NIBC is a Dutch merchant bank focused on the mid-cap segment in western Europe with a global distribution network. The Bank has 718 full-time employees and offices in The Hague, London, Brussels, Frankfurt, New York and Singapore. NIBC, which was founded in 1945, offers innovative corporate finance, banking and investment management solutions to corporate clients, financial institutions, institutional investors and family offices. NIBC is presently owned by a consortium of shareholders led by J.C. Flowers & Co. LLC ("JCF & Co." or the "Sellers").

The expected acquisition will allow Kaupthing to further diversify and strengthen its existing operations. It will also make it one of the leading corporate and investments banks focusing on financial services to small and medium sized enterprises in Europe. The combined group will benefit from Kaupthing and NIBC's complementary product offerings and compatible business culture.

Transaction Terms and Financing:

The purchase price of EUR 2,985 million represents 12.7x NIBC's last twelve months ("LTM") net income and 1.5x NIBC's shareholders' equity as at 30 June 2007.

The purchase consideration will be structured as follows:

• 110 million of newly issued Kaupthing shares at SEK 115.375 per share for an aggregate value of EUR 1,360 million will be issued to the Sellers in relation to completion. The Sellers will become the second largest shareholder in Kaupthing. These shares will be subject to a customary lock-up arrangement whereby all will be restricted for 12 months from closing, tapering to approximately 48 million for 24 months.
• Cash consideration of EUR 1,625 million financed from existing cash resources, an issue of Tier 1 hybrid instruments and proceeds from an issuance of 40 million new shares (via a pre-emptive rights issue). The rights issue is expected to take place early next year.