding-up Board on the claim in any respect. A claim may nonetheless
already be rejected or disputed.


                                                        23
8. From Moratorium to winding-up proceedings
    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 has been
extended a few times during the years 2009 and 2010 and will expire on 15 March 2011.

Following a ruling of the District Court of Reykjavik the Bank will formally enter into winding-up proceedings.
Although Icelandic law provides for automatic end of the moratorium period upon entering into winding-up
proceedings. The Resolution Committee and the Winding-up Board jointly applied to the District Court of
Reykjavik to formally get a recognition that the Bank is in a winding-up proceedings. This was done in order
to ensure that the Bank continues to enjoy the same protections from litigation, collection measures and
other depletion of assets as it has had during the moratorium.


    8.2. The winding-up proceedings and applicable legislation

Applying for the Moratorium in March 2009 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. The Moratorium has provided the Bank with appropriate
protection from legal actions and ensured that it maintained a banking license.

There will be no significant changes in the legal status or operations of the Bank because of this transition
from a Moratorium to winding-up proceedings, although the Icelandic Financial Supervisory Authority intends
to revoke the Bank´s licence (see further paragraph 8.4). The change should hardly be noticeable for
creditors and counterparties.

The Resolution Committee will continue to manage the interests of the Bank with the same aim as before to
maximise the value of assets. That includes waiting for the maturity of assets if deemed beneficial rather
than disposing of them immediately. The Resolution Committee shall continue to hold the powers of the
board of directors as well as the powers of the Bank's shareholders' meeting.

The provisions of Act no. 44/2009, i.e. article 103 of the Act on Financial Undertakings stipulates 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

                                                      24
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 into insolvent liquidation cannot be filed nor can its assets become
subject to an attachment, an execution or a forced sale while the winding-up proceedings remains in effect.
No law suit can be commenced against the Bank unless such action is specifically provided for by law or
relates to criminal proceedings.

    8.3. Closing of the winding-up proceedings

The current winding-up proceedings are in essence a temporary period for the estate. Article 103a of Act
no.161/2002 on Financial Undertakings implies that the estate can only remain in winding-up proceedings as
long as a composition is targeted or achievable as the Winding-up Board is otherwise obliged, according to
fourth paragraph of Article 103a, to put the estate into liquidation. The winding-up proceedings of the Bank
shall conclude by means of one of the following:


i) Insolvent liquidation

In insolvent liquidation, the management of the assets of the Bank would vest in a liquidator. According to
the Bankruptcy Act, the trustee in bankruptcy shall ensure that the winding-up is concluded without undue
delay, although there may be some room for value maximisation by way of reference from Article 103 a. of
Act no. 161/2002 on Financial Undertakings.


ii) Scheme of Arrangement (see section 9)

It should be pointed out that the Winding-up Board is considering a solution whereby the restructuring of the
Bank will be completed by a Composition with creditors.


    8.4. FME´s revocation of the operating banking licence

The Icelandic Financial Supervisory Authority (FME) notified the Resolution Committee in a letter dated 13
January 2011 that it was considering revoking the Bank´s operating licence. A notification was furthermore
sent on 24 February informing the Resolution Committee that the revocation of the Bank´s licence would be
on the agenda addressed at FME´s board´s meeting on 15 March 2011. The Resolution Committee has
been working on making sure that this possible revocation will not lead to the Bank facing forced asset sales
and will still continue to have the ability to support its assets properly. The Resolution Committee has sent a
letter to the FME requesting that the FME provide the Bank with necessary guidelines as to all possible
aftermath this decision could entail, in accordance with the FME´s obligation in accordance with Icelandic
law.

The Resolution Committee has obtained an external Legal Opinion regarding the Bank´s legal position to the
effect that the bank´s licence is no longer necessary as a protection against forced sale of assets nor can its
assets become subject to an attachment or an execution while the winding-up proceedings remains in effect.
It is furthermore the opinion of the Resolution Committee that the Bank still has its protection under the EU
Winding-up Directive No. 2001/24/EC despite the revocation of the Bank´s banking licence.




                                                      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 proceedings.

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 proceedings. When a
financial undertaking in a winding-up proceedings 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 and the Winding-up Board 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.

Creditor’s meetings held jointly by the Resolution Committee and the Winding-up Board for the purposes
mentioned in this section, have already been held on 9 June 2009, 27 November 2009, 21 January 2010, 7
September 2010, 15 March 2011 and the next meeting may be held in September 2011.




                                                       28
Appendix 1
Glossary of term

CBI                    Central Bank of Iceland

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 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 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.

    4. 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.

    5. 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.

    6. 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.

    7. 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.

    8. 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
       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.

    9. 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

                                                      30
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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