Landsbankinn's funding is based on four main pillars: Customer deposits, obligations to financial undertakings, borrowing and equity. In July 2015, the international rating agency Standard & Poor's upgraded the bank's long- and short-term counterparty credit ratings to BBB- and A-3 respectively with a positive outlook.

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Customer deposits

By far the greatest share of Landsbankinn's funding comes from customer deposits, which totalled ISK 559 billion at year-end 2015, and the majority of which are non-indexed demand deposits. Customer deposits increased by ISK 8 billion during the year despite a substantial outflow of the deposits of financial undertakings in winding-up proceedings prior to year-end. Inflation-indexed deposits amounted to ISK 104 at year-end 2015, increasing by ISK 6 billion YoY.

Liabilities to financial undertakings

Liabilities owed to financial undertakings amounted to around ISK 57 billion at year-end 2015, an increase of around ISK 3 billion YoY, as liabilities to financial undertakings were around ISK 54 billion at year-end 2014.

Funding pillars (ISKm)

Landsbankinn sought to broaden its funding base in 2015 and concluded its first issuance under the bank's EMTN programme in October, with the issuance of 3Y senior unsecured notes of EUR 300 million total nominal value. The bank was also active on the domestic bond market, issuing covered bonds and bills.

Debt repayment profile (ISKm)

Covered bond issuance schedule

The bank utilised the proceeds of this issue to prepay bonds issued to LBI hf.
More on covered bonds

Standard & Poor's

Long-term BBB-
Short-term A-3
Outlook Positive
Issue date July 2015

EMTN Programme

Landsbankinn has set up an EMTN Programme for issuance of up to EUR 1,000 million and issued its first notes, for a total of EUR 300 million, in October 2015. The bank utilised the proceeds of this issue to prepay bonds issued to LBI hf. Landsbankinn also issued notes totalling 250 million in NOK and SEK in December 2015.

Bonds issued to LBI hf.

The majority of Landsbankinn's borrowing is in the form of bonds issued to LBI hf., originally negotiated when assets and liabilities were transferred to Landsbankinn hf. from the old bank, now called LBI hf., in 2009. In 2014 an agreement was reached between Landsbankinn and the Winding-up Board of LBI hf. on amendments to the bonds. The outstanding balance owed was to be paid with bonds maturing at two-year intervals, issued in EUR, GBP and USD.

Covered bonds

Landsbankinn set up an issuance programme for covered bonds amounting to ISK 100 billion, intended primarily as funding for the bank's housing mortgages and to reduce its fixed-interest-rate risk. The bank has issued non-indexed fixed-rate 3Y and 5Y bonds and added a new indexed fixed-rate bond series with a 7-year maturity in 2015.


In May 2015 Landsbankinn established a programme for bill and bond issuance totalling ISK 30 billion and issued bills at regular intervals on the domestic bond market through the year.

In 2013 the bank began work on obtaining a credit rating from the international rating agency Standard & Poor's (S&P) and in January 2014 Landsbankinn was awarded a rating of BB+/B with stable outlook. In July 2015 S&P upgraded the bank's rating to BBB-/A-3 with a positive outlook.

Share capital

The fourth pillar of Landsbankinn's funding is its share capital, which totalled ISK 264.5 billion at the end of December 2015, nearly ISK 14 billion more than at year-end 2014.

In 2015 Landsbankinn paid a dividend of almost ISK 24 billion to its owners. At year-end 2015 Landsbankinn's capital ratio was 30.4%.

Capital ratio