- SPM's standstill agreement extended with its main creditors to April 1st, 2009.

SPM Savings Bank has been working on a financial restructuring plan since it
became clear that a proposed agreement with Kaupthing Bank hf. would not be
completed after the collapse of the Icelandic banks. 
 
In November 2008 New Kaupthing Bank hf. and the municipality of Borgarbyggð
reached an agreement whereby the bank would acquire the entire share capital of
SPM. This deal is subject to an agreement being reached with the creditors on
the financial restructuring of SPM and also to the approval of the Icelandic
Financial Supervisory Authority and the Competition Authority. 

On 27 January 2009 SPM signed an agreement with all of its main domestic and
international creditors whereby the creditors agreed not to accelerate SPM's
loans before 2 March 2009. All of those creditors, except for one, agreed to
extend this period until 1st of April 2009. SPM expects to finalise the
discussion with the remaining creditor in the next few days. The standstill
period will be used to negotiate with the creditors on their involvement in the
financial restructuring of SPM. 

The principal amount of the loans will not be paid during the period, nor will
interest on subordinated loans and bonds. 

SPM will, however, pay interest on the senior ranking loans and bonds, as
applicable, during the standstill period and the agreement does not affect the
position of depositors or trade creditors. 

Already one bond holder agreed to extend the standstill period. The remaining
holders of bonds admitted to trading on the securities exchange are also
encouraged to participate in the financial restructuring of SPM. 

As mentioned above, SPM has been involved in discussions with its creditors for
some time and the CEO and board of SPM are optimistic that an agreement on
financial restructuring can be reached and welcome the standstill agreement as
a positive step towards securing the interest of SPM's depositors and other
stakeholders. 

For further information, please contact:
Bernhard Þór Bernhardsson
CEO
Tel: + 354 430 7500
E-mail: bernhard@spm.is