Glitnir Bank Files US$2bn Legal Claim Against Jón Ásgeir Jóhannesson and Other Former Directors and Shareholders, Alleging Fraud; also Sues PwC for Malpractice and Negligence

New York, May 12, 2010 (ots/PRNewswire) - Glitnir Bank announces that it
has commenced legal action in the Supreme Court of the State of New
York against Jón Ásgeir Jóhannesson, formerly its principal
shareholder, Lárus Welding, previously Glitnir's Chief Executive,
Thorsteinn Jonsson, its former Chairman, and other former directors,
shareholders and third parties associated with Jóhannesson, for
fraudulently and unlawfully draining more than $2 billion out of the
Bank.

Glitnir is also taking action against its former auditors
PricewaterhouseCoopers (PwC), for facilitating and helping to conceal
the fraudulent transactions engineered by Jóhannesson and his
associates, which ultimately led to the Bank's collapse in October
2008.

Glitnir has also secured a freezing order from the High Court in
London against Jón Ásgeir Jóhannesson's worldwide assets, including
two apartments in Manhattan's exclusive Gramercy Park neighbourhood,
for which he paid approximately $25 million.

Jóhannesson - beneficial owner of the now-defunct Baugur
investment group - is understood to be domiciled in the United
Kingdom, and still holds a number of high-profile directorships
there, including Iceland Foods and House of Fraser, two of the UK's
best-known retailers.

The lawsuit, filed in New York on May 11, shows:
- How a cabal of businessmen led by Jóhannesson conspired to
systematically loot Glitnir Bank in order to prop up their own
failing companies
- How Jóhannesson and his co-conspirators seized control of
Glitnir, removing or sidelining experienced Bank employees - and
abused this control to place the Bank in extreme financial peril
- How Jóhannesson, Welding and the other Defendants
facilitated and concealed their diversions from the Bank by
overriding Glitner's financial risk controls, violating Iceland's
banking laws, and orchestrating a blizzard of convoluted stock
"parking" transactions
- How the individual Defendants, with the complicity of
Glitnir's auditor PwC, raised $1bn from investors in New York without
revealing the truth about the Bank's financial exposures to Jóhannesson
and his co-conspirators
- How the Defendants' transactions cost Glitnir more than $2bn
and contributed significantly to the Bank's collapse

A full copy of the New York court action will be available at
http://www.glitnirbank.com.

The litigation is being piloted by Glitnir's Winding-Up Board,
which was appointed by the Icelandic Court to supervise the
liquidation of the Bank. It follows a thorough forensic review of
Glitnir's management and transactions in the years leading up to the
Bank's collapse.

On behalf of Glitnir's creditors, the Winding-Up Board is
determined to pursue recovery of assets looted from Glitnir by
Jóhannesson and the other Defendants, and believes that the New York
court is the most suitable forum for doing so. Central to the case is
the $1bn bond issue sold in September 2007 to New York investors who
were misled as to Glitnir's financial exposures. Around 90% of
Glitnir Bank's estimated 9,000 creditors are thought to be based
outside Iceland.

"There is evidence supporting the allegation that Glitnir Bank
was robbed from the inside," said Steinunn Gubjartsdóttir, chair of
the Glitnir Winding-Up Board. "Today's legal action is a positive
step aimed at making accountable the small number of people whose
intent or negligence contributed significantly to Glitnir's demise."

Glitnir has already filed separate litigation against some of the
individual Defendants in Iceland. It has also made a relevant
submission to Iceland's Special Prosecutor and Icelandic authorities.
The Icelandic Government has also been notified about today's
litigation.

Last month, a report from Iceland's Special Investigation
Commission ruled that Iceland's financial collapse was partly caused
by the disproportionate exercise influenced over the country's banks
by a small group of businessmen, including Jón Ásgeir Jóhannesson.

Glitnir Bank's Winding-Up Board's legal representation is Steptoe
& Johnson, LLP (New York) and Slaughter and May (London).

The Glitnir Winding-Up Board will hold a press conference today
at the Hilton Reykjavik Nordica, 2nd floor, Room D, at 14.30
Reykjavik time (15.30 London time, 10.30 New York time). The press
conference will be convened by Steinunn Gubjartsdóttir and Pall
Eiriksson of the Winding-Up Board.

A telephone dial-in to the press conference will be made
available for the international media. The dial-in is +354-7557755,
and the access code is: 5155200.

Notes to editors:

The legal claim:

A full copy of the New York court action will be available at
http://www.glitnirbank.com. It accuses Jón Ásgeir Jóhannesson, who
controlled around 39% of Glitnir's shares via various entities, of
seizing effective executive control of the Bank in April 2007, by
ousting Glitnir's directors and senior management and replacing them
with Welding, Jonsson and other accomplices. Jóhannesson and the
other named Defendants then used their control over the Bank to
issue massive loans to, and fund a series of transactions with,
other companies they controlled. In doing so, they flouted the
Bank's internal risk policies, as well as Iceland's laws and
financial regulations governing large exposure to connected parties.

To finance these diversions, the individual Defendants relied
heavily on funds which Glitnir raised in the United States throughout
2007 and, in particular, through the $1bn sale of Bonds to investors
located in New York and elsewhere in the United States in September
2007. The extent of Glitnir's financial exposure to Jóhannesson and
the companies and individuals who were connected to him was
fraudulently hidden from US investors at the time of this
fundraising.

In the event, Jóhannesson's looting of Glitnir Bank failed to
save Baugur, his own company, from failure; nor have the sums the
individual Defendants siphoned from Glitnir ever been repaid to the
Bank. The transactions made no economic sense for Glitnir, and put
the Bank - and, by extension, its creditors - in extreme financial
peril. Having depleted Glitnir's cash reserves, the individual
Defendants left the Bank heavily exposed to the global credit crunch
which struck Iceland's markets during the summer of 2007, and
contributed significantly to its eventual bankruptcy.

Jóhannesson and the other individual Defendants could not have
succeeded in their schemes without the complicity of PwC. PwC knew
about Glitnir's irregular related party exposures, reviewed and
signed off on Glitnir financial statements which grossly
misrepresented these exposures, and facilitated Glitnir's fraudulent
fundraising in New York.

The Defendants in the case are:
- Jón Ásgeir Jóhannesson, former Executive Chairman of Baugur;
former Chairman of FL Group; principal shareholder in both companies
and, through them, controlled around 39% of shares in Glitnir Bank
- Thorsteinn Jonsson, former Chairman of the Board, Glitnir
Bank; also former vice-Chairman of FL Group
- Jón Sigursson, former Director of Glitnir Bank; also former
Deputy CEO of FL Group
- Lárus Welding, former CEO and Chairman of the Risk
Committee, Glitnir Bank
- Pálmi Haraldsson, former Director, Glitnir Bank
- Hannes Smarason, former CEO of FL Group
- Ingibjörg Stefanía Pálmadóttir, wife of Jón Ásgeir
Jóhannesson; former Director, Baugur
- PwC, auditor to Glitnir Bank; performed reviews and issued
letters on which investors relied in connection with the September
2007 New York bond offering

Freezing Orders

Separate to the New York litigation, the Winding-Up Board of
Glitnir Bank secured on May 11, 2010 an order from the High Court in
London, freezing the worldwide assets of Jón Ásgeir Jóhannesson.
Freezing orders have also been applied for in the Icelandic court
against Jóhannesson, Welding and Pálmi Haraldsson, former Director,
Glitnir Bank.

Glitnir Bank

Glitnir Bank, a public company, was until its collapse a
full-service bank, providing corporate banking, investment banking,
capital markets, investment management and retail banking services.
It had offices in ten countries, including Manhattan, and its market
capitalisation once stood at more than EUR4bn.

Hit by the global financial crisis in 2007-08, and financially
weakened by the fraudulent transactions of the individual Defendants,
Glitnir declared bankruptcy in October 2008. It is now the subject of
a court-supervised moratorium proceeding in Iceland, under the
supervision of Iceland's Financial Supervisory Authority and a
Resolution Committee. An Icelandic court has appointed a Winding-Up
Board, headed by Steinunn Gubjartsdóttir, to supervise the
liquidation of the Bank's assets. The Winding-Up Board and Resolution
Committee have authorised this litigation.

Glitnir's Legal Representation

Glitnir is represented in the New York action by Michael Campion
Miller, Robbin Itkin, Evan Glassman and Katherine Piper from Steptoe
& Johnson, LLP. In London, Glitnir is represented by Slaughter and
May.

For more information, please contact:
Rory Godson, Powerscourt (London)
Tel: +44-20-7250-1446
Rory.godson@powerscourtmedia.com
Conal Walsh, Powerscourt (London)
Tel: +44-20-7250-1446
Conal.walsh@powerscourtmedia.com
Lisa Kavanagh, Powerscourt (London)
Tel: +44-20-7250-1446
Lisa.kavanagh@powerscourtmedia.com
John Dudzinsky, APCO Worldwide (New York)
Tel: +1-212-300-1817
jdudzinsky@apcoworldwide.com

ots Originaltext: Glitnir Bank
Im Internet recherchierbar: http://www.presseportal.de

Contact:
CONTACT: For more information, please contact: Rory Godson,
Powerscourt(London), Tel: +44-20-7250-1446,
Rory.godson@powerscourtmedia.com ; ConalWalsh, Powerscourt (London),
Tel: +44-20-7250-1446,Conal.walsh@powerscourtmedia.com ; Lisa
Kavanagh, Powerscourt (London),Tel: +44-20-7250-1446,
Lisa.kavanagh@powerscourtmedia.com ; John Dudzinsky,APCO Worldwide
(New York), Tel: +1-212-300-1817,jdudzinsky@apcoworldwide.com