Background

2008 year

December

• MBRD has joined the Russian Union of Industrialists and Entrepreneurs/RSPP/ and become a member of Committee on Banks and Bank’s Operation. The membership in RSPP will allow MBRD not only to take part in Russian banking sector development but have a direct bearing on development of Banking laws.
  
• Starting from 1st of December 2008 MBRD restarted “Optima.Ru” mortgage program under new conditions.
  
• MBRD and “Detsky Mir” retail chain for kids hold a “Gift Card” co-project.
  
• Central Bank of Russia has confirmed financial solvency of MBRD. The list of banks satisfing the new Central Bank standards on loan collateral was again updated on December 8, 2008. MBRD is in TOP 52 banks included into this list which have required international rating and their guarantees are accepted for loans granted by the Bank of Russia.
  
• On 10th of December, 2008 MBRD has signed agreement on cooperation with All-Russian Public Organization “Russian Union of Borrowers and Depositors” (RUBD).
  
• MBRD has increased authorized capital by issuing additional shares (registered by the Bank of Russia on 19.05.08). End date of additional shares placing is December 15, 2008.
  As a result MBRD has raised its equity capital by 6,75 mln RUB. Placement price amounts to 10,000 RUB with a par value of 500 RUB each. Acting MBRD’s shareholder - JSFC Sistema – has acquired shares of additional emission by private offering and increased its participation in authorised capital of MBRD by 74.32%.
  
• Expecting New Year holidays our clients get a new offer “Deposit + Credit card”.
  
• Moscow Bank for Reconstruction and Development has increased fixed-term deposit rates for companies. Fixed-term deposit rates (rubles) were increased by 2-3% in Moscow, Moscow area and other 16 regions of Bank’s presence as well.

• MBRD has become TOP 3 “Best Deposit Banks” as of October 27, 2008. RosBusinessConsulting Agency (RBC) has published results of deposit terms rating.
  According to the results of the year 2008, MBRD became the leader in terms of US dollars deposits and got second ranking for Rubles and Euro deposits, having improved its position on 20 points compared with 2007.

• Moscow Bank for Reconstruction and Development was awarded with “Sport and Style Award” in “For the particular contribution in national sport development” special nomination.
  
• Central Bank of Russia has confirmed financial solvency of MBRD. The list of banks which satisfy the new Central Bank standards on loan collateral was updated on October 15, 2008. Banks included into this list have required international rating and their guarantees are accepted for loans granted by the Bank of Russia. MBRD is in TOP 50 credit organizations complying with these requirements.

• Euromoney, European financial magazine, has awarded Moscow Bank for Reconstruction and Development “The Best Bank in Corporate Governance for Emerging Europe 2008”

• Moscow Government has renewed MBRD’s status as “Moscow Government’s Authorized Bank” for another 18 months. The Bank is a veteran member of the institution.
  
• According to the recent RBC Agency’s research Moscow Bank for Reconstruction and Development has become one of the best Russian Mortgage Banks. The results of the first six months of 2008 show that the Bank was rated 9th on quantity of deals (the Bank went 1 position up in comparison with rating in 2007) and 13th on the mortgage portfolio originated.

• Since 2007 Moscow Bank for Reconstruction and Development has progresses one step up the rating of customer satisfaction thus having occupied 6th place.
  
• Senteo company experts have analysed the leading banks based on “customer satisfaction index”. The main tool of analysis was a scoring card with assessment of customer impressions on the following aspects: brand, communication, environment, offered products and service culture. For highly précised statistical data the survey encompassed 400 offices of 50 banks based in Moscow and Saint Petersburg. Banks’ ratings on each of five parameters reflect the level of customer satisfaction.
  
• As the survey shows the average CSI for Russian banks is 3.25 as of Q12008. MBRD has confidently occupied the position in the first half of the rating and is still progressing up the ranks.
  
• July 10, 2008, MBRD signed 40 mln EURO Syndication Loan Agreement. The loan tenor is 6+6 months with Eurobor + 1.6% rate. The Sole Lead Arranger of the syndication was WestLB London AG acting also as Agent Bank. Credit Europe Bank N.V. and Reiffeisen ZAO acted as Arrangers for this transaction, 10 banks in general participated in syndication. The borrowed funds will be used for business expansion, including financing of trade transactions.
  
• MBRD’s Retail Loan Portfolio reached 1,002,738 USD as of July 14, 2008 (including securitised assets) thus showing a 143% increase compared to 2007.

• The loan portfolio of MBRD’s payments cards has exceeded 2 bln RUB as of June 15, 2008 and reached 2,54 bln RUB. The total growth since January 1, 2008, has reached 43%. Since January 1, 2007 until June 15, 2008 the growth rate amounted to 172%. In the current card portfolio of the Bank Moscow accounts for 42% while the branches account for 58%.
  
• The meeting approved, among others, the Annual Report ’07, accounting statements, including loss and profit for 2007, elected Board of Directors, audit commission and the auditor company for 2008.
  
• Moscow Bank for Reconstruction and Development has signed AMEX card acquiring service agreement with Russian Standard Bank.

• 2007 results of Moscow Bank for Reconstruction and Development. Consolidated net income increased 142%. 2007 results: the consolidated assets of the Bank group had 127% growth that totaled $ 5 010.0 mln, the consolidated capital (tier 1 and tier 2) had 72% growth and totaled $ 392 mln, the consolidated net income had 142,7% growth up to $ 35,3 mln.
  
• Moscow Bank for Reconstruction and Development and ROSNO Insurance Company launch new joint project which will facilitate insurance premium payment.

• MBRD has started to provide the new loan program for small and medium businesses throughout 16 Russian regions of the Bank’s presence. This program is more attractive for customers due to simplified origination procedure, availability of all loan types (lending facilities and overdrafts) and individual repayment schedules according to needs of each client.
  
• Moscow Bank for Reconstruction and Development has organised a series of roundtables on cooperation between the Bank and realtor community in MBRD’s regions of operation. The first roundtable was held in Saratov, it hosted more than 50 participants representing realtor companies, BTI (Bureau of Technical Inventory – Russian agency responsible for registration of property) and mass media of Saratov and Saratov region.
  
• Moscow Bank for Reconstruction and Development was awarded with ‘Financial Olymp’ prize in ‘RETAIL BANK’ nomination and ‘DYNAMICS AND EFFICIENCY’ category. Tsereteli Art Gallery hosted annual ‘Financial Olymp’ Awards Ceremony, which celebrates companies’ achievements in the Russian financial market. The event was organized by Rosbusinessconsulting company. ‘Financial Olymp’ is one of the oldest financial and professional awards warded to those who managed to achieve highest results in financial world.
  
• April 18, ‘Interfax - Siberia’ Press Centre hosted the conference of Moscow Bank for Reconstruction and Development on launch of the Bank’s Siberian Regional Direction. Representatives of Sistema JSFC, MBRD management, executives of Siberian Regional Direction and reporters from the region’s leading mass media took part in the event.
  
• MBRD took part in the meeting dedicated to the 15th Anniversary of Moscow Government’s Authorised Banks’ System, which hosted representatives of Moscow Government, Russian Banks Association, CB RF, the Regional Branch for the City of Moscow of the Bank of Russia and management of Moscow Government’s Authorised Banks.

• MBRD has timely and fully repaid its first Eurobonds issue for USD 150 mln and today MBRD has no public debts due in 2008. The bonds were issued on March 3, 2005 as LPN and listed on Luxembourg Stock Exchange. The Lead Arranger of the issue was Dresdner Kleinwort Wasserstein. The notes issued amounted to $150 mln due in 3 years. In 2007 the Bank attracted credit from Dresdner Bank, London, for $50 mln for a term of 2 years and also syndicated loans totaling $100 mln for a term of 3 years.
  
• MBRD increased its net profit 3.4 times. As of the end 2007 net income amounted to RUB 2,12 bln which is by 246% more than total results as of 2006. Net profit rising was caused by retail business development, financing small and medium business and expanding regional network, also by grown client base and range of products and services.
  
• Moscow Bank for Reconstruction and Development Enters TOP-10 of the Largest Mortgage Banks of 2007. According to RBC rating agency’s research MBRD has entered TOP-10 of the largest Russian banks by the quantity of mortgages originated in 2007 thus having advanced in ratings by 12 positions in comparison with the similar period of 2006. Moreover, according to the volume of mortgages originated the Bank was rated #11. In 2007 MBRD originated 5,624 mortgage loans totaling 10,361 mln RUB, having increased similar parameters of 2006 by 179.52 % and 273.32 % respectively. As of January 1, 2008 the Bank’s mortgage portfolio has increased 2.8 times and accounted for 6,707 mln RUB.

• February 11, 2008, a resolution on securities placement (series 02 and 03 bonds) was passed by the Board of Directors of MBRD. According to the meeting results, bonds will be placed with public offer for subscription in two tranches. Total amount of securities is 6,000,000 shares with a par value of 1,000 RUB each.
  
• MBRD has securitised part of its car loan portfolio. This deal will provide the Bank with the funding in the amount of 1.499 bln RUB. The Issuer may increase the borrowing up to $200 mln USD (eq.) in the next 12 months. All notes are denominated in roubles and the transaction implies a unique interest rate hedging scheme.
  
• MBRD has approved the agenda for the extraordinary meeting of shareholders to consider a proposal of increasing the Bank’s authorised bank capital through the issue of ordinary shares. March, 26, MBRD is going to hold extraordinary shareholders’ meeting in order to pass a resolution on the additional issue of ordinary shares for the total amount of 6,750,000,000 RUB (675,000 ordinary shares with a par value of 500 RUB each and placement price of 10,000 RUB each) and also to approve an interested party transaction between Sistema JSFC and Moscow Bank for Reconstruction and Development regarding acquisition of the Bank’s additional ordinary shares’ issue.
  
• Fitch Ratings, international rating agency, confirmed the ratings of Moscow Bank for Reconstruction and Development as follows:
• IDR – “B+”;
  
• Short-term rating – “B”
  
• Individual rating – “D/E”
  
• Rating of support– “4”
  
• Long-term national rating – “A-(rus)”

The IDR outlook is “positive”.

• According to Finance Magazine rating of the TOP 20 Russian banks’ most functional and convenient ATM networks MBRD occupies 13th place.
  
• Moody's Investors Service Confirmed MBRD Ratings. Moody’s affirmed MBRD’s ratings as follows:
• Long-term Deposit Rating – B1
  
• Short-term Deposit Rating – Not Prime
  
• Financial Strength Rating - E+
  
• Senior Unsecured Rating - B1
  
• Subordinate Debt Rating - B2

2007 year

• Moscow Bank for Reconstruction and Development became a holder of controlling stake in East-West United Bank, Luxemburg. After purchasing 49% of EWUB shares from VTB Russia and VTB France MBRD increased its participation up to 66%. Transaction amounted to 31 million Euro.
• According to the recent Senteo Agency’s research of customers’ preferences MBRD entered TOP 10 of Russian retail banks. Bank attractiveness was assessed in 5 categories, influencing customers’ choice: brand name, communications, surrounding, special offers and service. According to the research, MBRD is above the average 3.32 point rating as of the 4th quarter of this year.
• MBRD opened new Specialized Mortgage Center, the second in Moscow, offering full range of services for corporate and retail customers. Highly equipped new Mortgage Center provides comprehensive professional consultations covering all stages of mortgage origination: from application to drawdown, for both primary and secondary market deals.
• MBRD’s Mortgage Centres:
• 7 bld.1, Izvestkovy Lane, Moscow (Taganskaya metro station);
• 2, Bolshaya Tylskaya str., Moscow (Tylskaya metro station).

• Moscow Bank for Reconstruction and Development has introduced a new exterritorial principle of servicing its retail clients in Moscow offices of the Bank in order to enhance the quality of its work and increase accessibility for private individuals. Now every deposit/account client of the Bank can enjoy the freedom choosing any office in MBRD’s Moscow network for transactions on their deposit/account. The project was designed and implemented in accordance with PMI international standards.
• September 19, 2007, Savoy Hotel, Moscow Bank for Reconstruction and Development held a roundtable “US Mortgage Crisis and Its Influence on the Russian Financial Market”. Despite discussion on what triggered the US mortgage crisis and probability of this scenario for Europe and Russia, the experts also touched upon the following issues: Analysis of the Russian financial market in terms of liquidity: trends and forecasts. Long-term influence of the financial crisis on the mortgage and consumer lending market. Solvency of Russian companies and banks in servicing their foreign debt.
• MBRD’s Private Banking Department has designed a new product for its VIP clients – “CLUB CARD”, that can satisfy the most sophisticated credit card holder.
  Exclusivity of this product lies in unique combination of payment and credit functions, in comfortable use for all and individuality for each.

• Moscow bank for reconstruction and development has increased its list of authorised construction companies – the Bank’s partners in its mortgage programs. PIK_Region, CJSC, has become the partner of the Bank.
• MBRD ‘Wooden Houses’ express-loan program. The interest rate has dropped from 16% to 8-12% (depending on loan’s tenor). Prepayment fee on the program doesn’t very depending on prepayment period and is 1.5% of the prepaid amount. Loan account fee has also changed and account for 0.5% per month. The maximum loan tenor has been increased up to 72 months (against 60 on the previous terms).
• These programs are oriented at clients interested in primary or secondary real estate market. The mortgage loan is granted in US dollars for a tenor up to 30 years and with 9% p.a. interest rate. The Bank’s clients now can afford a flat with just 10% (of apartment’s price) downpayment, which is 5% below the previous term.
• Moscow Bank for Reconstruction and Development introduces RUB tariffs on classic car lending programs for new foreign cars (B category vehicles). Loan amount is 30,000 RUB – 2,400,000 RUB, maximum tenor – 7 years, annual interest rate - 12%. Every client gets MBRD’s card as a present.
• A corresponding agreement was signed between Moscow Bank for Reconstruction and Development VTB Bank Europe, according to which MBRD is lent 35 mln. USD for a 3 year tenor. The loan was granted by VTB Bank of Europe August 6, 2007, the further syndication is planned
• MBRD presents new car lending programs for trucks and cars. It takes just little time and a few documents to apply for a loan to purchase new foreign or Russian truck or car. The annual interest rate for new vehicles is 10.5% for USD loans, maximum tenor - 7 years. And for used foreign vehicles the rate is 11.5% (USD loans), maximum tenor - 5 years.
• According to the recent RBC Agency’s research Moscow Bank for Reconstruction and Development has become one of the best Russian mortgage banks. The results of the first six months of 2007 show that the Banks was rated 13th on the mortgage portfolio originated and 10th on quantity of deals. The portfolio originated for the reporting period accounted for 3.6 bln RUB with the number of contracts equaling 2,312. These volumes are 7.3 times better than the Bank’s results in the first half of the previous year and let the Bank go 17 positions up in the rating.

• IDR – “B”
• Long-term national rating –« BBB-(rus)»
• Short-term rating – «B»
• Individual rating – «D/E»
• Rating of support– «4»
• The IDR outlook is “positive”.

• According to the RosBusinessConsulting rating MBRD entered TOP 30 as of first quarter 2007. Bank was pointed 27th on net worth rating and 23th on deposit rating.
• In summer MBRD offers its clients new car lending programs on small size vessels and category A vehicles. It takes just little time and a few documents to apply for a loan to purchase a motorcycle (the annual interest rate is 10.5% for USD loans, maximum tenor - 3 years) or a small size vessel (the annual rate is 11.5% for USD loans, maximum tenor - 5 years).

• MBRD’s regional network has expanded dramatically in May 2007. Ten more offices were opened.
• The 14th branch of the Bank was registered by the CB RF in Kemerovo.
• Furthermore, two sub-offices were opened in Krasnodar (‘Komsomolsky’) and in Saint-Petersburg (‘Mortgage Centre’). MBRD is enhancing its regional network by opening teller offices throughout Astrakhan, Izhevsk, Orenburg, Penza, Samara, Tver, Yaroslavl. Now the Bank’s regional network includes 134 offices in 47 Russian cities.
• Moscow Bank for Reconstruction and Development has signed an agreement with Dresdner Bank providing for access to 50 mln USD for 2 years in the form of untied loans.
• Now the Bank’s client in Krasnodar region can enjoy better mortgage terms - Moscow Bank for Reconstruction and Development increases the maximum amount of the standard mortgage loan from 4 mln. RUB to 16.2 mln. RUB.

• MBRD was ranked 17th in the ‘Finance’ magazine’s rating of car lending market leaders (‘Finance’ magazine, issue №13 (199), dd. April 208, 2007). The rating’s basic criterion was the volume of car lending as of January 1, 2007.
• MBRD and CMD-soft company have successfully implemented the joint project on computerization of the Bank’s Mortgage Centre. CMD-soft’s solution “Mortgage lending on Microsoft Dynamics TM CRM basis” was used as a technological base for the project.
• March
• By 2006 results Moscow Bank for Reconstruction and Development was second in its growth rates of mortgage origination among Russian banks according to RBC rating agency survey (as of 1 January, 2007).
• February
• According to the recent RBC Agency’s research Moscow Bank for Reconstruction and Development has become one of the best Russian deposit banks. The Bank was rated 18th on the ruble investments by the results of the first six months of 2007.

• January 29, Moscow Bank for Reconstruction and Development celebrated its 14th birthday.