- Kaupthing postpones the change of the functional currency until January 2009

In accordance with IFRS standards the Board of Directors of Kaupthing Bank
decided last year to change the functional currency of the Bank to the euro
from the beginning of 2008. 

The importance of the euro in the Bank's operations has increased in recent
years and will continue to do so. At present less than 13% of the Bank's total
assets and less than 11% of total debt are in ISK. 

The Board is still determined to change the functional currency to the euro to
ensure that the Bank's accounts give at all times a true and fair view of the
consolidated financial position of the Bank. The application process has
however taken more time than expected and at this point, more than two months
into the current accounting year, it will be difficult to change the functional
currency as of 1 January 2008, also in view of the current market
turbulence. 

At the Annual General Meeting the Board of Directors of the Bank has submitted
a proposal which authorises the Board of Directors to decide to have the Bank's
share capital denominated in euros instead of Icelandic krónas. It is expected
that settlement of trading with shares denominated in a currency other than the
ISK will be possible in Iceland before the end of 2008. The Board of Directors
considers it appropriate to change the functional currency and to denominate
the share capital in euros at the same time. 

In view of the above, the Bank has decided to postpone the change of the
functional currency to the euro until January 2009 and to withdraw the current
application. 

Further information:
Jónas Sigurgeirsson - Chief Communications Officer, +354 444-6112