SOURCE: Landsbanki Íslands hf

August 04, 2006 07:37 ET

Landsbanki to buy Cheshire Guernsey Limited

REYKJAVÍK, UK -- (MARKET WIRE) -- August 4, 2006 --

Landsbanki has entered into an agreement to acquire Cheshire Guernsey Limited (CGL), a Guernsey-based bank, from Cheshire Building Society in the UK, for a total consideration of £1.2 million in addition to the net asset value of the company (£ 20.1 million at June 30th 2006) on completion of the transaction. CGL has a small but loyal and high quality customer base and has had particular appeal to the international depositor. Acquiring CGL gives Landsbanki a fast track entry into the offshore banking sector which is an ideal platform for the bank to build on. As a part of the agreement on completion, Landsbanki will change the company's name to Landsbanki Guernsey Limited. The transaction is subject to regulatory approval in Guernsey and Iceland and is expected to be completed before the end of September 2006.

Cheshire Guernsey Limited was established in 1997 by Cheshire Building Society with the aim of attracting sterling deposits from UK and international retail depositors who by virtue of their circumstances are able to benefit from placing their funds in a high quality, well regulated, politically stable offshore financial services centre. Today, total deposits amount to around £110 million.

CGL has a good selection of no notice, notice and fixed rate fixed term postal deposit products. Landsbanki's strategic aim is to extend and strengthen the Guernsey operations considerably, both through CGL's existing product range and by introducing new products such as online savings and accounts designed for institutional customers.

The administration of the bank is outsourced to a third party service provider in Guernsey.

In line with the Bank's overall funding strategy and diversification of funding sources, Landsbanki intends to introduce a new online retail deposit program in the UK later this year. The Heritable Bank subsidiary in the UK and the Landsbanki London branch have been very successful in expanding their deposit activities and by acquiring CGL and entering into the offshore deposit market from Guernsey, Landsbanki seeks to further increase and diversify its deposit programs.

The total consideration for CGL is the sum of £1.2 million and the Net Asset Value of CGL on completion of the agreement. The Net Asset Value of CGL was £20.1 million at the end of June but the final amount will be based on the company's accounts at the completion of the agreement.

About Landsbanki

Celebrating 120 years of operations, Landsbanki is a leading Icelandic financial institution with total assets of EUR 18.6 billion and shareholders equity of EUR 1.3 billion at end of June 2006. With the leading market share in all major segments of the Icelandic financial service sector, including above 30% in deposits and domestic lending, Landsbanki has positioned itself as Iceland's primary source of general and specialised financial services to individuals, corporate entities and institutions.

Building on its strong foundation in Iceland, Landsbanki has successfully extended its services into new markets. Landsbanki and its subsidiaries have offices operating in all major financial centres of Europe, as well as New York and Halifax. Through its extensive distribution network, Landsbanki has a strong platform to deliver targeted financial services based on local expertise. Landsbanki continues to expand its international business activities, through integration and consolidation of the Bank's operational platforms and service offering. For additional information on company profile, please visit

About Cheshire Building Society

Cheshire Building Society is a leading financial services provider focused on building a stronger financial future for the benefit of its 450,000 members and local communities. It was one of the first building societies established in 1870 and operates a 49 branch network throughout Cheshire and surrounding counties.

Cheshire has assets over £4.7 billion and is the 11th largest building society in the UK. It employs more than 700 staff across its Macclesfield head office, branch network including Cheshire Property Services, contact centre, internet and intermediary channels. For additional information about Cheshire, please visit

For further information, please contact:

Landsbanki CEO          Halldor J. Kristjansson +354 820 6399
Landsbanki CEO          Sigurjon Th. Arnason    +354 898 0177

From Financial Dynamics Andrew Walton           +44 20 7831 3113
From Cheshire           Julie Mazzei            +44 16 2565 2582

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