U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes to be issued by, but with limited recourse to, Russian Standard Finance S.A. for the sole purpose of financing loans to Joint Stock Company “Russian Standard Bank” Under the Programme for the Issuance of Loan Participation Notes (the “Programme”) described in this base prospectus (the “Base Prospectus”), Russian Standard Finance S.A. (the “Issuer”), subject to compliance with all relevant laws, regulations and directives, may from time to time issue loan participation notes (the “Notes”) on the terms and conditions set out herein, as such terms and conditions are supplemented by a final terms (each a “Final Terms”) for each issue. The aggregate principal amount of Notes outstanding under the Programme will not at any time exceed U.S.$2,500,000,000 (or the equivalentin other currencies). This Base Prospectus supersedes any previous Base Prospectus relating to the Programme and any supplements thereto. Any Notes issued under the Programme on or after the date of this Base Prospectus shall be issued pursuant to this Base Prospectus. This Base Prospectus does not affect any Notes issued under the Programme prior to the date hereof. Notes will be issued in Series (as defined in “Overview of the Programme”) and the sole purpose of issuing each Series will be to finance a loan (each a “Loan”) to Joint Stock Company “Russian Standard Bank” (“RSB” or the “Borrower”) as borrower, on the terms of a third amended and restated facility agreement between the Issuer and RSB dated 29 May 2012 (the “Facility Agreement”), as amended and supplemented by a loan supplement to be entered into in respect of each Loan on each issue date (each an “Issue Date”) (each a “Loan Supplement” and, together with the Facility Agreement, the “Loan Agreement”) between the Issuer and RSB. Subject as provided in a third amended and restated principal trust deed dated 29 May 2012, as supplemented by a supplemental trust deed in respect of each Series of Notes (“Trust Deed”), the Issuer will charge, in favour of Deutsche Trustee Company Limited (the “Trustee”) as trustee, by way of a first fixed charge as security for its payment obligations in respect of each Series of Notes and under the Trust Deed, certain of its rights and interests under the relevant Loan Agreement and the relevant Account (as defined in the relevant Loan Supplement). In addition, the Issuer will assign certain of its administrative rights under the relevant Loan Agreement to the Trustee. In each case where amounts of principal, interest and additional amounts (if any) are stated to be payable in respect of a Series of Notes, the obligation of the Issuer to make any such payment shall constitute an obligation only to account to the noteholders of such Series of Notes (the “Noteholders”), on each date upon which such amounts of principal, interest and additional amounts (if any) are due in respect of such Series of Notes, for an amount equivalent to all principal, interest and additional amounts (if any) actually received from RSB by or for the account of the Issuer pursuant to the relevant Loan Agreement excluding, however, any amounts paid in respect of Reserved Rights (as defined in the terms and conditions of the Notes). The Issuer will have no other financial obligation under the Notes. Noteholders will be deemed to have accepted and agreed that they will be relying solely and exclusively on the credit and financial standing of RSB in respect of the payment obligations of the Issuer under the Notes. Each Loan will rank pari passu in right of payment with RSB’s other outstanding unsecured and unsubordinated indebtedness. Other than as described in this Base Prospectus and the Trust Deed, the Noteholders have no proprietary or other direct interest in the Issuer’s rights under or in respect of the relevant Loan Agreement or the relevant Loan. Subject to the terms of the Trust Deed, no Noteholder will have any rights to enforce any of the provisions in the relevant Loan Agreement or have direct recourse to RSB except through action by the Trustee. AN INVESTMENT IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 17 BEFORE INVESTING. THE NOTES AND LOANS (TOGETHER, THE “SECURITIES”) HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)). THE NOTES OF EACH SERIES MAY BE OFFERED AND SOLD (I) WITHIN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS (“QIBs”), AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), THAT ARE ALSO QUALIFIED PURCHASERS (“QPs”), AS DEFINED IN SECTION 2(A)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940 (THE “INVESTMENT COMPANY ACT”) IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144A (THE “RULE 144A NOTES”) AND (II) TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S (THE “REGULATION S NOTES”). THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT. PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT SELLERS OF THE NOTES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. FOR A DESCRIPTION OF THESE AND CERTAIN FURTHER RESTRICTIONS, SEE “SUBSCRIPTION AND SALE” AND “TRANSFER RESTRICTIONS”. Application has been made to the Financial Services Authority (the “UK Listing Authority”), in its capacity as competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 (the “FSMA”), for the Notes issued under the Programme for the period of 12 months from the date of this Base Prospectus to be admitted to the official list of the UK Listing Authority (the “Official List”), and to the London Stock Exchange plc (the “London Stock Exchange”) for such Notes to be admitted to trading on the Regulated Market (the “Regulated Market”) of the London Stock Exchange. Admission to the Official List of the UK Listing Authority, together with admission to trading on the Regulated Market, constitutes official listing on a stock exchange. The Regulated Market is a regulated market for the purposes of the Markets in Financial Instruments Directive 2004/39/EC. However, unlisted Notes may also be issued pursuant to the Programme. The Programme also permits Notes to be issued on an unlisted basis or to be admitted to listing, trading and/or quotation by such other or further listing authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer. Regulation S Notes of each Series will initially be represented by interests in a permanent global note in fully registered form (each a “Regulation S Global Note”) without interest coupons, which will be deposited with a common depositary for, and registered in the name of a nominee of, Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), on its Issue Date. Beneficial interests in a Regulation S Global Note will be shown on, and transfers thereof will be effected only through records maintained by, Euroclear or Clearstream, Luxembourg and their respective participants. Rule 144A Notes of each Series will initially be represented by interests in a permanent global note in fully registered form (each a “Rule 144A Global Note” and, together with any Regulation S Global Note for the relevant Series of Notes, the “Global Notes”) without interest coupons, which will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company (“DTC”) on its Issue Date. Beneficial interests in a Rule 144A Global Note will be shown on, and transfers thereof will be effected only through records maintained by, DTC and its participants. See “Summary of the Provisions Relating to the Notes in Global Form”. Individual definitive Notes in registered form will only be available in certain limited circumstances as described herein. The Notes will be in denominations in aggregate principal amount, for Rule 144A Notes, of at least U.S.$200,000 (or the equivalent in other currencies) and integral multiples of U.S.$1,000 (or the equivalent in other currencies) in excess thereof, and for Regulation S Notes, of at least EUR100,000 (or the equivalent in other currencies) and integral multiples of EUR1,000 (or the equivalent in other currencies) in excess thereof, save that unless otherwise permitted by then current laws and regulations, Notes which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise would constitute a contravention of section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) will have a minimum denomination of GBP100,000 (or its equivalent in other currencies). Arrangers and Permanent Dealers Citigroup J.P. Morgan The date of this Base Prospectus is 29 May 2012 This Base Prospectus (including the financial statements attached thereto) comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC (the “Prospectus Directive”) and for the purpose of giving information with respect to RSB and its consolidated subsidiaries taken as a whole (the “Group”), the Issuer, the Loan Agreements and the Notes.

In addition, RSB, having made all reasonable enquiries, confirms that (i) this Base Prospectus contains all information with respect to RSB, the Group, the Issuer, the Loan Agreements and the Notes that is material in the context of the issue and offering of the Notes; (ii) the statements contained in the Base Prospectus are in every respect true and accurate and not misleading; (iii) the opinions, expectations and intentions expressed in this Base Prospectus are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions; (iv) there are no other facts with respect to RSB, the Group, the Issuer, the Loan Agreements or the Notes the omission of which would, in the context of the issue and offering of the Notes, make any statement in this Base Prospectus misleading in any respect; and (v) all reasonable enquiries have been made by RSB to ascertain such facts and to verify the accuracy of all such information and statements. RSB accepts responsibility accordingly.

Each of RSB and the Issuer accepts responsibility for all information in this Base Prospectus. To the best of the knowledge and belief of RSB and the Issuer (which have taken all reasonable care to ensure that such is the case), the information contained in this Base Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.

The credit ratings in this Base Prospectus have been issued by Fitch Ratings CIS Limited (“Fitch”), Moody’s Investors Service Limited (“Moody’s”) and Standard & Poor’s Credit Market Services Europe Limited (“Standard & Poor’s”) (together, the “Rating Agencies”).

As of the date of this Base Prospectus, Fitch, Moody’s and Standard & Poor’s are established in the European Union and registered under Regulation (EU) No 1060/2009, as amended (the “CRA Regulation”). Series of Notes issued under the Programme may be rated or unrated. Where a Series of Notes is rated, such rating will not necessarily be the same as the rating described above or the rating(s) assigned to Notes already issued. Where a Series of Notes is rated, the applicable rating(s) will be specified in the relevant Final Terms. Whether or not each credit rating applied for in relation to a relevant Series of Notes will be (1) issued by a credit rating agency established in the European Union and registered (or which has applied for registration and not been refused) under the CRA Regulation, or (2) issued by a credit rating agency which is not established in the European Union but will be endorsed by a credit rating agency which is established in the European Union and registered under the CRA Regulation or (3) issued by a credit rating agency which is not established in the European Union but which is certified under the CRA Regulation will be disclosed in the Final Terms.

NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY CITIGROUP GLOBAL MARKETS LIMITED OR J.P. MORGAN SECURITIES LTD. (THE “ARRANGERS”), ANY DEALER (AS DEFINED HEREIN), THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES OR ANY PERSON ACTING ON THEIR BEHALF AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS BASE PROSPECTUS. NOTHING CONTAINED IN THIS BASE PROSPECTUS IS, OR SHALL BE RELIED UPON AS, A PROMISE OR REPRESENTATION, WHETHER AS TO THE PAST OR THE FUTURE. EACH PERSON CONTEMPLATING MAKING AN INVESTMENT IN THE NOTES MUST MAKE ITS OWN INVESTIGATION AND ANALYSIS OF THE CREDITWORTHINESS OF RSB AND THE ISSUER AND ITS OWN DETERMINATION OF THE SUITABILITY OF ANY SUCH INVESTMENT, WITH PARTICULAR REFERENCE TO ITS OWN INVESTMENT OBJECTIVES AND EXPERIENCE, AND ANY OTHER FACTORS WHICH MAY BE RELEVANT TO IT IN CONNECTION WITH SUCH INVESTMENT.

Certain information and data (which may include estimates and approximations) contained in the sections titled “Business” and “Overview of the Banking Sector and Banking Regulation in Russia” of this Base Prospectus were derived from publicly available information, including press releases and filings under various regulatory and securities laws. In particular, the information and data contained on pages 66, 76, 77, 199 and 200 were derived from the web sites of RosBusinessConsulting, European Card Acquiring Forum and the Agency for Deposit Insurance (the “Deposit Insurance Agency”). Each of RSB and the Issuer accepts responsibility that such publicly available information and data have been accurately reproduced and, as far as RSB and the Issuer are aware and are able to ascertain from information published by such third parties, no facts have been omitted which would render such information inaccurate or misleading. However, RSB and the Issuer have relied on the accuracy of such publicly available information and data without carrying out an independent verification.

-i- Certain information and data (which may include estimates and approximations) contained in the sections titled “Presentation of the Financial Information”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Overview of the Banking Sector and Banking Regulation in Russia” of this Base Prospectus were derived from official data published by Russian government agencies. In particular, the information and data contained on pages 5, 17, 43, 69, 196 and 197 of this Base Prospectus were derived from the web sites of the Central Bank of Russia (“CBR”), the Ministry for Economic Development of Russia and the Federal State Statistics Service of Russia. Each of RSB and the Issuer accepts responsibility that such official data have been accurately reproduced and, as far as RSB and the Issuer are aware and able to ascertain from information published by such Russian government agencies, no facts have been omitted which would render such information inaccurate or misleading. However, the official data published by Russian federal, regional and local governments is substantially less complete or researched than data published by governmental agencies of Western countries. Official statistics may also be compiled on different bases than those used in Western countries. Any discussion of matters relating to Russia in this Base Prospectus may, therefore, be subject to uncertainty due to concerns about the completeness or reliability of available official and public information. The veracity of some official data released by the Russian government may be questionable. See “Risk Factors - Risks Related to Russia - Neither the Issuer nor RSB has independently verified official data from Russian government agencies, nor have they independently verified information regarding the banking sector”.

This Base Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, RSB, the Arrangers or the Dealers to subscribe for or purchase any Series of Notes. The distribution of this Base Prospectus and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus comes are required by the Issuer, RSB, the Arrangers and the Dealers to inform themselves about and to observe any such restrictions. In particular, the Notes have not been and will not be registered under the Securities Act. Subject to certain exceptions, the Notes may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons. For a description of certain further restrictions on offers and sales of the Notes and distribution of this Base Prospectus, see “Subscription and Sale”.

Neither the Issuer nor RSB intends to provide any post-issuance transaction information regarding the Notes or the performance of any Loan. No person is authorised to provide any information or to make any representation not contained in this Base Prospectus, and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer, RSB, the Trustee, the Arrangers or the Dealers. The delivery of this document at any time does not imply that the information contained in it is correct as at any time subsequent to its date. Without limitation to the generality of the foregoing, the contents of RSB’s website as at the date hereof or as at any other date do not form any part of this Base Prospectus (and, in particular, are not incorporated by reference herein).

IN CONNECTION WITH THE ISSUE OF ANY SERIES OF NOTES, THE DEALER OR DEALERS (IF ANY) NAMED AS THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) IN THE APPLICABLE FINAL TERMS MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF A STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE RELEVANT SERIES OF NOTES AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE RELEVANT SERIES OF NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE RELEVANT SERIES OF NOTES. ANY STABILISATION ACTION OR OVERALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF A STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

-ii- CONTENTS

FORWARD-LOOKING STATEMENTS ...... 1 ENFORCEABILITY OF JUDGMENTS ...... 2 SUPPLEMENTAL BASE PROSPECTUS ...... 3 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... 4 ADDITIONAL INFORMATION ...... 7 OVERVIEW OF THE PROGRAMME ...... 8 RISK FACTORS ...... 13 DESCRIPTION OF THE TRANSACTIONS ...... 37 USE OF PROCEEDS ...... 39 CAPITALISATION ...... 40 SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION ...... 41 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 42 BUSINESS ...... 66 ASSET, LIABILITY AND RISK MANAGEMENT ...... 84 MANAGEMENT ...... 98 SHAREHOLDING ...... 103 RELATED PARTY TRANSACTIONS ...... 104 THE ISSUER ...... 106 THE FACILITY AGREEMENT ...... 109 TERMS AND CONDITIONS OF THE NOTES ...... 145 FORM OF FINAL TERMS ...... 157 SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM ...... 164 TAXATION ...... 170 CERTAIN ERISA CONSIDERATIONS ...... 184 SUBSCRIPTION AND SALE ...... 186 TRANSFER RESTRICTIONS ...... 190 GENERAL INFORMATION ...... 193 OVERVIEW OF THE BANKING SECTOR AND BANKING REGULATION IN RUSSIA ...... 195 INDEX TO FINANCIAL STATEMENTS ...... F-1 FORWARD-LOOKING STATEMENTS

Some statements in this Base Prospectus, as well as written and oral statements that RSB and its officers make from time to time in reports, filings, news releases, conferences, teleconferences, web postings or otherwise, may be deemed to be “forward-looking statements”. Forward-looking statements include statements concerning RSB’s plans, objectives, goals, strategies and future operations and performance and the assumptions underlying these forward-looking statements. RSB uses the words “anticipates”, “estimates”, “expects”, “believes”, “intends”, “plans”, “may”, “will”, “should” and other similar expressions to identify forward-looking statements. These forward-looking statements are contained in “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business” and other sections of this Base Prospectus. RSB has based these forward-looking statements on the current views of its management with respect to future events and financial performance. These views reflect the best judgment of the management of RSB but involve uncertainties and are subject to certain risks, the occurrence of which could cause actual results to differ materially from those RSB predicts in its forward-looking statements and from its past results, performance or achievements.

Although RSB believes that the estimates and the projections reflected in its forward-looking statements are reasonable, if one or more risks or uncertainties were to materialise or occur, including those which RSB has identified in this Base Prospectus, or if any underlying assumptions prove to be incomplete or inaccurate, its results of operations may vary from those it expected, estimated or projected.

Forward-looking statements that may be made by RSB from time to time (but that are not included in this document) may also include projections or expectations of interest income, net interest income, operating income (or loss), net profit (or loss) (including on a per share basis), dividends, capital structure or other financial items or ratios.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. You should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include: • inflation, interest rate fluctuations and exchange rate fluctuations in Russia; • the ability of RSB to refinance its indebtedness on reasonable terms or at all; • RSB’s ability to maintain its collection rate on overdue loans; • prices for securities issued by Russian entities; • the health of the Russian economy, including the Russian banking sector; • RSB’s ability to maintain its liquidity levels; • the effects of, and changes in, the policy of the federal government of Russia (the “Russian Government”) and regulations promulgated by the CBR; • the effects of competition in the geographic and business areas in which RSB conducts its operations; • the effects of changes in laws, regulations and taxation or accounting standards or practices in the jurisdictions where RSB conducts its operations; • RSB’s ability to maintain or increase market share for its products and services and control expenses; • acquisitions or divestitures; • technological changes; and • RSB’s success at managing the risks associated with the aforementioned factors.

This list of important factors is not exhaustive. When reviewing forward-looking statements, the investors should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which RSB operates. Such forward-looking statements speak only as of the date on which they are made. Accordingly, but subject to the requirements of the UK Listing Authority, RSB is not obliged to, and does not intend to, update or revise any forward-looking statements made in this Base Prospectus whether as a result of new information, future events or otherwise. All subsequent written or oral forward-looking statements attributable to RSB, or persons acting on RSB’s behalf, are expressly qualified in their entirety by the cautionary statements contained throughout this Base Prospectus. As a result of these risks, uncertainties and assumptions, a prospective purchaser of the Notes should not place reliance on these forward- looking statements.

-1- ENFORCEABILITY OF JUDGMENTS

RSB is a joint stock company organised under the laws of Russia. The majority of RSB’s directors and executive officers reside in Russia. Substantially all the assets of RSB are located in Russia. As far RSB is aware, part of the assets of RSB’s directors and executive officers are located in Russia. As a result, the Trustee, acting on behalf of the Noteholders, may not be able to effect service of process in the United Kingdom or the United States on RSB or any of RSB’s directors or executive officers named in this Base Prospectus. However, RSB will appoint a process agent for the service of legal process in England and Wales. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce any provisions of the Loan Agreement, or have direct recourse to RSB, except through action by the Trustee. Neither the Issuer nor the Trustee will be required to enter into proceedings to enforce payment from RSB under the Loan Agreement, unless it has been indemnified and/or secured by the Noteholders to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses, which it may incur in connection therewith.

Similarly, the Trustee may not be able to obtain or enforce English or United States court judgments in Russia against RSB or its directors or executive officers. Courts in Russia will only recognise judgments rendered by a court in any jurisdiction outside Russia if an international treaty providing for the recognition and enforcement of judgments in civil cases exists between Russia and the country where the judgment is rendered. No such treaty for the reciprocal enforcement of foreign court judgments in civil and commercial matters exists between Russia and most Western jurisdictions (including the United Kingdom, Luxembourg and the United States), which may require new proceedings to be brought in Russia in respect of a judgment already obtained in any such jurisdiction against RSB or its directors or executive officers. In addition, Russian courts have limited experience in the enforcement of foreign court judgments. The limitations described above, including the general procedural grounds set out in Russian legislation for the refusal to recognise and enforce foreign court judgments in Russia, may significantly delay the enforcement of any such judgment, or deprive the Noteholders or the Trustee of effective legal recourse for claims under the Notes relating to the relevant Loan.

Each Loan Agreement will be governed by English law and will provide that if any dispute or proceeding arises from or in connection with such Loan Agreement, the Issuer may elect, by notice in writing to RSB, to settle the claim by arbitration in accordance with the Rules of the LCIA (formerly the London Court of International Arbitration) (the “LCIA Rules”). The place of such arbitration shall be London, England. Russia and the United Kingdom are parties to the United Nations (New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”). Consequently, Russian courts should generally recognise and enforce in Russia an arbitral award from an arbitral tribunal in the United Kingdom, on the basis of the rules of the New York Convention (subject to qualifications provided for in the New York Convention and compliance with Russian procedural regulations and other procedures and requirements established by Russian legislation).

The Arbitrazh Procedural Code of Russia dated 24 July 2002 (the “Arbitrazh Procedural Code”) sets out the procedure for the recognition and enforcement of foreign arbitral awards by Russian courts. The Arbitrazh Procedural Code also contains an exhaustive list of grounds for the refusal of recognition and enforcement of foreign arbitral awards by Russian courts, which grounds are broadly similar to those provided by the New York Convention.

The Arbitrazh Procedural Code and other Russian procedural legislation could change, and other grounds for Russian courts to refuse the recognition and enforcement of foreign courts’ judgments and foreign arbitral awards could arise in the future. In practice, reliance upon international treaties may meet resistance or a lack of understanding on the part of a Russian court or other officials, thereby introducing delay and unpredictability into the process of enforcing any foreign judgment or any foreign arbitral award in Russia.

Furthermore, any arbitral award pursuant to arbitration proceedings in accordance with the LCIA Rules and the application of English law to each Loan Agreement may be limited by the mandatory provisions of Russian laws relating to the exclusive jurisdiction of Russian courts and the application of Russian laws with respect to bankruptcy, winding up or liquidation of Russian companies and credit organisations in particular. Each Loan Agreement will provide for the Issuer to elect for disputes to be settled in the courts of England and Wales as an alternative to arbitration.

-2- SUPPLEMENTAL BASE PROSPECTUS

If at any time the Issuer shall be required to prepare a supplemental base prospectus pursuant to Section 87G of the FSMA, the Issuer will prepare and make available an appropriate amendment or supplement to this Base Prospectus or a further base prospectus which, in respect of any subsequent issue of Notes to be admitted to the Official List of the UK Listing Authority, shall constitute a supplemental base prospectus as required by the UK Listing Authority and Section 87G of the FSMA.

The Issuer and RSB may agree with any Dealer that a Series of Notes may be issued in a form not contemplated by the Terms and Conditions herein, in which event a supplement to this Base Prospectus, if appropriate, will be published which will describe the effect of the agreement reached in relation to such Notes.

-3- PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Presentation of Financial Information The financial information set forth herein as of and for the years ended 31 December 2011, 2010 and 2009 has, unless otherwise indicated, been derived from the Group’s audited consolidated financial statements as of and for the years ended 31 December 2011 and 2010 and the related notes thereto (the “Financial Statements”). The Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as promulgated by the International Accounting Standards Board.

The audited consolidated financial statements of the Group as of and for the year ended 31 December 2011 are set out on pages F-2 to F-58 of this Base Prospectus.

The audited consolidated financial statements of the Group as of and for the year ended 31 December 2010 are set out on pages F-59 to F-116 of this Base Prospectus.

The Issuer’s audited financial statements as of and for the years ended 31 December 2011 and 2010 have been prepared in accordance with generally accepted accounting principles in Luxembourg and audited by the Issuer’s independent auditor Fiduciare Patrick Sganzerla S.á r.l., whose registered office is at 17 rue des Jardiniers, L-1026, Luxembourg, Grand Duchy of Luxembourg. The Issuer’s audited financial statements as of and for the years ended 31 December 2011 and 2010 have been filed with the UK Listing Authority and shall be deemed to be incorporated in, and to form part of, this Base Prospectus.

Auditors The Group’s Financial Statements have been audited by ZAO PricewaterhouseCoopers Audit, independent auditors, whose registered address is at 10 Butyrsky Val, Moscow 125047, Russia (“PwC”), as stated in their reports appearing herein. PwC is a corporate member of the Russian Chamber of Auditors (Auditorskaya Palata Rossii).

Currency In this Base Prospectus, the following currency terms are used: •“EUR”, “Euro”or“€” means the currency introduced at the start of the third stage of European economic and monetary union and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended; •“GBP” means the lawful currency of the United Kingdom; •“RUB”, “Russian rouble”, “Rouble”or“rouble” means the lawful currency of Russia; •“UAH” means the lawful currency of the Ukraine; and •“U.S. Dollar”, “USD”or“US$” means the lawful currency of the United States.

-4- Exchange Rates The table below sets forth, for the periods indicated, certain information regarding the exchange rate between the Rouble and the U.S. Dollar, based on the official exchange rate quoted by the CBR. Fluctuations in the exchange rate between the Rouble and the U.S. Dollar in the past are not necessarily indicative of fluctuations that may occur in the future.

The Group’s Financial Statements are presented in Russian roubles, the Group’s functional currency. Solely for the convenience of the reader, certain financial information has been translated into U.S. Dollars at the conversion rate quoted by the CBR as of the indicated date. RSB does not make any representation that the Rouble amounts referred to in this Base Prospectus could have been or could be converted into U.S. Dollars at the below exchange rates, at any other rate or at all.

Period High Low Average(1) end(2) Rouble/U.S. Dollar Year ended 31 December 2007 ...... 26.58 24.26 25.58 24.55 2008 ...... 29.38 23.13 24.86 29.38 2009 ...... 36.43 28.67 31.72 30.24 2010 ...... 31.78 28.93 30.37 30.48 2011 ...... 32.68 27.26 29.39 32.20

Period High Low Average(1) end(2) Rouble/U.S. Dollar Month ended January 2012 ...... 32.20 30.36 31.52 30.36 February 2012 ...... 30.41 28.95 29.88 28.95 March 2012 ...... 29.67 28.95 29.37 29.32 April 2012 ...... 29.80 29.28 29.47 29.36 May 2012(3) ...... 31.76 29.36 30.51 31.76

(1) The average of the exchange rates on the last business day of each full month during the relevant period. (2) The period end rates are quoted for the last business day of the relevant period. (3) Data as of 28 May 2012. Source: www.cbr.ru (CBR)

Rounding Some numerical figures included in this Base Prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them.

Market Share Information In this Base Prospectus, RSB and the Issuer refer to information regarding RSB’s business and the market in which RSB operates. RSB and the Issuer obtained this information in part from various third party sources and in part from RSB’s own internal estimates. RSB and the Issuer have obtained market and industry data relating to RSB’s business from providers of industry and market data, primarily the CBR.

Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Each of RSB and the Issuer has relied on the accuracy of the information from industry publications, surveys and forecasts without carrying out an independent verification thereof and cannot guarantee their accuracy or completeness. Each of RSB and the Issuer confirms that such third party information has been accurately reproduced and, as far as each of RSB and the Issuer is aware and is able to ascertain from information published by such third parties, no facts have been omitted from the information in this Base Prospectus that would render it inaccurate or misleading.

In addition, RSB has made statements in this Base Prospectus regarding the Russian banking industry and its position in this industry based on RSB’s own experience and investigation of market conditions. RSB cannot provide assurances that any of its assumptions regarding the banking industry are accurate or correctly reflect the position of other banks in the industry, and its statements have not been verified by any independent sources.

-5- Documents Incorporated by Reference The Issuer’s audited financial statements as of and for the years ended 31 December 2011 and 2010 (including the auditors’ report thereon and notes thereto) which have been submitted to and filed with the UK Listing Authority, shall be deemed to be incorporated in, and to form part of, this Base Prospectus.

Copies of the documents incorporated by reference in this Base Prospectus may be inspected, free of charge, at the registered office of the Issuer at 2, Bd. Konrad Adenauer, L-1115 Luxembourg and accessed on the website www.bourse.lu.

-6- ADDITIONAL INFORMATION

Neither the Issuer nor RSB is required to file periodic reports under Section 13 or 15 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). For so long as either the Issuer or RSB is not a reporting company under Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the Issuer or RSB will, upon request, furnish to each holder or beneficial owner of Notes that are “restricted securities” (within the meaning of Rule 144(a)(3) under the Securities Act) and to each prospective purchaser thereof designated by such holder or beneficial owner upon request of such holder, beneficial owner or prospective purchaser, in connection with a transfer or proposed transfer of any such Notes pursuant to Rule 144A under the Securities Act or otherwise, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

-7- OVERVIEW OF THE PROGRAMME

Description Programme for the Issuance of Loan Participation Notes

Issuer Russian Standard Finance S.A.

Borrower Joint Stock Company “Russian Standard Bank”

Programme Size Up to U.S.$2,500,000,000 (or its equivalent in other currencies at the date of issue) aggregate principal amount of Notes outstanding at any one time. RSB may increase the amount of the Programme in accordance with the Dealer Agreement (as defined herein). In this respect, for the purpose of calculating the aggregate principal amount of Notes outstanding, Notes issued at a premium shall be treated as having been issued at the amount of their net proceeds received by the Issuer.

Arrangers and Permanent Dealers Citigroup Global Markets Limited and J.P. Morgan Securities Ltd.

Permanent Dealers Citigroup Global Markets Limited and J.P. Morgan Securities Ltd. Pursuant to the terms of the Dealer Agreement, the Issuer, on RSB’s instructions, may from time to time terminate the appointment of any dealer under the Programme or appoint additional dealers either in respect of one or more Series of Notes or in respect of the whole Programme. References in this Base Prospectus to “Permanent Dealers” are to the persons listed above as Dealers and to such additional persons that are appointed as dealers in respect of the whole programme (and whose appointment has not been terminated). References in this Base Prospectus to “Dealers” are to all Permanent Dealers and all other persons who are appointed as dealers in respect of one or more Series of Notes.

Trustee Deutsche Trustee Company Limited

Principal Paying Agent Deutsche Bank AG, London Branch

Paying Agents Deutsche Bank AG, London Branch and Deutsche Bank Trust Company Americas

Registrars Deutsche Bank Luxembourg S.A. in respect of Regulation S Notes and Deutsche Bank Trust Company Americas in respect of Rule 144A Notes. A register of the Notes shall be kept at the registered office of the Issuer. In case of inconsistency between the register of the Notes kept by either of the Registrars and the one kept by the Issuer at its registered office, the register kept by the Issuer at its registered office shall prevail.

Luxembourg Paying Agent Deutsche Bank Luxembourg S.A.

Transfer Agents Deutsche Bank AG, London Branch, Deutsche Bank Luxembourg S.A. and Deutsche Bank Trust Company Americas.

Calculation Agent Deutsche Bank AG, London Branch unless otherwise stated in the relevant Final Terms.

Issue Price Notes may be issued at their principal amount or at a discount or premium to their principal amount.

Maturities Subject to compliance with all relevant laws, regulations and directives, any maturity as may be agreed between the Issuer, RSB and the relevant Dealer(s).

-8- Interest Periods and Rates The length of the interest periods for the Notes and the applicable interest rate may differ from time to time or be constant for any Series. Notes may be issued on a fixed rate or floating rate basis (as further described below) and may have a maximum interest rate, a minimum interest rate, or both. All such information will be set out in the relevant Final Terms.

Fixed Rate Notes Each Fixed Rate Note will bear interest on the outstanding principal amount from (and including) the Interest Commencement Date (as defined in the Trust Deed) at the rate(s) per annum (expressed as a percentage) equal to the Rate(s) of Interest specified on the Note, which shall be equal to the rate per annum at which interest under the Loan accrues, such interest being payable in arrear on each Interest Payment Date.

Floating Rate Notes Floating Rate Notes will bear interest determined separately for each Series and corresponding Loan as follows:

(a) on the same basis as the floating rate under a notional interest rate transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc.; or

(b) by reference to LIBOR, EURIBOR or MosPrime Rate (or such other benchmark as may be specified in the relevant Final terms) as adjusted for any applicable margin.

Method of Issue The Notes will be issued on a syndicated or non-syndicated basis. The Notes will be issued in series (each, a “Series”) having one or more issue dates and on terms otherwise identical (or identical other than in respect of the first payment of interest), the Notes of each Series being intended to be fungible with all other Notes of that Series. The specific terms of each Series will be set out in Final Terms to this Base Prospectus which shall supplement the Terms and Conditions of the Notes.

Limited Recourse The Notes will constitute the obligation of the Issuer to apply the proceeds from the issue of the Notes solely for the purpose of financing the relevant Loan to RSB pursuant to the terms of the corresponding Loan Agreement. The Issuer will only account to the Noteholders for all amounts equivalent to those (if any) received from RSB under such Loan Agreement or held on deposit in the Account less amounts in respect of the Reserved Rights (as defined in the “Terms and Conditions of the Notes”), all as more fully described under “Terms and Conditions of the Notes”

Security Each Series of Notes will be secured by a first fixed charge in favour of the Trustee for the benefit of the Noteholders of (i) certain of the Issuer’s rights and interests as lender under the Loan Agreement, and (ii) the Issuer’s rights, title and interest in and all sums held on deposit in the Account (in each case, other than the Reserved Rights), all as more fully described under “Terms and Conditions of the Notes”. In addition, the Issuer with full title guarantee will assign absolutely its administrative rights under the Loan Agreement (save for the rights charged or excluded as described above) to the Trustee for the benefit of the Noteholders, as more fully described under “Terms and Conditions of the Notes”.

-9- Form Each Series of Notes will be issued in registered form. The Notes will be in denominations in aggregate principal amount, for Rule 144A Notes, of at least U.S.$200,000 (or its equivalent in other currencies) and integral multiples of U.S.$1,000 (or its equivalent in other currencies) in excess thereof, and for Regulation S Notes, of at least EUR 100,000 (or its equivalent in other currencies), and integral multiples of EUR 1,000 (or its equivalent in other currencies) in excess thereof, save that unless otherwise permitted by then current laws and regulations, Notes which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise would constitute a contravention of section 19 of the FSMA will have a minimum denomination of GBP100,000 (or its equivalent in other currencies). Notes of each Series will be represented by interests in one or more Global Notes. The Global Notes will only be exchangeable for definitive certificates in the limited circumstances described under “Summary of Provisions Relating to the Notes in Global Form”. Each series of Notes offered and sold outside the United States to non U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act will be represented by interests in a Regulation S Global Note.

Each Series of Notes offered or resold in the United States to QIBs that are also QPs in reliance on Rule 144A will be represented by interests in one or more Rule 144A Global Notes.

Each Series of Notes will be redeemed in whole, but not in part, at any time, upon notice having been given to the Noteholders, at their principal amount together with accrued and unpaid interest to the date of redemption and any additional amounts (if any) then due if RSB, pursuant to the provisions of the relevant Loan Agreement, elects to prepay the Loan for tax reasons or by reason of increased costs or, at the option of the Issuer, in the event that it becomes unlawful for the Issuer to fund the Loan or to allow it to remain outstanding under the Loan Agreement, all as more fully described in the Loan Agreement. See also Condition 6 (Redemption) of the “Terms and Conditions of the Notes”.

Certain Covenants As long as any of the Notes remains outstanding, the Issuer will not, without the prior written consent of the Trustee, agree to any amendment to or any modification or waiver of, or authorise any breach or proposed breach of, the terms of the Loan Agreement, except as otherwise expressly provided in the Trust Deed or the Loan Agreement.

Clause 10.1 of the Loan Agreement contains a negative pledge in relation to the creation of Liens (other than Permitted Liens) by RSB. The Loan Agreement also contains in Clause 10, among other things, covenants limiting mergers and disposals by RSB, transactions between RSB and its Affiliates (as defined in the Loan Agreement) and a covenant by RSB to maintain a ratio of Capital to Risk Weighted Assets (each as defined in the Loan Agreement) at certain levels specified in the Loan Agreement.

Relevant Event/Event of Default In the case of a Relevant Event (as defined in the Trust Deed) the Trustee may, subject to the provisions of the Trust Deed, enforce the security created in the Trust Deed in favour of the Noteholders.

-10- In the case of an Event of Default (as defined in the Loan Agreement) the Trustee may, subject to the provisions of the Trust Deed, declare all amounts payable by RSB under such Loan Agreement to be due and payable. Upon repayment of the Loan following an Event of Default, the Notes will be redeemed or repaid at their principal amount together with interest accrued to the date fixed for redemption and any additional amounts then due (if any), and thereupon shall cease to be outstanding. Further Issues The Issuer may from time to time issue further Notes of any Series on the same terms as existing Notes and such further Notes shall be consolidated and form a single Series with such existing Notes of the same Series. In the event of such further issuance the Loan will be correspondingly increased. Rating The Programme has been given a long term rating of “B+” by S&P, “Ba3” by Moody’s and “B+” by Fitch. Series of Notes issued under this Programme may be rated or unrated. Where a Series of Notes is rated, such rating will not necessarily be the same as the rating assigned to the Programme. Credit ratings assigned to the Notes or the Programme do not necessarily mean that the Notes are a suitable investment. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Similar ratings on different types of notes do not necessarily mean the same thing. The ratings do not address the marketability of the Notes or any market price. Any change in the credit ratings of the Notes, the Programme or RSB could adversely affect the price that a subsequent purchaser would be willing to pay for the Notes. The significance of each rating should be analysed independently from any other rating. As of the date of this Base Prospectus, Fitch, Moody’s and Standard & Poor’s are established in the European Union and are registered under the CRA Regulation. Withholding Tax All payments in respect of the Notes will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of the Grand Duchy of Luxembourg save as required by law. If any such taxes, duties, assessments or governmental charges are payable, the Issuer shall (subject to certain exceptions and in particular to the application of the laws of 21 June 2005 implementing the EU Savings Directive 2003/48/EC (the “EU Savings Directive”) as well as related agreements and the law of 23 December 2005, having introduced a 10 per cent. withholding tax on savings income for Luxembourg resident individuals) pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received had no such deduction or withholding been required. The sole obligation of the Issuer in this respect will be to account to the Noteholders for the sums equivalent to the sums received from RSB. See “Terms and Conditions of the Notes”. In such circumstances, RSB will be required to increase the sum payable under the Loan Agreement to the extent necessary to ensure that the Issuer receives a net sum sufficient to pay to the Noteholders such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received had no such deduction or withholding been made or required to be made.

-11- In addition, the Issuer shall not be obligated to pay additional amounts in connection with U.S. Internal Revenue Code sections 1471 through 1474 (commonly referred to as FATCA). The net proceeds of each Series of Notes will be used by the Issuer for the sole purpose of financing the corresponding Loan to RSB. In connection with the receipt of each Loan, RSB will pay an arrangement fee, as reflected in the relevant Final Terms. Admission to Trading Applications will be made, where specified in the applicable Final Terms, to the UK Listing Authority for a Series of Notes to be admitted to listing on the Official List and to the London Stock Exchange for each Series of Notes to be admitted to trading on the Regulated Market and/or such other competent authority, stock exchange and/or quotation system as specified in the relevant Final Terms. Notes may be issued on the basis that the Notes will not be admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system. Selling Restrictions The Notes have not been, and will not be, registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Terms used in this paragraph have the meaning ascribed to them by Regulation S under the Securities Act. The Notes may be sold in other jurisdictions (including the United Kingdom and Russia) only in compliance with applicable laws and regulations. See “Subscription and Sale”. ERISA Considerations A Series of Notes issued under the Programme may be regarded for ERISA purposes as equity interests in a separate entity whose sole asset is the Loan. Accordingly, the Notes should not be acquired by any “benefit plan investor,” within the meaning of Section 3(42) of ERISA. Each purchaser and/or holder of Notes and each transferee therefore will be deemed to have made certain representations as to its status under ERISA. Potential purchasers should read the sections entitled “Certain ERISA Considerations” and “Transfer Restrictions”. Governing Law The Notes, the Trust Deed and all non-contractual obligations arising out of or in connection with them shall be governed by, and construed in accordance with, English law. The provisions of articles 86 to 94-8 of the Luxembourg law of 10 August 1915, as amended, on commercial companies are excluded. Initial Delivery of Notes On or before the Issue Date for each Series, the Rule 144A Global Note will be deposited with a custodian for DTC, and the Regulation S Global Note will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. The Rule 144A Notes will be registered in the name of a nominee of DTC, and Regulation S Notes will be registered in the name of a nominee of the common depository for Euroclear and Clearstream, Luxembourg. Global Notes may also be deposited with any other clearing system or may be delivered outside any clearing system, provided that the method of such delivery has been agreed in advance by the Issuer, RSB, the Paying Agents, the Trustee and the relevant Dealer(s). Notes that are to be credited to one or more clearing systems on issue will be registered in the name of a nominee or nominees for such clearing systems. Currencies Subject to compliance with all relevant laws, regulations and directives, Notes may be issued in any currency agreed between the Issuer, RSB and the relevant Dealer(s).

-12- RISK FACTORS

An investment in the Notes involves a high degree of risk. Prospective investors should consider carefully, among other things, the risks set forth below and the other information contained in this Base Prospectus prior to making any investment decision with respect to the Notes. The risks highlighted below could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects which, in turn, could have a material adverse effect on RSB’s ability to service its payment obligations under the Loan Agreement and, as a result, the ability of the Issuer to make payments under the Notes. In addition, the value of the Notes could decline due to any of these risks, and prospective investors may lose some or all of their investment.

Prospective investors should note that the risks described below are not the only risks RSB and the Issuer face. These are the risks RSB considers material. There may be additional risks that RSB currently considers immaterial or of which it is currently unaware, and any of these risks could have similar effects to those set forth above.

Risks Related to the Issuer The Issuer is an SPV and as such its ability to make payments will rely on RSB’s ability to service its payment obligations under the Loan Agreement. This will rely on RSB’s business, financial condition, results of operations and prospects which may be adversely affected by the risks highlighted below.

Risks Related to RSB’s Business and Banking Sector RSB’s business, results of operations and financial condition have been, and may continue to be, adversely affected by the volatility of macroeconomic conditions The global financial and economic crisis adversely affected the macroeconomic environment in Russia. The global and Russian financial markets, and the banking sector in particular, have faced significant volatility, dislocation and liquidity constraints since the onset of the global credit crunch, which began to unfold in the summer of 2007 and escalated into a full-scale global financial and economic crisis in the autumn of 2008. In response to the global financial and economic crisis, many countries, including Russia, announced, and in many cases implemented and continue to implement, significant rescue packages, which have included, among other things: the recapitalisation of banks through the state purchase of common and preferred equity securities; state guarantee of certain forms of bank debt; the purchase by the state of distressed assets from banks and other financial institutions; and the provision by the state of guarantees of distressed assets held by banks and other financial institutions.

An additional effect from the global financial and economic crisis was an increased concern about the stability of the financial markets generally and the strength of counterparties. As a result, many lenders and institutional investors reduced, and in some cases ceased to provide, funding to borrowers, including other financial institutions, which significantly reduced the liquidity in the global financial system, and credit risk spreads increased significantly. In the first quarter of 2009, credit markets began to re-open, credit risk spreads began to narrow and corporate credit default swaps started to reflect greater confidence among lenders to the corporate sector.

Since then, however, massive government borrowing, including that used to finance bailouts of financial and other institutions, as well as large fiscal stimulus packages, have led to a deterioration of sovereign credit of many governments. In particular, global financial markets experienced increased volatility since the second half of 2011, a period which has seen the sovereign rating downgrades of, amongst others, the United States, France, Austria, Greece, Ireland, Portugal, Spain and Italy and continued concerns over the stability of the European monetary system and the stability of certain European economies. In 2010, 2011 and the beginning of 2012, Greece negotiated two bailout packages with its creditors to avoid defaulting on its outstanding obligations. Uncertainty surrounding the outcome of these negotiations resulted in widening credit spreads, reduced liquidity and reduced access to funding in the global financial markets. A risk of contagious effects of the Greek sovereign debt crisis on other countries, in particular Italy, Spain, Portugal and Ireland, has intensified these adverse effects on the global financial markets. By the end of 2011, the sovereign debt crisis in Europe also started to have a more significant adverse effect on economic growth. GDP for all 27 EU countries decreased by 0.3 per cent. in the fourth quarter of 2011 as compared to the previous quarter (Source: Eurostat website), which also affected growth in other parts of the world, including the United States, China and Russia. There can be no assurance that

-13- the disruptions in the global capital and credit markets in connection with a sovereign debt crisis could not be amplified or replicated in other countries, including Russia, on a more significant scale in the near future. Global credit and capital markets remain volatile and there can be no assurance that a further economic downturn or a full-scale crisis will not occur.

Although RSB does not have exposure to Eurozone sovereign debt, continuing uncertainty in the international financial markets, or the default or a significant decline in the credit rating of one or more sovereigns or financial institutions, could adversely impact RSB’s business and operating results as a result of: • decreases in the business activity and deterioration of creditworthiness of customers; • reduced demand for RSB’s loan products; • impairments on assets and/or collateral as well as increased levels of non-performing loans (payments of principal and/or interest are 90 days or more overdue) (“NPLs”) and amounts of loan impairment charges; • decreases in RSB’s net interest income and fee and commission income; and • increases in borrowing costs and reduced, or complete lack of, access to capital markets due to unfavourable market conditions and increased competition for deposits.

If any of the above events occur, this could have a material adverse effect on RSB’s business, results of operations, financial conditions and prospects.

State measures of support of financial markets may be inadequate or inefficient Following the onset of the global financial and economic crisis in 2008, many governments adopted measures to facilitate the support of the banking sector, restore investor confidence, provide liquidity and support medium term growth of the economy. In Russia, these support measures included the granting of a right to the CBR and Vnesheconombank (“VEB”) to issue subordinated loans to state-owned and private banks. In addition, the CBR broadened the range of liquidity schemes available for the banks. In 2008 and 2009, RSB chose to take advantage of state support through the CBR liquidity schemes, including unsecured lending and repo operations with the CBR. As of 31 December 2009, RSB had unsecured loans from the CBR in the amount of RUB 13,238 million. The unsecured lending facility from the CBR was repaid by RSB in 2010. In addition, in October 2009 RSB received a subordinated loan from VEB for RUB 4,959 million with a fixed interest rate of 8 per cent. per annum (reduced to 6.5 per cent. per annum from August 2010) maturing in December 2019. There can be no assurance that any similar measures that might be taken in the future will succeed in supporting the liquidity position of state owned or private banks, including RSB, in the case of another financial crisis, or that they will not result in an increased overall cost of funding or will result in funding being readily available to the banks.

Instability in the Russian economy could have an adverse impact on the growth of RSB’s loan portfolio and its asset quality The European debt crisis of 2011 so far has had limited impact on the Russian economy since it has not led to significant declines in the prices of Russia’s key exports, mainly natural resource commodities, including oil and gas, as well as due to Russia’s relatively healthy fiscal finances including a low debt to GDP ratio and high level of international reserves. Nevertheless, in October 2011, Moody’s adjusted its ratings outlook for the Russian banking system from “stable” to “negative”. The change reflected concerns that market volatility was weakening Russia’s operating environment, which could potentially negatively affect Russian banks through a systemwide liquidity contraction, slower credit growth and pressured asset quality over the next 12 to 18 months. In January 2012, the World Bank cut its 2012 global economy growth forecast to 2.5 per cent. from 3.6 per cent., and the Russian economy growth forecast to 3.5 per cent. from 4.0 per cent. In January 2012, Fitch Ratings Ltd. lowered its credit rating of the Russian Federation from “positive” to “stable” based on perceived increased political uncertainty and the global economic outlook. If the negative economic and political trends continue the growth of RSB’s loan portfolio and its asset quality could be affected, which would have a material adverse effect on RSB’s business, financial condition, results of operations and prospects.

Margins on RSB’s products may decline in the future RSB has experienced a significant decrease in both its average interest rates and effective interest rates on credit card loans, personal loans and point-of-sale (“POS”) loans, products for which intense competition has developed to date. As a result of increased volatility in the international and domestic markets together with

-14- changes in the Russian regulatory environment connected with the new regulations introduced by the CBR on the disclosure of the effective interest rate charged on consumer lending products, as well as certain calculation procedures, in August 2007 RSB changed the pricing policy of its consumer lending products, including removing monthly fees and commissions charged on both new and existing products. In addition, RSB’s retail partners have introduced commissions for selling RSB’s products through their retail chains. As a result of the above, margins on RSB’s credit card loans, personal loans, POS loans and other products declined, in particular in 2009, as did effective interest rates for these products. Although in 2011 RSB’s net interest margin stabilised at the level of 18.9 per cent., in the medium term RSB believes that margins in its POS and likely in its personal loan business may contract to levels at which such business is used principally as a vehicle for acquiring credit card customers. RSB also expects that margins in its credit card business may decline as a result of increased competition in the credit card market, in particular by state-owned banks, and an increased cost of funds due to instability of the global financial markets.

RSB’s ability to grow its business is dependent on having sufficient funding as well as access to various funding sources, and RSB’s inability to access such funding at favourable rates, or at all, could adversely affect RSB’s operating results and prospects RSB funds its businesses through a range of sources including retail deposits, issuance of debt securities and bank borrowings. Over the years, RSB has sought to increase the level of retail deposits and the proportion of such deposits in its total liabilities in order to diversify its funding base. As of 31 December 2011, customer accounts accounted for 68.0 per cent. of RSB’s total liabilities as compared to 57.1 per cent. as of 31 December 2010 and 24.3 per cent. as of 31 December 2009. The ongoing availability of retail deposit funding is dependent on a variety of factors outside RSB’s control, such as general economic conditions, market volatility, consumer confidence levels in the general economy and the financial services industry, the availability and extent of deposit guarantees and other current laws and regulations affecting deposits (for example, Russia currently entitles depositors who are individuals to withdraw deposits, including term deposits, at any time). In addition, the growth in RSB’s deposits is, in part, attributable to the fact that RSB has been offering competitive interest rates on its deposits and has been placing a significant emphasis on customer service. RSB may decide that its strategy of offering higher interest rates is not sustainable in the long-term and it may decide to focus on alternative methods of attracting retail deposits. These and other factors could lead to a reduction in RSB’s ability to attract retail deposit funding on appropriate terms in the future. Similar to other deposit-taking institutions, if RSB is unable to attract retail deposits, RSB could be forced to find alternative sources of funding. Such alternative funding may not be available or, if available, may be more expensive, which may adversely impact RSB’s ability to achieve its strategic goals to expand its network of branches and grow its loan portfolio. In addition, loss of consumer confidence in RSB’s business could lead to retail deposit withdrawals in a short period of time and, if such a risk materialised, it would have an adverse effect on RSB’s ability to fund its loan portfolio and its business operations, which in turn would adversely affect RSB’s financial condition.

RSB also funds its business through the issuance of debt securities and bank borrowings. RSB’s ability to continue to access the fixed income capital markets and bank lenders to the extent sufficient to meet its funding needs, including the refinancing of outstanding debt falling due, could be adversely affected by a number of factors, including the current instability in the Russian and international financial markets, the state of the Russian financial and banking system and changing Russian and international economic conditions generally. The recent global financial and economic crisis was characterised by, among other things, extremely limited opportunities for funding in the capital markets, as well as significantly higher interbank lending rates, making financing more difficult and costly to obtain. The financial markets remain unstable due to the sovereign debt crisis in the euro-zone, doubts about the fiscal stability of the United Kingdom, Japan and the United States and resulting volatility in the global capital and credit markets. If RSB is forced to use more expensive funding sources or if other sources of its existing short and long-term funding are not available, RSB’s business, financial condition, results of operations, prospects and liquidity position could be adversely affected.

Any deterioration in the rating of RSB could have an adverse impact on its ability to obtain funding As of 31 December 2011, RSB had a “Ba3” long term rating with a stable outlook from Moody’s. RSB also had long term and short term ratings of “B+” and “B”, respectively, with a stable outlook from Standard & Poor’s and a long term rating at “B+” with a stable outlook from Fitch. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. There is no assurance that RSB’s credit ratings will not be subject to negative rating action at any time by the relevant assigning rating organisation, as was previously the case in 2008 and 2009. Such negative rating action could be caused by any of a number of factors, either alone or in combination. Examples of such

-15- factors include, without limitation, a downgrade in a sovereign rating, a significant deterioration in the operating environment, or in RSB’s financial or operational performance or the quality of its assets; liquidity pressures; or a reduction in RSB’s capitalisation levels through payment of dividends or otherwise. Any deterioration in RSB’s credit ratings could undermine confidence in RSB and limit its access to capital markets, which could require RSB to seek alternative, more expensive sources of funding in order to maintain market share or grow RSB’s business, thereby affecting RSB’s competitiveness and financial condition.

RSB’s financial condition and results of operations depend on consumers’ consumption and income levels as well as consumer understanding of credit products, which are outside RSB’s control As of 31 December 2011, 49.2 per cent. of RSB’s loan portfolio exposure was represented by its credit card products, compared to 49.9 per cent. as of 31 December 2010. In addition, as of 31 December 2011 and 31 December 2010, 20.6 per cent. and 18.5 per cent., respectively, of RSB’s loan portfolio was represented by its POS loans which are granted with respect to the purchase of consumer durable goods such as refrigerators, washing machines, televisions and mobile phones. The sustainable development of the consumer finance market and the credit card market in Russia is highly dependent on economic growth, increases in consumers’ average disposable income and levels of consumer spending. A deterioration in the performance of the Russian economy or stagnation or reduction in levels of personal income, individual purchasing power or consumer confidence (either generally or specifically in respect of the banking sector) may cause the demand for consumer goods and credit products to decrease, resulting in a corresponding decrease in demand for RSB’s credit cards and other consumer finance products. The disruptions in macroeconomic conditions within Russia or abroad described above could also have an impact on the demand for consumer goods and credit products in time. The development of the consumer finance market and credit card market in Russia is also dependent on increasing consumer understanding and acceptance of credit products, particularly in smaller population centres outside of Moscow. As a substantial portion of RSB’s customer base consists of lower-income Russians with relatively little experience or understanding of credit products, RSB’s continued growth depends on maintaining and increasing consumer acceptance of credit products.

Damage to RSB’s brand or reputation, including as a result of adverse use of the “Russian Standard” brand could have a material adverse effect on RSB’s profitability RSB’s success is dependent, in part, upon the strength of the Group’s “Russian Standard” brand and the reputation of its business. The Group licenses the “Russian Standard” trademark. There could be significant brand confusion in areas where the Group uses the same trademark for businesses other than its banking business. Such brand confusion could harm RSB’s reputation or reduce the value of the brand. If RSB’s brand recognition decreases, it may lose customers, and its business, financial condition and results of operations could be materially and adversely affected. Adverse publicity and damage to the “Russian Standard” brand could directly affect customer willingness to use RSB’s products or deposit funds with RSB and thereby directly affect its business, results of operations, financial condition or prospects. Adverse publicity and damage to the “Russian Standard” brand could also adversely affect RSB’s ability to partner with retailers and the key relationships with third parties on which RSB depends.

Failure by RSB to comply with privacy and data protection laws and regulation may lead to action being taken against RSB RSB relies on the collection and use of information from customers to conduct its business. RSB may be subject to investigative or enforcement actions by data protection authorities, legal claims or reputational damage if they act or are perceived to be acting inconsistently with the terms of a privacy policy, customer expectations or applicable law. Concerns about RSB’s collection, use and/or sharing of personal information or other privacy related matters, even if unfounded, could deter customers from using RSB’s services and require the alteration of RSB’s business practices with attendant costs and possible loss of revenue. Data protection legislation and regulation may change in the future and impose new burdensome requirements. Compliance with these requirements may increase RSB’s costs or require it to change the way it conducts business with attendant costs and possible loss of revenue.

Change in regulation or consumer protection laws may adversely affect RSB’s consumer finance business RSB’s operations are subject to legislation, regulations, rules, guidance, codes of conduct and government policies in relation to the products it markets and sells. Regulatory authorities have broad jurisdiction over many aspects of RSB’s business, including capital adequacy requirements, marketing and selling practices, advertising

-16- and terms of business. These requirements, the interpretations of which are often unclear, are typically designed to protect retail customers. Consequently, these regulations may limit RSB’s activities, including its lending, and may increase its costs of doing business or affect the profitability of RSB’s products.

In the absence of specific consumer lending laws, Russian courts have extended the scope of the Federal Law No. 2300-1 “On Consumer Protection” dated 7 February 1992, as amended (“Consumer Protection Law”), which provides general protection for consumers, to consumer loans. As of the date of this Base Prospectus, the draft law on consumer lending has been drafted by the Russian Government but has not been submitted to the Russian parliament. If specific consumer protection laws, such as the Consumer Protection Law, are adopted, such laws may provide for the right of regulatory agencies to regulate the consumer loan market and introduce mandatory rules on consumer finance activities, which may require RSB to change its business practices. A forced change in business practices may have a material impact on the success of RSB’s operations and its overall profitability.

Although RSB believes that it operates its business in compliance with all applicable laws and regulations, there can be no assurance that the laws will not change or that a regulator will not change its interpretation of the laws and take action against market participants offering such products.

RSB would have to respond to any material changes in legislation or regulation which affected its business by adapting its products. There can be no assurance that RSB will be able to respond effectively to any such changes, and its failure to do so may affect RSB’s operations and the conduct and success of its business.

The interests of RSB’s controlling shareholder may conflict with those of the Noteholders As of the date of this Base Prospectus, 99.999 per cent. of RSB’s total outstanding share capital was controlled by The Closed Joint Stock Company “Russian Standard” Corporation” (“RSC”), Limited Liability Company “Russian Standard - Invest” (“RSInv”) and The Closed Joint Stock Company with 100 per cent. foreign investments “ROUST INCORPORATED” (“ROUST”), which are in turn indirectly owned and controlled by Mr. Roustam Tariko, a Russian entrepreneur, through his holding vehicle, Roust Trading Limited (“Roust Trading”). As such, Mr. Tariko is the beneficial owner of most of RSB’s outstanding share capital. Mr. Tariko, through Roust Trading, RSC, RSInv and ROUST, is able to elect the majority of RSB’s Board of Directors and determine the outcome of all matters submitted to RSB’s shareholders without recourse to the minority shareholders, save where such matters fall within the rules governing interested party transactions under Russian civil legislation. For example, Mr. Tariko, through Roust Trading, RSC, RSInv and ROUST, could cause RSB to pursue acquisitions and other transactions or provide a loan or make large dividend payments or other distributions or payments to shareholders that are designed to benefit Mr. Tariko, RSC, RSInv and ROUST, even though such transactions may involve increased risk for the Noteholders. RSB paid RUB 5,299 million of dividends for the year ended 31 December 2011. As of 31 December 2011, loans granted by RSB to RSC and other entities controlled by Mr. Tariko amounted to RUB 2,023 million. Accordingly, the interests of the controlling shareholder may conflict with the interests of the Noteholders and the controlling shareholder may require RSB to take actions that may adversely affect RSB’s business, financial condition, results of operations and prospects and the Noteholders’ investment.

Competition in the Russian banking industry and specifically in consumer lending may continue to adversely affect RSB’s financial condition and prospects The market for consumer finance and banking services is highly competitive, and RSB is subject to significant competition from both domestic and foreign providers of financial services. According to the CBR, as of 1 March 2012, 974 banks and non-banking credit institutions were operating in Russia, with most of the large Russian banks’ operations being based in Moscow. Some of these competitors are larger and have access to greater resources than RSB. If these competitors and other providers of financial services were to focus more of their resources on the consumer finance market, it could have a negative impact on RSB’s business, results of operations, financial condition and prospects.

RSB is a retail bank focusing on consumer lending. As other banks, especially the state owned ones (such as Sberbank and Closed Joint Stock Company “Bank VTB 24” (“VTB 24”)), launch consumer finance programmes or joint ventures in Russia and as existing competitors’ programmes develop further, RSB’s share in these markets may decline. As economic conditions started to improve in the beginning of 2010, RSB has faced more intense price and other competition from its principal competitors, who are: • in the credit card loan market, Sberbank, VTB 24, Open Joint Stock Company “OTP Bank” (“OTP Bank”), Closed Joint Stock Company Bank “Tinkoff Credit Systems” (“TCS Bank”), Limited Liability Company

-17- “Home Credit & Finance Bank” (“Home Credit & Finance Bank”), Closed Joint Stock Company “Citibank” (“Citibank”), Open Joint Stock Company “Orient Express Bank” (“Orient Express Bank”) and Open Joint Stock Company “Alfa Bank” (“Alfa Bank”); • in the personal loan market, Sberbank, VTB 24, Russian Agricultural Bank and Orient Express Bank; • in the POS loan market, Home Credit & Finance Bank, Alfa Bank, OTP Bank, Limited Liability Company “Rusfinance Bank” (“Rusfinance Bank”) and Closed Joint Stock Company “BNP PARIBAS Bank” (“Cetelem”); and • in the retail deposit market, Sberbank and VTB 24.

Russian state owned banks such as Sberbank and VTB 24 have recently increased their focus on retail banking, including the provision of credit card loans, personal loans and POS loans, and may become key competitors in the future. RSB’s share in the credit card market has declined, and may continue to decline, especially due to an increased activity of Sberbank and VTB 24 in this market. In addition, in June 2011, Sberbank (which is the largest bank in Russia) and Cetelem (part of the BNP Paribas group) announced the signing of a non-binding memorandum of understanding to establish a new bank to focus primarily on the Russian POS market.

The moderate size of RSB’s business compared to Russian state owned banks such as Sberbank and VTB 24 and other Russian and international banks might impede RSB’s ability to compete successfully with such larger rivals now or in the future, which may adversely affect RSB’s business, financial condition, results of operations or prospects.

RSB’s position in the consumer finance market may also be impacted by potential consolidation in the retail sector or the launch of consumer finance projects by retailers and/or partnerships between retailers and other consumer finance providers or banks. Consolidation in the retail sectors in which RSB operates could adversely affect the terms on which RSB cooperates with its retail partners. Should retailers launch their own consumer finance programmes or partner with RSB’s competitors, independent providers of consumer finance such as RSB could face significant barriers to offering financial services to such retailers’ customers. The potential consolidation of the retail sector in Russia, the possibility that large retailers may establish their own in-house consumer finance operations or RSB’s inability to partner with key retailers could adversely affect RSB’s market position, especially in the POS loan market, and potentially lead to a decrease in its market share, volumes of business operations, interest income and profitability.

The expansion of RSB’s business is subject to a number of risks RSB may not be able to achieve its desired customer growth if it does not effectively manage the process of addressing RSB’s target markets, acquiring customers and adapting its product range to changes in customer needs. To achieve and sustain growth, RSB will need to monitor the economic cycles and customer base and offer products in those markets which are tailored to meet customer demand.

The ability of RSB to expand its business will depend on, among other things, effective adherence to its credit policies and provisioning procedures. If RSB accepts a higher degree of credit risk to achieve growth, this may have a negative effect on its underwriting standards and increase the level of NPLs in its loan portfolio, which could have a material adverse effect on its financial performance and results of operations.

A key element of RSB’s strategy is to increase volumes of credit card loans and deposits. To achieve this strategic goal, RSB intends to expand its network of banking offices throughout Russia from 181 banking offices as of 31 December 2011 to over 250 banking offices as of 31 December 2012. As it expands its network of banking offices, RSB may fail to accurately assess the market potential of targeted new regions in Russia. Additionally, these new regions may generate smaller profits than anticipated and, if RSB subsequently withdraws from a region, RSB will incur costs of withdrawal. Furthermore, RSB may not be able to support its expected growth successfully if it cannot recruit qualified employees. The failure to manage any risks associated with its growth expansion could result in a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

The Group’s expansion into Ukraine may expose it to increased credit risk which the Group may be unable to manage successfully Although the Group has been present in Ukraine since 2006, the volume of its operations is relatively small. As a result, it may not be able to successfully compete with its larger rivals in the Ukrainian market now or in the

-18- future, which may adversely affect the Group’s business and financial condition. As of 31 December 2011, the Group had 10 banking offices in different cities of Ukraine. The Group intends to expand further its network of banking offices. The Group’s expansion into Ukraine will involve increased staff costs and administrative expenses. Additionally, the new regions in Ukraine, which the Group intends to expand into, may fall short of the Group’s expectation in terms of profit generation and the Group’s withdrawal from such regions will entail additional costs of withdrawal. In addition, the Group’s policies and procedures for managing credit risk in Ukraine may not be sufficiently robust, which may expose the Group to increased credit risks it may be unable to manage effectively. Therefore the anticipated benefits of the Group’s expansion into Ukraine may not be realised in the short term, or at all, which may adversely affect the Group’s financial condition and results of operations.

RSB’s participation in the development of a postal bank in Russia may adversely affect RSB’s results of operations and prospects RSB is one of the two remaining participants in the tender held by VEB for the development of a postal bank in Russia. Should RSB win the tender, then cooperation with the Russian Post and VEB would allow RSB to increase its penetration in the retail banking market by selling products through Russian post offices. However, the terms of external investors’ participation in this project have not been determined and could require considerable investments from the external participants. In addition to funding the establishment of the postal bank, if appointed, RSB may incur additional burdens in the form of management time and other resources that it would have to commit to the project. As at the date of this Base Prospectus, RSB does not have any binding legal commitments as a result, or in respect, of this tender.

RSB relies on its relationships with third party distribution channels, but there is no guarantee that these relationships will continue in their current form or at all RSB uses various distribution channels to offer its products to customers, such as retail chains, points of sale and post offices, and its ability to successfully conduct its business and originate loans is highly dependent on its relationships and the contracts it has with these third parties.

The top ten partners of RSB among the largest Russian retail chains have generated 46 per cent. of RSB’s POS loans for the year ended 31 December 2011, compared to 51 per cent. for the year ended 31 December 2010. However, as RSB’s relationship with these retail chains is not exclusive, retailers may either seek alternatives or renegotiate their relationship with RSB to be more consistent with recent market developments. In particular, retailers have previously increased, and may continue to increase, commissions paid by RSB for selling its products through their retail chains. There can be no guarantee that retail chains or other retail stores that permit RSB POS lending operations will not choose to transfer some or all of their business to other banks, seek to provide consumer finance services directly themselves or seek to negotiate more favourable terms for cooperation with RSB, which could affect the income earned from such relationships. As a result, RSB’s business, financial condition, results of operations or prospects could be adversely affected.

RSB’s financial condition and results of operations depend on correctly assessing the creditworthiness of its customers, and this is not always possible RSB is subject to credit risks associated with its consumer finance business. There can be no assurance that RSB will correctly assess the creditworthiness of credit applicants. The quality of information about potential borrowers available to RSB on which to base its lending decisions varies and, as a result, the information may not be accurate or sufficient as compared to lenders in more developed countries. RSB has developed a proprietary database of individuals (including both RSB’s clients and applicants who are not RSB’s clients) consisting of over 30 million records as of 31 December 2011, and has access to several databases of information which help it to assess more accurately the creditworthiness of credit applicants in Moscow and in some larger cities. However, there is no assurance that the databases upon which RSB relies will be accessible on the same terms or at all in the future. In addition, RSB does not have the same or similar sources in the smaller population centres where it expects its future growth to lie. These factors and others (including the absence of a reliable national identification system in Russia and RSB’s expansion into new product lines, such as personal loans, which may attract a new customer base) may result in RSB facing increased credit delinquencies in its consumer finance portfolio. As of 31 December 2011, RSB’s restructured loans amounted to RUB 604 million and total amounts written off amounted to RUB 5,417 million. While RSB has detailed procedures in place to deal with problem loans, there can be no assurance that these procedures will result in full or partial recovery of those loans.

-19- As of 31 December 2011, NPLs represented 4.5 per cent. (by value) of RSB’s gross loans and advances to customers. Loans and advances to customers net of provision for loan impairment accounted for 60.5 per cent. of RSB’s assets as of that date. There can be no assurance that RSB’s current level of loan recovery will be maintained in the future.

RSB’s exposure to market risks, including interest rate risks, may have a material adverse effect on RSB’s financial condition and results of operations RSB is exposed to risks resulting from mismatches between the short-term (i.e., generally less than one year) nature of its loan portfolio and the longer term (i.e., generally longer than one year) nature of its debt obligations. Although its loan portfolio is based on fixed interest rates, as are most of RSB’s debt obligations, the shorter terms of the loan portfolio make the loan portfolio more susceptible to variations in interest rates. If interest rates were to decline, RSB would earn less interest income in the short-term while its interest expense, based on existing long-term indebtedness, would remain unchanged. If interest rates were to increase, RSB may be unable to pass on any increase to customers. Moreover, in the long term, RSB would be affected by such increases in interest rates when it refinances its long-term indebtedness. With increased interest expense and static or decreased interest income, RSB’s profitability would be adversely affected. Therefore, while RSB monitors interest rates with respect to its interest-earning assets and its interest-bearing liabilities, interest rate movements may adversely affect RSB’s financial position and results of operations.

Furthermore, if interest rates increase, RSB’s results of operations may be adversely affected because of the associated decline in the value of the Rouble and the decreased purchasing power of Russian consumers, which may result in decreases in demand for RSB’s consumer finance products.

RSB’s risk management policies and procedures may be ineffective RSB’s policies and procedures for managing credit risk, market risk, liquidity risk and operational risk may prove ineffective. Some of RSB’s methods for managing risk are based upon observations of historical market behaviour, and RSB applies statistical techniques to these observations to arrive at quantifications of its potential risk exposures. However, these methods may not accurately quantify RSB’s risk exposures, especially in situations that cannot be identified based on its historical data. In particular, if RSB enters new lines of business, historical data may be incomplete.

It is also possible that the recent global financial and economic crisis might have impaired RSB’s ability to assess credit exposure and asset values accurately if its models and techniques have become less predictive of future conditions, behaviours and valuations. As additional information becomes available, RSB may need to make additional provisions if default rates are higher than expected. If circumstances arise whereby RSB did not identify, anticipate or correctly evaluate certain risks in developing its statistical models, losses could be greater than the maximum losses envisaged under its risk management system. In addition, certain risks may not be accurately quantified by RSB’s risk management systems. If a material deficiency in RSB’s risk management or other internal control policies or procedures arises, this may expose it to significant credit, liquidity, market or operational risk, which may in turn have a material adverse effect on RSB’s business, financial condition, results of operations and prospects and on the value of the Notes.

Material deficiencies in RSB’s risk management policies or procedures may expose it to significant credit, liquidity, market or operational risk. Deficiencies in respect of credit risk management may lead to RSB not being able to assess accurately default risk on loans provided to its clients. RSB may, therefore, need to make additional provisions if default rates are higher than expected. Deficiencies in respect of liquidity risk management may result in the inability of RSB to meet its obligations in full when they become due without borrowing funds at higher than market rates or at all. For instance, unanticipated decreases in client deposits and/ or unexpected withdrawals of deposits may result in liquidity gaps that RSB may not be able to cover through borrowing in domestic and international capital, syndicated loan and inter-bank markets. Deficiencies in respect of interest rate risk management may have a negative impact on RSB’s funding costs, net interest income and net interest margin and may result in a gap between its interest rate-sensitive assets and liabilities. Deficiencies in respect of securities price risk management may adversely affect the value of RSB’s securities portfolio. Operational risk management deficiencies may result in significant unanticipated losses resulting from, among other things, fraud by employees or outsiders, mismanagement, unauthorised transactions by employees and operational errors. Therefore, material deficiencies in RSB’s risk management policies or procedures could have a material adverse effect on its business, financial condition, results of operations and prospects and on the value of the Notes.

-20- Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that either the Issuer or the Group will be unable to comply with its obligations as a company with securities admitted to the Official List.

RSB’s exposure to floating interest rates on its indebtedness may have a material adverse effect on its results of operations and financial condition As at 31 December 2011, RSB had RUB 4 billion of outstanding indebtedness bearing interest at floating rates linked to the 3M MosPrime rate, consisting of a RUB 4 billion loan received from the European Bank for Reconstruction and Development (the “EBRD”). While RSB’s exposure to floating interest rates on its indebtedness may be partially hedged through derivative transactions with rated counterparties, if interest rates increase RSB’s interest expense and net interest income would be directly and adversely affected.

RSB’s exposure to foreign currency exchange rate risk may increase, particularly as it continues to access international capital markets RSB’s loans and advances to customers are denominated primarily in Russian roubles while a substantial proportion of its liabilities is denominated in foreign currencies and in particular U.S. dollars. Although RSB sets limits and performs certain other measures aimed at reducing exchange rate risk, including, but not limited to, entering into foreign exchange derivative contracts, fluctuations in exchange rates may adversely affect RSB’s business, financial condition, results of operations and prospects.

In order to diversify its funding sources, RSB plans to continue accessing the international capital markets, increasing its exposure to inherent risks of borrowing funds in foreign currencies and then using such funds to make loans predominantly in Russian roubles. Although RSB seeks to minimise such risks there is no guarantee that these measures will be effectively implemented, that they will allow RSB to minimise the impact of currency volatility or that they will be available to RSB.

If RSB’s risk management procedures and limits do not minimise the impact of exchange rate risk on the RSB, its business, financial condition, results of operations and prospects may be materially adversely affected.

Any failure of RSB to comply with capital adequacy or other ratios may result in the revocation of RSB’s bank licence and breach of loan covenants According to CBR regulations, which apply a methodology using unconsolidated financial data based on Russian accounting standards, RSB’s shareholders’ equity as a percentage of risk-weighted assets, or its capital adequacy ratio, must be at least 10 per cent. RSB’s capital adequacy ratio in accordance with the CBR regulations as of 31 December 2011 was 13.3 per cent. (and thus in compliance with CBR requirements). If, however, RSB’s capital adequacy ratio were to fall below the 10 per cent. threshold, RSB would be in violation of the CBR mandatory ratio, and the CBR could impose various administrative fines or, in the event of repeated violations, revoke RSB’s banking licence. As of 31 December 2010, RSB had a total capital ratio of 28.2 per cent. and a Tier 1 capital ratio of 18.7 per cent. calculated in accordance with the requirements of the Basel Accord as defined in the International Convergence of Capital Measurement and Capital Standard (updated April 1998) and Amendment to the Capital Accord to incorporate market risks (updated November 2005), commonly known as Basel I (“Basel”). As of 31 December 2011, RSB had a total capital ratio of 21.3 per cent. and a Tier 1 capital ratio of 14.0 per cent. calculated in accordance with Basel.

In addition, certain of RSB’s loan agreements contain covenants that require RSB to maintain its capital adequacy ratio in accordance with the CBR regulations and total adequacy ratio in accordance with Basel at certain levels. If RSB were to fall below the required thresholds for its capital adequacy ratio and total capital ratio, it would breach its covenants and be in default under the terms of these agreements, as well as the terms of other loan agreements to which it is a party which have cross-default provisions. Any such default and/or cross- default would permit acceleration of amounts due under the loans, which could have a material adverse effect on RSB’s financial condition and business.

RSB may be unable to retain key management personnel or recruit experienced and/or qualified personnel, either of which may adversely affect RSB’s results of operations and prospects RSB is dependent on its senior management to implement its strategy and the operation of its day-to-day business. In addition, retailer and other business relationships of members of senior management are important to

-21- the conduct of RSB’s business. RSB’s continuing success depends, in part, on its ability to continue to attract, retain and motivate qualified and experienced banking and management personnel. Competition in the Russian banking industry for personnel with relevant expertise is intense, due to the relatively small number of available qualified individuals. RSB’s failure to recruit and retain necessary personnel or manage its personnel successfully could have a material adverse effect on RSB’s business, financial condition, results of operations or prospects.

If RSB’s provision for loan impairment is not sufficient to cover actual loan losses, RSB’s earnings could decrease RSB makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of borrowers and the value of assets serving as collateral for the repayment of many loans. In determining the amount of the allowance for loan losses, RSB reviews its loans and its loss and delinquency experience, and evaluates economic conditions. If RSB’s assumptions are incorrect, its provision for loan impairments may not be sufficient to cover probable incurred losses in its loan portfolio, resulting in additions to the allowance. RSB’s provision for loan impairment was RUB 8,483 million, or 6.9 per cent., of total loans as at 31 December 2011, and RUB 7,792 million, or 8.7 per cent., of total loans as at 31 December 2010. RSB’s NPLs were 4.5 per cent. of gross total loans as at 31 December 2011, and 5.9 per cent. of gross total loans as at 31 December 2010. Material additions to the provision for loan impairment could materially decrease RSB’s net income. The actual amount of future provisions for loan losses cannot be determined in advance and may vary from the amounts of past provisions. Any increase in the provision for loan impairment might have a material adverse effect on RSB’s financial condition and results of operations.

RSB’s business is highly dependent on its IT system, the disruption or failure of which could result in loss of business and reputational damage to RSB As with other consumer finance groups, RSB’s business depends on its ability to process a large number of transactions efficiently and accurately. RSB’s ability to maintain financial and operating controls, to monitor and manage its risk exposure across RSB, to keep accurate records, to provide high quality customer service, and to develop and sell products and services depends, in part, on the uninterrupted and efficient operation of its information and communications systems, including its information technology and other systems which protect business continuity. It also depends on such systems’ ability to increase capacity.

RSB’s IT systems may be vulnerable to a number of problems, such as software or hardware malfunctions, malicious hacking, physical damage to vital IT centres and computer virus infection. In addition, RSB’s IT systems need regular upgrading to meet changing business and regulatory requirements and to maintain efficiency of its network’s operations. To the extent that RSB’s activities or the activities of customers involve the storage and transmission of confidential information, security breaches and viruses could expose RSB to claims, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in RSB’s systems and could adversely affect RSB’s reputation and its ability to generate deposits.

Moreover, as RSB considers expanding its Internet banking services, it may be exposed to greater security risks and additional risks of disruption to its systems. There can be no assurance that a disruption (even short-term) to the functionality of RSB’s information technology systems, delays, or other problems in increasing the capacity of the information technology systems, or increased costs associated with such systems, will not have a material adverse effect on RSB’s business, financial condition, results of operations or prospects.

RSB’s financial condition and results of operations could be adversely affected if actual insurance claims against RSI and BAC exceed RSI’s and BAC’s loss reserves Through its holdings in Russian Standard Insurance (“RSI”) and Bankassuranse Company (“BAC”), RSB engages in the provision of insurance products. RSI’s and BAC’s results of operations and financial condition depend upon its ability to assess accurately the potential losses associated with the risks that it insures. RSI and BAC establish reserves for unpaid losses and loss adjustment expense (“LAE”) liabilities, which are estimates of future payments of reported and unreported claims for losses and related expenses with respect to insured events that have occurred. The process of establishing reserves can be complex and is subject to considerable variability as it requires the use of informed estimates and judgments. Actuarial estimates of unpaid loss and LAE liabilities are subject to potential errors of estimation, which could be significant, due to the fact that the ultimate disposition of claims incurred prior to the date of such estimation, whether reported or not, is subject to the

-22- outcome of events that have not yet occurred. Examples of these events include the accuracy of the factual information on which the estimates were based, especially as this develops, jury decisions, court interpretations, legislative changes, changes in the medical condition of claimants, public attitudes, and economic conditions such as inflation. Any estimate of future costs is subject to the inherent limitation on the ability to predict the aggregate cost of future events. It should therefore be expected that the actual emergence of loss and LAE liabilities will vary, perhaps materially, from any estimate. In addition, neither RSI nor BAC is insured by a re-insurer. If the amount of insurance payments increased, this would affect the Group’s profit. As a result, RSB’s business, financial condition, results of operations or profits could be adversely affected.

Risks Related to Russia The Group is a Russian banking group and substantially all of its net interest income is derived from Russia. There are certain risks associated with an investment in Russia.

Emerging markets such as Russia are subject to greater risks than more developed markets Investors in emerging markets such as Russia should be aware that these markets are subject to greater risk than more developed markets, including, in some cases, significant legal, economic, financial and political risks.

Investors should also note that emerging economies such as the economy of Russia are subject to rapid changes and that the information set out in this Base Prospectus may become outdated relatively quickly. Moreover, financial turmoil in any large developing country may tend to adversely affect prices in equity and debt markets of other developing countries as investors move their money to more stable and developed markets. For example, in the fourth quarter of 2008, during the acute stage of the global financial and economic crisis, the Russian securities markets were highly volatile, resulting, on occasions, in a series of temporary suspensions in trading on the MICEX and RTS stock exchanges by the Federal Service for Financial Markets of Russia (the “FSFM”), which had an adverse impact on the price of Russian securities generally.

As has happened in the past, financial problems, or an increase in the perceived risks associated with investing in emerging economies, could dampen foreign investments in Russia and have an adverse effect on the Russian economy as a whole. In September 2011, due to the global market turbulence the World Bank cut its forecast for Russian economic growth for 2011 from 4.4 per cent. to 4 per cent. Moreover, any financial turmoil can result in declines in the creditworthiness of many borrowers and an overall decrease in demand for loans as well as severe liquidity constraints for companies that operate in emerging markets due to the withdrawal of foreign funding sources, which, in turn, could have an adverse effect on Russian banks, including RSB.

Investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, their investment is appropriate. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved and investors are urged to consult with their own legal, financial and tax advisers before making an investment in the Notes.

Political instability in Russia may have a material adverse effect on RSB’s business, financial condition, results of operations or prospects There was considerable political uncertainty in Russia in the 1990s, characterised by frequent conflicts between the executive, legislative and judicial authorities, which had a consequent adverse impact on the business and investment climate in Russia. Over the past two decades, the progress of political and other reforms has been erratic and unpredictable and the composition of the Russian Government has at times been unstable. The Russian political system continues to be vulnerable to popular dissatisfaction, including dissatisfaction with the results of the privatisations of the 1990s, as well as to demands for autonomy from certain ethnic and regional groups. Shifts in governmental policy and regulation in Russia are less predictable than in many Western democracies and could disrupt or reverse political, economic and regulatory reforms. Any significant change in the Russian Government’s programme of reform could lead to a deterioration in Russia’s investment climate which might limit the ability of RSB to obtain financing in the international capital markets, could require RSB to seek alternate sources of funding resulting in higher borrowing costs and could have a material adverse effect on its business, results of operations, financial condition and prospects.

Political activity in Russia increased when the State Duma and presidential elections took place in December 2011 and March 2012, respectively. In protest to results of the elections, many residents of Moscow and other Russian cities took part in rallies organised by Russian political parties. While the Russian political system and the relationship between the President, the Russian Government and the Russian parliament currently appear to

-23- be stable, the potential for political instability resulting from the uncertain political climate and an increase in political activity in Russia should not be disregarded. As a result of this political instability, investment in Russian companies may decrease and the stability of the Russian economy may be significantly affected. This may have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

Political, social and military conflicts, acts of terrorism or natural disasters could have a material adverse effect on RSB’s business, financial condition, results of operations or prospects Russia is a federation of 83 political units, which include republics, territories, regions, cities of federal significance, an autonomous region and autonomous districts. The delineation of authority and jurisdiction among the constituents of Russia and the Russian Government is, in many instances, unclear and sometimes remains contested. In the past, lack of consensus between the federal government and regional or local authorities resulted in the enactment of conflicting legislation at various levels and led to political instability. In particular, in the past, conflicting laws were enacted in the areas of privatisation, securities, corporate legislation, regulation of land use and licensing. Some of these laws and the governmental and administrative decisions implementing them, as well as certain transactions consummated pursuant to them, have, in the past, been challenged in Russian courts and such challenges may occur in the future. This lack of consensus creates uncertainties in the operating environment in Russia, which could hinder RSB’s long-term planning efforts and may prevent RSB from effectively and efficiently carrying out its business strategy.

Military conflicts and international terrorist activity have historically had a significant effect on international finance and commodity markets. In addition, ethnic, religious, historical and other divisions have, on occasions, given rise to tensions and, in some cases, military conflicts and terrorist attacks. Thus, the conflict in the Russian region of Chechnya in the late 1990s and into the 2000s brought normal economic activity within Chechnya to a halt for a period of time and adversely affected the economic and political situation in neighbouring regions. Violence and attacks relating to conflicts in the North Caucasus also spread to other parts of Russia and resulted in terrorist attacks in Moscow. Most recently, on 24 January 2011, suicide bombings were carried out at the Moscow Domodedovo airport, which, as reported, resulted in the death of more than 37 people and injuries to many more. Any future military conflicts or acts of terrorism could have an adverse effect on Russia’s political stability, as well as the international financial and commodities markets and the global economy.

Historically, natural disasters have adversely affected the global and Russian economy and financial market. For example, in July and August 2010, a series of fires broke out across Western Russia and around Moscow, covering at one stage over 193,000 hectares. The fires, combined with a summer drought and record high temperatures, resulted in a decline in the Russian harvest, and accordingly an increase in demand for imported grain, reported to be Russia’s largest import demand for over ten years. The costs associated with controlling and reducing the fires, addressing environmental concerns and repairing the damage caused by the fires may have had an adverse effect on the Russian economy. The risks associated with these or similar events could materially and adversely affect the investment environment and overall consumer confidence in Russia, which, in turn, could have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

Economic instability in Russia could have a material adverse effect on the business of RSB Since the dissolution of the Soviet Union, Russia has experienced and/or is currently experiencing: • significant declines in national gross domestic product (“GDP”); • high levels of inflation; • an unstable currency; • high levels of state or corporate debt, relative to GDP; • crises in banking sector limiting the ability of banks to provide liquidity to Russian corporate and individual borrowers; • a large number of loss-making enterprises that continue to operate due to the lack of effective bankruptcy procedures; • significant use of barter transactions and illiquid promissory notes to settle commercial transactions; • widespread tax evasion; • growth of the “black” and “grey” market economies; • pervasive capital flight;

-24- • high levels of corruption and extensive penetration of organised crime into the economy; • political and social instability, including acts of terrorism; • dependence of the economy on exports of commodities; • significant declines and volatility in the stock market; • significant increases in unemployment and underemployment; • the impoverishment of a large portion of the Russian population; and • outdated and deteriorating physical infrastructure.

As Russia produces and exports large quantities of crude oil, natural gas and other commodities, the Russian economy is particularly vulnerable to fluctuations in the prices of crude oil, natural gas and other commodities on the world market, which reached record high levels in the first half of 2008 and have since experienced high levels of volatility, including significant decreases. During the recent global financial and economic crisis, the Russian economy was characterised by extreme volatility in debt and equity markets, reductions in foreign investment and sharp decreases in GDP. There can be no assurance that a future financial or economic crisis, will not have a negative effect on investors’ confidence in Russia’s markets or economy or the ability of Russian entities to raise capital in the international capital markets, any of which, in turn, could have a material adverse effect on Russia’s economy and/or RSB’s business, results of operations, financial condition and prospects.

Disruptions or deterioration in Russia’s physical infrastructure may increase the cost of doing business in Russia Russia’s physical infrastructure is in very poor condition and largely dates back to Soviet times. It has not been adequately funded and maintained over the past two decades and may cause disruptions in normal business activities, as was the case when recent electricity and heating shortages disrupted the local economics of several regions of Russia. Particularly affected are pipeline, rail and road networks, power generation and transmission systems, communication systems and building stock. The Russian Government is actively implementing programmes to reorganise the nation’s rail, electricity and telephone systems. Such reorganisations are expected to result in increased charges and tariffs while failing to generate the anticipated capital investment needed to repair, maintain and improve these systems. Further deterioration of Russia’s physical infrastructure may harm the national economy, disrupt the transportation of goods and supplies, add costs to doing business in Russia and interrupt business operations, any of which could have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

Crime and corruption could disrupt RSB’s ability to conduct its business and adversely affect the value of the Notes Levels of organised criminal activity continue to be significant in Russia. The Russian and international press have reported high levels of corruption in Russia, including the bribing of officials for the purpose of initiating investigations by government agencies and facilitating payments. Additionally, published reports indicate that a significant number of the Russian media regularly publishes biased articles in exchange for payment. RSB’s business, results of operations, financial condition and prospects, as well as the value of the Notes, could be materially adversely affected by illegal activities or corruption or by claims alleging that RSB is involved in illegal activities.

Risks related to the Russian legal system and legislative weaknesses Russia continues to develop a legal framework adequate to facilitate the proper functioning of a market economy. The recent nature of much of Russian legislation and regulation and the rapid evolution of the Russian legal system place the enforceability of certain laws and regulations in doubt, resulting in ambiguities and inconsistencies in their application. The following aspects of Russia’s legal system, many of which do not exist in countries with more developed legal systems, create uncertainty with respect to many of the legal and business decisions that RSB’s management makes: • since 1991, Soviet law has been largely, but not entirely, replaced by a new legal regime as established by the 1993 Russian Federal Constitution, the Civil Code of Russia (the “Civil Code”) and other federal laws and by decrees, orders, regulations and resolutions issued by the President, the Russian Government and federal ministries which are, in turn, complemented by regional and local rules and regulations. There have

-25- been, and continue to be, inconsistencies between such laws, presidential decrees, state resolutions and ministerial orders, and between local, regional and federal legislation and regulations; • decrees, resolutions and regulations may be adopted by state authorities and agencies in the absence of a sufficiently clear constitutional or legislative basis and with a high degree of discretion. See “Unlawful or arbitrary government actions may have a material adverse effect on RSB’s business, financial condition, results of operations or prospects”; • substantial gaps in the regulatory structure may be created by delay in or the absence of regulations implementing certain legislation; • there is a lack of judicial and administrative guidance on interpreting applicable rules and judicial decisions have limited value as precedents. Most court decisions are not published and enforcement of court orders can in practice be very difficult in Russia; • Russia has a judiciary with limited experience in interpreting and applying market-oriented legislation that is vulnerable to economic and political influence; and • Russia has weak enforcement procedures for court judgments and there is no guarantee that a foreign investor would be able to obtain effective redress in a Russian court.

As a result of the above factors, sudden unexpected changes in legal requirements in Russia may occur. Such unpredictability and lack of legal guidance may result in inadvertent violations by RSB of applicable rules and regulations.

Moreover, the current status of the Russian legal system makes it uncertain whether RSB would be able to enforce its rights in disputes with any of its contractual counterparties. See “Enforcement of RSB’s rights in Russia including the enforcement of security or guarantee arrangements in Russia may be time consuming or impossible”. RSB’s ability to protect and enforce such rights is dependent on the Russian courts, which are underdeveloped, inefficient and, in places, corrupt. The independence of the judicial system and its immunity from economic, political and social influences in Russia remains uncertain and the court system is generally understaffed and underfunded. All of these factors make judicial decisions in Russia difficult to predict and effective redress uncertain. In addition, court claims are often used to further political aims and court judgments are not always enforced or followed by law enforcement agencies.

Furthermore, although Russia (as successor to the Soviet Union) is a party to the New York Convention and therefore arbitral awards obtained in another signatory state should be recognised by a Russian court, in practice, reliance on international treaties may meet resistance or lack of understanding in courts of Russia. These factors introduce an element of delay and unpredictability into the process of enforcing any foreign arbitral award in Russia, which may hamper investors’ ability to sue under the Notes.

These weaknesses of the Russian legal system create a considerable uncertainty in legal and operating environment for Russian banks and banking groups, including RSB, as compared to banks in developed countries. In such environment, it is more difficult for RSB, as well as for the other Russian banks and banking groups, to comply with existing and future laws and regulations and the terms and conditions of its licenses and permits, the violation of which may result in the imposition of fines or penalties or more severe sanctions. These weaknesses also affect RSB’s costs of compliance and the costs of doing business generally and create an unfavourable environment for quick and efficient resolution of disputes with other parties. Any of the above factors could have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

Russia’s banking and financial regulations are subject to relatively frequent changes and it is unclear how these changes could impact on RSB’s business Like most of Russia’s legislation on business activities, Russia’s laws on banks and banking activity were adopted in the early 2000s. The CBR continues to develop new banking legislation and regulations, including regulations on bank capital, aimed at bringing the regulatory regime more in line with that of more developed countries and regulations aimed at the protection of retail customers. Because of the changes in the banking and financial regulations, Russian banks operate in a new and relatively unclear regulatory environment. It is difficult to forecast how the changes in the banking and financial regulation will affect the Russian banking system, and no assurance can be given that the regulatory system will not change in a way that will impair RSB’s ability to provide a full range of banking services in Russia or to compete effectively, thus adversely affecting RSB’s business, financial condition, results of operations and prospects.

-26- Unlawful or arbitrary government actions may have a material adverse effect on RSB’s business, financial condition, results of operations or prospects State authorities have a high degree of discretion in Russia and at times exercise such discretion arbitrarily, without conducting a hearing or giving prior notice, and sometimes they illegally go beyond the limits of their discretion. Moreover, the state also has the power, in certain circumstances, by regulation or act, to interfere with the performance of, or to nullify or terminate contracts. Unlawful or arbitrary state actions have included withdrawal of licences, sudden and unexpected tax audits, criminal prosecutions and civil actions. Federal and local government agencies have also used common defects in matters surrounding documentation of financing activities as pretexts for court claims and other demands to invalidate such activities and/or to void transactions, often for political purposes. Unlawful or arbitrary state action, if directed at RSB, could have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

Enforcement of RSB’s rights in Russia including the enforcement of security or guarantee arrangements in Russia may be time consuming or impossible The current status of the Russian legal system makes it uncertain whether RSB would be able to enforce its rights in disputes with its contractual counterparties. RSB’s ability to operate in Russia could be adversely affected by difficulties in protecting and enforcing its rights and by future changes to laws and regulations. Further, its ability to protect and enforce such rights is dependent on the Russian courts. See “Risks related to the Russian legal system and legislative weaknesses”. Any of the above may have an adverse effect on RSB’s business, results of operations, financial condition and prospects.

In addition, some RSB’s loans are guaranteed by legal entities and/or individuals. If the guarantor’s financial condition deteriorates or if RSB is unable to enforce the guarantee, it may suffer losses, which could have a material adverse effect on its business, results of operations, financial condition and prospects.

Legislation to protect against nationalisation and expropriation may not be enforced in the event of a nationalisation or expropriation of RSB’s assets Although the Russian Government has enacted legislation to protect property against expropriation and nationalisation and to provide fair compensation to be paid if such events were to occur, there can be no certainty that such protections would be enforced. This uncertainty is the result of several factors, including the lack of state budgetary resources, an independent judicial system and sufficient mechanisms to enforce judgments. The concept of property rights is not well developed in Russia and there is not a great deal of experience in enforcing legislation enacted to protect private property against nationalisation and expropriation. As a result, RSB may not be able to obtain proper redress in the courts, and may not receive adequate compensation if in the future the Russian Government decides to nationalise or expropriate some or all of RSB’s assets. The expropriation or nationalisation of any of RSB’s assets without fair compensation may have a material adverse effect on RSB’s business, results of operations, financial condition and prospects.

The Russian taxation system is relatively underdeveloped RSB is subject to a broad range of taxes and other compulsory payments imposed at the federal, regional and local levels, including, but not limited to, corporate income tax, value added tax, property tax and other taxes.

Russian tax laws, regulations and court practice are subject to frequent change, varying interpretations and inconsistent and selective enforcement. Historically, the system of tax collection has been relatively ineffective, resulting in the imposition of new taxes in an attempt to increase government revenues. The existing Russian tax legislation, including the Tax Code of Russia (the “Tax Code”), has been in force for a short period relative to tax laws in more developed market economies. Interpretation of existing tax laws by the governmental authorities is often unclear, inconsistent or contradictory and may result in the imposition of conditions, requirements or restrictions not provided for by the existing legislation. Accordingly, few precedents with regard to the interpretation of these laws have been established. In addition, in some past instances, although it may be viewed as contradictory to Russian constitutional law, Russian tax authorities have applied certain tax laws retroactively, issued tax claims for periods for which the statute of limitations had expired and reviewed the same tax period multiple times. In practice, the Russian tax authorities generally interpret the tax laws in ways that do not favour taxpayers, who often have to resort to court proceedings to defend their position against the tax authorities. Furthermore, in the absence of binding precedent, court rulings on tax or other related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory.

-27- In addition to the usual tax burden imposed on Russian taxpayers, these conditions complicate tax planning and related business decisions. For example, tax laws are unclear with respect to the deductibility of certain expenses. Despite RSB’s best efforts to comply with applicable tax laws, these uncertainties could possibly expose RSB to significant fines and penalties and to potentially severe enforcement measures despite its best efforts at compliance, could result in a greater than expected tax burden and could have a material adverse effect on the Group’s business, financial condition, results of operations or prospects.

On 12 October 2006, the Plenum of the Supreme Arbitration Court of Russia (the “Supreme Arbitration Court”) issued Resolution No. 53 (the “Resolution”), formulating the concept of “unjustified tax benefit”, which is described in the Resolution by reference to circumstances such as absence of business purpose or transactions where the form does not match the substance, and which could lead to the disallowance of tax benefits resulting from the transaction or the re-characterisation of the transaction for tax purposes. There has been very little further guidance on the interpretation of this concept by the tax authorities or courts, but it is likely that the tax authorities will actively seek to apply this concept when challenging tax positions taken by taxpayers in Russian courts. Although the intention of this Resolution was to combat tax law abuses, in practice there can be no assurance that the tax authorities will not seek to apply this concept in a broader sense than may have been intended by the Supreme Arbitration Court.

Russia’s largely ineffective tax collection system and continuing budgetary funding requirements increase the likelihood that the Russian Government will impose arbitrary and/or onerous taxes and penalties in the future, which could have a material adverse effect on RSB’s business, financial condition, results of operations or prospects. Additionally, tax has been utilised as a tool for significant state intervention in certain key industries.

A large number of changes have been introduced to the Tax Code since its adoption. These amendments may result in additional tax costs for RSB. One of these amendments was introduced to decrease deductibility limits applicable to taxpayers’ interest expenses, which are calculated on the basis of the CBR’s refinance rate (including for obligations denominated in foreign currency). The amendment decreasing deductibility limits was introduced as a temporary measure to be in effect for a time period specified in the law and, according to the current wording of the law, this period expires on 31 December 2012.

The above conditions create tax risks in Russia that are more significant than the tax risks typically found in countries with more developed taxation, legislative and judicial systems. These tax risks may impose additional burdens and costs on RSB’s operations, including management resources. Further, these risks and uncertainties complicate RSB’s tax planning and related business decisions, potentially exposing RSB to significant fines, penalties and enforcement measures, which could have a material adverse effect on the RSB’s business, results of operations, financial condition and prospects.

It is expected that Russian tax legislation will become more sophisticated, which may result in the introduction of additional revenue raising measures. Although it is unclear how any new measures would operate, the introduction of such measures may affect RSB’s overall tax efficiency and may result in significant additional taxes becoming payable. RSB cannot offer prospective investors any assurance that additional tax exposures will not arise while the Notes are outstanding. Additional tax exposures could have a material adverse effect on RSB’s business, financial condition, results of operations or prospects.

Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments Generally, tax returns in Russia remain open and subject to inspection by the tax authorities for a period of three years immediately preceding the year in which the decision to conduct a tax audit is taken. The fact that a particular year has been reviewed by the tax authorities does not mean that any tax returns applicable to that year will not be subject to further review by a superior tax authority during the three year limitation period. On 14 July 2005, the Constitutional Court of Russia issued a decision that allows the statute of limitations for tax penalties to be extended beyond the three year term set forth in the Tax Code if a court determines that a taxpayer has obstructed or hindered a field tax audit. Moreover, amendments introduced to the Tax Code, which came into effect on 1 January 2007, provide for the extension of the three year statute of limitations if the actions of a taxpayer create insurmountable obstacles for a tax audit. Because none of the relevant terms is defined in Russian law, the tax authorities may have broad discretion to argue that a taxpayer has “obstructed” or “hindered” or “created insurmountable obstacles” in respect of an inspection and to ultimately seek review and possibly apply penalties beyond the three year term.

-28- Tax audits may result in additional costs to RSB if the relevant tax authorities conclude that RSB did not satisfy its tax obligations in any given year. Such audits may also impose additional burdens on RSB by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on RSB’s business, financial condition, results of operations and prospects or the trading price of the Notes.

Russian transfer pricing legislation is unclear Transfer pricing legislation became effective in Russia on 1 January 1999. This legislation allowed the tax authorities to make transfer-pricing adjustments and impose additional tax liabilities in respect of certain types of transactions (“controlled” transactions). There were also special transfer pricing rules for transactions with securities and derivatives. However, Russian transfer pricing rules were not well-developed and there was little guidance and court practice, which left a wide room for interpretation by the Russian tax authorities and courts.

Following adoption of Federal Law No 227-FZ dated 18 July 2011, the new Russian transfer pricing rules became effective from 1 January 2012. The new rules are more technically elaborated, detailed and, to a certain extent, better aligned with the international transfer pricing principles developed by the Organisation for Economic Cooperation and Development.

The amendments have toughened considerably the previous transfer pricing rules, by, among other things, effectively shifting the burden of proving market prices from the tax authorities to the taxpayer and obliging the taxpayer to keep specific documentation.

The introduction of the new transfer pricing rules may increase the risk of transfer pricing adjustments being made by the tax authorities and, therefore, may have a material impact on RSB’s business and results of operations. It will also require RSB to ensure compliance with the new transfer pricing documentation requirements proposed in such rules.

Russian corporate governance, public reporting requirements and accounting regulations, to which RSB is subject, differ significantly from those applicable to comparable companies in other jurisdictions RSB’s corporate affairs are governed by its charter, its internal regulations and the laws governing Russian banks and companies incorporated in Russia. The responsibilities of members of RSB’s management and Board of Directors under Russian law are different from those applicable to, and may be subject to certain requirements not generally applicable to, companies organised in the United Kingdom, the United States or other developed countries. For instance, disclosure and reporting requirements, as well as anti-fraud and insider-trading legislation, have only recently been enacted in Russia. Most Russian companies and managers are not accustomed to restrictions on their activities arising from these requirements. The concept of fiduciary duties of management or directors to their companies and shareholders is also relatively new and is not well developed. Violations of disclosure and reporting requirements or breaches of fiduciary duties could materially adversely affect RSB’s business, financial condition, results of operations and prospects and the value of the Notes. Russian banking and securities market regulations contain certain disclosure requirements, including the requirement to file periodic financial statements prepared in accordance with Russian Accounting Standards (“RAS”) with the CBR. Much of this financial information is subsequently made available to the public. Material differences exist between financial information prepared under RAS and that prepared under IFRS. Therefore, prospective investors are cautioned not to place undue reliance on such information when evaluating the financial performance of RSB. In addition, despite recent initiatives to improve corporate transparency in Russia, there is less publicly available information about RSB than there is available for comparable banks and banking groups in, for example, the United Kingdom or the United States.

Neither the Issuer nor RSB has independently verified official data from Russian government agencies, nor have they independently verified information regarding the banking sector Official statistics and other data published by the CBR, Russian federal, regional and local governments and federal agencies may be substantially less complete or researched and, consequently, less reliable than those published by comparable bodies in more developed countries, such as those in North America and Western Europe. Accordingly, neither the Issuer nor RSB can assure prospective investors that the official sources from which the Issuer and RSB have drawn some of the information set out herein are reliable or complete. Russian state entities may produce official statistics on bases different from those used by comparable bodies in other jurisdictions. Any discussion of matters relating to Russia herein may, therefore, be subject to uncertainty due to concerns about the completeness or reliability of available official and public information.

-29- Risks Related to the Notes and the Trading Market Payments under the corresponding Series of Notes are limited to the amount of certain payments received under the relevant Loan Agreement The Issuer is only obliged to make payments under a Series of Notes to the Noteholders in an amount equal to, and in the same currency as, sums of principal, interest and additional amounts (if any) actually received and retained (net of tax) by or for the account of the Issuer from RSB pursuant to the relevant Loan Agreement. Consequently, if RSB fails to meet its payment obligations under the Loan Agreement in full, this will result in the Noteholders of a Series of Notes receiving less than the scheduled amount of principal, interest and additional amounts (if any) on the relevant due date.

The Noteholders have no direct recourse to RSB Except as otherwise disclosed in the “Terms and Conditions of the Notes” and in the Trust Deed, no proprietary or other direct interest in the Issuer’s rights under or in respect of any Loan exists for the benefit of the Noteholders. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce any of the provisions of the Loan Agreement or have direct recourse to RSB, except through action by the Trustee under the Security Interests (as defined in “Terms and Conditions of the Notes”). Neither the Issuer nor the Trustee pursuant to the Security Interests shall be required to enter into proceedings to enforce payment under the Loan Agreement, unless it has been indemnified and/or secured by the Noteholders to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith.

Payment of principal and/or interest by RSB under the Loan Agreement to, or to the order of, the Trustee or the Principal Paying Agent is expected to meet, and will discharge, the Issuer’s obligations in respect of the Notes. Consequently, the Noteholders will have no further recourse against the Issuer or RSB after such payment is made.

Newness of debt instruments denominated and settled in Roubles There are risks associated with the newness of debt instruments that are denominated and settled in Roubles and the inexperience of Euroclear and Clearstream, Luxembourg (both “Clearing Systems”) and the Russian and international banking systems in dealing with them.

Offerings of debt instruments that are denominated and may be settled in Roubles, as a Series of Notes may be, are a relatively new product in the international capital markets. This, coupled with the relative inexperience of Clearing Systems and the Russian and international banking systems in dealing with Rouble payments and Rouble accounts, could lead to unforeseen difficulties, which may have an adverse effect on the liquidity, marketability or trading price of such Notes.

In particular: • Roubles became an eligible settlement currency of Clearstream, Luxembourg with effect from 15 January 2007 and of Euroclear from 12 February 2007. Due to the lack of experience of the Clearing Systems with settling, clearing and trading debt instruments that are both denominated and settled in Roubles, there can be no guarantee that such clearing, settlement and trading procedures will progress smoothly or in a way which is comparable to procedures carried out with respect to instruments denominated in more conventionally settled currencies, such as U.S. Dollars or Euros. • Russian law previously prohibited or otherwise severely restricted the transfer and holding of Roubles offshore and required their repatriation onshore. Although these restrictions have now been lifted for non-residents (save for some restrictions which apply to the regime of residents’ accounts held outside of Russia), there is still no specific tested framework under Russian law for transferring or holding Roubles in offshore Rouble accounts. As with much recent Russian legislation, there is extremely limited or non-existent regulatory or court practice in interpreting these regulations (see “Risks Related to Russia” - “Risks related to the Russian legal system and legislative weaknesses”). If restrictions or prohibitions were placed on the transfer and holding of Roubles offshore or if such legislation was reinterpreted by the Russian regulators or courts to the effect that restrictions were still deemed to apply to the transfer and holding of Roubles offshore, this would severely hinder the Noteholders’ ability to receive payments of principal or interest under the relevant Notes or proceeds from the sale of such Notes.

-30- • Payments of principal and interest under the relevant Notes and proceeds from the sale of such Notes will be made in Roubles. All payments of Roubles to, from, or between Rouble accounts located outside Russia will be made via onshore correspondent accounts within the Russian banking system. The Russian banking system is less developed than many of its Western counterparts and at present has little experience in dealing with payments relating to Eurobonds or similar international debt instruments. Consequently there is a risk that payments of both principal and interest under the relevant Loan and the relevant Notes and proceeds from the sale of such Notes, which need to pass through the Russian banking system, will be subject to delays and disruptions which may not exist in more mature banking markets. • In order for the Noteholders to remove Roubles received from payments of principal and interest on the relevant Notes and proceeds from the sale of such Notes from the Clearing Systems, they will need to hold a bank account denominated in Roubles. The administrative difficulties associated with opening Rouble accounts outside Russia are significant. Non-resident Noteholders may also encounter considerable procedural difficulties with opening Rouble accounts onshore in Russia. There can therefore be no guarantee that the Noteholders will be able to successfully open up a Rouble bank account either offshore or in Russia or transfer Rouble payments made under the relevant Notes out of the Clearing Systems.

Upon the occurrence of certain circumstances described in the relevant Loan Agreement, RSB may prepay the relevant Loan Under the terms of the relevant Loan Agreement, RSB may, subject to certain conditions, prepay the relevant Loan if RSB is required to increase its payments for tax reasons regardless of whether the increased payment obligation results from any change in the applicable tax laws or treaties, or from the change in application of existing tax laws or treaties, or from enforcement of the security provided for in connection with the Notes. RSB may also prepay the relevant Loan if RSB is required to indemnify the Issuer in respect of certain increased costs to the Issuer (as set out in the Loan Agreement). In the event that it becomes unlawful for the Issuer to allow the relevant Loan to remain outstanding under the relevant Loan Agreement, to allow the Notes to remain outstanding, to maintain or give effect to any of its obligations under the Loan Agreement and/or to charge or receive or to be paid interest at the rate then applicable to the relevant Loan, RSB may be required by the Issuer to repay the relevant Loan in full. In case of any prepayment, all outstanding Notes would be redeemable at par with accrued interest or as otherwise specified in the relevant Loan Agreement.

There may be no market for the Notes when issued There may not be an existing market for the Notes at the time they are issued. Further there can be no guarantee that a Series of the Notes will be listed or traded on any exchange. Further, if a Series of the Notes is listed or traded on an exchange, there can be no assurance that a liquid market will develop for the Notes, that the holders of the Notes will be able to sell their Notes, or that such holders will be able to sell their Notes for a price that reflects their value.

Even if a market for a Series of the Notes develops, the market price of the Notes could be subject to significant fluctuations in response to actual or anticipated variations in the operating results of RSB’s competitors, adverse business developments, changes to the regulatory environment in which RSB operates, changes in financial estimates by securities analysts, the actual or anticipated sale of a large number of Notes and other factors, including those set forth in “Risk Factors”.

RSB’s payments under Loans may be subject to Russian withholding tax In general, interest payments on borrowed funds made by a Russian legal entity to non-resident persons are subject to Russian withholding tax at a rate of 20 per cent. in respect of legal entities or organisations and 30 per cent. in respect of individuals, unless such withholding is reduced or eliminated pursuant to the terms of an applicable double tax treaty. RSB believes, based on (i) arguments supporting the application of benefits under the Convention between Russia and the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital signed on 28 June 1993 (the “Russia-Luxembourg Tax Convention”), and (ii) the likely effect of the proposed changes to the Russian Tax Code (discussed below) expected to come into force, that interest payments to the Issuer on each Loan should not be subject to withholding tax. However, in relation to (i) above there can be no assurance that such relief will be obtained in practice or will continue to be available throughout the term of any Loan.

In particular, the new protocol to the Russia-Luxembourg Tax Convention was signed in 2011. The protocol introduces certain changes to the provisions of the Russia-Luxembourg Tax Convention. Such changes include,

-31- inter alia, a limitation of benefits of a resident of one contracting state if the main purpose or one of the main purposes of the establishment and existence of such resident was receipt of treaty benefits; further exchange of information procedures are extended. Once the protocol is ratified and becomes effective, it may have an impact on future payments under the Loan Agreement.

The application of tax benefits under the Russia-Luxembourg Tax Convention may be also influenced by changes in the position of the Russian tax authorities to look beyond the mere form of the transaction while assessing the availability of treaty benefits. Such position was reflected in the letter of the Ministry of Finance of the Russian Federation No. 03-08-13/1 dated 30 December 2011 (the “Ministry of Finance Letter”), which is addressed to the Federal Tax Service of the Russian Federation. The Ministry of Finance Letter considers a Eurobond structure and concludes that the issuer of Eurobonds cannot be regarded as the beneficial owner of the interest income because such issuer does not determine “the economic fate of the income received”. The Ministry of Finance Letter refers to an issuer domiciled in Ireland and although the Ministry of Finance Letter alludes to a deal structure which is different to the structure of the transaction described in this Base Prospectus, RSB cannot exclude the risk that conclusions made in the Ministry of Finance Letter may be applied by the Russian tax authorities to the payments of interest in respect of the Notes.

It should be also noted that there are several recent cases where the tax authorities challenged a transaction similar to the one described in this Base Prospectus arguing that the noteholders rather than the issuer should be regarded as actual recipients of interest income. These cases are currently pending and, as far as RSB is aware, have not been litigated in the court yet. If this issue is brought before a Russian court and such court upholds the position of the Russian tax authorities, this may prevent the Issuer and RSB benefitting from the withholding tax exemption provided by the Russia-Luxembourg Tax Convention.

The above practice indicates that the Russian tax authorities and the Russian courts have changed their approach with regard to transactions involving special purposes vehicles. The Russian tax authorities have started to look more at the substance of a transaction and through intermediary entities and to disallow benefits granted by treaties between Russia and countries of location of such vehicles. As a result, there can be no assurance that the Russian tax authorities would not use this approach to challenge the transaction described in this Base Prospectus and the court would not uphold the position of the tax authorities in this respect.

On the other hand, the expected amendments to the Tax Code should bring relevant tax relief in case such amendments are adopted. In particular, the Ministry of Finance of Russia has suggested to introduce into the Tax Code exemptions from the obligation to withhold tax from interest paid under similar transactions. The draft law which introduces the relevant amendments to the Russian Tax Code was approved by the State Duma in the first reading and the text of these amendments was posted on the website of the State Duma on 23 May 2012.

According to these amendments Russian borrowers may be released from the obligation to withhold the tax on interest payments on debt obligations granted by foreign lenders provided that the deal structure satisfies certain criteria. This exemption, if adopted in the current form, will effectively mean that no Russian withholding tax should arise in Eurobond structures as currently there is no mechanism or requirement in the Russian tax legislation for non-residents to self-assess and pay the tax if such tax wasn’t withheld by the Russian tax agent. In addition, the current wording of the draft amendments to the Tax Code suggests that the exemption should apply to interest payment starting from 1 January 2007. The second reading of these amendments by the State Duma is not scheduled at this point. Currently it is not clear when and in what form these amendments will come into force.

According to official communications of the Ministry of Finance of Russia, there are no plans to challenge borrowers in connection with payments on Eurobonds already issued in respect of which borrowers are expected to be released from obligations as a tax agent under the proposed legislative amendments. Nevertheless, it is not clear what would be the final wording of the law and whether it would contain provisions that would have an adverse tax effect on this transaction.

It should also be noted that the President of Russia in his budget message dated 25 May 2009 expressed a goal of introducing legal mechanisms to restrict the use of international double tax treaties for the purpose of minimising taxes where the ultimate beneficiaries are not residents of the country being a party to the relevant double tax treaty.

In addition, on 2 May 2012 the Russian Government considered in its Main Directions of Russian Tax Policy for 2013, and planned for 2014-2015, legislative changes concerning taxation of payments made by Russian borrowers under Eurobonds structures. In particular, it is proposed to release Russian borrowers from obligations

-32- to withhold the Russian withholding tax on interest payments in respect of bonds issued prior to 1 January 2013, provided certain criteria are met. It is also proposed to introduce into the Russian tax legislation so called controllable foreign companies rules aimed at anti-avoidance from taxation of profits retained by controllable foreign entities, especially by entities which are residents in offshore jurisdictions. For anti-avoidance purposes, it is also proposed to introduce the concepts of the “tax residency” and “actual recipient of income”.

Based on the above, currently it is not possible to determine the extent to which the above mentioned factors could impact the application of the double tax treaty benefits to interest payments under any Loan Agreement made by RSB. Accordingly, in absence of clarity on the potential amendments to the tax legislation there can be no assurance that the double tax treaty relief will be obtained in practice or will continue to be available throughout the term of any Loan.

In circumstances where payments under any Loan Agreement become payable to the Trustee as described herein, benefits of the Russia-Luxembourg Tax Convention will cease, and payments under such Loan Agreement to the Trustee should be made subject to Russian income tax withholding at a rate of 20 per cent. (or, potentially, 30 per cent. in respect of individual non-resident Noteholders) or such other rate as may be in force at the time of payment. It is not expected that the Trustee would, or would be able to, claim a withholding tax exemption under any double tax treaty under such circumstances. In addition, while some Noteholders might be eligible for an exemption from or reduction of Russian withholding tax under applicable double taxation treaties, there is no assurance that such exemption or reduction would be available in practice under such circumstances.

If the interest payments under any Loan are subject to any withholding of Russian tax (as a result of which the Issuer would reduce payments under the corresponding Series of the Notes in the amount of such withholding tax), RSB will be obliged under the terms of the relevant Loan Agreement to increase interest payments (pay additional amounts) as may be necessary so that the net amount of payments received by the Issuer will not be less than the amounts it would have received in the absence of such withholding. It is currently unclear whether the provisions obligating RSB to gross-up interest payments will be enforceable under Russian law. There is a risk that gross-up for withholding tax will not take place and that interest payments made by RSB under the relevant Loan Agreement will be reduced by any such Russian income tax withheld by RSB at a rate of 20 per cent. (or, potentially, 30 per cent. in respect of individual non-resident Noteholders), or such other rate as may be in force at the time of payment. See “Taxation - Russian Taxation - Taxation of Interest on the Loan”. If RSB is obliged to increase payments or pay additional amounts, it may (without premium or penalty), subject to certain conditions, prepay such Loan in full. In such case, all outstanding Notes of the corresponding Series would each be redeemable at par together with accrued and unpaid interest and additional amounts, if any, to the date of the redemption. See “Terms and Conditions of the Notes - 6. Redemption”.

Tax might be withheld on dispositions of the Notes in Russia, reducing their value If a non-resident Noteholder that is a legal entity or organisation, which in each case is not established under Russian law and which holds and disposes of the Notes of any Series other than through its permanent establishment in Russia, sells the Notes of any Series and receives proceeds from a source within Russia, there is a risk that the part of the payment, if any, representing accrued interest may be subject to 20 per cent. Russian withholding tax (even if disposal is made at a loss), unless relief is available under an applicable double tax treaty.

Where proceeds from a disposition of the Notes of any Series are received from a source within Russia by a non-resident Noteholder that is an individual, Russian withholding tax would be charged at a rate of 30 per cent. on the gross amount of proceeds from such disposal of the Notes of corresponding Series less any available documented cost deductions (including the acquisition cost of the Notes). There is no assurance that advance double tax treaty relief would be granted to a non-resident Noteholder who is an individual, and obtaining a refund can involve considerable practical difficulties. The imposition or possibility of imposition of this withholding tax could adversely affect the value of the Notes. See “Taxation - Russian Taxation - Taxation of the Notes”.

U.S. Foreign Account Tax Compliance Withholding The Issuer and other non-U.S. financial institutions to which payments on the Notes are made may be required to withhold U.S. tax at a rate of 30 per cent. on all, or a portion of, payments made after 31 December 2016 pursuant to the foreign account tax compliance provisions (“FATCA”) of the Hiring Incentives to Restore Employment Act of 2010. This withholding tax may be triggered if (i) the Issuer is a foreign financial institution

-33- (“FFI”) (as defined in FATCA) which enters into an agreement with the U.S. Internal Revenue Service (“IRS”) to provide certain information on its account holders (making the Issuer a “Participating FFI”), (ii) the Issuer has a positive “passthru percentage” (as defined in FATCA), and (iii) (a) an investor does not provide information sufficient for the relevant Participating FFI to determine whether the investor is subject to withholding under FATCA, (b) an investor does not consent, where necessary, to have its information disclosed to the IRS, or (c) any FFI to or through which payment on such Notes is made is not a Participating FFI or otherwise exempt from FATCA withholding. The application of FATCA to interest, principal or other amounts paid with respect to the Notes is not clear. If an amount in respect of U.S. withholding tax were to be deducted or withheld from interest, principal or other payments on the Notes as a result of FATCA, none of the Issuer, any paying agent or any other person would, pursuant to the Terms and Conditions of the Notes be required to pay additional amounts as a result of the deduction or withholding of such tax. As a result, investors may, if FATCA is implemented as currently proposed by the IRS, receive less interest or principal than expected.

Investors will not be entitled to receive additional amounts or otherwise be compensated by RSB with respect to taxes withheld pursuant to FATCA,

The application of FATCA to Notes issued or materially modified on or after 1 January 2013 may be addressed in the relevant Final Terms or a supplement/supplementary prospectus to this Prospectus, as applicable.

FATCA is particularly complex and its application to the Issuer, the Notes and the Holders of the Notes is uncertain at this time. Each Holder of Notes should consult its own tax adviser to obtain a more detailed explanation of FACTA and to learn how this legislation might affect each Holder in its particular circumstance.

In the event of RSB’s insolvency, Russian bankruptcy law could adversely affect the ability of the Lender, the Trustee or the Noteholders to recover sums owed under the relevant Loan Agreements Russian bankruptcy laws are subject to varying interpretations and constant amendments. As a result of limited court practice it is not possible to predict with certainty how claims of the Issuer and/or the Trustee or the Noteholders under the Loan Agreement against RSB would be resolved in case of RSB’s bankruptcy. Under the Federal Law No. 127-FZ “On Insolvency (Bankruptcy)” dated 26 October 2002, as amended (the “Law on Insolvency (Bankruptcy)”) and the Federal Law No. 40-FZ “On Insolvency (Bankruptcy) of Credit Organisations” dated 25 February 1999 (the “Law on Insolvency (Bankruptcy) of Credit Organisations”, together with the Law on Insolvency (Bankruptcy), “Russian Bankruptcy Law”), unsecured creditors’ claims are generally subordinated to current liabilities (i.e. claims which arose after the initiation of bankruptcy proceedings and costs related to bankruptcy litigation) and the following claims (“Priority Claims”): (a) injury and moral damages obligations; (b) claims of individuals under cash deposits and balances on current accounts (except for individual entrepreneurs holding such deposits or accounts for business purposes); (c) claims of the state corporation Agency for Deposits Insurance (“Deposits Insurance Agency”) transferred to it pursuant to the Federal Law No. 177-FZ “On Insurance of Retail Deposits in Russian Banks” dated 23 December 2003 (“Retail Deposit Insurance Law”); (d) recourse claims of the CBR if it paid compensation to the retail depositors of a bank which does not participate in the retail deposit insurance system; (e) claims arising in connection with severance payments and other employment related obligations and royalties.

In accordance with the Law on Insolvency (Bankruptcy) of Credit Organisations, claims of creditors secured by a pledge are satisfied from the proceeds from the sale of pledged assets in priority to other creditors’ claims, except for Priority Claims. Any obligations of creditors secured by a pledge remaining unsatisfied following the sale of the pledged assets would be ranked as claims of unsecured creditors.

Generally, under the Law on Insolvency (Bankruptcy), taxes and other payment obligations owed to the Russian Government are satisfied pari passu with the claims of unsecured creditors. Application of these provisions, however, remains untested.

In the event of the insolvency of RSB, Russian Bankruptcy Law could adversely affect the ability of the Issuer, the Trustee or the Noteholders to recover sums owed by RSB under the Loan Agreement.

Risks Related to Luxembourg Law Issuer’s payments under the Notes may be subject to withholding tax Payments in respect of any Series of Notes will be made, except in certain limited circumstances, without a deduction or withholding for or on account of Luxembourg taxes, provided certain conditions are met. However,

-34- interest on the Notes paid to individuals resident or certain types of legal entities established in European Union member states and certain other countries may become subject to withholding tax (pursuant to the European Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”)). For further information on the Savings Directive and the applicability of withholding tax to interest payments, see “Taxation - Luxembourg Taxation”. If any payments in respect of the Notes become subject to deduction or withholding for or on account of Luxembourg taxes (other than pursuant to the Savings Directive), RSB will, subject to certain limitations, be obliged under the terms of the relevant Loan Agreement to increase interest payments (pay additional amounts) as may be necessary so that the net payments received by the Noteholders will not be less than the amounts they would have received in the absence of such withholding. For further information regarding the circumstances in which the payment of such additional amounts will be required and the limitations thereon, see “Terms and Conditions of the Note - 8. Taxation”.

Luxembourg insolvency laws may affect the ability of Noteholders to enforce their rights under the Notes Under Luxembourg insolvency laws, the ability of Noteholders to receive payment from the Issuer in respect of the Notes may be subject to significant limitations. Under Luxembourg law, the following types of proceedings (together referred to as insolvency proceedings) may be opened against an entity having its registered office or centre of main interest (as defined in the EC Regulation 1346/2000 of 29 May 2000 on insolvency proceedings (the “Regulation 1346/2000”)) in Luxembourg: • bankruptcy proceedings (faillite), the opening of which may be requested by the Issuer or by any of its creditors. The Issuer itself has the obligation to file for bankruptcy within one month of it being in a state of cessation of payments (cessation des paiements). Following such a request, the courts having jurisdiction may open bankruptcy proceedings if the Issuer (i) is in a state of cessation of payments (cessation des paiements) and (ii) has lost its commercial creditworthiness (ébranlement de credit). If a court finds that these conditions are satisfied, it may also open bankruptcy proceedings ex officio (absent a request made by the Issuer or a creditor). The main effect of such proceedings is the suspension of all measures of enforcement against the Issuer, except, subject to certain limited exceptions, for secured creditors, and the payment of the creditors in accordance with their rank upon realisation of the assets of the Issuer; • controlled management proceedings (gestion contrôlée), the opening of which may only be requested by the Issuer and not by its creditors; and • composition proceedings (concordat préventif de faillite), which may be requested only by the Issuer (subject to obtaining the required majority consent of its creditors) and not by its creditors themselves.

In addition to the proceedings described above, the ability of Noteholders to receive payment on the Notes may be affected by a decision of a court to grant a stay on payments (sursis de paiements) or to put the Issuer into judicial liquidation (liquidation judiciaire). Judicial liquidation proceedings may be opened at the request of the public prosecutor against companies pursuing an activity violating criminal laws or that is in violation of the commercial code or of the laws governing commercial companies. The management of such liquidation proceedings will generally follow the rules of bankruptcy proceedings.

The Issuer’s liabilities in respect of the Notes will, in the event of the liquidation of the Issuer following bankruptcy or judicial liquidation proceedings, only rank after the cost of liquidation (including any debt incurred for the purpose of such liquidation) and those of the Issuer’s debts entitled to priority under Luxembourg law. Preferential debts under Luxembourg law include, inter alia: • money owed to the Luxembourg tax authorities; • value added tax and other taxes and duties owed to the Luxembourg customs and excise; • social security contributions; and • remuneration owed to employees.

Assets over which a security interest has been granted and duly perfected will in principle not be available for distribution to unsecured creditors (except after enforcement, and only to the extent a surplus is realised), and subject to the application of the relevant priority rules and liens and privileges arising by mandatory laws.

During such insolvency proceedings, all enforcement measures by unsecured creditors are suspended. The ability of secured creditors to enforce their security interest may also be limited, in particular in the event of controlled management proceedings automatically causing the rights of secured creditors to be frozen until a final decision

-35- has been taken by the court as to the petition for controlled management and may be affected thereafter by a reorganisation order given by the relevant Luxembourg court, subject to the exceptions under the Luxembourg law of 5 August 2005 on financial collateral arrangements, as amended.

Furthermore, prospective investors should note that declarations of default and any subsequent acceleration (such as acceleration upon the occurrence of an event of default) might not be enforceable during controlled management proceedings.

Luxembourg insolvency laws may affect transactions entered into or payments made by the Issuer during the period before any liquidation or administration. For example, if the liquidator or administrator can demonstrate (including, without limitation, in relation to the Issuer, any commissaire, juge-commissaire, liquidateur or curateur or similar official) that the Issuer has given “preference” to any person by defrauding the rights of creditors generally, regardless of when this occurred, a Luxembourg court has the power, among other things, to avoid the preferential transaction. If the liquidator or administrator can show that a payment was made during the so-called suspect period (which is a maximum of six months and ten days preceding the judgment declaring bankruptcy) and is disadvantageous to the general body of creditors and the party receiving such payment is shown to have known that the bankrupt party had generally stopped making payments when such payment occurred, a Luxembourg court has the power, among other things, to void the preferential transaction.

Regardless of the suspect period, article 448 of the Luxembourg Code of commerce and article 1167 of the Luxembourg civil Code (action paulienne) give any creditors the rights to challenge any fraudulent payments and transactions made prior to the bankruptcy.

Finally, international aspects of Luxembourg bankruptcy, controlled management or composition proceedings may be subject to the Regulation 1346/2000.

The Luxembourg public prosecutor may request the dissolution or the liquidation of the Issuer Pursuant to the Luxembourg law dated 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings, as amended, the Issuer is required to submit its annual financial statements to its shareholders for approval not later than six months after the end of each financial year. After approval by the shareholders, the Issuer’s financial statements have to be filed with the Luxembourg Register of Commerce and Companies within a month. In approving and filing the annual financial statements for the years ended 31 December 2009 the Issuer did not comply with the terms given in the above mentioned provisions.

Pursuant to the Luxembourg law on commercial companies dated 10 August 1915, as amended (the “Companies Law”), the Tribunal d’Arrondissement, which is the authorised body for commercial matters, may, upon request of the public prosecutor (Procureur d’Etat), pronounce the dissolution and order the liquidation of any company established and operating under the laws of Luxembourg if such company performs activities that are contrary to criminal laws or seriously contravenes the provisions of the Luxembourg commercial code or the Companies Law.

Any decision of the public prosecutor to institute proceedings which might lead to dissolution or liquidation of the Issuer would be taken by the public prosecutor at its discretion on the basis of the circumstances in the specific case while the ultimate decision as to ordering dissolution or liquidation would need to be made by the competent Luxembourg court.

Although it is unlikely that late approval and filing of financial statements by the Issuer should constitute a serious breach of the applicable legislation from the public prosecutor’s perspective, this cannot be excluded in which case the public prosecutor could bring before the competent Luxembourg courts claims for dissolution or liquidation of the Issuer, which would likely constitute a Relevant Event under the Terms and Conditions of the Notes which may in turn adversely affect the value of the Notes.

-36- DESCRIPTION OF THE TRANSACTIONS

The following summary description should be read in conjunction with, and is qualified in its entirety by, the information set out under “Terms and Conditions of the Notes” and “The Facility Agreement” appearing elsewhere in this Base Prospectus.

Loan Issuer RSB Principal and Interest

Proceeds of Principal and the Notes Interest on the Notes

Noteholders

Each transaction relating to a Series of Notes will be structured as a loan to RSB by the Issuer under the Loan Agreement. The Issuer will issue a Series of Notes, which will be limited recourse loan participation notes issued for the sole purpose of funding the corresponding Loan to RSB. Each Loan will be made on the terms of the Facility Agreement as amended and supplemented by the relevant Loan Supplement and will have characteristics that demonstrate capacity to produce funds to service any payments due and payable on the Notes. Each Series of Notes will be constituted by, subject to, and have the benefit of the Trust Deed entered into between the Issuer and the Trustee. The obligations of the Issuer to make payments under the Notes shall constitute an obligation only to account to the Noteholders for an amount equal to the sums of principal, interest and/or additional amounts (if any) the Issuer actually receives by or for its account from RSB pursuant to the relevant Loan Agreement or that are deposited in the Account, less any amounts in respect of the Reserved Rights.

As provided in the Trust Deed, the Issuer will charge in favour of the Trustee for the benefit of the Noteholders as security for its payment obligations in respect of a Series of Notes (a) its rights to all principal, interest and additional amounts (if any) payable by RSB under the corresponding Loan Agreement, (b) its right to receive all sums which may be or become payable by RSB under any claim, award or judgment relating to the corresponding Loan Agreement and (c) its rights, title and interest in and to all sums of money now or in the future deposited in an account with the Principal Paying Agent with respect to such Series of Notes in the name of the Issuer, together with the debt represented thereby (the “Account”) (collectively, the “Charged Property”), in each case other than the Reserved Rights and amounts relating thereto. The Issuer will assign absolutely certain administrative rights under the Loan Agreement to the Trustee for the benefit of the Noteholders of the applicable Series. RSB will be obliged to make payments under the Loan to the Issuer in accordance with the terms of the Loan Agreement to the Account or as the Trustee may otherwise direct following the occurrence of an Event of Default or Relevant Event.

The Issuer has covenanted not to agree to any amendments to or any modification or waiver of, or authorise any breach or potential breach of, the terms of the Loan Agreement unless the Trustee has given its prior written consent (in each case except in relation to the Reserved Rights). The Issuer (save as expressly provided in the Trust Deed, the Loan Agreement or with the consent of the Trustee) shall not pledge, charge or otherwise deal with the relevant Loan or the relevant Charged Property or any right or benefit either present or future arising under or in respect of the relevant Loan Agreement or the Account or any part thereof or any interest therein or purport to do so (in each case except in relation to the Reserved Rights). Any amendments, modifications, waivers or authorisations made with the Trustee’s consent shall be notified to the Noteholders of the applicable Series in accordance with Condition 14 (Notices) of the “Terms and Conditions of the Notes” and will be binding on the Noteholders of such Series.

The security under the Trust Deed will become enforceable upon the occurrence of a Relevant Event, as further described in “Terms and Conditions of the Notes”.

Payments in respect of the Notes will be made without any deduction or withholding for, or on account of, taxes of the Grand Duchy of Luxembourg except as required by law. See “Taxation”. In that event, the Issuer will only be required to pay an additional amount to the extent it receives corresponding amounts from RSB under the Loan Agreement. The Loan Agreement provides for RSB to pay such corresponding amounts in these

-37- circumstances. In addition, payments under the relevant Loan Agreement will be made without any deduction or withholding for, or on account of, any taxes in Russia or any jurisdiction from, or through, which any payments are made, except as required by law, in which event RSB will be obliged to increase the amounts payable under the relevant Loan Agreement. See “Risk Factors - Risks Related to the Notes and the Trading Market”.

In certain circumstances, RSB may at its option prepay a Loan at its principal amount, together with accrued interest and additional amounts (if any), in the event that RSB is required to increase the amount payable or to pay additional amounts on account of taxes of Russia or the Grand Duchy of Luxembourg pursuant to the relevant Loan Agreement or required to pay additional amounts on account of certain costs incurred by the Issuer. The Issuer may (in its own discretion) require RSB to prepay the relevant Loan if it becomes unlawful for the relevant Loan or the Notes to remain outstanding, as set out in the relevant Loan Agreement. In each case (to the extent that the Issuer has actually received the relevant funds from RSB), the Issuer will prepay the Notes together with accrued interest and additional amounts (if any) thereon. See “The Facility Agreement - 5. Repayment and Prepayment - 5.2 Prepayment in the event of Taxes or Increased Costs and 5.3 Prepayment in the event of Illegality” and “Terms and Conditions of the Notes - 6. Redemption”.

In certain circumstances, RSB may at its option prepay a loan at its principal amount, together with accrued interest and additional amounts (if any) thereon. See “The Facility Agreement - 5. Repayment and Prepayment - 5.2 Prepayment in the event of Taxes or Increased Costs and 5.3 Prepayment in the event of Illegality” and “Terms and Conditions of the Notes - 6. Redemption”.

-38- USE OF PROCEEDS

The proceeds from the offering of each Series of Notes will be used by the Issuer for the sole purpose of financing the corresponding Loan to RSB. RSB will use the proceeds from the relevant Loan to fund its lending activities and for general banking purposes (unless otherwise specified in the relevant Final Terms). In connection with the receipt of such Loan, RSB will pay an arrangement fee, as reflected in the relevant Final Terms.

-39- CAPITALISATION

The following table sets out the Group’s consolidated liabilities and equity as at 31 December 2011. Prospective investors should read this information in conjunction with “Presentation of Financial and Other Information”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements included elsewhere in this Base Prospectus.

31 December 2011 (in millions of Roubles) Liabilities Due to other banks ...... 5,311 Customer accounts ...... 109,479 Debt securities in issue ...... 15,748 Other liabilities ...... 7,925 Subordinated debt ...... 22,562 Total liabilities ...... 161,025 Equity Share capital ...... 1,565 Share premium ...... 673 Additional paid-in capital ...... 191 Revaluation reserve for available for sale securities ...... 378 Translation reserve ...... (48) Retained earnings ...... 24,337 Total equity ...... 27,096 Total liabilities and equity ...... 188,121

Save as disclosed below, there has been no material change in the consolidated capitalisation, indebtedness, guarantees or contingent liabilities of the Group since 31 December 2011. The below information is not reflected in the table above.

In March 2012, the Group issued bonds in the amount of RUB 5,000 million due in March 2015. The interest rate is 9.0 per cent. per annum. The bondholders have the right to redeem the bonds at their nominal in March 2013.

In April 2012, the Group issued euro-commercial papers in the amount of U.S.$ 150 million due in April 2013. The effective yield is 5.5 per cent. per annum. Euro-commercial papers were placed at discounted value.

In April 2012, RSB’s General Shareholders’ Meeting approved dividends for the year ended 31 December 2011 in the amount of RUB 2,115 million (RUB 1,846 per share). The dividends were paid in April 2012.

In May 2012, the Group issued bonds in the amount of RUB 5,000 million due in May 2015. The interest rate is 9.4 per cent. per annum. The bondholders have the right to redeem the bonds at their nominal in November 2013.

As a result of issuance of bonds in the beginning of 2012, debt securities in issue increased to RUB 20,241 million as at 31 March 2011.

-40- SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The following table presents the Group’s selected consolidated financial information which has been extracted without material adjustment from, and should be read in conjunction with, the Financial Statements included elsewhere in this Base Prospectus, as well as “Presentation of Financial and Other Information”, “Capitalisation” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Year ended 31 December 2011 2010 2009 (in millions Roubles) Interest income ...... 32,776 28,432 33,937 Interest expense ...... (9,959) (8,923) (13,247) Net interest income ...... 22,817 19,509 20,690 Provision for impairment of loans to customers ...... (4,603) (6,345) (12,485) Net interest income after provision for loan impairment ...... 18,214 13,164 8,205 Fee and commission income ...... 3,088 1,320 841 Fee and commission expense ...... (2,230) (986) (597) Gains/(losses) from operations with securities ...... (244) (56) 197 Losses less gains from operations with foreign currencies ...... (496) (902) (5,920) Gains from early debt retirement ...... — — 1,696 Income from insurance operations ...... 4,415 2,488 2,612 Other operating income ...... 1,061 1,199 591 Administrative and other operating expenses ...... (17,206) (13,696) (13,195) Profit/(loss) before tax ...... 6,602 2,531 (5,570) Income tax (expense)/credit ...... (1,591) (686) 1,043 Profit/(loss) for the year ...... 5,011 1,845 (4,527) Other comprehensive income Exchange differences on translation to presentation currency ...... 3 (25) (34) Revaluation of securities available for sale ...... 269 106 3 Other comprehensive income/(loss) for the year ...... 272 81 (31) Total comprehensive income/(loss) for the year ...... 5,283 1,926 (4,558)

-41- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial condition and results of operations of RSB covers the years ended 31 December 2011, 2010 and 2009. Unless otherwise specified, the financial information presented in this discussion has been extracted or derived from the Financial Statements. This section should be read in conjunction with the Financial Statements and the notes thereto, and the other financial information included elsewhere in this Base Prospectus.

Certain information contained in the discussion and analysis set forth below and elsewhere in this Base Prospectus includes “forward-looking statements”. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. See the section entitled “Forward-Looking Statements”.

Overview RSB’s core business is issuing and extending loans and advances to customers, primarily to individuals, in the form of credit card loans, personal loans and POS loans. For the year ended 31 December 2011, interest, fees and other amounts payable on loans to individuals accounted for 92.0 per cent. of RSB’s interest income as compared to 91.2 per cent. for each of the years ended 31 December 2010 and 2009, respectively.

RSB began operations predominantly as a consumer loan bank focused primarily on lower income customers in Moscow and other large cities. It subsequently expanded its consumer finance business into smaller population centres outside of Moscow, developed its credit card business and additional consumer credit products such as personal loans and broadened the demographic profile of its client base. To service the needs of this diversified client base, RSB continues to develop a wide range of financial products and services for the retail sector. As of 31 December 2011, RSB operated through its network of 181 banking offices throughout Russia.

According to RSB’s estimates, RSB is one of the leaders in the credit card market with a share of 17.2 per cent. of the market as at 31 December 2011. RSB aims to retain this leading position by raising its service level, expanding its product range and enhancing the quality of its products.

In 2009, RSB launched its new multifunctional bank-in-pocket product (“Bank-in-Pocket”). The product offers customers easy and convenient access to their current accounts and other current financial products and services. In 2010, “Bank-in-Pocket” gained the leading position in the market for debit cards with an overdraft facility and demonstrated good financial performance. See “Business - Banking Products and Services - Credit Cards - Bank-in-Pocket”.

RSB focuses on the development of new banking technologies and the creation of innovative business areas. In 2010 and 2011, RSB launched a range of innovative products, including its Virtual Prepaid Card, Gift Card and Money Transfer services. This step has helped RSB to expand its customer base and reach customers that do not use RSB’s traditional offerings and strengthen its position in new markets for products in which RSB did not previously compete. In 2011, RSB was one of the first Russian banks to offer its customers Virtual Prepaid Cards. See “Business - Banking Products and Services - Credit Cards - Virtual Prepaid Card”.

In 2010, RSB developed its merchant acquiring business as a strategic priority and an additional source of fee and commission income, and increased RSB’s total trading turnover through the development of new business acquiring channels such as the Internet and fast food restaurants. As a result, RSB’s card acquiring network grew to 158,000 merchants as of 31 December 2011. See “Business - Banking Products and Services - Merchant Acquiring and Payment Terminals”.

RSB also made its programmes for attracting retail deposits a strategic priority in order to diversify its funding base and compensate for a decline in other liquidity sources as a result of the financial and economic crisis. The success of these initiatives resulted in an increase in the customer accounts portfolio as a percentage of RSB’s liabilities to 68.0 per cent. as of 31 December 2011 from 57.1 per cent. and 24.3 per cent. as of 31 December 2010 and 2009, respectively.

Significant Factors Affecting Results of Operations General Market Conditions and Operating Environment Due to the concentration of RSB’s assets in Russia, RSB is substantially affected by Russian macroeconomic conditions. While there have been improvements in economic trends in the country, Russia displays certain

-42- characteristics of an emerging market, including relatively high inflation. The banking sector in Russia is sensitive to adverse fluctuations in confidence and economic conditions and has occasionally experienced reductions in liquidity. RSB is unable to predict all developments that could have an effect on the banking sector and consequently what effect, if any, they could have on RSB’s financial position.

The tax, currency and customs legislation within Russia is subject to varying interpretations and frequent changes. Furthermore, the need for further developments in the bankruptcy laws, the absence of formalised procedures for the registration and enforcement of collateral, and other legal and fiscal impediments contribute to the challenges faced by banks currently operating in Russia. The future economic direction of Russia is largely dependent upon the effectiveness of economic, financial and monetary measures undertaken by the Russian Government, together with tax, legal, regulatory, and political developments.

The following table sets forth certain Russian economic indicators for the years ended 31 December 2011, 2010 and 2009.

Year ended 31 December 2011 2010 2009 Nominal gross domestic product (GDP) (RUB billion) ...... 54,369 45,166 38,809 Real GDP growth / (decline) (in per cent.) ...... 4.3 4.0 (7.8) Surplus / (deficit) of Russian Federal budget (RUB billion) ...... 416.5 (1,812.0) (2,322.3) International reserves (U.S.$ million) ...... 498.6 479.4 439.5 Inflation (in per cent. consumer price index) ...... 6.1 8.8 8.8 Nominal appreciation/depreciation of the RUB against the U.S.$ (in per cent.)(1) ...... 3.4 4.3 (21.7) Real appreciation/depreciation of the RUB against the U.S.$ (in per cent.)(2) ..... 8.8 9.7 (12.2)

(1) Nominal appreciation/depreciation is calculated as the nominal exchange rate of Roubles to U.S. Dollars (average for the relevant year) divided by the nominal exchange rate of Roubles to U.S. Dollars (average for the previous year). (2) Real appreciation/depreciation is distinguished from its nominal counterpart because it also takes into account inflation in Russia and the United States, as well as taking into account certain other macroeconomic parameters which are calculated by the CBR.

Source: CBR, Ministry for Economic Development of Russia, Federal State Statistics Service of Russia.

Impact of the Global Financial and Economic Crisis In the end of 2008 and in 2009, the Russian economy was negatively impacted by the global financial and economic crisis resulting in a substantial deterioration of financial and corporate sectors. The volume of available wholesale financing domestically and to a greater degree from overseas significantly decreased. Falling incomes and rising unemployment reduced consumer demand for retail banking products in Russia and resulted in higher default rates on loans. RSB’s core consumer finance business was adversely affected by the above factors. In particular, the Group faced a significant decrease in its total assets, loans and advances to customers and interest income which amounted to RUB 140,105 million, RUB 92,985 million and RUB 33,937 million, respectively, for the year ended 31 December 2009. In addition, NPLs increased to 5.4 per cent. of RSB’s gross loans and provisions (charge) for impairment of loans to customers increased to RUB 12,485 million as of and for the year ended 31 December 2009.

In response to the lack of funding during the financial crisis, RSB launched programmes for attracting deposits and other retail customer accounts to diversify its funding base and compensate for a decline in other liquidity sources. As a result, the Group’s customer accounts significantly increased from RUB 26,835 million as of 31 December 2009 to RUB 62,890 million as of 31 December 2010. RSB also put in place certain business optimisation measures, including tightening its underwriting criteria (for a time, RSB cut back practically all loan origination for clients who did not have any credit history with RSB), retaining credit products that had the best credit risk quality, staff reductions and closure of banking offices. RSB also closed over 6,000 points of sale in order to cut its costs. As a result, the POS loan portfolio significantly decreased. See “Business - History - Effect of the Financial Crisis - Capital Preservation and Cost-cutting”.

The Russian economy stabilised in 2010 and 2011, with 4.0 per cent. and 4.3 per cent. real GDP growth in 2010 and 2011, respectively, as compared to a 7.8 per cent. decline in 2009. Such economic growth had a positive effect on the Russian retail banking sector. According to the CBR, total retail loans of Russian banks increased by 28.2 per cent. in 2010 from RUB 2,613 billion as of 1 January 2010 to RUB 3,349 billion as of 1 January 2011 and then further increased by 62.4 per cent. in 2011 to RUB 5,438 billion as of 1 January 2012.

The rapid improvement in the state of the Russian economy had a significant positive effect on the results of operations and financial condition of RSB in 2010 and 2011, allowing it to resume growth of its business, while

-43- at the same time significantly increasing profitability. As the Russian economy improved in 2010 and 2011 (as compared to year 2009), RSB increased its lending activity. This resulted in an increase in the Group’s loans and advances to customers to RUB 113,753 million as of 31 December 2011 from RUB 81,930 million as of 31 December 2010. In addition, RSB launched certain new products, including Personal Instalment Loans (“PIL”) which are loans to “Bank-in-Pocket” accounts. This credit product amounted to 17.1 per cent. of RSB’s total loan portfolio as of 31 December 2011. RSB also continued to follow its strategy of increasing the share of retail deposits in its total liabilities. The Group’s customer accounts increased to RUB 109,479 million as of 31 December 2011 from RUB 62,890 million as of 31 December 2010.

The second half of 2011 was marked by volatility in the global financial markets which affected the macroeconomic environment in Russia. In September 2011, the World Bank cut its forecast for Russian economic growth for 2011 to 4 per cent from a previously estimated 4.4 per cent as a result of an expected slowdown in the United States and the European Union, a decline in oil prices and the euro-zone debt crisis. See “Risk Factors - Risks Related to RSB’s Business and Banking Sector - RSB’s business, results of operations and financial condition have been, and may continue to be, adversely affected by the volatility of macroeconomic conditions”.

There is significant competition among banks for borrowers, including individuals, in the Russian consumer finance market. Due, in part, to this competition, RSB’s net interest margin may decrease. Although, RSB’s net interest margin stabilised at the level of 18.9 per cent for the year ended 31 December 2011, it may decline in the future. See “Risk Factors - Risks Related to RSB’s Business and Banking Sector - Margins on RSB’s products may decline in the future”.

Russian legislation may also have a significant effect on RSB’s results of operations. Due to the absence of clear interpretations of provisions of Russian commercial and tax legislation, as well as the practice (developed in a generally unstable environment) by the tax authorities of relatively arbitrary tax assessments of business activities, the judgment of RSB regarding taxes payable may not coincide with the interpretations of the Russian tax authorities. As a result, if the Russian tax authorities challenge RSB’s treatment of certain accounting items, RSB may be subject to significant additional taxes, penalties and interest. Tax years generally remain open to review by the tax authorities for three years. See “Risk Factors - Risk Related to Russia - Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments”.

The Russian banking sector is particularly sensitive to currency fluctuations and economic conditions. The need for further developments in the bankruptcy laws, the absence of formalised procedures for the registration and enforcement of certain categories of collateral, and other legal and fiscal impediments together with the current volatility and reduced liquidity in this sector also contribute to difficulties experienced by banks in Russia. Russia’s future economic direction is largely dependent on the effectiveness of economic, financial and monetary measures undertaken by the Russian Government, together with tax, legal regulatory and political developments.

Critical Accounting Policies RSB’s consolidated results of operations and consolidated financial condition presented in the Financial Statements and the notes thereto and in the selected statistical and other information appearing elsewhere in this Base Prospectus are, to a large degree, dependent upon RSB’s accounting policies. The selection and application of its accounting policies involve judgments, estimates and uncertainties that are susceptible to change. RSB’s significant accounting policies are described in the Notes to the Financial Statements appearing elsewhere in this Base Prospectus.

RSB has identified the following accounting policies that it believes are the most critical to an understanding of the consolidated results of operations and consolidated financial condition of RSB. These critical accounting policies require management’s subjective and complex judgment about matters that are inherently uncertain. The impact of, and any associated risks related to, RSB’s critical accounting policies on its business operations, are discussed throughout this section where these policies affect RSB’s consolidated financial results as presented in this Base Prospectus.

Changes in Accounting Policies Certain new standards and interpretations have been published that are mandatory for the Group’s accounting periods beginning on or after 1 January 2011 or later periods, which the Group has not early-adopted.

A number of new standards, amendments to standards and interpretations are not yet effective as at 31 December 2011, and have not been applied in preparing the Financial Statements. Of these pronouncements, the following

-44- will have a potential impact on the Group’s operations. The Group plans to adopt these pronouncements when they become effective. The Group is in the process of analysing the likely impact of these pronouncements on its consolidated financial statements.

IFRS 9, Financial Instruments IFRS 9, Financial Instruments will be effective for annual periods beginning on or after 1 January 2015. The new standard will be issued in several phases and is intended to replace IAS 39, Financial Instruments: Recognition and Measurement. The first phase of the new standard was issued in November 2009 and relates to the recognition and measurement of financial assets. The second phase of the new standard was issued in October 2010 and relates to the classification and measurement of financial liabilities. The Group recognises that the new standard introduces many changes to the accounting for financial instruments and is likely to have a significant impact on the Group’s consolidated financial statements. The impact of these changes will be analysed during the course of the project as further phases of the standard are issued.

IFRS 10, Consolidated Financial Instruments IFRS 10, Consolidated Financial Statements will be effective for annual periods beginning on or after 1 January 2013. The new standard supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation-Special Purpose Entities. IFRS 10 introduces a single control model which includes entities that are currently within the scope of SIC-12. Under the new three-step control model, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with that investee; has the ability to affect those returns through its power over that investee; and there is a link between power and returns. Consolidation procedures are carried forward from IAS 27 (2008). When the adoption of IFRS 10 does not result in a change in the previous consolidation or non-consolidation of an investee, no adjustments to accounting are required on initial application. When the adoption results in a change in the consolidation or non-consolidation of an investee, the new standard may be adopted with either full retrospective application from date that control was obtained or lost or, if not practicable, with limited retrospective application from the beginning of the earliest period for which the application is practicable, which may be the current period. Early adoption of IFRS 10 is permitted provided an entity also early-adopts IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011).

IFRS 12 Disclosure of Interests in Other Entities IFRS 12 Disclosure of Interests in Other Entities will be effective for annual periods beginning on or after 1 January 2013. The new standard contains disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. Interests are widely defined as contractual and non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity. The expanded and new disclosure requirements aim to provide information to enable the users to evaluate the nature of risks associated with an entity’s interests in other entities and the effects of those interests on the entity’s financial position, financial performance and cash flows. Entities may early-present some of the IFRS 12 disclosures without a need to early-adopt the other new and amended standards. However, if IFRS 12 is early- adopted in full, then IFRS 10, IFRS 11, IAS 27 (2011) and IAS 28 (2011) must also be early-adopted.

Impairment on Loans and Advances RSB regularly reviews its loan portfolios to assess impairment. In determining whether an impairment loss should be recorded in the income statement, RSB makes judgements as to whether there are any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on RSB’s assets. The primary factor that RSB considers as objective evidence of impairment is the overdue status of the loan. If RSB determines that no objective evidence exists that impairment was incurred for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment.

Provision for loan impairment consists of (i) incurred losses when the loan has missed four monthly instalments and then RSB assumes no recovery, except for auto loans, and (ii) losses when the loan has signs of impairment (missed at least one monthly instalment) as at the reporting date; such losses are calculated based on historical statistical data on the performance of other loans with the similar characteristics. In general, loans where there

-45- are no breaches in loan servicing are considered to be unimpaired. Given the nature of the borrowers and the loans extended, it is RSB’s view and experience that the time lag between a possible loss event that could lead to impairment and the non or under payment of a monthly instalment is minimal. RSB’s management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce differences between loss estimates and actual loss experience. In accordance with internal methodology for the provision estimation RSB uses all available loss statistics for the whole period of its operations. The statistics of losses for the last six- months’ period produces the most significant effect on the amount of provisions. Such approach lets RSB build the effect of the latest trends into its model for loss provision calculation.

To the extent that the provision for loan impairment as at 31 December 2011 decrease/increase by 10 per cent., the profit before tax would be approximately RUB 848 million higher or RUB 848 million lower. To the extent that the provision for loan impairment as at 31 December 2010 decrease/increase by 10 per cent., the profit before tax would be approximately RUB 779 million higher or RUB 779 million lower.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for such groups of assets because RSB believes they are indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and the experience of management in respect of the extent to which amounts will become overdue as a result of past loss events and the success of recovery of overdue amounts. Past experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect past periods and to remove the effects of past conditions that do not exist currently.

Impairment losses are always recognised through an allowance account to write down the asset’s carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recorded (such as an improvement in the debtor’s credit rating), the previously recorded impairment loss is reversed by adjusting the allowance account through profit or loss.

Uncollectible assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been completed, RSB’s Credit Committee has formally recognised assets as uncollectible and the amount of the loss has been determined.

Income and Expense Recognition Interest income and expense are recorded in the consolidated income statement for all debt instruments on an accrual basis using the effective interest method. This method defers, as part of interest income or expense, all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

The effective interest rate method is a method of allocating interest income or interest expense over the relevant period so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate.

-46- Fees integral to the effective interest rate include origination fees received or paid by the entity relating to the creation or acquisition of a financial asset or issuance of a financial liability, for example fees for evaluating creditworthiness, evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing transaction documents. Commitment fees received by RSB to originate loans at market interest rates are integral to the effective interest rate if it is probable that RSB will enter into a specific lending arrangement and does not expect to sell the resulting loan shortly after origination. RSB does not designate loan commitments as financial liabilities at fair value through profit or loss.

When loans and other debt instruments become doubtful of collection, they are written down to the present value of expected cash inflows and interest income is thereafter recorded for the unwinding of the present value discount based on the asset’s effective interest rate which was used to measure the impairment loss.

All other fees, commissions and other income and expense items are generally recorded on an accrual basis by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Income Taxes Income taxes have been provided for in the consolidated financial statements in accordance with Russian and Ukrainian tax legislation enacted or substantively enacted by the reporting date. The income tax charge comprises current tax and deferred tax and is recognised in the consolidated income statement except if it is recognised directly in equity because it relates to transactions that are also recognised, in the same or a different period, directly in equity.

Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates if financial statements are authorised prior to filing relevant tax returns. Taxes, other than on income, are recorded within administrative and other operating expenses.

Deferred income tax is provided using the balance sheet liability method for tax loss carry-forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill and subsequently for goodwill which is not deductible for tax purposes. Deferred tax balances are measured at tax rates enacted or substantively enacted at the reporting date which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of RSB. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deductions can be utilised.

Deferred income tax is provided on post acquisition retained earnings of subsidiaries, except where RSB controls the subsidiary’s dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future.

Selected Statistical Information Average Balance Sheet and Interest Rate Data The following tables set forth the consolidated average balances of assets and liabilities of RSB for the periods indicated and, for interest earning assets and interest bearing liabilities, sets forth the amount of interest income or expense and the average rate of such interest income or expense for such assets and liabilities. For the purposes of this table, the consolidated average balances of assets and liabilities represent the average of the opening, quarterly and closing balances for each year.

The results of this analysis would likely be different if alternative, more frequent, averaging methods were used. The average rates below are calculated by dividing aggregate interest income/expense for the relevant line item below by the average balance for the same line item. Average interest rates are distinct from the effective interest

-47- rates presented in RSB’s Financial Statements and referred to elsewhere in this Base Prospectus. See “Critical Accounting Policies”, “Income and Expense Recognition” for a description of the method of calculation of effective interest rates.

2011 Interest Average Income/ Average balance Expense Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals(1)(2) ...... 88,656 30,151 34.0% Debt securities portfolio ...... 26,132 2,130 8.2% Loans to legal entities(1)(2) ...... 4,902 429 8.8% Due from other banks ...... 762 66 8.7% Total interest-earning assets ...... 120,452 32,776 27.2% Interest-bearing liabilities Due to other banks ...... 2,997 369 12.3% Customer accounts ...... 83,906 6,814 8.1% Debt securities in issue ...... 13,352 1,085 8.1% Subordinated debt ...... 21,900 1,691 7.7% Total interest-bearing liabilities ...... 122,155 9,959 8.2% Net interest spread(3) ...... 19.0% Net interest income ...... 22,817 Net interest margin(4) ...... 18.9%

2010 Interest Average Income/ Average balance Expense Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals(1)(2) ...... 76,739 25,944 33.8% Debt securities portfolio ...... 20,009 1,760 8.8% Loans to legal entities(1)(2) ...... 7,881 688 8.7% Due from other banks ...... 465 40 8.6% Total interest-earning assets ...... 105,094 28,432 27.1% Interest-bearing liabilities Due to other banks ...... 5,591 370 6.6% Customer accounts ...... 42,737 4,407 10.3% Debt securities in issue ...... 32,374 2,712 8.4% Subordinated debt ...... 22,243 1,434 6.4% Total interest-bearing liabilities ...... 102,945 8,923 8.7% Net interest spread(3) ...... 18.4% Net interest income ...... 19,509 Net interest margin(4) ...... 18.6%

-48- 2009 Interest Average Income/ Average balance Expense Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals(1)(2) ...... 100,342 30,939 30.8% Debt securities portfolio ...... 12,722 1,241 9.8% Loans to legal entities(1)(2) ...... 13,119 1,688 12.9% Due from other banks ...... 864 69 8.0% Total interest-earning assets ...... 127,047 33,937 26.7% Interest-bearing liabilities Due to other banks ...... 34,041 3,967 11.7% Customer accounts ...... 20,933 1,720 8.2% Debt securities in issue ...... 67,732 6,163 9.1% Subordinated debt ...... 15,573 1,397 9.0% Total interest-bearing liabilities ...... 138,279 13,247 9.6% Net interest spread(3) ...... 17.1% Net interest income ...... 20,690 Net interest margin(4) ...... 16.3%

(1) These values are net of provision for impairment and present value discounts. (2) The line item “Loans and Advances to Customers” in RSB’s consolidated financial statements consists principally of consumer and credit card loans, as well as, to a lesser extent, other loans to individuals and direct commercial loans. (3) The difference between the average interest rate on interest-earning assets and the average interest rate on interest-bearing liabilities. Average rate on interest-earning assets was calculated as respective interest income divided by interest-earning assets representing the average of the opening, quarterly and closing balances for the respective year. Average rate on interest-bearing liabilities was calculated as respective interest expense divided by interest-bearing liabilities representing the average of the opening, quarterly and closing balances for the respective year. (4) Net interest margin is defined as net interest income before provision for loan impairment as a percentage of average interest earning assets.

The increase in interest-earning assets in the year ended 31 December 2011 in comparison to year ended 31 December 2010 is the result of increased consumer loan and credit card lending activity and the launch of RSB’s new credit products, including PILs. To balance an increased customer account portfolio, RSB’s management sought to create a liquidity cushion in the form of a larger securities portfolio.

The decrease in interest-earning assets in the year ended 31 December 2010 in comparison to the year ended 31 December 2009, was principally the result of an aggregate decrease in the demand for consumer loans due to the financial crisis as well as the new credit policy introduced by RSB since September 2008 focusing on products with the best credit quality. See “Business - History - Effect of the Financial Crisis - Optimisation of Product Line”.

RSB relies on interest-bearing liabilities as its major source of financing for interest-earning assets. The dynamics of interest-bearing liabilities are similar to those of interest-earning assets. The temporarily unused cash received from/collected for repayment of debt securities is generally placed in highly liquid securities or deposited with other banks.

The increase in interest-bearing liabilities in the year ended 31 December 2011 in comparison to year ended 31 December 2010 is the result of a significant increase in customer accounts, mainly deposits and Bank-in-Pocket accounts. RSB has actively developed an individual deposits programme and increased the amount of term deposits from individuals by 64.3 per cent. from RUB 45,559 as of 31 December 2010 to RUB 74,855 million as of 31 December 2011.

Interest-bearing liabilities decreased in the year ended 31 December 2010 in comparison to the year ended 31 December 2009, primarily due to repayment of debt securities at maturity or offer dates. The share of debt securities as a proportion of total RSB liabilities decreased from 38.6 per cent. as of 31 December 2009 to 19.1 per cent. as of 31 December 2010 as a result of RSB’s strategy to reduce its exposure to global capital markets during the financial crisis.

-49- Net Changes in Interest Income and Expense-Volume and Rate Analysis The following tables provide a comparative analysis of net changes in interest income and interest expense by reference to changes in average volume and rates for the periods indicated. Net changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for interest-earning assets and sources of funds on which interest is received or paid. Volume change is calculated as the change in volumes multiplied by the sum of average rates for two compared periods divided by two, while rate change is the change in rate multiplied by the sum of average volumes for two compared periods divided by two. Average balances represent the average of the opening, quarterly and closing balances for the respective years.

2011/2010 2010/2009 Increase (decrease) due to changes in Increase (decrease) due to changes in Volume Rate Net change Volume Rate Net change (in millions of Roubles) Interest Income Loans and advances to individuals ...... 4,041 166 4,207 (7,629) 2,634 (4,995) Debt securities portfolio ...... 519 (149) 370 676 (157) 519 Loans to legal entities ...... (260) 1 (259) (566) (434) (1,000) Due from other banks ...... 26 — 26 (33) 4 (29) Total interest income ...... 4,326 18 4,344 (7,552) 2,047 (5,505) Interest Expense Due to other banks ...... (246) 245 (1) (2,599) (998) (3,597) Customer accounts ...... 3,794 (1,387) 2,407 2,020 667 2,687 Debt securities in issue ...... (1,570) (57) (1,627) (3,090) (361) (3,451) Subordinated debt ...... (24) 281 257 514 (477) 37 Total interest expense ...... 1,954 (918) 1,036 (3,155) (1,169) (4,324) Net change in net interest income ..... 2,372 936 3,308 (4,397) 3,216 (1,181)

The 15.3 per cent. increase in total interest income for the year ended 31 December 2011 compared with the year ended 31 December 2010 was due primarily to an increase in volume of loans originated by RSB as a result of its expanding lending activity.

The 16.2 per cent. decrease in total interest income for the year ended 31 December 2010 compared with the year ended 31 December 2009 was primarily attributable to a contraction of RSB’s loan portfolio as a result of the tightening of its underwriting policies in 2009.

Results of Operations Summary The following table sets forth the principal components of RSB’s net profit for the periods indicated:

Change For the year ended from prior 31 December period 2011 2010 (percentages) (in millions of Roubles) Interest income ...... 32,776 28,432 15.3% Interest expense ...... (9,959) (8,923) 11.6% Net interest income ...... 22,817 19,509 17.0% Provision for impairment of loans to customers ...... (4,603) (6,345) (27.5)% Net interest income after provision for loan impairment ...... 18,214 13,164 38.4% Non-interest income ...... 5,594 3,063 82.6% Operating income ...... 23,808 16,227 46.7% Administrative and other operating expenses ...... (17,206) (13,696) 25.6% Profit before tax ...... 6,602 2,531 160.8% Income tax expense ...... (1,591) (686) 131.9% Profit for the year ...... 5,011 1,845 171.6% Cost/Income Ratio(1) ...... 60.6% 60.7% (0.2)%

-50- For the year ended Change from 31 December prior period 2010 2009 (percentages) (in millions of Roubles) Interest income ...... 28,432 33,937 (16.2)% Interest expense ...... (8,923) (13,247) (32.6)% Net interest income ...... 19,509 20,690 (5.7)% Provision for impairment of loans to customers ...... (6,345) (12,485) (49.2)% Net interest income after provision for loan impairment ...... 13,164 8,205 60.4% Non-interest income/(expense) ...... 3,063 (580) (628.1)% Operating income ...... 16,227 7,625 112.8% Administrative and other operating expenses ...... (13,696) (13,195) 3.8% Profit/losses before tax ...... 2,531 (5,570) (145.4)% Income tax (expense)/credit ...... (686) 1,043 (165.8)% Profit/(loss) for the year ...... 1,845 (4,527) (140.8)% Cost/Income Ratio(1) ...... 60.7% 65.6% (7.5)%

(1) Cost/income ratio is calculated as administrative and other operating expenses divided by operating income excluding provision for loan impairment and other provisions.

RSB’s net profit increased to RUB 5,011 million in year ended 31 December 2011 from RUB 1,845 million in the year ended 31 December 2010 and the net loss of RUB 4,527 million in the year ended 31 December 2009. The key factor leading to this improvement was the tightening by RSB of its underwriting policies which improved the quality of its loan portfolio and resulted in lower provisions for loan impairment. Other factors include an increase in non-interest income (in particular, fee and commission income and income from insurance operations).

Results of Operations for the Years ended 31 December 2011, 31 December 2010 and 31 December 2009. Interest Income, Interest Expense, Net Interest Margin and Provision for Loan Impairment The following table sets out the principal components of RSB’s net interest income and average interest-earning assets, calculated as the average of the opening, quarterly and closing balances for each year under review.

Change from prior For the year ended 31 December year 2011 2010 2009 2011/2010 2010/2009 (in millions of Roubles, except percentages) Interest income Loans and advances to individuals ...... 30,151 25,944 30,939 16.2% (16.1)% Debt securities portfolio ...... 2,130 1,760 1,241 21.0% 41.8% Loans to legal entities ...... 429 688 1,688 (37.6)% (59.2)% Cash and cash equivalents and due from other banks ..... 66 40 69 65.0% (42)% Total interest income ...... 32,776 28,432 33,937 15.3% (16.2)% Total interest expense ...... (9,959) (8,923) (13,247) 11.6% (32.6)% Net interest income ...... 22,817 19,509 20,690 17.0% (5.7)% Average interest earning assets Loans and advances to individuals ...... 88,656 76,739 100,342 15.5% (23.5)% Debt securities portfolio ...... 26,132 20,009 12,722 30.6% 57.3% Loans to legal entities ...... 4,902 7,881 13,119 (37.8)% (39.9)% Due from other banks ...... 762 465 864 63.9% (46.2)% Total average interest-earning assets ...... 120,452 105,094 127,047 14.6% (17.3)%

The amount of net interest income earned by RSB is affected by a number of factors. It is primarily determined by the volume of interest earning assets (mainly loans to individuals with less impact from the debt securities portfolio or placements with other banks and loans to legal entities), interest bearing liabilities (such as customer deposits, debt securities issued, subordinated loans and deposits from other credit institutions), and the differential between rates on interest earning assets and interest bearing liabilities and the relative margins of RSB’s consumer finance portfolio and its own funding. Interest earning assets are composed primarily of credit

-51- card loans, personal loans, POS loans, debt securities and loans to other credit institutions and legal entities. However, the overwhelming proportion of RSB’s interest earning assets relates to credit card loans and personal loans. Since 2006, interest income earned by RSB on its credit card loans has represented the largest component of its interest income.

Interest Income Interest income is comprised of (a) interest paid to RSB by consumer and corporate clients that have borrowed funds from RSB, (b) fees and commissions payable by customers directly attributable to loans, (c) interest paid by issuers of debt securities owned by RSB and (d) interest paid by credit institutions, which have borrowed funds from RSB on interbank terms and at interbank rates. Fees and commissions paid by RSB to retailers are accounted for in the interest income line reducing the interest income.

Interest income increased by 15.3 per cent., or by RUB 4,344 million, to RUB 32,776 million in the year ended 31 December 2011 from RUB 28,432 million in the year ended 31 December 2010. The reason for such improvement was RSB’s increased lending activity which resulted in the increase in RSB’s loan portfolio. Interest income decreased by 16.2 per cent., or by RUB 5,505 million, to RUB 28,432 million in the year ended 31 December 2010 from RUB 33,937 million in the year ended 31 December 2009. The main reason for the decrease in interest income in the year ended 31 December 2010 compared to the year ended 31 December 2009 was a decrease in the aggregate size of the loan portfolio a result of stricter policies towards originating new loans and the impact of the global financial crisis. The decrease of RSB’s loan portfolio which resulted in the decrease in interest income for the year ended 31 December 2010 was partially compensated by an increase in the average interest rate on loans to individuals, up to 33.8 per cent. in the year ended 31 December 2010 from 30.8 per cent. in the year ended 31 December 2009.

As of 31 December 2011, the average interest rate on credit card loans (measured as the rate for credit card loans assuming that clients exercise the full limit in cash and repay it within approximately 14 to 16 months) was 42.0 per cent. as compared to 44.3 per cent. and 45.1 per cent. as of 31 December 2010 and 2009, respectively. The average interest rates on consumer loans (except for credit card loans) as of 31 December 2011, 2010 and 2009 were 29.7 per cent., 32.7 per cent. and 30.9 per cent., respectively. Such decrease in the average interest rate on credit card loans in 2011 and 2010 and on consumer loans in 2011 was due to an overall decrease in market interest rates as a result of increased competition in the lending market. An increase in the average interest rate on consumer loans in 2010 was mainly due to a change in the composition of RSB’s loan portfolio, in particular a decrease in volumes of auto loans with relatively low interest rates. Credit cards net of provision for loan impairment represented 51.2 per cent., 52.7 per cent. and 50.2 per cent. of total loans outstanding as of 31 December 2011, 2010 and 2009, respectively. Consumer loans net of provision for loan impairment represented 44.3 per cent., 41.5 per cent. and 39.2 per cent. of total loans outstanding as of 31 December 2011, 2010 and 2009, respectively.

The average interest rate on interest-earning assets of RSB was 27.2 per cent., 27.1 per cent. and 26.7 per cent. as of 31 December 2011, 2010 and 2009, respectively. Despite a decrease in the average interest rates on RSB’s loan products, average interest rates on interest-earning assets slightly increased in 2010 and remained stable in 2011 due to a change in the composition of RSB’s loan portfolio, including a decrease in volumes of loans with relatively low interest rates (such as auto loans and loans to legal entities) in RSB’s loan portfolio.

As a result of increased market competition, RSB pays commissions to the large retail chains for certain of RSB’s high margin products. As these commissions comprised a part of the effective yield of consumer loans and, as such, represent a portion of interest income, interest income and interest margins have been adversely affected.

The following table sets out the principal components of RSB’s interest income in the years ended 31 December 2011, 2010 and 2009.

Per cent of total 2011 interest income (in millions of Roubles, except percentages) Total interest income ...... 32,776 100.0% of which from loans to individuals ...... 30,151 92.0% from debt securities portfolio ...... 2,130 6.5% from loans to legal entities ...... 429 1.3% cash and cash equivalents and due from other banks ...... 66 0.2%

-52- Per cent of total Per cent of total 2010 interest income 2009 interest income (in millions of Roubles, except percentages) Total interest income ...... 28,432 100% 33,937 100% of which from loans to individuals ...... 25,944 91.2% 30,939 91.2% from debt securities portfolio ...... 1,760 6.2% 1,241 3.6% from loans to legal entities ...... 688 2.4% 1,688 5.0% cash and cash equivalents and due from other banks ...... 40 0.2% 69 0.2%

Interest Expense Interest expense is principally comprised of amounts paid by RSB as interest on debt securities issued by RSB (principally bonds, promissory notes, asset-backed notes, euro-commercial papers and loan participation notes), as well as on deposit funds of customers and credit institutions. The following table sets out the principal components of RSB’s consolidated interest expense in the years ended 31 December 2011, 2010 and 2009 and average interest-bearing liabilities, calculated as the average of the opening, quarterly and closing balances for each period under review.

For the year ended 31 December Change from prior period 2011 2010 2009 2011/2010 2010/2009 (in millions of Roubles) (percentages) Interest expense Customer accounts ...... 6,814 4,407 1,720 54.6% 156.2% USD denominated loan participation notes ...... 550 2,197 3,543 (75.0)% (38)% Subordinated debt ...... 1,691 1,434 1,397 17.9% 2.6% RR denominated bonds ...... 532 498 1,336 6.8% (62.7)% Due to other banks ...... 369 370 3,967 (0.3)% (90.7)% Promissory notes issued ...... 3 17 27 (82.4)% (37)% Euro denominated notes ...... — — 1,257 — (100)% Total interest expense ...... 9,959 8,923 13,247 11.6% (32.6)% Average interest-bearing liabilities Due to other banks ...... 2,997 5,591 34,041 (46.4)% (83.6)% Customer accounts ...... 83,906 42,737 20,933 96.3% 104.2% Debt securities in issue(1) ...... 13,352 32,374 67,732 (58.8)% (52.2)% Subordinated debt ...... 21,900 22,243 15,573 (1.5)% 42.8% Total average interest-bearing liabilities ...... 122,155 102,945 138,279 18.7% (25.6)%

(1) Debt securities in issue include loan participation notes, bonds issued, asset-backed notes issued, euro-commercial papers issued and promissory notes issued.

Interest expense increased by 11.6 per cent. in the year ended 31 December 2011 to RUB 9,959 million as compared to RUB 8,923 million in the year ended 31 December 2010. The increase was mainly due to an increase in RSB’s customers’ accounts as a result of its retail deposits strategy which was partially compensated by a decrease in the average interest expense rates. Interest expense decreased by 32.6 per cent. in the year ended 31 December 2010 from RUB 13,247 million in the year ended 31 December 2009. This decrease was primarily attributable to a decrease in interest-bearing liabilities to RUB 102,945 million as of 31 December 2010 from RUB 138,279 million in the year ended 31 December 2009. This decrease was due to RSB’s efforts to decrease its dependence on the capital markets and repayment of its debt securities at maturity or offer dates.

Net Interest Margin RSB’s net interest margin, defined as net interest income before the provision for loan impairment as a percentage of average interest earning assets, was 18.9 per cent. in the year ended 31 December 2011, compared to 18.6 per cent. and 16.3 per cent. for the years ended 31 December 2010 and 2009, respectively. RSB’s net interest spread, defined as the difference between the average interest rate on interest earning assets and the average interest rate on interest bearing liabilities, was 19.0 per cent. for the year ended 31 December 2011 as compared to 18.4 per cent. and 17.1 per cent. for the years ended 31 December 2010 and 2009, respectively.

-53- The tables below summarise the effective interest rates by major currencies for major monetary financial instruments as of 31 December 2011, 2010 and 2009. The analysis has been prepared based on period-end effective rates used for amortisation of the respective assets and liabilities.

31 December 2011 2010 2009 RUB USD Euro RUB USD Euro RUB USD Euro Assets Cash balances with the CBRF ...... 0.0 — — 0.0 — — 0.0 — — Correspondent accounts and overnight placements with other banks ...... 1.6 0.6 0.0 0.0 0.8 0.0 0.9 0.5 — Debt securities at fair value through profit or loss ...... 8.3 7.3 — 10.5 — — 14.6 1.5 — Due from other banks ...... — 0.7 0.2 5.5 2.1 — — 0.6 — Loans and advances to customers —consumer loans ...... 29.7 — — 32.7 — — 30.9 — — —credit card loans(1) ...... 42.0 — — 44.3 — — 45.1 18.7 — —direct commercial loans ...... 9.5 10.7 9.5 9.7 11.5 11.6 12.7 12.4 10.2 Debt securities available for sale ...... 8.8 3.0 — 8.9 — — 9.4 — — Liabilities Due to other banks ...... 9.9 — 2.2 — — — 11.0 — 6.2 Customer accounts —term deposits of legal entities ...... 6.3 — — 5.7 6.7 9.7 10.0 9.0 6.3 —term deposits of individuals ...... 10.7 7.5 6.4 11.9 8.1 7.5 15.8 11.1 10.3 Debt securities in issue —RR denominated bonds ...... 10.8 — — 9.3 — — 13.8 — — —USD denominated loan participation notes ..... — 9.3 — — 7.1 — — 8.4 — —EUR denominated notes ...... — — — —————— Subordinated debt ...... 6.5 7.8 — 8.0 9.0 8.1 9.6 —

(1) Effective rate for credit card loans was calculated based on the assumption that clients exercise full limit in cash and repay it approximately in the period from 14 to 16 months.

Provision for Loan Impairment The provision for loan impairment includes changes in allowances for impairment of loans and advances to clients, as well as changes in allowances for amounts due from other banks. The following table sets out movements in RSB’s provision for loan impairment relating to RSB’s gross loans and advances to customers for the years ended 31 December 2011, 2010 and 2009.

For the year ended 31 December 2011 2010 2009 (in millions of Roubles, except percentages) Provision for loan impairment as at 1 January ...... 7,792 9,476 8,628 Provision for loan impairment during the year ...... 6,108 8,219 14,668 Amounts written off during the year as uncollectible ...... (5,417) (9,903) (13,820) Provision for loan impairment as at 31 December ...... 8,483 7,792 9,476 Gross loans and advances to customers ...... 122,236 89,722 102,461 Provision for loan impairment as a percentage of gross loans and advances to customers ...... 6.9% 8.7% 9.2%

As at 31 December 2011, the provision for loan impairment as a percentage of gross loans and advances to customers decreased to 6.9 per cent. from 8.7 per cent. and 9.2 per cent. as at 31 December 2010 and 2009, respectively. The provision for impairment during the years ended 31 December 2011, 2010 and 2009 differs from the amount presented in the consolidated statement of comprehensive income by RUB 1,505 million, RUB 1,874 million and RUB 2,183 million, respectively, due to recovery of such amounts previously written off as uncollectable which were credited directly to the provisions line in the consolidated statement of comprehensive income. The decrease in provisions as a percentage of gross loans and advances to customers in 2011 and 2010 was a result of the overall recovery of the Russian economy and improvements in RSB’s loan origination procedures and risk management policy and, as a result of this, the quality of RSB’s loan portfolio improved.

-54- As of 31 December 2011, the total amount of NPLs in RSB’s retail portfolio was RUB 1,743 million compared to RUB 1,717 million and RUB 5,138 million as of 31 December 2010 and 2009, respectively. The ratio of NPLs to the total loan portfolio of loans to individuals (gross of provisions) was 1.5 per cent. as of 31 December 2011 compared to 2.1 per cent. and 5.7 per cent. as of 31 December 2010 and 2009, respectively. The decrease of NPLs ratio in 2011 and 2010 was due to an improved quality of RSB’s loan portfolio as a result of measures introduced by RSB in 2009 (focusing on products with low credit risk and tightening underwriting criteria). The cover ratio for the portfolio of loans to individuals, calculated as total provisions divided by the total amount of NPLs, was 254.0 per cent. as of 31 December 2011, compared to 227.4 per cent. and 151.3 per cent. as of 31 December 2010 and 2009, respectively.

Loans written off during the year ended 31 December 2011 decreased by 45.3 per cent. compared to the year ended 31 December 2010. Loans written off during the year ended 31 December 2010 decreased by 28.3 per cent. compared to the year ended 31 December 2009. RSB’s criteria for loans written off are based on the portfolio behaviour. RSB has the following criteria for writing off loans as uncollectible: loans identified as fraudulent, loans overdue for 120 days with a principal amount less than RUB 50,000 and loans overdue for 360 days irrespective of the principal amount.

Non-Interest Income/(Expense) The following table sets out the principal components of RSB’s non-interest income/(expense) in the years ended 31 December 2011, 2010 and 2009.

For the year ended 31 December 2011 2010 2009 (in millions of Roubles) Non-interest income/(expense) Fee and commission income ...... 3,088 1,320 841 Fee and commission expense ...... (2,230) (986) (597) (Losses less gains) / gains less losses from operations with securities ...... (244) (56) 197 Losses less gains from operations with foreign currencies ...... (496) (902) (5,920) Gains from early debt retirement ...... — — 1,696 Income from insurance operations ...... 4,415 2,488 2,612 Other operating income ...... 1,061 1,199 591 Total non-interest income/(expense) ...... 5,594 3,063 (580)

Fee and commission income increased to RUB 3,088 million for the year ended 31 December 2011 from RUB 1,320 million and RUB 841 million for the years ended 31 December 2010 and 2009, respectively. Such increase was due to an increase in acquiring and interchange commission income to RUB 1,962 million for the year ended 31 December 2011 from RUB 1,045 million and RUB 715 million for the years ended 31 December 2010 and 2009, respectively.

Fee and commission expense increased to RUB 2,230 million for the year ended 31 December 2011 from RUB 986 million and RUB 597 million for the years ended 31 December 2010 and 2009, respectively. This increase was primarily due to increase in acquiring and interchange commission expense to RUB 1,539 million for the year ended 31 December 2011 from RUB 620 million and RUB 375 million for the years ended 31 December 2010 and 2009, respectively.

Income from insurance operations for the year ended 31 December 2011 increased to RUB 4,415 million from RUB 2,488 million for the year ended 31 December 2010. Such increase was due to an increase in volumes of loans and advances to customers in the same period. Income from insurance operations decreased in 2010 from RUB 2,612 million for the year ended 31 December 2009. This decrease was due to a reduction in volumes of loans and advances to customers in the same period.

Losses less gains from operations with foreign currencies represent results from RSB’s hedging procedures against RSB’s exposure to currency risk. RSB is exposed to currency risk because the significant part of RSB’s liabilities is denominated in foreign currencies, while most of RSB’s assets are denominated in Roubles. RSB does not apply the optional hedge accounting allowed under IFRS.

In the year ended 31 December 2011, losses less gains from operations with foreign currencies decreased to RUB 496 million from RUB 902 million and RUB 5,920 million for the years ended 31 December 2010 and 2009, respectively. This decrease was due to RSB’s improvement in currency-related matching of liabilities to assets.

-55- For the year ended 31 December 2011, other operating income amounted to RUB 1,061 million as compared to RUB 1,199 million and RUB 591 million for the years ended 31 December 2010 and 2009, respectively. Such changes in other operating income in 2011 and 2010 are largely attributable to gains from assignment of bad debts to third party purchasers of RUB 789 million, RUB 1,020 million and RUB 157 million for the years ended 31 December 2011, 2010 and 2009, respectively.

Administrative and Other Operating Expenses Administrative and other operating expenses are comprised of staff costs, administrative expenses, rental expenses, advertising and marketing, professional services, taxes other than income tax, depreciation of fixed assets and amortisation of intangible assets, other expenses related to maintenance of fixed and intangible assets and other operating expenses. The following table sets out RSB’s consolidated administrative and other operating expenses for the years ended 31 December 2011, 2010 and 2009.

For the year ended Change from prior 31 December period 2011 2010 2009 2011/2010 2010/2009 (in millions of Roubles, except percentages) Staff cost ...... 9,878 7,281 5,839 35.7% 24.7% Rent expenses ...... 1,536 1,112 1,671 38.1% (33.5)% Depreciation and amortisation charge ...... 1,302 1,491 1,301 (12.7)% 14.6% Other costs of premises and equipment ...... 1,028 915 985 12.3% (7.1)% Taxes other than on income ...... 1,009 720 836 40.1% (13.9)% Advertising and marketing ...... 651 439 367 48.3% 19.6% Telecommunication ...... 412 414 675 (0.5)% (38.7)% Low value items and stationery ...... 323 325 305 (0.6)% 6.6% Professional services ...... 292 208 165 40.4% 26.1% Security ...... 230 157 222 46.5% (29.3)% Other ...... 200 264 205 (24.2)% 28.8% Mail ...... 113 64 188 76.6% (66.0)% Business trips ...... 93 69 85 34.8% (18.8)% Insurance ...... 53 99 142 (46.5)% (30.3)% Statutory duties ...... 48 56 92 (14.3)% (39.1)% Charity ...... 38 82 117 (53.7)% (29.9)% Total administrative and other operating expenses ...... 17,206 13,696 13,195 25.6% 3.8%

Staff Costs For the year ended 31 December 2011 staff costs increased by 35.7 per cent. to RUB 9,878 million from RUB 7,281 million for the year ended 31 December 2010, which in turn represented increase by 24.7 per cent. from RUB 5,839 million for the year ended 31 December 2009. The increase in staff costs for the years ended 31 December 2011, 2010 and 2009 was due to the increased headcount and employees’ salaries as well as expansion of RSB’s branch network. RSB and its subsidiaries employed 21,639 persons as at 31 December 2011 as compared to 14,816 persons and 12,285 persons employed by RSB and its subsidiaries as at 31 December 2010 and 2009, respectively.

Rent Expenses For the year ended 31 December 2011, rent expenses increased by 38.1 per cent. to RUB 1,536 million from RUB 1,112 million for the year ended 31 December 2010. Such increase in rent expenses was due to the expansion of RSB’s branch network in 2011. For the year ended 31 December 2010 rent expenses decreased by 33.5 per cent. from RUB 1,671 million for the year ended 31 December 2009. Such decrease was primarily due to cost-cutting measures (including a significant reduction in the number of RSB’s branches and points of sale) introduced and implemented in 2009 which became effective in 2010.

Depreciation and Amortisation Depreciation of fixed assets and amortisation of intangible assets decreased by 12.7 per cent. to RUB 1,302 million for the year ended 31 December 2011 from RUB 1,491 million for the year ended 31 December 2010.

-56- This reduction was due to the increase in the volume of fully depreciated fixed assets. Depreciation of fixed assets and amortisation of intangible assets increased in 2010 by 14.6 per cent. from RUB 1,301 million for the year ended 31 December 2009, reflecting growth in RSB’s intangible assets.

Taxes Other Than Income Tax Taxes other than income tax increased by 40.1 per cent. to RUB 1,009 million for the year ended 31 December 2011 from RUB 720 million for the year ended 31 December 2010. Taxes other than income tax consist mainly of VAT which is imposed on certain services and on property and fixed assets. Such increase in 2011 was primarily due to increase in RSB’s VAT-chargeable expenses (mainly administrative and operating expenses). Taxes other than income tax decreased in 2010 by 13.9 per cent. from RUB 836 million in the year ended 31 December 2009 as a result of the decrease in RSB’s expenses on which VAT is imposed (mainly reduction in administrative and operating expenses due to cost-cutting measures implemented by RSB during the financial crisis).

Advertising and Marketing RSB advertises its consumer finance products primarily by using the telemarketing capability of RSB’s call centre, direct-marketing tools at RSB’s points of sale and TV advertising. Advertising and marketing expenses increased by 48.3 per cent. to RUB 651 million for the year ended 31 December 2011 from RUB 439 million for the year ended 31 December 2010. Advertising and marketing expenses increased in 2010 by 19.6 per cent. from RUB 367 million for the year ended 31 December 2009. This increase reflected overall growth in advertising activity associated with RSB’s launch of new products as well as expansion of its branch network.

Liquidity, Funding and Capital Resources Liquidity RSB’s liquidity needs arise primarily from its issuing or extending loans and advances to customers, which is its core business as a consumer finance company. To date, RSB’s liquidity needs have been funded largely through customer accounts, debt issuances and interest received on loans and advances to customers.

Cash Flow The following table sets out RSB’s main sources of cash in the years ended 31 December 2011, 2010 and 2009:

For the year ended 31 December 2011 2010 2009 (in millions of Roubles) Cash flows from operating activities before changes in operating assets and liabilities ...... 12,522 11,612 8,942 Net cash from operating activities ...... 19,686 22,786 9,118 Net cash used in investing activities ...... (2,131) (732) (1,316) Net cash used in financing activities ...... (10,285) (22,850) (47,069) Effect of exchange rate changes on cash and cash equivalents ...... (396) (367) 3,208 Net increase/(decrease) in cash and cash equivalents ...... 6,874 (1,163) (36,059) Cash and cash equivalents as at the end of the period ...... 18,266 11,392 12,555

Most of RSB’s cash is used to extend credit card and consumer loans. Before the financial crisis, RSB’s deposits from customers were not sufficient to match the rate of growth of RSB’s consumer loan and credit card loan businesses, and RSB therefore relied on debt securities as a source of funding. In response to the lack of credit available during the global financial crisis, in 2008-2009 RSB began to grow its customer deposits as an alternative source of funding. RSB increased the amount of term deposits from individuals by 139.9 per cent. as of 31 December 2010 compared to 31 December 2009. During the year ended 31 December 2011 RSB increased the amount of term deposits from individuals by 64.3 per cent. to RUB 74,855 million compared to 31 December 2010.

The increase in the cash flows from all activities over the periods under review is primarily due to the expansion of RSB’s customer base, the expansion of its activities and the corresponding financing of its expansion through the issuance of debt securities and loans received from banks. For further information, see “Business - Strategy”.

-57- Funding RSB’s funding sources as at 31 December 2011, 2010 and 2009 are set forth in the table below:

As of 31 December Per cent of Per cent of Per cent of total total total 2011 funding 2010 funding 2009 funding (in millions of Roubles, except percentages) Due to banks ...... 5,311 3.3% 459 0.4% 15,673 14.2% Debt securities in issue USD 100 million 9.1% euro commercial papers due May 2012 ...... 4,683 2.9% — — — — USD 350 million 8.6% loan participation notes due May 2011 ...... — — 10,802 9.8% 10,708 9.7% USD 100 million 8.0% euro commercial papers due October 2011 ...... — — 2,876 2.6% — — USD 500 million 7.5% loan participation notes due October 2010 ...... — — — — 13,527 12.2% USD 400 million 8.5% loan participation notes due June 2010 ...... — — — — 8,967 8.1% RUB 5,000 million 11 % bonds due November 2014 ...... 5,063 3.1% — — — — RUB 5,000 million 7.8 % bonds due April 2012 ...... 4,879 3.0% 1,382 1.2% 998 0.9% RUB 5,000 million 7.8 % bonds due September 2011 ...... — — 3,193 2.9% 1,933 1.7% RUB 6,000 million 10.8 % bonds due February 2011 ...... — — 2,725 2.5% 6,400 5.8% RUB 5,000 million 13.0% bonds due September 2010 ...... — — — — 108 0.1% UAH 100 million 15% bonds due February 2012 ...... 406 0.3% — — — — Promissory notes issued ...... 717 0.5% 61 0.1% 83 0.1% Total debt securities in issue ...... 15,748 9.8% 21,039 19.1% 42,724 38.6% Subordinated debt USD 200 million 7.73 % loan participation notes due December 2015 ...... 6,441 4.0% 6,093 5.5% 6047 5.5% USD 200 million 7.56 % loan participation notes due December 2016 ...... 6,455 4.0% 6,117 5.6% 6,067 5.5% RUB 5,000 million 6.5 % loan due January 2020 ...... 5,142 3.2% 5,175 4.7% 5,175 4.7% RUB 4,959 million 6.5 % loan due December 2019 ...... 4,524 2.8% 4,485 4.1% 4,956 4.4% Total subordinated debt ...... 22,562 14.0% 21,870 19.9% 22,245 20.1% Customer accounts Current/demand accounts of individuals ..... 26,591 16.5% 16,671 15.1% 7,363 6.7% Term deposits of individuals ...... 74,855 46.5% 45,559 41.4% 18,990 17.2% Term deposits of state and municipal ...... 7,105 4.4% — — — — Current/settlement accounts of legal entities ...... 824 0.5% 527 0.5% 396 0.3% Term deposits of legal entities ...... 104 0.1% 133 0.1% 86 0.1% Total customer accounts ...... 109,479 68.0% 62,890 57.1% 26,835 24.3% Other liabilities ...... 7,925 4,9% 3,807 3.5% 3,086 2.8% Total Funding ...... 161,025 100,0% 110,065 100.0% 110,563 100.0%

-58- RUB denominated bonds. In November 2011, the Group issued bonds in the amount of RUB 5,000 million due in November 2014. The bondholders have the right to redeem these bonds at their nominal amount in November 2012.

UAH denominated bonds. In February 2011, the Group issued bonds in the nominal amount of UAH 100 million due in February 2012.

Subordinated Debt. In December 2005, RSB issued loan participation notes in the amount of U.S.$ 200 million due in December 2015. The notes bore a fixed interest rate of 8.875 per cent. until December 2010. The interest rate for the period starting from December 2010 was set at 7.73 per cent. per annum.

In December 2006, RSB issued loan participation notes in the amount of U.S.$ 200 million due in December 2016. The notes bear a fixed interest rate of 9.75 per cent. until December 2011. The interest rate for the period starting from December 2011 was set at 7.56 per cent. per annum.

In July 2009, RSB obtained a subordinated loan from RSC in the amount of RUB 5,000 million due in January 2020. As of the date of this Base Prospectus, the interest rate on this loan is 6.5 per cent. per annum.

In October 2009, RSB obtained a subordinated loan from VEB in the amount of RUB 4,959 million with a 8.0 per cent. per annum interest rate and the maturity date in December 2019. RSB was able to obtain this loan from VEB as a result of the subordinated loan received from its parent company in amount that exceeded this loan. According to the Federal Law No. 206-FZ “On amendments to the Federal Law “On follow-up sponsorship of financial system of Russia” dated 27 July 2010, the interest rate for the loan was changed from 8.0 per cent. to 6.5 per cent. starting in August 2010.

The claims of the lenders against the Group in respect of the principal and interest on the subordinated loans are subordinated to the claims of other creditors in accordance with the legislation of Russia.

Customer Accounts The following table summarises RSB’s customer accounts by type of customer as of the dates indicated:

As of 31 December 2011 2010 2009 (in millions of Roubles) Legal entities —Current/settlement account ...... 824 527 396 —Term deposits ...... 104 133 86 State and Public Organisations —Term deposits ...... 7,105 — — Individuals —Current/settlement account ...... 26,591 16,671 7,363 —Term deposits ...... 74,855 45,559 18,990 Total customer accounts ...... 109,479 62,890 26,835

As at 31 December 2011, RSB’s total customer accounts amounted to RUB 109,479 million, representing 68.0 per cent. of its total liabilities, as compared to RUB 62,890 million as at 31 December 2010, representing 57.1 per cent. of its total liabilities. As at 31 December 2009, RSB’s total customers accounts were RUB 26,835 million, representing 24.3 per cent. of its total liabilities. The substantial growth in RSB’s total customers accounts in 2011 and 2010 was due to RSB’s strategy to diversify its funding base and decrease its reliance on the global financial markets.

Loan Portfolio As at 31 December 2011, RSB’s total net loans and advances to customers were RUB 113,753 million, representing 60.5 per cent. of its total assets, as compared to RUB 81,930 million as at 31 December 2010, representing 59.8 per cent. of its total assets. Such increase was due to increase of RSB’s lending activity. As at 31 December 2009, RSB’s total net loans and advances to customers were RUB 92,985, representing

-59- 66.4 per cent. of its total assets. Decrease in RSB’s total net loans and advances to customers in 2010 was due to the tightening of RSB’s underwriting standards and lending criteria as well as an overall decrease in demand for consumer loans as a result of the financial crisis.

The following table summarises RSB’s loan portfolio as at the dates indicated:

As of 31 December 2011 2010 2009 Loans to individuals Credit Card loans ...... 60,158 44,776 49,449 POS loans ...... 25,226 16,634 11,697 Personal loans ...... 24,325 12,249 16,513 Auto loans ...... 1,484 5,338 11,013 Restructured loans ...... 604 1,032 1,810 Other ...... 1,208 1,063 389 Loans to legal entities ...... 9,231 8,630 11,590 Gross loans and advances to customers ...... 122,236 89,722 102,461 Less: Provision for loan impairment ...... (8,483) (7,792) (9,476) Total loans and advances to customers ...... 113,753 81,930 92,985

As of 31 December 2011, credit card loans were RUB 60,158 million as compared to RUB 44,776 million as 31 December 2010. Such increase was mostly due to RSB’s increased focus on the credit card market and increased sales of credit card products through RSB’s distribution channels. In 2010, credit card loans decreased from RUB 49,449 million as of 31 December 2009. This decrease was primarily due to RSB’s intention to reduce the volumes of credit card loans (as such loans have a lower predictability of drawdowns and repayments) and limit the sales offering of card products only to existing clients during the period of instability in the market.

As of 31 December 2011, POS loans increased to RUB 25,226 million as compared to RUB 16,634 as of 31 December 2010. In 2010, POS loans increased from RUB 11,697 million as of 31 December 2009. This increase was due to an increase in consumer demand for POS loans.

As of 31 December 2011, personal loans amounted to RUB 24,325 million as compared to RUB 12,249 million as of 31 December 2010. Such increase was due to RSB’s effort in marketing PILs. Personal loans decreased in 2010 from RUB 16,513 million as of 31 December 2009. This decrease was mainly due to the tightening of RSB’s underwriting criteria as well as limitation of sales by offering new loans only to RSB’s existing clients during the financial crisis.

Short-term placements with other banks, representing a minor part of RSB’s business, increased to 1,605 RUB million as of 31 December 2011 from RUB 513 million and RUB 528 million as of 31 December 2010 and 2009, respectively.

The following table sets out RSB’s net loan portfolio (loans and advances to customers, net of provision for loan impairment) by maturity as at 31 December 2011, 2010 and 2009:

As of 31 December 2011 Per cent 2010 Per cent 2009 Per cent (in millions of Roubles, except percentages) Demand and less 1 month ...... 11,751 10.3% 10,786 13.2% 10,197 11.0% From 1 to 3 months ...... 20,824 18.3% 13,540 16.5% 13,245 14.2% From 3 to 12 months ...... 62,083 54.6% 46,236 56.4% 48,722 52.4% More than 1 year ...... 19,095 16.8% 11,368 13.9% 20,821 22.4% Total ...... 113,753 100.0% 81,930 100.0% 92,985 100.0%

Short-term loans are dominant in RSB’s consumer finance portfolio, and are customary in the Russian consumer lending market. According to RSB’s estimates, credit card and personal loans with more than one year to maturity will experience growth, as credit card and personal loan balances tend to be repaid over this time period. When estimating the maturity of credit card loans, RSB relies on the outstanding balance as at a reporting date and assumes that repayments will be comparable to the actual repayment schedule in the past.

-60- The following table sets out loans and advances to customers, including overdue loans and provision for loan impairment as at 31 December 2011, 2010 and 2009:

Change from the prior As of 31 December period 2011 2010 2009 2011/2010 2010/2009 (in millions of Roubles, except percentages) Current loans and advances ...... 116,677 84,392 96,933 32,285 (12,541) Non-performing loans and advances ...... 5,559 5,330 5,528 229 (198) Gross loans and advances ...... 122,236 89,722 102,461 32,514 (12,739) Less: provision for loan impairment ...... (8,483) (7,792) (9,476) (691) 1,684 Total ...... 113,753 81,930 92,985 31,823 (11,055) Provision for loan impairment as a percentage of total gross loans and advances ...... 6.9% 8.7% 9.2% (1.8)% (0.5)% Provision for loan impairment as a percentage of NPLs ...... 152.6% 146.2% 171.4% 6.4% (25.2)% NPLs as a percentage of total gross loans and advances ...... 4.5% 5.9% 5.4% (1.4)% 0.5%

As at 31 December 2011, the provision for loan impairment as a percentage of gross loans and advances to customers was 6.9 per cent. as compared to 8.7 per cent. and 9.2 per cent. as at 31 December 2010 and 2009, respectively. This reduction is the result of improvements in RSB’s credit procedures and risk management policy and as a result of the overall recovery of Russian economy.

Non-Performing Loans Analysis by credit quality of loans outstanding as at 31 December 2011 is as follows:

Credit Loans to Card POS Auto Personal Restructured legal loans loans loans loans loans Other entities Total (in millions of Roubles) Current and not impaired ...... 7,520 6,587 7 2,908 34 — — 17,056 Total current and not impaired ...... 7,520 6,587 7 2,908 34 — — 17,056 Loans collectively assessed for impairment (gross) ...... —non-overdue or less than 30 days overdue ...... 50,360 17,898 1,397 20,614 448 1,169 — 91,886 —30 to 90 days overdue ...... 1,413 426 32 391 58 — — 2,320 Non-performing loans-loans over 90 days overdue ...... 865 315 48 412 64 39 — 1,743 Total collectively assessed for impairment (gross) ...... 52,638 18,639 1,477 21,417 570 1,208 — 95,949 Loans individually determined to be impaired (gross) —non-overdue or less than 30 days overdue ...... — — — — — — 5,415 5,415 Non-performing loans ...... — — — — — — 3,816 3,816 Total individually impaired loans (gross) .. — — — — — — 9,231 9,231 Less impairment provisions ...... (1,966) (1,079) (72) (1,123) (131) (56) (4,056) (8,483) Total loans and advances to customers .... 58,192 24,147 1,412 23,202 473 1,152 5,175 113,753

-61- Analysis by credit quality of loans outstanding as at 31 December 2010 is as follows:

Credit Loans to Card POS Auto Personal Restructured legal loans loans loans loans loans Other entities Total (in millions of Roubles) Current and not impaired ...... 5,800 4,433 — 744 34 — — 11,011 Total current and not impaired ...... 5,800 4,433 — 744 34 — — 11,011 Loans collectively assessed for impairment (gross) —non-overdue or less than 30 days overdue . . . 36,890 11,749 5,049 10,785 751 1,029 — 66,253 —30 to 90 days overdue ...... 1,295 301 120 269 126 — — 2,111 Non-performing loans-loans over 90 days overdue ...... 791 151 169 451 121 34 — 1,717 Total collectively assessed for impairment (gross) ...... 38,976 12,201 5,338 11,505 998 1,063 — 70,081 Loans individually determined to be impaired (gross) —non-overdue or less than 30 days overdue . . . — — — — — — 5,017 5,017 Non-performing loans ...... — — — — — — 3,613 3,613 Total individually impaired loans (gross) ... — — — — — — 8,630 8,630 Less impairment provisions ...... (1,561) (497) (191) (1,127) (480) (49) (3,887) (7,792) Total loans and advances to customers ..... 43,215 16,137 5,147 11,122 552 1,014 4,743 81,930

Analysis by credit quality of loans outstanding as at 31 December 2009 is as follows:

Credit Loans to Card POS Auto Personal Restructured legal loans loans loans loans loans Other entities Total (in millions of Roubles) Current and not impaired ...... 2,825 3,054 — — 55 — 180 6,114 Total current and not impaired ...... 2,825 3,054 — — 55 — 180 6,114 Loans collectively assessed for impairment (gross) —non-overdue or less than 30 days overdue ...... 42,380 8,134 9,949 14,149 1,194 370 — 76,176 —30 to 90 days overdue ...... 2,157 150 377 703 236 — — 3,623 Non-performing loans-loans over 90 days overdue ...... 2,087 359 687 1,661 325 19 — 5,138 Total collectively assessed for impairment (gross) ...... 46,624 8,643 11,013 16,513 1,755 389 — 84,937 Loans individually determined to be impaired (gross) —non-overdue or less than 30 days overdue ...... — — — — — — 11,020 11,020 Non-performing loans ...... — — — — — — 390 390 Total individually impaired loans (gross) .. — — — — — — 11,410 11,410 Less impairment provisions ...... (2,783) (686) (794) (2,527) (953) (29) (1,704) (9,476) Total loans and advances to customers .... 46,666 11,011 10,219 13,986 857 360 9,886 92,985

-62- Capital Adequacy and other ratios RSB’s capital adequacy ratio (the “CAR”) is calculated in accordance with the international framework for capital measurement and capital standards for banking institutions set by the Basel Committee on Banking Regulation and Supervisory Practices. The following table sets out the principal components of RSB’s CAR as at 31 December 2011, 2010 and 2009: As of 31 December 2011 2010 2009 (in millions of Roubles, except percentages) Total tier I capital(1) ...... 24,108 24,329 27,063 Tier II capital ...... 12,432 12,274 13,536 Total capital ...... 36,540 36,603 40,599 Tier I capital ratio ...... 14.0% 18.7% 20.2% Total capital ratio(2) ...... 21.3% 28.2% 30.3% RoE(3) ...... 18.3% 6.3% (14.2)% Cost of risk(4) ...... 4.9% 7.5% 11.0% RoA(5) ...... 3.2% 1.4% (2.6)%

(1) Tier I capital is calculated in accordance with Basel requirements-total capital was adjusted for goodwill in respective periods. (2) RSB is committed to maintain CAR at level above 15 per cent. which is significantly above minimum capital standards set by the Basel Committee on Banking Regulations and Supervisory Practices. (3) ROE (Return On Equity) was calculated as respective profit/(loss) divided by total equity, representing the average of the opening, quarterly and closing balances, for the respective year. (4) Cost of risk was calculated as respective provision charge for loan impairment divided by net loan portfolio, representing the average of the opening, quarterly and closing balances, for the respective year. (5) ROA (Return On Assets) was calculated as respective profit/(loss) divided by total assets, representing the average of the opening, quarterly and closing balances for the respective year. The CBR requires banks to maintain a total capital adequacy ratio of 10 per cent. of risk-weighted assets, computed based on RAS. As at 31 December 2011, RSB’s capital adequacy ratio calculated on this basis was 13.3 per cent., which exceeded the statutory minimum.

Off-Balance Sheet Arrangements The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit (which represent irrevocable assurances that RSB will make payments in the event that a customer cannot meet its obligations to third parties) carry the same credit risk as loans. Documentary and commercial letters of credit, which are written undertakings by RSB on behalf of a customer authorising a third party to draw drafts against RSB up to a stipulated amount under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or cash deposits and therefore carry less risk than a direct borrowing. Undrawn credit lines and other commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans or guarantees. With respect to credit risk on undrawn credit lines and commitments to extend credit, RSB is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. RSB monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments. The total outstanding contractual amount of undrawn credit lines, letters of credit, and guarantees does not necessarily represent future cash requirements, as these financial instruments may expire or terminate without being funded. The table below sets out RSB’s credit-related commitments as at 31 December 2011, 2010 and 2009: As of 31 December 2011 2010 2009 (in millions of Roubles) Undrawn credit lines on credit cards ...... 23,366 18,423 17,298 Guarantees issued ...... 4,810 2,098 4,674 Undrawn credit lines on loans to customers ...... 314 549 92 Import letters of credit ...... 28 — 8 Total credit related commitments ...... 28,518 21,070 22,072

-63- The following table sets out RSB’s credit related commitments by currency as at 31 December 2011, 2010 and 2009:

As of 31 December 2011 2010 2009 (in millions of Roubles) Russian roubles ...... 25,564 19,278 20,015 US Dollars ...... 2,160 1,710 1,874 Euro ...... 794 82 183 Total ...... 28,518 21,070 22,072

Where RSB has operating lease commitments as the lessee, the future minimum lease payments under non-cancellable premises operating leases are as follows:

As of 31 December 2011 2010 2009 (in millions of Roubles) Not later than 1 year ...... 1,294 988 998 Later than 1 year and not later than 5 years ...... 2,724 1,435 1,609 Later than 5 years ...... 2,401 300 255 Total operating lease commitments ...... 6,419 2,723 2,862

Derivative Financial Instruments Derivative financial instruments, including foreign exchange contracts, currency and interest rate swaps, cross currency interest rate swaps and interest rate options are carried at their fair value.

All derivative instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Any change in the fair value of derivative instruments is included in profit or loss. RSB does not apply hedge accounting.

Foreign exchange derivative financial instruments entered into by RSB are generally traded in the over-the-counter market with professional market counterparties on standardised contractual terms and conditions. Derivatives have potentially favourable (assets) or unfavourable (liabilities) conditions as a result of fluctuations in market interest rates, foreign exchange rates and other variables relative to their terms. The aggregate fair value of derivative financial assets and liabilities can fluctuate significantly from time to time.

RSB uses foreign exchange derivatives financial instruments for economic hedging purposes. RSB does not apply hedge accounting and carries derivatives at fair value through the profit or loss. These instruments represent commitments to purchase foreign and domestic currency after the reporting date.

The table below sets out fair values at the reporting date of currencies receivable or payable under derivative contracts entered into by RSB. The table reflects gross positions before the netting of any counterparty positions and payments and covers the contracts with settlement dates after the respective reporting date.

As of 31 December 2011 2010 2009 Contracts Contracts Contracts Contracts Contracts Contracts with with with with with with positive negative positive negative positive negative fair value fair value fair value fair value fair value fair value (in millions of Roubles) Foreign exchange forwards and futures: fair values as at the reporting date of —USD receivable on settlement ...... 16,020 1,299 22,338 1,828 23,287 6,694 —USD payable on settlement ...... — (2,264) (1,858) — — — —Euros receivable on settlement ...... 4,167 — 2,992 — 2,177 — —Euros payable on settlement ...... — (208) — — — — —RUB receivable on settlement ...... — 2,453 1,547 — — — —RUB payable on settlement ...... (19,673) (1,290) (25,216) (1,525) (25,168) (6,694) —Other CCY receivable/(payable) on settlement ...... (406) — 307 (307) — — Net fair value of derivatives ...... 108 (10) 110 (4) 296 —

-64- Derivatives with positive fair values are included in other assets, while derivatives with negative fair values are included in other liabilities. RSB uses derivative instruments to hedge foreign exchange open position risk resulting from the foreign currency denominated part of its funding base, which is mainly represented by subordinated loans, loan participation notes and customer accounts.

The principal amounts of certain types of financial instruments provide a basis for comparison with instruments recorded on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate RSB’s exposure to credit or price risks.

-65- BUSINESS

Overview RSB is a universal retail bank organised as a closed joint stock company under the laws of Russia with a full (general) banking licence No. 2289. RSB’s registered legal address is bld. 36 Tkatskaya Street, Moscow, 105187, Russia. RSB is registered in the Unified State Register of Legal Entities with the Principal State Registration Number 1027739210630.

RSB’s business activities are primarily focused on consumer finance products and services, such as credit card loans, personal loans, POS loans and retail deposits. As of 31 December 2011, RSB attracted approximately 25 million retail customers acquired through a wide range of channels, including points of sale, banking offices, the Internet and telesales. To complement its consumer finance products, RSB offers insurance products (such as life insurance, permanent disability insurance and unemployment insurance) to all of its customers through two wholly-owned subsidiaries of the Group, RSI and BAC. RSB’s revenue is derived principally from interest income on retail loans, fees and commissions and insurance income. RSB’s primary sources of funds are customer accounts, subordinated debt and debt securities issued (including domestic bonds, loan participation notes and euro-commercial paper).

RSB services the financial interests of a broad range of retail customers by continuing to expand its list of products and services offered to customers while developing new distribution channels as a means to reach these customers. As of 31 December 2011, in addition to 181 banking offices, RSB’s distribution network included approximately 48,000 points of sale, over 1,600 automated teller machines (“ATMs”) and automated cash deposit machines (“cash-in machines”) and over 2,500 instant payment terminals located in RSB’s banking offices, third-party retail chains and outlets.

According to RosBusinessConsulting, RSB was the 26th largest bank in Russia by net assets as of 1 January 2012. RSB has a “Ba3” long term rating with a stable outlook from Moody’s. RSB also has long term and short term ratings of “B+” with a stable outlook from Standard & Poor’s and a long term rating of “B+” with a stable outlook from Fitch. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation.

In the year ended 31 December 2011, the Group’s net profit for the period was RUB 5,011 million, as compared to RUB 1,845 million in the year ended 31 December 2010 and the net loss of RUB 4,527 million in the year ended 31 December 2009.

As of 31 December 2011, the total assets of the Group amounted to RUB 188,121 million as compared to RUB 137,055 million and RUB 140,105 million as of 31 December 2010 and 2009, respectively.

The Group had total equity of RUB 27,096 million as of 31 December 2011, compared to RUB 26,990 million and RUB 29,542 million as of 31 December 2010 and 2009, respectively.

History Incorporation and Development RSB was incorporated as Agrooptorgbank (“ATB”) and received its banking licence from the CBR on 31 March 1993. Its original function was to act as a settlement bank for the Russian agricultural sector and a number of Russian agricultural companies were its shareholders. Following the reform and general decline of the Russian agricultural sector in 1998, ATB ceased to act as the agricultural sector settlement bank and in 1999, ROUST acquired approximately 99.4 per cent. of the shares in ATB, subsequently renaming it Russian Standard Bank, after licensing the “Russian Standard” brand from ROUST. On 19 July 2001, the CBR granted RSB a full (general) banking licence No. 2289.

Since 2001, RSB has developed a network of offices in Moscow and branches and representative offices throughout Russia and Ukraine. In February 2003, International Finance Corporation (“IFC”) acquired 10.44 per cent. of RSB’s share capital for U.S.$10 million. In the same year, following an additional share issuance agreed between RSB’s principal shareholders (to which IFC did not subscribe), IFC’s shareholding in RSB was diluted to 6.42 per cent. of RSB’s total share capital. In July 2006, IFC sold its share holdings to the principal shareholder, RSC, thereby increasing RSC’s shareholding to 97.17 per cent. of RSB’s outstanding capital and specifically increasing Mr. Roustam Tariko’s direct and indirect ownership to 99.999 per cent. of RSB’s outstanding capital.

-66- Effect of the Financial Crisis RSB’s lending strategy prior to the onset of the financial crisis was focused on a rapid expansion of its customer base across a wide geographical area and concentrated on extending a high volume of loans. RSB targeted lower income Russians for the purpose of financing household appliances and other durable consumer goods. RSB also targeted middle and high income individuals with consumer loans, auto loans, cash loans and credit card loans as well as current accounts and deposits.

In response to the onset of the global financial crisis in late 2008, RSB started to implement business optimisation measures developed by its management to offset the reduced customer demand for RSB’s products and increased costs of funding. These measures included:

Diversification of Funding Base. In order to diversify its funding base and decrease its dependence on the wholesale market, RSB launched a retail deposit programme. As a result, the Group’s customer accounts increased from RUB 26,835 million or 24.3 per cent. of the Group’s total liabilities as of 31 December 2009 to RUB 62,890 million or 57.1 per cent. and RUB 109,479 million or 68.0 per cent. as of 31 December 2010 and 2011, respectively.

Strengthening Risk Management. RSB tightened its underwriting standards and lending criteria (e.g. significantly reducing credit limits for certain categories of its customers and introducing a requirement that potential borrowers must present at least two documents confirming their identity) and adjusted its fraud prevention systems. In late 2008 and 2009, RSB also significantly reduced sales of its loan products offering such products only to existing clients with positive credit history. Restructuring was also made available only to clients with positive credit history and subject to prepayment of a portion of the restructured loan.

Optimisation of Product Line. The effects of the global financial and economic crisis led RSB to overhaul its lending strategy. RSB suspended origination of auto loans and reduced its credit card loan portfolio due to lower predictability of drawdowns and repayments under this type of credit facility. RSB also decreased origination of POS loans and personal loans providing such loans only to customers with reliable payment histories who thereby represented lower credit risks. As a result, credit card loans reduced to RUB 49,449 million, personal loans reduced to RUB 16,513 million and POS loans reduced to RUB 11,697 million for the year ended 31 December 2009.

Capital Preservation and Cost-cutting. In order to preserve capital, RSB repurchased some of its outstanding debt securities and reduced the scale of its operations by closing over 100 branches and over 6,000 points of sale. RSB also reduced its headcount by approximately 54 per cent. during the period from October 2008 to October 2009 in order to minimise operating costs. As a result, the Group reduced the number of its employees to 12,285 and RSB’s administrative and other operating expenses reduced to RUB 13,195 million for the year ended 31 December 2009.

Some of the measures described above started to reverse in 2010. In particular, RSB started to expand its distribution network, increased its headcount and launched certain new products such as “Bank-in-Pocket”. RSB has also re-focused on credit card loans which increased to RUB 60,158 million as of 31 December 2011 from RUB 44,776 million as of 31 December 2010.

Recent Developments During 2011, RSB launched a number of new credit card products: •“Credit-in-Pocket” is a credit card on the MasterCard® payment system with a RUB 30,000 initial credit limit. This credit card can be issued immediately upon a client’s demand. “Credit-in-Pocket” credit cards are offered in all RSB’s points of sale locations and also at airports. RSB uses “Credit-in-Pocket” credit cards as an effective tool for attracting new clients. •“Transport Card” is a full-service debit card on the MasterCard® payment system. It can be used as a ticket for paying the public transport fare in Saint-Petersburg. From 2012, Transport Card is also available in Moscow. •“Student Card” is issued for 18-22 years old students in Russia. “Student Card” has the reduced interest rate which is 29 per cent. per annum.

In March 2011, RSB became an acquiring partner of the rapidly developing Chinese paying system - China UnionPay. As a result of this partnership, China UnionPay cardholders are now able to use RSB’s ATM and acquiring system.

-67- In June 2011, RSB acquired exclusive rights to issue Diners Club International® cards and develop the acquiring network for these cards in Russia and Ukraine.

In the second half of 2011, RSB also started offering money transfer services which are based on the “VISA Personal Payments” and “MasterCard MoneySend” technologies developed by VISA and MasterCard, respectively. These services allow RSB’s clients to make cash and non-cash money transfers using recipients’ credit card numbers as payment details.

Operations in Ukraine RSB conducts its business in Ukraine through its wholly owned subsidiary - Public Joint Stock Company “Russian Standard Bank” (“RSB Ukraine”). As of 31 December 2011, RSB Ukraine had a head office in Kyiv and 10 branches in Kyiv, Donetsk, Kharkov, Dnepropetrovsk and Odessa. RSB Ukraine is focused on POS loans and credit card loans. In addition, it has insignificant portfolios of auto loans and cash loans. RSB estimates that, as of 31 December 2011, RSB Ukraine was the 28th largest bank in Ukraine by volume of its retail loan portfolio. According to the Group’s estimates, as of 31 December 2011, RSB Ukraine had a market share of 11.9 per cent. in POS loans in Ukraine. As of 31 December 2011, 58 per cent. of RSB Ukraine’s total retail loan portfolio was represented by POS loans, as compared to 79 per cent. as of 31 December 2010. Credit card loans represented 33 per cent. of RSB Ukraine’s total retail loan portfolio as of 31 December 2011, as compared to 14 per cent. as of 31 December 2010. The share of NPLs in RSB Ukraine’s total retail loan portfolio was 1.3 per cent. as of 31 December 2011 as compared to 1.7 per cent. as of 31 December 2010. Such decrease was due to the improved quality of RSB Ukraine’s loan portfolio. RSB Ukraine’s main sources of liquidity are from RSB. However, RSB intends to increase the share of retail deposits in RSB Ukraine’s liabilities to make RSB Ukraine a self-sustainable bank.

Strategy RSB’s long term objective is to become a full service retail bank focused on credit cards. To achieve this goal, RSB intends to:

Pursue a Profitable Growth Strategy RSB believes that the retail banking market is still underpenetrated. RSB intends to maintain and increase its market share across its principal product lines such as credit card loans and personal loans. Despite the increasing competition, credit card loans are expected to remain the main focus for RSB. Expansion of the network of banking offices will also allow RSB to grow its retail deposits base.

Develop New Customer Acquisition Channels RSB intends to actively develop new customer acquisition channels, including remote channels such as the Internet banking, mobile banking, telesales and self-service channels. RSB believes such new customer acquisition channels will enable it to expand considerably its customer base and help it develop strong positions in the consumer finance market. RSB also intends to continue using its POS and personal loan business as a vehicle for acquiring credit card customers. In 2009, RSB launched “Bank-in-Pocket” product which offers customers easy and convenient access to their current accounts and other financial products and services. In 2010, RSB attracted almost one million new clients via “Bank-in-Pocket”. In 2011, RSB further strengthened this product’s competitive positions by widening its functionality. RSB will also continue to develop its newest business line - Virtual and Gift Cards targeting the mass market segment. RSB believes these products will create a new customer solicitation channel and increase the volume of sales.

Further Develop Payments Infrastructure RSB intends to further develop its payments infrastructure. In particular, RSB is planning to improve its mobile banking solutions which already support such platforms as iPhone, Android, J2ME and Windows mobile. Mobile banking allows RSB’s customers to perform banking operations using their mobile devices without contacting RSB’s operators. Telephone banking enables RSB’s customers to carry out banking operations by calling RSB’s operators with a follow up SMS confirmation of the transaction. RSB is also focused on e-commerce and providing support to all types of payments made via the Internet. RSB expects that its payments infrastructure will enable it to stay close to its clients and cross-sell other products. RSB believes that in the long-term, Internet banking, mobile banking and telephone banking will increase its efficiency and reduce its operating costs.

-68- Further Expand Distribution Network RSB’s multi-channel distribution network provides customers with various banking solutions to meet their needs. According to RSB’s estimates, its distribution network covers over 93 per cent. of the Russian population in large cities and smaller population centres with relatively untapped demand. RSB intends to substantially increase its distribution network by opening new branches, mini-offices (small-scale offices in trading centres and outlets) and points of sale in the regions where RSB believes there is an increased demand for its products or where RSB does not have sufficient presence. RSB believes that its branch network remains the most reliable channel for attracting new clients and cross-selling RSB’s products to its existing clients.

Improve Business Performance with Support of Efficient IT RSB will focus on the development of information technology systems as a means to improve its operational efficiency as well as a means to innovate and generate business ideas. In the credit card market, RSB plans to continue expanding the functionality of its credit cards to increase the number of transactions entered into by RSB’s customers. RSB also intends to expand the number of plastic card products offered to its customers and encourage more active use of credit card products. To achieve this goal, RSB has actively developed and promoted non-financial service components of its credit cards and toughened the security requirements for use of credit cards. Security innovations include increased use of smart cards and growing implementation of 3-D secure technology.

Market Position, Competition and Competitive Strengths Market Position According to the CBR, as of 1 March 2012, 974 banks and non-banking credit organisations were operating in Russia, with most of the large Russian banks’ operations based in Moscow. RSB estimates that, as of 31 December 2011, it had a market share of 17.2 per cent. in credit cards, 11.7 per cent. in POS loans, 0.88 per cent. in cash (personal) loans and 0.62 per cent. in retail deposits in Russia.

Competitive Strengths RSB believes that the following competitive strengths will help RSB to grow and develop its business and achieve its strategic objectives: • Large Customer Base. As an early entrant into the consumer lending market, RSB was able to gain access to a large customer base and accumulate a significant amount of information on its customers. As of 31 December 2011, RSB had approximately 25 million retail customers in all segments from the mass market to premium clients. Having formed a large customer base in previous years, RSB is now able to cross sell to such customers. RSB has a significant competitive advantage in this respect as it already has a substantial amount of information on its customers, which is particularly important for RSB’s underwriting procedures and risk management. • Wide Range of Financial Products. The Group offers its customers a wide range of financial products and services, such as credit and debit cards, POS loans, personal loans, deposits, virtual and gift prepaid cards, money transfer services, instant cards, transportation cards, private banking services, insurance services, mutual funds, brokerage and asset management services. The Group targets all groups of customers and tailors its offering to their specific preferences and needs. It also develops unique hybrid products (such as “Bank-in-Pocket” and “Transport Card”) combining different types of services, such as credit and payment services. • Large Distribution Network. RSB is represented in 56 regions of Russia. As of 31 December 2011, RSB has its offices and branches in 79 Russian cities and RSB’s products and services are distributed over than 1,500 towns and villages. Supported by the growth of the Russian consumer finance market, RSB intends to further expand its distribution network in order to increase its presence throughout the country. According to the CBR, total retail loans of Russian banks increased by 108.1 per cent. from RUB 2,613 billion as of 1 January 2010 to RUB 5,438 billion as of 1 January 2012. RSB intends to increase the number of its banking offices to over 250 as of 30 June 2012. • Strong Cross-Sale Expertise. RSB has an extensive database consisting of more than 30 million records. Cross-sales remain one of the main distribution channels for RSB. RSB uses POS loans as the main tool for acquisition of new clients. Analysis of RSB’s client database allows it to sell its additional products to existing clients taking into account their credit and payment histories.

-69- • Information Technology and Credit-Scoring Technology. RSB offers its customers the advantages of its centralised proprietary automated scoring system (“PASS”). RSB believes that PASS is the largest consumer finance database in Russia, with over 200 million entries. PASS has the capacity to process large volumes of credit applications and to do so generally within 15 minutes of the relevant application being input into PASS, even during peak times. RSB’s management believes that PASS allows RSB to process credit applications faster than many of RSB’s competitors. In addition, RSB has implemented a customer relationship management (“CRM”) system which allows it to manage its interactions with customers, including special sales campaigns. • Experience in the Consumer Finance Sector. Since 2000, RSB has extended consumer loans to approximately 25 million customers in Russia. As a result, RSB has accumulated substantial experience in the consumer finance sector, including the management of NPLs. In addition, RSB has developed an advanced database containing payment and credit records with respect to its past and current customers. This credit database allows RSB to perform detailed analyses of the trends in the Russian consumer finance market and better manage credit risks generally associated with this market. • Brand Recognition. RSB’s brand originated from the more generic “Russian Standard” brand associated with Russian vodka. However, RSB has developed its own banking brand and has achieved widespread recognition in the Russian consumer finance market. Principal factors that have contributed to RSB’s brand recognition are its well-established track record of consumer financing, continuing regional expansion and well-targeted public relations communications and advertising.

Competition RSB faces competition in all the regions and retail banking segments in which it operates, and considers that its primary competitors are: • in the credit card market, Sberbank, VTB 24, OTP Bank, TCS Bank, Home Credit & Finance Bank, Citibank, Orient Express Bank and Alfa Bank; • in the personal loan market, Sberbank, VTB 24, Russian Agricultural Bank and Orient Express Bank; • in the POS loan market, Home Credit & Finance Bank, Alfa Bank, OTP Bank, Rusfinance Bank and Cetelem (part of BNP Paribas group); and • in the retail deposit market, Sberbank and VTB 24.

RSB has faced increasing competition from state-owned banks (e.g. Sberbank and VTB 24) and from the Russian subsidiaries of major foreign financial institutions. In particular, in June 2011, Sberbank and Cetelem (part of BNP Paribas group) announced the signing of a non-binding memorandum of understanding to establish a new bank that will focus on the Russian POS loans market. Cetelem became an active player in the consumer lending market, which increased the competition for RSB in its main sphere of business.

Banking Products and Services RSB specialises in multi-channel consumer finance lending, offering a variety of products, including credit card loans, personal loans, POS loans and other types of loan products as well as retail deposits. RSB also offers merchant acquiring services and distributes certain insurance products.

Descriptions of the main products offered by RSB are set out below.

Credit Cards According to RSB’s estimates, RSB held 17.2 per cent. of the Russian credit card market as at 31 December 2011 with approximately 34 million credit cards issued. RSB is the only bank issuing and acquiring cards of the five largest international payment systems in Russia: VISA International®, MasterCard WorldWide®, American Express®, Diners Club International® and JCB International®.

RSB earns interest income from credit cards through the interest rate charged to the customer (which currently ranges from 22 per cent. to 42 per cent. per annum). As of 31 December 2011, RSB’s outstanding credit card loans amounted to RUB 60,158 million representing 49.2 per cent. of RSB’s gross loans and advances to customers, as compared to RUB 44,776 million or 49.9 per cent. and RUB 49,449 million or 48.3 per cent. as of 31 December 2010 and 2009, respectively.

-70- RSB aims to diversify the acquisition channels for the distribution of its credit cards. Initially, credit cards were primarily offered by RSB to existing customers with an existing and satisfactory credit record and, therefore, initial contact was primarily through RSB’s consumer loan network. As RSB’s business has developed, credit cards have also been issued via a direct offering and upon customer’s application, independently of the customer’s loan history with RSB. RSB’s customers can also apply for credit cards in RSB offices as well as via Internet and mobile phone. Credit cards typically have a limit from RUB 30,000 to RUB 750,000, and a monthly payment from 5 per cent. to 20 per cent. of the outstanding balance. Although the share of non-cash operations is gradually growing, RSB’s customers primarily use credit cards for cash withdrawals which contribute to RSB’s interest income and fee and commission income.

RSB has been a principal member of MasterCard® International since 2000. In 2001, RSB became one of the first Russian banks to offer credit cards on the Russian retail market by offering its own branded credit cards as an extension of its consumer lending programme. In 2002, this move was followed by RSB offering its customers MasterCard® Standard credit cards. In addition to its MasterCard® Standard credit cards, RSB has offered MasterCard® Electronic credit cards. In 2011, RSB started offering World MasterCard® cards and issuing Instant credit cards (MasterCard® Standard Unembossed Card). RSB is also a member of VISA International® with authority to issue credit cards.

RSB began issuing these cards in September 2008. Many of them require electronic authorisation while a few can be operated manually using a credit card slip. In 2011, RSB also started issuing MasterCard® and VISA International® EMV cards. The design of both MasterCard® and VISA International® cards can be determined and customised by the client himself.

In 2005, RSB became a strategic partner of American Express® in Russia. RSB started issuing both Rouble and U.S. Dollar-denominated American Express® cards in December 2005. RSB’s licence provides RSB with the exclusive right to issue the Centurion line of American Express® cards (Centurion, Platinum, Gold, Green and Blue American Express® cards) and non-exclusive right to issue American Express® Network cards (Blue Box cards). In April 2007, RSB entered into a further agreement with American Express which granted RSB the exclusive right to develop the acquiring network for American Express® cards in Russia. Under this agreement RSB was responsible for developing the acquiring network for American Express® cards, attracting new partners into the network and processing all American Express® transactions in Russia. American Express® transferred its acquiring business in Russia to RSB on 1 July 2007. The American Express® acquiring business allowed RSB to become one of the biggest acquirers in Russia with over 158,000 merchant contracts signed as of 31 December 2011. As at 31 December 2011, RSB had issued approximately 1.2 million American Express® cards. According to RSB’s estimates, as a result of cooperation with RSB in 2005 - 2011 the market share of American Express® cards in Russia grew from less than 1 per cent. to at least 5 per cent. In January 2012, RSB started to issue Euro- denominated American Express® cards. In March 2012, RSB also launched the most exclusive card of American Express portfolio worldwide - Titanium card which is offered exclusively to existing American Express® Centurion members and by RSB’s invitation only.

In March 2011, RSB became an acquiring partner of the rapidly developing Chinese paying system - China UnionPay. As a result of this partnership, RSB is now able to offer its ATM and acquiring services to holders of China UnionPay cards.

In June 2011, RSB acquired exclusive rights to issue Diners Club International® cards and develop the acquiring network for such cards in Russia and Ukraine.

RSB also issues co-branded cards offered jointly with companies in various industries (such as JSC “Aeroflot” (“Aeroflot”), MTS OJSC, British Airways, OJSC “TRANSAERO Airlines”, Loyalty Partners Vostok (Malina) and New Economic School), a segment that RSB has actively developed since 2010. RSB was one of the first market participants to start issuing co-branded cards by signing an agreement with Aeroflot in 2002. The project with Aeroflot was extended with the update of products offered by RSB to its customers. In 2010, RSB issued Classic, Gold and Premium Aeroflot American Express® credit cards based on the American Express® payment system, and Aeroflot MasterCard® Standard debit cards based on the MasterCard® payment system. Miles accumulated by using these credit cards are exchanged for tickets for flights by Aeroflot and other airlines of the SkyTeam alliance, and can also be used to upgrade the service class.

RSB also co-brands its credit cards with popular cultural events or activities that build long-term marketing relationships. In May 2010, RSB and Kazan Unics, a leading national basketball club, started issuing co-branded

-71- Russian Standard-UNICS cards that featured a unique design developed specifically for basketball fans and based on a cutting-edge dotted lacquer coating technique that makes the surface of the card feel like a real basketball. In June 2010, RSB issued Visa FIFA cards developed specifically for the World Cup in South Africa where a certain percentage of the amount of each transaction would benefit the children’s football programme.

RSB designs its loyalty programmes to facilitate a customer’s continued use of RSB credit cards. In November 2010, for example, RSB implemented the Malina loyalty programme that linked Malina Classic and Malina Gold packages to American Express® and MasterCard® Worldwide. Use of the cards generates points that can be exchanged for numerous bonuses from the catalogue of the MALINA programme while customers gain access to the benefits of American Express® and MasterCard® services and discounts.

In 2011, RSB launched a new credit card project based on RSB proprietary loyalty programme. RSB’s clients can apply for RSB Travel Classic or RSB Travel Premium package including two cards - American Express® and MasterCard® Worldwide. Cardholders can earn bonus points which may be used for travel-related purchases. Unlike co-branded cards with individual airlines, this product is more flexible as the customers may choose any airline, destination and any dates when using their bonus points.

Most of RSB’s credit cards loans are offered through its branch network and cross-sales to existing customers. Other distribution channels for credit cards loans are the Internet and direct sales.

“Bank-in-Pocket” In 2009, RSB launched a new multifunctional financial product “Bank-in-Pocket”. “Bank-in-Pocket” is a debit card with a small overdraft facility which gives access to a variety of products and services such as payments, which are free of charge and transfers, deposits, loans, insurance and other services. It also offers up to 10 per cent. per annum interest on the balance of the card account and discounts in certain retail chains. As of 31 December 2011, RSB had issued more than 3.6 million “Bank-in-Pocket” cards, including 1.8 million “Bank-in-Pocket” cards issued in 2011. “Bank-in-Pocket” cards are offered to walk in customers and RSB’s existing clients. RSB believes “Bank-in-Pocket” cards are an effective cross-selling tool and an additional source of funding. In addition, the overdraft facility embedded in “Bank-in-Pocket” generates interest income for RSB.

RSB continually seeks to improve its service content and expand its functionality. In 2010, RSB added the following capabilities to “Bank-in-Pocket” standard services and functionalities: • applying for a Virtual Prepaid Card with the required limit via the Internet bank or RSB’s website; • applying for up to 3 “Bank-in-Pocket” cards per person; • changing the overdraft limit as necessary by calling RSB’s call centre; • applying for a loan of up to RUB 300,000 to the card account via the Internet bank; • paying for insurance policies; • making any internal and external transfers with minimum information on the payer, e.g. only the plastic card number of RSB’s customer; and • getting bonuses and discounts of up to 30 per cent. while paying for goods and services with the “Bank-in-Pocket” card.

RSB distributes “Bank-in-Pocket” cards through its offices, retail partner stores and post offices. In the short term, RSB intends to develop additional card marketing channels such as shopping malls, insurance companies and transport card sales outlets.

Since July 2010, RSB has been developing the lending component of the “Bank-in-Pocket” service package by launching a new line of integrated loan products for its holders. The service rapidly became popular among customers, with the amount of loans totalling RUB 20.9 billion as of 31 December 2011.

Prepaid Gift Card In 2010, RSB launched its prepaid gift card product (“Gift Card”). The wide acceptance network is the key advantage of Gift Card over popular gift certificates of retail chains that give the right to buy a product or a service only from specific stores or companies. RSB runs a large-scale advertising campaign to support the new product in federal and regional media, on the Internet, and directly at the points of sale of Gift Card. Gift Card is also marketed through RSB’s offices.

-72- Virtual Prepaid Card In 2010, RSB launched virtual prepaid cards (“Virtual Prepaid Card”), an online payment product. Virtual Prepaid Card is a VISA® bank card with no tangible carrier and designed to enhance online payment security. By using Internet bank, mobile bank, RSB’s web-site or a self-service terminal, customers of RSB may issue their own Virtual Prepaid Cards with the limit they need (from RUB 100 to RUB 100,000 via Internet Bank and up to RUB 15,000 via other channels). The details of Virtual Prepaid Card may be used to pay for any goods or services on the Internet without fearing that the information on the customer’s standard bank card will be compromised. As of 31 December 2011, RSB sold more than 80,000 Virtual Prepaid Cards to its clients.

Personal Loans RSB offers unsecured cash loans of up to RUB 1 million with a tenor of between six months and three years. Personal loans provided by RSB have fixed interest rates with a minimum interest rate of 24 per cent. per annum.

RSB’s customers are typically middle-class borrowers seeking to finance home improvement, children’s education and travel and vacation, as well as small business owners seeking to finance their primary business needs such as equipment and car purchases. Personal loans are not conditional on the purchase of goods or services and can be used for any purpose. Compared to POS loans, personal loans have longer terms and higher principal amounts. RSB has focused on providing personal loans to existing clients with established credit history rather than new customers to reduce the risks of non-performance. Before extending a personal loan, an RSB employee conducts a personal interview, checks the applicant’s documentation and sets the credit limit. A credit officer then verifies the applicant’s contact information and credit history and decides whether or not to grant the loan. As of 31 December 2011, 19.9 per cent. of RSB’s gross loans and advances to customers were represented by personal loans, as compared to 13.7 per cent. and 16.1 per cent. as of 31 December 2010 and 2009, respectively.

RSB is currently targeting its personal loans at customers in most of the Russian regions through its regional branches which are the main distribution channel for this type of loans. RSB plans to expand the number of its branches, and adapt certain existing front offices to handle personal loan applications.

The following table sets out information on the average size, average tenor and average yield of new personal loans made by RSB for the years ended 31 December 2011 and 2010.

Year ended 31 December 2011 2010 Average amount (in thousands of Roubles) ...... 85 72 Average tenor (in months) ...... 30.7 22.7 Average yield (in per cent.)(1) ...... 32.4% 26.5%

(1) Average yield is calculated as a weighted average of the effective interest rate of new personal loans divided by new personal loan volume for the period indicated.

POS Loans POS loans are generally used for the purchase of consumer durable goods, mobile phones, household appliances, furniture and computer equipment. As of 31 December 2011, 20.6 per cent. of RSB’s gross loans and advances to customers were represented by POS loans, as compared to 18.5 per cent. and 11.4 per cent. as of 31 December 2010 and 2009, respectively. According to RSB’s estimates, as of 31 December 2011, POS loan products were represented in more than 48,000 merchants across almost all Russian regions covering 93% of Russian population.

POS loans are offered to the mass market segment. POS loans generally have a tenor between 3 and 24 months and their average amount is approximately RUB 18,700. A very small number of POS loans (approximately 0.3 per cent.) are in amounts exceeding RUB 100,000. All POS loans granted by RSB are denominated in Roubles, require a down payment and are repaid in monthly instalments. Loans for the purchase of household goods are secured by pledges of the purchased goods. RSB also relies on other available remedies for more efficient loan collection, including civil proceedings based on claims of borrower fraud.

-73- RSB was one of the first banks to enter the Russian POS loan market. During the financial crisis RSB limited the issuance of new POS loans and reduced its POS loan portfolio (See “History - Effect of the Financial Crisis - Optimisation of Product Line”). In 2010, RSB reinforced its relations with leading retail chains selling home appliances, electronics and furniture, and expanded relationships with non-chain merchants. Key partners of RSB are such companies as M.Video, Evroset (Russian mobile phone retail chains) and Expert (Russian consumer electronics retail chains). RSB also continued upgrading its product range in the POS loan segment by lowering its interest rates and loan maturities while implementing programmes to improve its after-sale service quality. As a result, RSB’s POS loan portfolio increased to RUB 16,634 million as of 31 December 2010 and RUB 25,226 million as of 31 December 2011.

RSB continues expanding its merchant lending programme under which loans are processed by merchant staff without assistance from RSB’s employees or other RSB agents. As a result, its POS lending programmes now include non-chain companies and others located in remote regions of Russia. According to RSB’s estimates, RSB had a 11.7 per cent. share in the POS loan market as of 31 December 2011. RSB intends to maintain its share in the market, as POS loans generate income and constitute an important cross-selling channel for RSB’s other banking products and services.

In the past, RSB managed to negotiate commercially favourable terms of cooperation with its retail partners, including with respect to the level of commissions in certain circumstances for helping to generate product sales. However, in times of increasing competition which resulted from the resumption of economic growth in Russia in 2010 and 2011, retailers have been able to re-negotiate terms for cooperation with RSB and increase commissions paid by RSB.

The following table sets forth a breakdown of RSB’s POS loan portfolio by loan original size for the year ended 31 December 2011:

Range in size of loans (in thousands of Roubles) Number of loans, thousands % 3-5 ...... 260 12.5% 5-10 ...... 448 21.5% 10-15 ...... 357 17.1% 15-20 ...... 312 14.9% 20-25 ...... 242 11.6% 25-30 ...... 169 8.1% 30-40 ...... 160 7.7% 40-50 ...... 61 2.9% 50-100 ...... 71 3.4% over 100 ...... 7 0.3% Total ...... 2,087 100.0%

The following table sets out information on the average size, average tenor and average yield of POS loans (made by RSB during the period indicated) as of or for the years ended 31 December 2011, 2010 and 2009.

Year ended 31 December 2011 2010 2009 Average amount (in thousands of Roubles) ...... 18.7 17.2 15.8 Average tenor (in months) ...... 10.4 9.6 8.3 Average yield (in per cent.)(1) ...... 32.6 44.8 53.7

(1) Average yield is calculated as a weighted average of the effective interest rate of new POS loans divided by new POS loans volume for the period indicated.

Consumer Deposits Following the onset of the global financial crisis, in late 2008 and 2009 RSB started to diversify its funding base and increase the share of customer accounts in its liabilities. RSB started offering term and demand deposits in Roubles, U.S. Dollars and Euro, which vary by term, amount and interest. In 2010, RSB continued developing its deposit business by improving its product range and related products offered to new depositors. RSB’s ability to attract new depositors depends on the interest rates offered by RSB as compared to those offered by RSB’s competitors which in turn affects RSB’s cost of funds.

-74- As of 31 December 2011, customer accounts represented 68.0 per cent. of RSB’s total liabilities as compared to 57.1 per cent. and 24.3 per cent. as of 31 December 2010 and 2009, respectively. Retail deposits amounted to RUB 101,446 million or 92.7 per cent. of RSB’s total customer accounts as of 31 December 2011, as compared to RUB 62,230 million or 99.0 per cent. and RUB 26,353 million or 98.2 per cent. as of 31 December 2010 and 2009, respectively. Retail deposits will remain one of the focuses of RSB’s business. However, given that retail deposits can be withdrawn at any time, RSB intends to maintain the share of retail deposits in its liabilities at approximately 50 – 60 per cent. balanced with a liquidity cushion in the form of a securities portfolio.

RSB’s retail deposits are primarily in Roubles. Interest rates for Rouble deposits vary from 5.25 per cent. to 12.0 per cent. per annum and interest rates for foreign currency deposits vary from 2.25 per cent. to 7.0 per cent. per annum depending on the deposits’ size, tenor, currency and other terms and conditions. RSB’s retail deposits have a tenor generally between 3 and 24 months.

The following table shows the average amount, the average tenor and the average yield of RSB’s retail deposits in Russia as of 31 December 2011, 2010 and 2009.

Year ended 31 December 2011 2010 2009 Average amount (in thousands of Roubles) ...... 481 386 286 Average tenor (in months) ...... 12.5 10.9 9.0 Average yield (in per cent.)(1) ...... 9.8 10.9 13.7

(1) Average yield is calculated as a weighted average of the effective yield of retail term deposits in Russia.

The following table sets out the breakdown of RSB’s retail deposits in Russia as of 31 December 2011, 2010 and 2009.

As of 31 December 2011 2010 2009 (in millions of Roubles) Term deposits ...... 74,855 45,559 18,990 Current accounts and demand deposits ...... 26,591 16,671 7,363 Total Deposits from Individuals ...... 101,446 62,230 26,353

As of 31 December 2011, RSB had approximately 152,000 retail deposit accounts in Russia with an average amount of RUB 481,000 per account, as compared to approximately 114,000 and 64,000 retail deposit accounts with an average amount of RUB 386,000 and 286,000 per account as of 31 December 2010 and 2009, respectively.

The following table sets out the breakdown of RSB’s legal entities deposits in Russia as of 31 December 2011, 2010 and 2009.

As of 31 December 2011 2010 2009 (in millions of Roubles) Term deposits ...... 104 133 86 Current accounts and demand deposits ...... 824 527 396 Total Deposits from Legal Entities ...... 928 660 482

Merchant Acquiring and Payment Terminals In 2010, RSB aggressively pursued the development of its merchant acquiring business, which is the process that enables merchants to accept credit and debit cards. Acquirers such as RSB charge a fee on card purchase transactions (which forms the income side associated with the transaction) and pay interchange fees to the card issuers for each purchase transaction (which is the cost side associated with the transaction). The fee charged by the acquirer depends on the card type, transaction type, merchant industry category and volume. In August 2010, RSB became the first bank in Russia to successfully complete the audit procedure of Trustwave® and receive certification for conformity to the Payment Card Industry Data Security Standard (“PCI DSS”), which represents the highest compliance standard of data security of international payment schemes such as Visa, MasterCard, American Express, JCB and Discover. Later, in August 2011, RSB successfully passed all of the audit requirements and received this certificate for the second time. RSB is the only bank in Russia that has successfully passed this type of certification with an international audit company.

-75- During 2010, RSB concentrated heavily on penetrating the “non-card-accepting universe”, enabling card acceptance at merchants that never took cards in Russia before. Cooperation between RSB and McDonald’s restaurants is an example of such a case and a milestone project for the national merchant acquiring market. As part of the project, RSB installed over 2,100 cashless payment terminals in 258 McDonald’s restaurants across Russia in less than two months. RSB developed a tailor-made innovative process solution for McDonald’s to ensure rapid cashless transactions while maintaining a high level of security. Each cash desk was equipped with a cashless payment terminal. One of the distinctive features of this project was that terminals were mounted on special stands at McDonald’s cash-desks facing the customer, making the payment process intuitive and fast. Equipment and software used in this project passed PCI DSS certification both from the bank side and the merchant side.

Another example of RSB’s efforts to penetrate the “non-card-accepting universe” is the launch of the pilot card acceptance project with Magnit (one of the biggest retail grocery chains in Russia) where all of Magnit’s supermarkets were equipped with payment terminals. Technical card acceptance was followed by a massive marketing campaign in the mass media.

In December 2010, RSB launched the Money Transfer project which allowed holders of cards of Russian banks to transfer funds instantly from one card to another. Previously some other banks allowed only Visa to Visa money transfers as part of the Visa Money Transfer platform. As a result, RSB became the first bank in Russia and Europe to implement MasterCard Money Send technology allowing MasterCard to MasterCard money transfers. Moreover, RSB became the first bank in the world to allow cross payment system transfers, making it possible to transfer money from a Visa to a MasterCard and vice versa. In 2011, RSB won the “Channel Award” of European Card Acquiring Forum for its innovative Card-to-Card Money Transfer service (Source: http:// www.europeancardacquiring.com).

RSB has carried its aggressive merchant acquiring strategy into 2011. It became the exclusive partner of Diners Club International for card issuing and acquiring in Russia and Ukraine. It also signed an acquiring agreement with China UnionPay, becoming the first bank in Russia able to offer its clients acceptance of seven payment schemes via its points of sale terminal (Visa, MasterCard, American Express, Diners Club, JCB, CUP and Golden Crown). According to RSB’s estimates, RSB has over 158,000 contracts with merchants making RSB the number one bank nationally in terms of merchant contracts and the number three bank in terms of volume of processed transactions.

Being one of the largest merchant acquirers, RSB concentrates on the value added side of payment processing as well. Thus, it has built a significant loyalty programme in Russia with over 4,000 participating merchants offering various discounts to RSB card holders. The value of these discounts is programmed at the POS terminal level and is applied automatically at purchase.

In 2011, RSB purchased over 2,000 payment terminals from Euroset and launched the payment service allowing card holders of any bank to top-up their mobile phones at RSB’s payment terminals to earn extra commission from such operations. Such terminals are also used in terms of advertising and expanding RSB’s client’s base by getting potential clients’ mobile phone numbers which allows further cross-selling.

RSB also maintains the secure Online Merchant Service portal which allows merchants to receive analytical information on payment transactions made online by logging in via the most-visited web site dedicated to merchant acquiring at http://www.acquiring.ru.

Insurance RSB offers a wide range of insurance products underwritten by RSI (life insurance company) and BAC (non-life insurance company) through RSB’s distribution network. For the year ended 31 December 2011, the Group’s income from insurance operations amounted to RUB 4,415 million, as compared to RUB 2,488 million for the year ended 31 December 2010.

RSI was founded in 2003 and was one of the first companies on the Russian market to offer life insurance for RSB’s customers. In 2007, RSB acquired 25.02 per cent. of RSI’s share capital from BNP Paribas Assurance. The remaining 74.98 per cent of RSI’s share capital was held by RSInv. In November 2007 and January 2009, RSB acquired 100 per cent. of RSInv’s share capital. As a result, the Group acquired 100 per cent. of RSI’s share capital.

-76- In May 2011, the Group acquired its Non-State Pension Fund “Russian Standard” (the “Fund”). RSI is the sole shareholder of the Fund. The Fund provides mandatory pension insurance and non-state provision services not only to its employees but also to other individuals.

The number of RSI’s clients exceeds two million individuals. According to RosBusinessConsulting, for the year ended 31 December 2011, RSI was the 26th biggest insurance company by volumes of insurance premiums. Major products of RSI offered by RSB include: • Life insurance for credit card loan and personal loan borrowers. The terms of life insurance policies provide that, in case of death or permanent disability of a client, the client’s outstanding debt is repaid by RSI. • Accident insurance. Accident insurance is represented by “First Aid” and “Be Careful-Children” programmes. Accident insurance policies cover such risks as sport accidents, flight accidents, revolts and terrorist attacks. • Endowment insurance. Under the terms of endowment insurance, a sum of money is paid to the insured person upon a certain date (e.g. reaching certain age) or upon occurrence of certain events (such as health problems). RSB also uses endowment insurance as an additional cross-selling channel for deposit products: RSB offers to the insured the “Russian Standard - Capital” deposit product with the highest interest rate of 12.5 per cent. per annum.

BAC was founded in 2006 with RSI’s share of 25 per cent. in BAC’s share capital. In June 2011, RSB acquired 74.25 per cent. of BAC’s share capital from RSC. Following that, RSB increased BAC’s share capital by RUB 150 million which resulted in consolidation by RSB of 99.84 per cent. of BAC’s share capital. The remaining 0.16 per cent. of BAC’s share capital also belongs to the Group.

BAC specialises in personal financial risks insurance. BAC also offers property insurance solutions. It has more than 500,000 clients throughout the territory of Russia. Major products of BAC offered by RSB include: • Involuntary loss of employment insurance for credit card loan and personal loan borrowers. This type of insurance covers the risks of the client’s redundancy or liquidation of its employer. BAC undertakes to make periodic payments to the client so that the client can meet its financial obligations under the loan agreement. • Cardholders’ insurance. Under the terms of this insurance policy, BAC agrees to cover the damages incurred by RSB’s cardholders as a result of fraud or robbery when using ATMs to withdraw cash. • Property and civil liability insurance. This product insures the client’s property (including furniture and personal belongings) and covers the client’s civil liability to its neighbours in case of damage to their apartments at client’s fault.

Postal Bank In March 2010, RSB filed an application for participation in the development of a postal bank in Russia. The tender is being held by VEB, the largest state-owned development bank in Russia. RSB’s application was, together with an application of one other Russian bank, selected by VEB for the second step of the tender. If RSB wins the tender, it expects it will be required to provide the new bank with product and technological support. RSB believes the cooperation with the Russian Federal Post (“RFP”) and VEB would allow it to increase its penetration in the retail banking market. See “Risk Factors - Risks Related to RSB’s Business and Banking Sector - RSB’s participation in the development of a postal bank in Russia may adversely affect RSB’s results of operations and prospects”.

Mutual Funds In the second half of 2011, RSB made a decision to develop its own investment and asset management business based on RSB’s fully-owned subsidiary, Management Company Russian Standard Ltd (“MCRS”), established in 2006 in Russia. In 2011, MCRS established four open-end mutual funds. RSB’s distribution network is used by MCRS for selling participation units in those funds. Investment and asset management is still being tested by RSB and represents only a small part of RSB’s business: total net asset value of all four mutual funds amounts to approximately RUB 70 million.

Multi-Channel Distribution Network As of 31 December 2011, RSB’s distribution network included 181 banking offices, approximately 48,000 points of sale, over 1,600 ATMs and cash in machines and over 2,500 instant payment terminals located in RSB’s

-77- branches, third-party retail chains or outlets. In addition, RSB offers telephone banking and Internet banking options and a Call Centre with more than 1,000 employees, as of 31 December 2011, operating 24 hours every day of the year. RSB also intends to open over 69 additional banking offices by 31 December 2012.

Branch Network RSB’s branch network focuses on providing its customers individualised attention and products that best satisfy their financial needs. RSB’s distribution network policy focuses on opening new banking offices in regions with an increased customer demand for RSB’s products. RSB’s mini-offices are opened in trading centres and outlets with significant customer traffic. RSB’s mini-offices usually consist of one or two RSB officers, fully equipped computer desk and an ATM. Such mini-offices enable RSB’s customers to perform a variety of banking operations, including loans, deposits, money transfers and paying bills. RSB’s extensive branch network remains the most reliable channel for attracting new clients and cross-selling RSB’s products to its existing clients.

Points of Sale RSB’s points of sale in retail partners’ outlets are opened on the basis of distribution agreements between RSB and the relevant retailer. These distribution agreements are generally for an indefinite period and may require RSB to pay retailers a commission, agreed upon from time to time, based on the amount of credit generated by sales and the type of credit product that is sold. RSB has developed and implemented a key client management system whereby a team of experienced managers is responsible for all aspects of RSB’s relationship with major retail partners.

None of RSB’s retail partners are exclusive to RSB nor bound by any contractual lock-in provisions. RSB’s retail partners include a number of Russian and foreign-owned retail chains such as MVideo (one of the biggest Russian consumer electronics retail chains) and Evroset (Russian mobile phone retail chain).

The majority of RSB’s points of sale are equipped with RSB’s software allowing direct access to RSB’s PASS. Some of RSB’s points of sale (including those in retail outlets) can accept loan repayments. Depending on the volume of sales and the range of products offered, RSB’s points of sale are staffed either with RSB loan officers or employees of RSB’s retail partners (with each point of sale staffed by between one and eight persons). The responsibilities of the points of sale staff include both selling and actively promoting RSB’s brand and consumer loan products. As of 31 December 2011, out of over 48,000 points of sale, approximately 18,800 were staffed with RSB’s loan officers.

RSB’s loan officers and employees of its retail partners, offering consumer loan products, are trained and certified by RSB’s training centre, which is run by its Network Development Department, and undergo a mandatory internal security check prior to their employment. Each of RSB’s point of sale is subject to bi-weekly or monthly internal audits to ensure compliance with RSB’s lending procedures. See “Employees”.

Call Centre RSB’s Call Centre remains a key channel for communication with existing and prospective customers. The Call Centre allocates an individual line to service customers and inform them of marketing offers in the scope of RSB’s efforts to streamline the process of informing customers of its promotional offers.

There are also specialised lines at the Call Centre for complaints (Hot Line), deposit owners, VIP-customers and for customers who purchased Gift Cards. All lines are equipped with a call routing system, which allows (if the call is in a queue) it to search for a free operator on another line who is capable of handling the call. This service advantage helps to minimise the customer’s waiting time by guaranteeing quick call pickup.

The Call Center also focuses on new customer communication channels. For example, RSB launched a support line for Internet Bank/Mobile Bank systems specifically to support customers using online services where RSB’s employees advise customers on matters related to the connection and use of remote banking systems. Video and Phone Bank Consulting Services (“Videoconsultant” and “Telephonebank”, respectively) were launched in 2011.

Another focus of the Call Centre is servicing RSB’s high net worth customers, primarily holders of American Express® cards. Apart from support to holders of medium and standard level American Express® cards, the Call Centre provides 24/7 support to key customers of RSB who hold American Express® Platinum/Centurion cards, premium cards co-branded with British Airways, Aeroflot, Transaero airlines and Imperia cardholders.

-78- Based in Moscow, the Call Centre operates 24 hours a day, every day of the year, and is serviced by more than 1,000 operators working in shifts. RSB’s call centre handles over 45,000 telephone calls per day from all areas of Russia where RSB has operations. The Call Centre’s subdivision is located in Tula, and a new subdivision was opened in Kazan in 2011 in order to optimise RSB’s costs.

Other Direct Channels Internet Banking Internet banking is becoming an increasingly important distribution channel for RSB’s business in Russia. RSB’s website allows customers to apply for RSB’s products, including loans and deposits, on-line with loan documentation in writing executed separately after the application. About 253,000 customers used RSB’s on-line banking generating 6.9 million transactions in the year ended 31 December 2011.

Internet banking enables RSB’s customers to make all types of payments (such as public utilities, mobile, Internet and cable TV) and provides them with money transfer options (via card number, via phone number, etc.). In 2010, RSB abolished commissions for utility bill payments made through Internet banking. Since 2010, RSB implemented more than 70 improvements to the Internet banking system such as more advanced interface design and simplified money transfer procedures.

The volume of Internet banking operations has been gradually growing during 2011. RSB believes Internet reduces its operating costs and increases its efficiency and brand recognition. In 2011, RSB established accounts in popular social networks, such as Facebook, VKontakte, Odnoklassniki, Twitter and Foursquare.

Mobile Banking Mobile banking is a mobile application that allows RSB’s customers using their mobile phones for banking operations such as checking account balances, paying bills and money transfers. Currently RSB’s Mobile bank supports devices running iPhone, Android, J2ME and Windows Mobile systems.

Post Offices RSB has a distribution agreement with RFP which, as of 31 December 2011, covered 42,000 branches. RSB has a non-exclusive agreement with RFP which allows RSB borrowers to repay their loans through RFP offices equipped to handle electronic wire transfers. The agreement with the RFP has particular importance in regions where RSB does not have banking offices. As RSB expands its network of banking offices, RSB’s reliance on RFP may decrease in future.

Lending Policies The principal body responsible for consideration of loan applications and allocation of credit limits is RSB’s Credit Department. Verification of the prospective borrowers consists of several stages such as checking of an application form and credit history, personal data verification and personal telephone interview.

Credit Cards Lending Policy Depending on the type of credit card, the credit limits are calculated in one of the ways described below.

For the cross-sale credit cards offered to the borrowers who have already proved their creditworthiness by borrowing and successfully repaying a consumer loan, the credit limit: (i) usually does not exceed RUB 75,000 for the borrowers in RSB’s regional centres; (ii) is RUB 50,000 for the borrowers in RSB’s representative offices; and (iii) is RUB 30,000 for the borrowers in the sub-divisions of RSB’s representative offices.

The above limits may be decreased depending on the payment history under the borrower’s original consumer loan. These limits allow the customer to make minimum monthly payments under the credit card agreement calculated on the basis of the scheduled monthly payment under the original consumer loan agreement.

For new borrowers, RSB’s direct-sale credit cards and RSB’s co-branded credit cards, the credit limit is calculated: (i) automatically by RSB’s scoring system where the requested amount does not exceed RUB 30,000 for a borrower with no credit history with RSB, RUB 100,000 for a borrower with a positive credit history with

-79- RSB, and RUB 10,000 for credit cards quickly issued in points of sale such as Visa Electron and Maestro (except for the credit cards issued in airports which have a credit limit up to RUB 30,000); and (ii) manually by RSB’s loan officers for “Gold” credit cards and where the requested amount exceeds RUB 50,000 for “Classic” credit cards.

When determining a borrower’s credit limit, RSB focuses on a borrower’s payments history under prior consumer loans and other factors.

Consumer Loans Lending Policy At the first stage in the lending process, RSB considers an application form consisting of 50 different information fields (including 15 fields used in the scoring procedure) along with the borrower’s identification document (typically, a passport). This information is entered into RSB’s PASS either by RSB loan officers or by authorised employees of its retail partners or outlets.

RSB’s PASS processes information provided by an applicant, including credit history, age, education, employment details, property ownership and income.

Information supplied by the prospective borrower is verified to the fullest extent possible through RSB’s database which contains over 30 million entries. RSB has entered into access agreements with a number of Russian state institutions, entities and companies allowing it to verify certain information with respect to applicants through these third party databases. As a matter of practice, information supplied by applicants is verified (where possible) through an address database, a property database and a civil status database. In addition to various telephone, address and property directories, RSB also uses the databases of the three largest Russian credit bureaus: OJSC “National Bureau of Credit Histories”, “United Bureau of Credit Histories” LLC, “Equifax Credit Services” LLC. To make the credit scoring procedure more efficient, RSB requires additional information, such as a personal income tax certificate and other RSB-approved forms.

RSB allows its clients to have a number of outstanding loans, though their aggregate value and aggregate monthly payment may not exceed the total credit limit and maximum monthly payment, respectively, assigned by PASS or manually.

RSB’s PASS operates 24 hours a day, seven days a week, and processes approximately 40,000 applications daily.

Personal Loans Lending Policy RSB’s two-stage personal loan application process applies stricter pre-scoring standards than for its consumer loans as well as longer verification times. For example, a personal loan application has a minimum age requirement as well as a minimum wait of one business day to verify information. First, an RSB employee conducts a personal interview and checks the applicant’s employment history, proof of income and any other relevant information. A Moscow-based RSB credit officer subsequently verifies the applicant’s contact information and credit history, and sets the credit limit.

RSB evaluates its consumer finance portfolio on a regular basis by monitoring both the overall performance of each loan portfolio, the performance of each loan portfolio for each type of good financed as well as each particular consumer loan.

Loan Repayment RSB sends statements to the borrowers at the date specified in the agreement for each borrower. The information set out in such statements summarises the borrower’s account activity during the last calculation period, including account balance. Statements are sent out to borrowers via RFP, email and RSB’s Internet Banking Online System.

RSB’s loans can be repaid in the following ways: (i) RSB’s Network. Borrowers can repay their loans through RSB’s offices. As of 31 December 2011, RSB operates through 181 banking offices and more than 3,800 self-service machines (cash-in) located in Moscow and in the regions of Russia. Usually, the payments made by borrowers through RSB’s offices are allocated intraday.

-80- (ii) Commercial Banks. Loan payments made through other Russian commercial banks are subject to a commission fee of 1.5 per cent. which is payable by the borrower to the other banks. The time delay between cash payment and its receipt by RSB is between one and three working days. (iii) Electronic Payment Systems. There are agreements between RSB and the largest Russian electronic payment systems (Rapida, QIWI/OSMP, Cyberplat, Elecsnet) allowing borrowers to repay loans through over 500,000 electronic terminals. These payments are subject to a 1.5 per cent. fee payable to the electronic payment system by the relevant borrower. In case of payment via any electronic payment system, it usually takes up to one day to allocate the payment to the borrower’s account. (iv) Russian Federal Post. RSB has an agreement with RFP that allows RSB borrowers to repay their loans through RFP offices equipped to handle electronic wire transfers. Loan repayments through RFP offices are subject to a 1.5 per cent. commission fee payable to RFP by the relevant borrower. There can be a time delay of between one and three working days between the borrower’s cash payment and its receipt by RSB.

Loan Collection RSB has created a multi-stage collection system that enables RSB to recover overdue loans more efficiently.

RSB’s loan collection system involves the following steps and procedures:

First Missed Minimum Monthly Payment. Following the first missed payment, a telephone call is made to the relevant borrower informing them of the missed payment and advising on the repayment options. In addition, the borrower is charged a late payment fee in the amount of RUB 300 with a 15 days’ grace period.

Two Missed Minimum Monthly Payments. In case of a borrower’s failure to make two sequential payments, a follow-up call is made advising the borrower of the possible consequences of non-payment. In addition, the borrower is charged a late payment fee of RUB 500.

Three Missed Minimum Monthly Payments. In case of the borrower’s failure to make three sequential payments, the borrower is also contacted in person and informed about the possibility of issue of a final statement (zakluchitelnoe trebovanie). RSB’s representative visits the borrower at home in order to support the follow-up call mentioned above and assess the reasons for the default by the borrower. In addition, the borrower is charged a late payment fee of RUB 1,000.

Four Missed Minimum Monthly Payments. In case of borrower’s failure to make four sequential payments, a final statement (requiring repayment of all outstanding principal amount, accrued interest and other amounts payable within 30 days) is sent to the relevant borrower and a telephone call is made informing the borrower about the possibility of litigation and daily penalty of 0.2 per cent. of the total indebtedness, which is charged from the due date stated in the final statement. In addition, the borrower is charged a late payment fee of RUB 2,000.

Assessment. Loans which remain overdue for more than 90 days (and in respect of which a final statement was sent to the relevant borrower) are reviewed by RSB’s analysts (who are monitored by the Compliance Control Department) who are authorised (1) to reschedule the loans, or (2) to classify the loans as non-recoverable in accordance with existing policy taking into account the outstanding indebtedness and expediency of collection procedures, or (3) to classify the loan as recoverable either through litigation (normally where the amount exceeds RUB 100,000) or through transfer to the Pre-Litigation Collection division of RSB (normally where the amount does not exceed RUB 100,000), or (4) to classify the loan as a fraud case to be processed through a criminal court.

Assignment. Loans that remain due but unpaid for 120 days but are still considered collectible are passed to the Collection Department formed within the Credit Direction of RSB. The Collection Department is engaged both in the pre-litigation and litigation debt collection procedures. Overdue loans remain in the Collection Department or in the Fraud Innvestigation Group for one year. After that, if overdue loans are not collected, RSB writes them off or sells to the debt collection agencies under long-term agreements.

Other Activities RSB’s treasury and trading business units engage in foreign currency exchange, securities and money market trading in order to manage RSB’s liquidity and support the activities of its corporate clients.

-81- RSB provides payment and account services to and on behalf of its corporate clients and also offers these customers classic credit products (loans, loan facilities and overdrafts) and trade finance products. RSB supports its corporate clients’ trading activities by providing letters of credit, guarantees, stand-by letters of credit and trade related loan facilities.

RSB continues to expand the range of operations run jointly with major Russian and international financial institutions. RSB has correspondent relations with more than 120 Russian and foreign banks and more than 90 accounts with correspondent banks. The existing correspondent network enables RSB to effect settlements in all major currencies on a timely basis and offer its customers the most attractive and highest-quality services.

Information Technology Infrastructure RSB continually invests in new technology and the maintenance of existing equipment and infrastructure in order to improve the customer value proposition, increase efficiency and support business growth. RSB’s technology systems focus on new customer communication channels. Internet Bank and Mobile Bank have a wide variety of functions. For example, these applications can restore logins and passwords, block or unblock access, and obtain information on electronic orders. RSB supports correspondence between its customers and RSB through Internet Bank’s secured mail system. Once a question is sent, the customer will receive a quick response containing both general and private information.

Information technology is an integral part of RSB’s daily operations. RSB regularly implements new technologies in order to support its present and future business. RSB operates a high-power IT system. RSB’s scoring system processes on average 40,000 loan applications per day (having a maximum capacity of 200,000). Back-up facilities have been established in different locations. The IT department employs approximately 160 experts in Moscow and 120 outside Moscow. RSB upgraded its servers (FujitsuSiemens) in October 2009 which led to a two-fold improvement in the system performance. In 2009, RSB started using Teradata CRM Solution which allowed users to receive more detailed information on their operations.

The core of RSB’s integrated banking information system, known as “Bankir”, is comprised of RSB’s call centre, credit card processing and credit scoring systems. “Bankir” also supports RSB’s corporate banking services allowing for remote access to customers’ accounts through RSB’s Bank Client systems.

In its business activities, RSB employs a variety of sophisticated software, including “Bankir” core banking system (manufactured by CSBI EE), the Transmaster credit card system (manufactured by Tieto Enator) and the “Bank Client” remote account access and management system (manufactured by Komita).

In order to ensure the safety of collected data, RSB also uses IBM multi-processor cluster systems which allow back-up storage for both servers and disks. RSB’s information technology systems also provide for the backup of communication and power supply systems. Scalability of RSB’s information technology systems allows RSB to increase capacity by adding new hardware, such as disks and processors.

There are different levels of user access rights for the employees of the different RSB departments.

RSB has plans to ensure business continuity in case a disaster affects the primary servicing and collections headquarters. The following fully automated process based on manual procedures will be implemented in case of any such disaster: (i) electricity will be provided for the first five minutes by an uninterruptible power supply and then by diesel generators; (ii) servers-start of second site in a cluster; (iii) disk arrays-restoring tape copy on another disk array and starting the server; (iv) computer centre-switching to second computer centre and copying data from disk arrays, unless tape copy on another disk array is restored and the server is started.

RSB believes that its information technology systems can be easily adapted and modified to address RSB’s growing business volumes and regional expansion. RSB’s information technology infrastructure can be adjusted by the incorporation of new modules to reflect the expansion of RSB’s product range.

In order to provide high quality service to its customers, RSB regularly seeks to improve the capacity and security of its call centre. In 2002, RSB implemented a Cisco IP Contact Centre, which is considered to be a highly secure and scalable solution for call centres. In May 2005, RSB received the Certificate of TUV Rheinland InterCert Kft., confirming establishment of a quality management system by RSB for the provision of services related to information technologies and information security. Proof has been furnished that the requirements according to ISO 9001:2000 are fulfilled.

-82- Subsidiaries and Special Purpose Entities RSI and BAC are insurance companies registered in Russia. RSI and BAC operate under insurance licences issued by the Federal Authority for Insurance Supervision of Russia. See “Insurance”.

RSInv is a holding company, registered in Russia which primarily holds the investment in RSI and in other RSB’s subsidiaries.

RSB Ukraine is registered in Ukraine and was acquired by RSB in October 2006. RSB Ukraine operates as a retail bank. It holds a banking licence for the major banking operations in Ukraine, although it does not have a licence for raising capital in the international markets.

Russian Standard-Finance Ltd (Ukraine), a company registered in the Ukraine, is indirectly owned and controlled by RSB. The company is used as a holding company and for certain operations related to RSB Ukraine as bonds servicing.

The main function of Debt Collection Agency Ltd. (“DCA”), a company registered in Russia, is to collect bad debts transferred from RSB.

Debt Collection Agency Ltd (Ukraine) (“DCAU”), a company registered in Ukraine, is owned by DCA. The only activity of this company is collection of bad debts owed to RSB Ukraine.

MCRS was established in 2006 in Russia. Its principal function is to manage investment funds.

Russian Standard Capital plc (“RSCap”), a company incorporated in Ireland, was acquired by RSB in January 2007. The principal activity of RSCap is to raise capital for RSB by issuing securities in the international markets.

Employees As of 31 December 2011, RSB and its subsidiaries had 21,639 employees. As of 31 December 2010 and 2009, RSB and its subsidiaries had 14,816 and 12,285 employees, respectively.

RSB has a sales course for its sales staff and employees of RSB’s retail partners engaged in promoting and selling RSB’s consumer credit products. The course covers RSB’s history, an overview of its consumer credit products, sales techniques and procedures. Following the completion of the sales course, RSB’s loan officers and employees of retail partners offering credit products receive training certificates which are renewable on an annual basis.

Insurance RSB believes that its policy regarding insurance coverage is consistent with the nature of RSB’s operations, the risks to which RSB is exposed in carrying out its business activities and the standards applied. RSB has entered into contracts for the provision of property insurance and banker’s blanket bond insurance, among others, which contain standard market terms for each type of risk.

Anti-Money Laundering Systems and Controls RSB has adopted internal regulations on money laundering that are based on, and are in full compliance with, the requirements of the Russian anti-money laundering regulations and related instructions of the CBR. The regulation of the Russian anti-money laundering regime is shared by the CBR and the Federal Service for Financial Monitoring of Russia. See “Overview of the Banking Sector and Banking Regulation in Russia - Legislative Framework for the Russian Banking Sector - The Anti-Money Laundering Law”.

Mandatory internal control checks are conducted by RSB’s Internal Control Service which directly reports to the Chairman of the Management Board. External control is provided by the CBR.

Litigation RSB has been, and continues to be, the subject of legal proceedings and adjudications from time to time, none of which has had, individually or in aggregate, a material adverse effect on RSB. There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened, of which RSB is aware) which may have or have had during the 12 months prior to the date of this Base Prospectus a significant effect on the consolidated financial position or profitability of RSB.

-83- ASSET, LIABILITY AND RISK MANAGEMENT

Introduction The purpose of RSB’s asset, liability and risk management (“risk management”) strategy is to evaluate, monitor and manage the size and concentration of the risks arising in the context of RSB’s activities. The principal categories of risk inherent in RSB’s business are credit risk, transaction risk, market risk and liquidity risk. RSB designed its risk management policy to manage these risks by establishing procedures and setting limits which are monitored by the appropriate RSB departments.

RSB’s risk management policies focus on identifying and analysing the above mentioned risks, establishing mechanisms designed to manage, mitigate and monitor these risks on a regular basis as well as facilitating compliance with risk management procedures. RSB’s risk management policies, procedures and methodologies are regularly reviewed in order to improve them and reflect changing market conditions, the effect of new products and services offered by RSB, the growth in scope of its operations and the development of risk management methodologies used in the international and Russian banking sectors.

In developing its risk management policies, RSB follows international best practices, principles and guidelines from the Basel Committee on Banking Supervision as well as the requirements of Russian laws and regulations, including recommendations issued by the CBR. The Bank actively cooperates with international financial institutions and implements best practices of global consumer lending leaders in its business. RSB has built a uniform distributed lending infrastructure which is in compliance with global standards and successfully maintains an optimal liquidity level.

Recent initiatives in the risk management area at RSB have been focused on: • improvement of credit approval procedures related to the assessment of customers’ credit risks; • identifying low risk segments and expanding RSB’s business in such segments; and • launching the “next best offer” project in order to offer the most appropriate products for RSB’s customers based on their credit and payment history with RSB.

Risk Management Organisational Structure RSB’s risk management organisation is divided between the bodies that are responsible for establishing risk management policies and procedures, including the establishment of limits, and bodies whose function is to implement those policies and procedures, including monitoring and controlling risks and limits on an ongoing basis.

Decision Making The decision making level of RSB’s risk management operations is comprised of the Board of Directors, the Management Board, the Credit Committee, and the Asset and Liability Management Committee (“ALCO”). These bodies perform the following functions:

The Board of Directors. The Board of Directors approves RSB’s credit policy (the “Credit Policy”), determines the threshold level and other characteristics of credit risks, appoints the Credit Committee and approves certain decisions that fall outside the scope of the Credit Committee’s authority.

The Management Board. The Management Board has overall responsibility for RSB’s asset, liability and risk management operations, policies and procedures. The Management Board delegates individual risk management functions to each of the various decision-making and execution bodies within RSB’s risk management structures.

The Credit Committee. The Credit Committee supervises and manages RSB’s credit risks. In particular, the Credit Committee establishes the terms of RSB’s retail credit products and a borrower’s approval conditions, approves individual credit transactions, establishes credit risk categories and provisioning rates and adopts decisions on the recognition and write-off of NPLs. The Credit Committee is comprised of nine members. The Chairman of the Management Board acts as the Chairman of the Credit Committee. The Credit Committee meets on a weekly basis and makes its decision by a simple majority vote of all members present provided that a quorum of at least half of the elected members of the Credit Committee is present. Where votes are tied, the Chairman of the Credit Committee (or his deputy) shall cast the deciding vote.

The ALCO. The ALCO establishes RSB’s policy with respect to capital adequacy and market risks, including market limits, manages RSB’s assets and liabilities, establishes RSB’s medium- and long-term liquidity risk

-84- management policy and sets interest rate policy and charges with respect to individual credit products. The ALCO is comprised of nine members. The Chairman of the Management Board acts as the Chairman of the ALCO. The ALCO meets on a weekly basis and makes its decision by simple majority provided that a quorum of at least half of the elected members of the ALCO is present. Where votes are tied, the Chairman of the Committee (or his deputy) shall cast the deciding vote.

Implementation The implementation level of RSB’s risk management is comprised of the Risk Analysis and Control Department, Credit Department, Corporate Lending Department, Treasury Department and Compliance Control Department. These bodies perform the following functions:

Risk Analysis and Control Department. The Risk Analysis and Control Department reports to the Head of the Financial Department and is responsible for monitoring compliance with the ratios established by RSB’s Credit Policy, assisting the Credit Department with establishing credit risk categories and provisioning rates, estimating credit risk on corporate borrowers, banks and issuers of securities, and preparing recommendations on altering the composition of the loan portfolio. RSB’s Risk Analysis and Control Department is independent of other departments that are responsible for risk management.

Credit Department. The Credit Department is responsible for approving loan applications with respect to retail consumer finance products (including credit card issuance), monitoring of outstanding indebtedness due to RSB and collecting amounts due but unpaid from RSB’s retail customers.

Corporate Lending Department. The Corporate Lending Department is responsible for monitoring credit risks arising in the context of lending to corporate clients and financial institutions.

Treasury Department. The Treasury Department is responsible for managing RSB’s short-term liquidity and open currency positions and monitoring the financial and business condition of RSB’s corporate clients.

Compliance Control Department. The Compliance Control Department assesses the adequacy of, and compliance with CBR and other government supervisions, as well as internal procedures at all levels throughout RSB.

Management Reporting RSB has implemented a management reporting system that requires the preparation, by the departments of RSB responsible for the implementation of RSB’s risk management system, of the following reports and calculations: • Daily basis - sales report, treasury report (with respect to RSB’s open foreign exchange positions, cash flow and limits) and operating expenses report; • Weekly basis - consumer business report, statement of financial position and profit and loss statements analysis, structural liquidity gap report, interest rate risk calculation and operational risk report; and • Monthly basis - IFRS financial statements, analytical report on consumer credit risk and lending, report on the status of RSB’s consumer finance business accompanied by comments and analysis and report on RSB’s performance versus its budget.

These reports are submitted for the review of RSB’s Board of Directors and Management Board.

Credit Risk RSB is exposed to credit risk, which is the risk that a borrower or counterparty will be unable to pay amounts in full when due. Credit risk is the principal category of financial risk related to RSB’s operations. This risk arises mainly in the context of RSB’s consumer finance activities such as retail loans issued by RSB under large-scale lending programmes: credit card loans, POS loans and personal loans, among others.

The general principles of RSB’s credit approach are outlined in its Credit Policy, which is approved by RSB’s Board of Directors and reviewed at least every two years. The current Credit Policy was adopted in 2008 reflecting the change in RSB’s business model to mitigate the impact of the financial crisis. In 2010, the Credit Policy was amended to remove certain additional restrictions and requirements introduced in 2008.

-85- The Credit Policy also outlines RSB’s credit risk control and monitoring procedures as well as its credit risk management systems. To manage credit risk under its large-scale credit products, RSB applies an automated credit scoring system to make decisions on the estimation of a borrower’s default probability.

Credit limits with respect to consumer loan applications are established either by RSB’s PASS or by the officers of the Credit Department. See “Business - Lending Policies - Consumer Loan Lending Policy; Loan Repayment and Loan Collection”.

The Credit Committee is also responsible for establishing exposure limits on a case-by-case basis with respect to corporate borrowers and financial institutions (on the basis of supporting documentation supplied by the Corporate Lending Department and Financial Institutions Department, respectively, and the Risk Control Department).

In order to manage the credit risk exposure of corporate loans and financial market instruments, RSB implements a system of internal credit ratings with a comprehensive estimate of the current financial standing of a borrower, its industry, cash flow, financial outcome, terms of transaction and credit history as a means to assess RSB’s ability to assume additional credit exposure. As implemented, the Credit Policy verifies the accuracy of, and makes necessary adjustments to, RSB’s credit procedures, credit scoring models and internal credit rating models.

RSB structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers. Such risks are monitored on a revolving basis and subject to an annual or more frequent review. Credit risk limits by individual borrower, transaction and group of financial instruments are set by the Credit Committee. The Board of Directors approves certain decisions that fall outside the scope of the Credit Committee’s authority. The exposure to any one borrower, including banks, is further restricted by sub-limits covering on- and off-balance sheet exposures and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts. Actual exposures against limits are monitored daily. Exposure to credit risk is managed through regular analyses of the ability of borrowers and potential borrowers to meet interest and principal repayment obligations and by changing these lending limits where appropriate. Exposure to credit risk is also managed, in part, by obtaining collateral and corporate and personal guarantees.

RSB’s maximum exposure to credit risk is primarily reflected in the carrying amounts of financial assets on the consolidated statement of financial position. The impact of possible netting of assets and liabilities to reduce potential credit exposure is not significant. Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss as a result of another party to a financial instrument failing to perform in accordance with the terms of the contract. RSB uses the same credit policies in entering into conditional obligations as it does for on-balance sheet financial instruments through established credit approvals, risk control limits and monitoring procedures. RSB also creates provisions for potential losses under loans and other claims exposed to credit risk to offset expected losses, and such provisioning is one of the key credit risk methods used by RSB. The provisions are recognised as RSB’s expenses and reflected in the cost of respective financial instruments.

Insurance risk RSB is exposed to insurance risk, which is the risk that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable.

For a portfolio of insurance contracts where the theory of probabilities is applied to pricing and reserving, the principal risk that the insurance company faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year from the estimate established using actuarial techniques. Factors that aggravate insurance risk include a lack of risk diversification in terms of the type and amount of risk, the geographical location and the type of policyholder base covered.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected pervasively by a change in any subset of the portfolio. RSI has developed its insurance underwriting strategy to diversify the

-86- gender, age and geography of insurance risks accepted and within each of these categories to achieve a sufficiently large population to reduce the variability of the expected outcome.

Provisioning Policy As RSB prepares its financial statements both under IFRS and Russian accounting standards, it must calculate provisions for impairment of loans and other financial assets under both IFRS and Russian accounting standards.

IFRS Provisioning Loans and advances and Provisions for Loan Impairment Impairment losses are recognised in profit or loss when incurred as a result of one or more events (“loss events”) that occurred after the initial recognition of the financial asset and which have an impact on the amount or timing of the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If RSB determines that no objective evidence exists that impairment was incurred for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. The primary factors that RSB considers as to whether a financial asset is impaired are its overdue status and the case at which related collateral, if any, can be realised. The following other principal criteria are also used to determine that there is objective evidence that an impairment loss has occurred: • any instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems; • the borrower experiences a significant financial difficulty as evidenced by borrower’s financial information that RSB obtains; • the borrower considers bankruptcy or a financial reorganisation; and • there is adverse change in the payment status of the borrower as a result of changes in the national or local economic conditions that impact the borrower or the value of collateral significantly decreased as a result of deteriorating market conditions.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and the experience of Management in respect of the extent to which amounts will become overdue as a result of past loss events and the success of recovery of overdue amounts. Past experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect past periods and to remove the effects of past conditions that do not exist currently.

Impairment losses are always recognised through an allowance account to write down the asset’s carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recorded (such as an improvement in the debtor’s credit rating), the previously recorded impairment loss is reversed by adjusting the allowance account through profit or loss.

Uncollectable assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been completed, the Credit Committee of RSB has formally recognised assets as uncollectable and the amount of the loss has been determined.

RSB regularly reviews its loan portfolios to assess impairment. In determining whether an impairment loss should be recorded in the income statement, RSB makes judgements as to whether there is any observable data

-87- indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in RSB. The primary factor that RSB considers as objective evidence of impairment is the overdue status of the loan. Provision for loan impairment consists of (i) incurred losses when the loan has missed four monthly instalments and then RSB assumes no recovery, except for auto loans, and (ii) losses when the loan has signs of impairment (missed at least one monthly instalment) as at the reporting date; such losses are calculated based on the historical statistical data considering the performance of other loans with the similar characteristics. In general, loans where there are no breaches in loan servicing are considered to be individually unimpaired. Given the nature of the borrowers and the loans extended, it is RSB’s view and experience that the time lag between a possible loss event that could lead to impairment and the non- or underpayment of a monthly instalment is minimal. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce differences between loss estimates and actual loss experience.

Under IFRS, as of 31 December 2011 RSB’s provision for loan impairment was 6.9 per cent. with respect to its gross loan portfolio, 4.7 per cent. with respect to its portfolio of consumer loans and 3.3 per cent. with respect to its portfolio of credit cards. As of 31 December 2010, RSB’s provision for loan impairment was 8.7 per cent. with respect to gross loan portfolio, in particular 6.5 per cent. with respect to its portfolio of consumer loans, and 3.5 per cent. with respect to its portfolio of credit cards.

CBR Provisioning RSB currently applies a methodology based on Russian accounting standards to calculate loan provisioning and determine expected losses.

Under the CBR, provisions for loan impairment are established following the borrower’s default under the loan or where there is an objective evidence of potential inability of the borrower to repay the loan. In case of consumer finance, RSB creates provisions by reference to homogenous credit portfolios i.e. groups of loans consolidated on the basis of certain credit risk criteria (type of credit product and quantity of payments missed) as well as individual credit products. CBR loan provisions are created by reference to the aggregate of the amount of actual and expected losses. Provisions with respect to individual credit products are calculated based on the borrower’s financial condition and debt service quality.

Under the CBR, loans extended to individuals should be grouped into portfolios according to the period of overdue payments. RSB’s consumer portfolio structure is based on its consumer financial instruments and the level of delinquency under CBR norms. Overall, RSB calculates its credit risk on its consumer portfolio as the sum of products of the volumes of debt in each level of delinquency by provisioning rates, determined in accordance with CBR requirements.

As of 31 December 2011, RSB’s average provisioning allowance was 8.9 per cent. with respect to its retail consumer finance loan portfolio and 26.5 per cent. with respect to its portfolio of other loans. As of 31 December 2010, RSB’s average provisioning allowance was 15.7 per cent. with respect to its retail consumer finance loan portfolio and 29.2 per cent. with respect to its portfolio of other loans.

Market Risks RSB takes on exposure to market risks which arise from open interest rate and currency positions, all of which are exposed to market volatility. Key market risk management processes are intended to prevent potential considerable one-off losses that may have critical implications for RSB. Market risks are assessed by RSB using the stress testing procedures, among others.

RSB has limited trading operations. It has mismatches in its positions that arise generally due to the lending in Roubles and significant borrowings in U.S. Dollars. RSB manages the positions through hedging operations, matching, or controlled mismatching.

-88- The general principles of RSB’s market risk management policy are set out by the ALCO. The goal of RSB’s market risk management is to limit and reduce the amount of possible losses on open market positions that may be incurred by RSB due to negative changes in currency exchange rates and interest rates.

The ALCO manages market risks by establishing limits on possible losses for each type of operation and the Risk Analysis and Control Department and the Treasury Department monitor compliance with such limits.

Some of RSB’s methods of managing risk are based upon its use of observed historical market behaviour. As a result, these methods may not predict future risk exposures, which could be significantly greater than the historical measures indicate.

Currency Risk RSB is exposed to fluctuations in prevailing foreign currency exchange rates on its consolidated financial position, results of operations and cash flows.

RSB’s currency risk is calculated as an aggregate of open positions of RSB and is limited by CBR mandatory guidelines requiring that RSB’s standalone open foreign exchange in any single currency be not more than 10 per cent. of its net equity (all figures based on RSB statutory accounts). Within these limitations, the open positions are controlled by setting value-at-risk limits (established by the ALCO) with respect to current market fluctuations. The open positions are also tested on different stress scenarios which include both historic and hypothetical events.

RSB’s open currency positions are managed by the Treasury Department on a daily basis. The ALCO sets open currency position limits with respect to both overnight and intra-day positions and stop-loss limits. Compliance with these limits and the CBR open position limits is monitored on a daily basis by the Risk Analysis and Control Department.

In order to hedge its foreign exchange risk, RSB enters into spot foreign exchange transactions, including currency swaps, with the largest Russian banks and international banks.

The table below presents, on a consolidated basis, RSB’s exposure to foreign currency exchange rate risk as of 31 December 2011. Included in the table are RSB’s assets and liabilities, categorised by currency.

At 31 December 2011 Monetary Monetary financial financial assets liabilities Derivatives Net position (in millions) RUB...... 151,302 (118,501) (18,510) 14,291 U.S.$ ...... 10,899 (30,081) 15,055 (4,127) EURO ...... 2,085 (5,870) 3,959 174 Other ...... 5,048 (1,896) (406) 2,746 Total ...... 169,334 (156,348) 98 13,084

The table below presents, on a consolidated basis, RSB’s exposure to foreign currency exchange rate risk as of 31 December 2010. Included in the table are RSB’s assets and liabilities, categorised by currency.

At 31 December 2010 Monetary Monetary financial financial assets liabilities Derivatives Net position (in millions) RUB...... 111,847 (70,312) (25,194) 16,341 U.S.$ ...... 5,579 (31,911) 22,308 (4,024) EURO ...... 1,428 (4,483) 2,992 (63) Other ...... 1,458 (613) — 845 Total ...... 120,312 (107,319) 106 13,099

-89- The table below presents, on a consolidated basis, RSB’s exposure to foreign currency exchange rate risk as of 31 December 2009. Included in the table are RSB’s assets and liabilities, categorised by currency.

At 31 December 2009 Monetary Monetary financial financial assets liabilities Derivatives Net position (in millions) RUB...... 109,644 (55,772) (31,862) 22,010 U.S.$ ...... 17,119 (49,159) 29,981 (2,059) EURO ...... 2,080 (3,728) 2,177 529 Other ...... 454 (28) — 426 Total ...... 129,297 (108,687) 296 20,906

Derivatives in each column represent the fair value of the respective currency at the reporting date that RSB agreed to buy (positive amount) or sell (negative amount) (all amounts by currency are stated gross) before netting of positions and payments with the counterparty. The net total represents fair value of the currency derivatives.

The above analysis includes only monetary assets and liabilities. Non-monetary assets and liabilities are not considered as posing any material currency risk.

The following table represents sensitivities of profit and loss and equity to reasonably possible changes in exchange rates applied at the reporting date provided that all other variables held constant:

As of 31 December 2011 As of 31 December 2010 As of 31 December 2009 Impact on Impact on Impact on Impact on Impact on Impact on profit or loss equity profit or loss equity profit or loss equity (in millions of Roubles) U.S.$ strengthening by 10 % ...... (413) (413) (402) (402) (206) (206) U.S.$ weakening by 10 % ...... 413 413 402 402 206 206 Euro strengthening by 10 % ...... 17 17 (6) (6) 53 53 Euro weakening by 10 % ...... (17) (17) 6 6 (53) (53)

The exposure was calculated only for monetary balances denominated in currencies other than the functional currency of the respective entity of RSB.

Interest Rate Risk RSB is exposed to interest rate risk, principally as a result of lending at fixed interest rates, in amounts and for periods which differ from those of term borrowings at fixed interest rates. Interest margins on assets and liabilities having different maturities may increase as a result of changes in market interest rates.

RSB manages its interest rate risk by maintaining an interest rate margin (net interest income as a percentage of average total interest-earning assets) sufficient to cover operational expenses and risk premium. For the year ended 31 December 2011, RSB’s net interest margin was 18.9 per cent. For the year ended 31 December 2010, RSB’s net interest margin was 18.6 per cent.

The ALCO sets ranges of interest rates for different maturities at which RSB may place assets and attract liabilities with and without approvals. Compliance with the interest rate policy is monitored by the Treasury Department and the Finance Department (which prepares weekly interest rate risk reports submitted to the ALCO). In the absence of an effective market for hedging, RSB normally seeks to match its interest rate positions.

For the year ended 31 December 2011, RSB’s interest income was RUB 32,776 million and its interest expense was 9,959 million, resulting in net interest income of RUB 22,817 million. For the year ended 31 December 2010, RSB’s interest income was RUB 28,432 million and its interest expense was RUB 8,923 million, resulting in net interest income of RUB 19,509 million.

-90- The table below summarises RSB’s exposure to interest rate risks as of 31 December 2011, 2010 and 2009. The table presents the aggregated amounts of RSB’s financial assets and liabilities at carrying amounts, categorised by the earlier of contractual interest repricing or maturity dates.

Demand and less than From 1 to From 3 to From 6 to More than 1 months 3 months 6 months 12 months 1 year Total (in millions of Roubles) 31 December 2011 Total financial assets ...... 34,927 44,787 25,449 38,896 25,383 169,442 Total financial liabilities ...... 36,505 21,419 40,696 26,644 31,094 156,358 Net interest sensitivity gap at 31 December 2011 ...... (1,578) 23,368 (15,247) 12,252 (5,711) 13,084 31 December 2010 Total financial assets ...... 25,231 17,134 22,638 38,809 16,500 120,312 Total financial liabilities ...... 24,143 15,988 20,678 26,217 20,293 107,319 Net interest sensitivity gap at 31 December 2010 ...... 1,088 1,146 1,960 12,592 (3,793) 12,993 31 December 2009 Total financial assets ...... 26,934 14,314 31,180 32,596 24,273 129,297 Total financial liabilities ...... 12,406 14,734 15,109 44,308 22,130 108,687 Net interest sensitivity gap at 31 December 2009 14,528 (420) 16,071 (11,712) 2,143 20,610

All of RSB’s debt instruments reprice within five years except for RUB denominated subordinated loans due 2019 and 2020.

Risk Testing The Bank runs stress testing to assess potential impact on the Bank’s financial position by a number of external negative factors that are associated with extraordinary, but probable events and that, in general, cannot be forecast using statistical methods. The stress testing of the financial result of the Bank’s portfolio represents a principal analytical tool that enables assessment of potential losses of the Bank from potential abrupt changes in the economic situation.

RSB runs regular integrated audits of the risk management system for compliance with the requirements of supervisory agencies and internal regulations, for reliability of the information system, accuracy and reliability of risk assessment and management methods and models applied.

-91- Geographical risk concentration The following table sets out the geographical concentration of RSB’s financial assets and liabilities as at 31 December 2011:

Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents ...... 13,729 3,730 807 18,266 Mandatory cash balances with the CBRF ...... 1,380 — — 1,380 Securities at fair value through profit or loss ...... 22,789 — — 22,789 Due from other banks ...... — 889 716 1,605 Loans and advances to customers ...... 110,651 18 3,084 113,753 Investment securities available for sale ...... 11,555 2,711 — 14,266 Other financial assets ...... 4,046 84 97 4,227 Total financial assets ...... 164,150 7,432 4,704 176,286 Non-financial assets ...... 11,481 — 354 11,835 Total assets ...... 175,631 7,432 5,058 188,121 Liabilities Due to other banks ...... 564 3,989 758 5,311 Customer accounts ...... 107,430 932 1,117 109,479 Debt securities in issue ...... 10,659 4,683 406 15,748 Subordinated debt ...... 9,666 12,896 — 22,562 Other financial liabilities ...... 3,153 18 87 3,258 Total financial liabilities ...... 131,472 22,518 2,368 156,358 Non-financial liabilities ...... 4,667 — — 4,667 Total liabilities ...... 136,139 22,518 2,368 161,025 Net balance sheet position ...... 39,492 (15,086) 2,690 27,096 Credit related commitments ...... 28,419 99 — 28,518

The following table sets out the geographical concentration of RSB’s financial assets and liabilities as at 31 December 2010:

Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents ...... 8,728 2,059 605 11,392 Mandatory cash balances with the CBRF ...... 1,222 — — 1,222 Securities at fair value through profit or loss ...... 17,568 — — 17,568 Due from other banks ...... — 513 — 513 Loans and advances to customers ...... 80,743 — 1,187 81,930 Investment securities available for sale ...... 11,657 — — 11,657 Other financial assets ...... 2,214 246 43 2,503 Total financial assets ...... 122,132 2,818 1,835 126,785 Non-financial assets ...... 9,924 — 346 10,270 Total assets ...... 132,056 2,818 2,181 137,055 Liabilities Due to other banks ...... — — 459 459 Customer accounts ...... 62,025 719 146 62,890 Debt securities in issue ...... 7,361 13,678 — 21,039 Subordinated debt ...... 9,660 12,210 — 21,870 Other financial liabilities ...... 1,014 30 17 1,061 Total financial liabilities ...... 80,060 26,637 622 107,319 Non-financial liabilities ...... 2,746 — — 2,746 Total liabilities ...... 82,806 26,637 622 110,065 Net balance sheet position ...... 49,250 (23,819) 1,559 26,990 Credit related commitments ...... 20,970 100 — 21,070

-92- The following table sets out the geographical concentration of RSB’s financial assets and liabilities as at 31 December 2009:

Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents ...... 10,732 1,498 325 12,555 Mandatory cash balances with the CBRF ...... 1,263 — — 1,263 Securities at fair value through profit or loss ...... 15,491 — — 15,491 Due from other banks ...... — 528 — 528 Loans and advances to customers ...... 92,500 180 305 92,985 Investment securities available for sale ...... 544 — — 544 Other financial assets ...... 5,833 79 19 5,931 Total financial assets ...... 126,363 2,285 649 129,297 Non-financial assets ...... 10,722 — 86 10,808 Total assets ...... 137,085 2,285 735 140,105 Liabilities Due to other banks ...... 15,673 — — 15,673 Customer accounts ...... 26,695 80 60 26,835 Debt securities in issue ...... 9,729 32,995 — 42,724 Subordinated debt ...... 10,131 12,114 — 22,245 Other financial liabilities ...... 752 454 4 1,210 Total financial liabilities ...... 62,980 45,643 64 108,687 Non-financial liabilities ...... 1,876 — — 1,876 Total liabilities ...... 64,856 45,643 64 110,563 Net balance sheet position ...... 72,229 (43,358) 671 29,542 Credit related commitments ...... 22,069 3 — 22,072

Assets, liabilities and credit-related commitments have generally been based on the country in which the counterparty is located. Balances with Russian counterparties actually outstanding to/from off-shore companies of these Russian counterparties are allocated to the caption “Russia”. Cash on hand and premises and equipment have been allocated based on the country in which they are physically held.

Liquidity Risks RSB is also exposed to liquidity risk, arising out of mismatches between the maturities of RSB’s assets and liabilities which may result in RSB being unable to meet its obligations in a timely manner. RSB is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan drawdowns and guarantees.

RSB’s short-term liquidity position is managed by the Treasury Department through interbank lending and reduction of its accounts balances. Structural (i.e. medium- and long-term) liquidity is managed by the ALCO through weekly liquidity gap reports which include one-year projections.

RSB does not maintain cash resources to meet all of these needs as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The liquidity risk is managed by the ALCO. The matching and/or controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of RSB. It is unusual for banks ever to be completely matched since business transacted is often of an uncertain term and of different types. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of RSB and its exposure to changes in interest and exchange rates. Liquidity requirements to support calls under guarantees and standby letters of credit are considerably less than the amount of the commitment because RSB does not generally expect the third party to draw funds under the agreement. The total outstanding contractual amount of commitments to extend credit does not necessarily represent future cash requirements, since many of these commitments will expire or terminate without being funded.

-93- RSB’s principal sources of funding are customer accounts, subordinated loans and debt instruments (including bonds, promissory notes, asset-backed securities, loan participation notes and interbank loans). Since 2009 RSB has significantly changed his funding strategy by increasing the share of sources that are independent from the capital markets. For further information, see “Business - History - Effect of the Financial Crisis - Diversification of Funding Base”.

The tables below present liabilities by their remaining contractual maturity. The amounts disclosed in the maturity tables are the contractual undiscounted cash flows, including gross finance lease obligations (before deducting future finance charges), prices specified in deliverable forward agreements to purchase financial assets for cash, contractual amounts to be exchanged under gross settled currency swaps. Such undiscounted cash flows differ from the amount included in the consolidated statement of financial position while thus is based on discounted cash flows. Net settled derivatives are included at the net amounts expected to be paid. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the reporting date. Foreign currency payments are translated using the spot exchange rate at the reporting date.

The maturity analysis of undiscounted financial liabilities at 31 December 2011 is as follows:

Demand and less From 12 than 1 From 1 to 3 From 3 to months to 5 Over 5 month months 12 months years years Total (in millions of Roubles) Liabilities Due to other banks ...... 509 119 2,268 3,535 — 6,431 Customer accounts ...... 33,990 16,509 54,337 9,242 — 114,078 Debt securities in issue ...... 788 104 11,663 6,097 — 18,652 Subordinated debt ...... — 80 1,554 18,914 12,044 32,592 Other financial liabilities ...... 2,078 1,134 36 10 — 3,258 Derivative liabilities —Inflow ...... (3,752) — — — — (3,752) —Outflow ...... 3,762 — — — — 3,762 Loss provision ...... 32 101 92 113 30 368 Total potential future payments for financial obligations ...... 37,407 18,047 69,950 37,911 12,074 175,389 Contingences and commitments Undrawn credit commitments ...... 23,680 — — — — 23,680 Guarantees and letters of credit ...... 4,838 — — — — 4,838 Total potential future payments for financial obligations, contingencies and commitments ...... 65,925 18,047 69,950 37,911 12,074 203,907

-94- The maturity analysis of undiscounted financial liabilities at 31 December 2010 is as follows:

Demand and less From 12 than 1 From 1 to 3 From 3 to months to 5 Over 5 month months 12 months years years Total (in millions of Roubles) Liabilities Due to other banks ...... 265 — 203 — — 468 Customer accounts ...... 23,300 12,867 25,337 3,683 — 65,187 Debt securities in issue ...... — 2,928 17,694 1,486 — 22,108 Subordinated debt ...... — 79 1,709 13,253 19,719 34,760 Other financial liabilities ...... 608 453 — — — 1,061 Derivative liabilities —Inflow ...... (1,828) — — — — (1,828) —Outflow ...... 1,832 — — — 1,832 Loss provision ...... 17 35 92 76 12 232 Total potential future payments for financial obligations ...... 24,194 16,362 45,035 18,498 19,731 123,820 Contingences and commitments Undrawn credit commitments ...... 18,972 — — — — 18,972 Guarantees and letters of credit ...... 2,098 — — — — 2,098 Total potential future payments for financial obligations, contingencies and commitments ...... 45,264 16,362 45,035 18,498 19,731 144,890

The maturity analysis of undiscounted financial liabilities at 31 December 2009 is as follows:

Demand and less From 12 than 1 From 1 to 3 From 3 to months to 5 Over 5 month months 12 months years years Total (in millions of Roubles) Liabilities Due to other banks ...... 2,412 15 14,550 — — 16,977 Customer accounts ...... 9,988 5,846 10,279 2,636 — 28,749 Debt securities in issue ...... 4 606 25,489 20,933 — 47,032 Subordinated debt ...... — — 1,827 7,699 27,934 37,460 Other financial liabilities ...... 88 668 454 — — 1,210 Derivative liabilities —Inflow ...... (93) — — — — (93) —Outflow ...... 93 — — — — 93 Loss provision ...... 11 38 19 30 6 104 Total potential future payments for financial obligations ...... 12,503 7,173 52,618 31,298 27,940 131,532 Contingences and commitments Undrawn credit commitments ...... 17,390 — — — — 17,390 Guarantees and letters of credit ...... 4,682 — — — — 4,682 Total potential future payments for financial obligations, contingencies and commitments ...... 34,575 7,173 52,618 31,298 27,940 153,604

Payments in respect of gross settled forwards will be accompanied by related cash inflows. Customer accounts are classified in the above analysis based on contractual maturities. However, in accordance with Russian Civil Code, individuals have a right to withdraw their deposits prior to maturity if they forfeit their right to accrued interest.

-95- RSB does not use the above undiscounted maturity analysis to manage liquidity. Instead, RSB monitors expected maturities that may be summarised as of 31 December 2011 as follows.

Demand and less From 12 than 1 From 1 to 3 From 3 to months to 5 Over 5 month months 12 months years years Total (in millions of Roubles) Assets Cash and cash equivalents ...... 18,266 — — — — 18,266 Mandatory cash balances with the CBRF ..... 1,380 — — — — 1,380 Securities at fair value through profit or loss . . 406 22,383 — — — 22,789 Due from other banks ...... 64 — 1,541 — — 1,605 Loans and advances to customers ...... 11,751 20,824 62,083 18,953 142 113,753 Investment securities available for sale ...... 331 — 1,290 12,645 — 14,266 Other financial assets ...... 2,473 1,580 58 115 1 4,227 Total financial assets ...... 34,671 44,787 64,972 31,713 143 176,286 Liabilities Due to other banks ...... 549 117 1,773 2,872 — 5,311 Customer accounts ...... 33,871 16,281 51,505 7,822 — 109,479 Debt securities in issue ...... 7 406 10,076 5,259 — 15,748 Subordinated debt ...... — 79 1,479 14,049 6,955 22,562 Other financial liabilities ...... 2,078 1,134 36 10 — 3,258 Total financial liabilities ...... 36,505 18,017 64,869 30,012 6,955 156,358 Net liquidity surplus/(gap) ...... (1,834) 26,770 103 1,701 (6,812) 19,928 Cumulative liquidity surplus ...... (1,834) 24,936 25,039 26,740 19,928

Expected maturities may be summarised as of 31 December 2010 as follows:

Demand and less From 12 than 1 From 1 to 3 From 3 to 12 months to 5 Over 5 month months months years years Total (in millions of Roubles) Assets Cash and cash equivalents ...... 11,392 — — — — 11,392 Mandatory cash balances with the CBRF . . . 1,222 — — — — 1,222 Securities at fair value through profit or loss ...... 176 2,728 14,664 — — 17,568 Due from other banks ...... — — 513 — — 513 Loans and advances to customers ...... 10,786 13,540 46,236 11,129 239 81,930 Investment securities available for sale .... — — 57 11,600 — 11,657 Other financial assets ...... 1,170 866 462 4 1 2,503 Total financial assets ...... 24,746 17,134 61,932 22,733 240 126,785 Liabilities Due to other banks ...... 265 — 194 — — 459 Customer accounts ...... 23,270 12,641 23,787 3,192 — 62,890 Debt securities in issue ...... — 2,894 16,797 1,348 — 21,039 Subordinated debt ...... — 78 1,617 9,696 10,479 21,870 Other financial liabilities ...... 608 453 — — — 1,061 Total financial liabilities ...... 24,143 16,066 42,395 14,236 10,479 107,319 Net liquidity surplus/(gap) ...... 603 1,068 19,537 8,497 (10,239) 19,466 Cumulative liquidity surplus ...... 603 1,671 21,208 29,705 19,466

-96- The analysis by expected maturities may be summarised as follows at 31 December 2009:

Demand and less From 12 than 1 From 1 to 3 From 3 to months to 5 Over 5 month months 12 months years years Total (in millions of Roubles) Assets Cash and cash equivalents ...... 12,555 — — — — 12,555 Mandatory cash balances with the CBRF .... 1,263 — — — — 1,263 Securities at fair value through profit or loss ...... — 665 11,803 3,023 — 15,491 Due from other banks ...... — — 528 — — 528 Loans and advances to customers ...... 10,197 13,245 48,722 20,684 137 92,985 Investment securities available for sale ...... — 127 14 403 — 544 Other financial assets ...... 2,389 277 3,239 26 — 5,931 Total financial assets ...... 26,404 14,314 64,306 24,136 137 129,297 Liabilities Due to other banks ...... 2,408 15 13,250 — — 15,673 Customer accounts ...... 9,906 5,582 9,239 2,108 — 26,835 Debt securities in issue ...... 4 8,469 24,360 9,891 — 42,724 Subordinated debt ...... — 97 1,724 5,897 14,527 22,245 Other financial liabilities ...... 88 668 454 — — 1,210 Total financial liabilities ...... 12,406 14,831 49,027 17,896 14,527 108,687 Net liquidity surplus/(gap) ...... 13,998 (517) 15,279 6,240 (14,390) 20,610 Cumulative liquidity surplus ...... 13,998 13,481 28,760 35,000 20,610

Management believes that in spite of a significant number of customer accounts being on demand, diversification of these deposits by number and type of depositors and the past experience of RSB would indicate that these customer accounts provide a long-term and stable source of funding for RSB.

-97- MANAGEMENT

The management of RSB is separated into various levels and sub-levels, each responsible for different aspects of RSB’s overall activities. The highest level of management, and the ultimate decision-making body, is the General Shareholders’ Meeting. This is followed by the Board of Directors, which is responsible for the general management of RSB, including strategy coordination and general supervision.

The Board of Directors elects the Management Board (which is the collective executive body of RSB) and the Chairman of the Management Board (which is the sole executive body of RSB). The Chairman of the Management Board and the Management Board are jointly responsible for RSB’s day-to-day operations.

A brief description of each of the General Shareholders’ Meeting, the Board of Directors, the Management Board and the Chairman of the Management Board is set out below.

RSB’s internal business divisions report to the Chairman of the Management Board. This structure is also set out below.

General Shareholders’ Meeting The General Shareholders’ Meeting is the supreme governance body of RSB. RSB’s General Shareholders’ Meetings are convened by RSB’s Board of Directors at least once a year. Extraordinary General Shareholders’ Meetings may be convened upon the request of the Board of Directors, the internal audit commission, the external auditor or a shareholder holding at least 10 per cent. of voting shares of RSB.

The following matters can only be dealt with by the General Shareholders’ Meeting and may not be delegated to other governing bodies of RSB: • alteration of RSB’s charter (save for amendments related to the establishment of representative offices and branches); • reorganisation and liquidation of RSB, appointment of a liquidation committee and approval of interim and final liquidation balance sheets; • determination of the composition of the Board of Directors, election of its members and early termination of their powers; • determination of the amount, nominal value and type of authorised shares; • increases and reductions in RSB’s share capital; • appointment of RSB’s auditor; • approval of dividends; • approval of the annual statutory accounting and reports; • approval of RSB’s participation in financial groups, holdings and associations; and • certain other matters provided for by the applicable legislation and under RSB’s charter.

The number of votes that each shareholder has in the General Shareholders’ Meetings corresponds to the number of RSB’s voting shares owned by such shareholder. According to RSB’s charter, each RSB voting share provides the shareholder with the right of one vote.

Board of Directors The Board of Directors is responsible for general management matters, with the exception of those matters that are designated by law and by RSB’s charter as being the exclusive responsibility of the General Shareholders’ Meeting. RSB’s Board of Directors meets as necessary, but not less than once a quarter, and makes its decisions, generally, by simple majority of those present provided that a quorum of at least half of the elected members of the Board of Directors is present. Members of the Board of Directors are elected by the General Shareholders’ Meeting and may be re-elected an unlimited number of times.

-98- The Board of Directors has the power to decide, among others, the following matters: • the determination of RSB’s priority business areas; • the formation and early termination of the executive bodies of RSB and the Head of Internal Control Service of RSB; • decisions on application of the reserves and other similar funds of RSB; • the recommendations on distribution of dividends and the payment procedure thereof; • the approval of interested party transactions and major transactions in the cases provided for by the applicable legislation; • establishment of new branches and representative offices; and • certain other matters provided for by the applicable legislation and RSB’s charter.

RSB’s charter requires the Board of Directors to comprise at least five members. There are currently five members of RSB’s Board of Directors. The current members of the Board of Directors were elected by RSB shareholders at a General Shareholders’ Meeting held in April 2012.

The name, position and certain other information for each member of the Board of Directors of RSB are set out below.

Name Title Member of the Board Since Roustam Tariko ...... Chairman July 1999 Dmitry Levin ...... Member November 2001 Alexander Zelenov ...... Member March 2010 Larissa Tikhonova ...... Member May 2008 Mihail Khmel ...... Member May 2008

As of the date of this Base Prospectus, as far as RSB is aware, members of RSB’s Board of Directors do not hold positions with companies outside of RSB, its subsidiaries and affiliates, unless otherwise indicated below.

Roustam Tariko (age 50) has been the Chairman of RSB’s Board of Directors since May 2000 and a member of RSB’s Board of Directors since July 1999. Previously, Mr. Tariko was the General Director of RSC and a member of the Board of Directors of ATB.

Dmitry Levin (age 46) has been a member of RSB’s Board of Directors since November 2001. He is also the Chairman of RSB’s Management Board and a member of the board of directors of Debt Collection Agency Ltd. Mr. Levin previously headed RSB’s Interbank Operations and Financial Markets Department. Prior to joining RSB, Mr. Levin headed the Capital Markets Department of OJSC Mezhcombank.

Alexander Zelenov (age 57) has been a member of RSB’s Board of Directors since March 2010. He has been working for VEB as a Director of Financial Institutions Department since 2007. Since 2009, he has also been a member of the board of directors of OJSC “Belvnesheconombank” (Belorussia), CJSC “Prominvestbank” (Ukraine), CJSC Bank Globex and OJSC NOMOS Bank.

Larissa Tikhonova (age 45) has been a member of RSB’s Board of Directors since May 2008. Mrs. Tikhonova is also administrative director of Roust Trading.

Mihail Khmel (age 50) has been a member of RSB’s Board of Directors since May 2008. Previously Mr. Khmel has been working in different positions within the compliance structures of the Group. He has also been a chief executive officer of OOO “Aviatsionniye Tekhnologii” (construction company) since 2004.

The business address of RSB’s Board of Directors is 36, Tkatskaya Street, Moscow, 105187, Russia.

Management Board and Chairman of the Management Board The day-to-day management of RSB (with the exception of those matters that are allocated by the applicable legislation and RSB’s charter to the exclusive authority of the Board of Directors or the General Shareholders’ Meeting) is carried out by the Chairman of the Management Board and the Management Board.

The Management Board is RSB’s collective executive body and controls the implementation of resolutions of the General Shareholders’ Meeting and the Board of Directors. The Management Board is accountable to both the Board of Directors to which it reports on a regular basis and the General Shareholders’ Meeting. Members of the

-99- Management Board are elected by the Board of Directors and may be re-elected an unlimited number of times. The Management Board meets as necessary and makes its decisions by simple majority provided that a quorum of at least half of the elected members of the Management Board is present.

The Chairman of the Management Board is RSB’s chief executive officer and ex officio acts on behalf of RSB in relations with third parties.

The name, position and certain other information for each member of the Management Board (and not previously set out under the preceding section entitled “Board of Directors”) is set out below. Unless otherwise indicated, members of RSB’s Management Board do not hold positions with companies outside of the Group.

Name Title Member of the Board Since Dmitry Levin ...... Chairman March 2000 Vladimir Pyshny ...... Member, First Deputy December 2002 Chairman Nikolay Itskov ...... Member November 2008 Denis A. Gubanov ...... Member June 2002 Andrey P. Frolov ...... Member March 2002 Irina V. Khaustova ...... Member March 2000 Ivan V. Glazachev ...... Member April 2012

Vladimir Pyshny (age 42) has been a member of RSB’s Management Board since December 2002. He is also a Director of the Network Development Department and a Senior Vice-President of RSB. Previously, Mr. Pyshny was the head of the New Banking Technologies Department at Elbim-Bank.

Nikolay Itskov (age 43) has been a member of RSB’s Management Board since November 2008. He is also a Director of the Financial Department of RSB. Prior to joining RSB, Mr. Itskov was a Financial Director of the Renaissance Capital-Financial Consultant.

Denis Gubanov (age 41) has been a member of RSB’s Management Board since June 2002. He is also director of the Credit Department and a Senior Vice-President of RSB. Previously, Mr. Gubanov worked at RSB’s Retail Operations Department.

Andrey Frolov (age 49) has been a member of RSB’s Management Board since March 2002. He is also a Director of the Information Technology Department and a Senior Vice-President of RSB. Prior to joining RSB, Mr. Frolov was a deputy director of the IT functional block of JSCB Investment Banking Group NIKOil. Mr. Frolov was also involved in the reorganisation of ATB in 1999.

Irina Khaustova (age 50) has been a member of RSB’s Management Board since March 2000. She is also Director of the Operations and Technology Department and a Senior Vice-President of RSB. Prior to that, Ms. Khaustova was a Director of the Settlements Department of OJSC Mezhcombank.

Ivan Glazachev (age 34) has been a member of RSB’s Management Board since April 2012. He is also Director of the Acquiring Department of RSB. Mr. Glazachev joined RSB in 2007 and previously was a Deputy Director of the Acquiring Department of RSB.

The business address of the Management Board is 36, Tkatskaya Street, Moscow, 105187 Russia.

Allocation of Responsibilities Within the joint responsibility of RSB’s management and shareholders are such areas as strategy, development of business plans, strategic alliances and key executive appointments. RSB’s management cannot adopt decisions within these areas without prior consultations with RSB’s shareholders.

Responsibility for overseeing the various sub-levels of RSB’s day-to-day management is divided between the Chairman of the Management Board (the “Chairman”) and the Deputy Chairmen of the Management Board (the “Deputy Chairmen”).

The Chairman is responsible for overseeing 20 departments combining operational and administrative activities. These include the Operations and Technology Department (which manages the cash desk, retail, currency

- 100 - control, settlements, financial monitoring and cash collection operations of RSB), the Financial Institutions Department (which is responsible for correspondent banking, structured finance and depository services), the Corporate Lending Department and the Public Relations Department. The Credit Department, also under the supervision of the Chairman, is responsible for RSB’s reporting functions, consumer finance operations, risk monitoring and analytics. Furthermore, the Chairman oversees the Finance Department (responsible for risk control, reporting, financial planning and accounting), the Information Technology Department (responsible for software development, corporate technology, data processing and hardware administration), the Security Department, the Legal Department as well as the Treasury Department, Human Resources, Office Maintenance, and Archive and Documentary Support Departments. Finally, the Chairman supervises the activity of the Compliance Control Department (which is responsible for controlling risks associated with all aspects of RSB’s operations).

The Deputy Chairmen are responsible for overseeing five departments, combining operational, administrative and marketing activities. The principal operational departments under the Deputy Chairmen’s supervision are the Network Development Department (which is responsible for credit card sales, key account managers, a training centre, retailer support, development of RSB’s trading network and regional sales branches and representative offices) and the Client Support Department (which is responsible for RSB’s call centre, customer support and quality control). At an administrative level, the Deputy Chairmen oversee the Processing and Billing Department, whose activities include operating the processing centre, data input, debit and credit card protection and managing the billing centre. Finally, the Deputy Chairmen oversee the Marketing Department (responsible for advertising, research, product development and communications development) as well as the Methodology and Banking Technology Department.

Remuneration The total compensation paid or accrued to the key management personnel amounted to RUB 1,166 million, RUB 714 million and RUB 261 million for the years ended 31 December 2011, 2010 and 2009, respectively.

Conflicts of Interest There are no potential conflicts of interest between any duties to the issuing entity of the members of the Board of Directors or the Management Board and their private interests and/or other duties.

- 101 - Internal Business Structure of RSB The following table sets out RSB’s management and internal business divisions.

General Shareholders Meeting

Board of Directors

Management Board

Chairman of the Management Board

Business unit 1st Deputy CEO "Credit Cards"

Distribution Block Cards products Department Regional Development Department Prepaid products Department Service Department Retail products Department Portfolio management Direction "Ukraine" and CRM Department Branch Network Department Cards products sales Advertise and promote Department products Department Consumer credit Credit cards advertising Department Department

Office of the Chairman of Legal Department the Management Board

Finance Department Financial Markets Department

Internal Control HR Department Department

Financial Institutions Acquiring Department Division Private Banking Division Administrative Department Corporate Business Public Relations Division Division

Client Service Department Security Department

Operations & Technology Brand management Department Division

Client investment Division Settlement Business Department

Department of new banking technologies Information & Technology Direction

Research and Analysis IT Department Operational Department Department

Banking Technology IT Security Department Credit Direction Department "Innovation Lab" Collections Department Risk Management Division

Information Division Credit Department

- 102 - SHAREHOLDING

As of 31 December 2011, RSB’s authorised and issued share capital was RUB 1,272,883,000 comprised of 1,272,883 ordinary registered shares with a nominal value of RUB 1,000 each. In addition, RSB has 6,263,117 authorised but unissued shares (comprised of 4,383,117 ordinary shares and 1,880,000 preference shares).

The following table sets out RSB’s principal shareholders as of the date of this Base Prospectus.

Number of Shares Percentage Shareholder The Closed Joint Stock Company “Russian Standard” Corporation” (RSC)(1)(2) ...... 1,144,594 89.921383 Limited Liability Company “Russian Standard-Invest” (RSInv)(3) ...... 127,279 9.999269 The Closed Joint Stock Company with 100 per cent. foreign investments “ROUST INCORPORATED” (ROUST)(1) ...... 1,000 0.078562 Others ...... 10 0.000786 Total ...... 1,272,883 100

(1) RSC and ROUST are subsidiaries of Roust Trading, a company incorporated in Bermuda with its registered address at Milner House, 18 Parliament Street, Hamilton, Bermuda, which is indirectly controlled by Mr. Roustam Tariko. (2) In July 2010, RSB acquired 14.499 per cent. of RSC’s share capital for RUB 6,473 million. (3) RSInv is a wholly owned subsidiary of RSB incorporated in Russia with its registered address at 36, Tkatskaya Street, 105187, Moscow, Russia. RSInv is a 100 per cent. subsidiary of RSB.

Rights of RSB’s Shareholders Under RSB’s charter and Russian legislation, RSB’s shareholders have the right to: • participate and vote in the General Shareholders’ Meeting on all the matters which fall under the competence of the meeting; • approve and receive dividends; • receive a liquidation quota upon any liquidation of RSB; • have access to information and documents relating to RSB’s activities and financial condition; • elect and be elected into RSB’s management bodies; • demand, in cases stipulated by Russian legislation and RSB’s charter, that part or all of a shareholder’s shares be repurchased by RSB; and • exercise other rights provided by the applicable legislation and RSB’s charter.

The rights of RSB’s shareholders to dispose of their shares are limited by the pre-emptive rights of RSB and other shareholders.

- 103 - RELATED PARTY TRANSACTIONS

Under IAS 24, Related Party Disclosures, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

RSB enters into banking transactions in the normal course of business with (a) its ultimate controlling shareholder Mr. Roustam Tariko and companies controlled by him, and (b) directors and management of RSB. These transactions include extending loans and trade finance, accepting deposits, provision of agency services, settlements and foreign exchange transactions.

The following table sets forth the outstanding balances with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading and, RSB’s management as at 31 December 2011.

As of 31 December 2011 Key Entities under management Parent company common control personnel (in millions of Roubles) Loans and advances to customers Loans and advances (contractual interest rate 9 – 12 per cent.) . . . 802 1,221 506 Investment securities available for sale Shares available for sale (14.5 per cent. immediate parent shares purchased from its parent) ...... 6,473 — — Customer accounts Term deposits (contractual interest rates: 9.5 – 15.25 per cent., on deposits denominated in Roubles; 4.25 – 10 per cent. in deposits denominated in USD or EUR) ...... — 46 417 Current accounts (non-interest bearing) ...... 8 45 23 Debt securities in issue Bonds guaranteed by Principal Shareholder ...... 4,879 — — Promissory notes ...... 709 — — Subordinated debts Subordinated debt ...... 5,142 — —

The following table sets forth the outstanding balances with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading, as at 31 December 2010 and 31 December 2009.

as of 31 December 2010 as of 31 December 2009 Entities Entities under Key under Key Parent common management Parent common management company control personnel company control personnel In millions of Roubles Loans and advances to customers Loans and advances (contractual interest rate 9 – 12 per cent.)(1) ...... 301 1,441 370 — 5,755 134 Investment securities available for sale(2) Shares available for sale (14.5 per cent. immediate parent shares purchased from its parent) ...... 6,473 — — — — — Customer accounts Term deposits(3) ...... — 77 228 — 45 188 Current accounts (non-interest bearing) ...... 4 52 56 1 34 — Debt securities in issue Bonds guaranteed by Principal Shareholder ...... 7,300 — — — 9,439 — Subordinated debts Subordinated debt, received from Principal Shareholder ...... 5,175 — — 5,175 — —

(1) As of 31 December 2009 contractual interest rate amounted to 9 per cent. on the loans denominated in USD or EUR and 9-15 per cent. on the loans denominated in Roubles.

- 104 - (2) In July 2010, RSB acquired 14,499 per cent. of RSC’s (its immediate parent) share capital for RUB 6,473 million. (3) As of 31 December 2009 contractual interest rate amounted to 9 per cent.-17 per cent. on deposits denominated in RR, and 7.5 per cent. to 12.5 per cent. on deposits denominated in USD or EUR. As of 31 December 2010 contractual interest rate amounted to 10.25 per cent. to 17 per cent. on deposits denominated in Roubles and 4.25 per cent. to 12.5 per cent. on deposits denominated in USD or EUR.

Other rights and obligations with related parties were as follows:

As of 31 December 2011 2010 2009 Entities under common control (in millions of Russian roubles) Guarantees issued by the Group fully secured by promissory notes issued by the Bank ...... 708 — — Other guarantees issued by the Group ...... 95 87 1,086 Guarantees received by the Group ...... 225 269 —

The following table sets forth the income statement items associated with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading, and RSB’s management for year ended 31 December 2011.

For the year ended 31 December 2011 Entities under Key Parent common management company control personnel (in millions of Roubles) Interest income Loans and advances to customers ...... 32 93 43 Interest expense Customer accounts ...... — 1 22 Subordinated debt ...... 325 — —

The following table sets forth the income statement items associated with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading and, RSB’s management for the years ended 31 December 2010 and 2009.

as of 31 December 2010 as of 31 December 2009 Entities Entities under Key under Key Parent common management Parent common management company control personnel company control personnel (in millions of Roubles) Interest income Loans and advances to customers ...... 27 447 22 — 644 2 Interest expense Customer accounts ...... — 9 17 — 9 69 Subordinated debt ...... 400 — — 179 — — Fee and commission income Guarantees and letters of credit ...... — 12 — — 27 —

- 105 - THE ISSUER

The Issuer, Russian Standard Finance S.A., was incorporated as a public limited liability company (société anonyme) on 31 March 2005 for an unlimited duration under the laws of the Grand Duchy of Luxembourg. The Issuer has its registered office at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg and telephone number +352 421 22 462. The Issuer is registered with the Register of Commerce and Companies of Luxembourg under number B 107.255. Its Articles of Incorporation have been published in the Mémorial C, Recueil des Sociétés et Associations (the “Mémorial”), on 25 August 2005 (number 822) and amended on 23 July 2008 which have been published in the Mémorial on 17 March 2009 (number 581). The updated articles of incorporation of the Issuer may be inspected at the registered office of the Issuer.

Corporate purpose of the Issuer The Issuer has been established as a special purpose vehicle for the purpose of issuing asset-backed securities. The corporate object of the Issuer, as described in Article 3 of its Articles of Incorporation is the granting of loans or other forms of financing directly or indirectly (e.g. including, but not limited to, by subscription of bonds, debentures, other debt instruments, advances, the granting of pledges or the issuing of other guarantees of any kind) to RSB.

The Issuer may finance itself in whatever form including, without being limited to, through borrowing or through issuance of listed or unlisted notes and other debt instruments (e.g. including but not limited to bonds, notes, loan participation notes and subordinated notes including) under medium term note and commercial paper programmes.

The Issuer may also: (a) grant security for funds raised, including notes and other debt instruments issued, and for the obligations of the Issuer; and (b) enter into all necessary agreements, including, but not limited to underwriting agreements, marketing agreements, management agreements, advisory agreements, administration agreements and other contracts for services, selling agreements, deposit agreements, hedging agreements, interest and/or currency exchange agreements and other financial derivative agreements, bank and cash administration agreements, liquidity facility agreements, credit insurance agreements and any agreements creating any kind of security interest.

In addition to the foregoing, the Issuer can perform all legal, commercial, technical and financial investments or operation and in general, all transactions which are necessary or useful to fulfil its objects as well as all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above.

Corporate administration The Directors (as defined in “- Management” below) have been appointed as directors (administrateurs)ofthe Issuer. Certain administrative and corporate services are provided to the Issuer by Deutsche Bank Luxembourg S.A. in its capacity as corporate administrator (société de domiciliation) pursuant to a domiciliation agreement.

Share Capital As at the date of this Base Prospectus, the Issuer’s issued share capital amounts to euro 31,000 divided into 310 registered shares with a par value of euro 100 each. All of the shares are fully paid up and issued.

Shareholders The issued and outstanding shares in the Issuer’s share capital are owned and controlled as follows:

309 shares by: Stichting Russian Standard Finance, a foundation (Stichting), established under the laws of The Netherlands, registered with the Amsterdam Chamber of Commerce under number 33093266 and having its statutory office in the Netherlands at De entrée 99-197, 1101 HE Amsterdam.

1 share by: Stichting Participatie DITC Amsterdam a foundation (Stichting), established under the laws of The Netherlands, registered with the Amsterdam Chamber of Commerce under number 3414 8998 and having its statutory office in the Netherlands at De entrée 99-197, 1101 HE Amsterdam.

- 106 - Management The Issuer is managed by its board of directors, who are appointed by the shareholders. The current directors (“Directors”) of the Issuer are: (1) Mr. Daniel Bley, private employee, having his professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in 2013. (2) Ms. Heike Kubica, private employee, having her professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in 2013. (3) Ms. Anja Lakoudi, private employee, having her professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in 2012.

There are no potential conflicts of interest between the duties owed by the Directors to the Issuer and their private interests or other duties in the context of the Programme.

Audit Committee In accordance with specific provisions provided for by Luxembourg law, the functions assigned to the Issuer’s audit committee will be performed by the Issuer board of Directors. The functions are to monitor the financial reporting process; the effectiveness of the Issuer’s internal control, internal audit and, where applicable, risk management systems; the statutory audit of the annual accounts; and review and monitor the independence of the approved statutory auditor (réviseurs d’entreprises agréés), and in particular the provision of additional services to the Issuer.

Subsidiaries The Issuer has no subsidiaries or affiliates.

Real estate assets The Issuer does not own any real estate assets.

Business year The business year of the Issuer begins on 1 January and ends on 31 December of each year.

Domiciliation Agent Deutsche Bank Luxembourg S.A. is the domiciliation agent of the Issuer. Its duties include the provision of certain administrative and related services. Its appointment may be terminated by either party giving two months’ prior written notice to the other party or it may be terminated with immediate effect by either party upon a serious breach of an administrative services and domiciliation agreement (which breach would include a material failure on the part of the parties to perform any of their legal or regulatory obligations under such agreement). Upon termination of the appointment of the domiciliation agent, the Issuer will appoint another company to act as the domiciliation agent. Deutsche Bank Luxembourg S.A. may (but is under no obligation to) assist the Issuer in identifying another administrator and will provide it with a list of at least three suitable service providers.

Approved statutory auditor The approved statutory auditor (réviseur d’entreprises agréé) of the Issuer is FPS Audit S.à r.l., having its registered office at 46, boulevard Grande-Duchesse Charlotte, L-1330 Luxembourg, Grand Duchy of Luxembourg and registered with the Register of Commerec and Companies of Luxembourg under number B 159.674, has been appointed to act as approved statutory auditor (réviseur d’entreprises agréé) until the annual general meeting of shareholders of the Issuer to be held in 2013.

Principal Accounts of the Issuer The Issuer holds its principal accounts with Deutsche Bank AG, London Branch. The registered address of Deutsche Bank AG, London Branch is Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom. Deutsche Bank AG is an international investment bank with offices in more than 70 countries. It provides trustee, agent, SPV management and related services for financial structures and transactions.

- 107 - Loan Participation Notes In December 2005, the Issuer issued loan participation notes due December 2015 with a total nominal amount of U.S.$200 million, placed at nominal value and bearing a fixed interest rate of 8.875 per cent. until December 2010. The interest rate for the period starting from December 2010 was set at 7.73 per cent. per annum. In December 2006, the Issuer issued loan participation notes due 2016 with a total nominal amount of U.S.$200 million placed at nominal value bearing interest of 9.75 per cent. until December 2011. The interest rate starting from December 2011 was set at 7.561 per cent. per annum.

Financial Statements Since its incorporation on 31 March 2005, the financial statements of the Issuer for the business year ended 31 December 2005 have been deposited with the Register of Commerce and Companies of Luxembourg on 13 November 2006.

Any future published financial statements prepared by the Issuer (which will be in respect of the period ending on 31 December in each year) will be available from the Luxembourg Paying Agent.

Financial statements are published by the Issuer on an annual basis and are audited by its approved statutory auditor FPS Audit S.à r.l. The Issuer’s audited financial statements as of and for the years ended 31 December 2011 and 2010 were approved by the annual general meeting of shareholders of the Issuer held on 24 May 2012 and 17 June 2011 respectively.

Since 31 December 2011, there has been no material change in the Issuer’s capitalisation, indebtedness, contingent liabilities or guarantees.

Material Contracts Neither RSB nor the Issuer has entered into contracts outside the ordinary course of business and which could result in any member of the Group becoming subject to an obligation or entitlement that would be material to the Issuer’s ability to meet its obligations to Noteholders in respect of the Notes.

- 108 - THE FACILITY AGREEMENT

This Third Amended and Restated Facility Agreement is made on 29 May 2012 between: (1) JOINT STOCK COMPANY “RUSSIAN STANDARD BANK”, a company established under the laws of the Russian Federation whose registered office is at 36 Tkatskaya Street, Moscow 105187, Russian Federation (“RSB”); and (2) RUSSIAN STANDARD FINANCE S.A., a société anonyme established under the laws of Luxembourg whose registered office is at 2, Bd. Konrad-Adenauer L-1115 Luxembourg, registered with the Register of Commerce and Companies of Luxembourg (registration number B 107.255) (the “Lender”). Whereas: (A) Pursuant to a Second Amended and Restated Facility Agreement dated 25 July 2008 (the “Second Amended and Restated Facility Agreement”) the Lender, at the request of RSB, agreed to make available to RSB a loan facility in the maximum amount of the Programme Limit (as defined below) on the terms and subject to the conditions of the Second Amended and Restated Facility Agreement, as amended and supplemented in relation to each Loan (as defined below) by a loan supplement dated the relevant Closing Date substantially in the form set out in Schedule 1 thereto (each, a “Loan Supplement”); (B) It is intended that, concurrently with the extension of any Loan under this loan facility, the Lender will issue certain loan participation notes in the same nominal amount and bearing the same rate of interest as such Loan; and (C) The parties hereto wish to amend and restate the Second Amended and Restated Facility Agreement as set out below.

Now it is hereby agreed as follows:

1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Facility Agreement (including the recitals), the following terms shall have the meanings indicated: “Account” means an account in the name of the Lender with the Principal Paying Agent as specified in the relevant Loan Supplement. “Affiliate” has the meaning ascribed to it in Rule 405 under the Securities Act. “Agency” means any agency, authority, central bank, department, government, legislature, minister, official or public statutory person (whether autonomous or not) of, or of the government of, any state or supra-national body. “Agency Agreement” means the third amended and restated paying agency agreement relating to the Programme dated 29 May 2012 between the Lender, RSB, the Trustee and the agents named therein, as may be amended or supplemented from time to time. “Arrangers” means Citigroup Global Markets Limited and J.P. Morgan Securities Ltd. or any additional or replacement arranger appointed, and excluding any Arranger whose appointment has terminated pursuant to the Dealer Agreement. “Auditors” means the auditors for the time being of the IFRS consolidated financial statements of the Group or, if they are unable or unwilling to carry out any action requested of them under this Facility Agreement, such other internationally recognised firm of accountants as may be approved in writing by the Lender for this purpose. “Authorised Signatory” means, in relation to RSB, any person who is duly authorised (in such manner as may be reasonably acceptable to the Lender) and in respect of whom the Lender has received a certificate signed by a director or another Authorised Signatory of RSB setting out the name and signature of such person and confirming such person’s authority to act. “BIS Guidelines” means the guidelines on capital adequacy standards (including the constituents of capital included in the capital base, the risk weights by category for on-balance-sheet assets, the credit conversion factors for off-balance-sheet items, and the target standard ratio) for international banks contained in the July 1998 text of the Basel Capital Accord, published by the Basel Committee on Banking Supervision (as amended, updated or supplemented from time to time), without any amendment or other modification by any other Agency.

- 109 - “Business Day” means (save in relation to Clause 4) a day (other than a Saturday or Sunday) on which (a) banks and foreign exchange markets are open for business generally in the relevant place of payment, and (b) if on that day a payment is to be made in a Specified Currency other than euro hereunder, where payment is to be made by transfer to an account maintained with a bank in the Specified Currency, foreign exchange transactions may be carried on in the Specified Currency in the principal financial centre of the country of such Specified Currency and (c) if on that day a payment is to be made in euro hereunder, a day on which the TARGET System is operating and (d) in relation to a Loan corresponding to a Series of Notes to be sold pursuant to Rule 144A under the Securities Act, banks and foreign exchange markets are open for business generally in New York City. “Calculation Agent” means, in relation to a Loan, Deutsche Bank AG, London Branch, or any person named as such in the relevant Loan Supplement or any successor thereto. “Capital” means RSB’s Capital as such term is defined in the BIS Guidelines. “Capital Stock” means, with respect to any person, any and all shares, interests, participations, rights to purchase, warrants, options, or other equivalents (however designated) of capital stock of a corporation and any and all equivalent ownership interests in a person other than a corporation; in each case whether now outstanding or hereafter used. “Central Bank” means the Central Bank of the Russian Federation. “Closing Date” means the date specified as such in the relevant Loan Supplement; “Day Count Fraction” has the meaning specified as such in the relevant Loan Supplement. “Dealer Agreement” means the third amended and restated dealer agreement relating to the Programme dated 29 May 2012 between the Lender, RSB, the Arrangers and the other dealers appointed pursuant to it, as may be amended or supplemented from time to time. “Debt Collection Agency” means any debt collection agency established under the laws of the Russian Federation, Ukraine or any other jurisdiction. “Definitive Notes” means the definitive notes in fully registered form representing the Notes to be issued in limited circumstances pursuant to the Trust Deed. “Dollars”, “$” and “U.S.$” means the lawful currency of the United States of America. “euro”or“€” means the lawful currency of the member states of the European Union that adopted the single currency in accordance with the Treaty of Rome, as amended. “Event of Default” has the meaning assigned to such term in Clause 11.1 hereof. “Fee Side Letter” means the third amended and restated fee side letter dated 29 May 2012 entered into between RSB, the Lender, the Trustee and the Agents in respect of the Programme. “Fixed Rate Loan” means a Loan specified as such in the relevant Loan Supplement. “Floating Rate Loan” means a Loan specified as such in the relevant Loan Supplement. “Global Notes” has the meaning assigned to it in the Trust Deed. “Group” means RSB and its Subsidiaries taken as a whole. “Guarantee” means any financial obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness or other obligation of any other person and any obligation, direct or indirect, contingent or otherwise, of such person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning. “IFRS” means International Financial Reporting Standards (formerly International Accounting Standards) issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (as amended, supplemented or re-issued from time to time).

- 110 - “Indebtedness” means any indebtedness, in respect of any person for, or in respect of, moneys borrowed or raised including, without limitation, any amount raised by acceptance under any acceptance credit facility; any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; any amount raised pursuant to any issue of shares which are expressed to be redeemable either on a compulsory basis or at the option of the shareholder; any amount raised under any other transaction (including, but without limitation to, any forward sale or purchase agreement) having the economic or commercial effect of a borrowing; and the amount of any liability in respect of any Guarantee or indemnity for any of the items referred to above. “Independent Appraiser” means any expert in the matter to be determined of international standing selected by RSB and approved by the Trustee (such approval not to be unreasonably withheld), provided, however, that such Independent Appraiser is not an Affiliate of the Group. “Interest Payment Date” means the date(s) specified as such in the relevant Loan Supplement, or, in the event of a prepayment in whole (but not in part) in accordance with Clauses 5.2 or 5.3 the date set for such redemption in respect of the Loan. “Interest Period” means each period beginning on (and including) an Interest Payment Date or, in the case of the first Interest Period, the Interest Commencement Date, and ending on (but excluding) the next Interest Payment Date. “Lead Manager(s)” means the Relevant Dealer(s) specified as such in the relevant Subscription Agreement. “Lender Agreements” means the Dealer Agreement, this Facility Agreement, the Agency Agreement, the Principal Trust Deed and together with, in relation to each Loan, the relevant Subscription Agreement, Loan Supplement and Supplemental Trust Deed. “Lien” means any mortgage, pledge, encumbrance, easement, restriction, covenant, right-of-way, servitude, lien, charge or other security interest or adverse claim of any kind (including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction and any conditional sale or other title retention agreement or lease in the nature thereof). “Loan” means each loan to be made pursuant to, and on the terms specified in this Facility Agreement and the relevant Loan Supplement, and includes each Fixed Rate Loan and Floating Rate Loan. “Loan Agreement” means this Facility Agreement and (unless the context requires otherwise), in relation to a Loan, means this Facility Agreement as amended and supplemented by the relevant Loan Supplement. “Material Adverse Effect” means a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or immediate prospects of RSB or any of its Material Subsidiaries; (b) RSB’s ability to perform or comply with its obligations under the Loan Agreement or (c) the validity or enforceability of the Loan Agreement or the rights or remedies of the Lender thereunder. “Material Subsidiary” means any subsidiary or Affiliate of RSB which, (i) in accordance with IFRS, as consistently applied, would be included in the IFRS consolidated financial statements of the Group and (ii) at any given time: (a) has gross income representing 10 per cent. or more of the consolidated gross income of the Group; or (b) has total assets representing 10 per cent. or more of the consolidated total assets of the Group, in each case calculated on a consolidated basis in accordance with IFRS, as consistently applied. Compliance with the conditions set out in paragraphs (a) and (b) above shall be determined by reference to the latest audited or unaudited consolidated annual or, as the case may be, audited or unaudited consolidated interim financial statements of that Subsidiary and the latest audited consolidated annual or, as the case may be, audited or unaudited consolidated interim financial statements of the Group, provided however, that an Officers’ Certificate that a Subsidiary of RSB is or is not a Material Subsidiary, accompanied by a report by the Auditors addressed to the Directors of RSB as to proper extraction of the figures used in the Officers’ Certificate in determining the Material Subsidiaries of RSB and mathematical accuracy of the calculations shall, in the absence of manifest error, be conclusive and binding on all parties. “Moody’s” means Moody’s Investors Service, Inc.

- 111 - “Net Asset Value” means the amount by which the total value of the Group’s consolidated assets exceeds the amount of its total consolidated liabilities, as defined in accordance with IFRS. “Noteholder” means, in relation to a Note, the person in whose name such Note is registered from time to time in the register of the noteholders (or in the case of joint holders, the first named holder thereof). “Notes” means the loan participation notes that may be issued from time to time by the Lender under the Programme in Series, each Series corresponding to a Loan and, in relation to a Loan, as defined in the relevant Loan Supplement. “Officers’ Certificate” means a certificate signed on behalf of RSB by two officers of RSB at least one of whom shall be the principal executive officer, principal accounting officer or principal financial officer of RSB, in a form similar to that set out in Schedule 2 hereto. “Original Financial Statements” means the most recent audited IFRS consolidated financial statements of the Group. “Permitted Liens” means: (a) any Lien over or affecting any asset acquired by a member of the Group after the date hereof and subject to which such asset is acquired, if: (i) such Lien was not created in contemplation of the acquisition of such asset by a member of the Group; (ii) the amount thereby secured has not been increased in contemplation of, or since the date of, the acquisition of such asset by a member of the Group; and (iii) such Lien is removed or discharged within three calendar months of the date of acquisition of such asset; (b) any Lien over or affecting any asset of any company which becomes a member of the Group after the date hereof, where such Lien is created prior to the date on which such company becomes a member of the Group, if: (i) such Lien was not created in contemplation of the acquisition of such company; (ii) the amount thereby secured has not been increased in contemplation of, or since the date of, the acquisition of such company; and (iii) such Lien is removed or discharged within three calendar months of such company becoming a member of the Group; (c) any netting or set-off arrangement entered into by any member of the Group in the normal course of its banking arrangements for the purpose of netting debit and credit balances; (d) any Lien upon, or with respect to, any present or future assets or revenues or any part thereof which is created pursuant to any securitisation of receivables, asset-backed financing or similar financing structure and whereby all payment obligations secured by such Lien or having the benefit of such Lien, are to be discharged solely from such assets or revenues, provided that the aggregate value of assets or revenues subject to such Lien when added to the aggregate value of assets or revenues which are the subject of any securitisation of receivables, asset-backed financing or similar financing structure permitted pursuant to Clause 10.3, does not, at any such time, exceed 30 per cent. of the loans and advances to customers, as determined at any time by reference to the most recent quarterly balance sheet of RSB prepared in accordance with IFRS; (e) any title transfer or retention of title arrangement entered into by any member of the Group in the normal course of its trading activities on the counterparty’s standard or usual terms; (f) any Lien arising by operation of law and in the normal course of business, if such Lien is discharged within 10 days of arising; (g) Liens incurred, or pledges and deposits in connection with workers’ compensation, unemployment insurance and other social security benefits, and leases, appeal bonds and other obligations of like nature in the ordinary course of business; (h) Liens for ad valorem, income or property taxes or assessments and similar charges which either are not delinquent or are being contested in good faith by appropriate proceedings for which RSB has set aside in its books of account reserves to the extent required by IFRS, as consistently applied;

- 112 - (i) any Lien granted by any Subsidiary of RSB in favour of RSB; (j) Liens upon, or with respect to, any present or future assets or revenues or any part thereof which is created pursuant to any Repo transaction; (k) Liens arising pursuant to any agreement (or other applicable terms and conditions) which is standard or customary in the relevant market relating to the establishment of margin deposits and similar arrangements in connection with interest rate and foreign currency hedging operations; (l) (i) bankers’ Lien in respect of deposit accounts, (ii) statutory landlords’ Lien, (iii) deposit to secure the performance of bids, trade contracts, government contracts, leases, statutory obligations, surety and appeal bonds, performance and return-of-money bonds or liabilities to insurance carriers under insurance or self-insurance arrangements and other obligations of like nature (so long as, in each case with respect to items described in sub-clauses (i), (ii) and (iii) above of this clause (l), such Lien (A) does not secure obligations constituting Indebtedness for borrowed money and (B) is incurred in the ordinary course of business), and (iv) Lien arising from any judgment, decree or other order which does not constitute an Event of Default; and (m) any other Lien where the aggregate value of the assets or revenues subject to such Lien does not exceed U.S.$20,000,000. “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, company, firm, trust, organisation, government, or any agency or political subdivision thereof or any other entity, whether or not having a separate legal personality. “Potential Event of Default” means any event which, after notice or passage of time or both, would be an Event of Default. “Principal Trust Deed” means the third amended and restated principal trust deed dated 29 May 2012 between the Lender and the Trustee, as it may be amended or supplemented from time to time. “Programme” means the programme for the issuance of loan participation notes of the Lender. “Programme Limit” means U.S.$2,500,000,000 or its equivalent in other currencies, being the maximum aggregate principal amount of Notes that may be issued and outstanding at any time under the Programme as may be increased in accordance with the Dealer Agreement. “Prospectus” has the meaning given to it in the Dealer Agreement. “Put Option”, if applicable, means the put option granted to Noteholders pursuant to the relevant Loan Supplement and the Conditions of the relevant Series of Notes. “Put Settlement Date”, if applicable, has the meaning given to it in the relevant Loan Supplement. “Rate of Interest” has the meaning assigned to such term in the relevant Loan Supplement. “Related Party” means with respect to any person, (a) an Affiliate of such person or (b) any of its Affiliates or (c) a group of its Affiliates. “Relevant Time” means, in relation to a payment in a Specified Currency, the time in the principal financial centre of such Specified Currency and, in relation to a payment in euro, Brussels time. “Repayment Date” has the meaning assigned to such term in the relevant Loan Supplement. “Repo” means a securities repurchase or resale agreement or reverse repurchase or resale agreement, a securities lending or rental agreement or any agreement relating to securities which is similar in effect to any of the foregoing and for the purposes of this definition, the term “securities” means any capital stock, share, debenture or other debt or equity instrument, or derivative thereof, whether issued by any public or private company, any government or Agency or instrumentality thereof or any supranational, international or multinational organisation. “Risk Weighted Assets” means the aggregate of the Group’s consolidated balance sheet assets and off-balance sheet commitments, weighted for credit and market risk in accordance with the BIS Guidelines. “Roubles” means the lawful currency of the Russian Federation. “RSB Account” means an account in the name of RSB as specified in the relevant Loan Supplement for receipt of Loan funds.

- 113 - “RSB Agreements” means this Facility Agreement, the Agency Agreement and the Dealer Agreement and, in relation to each Loan, the foregoing agreements together with the relevant Subscription Agreement and Loan Supplement. “Same-Day Funds” means funds for payment, in the Specified Currency as the Lender may at any time determine to be customary for the settlement of international transactions in the principal financial centre of the country of the Specified Currency or, as the case may be, euro funds settled through the TARGET System or such other funds for payment in euro as the Lender may at any time reasonably determine to be customary for the settlement of international transactions in Brussels of the type contemplated hereby. “Securities Act” means the U.S. Securities Act of 1933. “Series” means a series of Notes that (except in respect of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the same series number. “Single Party” means with respect to any counterparty such counterparty and all Related Parties of such counterparty. “Specified Currency” means the currency specified as such in the relevant Loan Supplement. “Standard & Poor’s” means Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. “Subscription Agreement” means the agreement specified as such in the relevant Loan Supplement. “Subsidiary” of any specified person means any corporation, partnership, joint venture, association or other business or entity, whether now existing or hereafter organised or acquired, (a) in the case of a corporation, of which more than 50 per cent. of the total voting power of the Voting Stock is held by such first-named person and/or any of its Subsidiaries and such first-named person or any of its Subsidiaries has the power to direct the management, policies and affairs thereof; or (b) in the case of a partnership, joint venture, association, or other business or entity, with respect to which such first-named person or any of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise if (in each case) in accordance with IFRS, as consistently applied, such entity would be consolidated with the first-named person for financial statement purposes. “Supplemental Trust Deed” means a supplemental trust deed in respect of a Series of Notes which constitutes and secures, inter alia, such Series dated the relevant Closing Date and made between the Lender and the Trustee (substantially in the form set out in Schedule 9 of the Principal Trust Deed). “TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007, or any successor thereof. “Trust Deed” means the Principal Trust Deed as supplemented by the relevant Supplemental Trust Deed and specified as such in the relevant Loan Supplement. “Trustee” means Deutsche Trustee Company Limited, as trustee under the Trust Deed and any other trustee or trustees thereunder. “Voting Stock” means, in relation to any person, Capital Stock entitled (without the need for the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. “Warranty Date” means the date hereof, the date of each Loan Supplement, each Closing Date, each date on which the Prospectus is amended, supplemented or replaced and each date on which the Programme Limit is increased.

- 114 - 1.2 Other Definitions Unless the context otherwise requires, terms used in this Facility Agreement which are not defined in this Facility Agreement but which are defined in the Principal Trust Deed, the relevant Notes, the Agency Agreement, the Dealer Agreement or the relevant Loan Supplement shall have the meanings assigned to such terms therein.

1.3 Interpretation Unless the context or the express provisions of this Facility Agreement otherwise require, the following shall govern the interpretation of this Facility Agreement: 1.3.1 All references to “this Facility Agreement” are references to this Third Amended and Restated Facility Agreement dated 29 May 2012. 1.3.2 All references to “Clause” or “sub-Clause” are references to a Clause or sub-Clause of this Facility Agreement. 1.3.3 The terms “hereof”, “herein” and “hereunder” and other words of similar import shall mean the relevant Loan Agreement as a whole and not any particular part hereof. 1.3.4 Words importing the singular number include the plural and vice versa. 1.3.5 All references to “taxes” include all present or future taxes, levies, imposts and duties of any nature and the terms “tax” and “taxation” shall be construed accordingly. 1.3.6 The table of contents and the headings are for convenience only and shall not affect the construction hereof. 1.3.7 Any reference herein to a document being in “agreed form” means that the document in question has been agreed between the proposed parties thereto, subject to any amendments that such parties may agree upon prior to the Issue Date.

1.4 Amendment and Restatement The parties hereto agree that this Facility Agreement amends and restates the Second Amended and Restated Facility Agreement. Any Loans made on or after the date hereof shall have the benefit of this Facility Agreement. The amendments set out herein do not affect any Loans made prior to the date of this Facility Agreement.

2. LOANS 2.1 Loans On the terms and subject to the conditions set forth herein and, as the case may be, in each Loan Supplement, the Lender hereby agrees to make available to RSB Loans up to the total aggregate amount equal to the Programme Limit.

2.2 Purpose The proceeds of each Loan will be used for general banking purposes (unless otherwise specified in the relevant Loan Agreement), but the Lender shall not be concerned with the application thereof.

2.3 Separate Loans It is agreed that with respect to each Loan, all the provisions of this Facility Agreement and the Loan Supplement shall apply mutatis mutandis separately and independently to each such Loan and the expressions “Account”, “Arrangement Fee”, “Closing Date”, “Day Count Fraction”, “Interest Payment Date”, “Loan Agreement”, “Notes”, “Rate of Interest”, “Repayment Date”, “Specified Currency”, “Subscription Agreement” and “Trust Deed”, together with all other terms that relate to such a Loan shall be construed as referring to those of the particular Loan in question and not of all Loans unless expressly so provided, so that each such Loan shall be made pursuant to this Facility Agreement and the relevant Loan Supplement, together comprising the Loan Agreement in respect of such Loan and that, unless expressly provided, events affecting one Loan shall not affect any other.

- 115 - 3. DRAWDOWN 3.1 Drawdown On the terms and subject to the conditions set forth herein and, as the case may be, in each Loan Supplement, on the Closing Date thereof the Lender shall make a Loan to RSB and RSB shall make a single drawing in the full amount of such Loan.

3.2 Loan Arrangement Fee In consideration of the Lender’s undertaking to make a Loan available to RSB, RSB hereby agrees that it shall, one Business Day before each Closing Date, pay to the Lender, in Same-Day Funds, an Arrangement Fee (as defined in the relevant Loan Supplement) in connection with the financing of such Loan. The total amount of the Arrangement Fee as increased by the front-end commissions, fees and expenses to be as specified in the relevant Loan Supplement.

3.3 Disbursement Subject to the conditions set forth herein and, as the case may be, in each Loan Supplement, on each Closing Date the Lender shall transfer the full amount of the relevant Loan to the RSB Account specified in the relevant Loan Supplement.

3.4 Ongoing Fees and Expenses In consideration of the Lender establishing and maintaining the Programme and agreeing to make Loans to RSB, RSB shall pay on demand to the Lender as and when such payments are due an amount or amounts to reimburse the Lender for its expenses relating to its management and operation in servicing the Loans as set forth to RSB in an invoice from the Lender.

4. INTEREST 4.1 Rate of Interest for Fixed Rate Loans Each Fixed Rate Loan bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate(s) per annum (expressed as a percentage) equal to the applicable Rate of Interest. If a Fixed Amount or a Broken Amount is specified in the relevant Loan Supplement, the amount of interest payable on each Interest Payment Date will amount to the Fixed Amount or, if applicable, the Broken Amount so specified and in the case of the Broken Amount will be payable on the particular Interest Payment Date(s) specified in the relevant Loan Supplement.

4.2 Payment of Interest for Fixed Rate Loans Interest at the Rate of Interest shall accrue on each Fixed Rate Loan from day to day, starting from (and including) the Interest Commencement Date and thereafter from (and including) each Interest Payment Date, to (but excluding) the next Interest Payment Date and shall be paid in arrear by RSB to the Account not later than 10.00 a.m. (Relevant Time) one Business Day prior to each Interest Payment Date.

4.3 Interest for Floating Rate Loans 4.3.1 Interest Payment Dates: Each Floating Rate Loan bears interest on its outstanding principal amount from (and including) the Interest Commencement Date and thereafter from (and including) each Interest Payment Date, to (but excluding) the next Interest Payment Date at the rate per annum (expressed as a percentage) equal to the applicable Rate of Interest, which interest shall be paid in arrear by RSB to the relevant Account not later than 10.00 a.m. (Relevant Time) one Business Day prior to each Interest Payment Date. Such Interest Payment Date(s) is/are either shown in the relevant Loan Supplement as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown in the relevant Loan Supplement, Interest Payment Date shall mean each date which falls the number of months or other period shown in the relevant Loan Supplement as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. 4.3.2 Business Day Convention: If any date referred to in the relevant Loan Supplement that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a

- 116 - day that is not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (C) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day. 4.3.3 Rate of Interest for Floating Rate Loans: The Rate of Interest in respect of Floating Rate Loans for each Interest Accrual Period shall be determined in the manner specified in the relevant Loan Supplement and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is specified in the relevant Loan Supplement. (i) ISDA Determination for Floating Rate Loans Where ISDA Determination is specified in the relevant Loan Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (i), “ISDA Rate” for an Interest Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: (a) the Floating Rate Option is as specified in the relevant Loan Supplement; (b) the Designated Maturity is a period specified in the relevant Loan Supplement; and (c) the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified in the relevant Loan Supplement. For the purposes of this sub-paragraph (i), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity”, “Reset Date” and “Swap Transaction” have the meanings given to those terms in the ISDA Definitions. (ii) Screen Rate Determination for Floating Rate Loans Where Screen Rate Determination is specified in the relevant Loan Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent at or about the Relevant Time on the Interest Determination Date in respect of such Interest Accrual Period in accordance with the following: (a) if the Primary Source for Floating Rate is a Page, subject as provided below, the Rate of Interest shall be: (I) the Relevant Rate (where such Relevant Rate on such Page is a composite quotation or is customarily supplied by one entity); or (II) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Page, in each case appearing on such Page at the Relevant Time on the Interest Determination Date; (b) if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph (a)(I) above applies and no Relevant Rate appears on the Page at the Relevant Time on the Interest Determination Date or if sub-paragraph (a)(II) above applies and fewer than two Relevant Rates appear on the Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall be the arithmetic mean of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Interest Determination Date, as determined by the Calculation Agent; and (c) if paragraph (b) above applies and the Calculation Agent determines that fewer than two Reference Banks are so quoting Relevant Rates, subject as provided below, the Rate of

- 117 - Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) that the Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in respect of a Representative Amount of the Specified Currency that at least two out of five leading banks selected by the Calculation Agent in the Relevant Financial Centre of the country of the Specified Currency or, if the Specified Currency is euro, in Europe as selected by the Calculation Agent are quoting at or about the Relevant Time on the date on which such banks would customarily quote such rates for a period commencing on the Effective Date for a period equivalent to the Specified Duration (I) to leading banks carrying on business in Europe, or (if the Calculation Agent determines that fewer than two of such banks are so quoting to leading banks in Europe) (II) to leading banks carrying on business in the Relevant l Financial Centre; except that, if fewer than two of such banks are so quoting to leading banks in the Relevant Financial Centre, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date (after readjustment for any difference between any Margin, Rate Multiplier or Maximum or Minimum Rate of Interest applicable to the preceding Interest Accrual Period and to the relevant Interest Accrual Period).

4.4 Accrual of Interest Interest shall cease to accrue on each Loan on the due date for repayment unless payment is improperly withheld or refused, in which event interest shall continue to accrue (as well after as before judgment) at the applicable Rate of Interest to, but excluding, the date on which payment in full of the principal thereof is made.

4.5 Margin, Maximum/Minimum Rates of Interest, Rate Multipliers and Rounding 4.5.1 If any Margin or Rate Multiplier is specified in the relevant Loan Supplement (either (x) generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with Clause 4.3 above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin or multiplying by such Rate Multiplier, subject always to the next paragraph. 4.5.2 If any Maximum or Minimum Rate of Interest is specified in the relevant Loan Supplement, then any Rate of Interest shall be subject to such maximum or minimum, as the case may be. 4.5.3 For the purposes of any calculations required pursuant to a Loan Agreement (unless otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up), save in the case of yen, which shall be rounded down to the nearest yen. For these purposes “unit” means the lowest amount of such currency that is available as legal tender in the country or countries of such currency. 4.6 Calculations The amount of interest payable in respect of any Loan for any period shall be calculated by multiplying the product of the Rate of Interest and the outstanding principal amount of such Loan by the Day Count Fraction, unless an Interest Amount (or a formula for its calculation) is specified in the relevant Loan Supplement in respect of such period, in which case the amount of interest payable in respect of such Loan for such period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable in respect of such Interest Period shall be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods.

4.7 Determination and Notification of Rates of Interest and Interest Amounts As soon as practicable after the Relevant Time on each Interest Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, it shall determine such rate and calculate the Interest Amounts in

- 118 - respect of such Floating Rate Loan for the relevant Interest Accrual Period, obtain such quotation or make such determination or calculation, as the case may be, and cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to RSB, the Trustee, the Lender, each of the Paying Agents and any other Calculation Agent appointed in respect of such Floating Rate Loan that is to make a further calculation upon receipt of such information. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to sub-Clause 4.3.2, the Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made with the consent of RSB and the Lender by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If such Floating Rate Loan becomes due and payable under Clause 11, the accrued interest and the Rate of Interest payable in respect of such Floating Rate Loan shall nevertheless continue to be calculated as previously in accordance with this Clause. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.

4.8 Determination or Calculation by Trustee If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Period or any Interest Amount in relation to a Floating Rate Loan in accordance with the terms of this Agreement and Clause 4.3 above, the Lender and RSB agree that such determination or calculation may be made by or at the direction of the Trustee or any agent of the Trustee. The Trustee shall incur no liability to any party in respect of such determination or calculation and such determination or calculation shall be binding on all parties in the absence of manifest error.

4.9 Definitions In this Clause 4, unless the context otherwise requires, the following defined terms shall have the meanings set out below: “Benchmark” has the meaning specified in the relevant Loan Supplement; “Business Day” means: (i) in the case of a Specified Currency other than euro, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such Specified Currency; and/or (ii) in the case of euro, a day on which the TARGET system is operating (a “TARGET Business Day”); and/or (iii) in the case of a Specified Currency and/or one or more Business Centres a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Business Centre(s) or, if no currency is indicated, generally in each of the Business Centres. “Day Count Fraction” means, in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period, the “Calculation Period”): (i) if “Actual/Actual”or“Actual/Actual - ISDA” is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); (ii) if “Actual/365 (Fixed)” is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 365; (iii) if “Actual/360” is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 360; (iv) if “30/360”, “360/360”or“Bond Basis” is specified hereon, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows:

Day Count Fraction = [360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) 360

- 119 - where: “Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls; “Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30; (v) “if “30E/360”or“Eurobond Basis” is specified hereon, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows:

Day Count Fraction = [360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) 360 where: “Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls; “Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; (vi) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = [360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) 360 where: “Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls; “Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;

- 120 - (vii) if “Actual/Actual-ICMA” is specified in the relevant Loan Supplement: (a) If the Calculation Period is equal to or shorter than the Determination Period during which it falls, the number of days in the Calculation Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and (b) if the Calculation Period is longer than one Determination Period, the sum of: (I) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and (II) (the number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year where: “Determination Period” means the period from and including a Determination Date in any year to but excluding the next Determination Date. “Determination Date” means the date specified in the relevant Loan Supplement or, if none is so specified, the Interest Payment Date.

“Effective Date” means, with respect to any Floating Rate to be determined on an Interest Determination Date, the date specified as such in the relevant Loan Supplement or, if none is so specified, the first day of the Interest Accrual Period to which such Interest Determination Date relates. “Interest Accrual Period” means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date. “Interest Amount” means the amount of interest payable, and in the case of Fixed Rate Loans, means the Fixed Amount or Broken Amount, as the case may be. “Interest Commencement Date” means the Closing Date or such other date as may be specified in the relevant Loan Supplement. “Interest Determination Date” means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such in the relevant Loan Supplement or, if none is so specified, (i) the first day of such Interest Accrual Period if the Specified Currency is Sterling or (ii) the day falling two Business Days in London and for the Specified Currency prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor euro or (iii) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is euro. “Interest Period” means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date. “Interest Period Date” means each Interest Payment Date unless otherwise specified herein. “ISDA Definitions” means the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc., unless otherwise specified in the relevant Loan Supplement. “Page” means such page, section, caption, column or other part of a particular information service (including, but not limited to, Reuters Markets 3000 (“Reuters”) and Telerate (“Telerate”)) as may be specified for the purpose of providing a Relevant Rate, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to that Relevant Rate. “Reference Banks” means the institutions specified as such in the relevant Loan Supplement or, if none, four major banks selected by the Calculation Agent in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that are most closely connected with the Benchmark (which, if EURIBOR is the relevant Benchmark, shall be Europe). “Relevant Financial Centre” means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the financial centre as may be

- 121 - specified as such in the relevant Loan Supplement or, if none is so specified, the financial centre with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR, shall be Europe) or, if none is so connected, London. “Relevant Rate” means the Benchmark for a Representative Amount of the Specified Currency for a period (if applicable or appropriate to the Benchmark) equal to the Specified Duration commencing on the Effective Date. “Relevant Time” means, with respect to any Interest Determination Date or Repayment Date, the local time in the Relevant Financial Centre specified in the relevant Loan Supplement or, if no time is specified, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Specified Currency in the interbank market in the Relevant Financial Centre and for this purpose “local time” means, with respect to Europe as a Relevant Financial Centre, 11.00 hours, Brussels time. “Representative Amount” means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the amount specified as such in the relevant Loan Supplement or, if none is specified, an amount that is representative for a single transaction in the relevant market at the time. “Specified Duration” means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the duration specified in the relevant Loan Supplement or, if none is specified, a period of time equal to the relevant Interest Accrual Period, ignoring any adjustment pursuant to sub-Clause 4.3.2.

4.10 Calculation Agent and Reference Banks The Lender (failing which RSB) shall procure that there shall at all times be specified no less than four Reference Banks (or such other number as may be required) with offices in the Relevant Financial Centre and appointed one or more Calculation Agents if provision is made for them in a Loan Supplement and for so long as any amount remains outstanding under a Loan Agreement. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank, then the Lender shall (with the prior approval of RSB) appoint another Reference Bank with an office in the Relevant Financial Centre to act as such in its place. Where more than one Calculation Agent is appointed in respect of a Loan, references in the relevant Loan Agreement to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the relevant Loan Agreement. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Period or Interest Accrual Period or to calculate any Interest Amount, or to comply with any other requirement, the Lender shall (with the prior approval of RSB) appoint a leading bank or investment banking firm engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid. Both RSB and the Lender agree that such successor Calculation Agent will be appointed on the terms of the Agency Agreement in relation to the relevant Loan Agreement.

5. REPAYMENT AND PREPAYMENT 5.1 Repayment Except as otherwise provided herein and in the applicable Loan Supplement, RSB shall repay each Loan not later than 10.00 a.m. (Relevant Time) one Business Day prior to the Repayment Date therefor.

5.2 Prepayment in the event of Taxes or Increased Costs If, as a result of the application of or any amendments or clarification of, or change (including a change in interpretation or application) in, the double tax treaty between the Russian Federation and Luxembourg or the laws or regulations of the Russian Federation or Luxembourg or of any political sub-division thereof or any authority therein having power to tax or the enforcement of the security provided for in any Trust Deed, RSB would thereby be required to make or increase any payment due pursuant to a Loan Agreement as provided in Clauses 6.2 or 6.3 (other than, in each case, where the increase in payment is in respect of

- 122 - any amounts due or paid pursuant to Clauses 3 and 13), or if (for whatever reason) RSB would have to or has been required to pay additional amounts pursuant to Clause 8, and in any such case such obligation cannot be avoided by RSB taking reasonable measures available to it, then RSB may (without premium or penalty), upon not less than 30 days’ notice to the Lender (which notice shall be irrevocable), prepay the Loan relating to such Loan Agreement in whole (but not in part) on any Interest Payment Date, in the case of a Floating Rate Loan, or at any time, in the case of a Fixed Rate Loan. Prior to giving any such notice in the event of an increase in payment pursuant to Clause 6.2, RSB shall deliver to the Lender an Officers’ Certificate confirming that it would be required to increase the amount payable, supported by an opinion of an independent tax adviser addressed to the Lender.

5.3 Prepayment in the event of Illegality If, at any time after the date of the relevant Loan Agreement, the Lender reasonably determines that it is or would be unlawful or contrary to any applicable law, regulation, regulatory requirement or directive of any Agency of any state or otherwise for the Lender to allow all or part of the Loan relating to such Loan Agreement or the corresponding Series of Notes to remain outstanding or for the Lender to maintain or give effect to any of its obligations in connection with the relevant Loan Agreement and/or to charge or receive or to be paid interest at the rate then applicable to such Loan (an “Event of Illegality”), then upon notice by the Lender to RSB in writing, RSB and the Lender shall consult in good faith as to a basis which eliminates the application of such Event of Illegality; provided, however, that the Lender shall be under no obligation to continue such consultation if a basis has not been determined within 30 days of the date on which it so notified RSB. If such a basis has not been determined within the 30 days, then upon written notice by the Lender to RSB and the Trustee, RSB shall prepay such Loan in whole (but not in part), in the case of a Fixed Rate Loan, on the next Interest Payment Date therefor, in the case of a Floating Rate Loan, or on the next Interest Payment Date or on such earlier date as the Lender shall (acting reasonably) certify to be necessary to comply with such requirements.

5.4 Reduction of a Loan Upon Cancellation of Corresponding Notes RSB may from time to time deliver to the Lender Definitive Notes, having an aggregate principal value of at least U.S.$1,000,000 (or its equivalent in a Specified Currency), together with a request for the Lender to present such Definitive Notes to the Registrar for cancellation, and may also from time to time procure the delivery to the Registrar of the relevant Global Notes with instructions to cancel a specified aggregate principal amount of Notes (being at least U.S.$1,000,000 or its equivalent in a Specified Currency) represented thereby (which instructions shall be accompanied by evidence satisfactory to the Registrar that RSB is entitled to give such instructions), whereupon the Lender shall, pursuant to Clause 8.1 of the Agency Agreement, request the Registrar to cancel such Notes (or specified aggregate principal amount of Notes represented by the relevant Global Notes). Upon any such cancellation by or on behalf of the Registrar, the principal amount of the Loan corresponding to the principal amount of such Notes together with accrued interest and other amounts (if any) thereon shall be extinguished for all purposes as of the date of such cancellation.

5.5 Payment of Other Amounts If a Loan is to be prepaid by RSB pursuant to any of the provisions of Clause 5.2 or Clause 5.3 or pursuant to the terms of the relevant Loan Agreement, RSB shall, simultaneously with such prepayment, pay to the Lender accrued interest thereon to the date of actual payment and all other sums payable by RSB pursuant to the relevant Loan Agreement. For the avoidance of doubt, if the principal amount of such Loan is reduced pursuant to the provisions of Clause 5.4, then no interest shall accrue or be payable during the Interest Period in which such reduction takes place in respect of the amount by which such Loan is so reduced and RSB shall not be entitled to any interest in respect of the cancelled Notes.

5.6 Provisions Exclusive RSB shall not prepay or repay all or any part of any Loan except in accordance with the express terms of the relevant Loan Agreement. Any amount prepaid may not be reborrowed under such Loan Agreement.

5.7 Optional Prepayment under Put Option If a Put Option is specified in the relevant Loan Supplement, provided that the Borrower has received notice from the Issuer at least five Business Days prior to the Put Settlement Date, the Borrower shall

- 123 - prepay the Loan (without premium or penalty), to the extent of the aggregate principal amount of the Notes to be properly redeemed in accordance with Condition 6(e) of the Notes, two Business Days prior to the Put Settlement Date.

6. PAYMENTS 6.1 Making of Payments All payments of principal, interest and additional amounts (other than those in respect of Reserved Rights) to be made by RSB under each Loan Agreement shall be made unconditionally by credit transfer to the Lender not later than 10.00 a.m. (Relevant Time) one Business Day prior to each Interest Payment Date or the Repayment Date (as the case may be) in Same-Day Funds to the relevant Account or as the Trustee may otherwise direct following the occurrence of an Event of Default or a Relevant Event. RSB shall, before 10.00 a.m. (Relevant Time) on the second Business Day prior to each Interest Payment Date or the Repayment Date or such other date (as the case may be), procure that the bank effecting such payments on its behalf confirms to the Principal Paying Agent by tested telex or authenticated SWIFT the payment instructions relating to such payment. The Lender agrees with RSB that it will not deposit any other monies into such Account and that no withdrawals shall be made from such Account other than as provided for and in accordance with the relevant Trust Deed and the Agency Agreement.

6.2 No Set-Off, Counterclaim or Withholding; Gross-Up All payments to be made by RSB under each Loan Agreement shall be made in full without set-off or counterclaim and (except to the extent required by law or by agreement with a taxing authority) free and clear of and without deduction for or on account of any taxes. If RSB shall be required by applicable law to make any deduction or withholding from any payment under a Loan Agreement for or on account of any such taxes, it shall, on the due date for such payment, increase any payment of principal interest or any other payment due under such Loan Agreement to such amount as may be necessary to ensure that the Lender receives a net amount in the Specified Currency equal to the full amount which it would have received had payment not been made subject to such taxes, shall promptly account to the relevant authorities for the relevant amount of such taxes so withheld or deducted within the time allowed for such payment under the applicable law and shall deliver to the Lender without undue delay evidence satisfactory to the Lender of such deduction or withholding and of the accounting therefor to the relevant taxing authority. If the Lender pays any amount in respect of such taxes (including penalties or interest, but excluding any amount referable to taxes payable by the Lender on its overall net income (except to the extent that the Lender is unable to obtain a deduction for tax purposes on payments to the Noteholders which offsets any tax liability on equivalent amounts received under the relevant Loan Agreement)), RSB shall reimburse the Lender in the Specified Currency for such payment on demand. The preceding two sentences shall not apply with respect to any tax or amounts owed pursuant to an agreement with a taxing authority that would not have been imposed but for a failure by the Lender (or any financial institution through which payment on any Loan is made) to (i) enter into an agreement described in Section 1471(b)(1) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise comply with Sections 1471 through 1474 of the Code or any regulations promulgated thereunder (or under any implementing legislation adopted by another jurisdiction), (ii) provide information sufficient for RSB to determine whether the Lender (or financial institution through which payment on any Loan is made) is a U.S. person or should otherwise be treated as holding a “United States account” of the Borrower (or comply with similar requirements under any implementing legislation adopted by a non-U.S. jurisdiction), or (iii) consent, where necessary, to have information about it reported to the U.S. taxing authorities.

6.3 Withholding on Notes Without prejudice to the provisions of Clause 6.2, if the Lender notifies RSB that it has become obliged to make any withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Luxembourg or any political subdivision or any authority thereof or therein having the power to tax from any payment which it is obliged to make under or in respect of a Series of Notes, RSB agrees to pay to the Lender, not later than 10:00 a.m. (Relevant Time) one Business Day prior to the date on which payment is due to the Noteholders of such Series in Same-Day Funds to the relevant Account, such additional amounts as are equal to the additional amounts which the Lender would be required to pay in order that the net amounts received by the Noteholders, after such withholding or deduction, will equal the respective amounts which would have been received by the Noteholders in the absence of such withholding or deduction; provided, however, that the Lender shall procure that immediately upon receipt from any Paying Agent of any reimbursement of the sums paid pursuant to this provision, to the extent that any Noteholders of such Series, are not entitled to such additional amounts pursuant to the Conditions of

- 124 - such Series of Notes, pay such amounts received by way of such reimbursement to RSB (it being understood that neither the Lender, nor the Principal Paying Agent nor any Paying Agent shall have any obligation to determine whether any Noteholder of such Series or such other Party is entitled to any such additional amount). Any notification by the Lender to RSB in connection with this Clause 6.3 shall be given as soon as reasonably practicable after the Lender becomes aware of any obligation on it to make any such withholding or deduction.

6.4 Reimbursement 6.4.1 To the extent that the Lender subsequently obtains or uses any tax credit or allowance or other reimbursements relating to a deduction or withholding with respect to which RSB has made a payment pursuant to this Clause 6, it shall pay to RSB so much of the benefit it received as will leave the Lender in substantially the same position as it would have been in had no additional amount been required to be paid by RSB pursuant to this Clause 6; provided, however, that the question of whether any such benefit has been received, and accordingly, whether any payment should be made to RSB, the amount of any such payment and the timing of any such payment, shall be determined solely by the Lender, provided that the Lender shall notify RSB promptly upon determination that it has received any such benefit. The Lender shall have the absolute discretion whether, and in what order and manner, it claims any credits or refunds available to it, and the Lender shall in no circumstances be obliged to disclose to RSB any information regarding its tax affairs or computations. 6.4.2 If as a result of a failure to obtain relief from deduction or withholding of any taxes referred to in Clause 6.2 (i) such taxes are deducted or withheld by RSB and pursuant to Clause 6.2 an increased amount is paid by RSB to the Lender in respect of such deduction or withholding and (ii) following the deduction or withholding of taxes as referred to above the Lender (upon instructions by RSB) applies to the competent taxing authority for a withholding tax refund and such withholding tax is refunded or repaid by the relevant taxing authority, the Lender shall as soon as reasonably practicable notify RSB of the receipt of such withholding tax refund and promptly transfer the actually received amount of the withholding tax refund in the currency actually received and less any applicable costs to a bank account of RSB specified for that purpose by RSB.

6.5 Representations of the Lender The Lender represents that, at the date hereof, (a) it is at the date hereof a resident of Luxembourg, is subject to taxation in Luxembourg on the basis of its registration as a legal entity, location of its management body or another similar criterion and it is not subject to taxation in Luxembourg merely on income from sources in Luxembourg or connected with property located in Luxembourg and it will be able to receive certification to this effect from the Luxembourg taxing authorities, (b) it does not have a permanent establishment in the Russian Federation, (c) it does not have any current intentions to effect, during the term of any Loan, any corporate action or reorganisation or change of taxing jurisdiction that would result in the Lender ceasing to be a resident of Luxembourg and subject to taxation in Luxembourg, (d) it is not a holding company within the meaning of Article 29 of the double tax treaty between the Russian Federation and Luxembourg and (e) it will account for each Loan on the relevant Closing Date on its balance sheet as an asset under “Financial Assets” (or equivalent) and the corresponding Series of Notes as a liability under “Bonds” (or equivalent).

6.6 Notification and Substitution 6.6.1 The Lender agrees upon becoming aware of such, promptly to notify RSB if it ceases to be resident in Luxembourg or opens a permanent establishment in Russia or if any of the representations set forth in Clause 6.5 are no longer true and correct. 6.6.2 If the Lender ceases, as a result of the Lender’s actions, to be tax resident in a jurisdiction for the purposes of a double taxation treaty between the Russian Federation and such jurisdiction, and such cessation results in RSB being required to make payments pursuant to Clause 6.2, then, except in circumstances where the Lender has ceased to be tax resident in such jurisdiction by reason of any change of law (as described in Clause 5.2) (including, without limitation, a change in a double taxation treaty or in such law or treaty’s application or interpretation), RSB may require the Lender to seek the substitution of the Lender as Issuer of the Notes and as lender under any Loan Agreement pursuant to and in accordance with the provisions of Clause 17 of the Trust Deed. RSB shall bear all costs and expenses relating to or arising out of such substitution.

- 125 - 6.7 Mitigation If at any time either party hereto becomes aware of circumstances which would or might, then or thereafter, give rise to an obligation on the part of RSB to make any deduction, withholding or payment as described in Clauses 6.2 or 6.3, then, without in any way limiting, reducing or otherwise qualifying the Lender’s rights, or RSB’s obligations, under such Clauses, the Lender shall, upon becoming aware of the same, notify RSB thereof and, in consultation with RSB and to the extent it can lawfully do so and without prejudice to its own position, take all reasonable steps to remove such circumstances or mitigate the effects of such circumstances; provided that the Lender shall be under no obligation to take any such action if, in its reasonable opinion, to do so might reasonably be expected to have any adverse effect upon its business, operations or financial condition or might be in breach of any provision of the Trust Deed or the Notes.

6.8 Tax Treaty Relief The Lender shall, provided that in each case a corresponding request from RSB is received by the Lender no later than 25 Business Days prior to the first Interest Payment Date or, as applicable, the beginning of each calendar year, and at RSB’s cost, to the extent it is able to do so under applicable law including, without limitation, Russian laws, use best efforts to obtain and to deliver to RSB no later than 10 Business Days before the first Interest payment Date or, as applicable, the beginning of each calendar year a certificate issued by the competent taxing authority in Luxembourg confirming that the Lender is tax resident in Luxembourg and such other information or forms as may need to be duly completed and delivered by the Lender to enable RSB to apply to obtain relief from deduction or withholding of Russian taxes after the date of this Agreement or, as the case may be, to apply to obtain a tax refund if a relief from deduction or withholding of Russian taxes has not been obtained. The Lender shall, at the request of RSB and at RSB’s cost, to the extent it is able to do so under applicable law including, without limitation, Russian laws, from time to time use its commercially reasonable efforts to obtain and to deliver to RSB any additional duly completed application forms as need to be duly completed and delivered by the Lender to enable RSB to apply to obtain relief from deduction or withholding of Russian taxes or, as the case may be, to apply to obtain a tax refund if a relief from deduction or withholding of Russian taxes has not been obtained. The certificate and, if required, other forms referred to in this Clause 6.8 shall be duly signed by the Lender, if applicable, and stamped or otherwise approved by the competent taxing authority in Luxembourg, if applicable. Together with any such certificate and, if required, other forms, the Lender shall deliver to the Borrower a copy of the same, certified by a Luxembourg notary to be a true and up to date copy of the original document. Any such notary’s certificate shall be apostilled or otherwise legalised. If a relief from deduction or withholding of Russian taxes under this Clause 6.8 has not been obtained and further to an application of RSB to the relevant Russian taxing authorities the latter requests the Lender’s rouble bank account details, the Lender shall at the request of RSB (a) use its commercially reasonable efforts, at RSB’s cost, to procure that such rouble bank account of the Lender is duly opened and maintained, and (b) thereafter furnish RSB with the details of such rouble bank account.

7. CONDITIONS PRECEDENT 7.1 Documents to be Delivered The obligation of the Lender to make each Loan shall be subject to the receipt by the Lender on or prior to the relevant Closing Date of evidence that the persons mentioned in sub-Clauses 14.12.3 and 14.12.4 hereof have agreed to receive process in the manner specified therein.

7.2 Further Conditions The obligation of the Lender to make each Loan shall be subject to the further conditions precedent that as of the relevant Closing Date (a) the representations and warranties made and given by RSB in Clause 9 shall be true and accurate as if made and given on the relevant Closing Date with respect to the facts and circumstances then existing, (b) no event shall have occurred and be continuing that constitutes, or that, with the giving of notice or the lapse of time, or both, would constitute, an Event of Default, (c) RSB shall not be in breach of any of the terms, conditions and provisions of the relevant Loan Agreement, (d) the relevant Subscription Agreement, Trust Deed and the Agency Agreement shall have been executed and delivered, and the Lender shall have received the full amount of the proceeds of the issue of the corresponding Series of Notes pursuant to such Subscription Agreement and (e) the Lender shall have received in full the amount referred to in Clause 3.2, if due and payable, above, as specified in the relevant Loan Supplement.

- 126 - 8. CHANGE IN LAW OR INCREASE IN COST 8.1 Compensation In the event that after the date of a Loan Agreement there is any change in or introduction of any tax, law, regulation, regulatory requirement or official directive (whether or not having the force of law but, if not having the force of law, the observance of which is in accordance with the generally accepted financial practice of financial institutions in the country concerned) or in the interpretation or application thereof by any person charged with the administration thereof and/or any compliance by the Lender in respect of the Loan with any request, policy or guideline (whether or not having the force of law but, if not having the force of law, the observance of which is in accordance with the generally accepted financial practice of financial institutions in the country concerned) from or of any central bank or other fiscal, monetary or other authority, agency or any official of any such authority, which: 8.1.1 subjects or will subject the Lender to any taxes with respect to payments of principal of or interest on such Loan or any other amount payable under such Loan Agreement (other than any taxes payable by the Lender on its overall net income or any taxes referred to in Clauses 6.2 or 6.3); or 8.1.2 increases or will increase the taxation of or changes or will change the basis of taxation of payments to the Lender of principal of or interest on such Loan or any other amount payable under such Loan Agreement (other than any such increase or change which arises by reason of any increase in the rate of tax payable by the Lender on its overall net income or as a result of any taxes referred to in Clauses 6.2 or 6.3); or 8.1.3 imposes or will impose on the Lender any other condition affecting such Loan Agreement or such Loan, and if as a result of any of the foregoing: (i) the cost to the Lender of making, funding or maintaining such Loan is increased; or (ii) the amount of principal, interest or additional amounts payable to or received by the Lender under such Loan Agreement is reduced; or (iii) the Lender makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount of any sum receivable by it from RSB hereunder or makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount of such Loan, then subject to the following, and in each such case: (a) the Lender shall, as soon as practicable after becoming aware of such increased cost, reduced amount or payment made or foregone, give written notice to RSB, together with a certificate describing in reasonable detail the introduction or change or request which has occurred and the country or jurisdiction concerned and the nature and date thereof and demonstrating the connection between such introduction, change or request and such increased cost, reduced amount or payment made or foregone, and providing all relevant supporting documents evidencing the matters set out in such certificate; and (b) upon demand by the Lender to RSB, RSB, in the case of paragraphs (i) and (iii) above, shall on demand by the Lender, pay to the Lender such additional amount as shall be necessary to compensate the Lender for such increased cost, and, in the case of paragraph (ii) above, at the time the amount so reduced would otherwise have been payable, pay to the Lender such additional amount as shall be necessary to compensate the Lender for such reduction, payment or foregone interest or other return; provided however, that the amount of such increased cost, reduced amount or payment made or foregone shall be deemed not to exceed an amount equal to the proportion which is directly attributable to this Facility Agreement, and provided, further, that the Lender will not be entitled to such additional amount where such reduction, payment or foregone interest or other return arises as a result of the negligence or wilful default of the Lender, provided that this Clause 8.1 will not apply to or in respect of any matter for which the Lender has already been compensated under Clauses 6.2 or 6.3.

8.2 Mitigation In the event that the Lender becomes entitled to make a claim pursuant to Clause 8.1 the Lender shall consult in good faith with RSB and shall use reasonable efforts (based on the Lender’s reasonable

- 127 - interpretation of any relevant tax, law, regulation, requirement, official directive, request, policy or guideline) to reduce, in whole or in part, RSB’s obligations to pay any additional amount pursuant to such Clause except that nothing in this Clause 8.2 shall obligate the Lender to incur any costs or expenses in taking any action hereunder which, in the reasonable opinion of the Lender, is prejudicial to it unless RSB agrees to reimburse the Lender such costs or expenses.

9. REPRESENTATIONS AND WARRANTIES 9.1 RSB’s Representations and Warranties RSB does, and on each Warranty Date shall be deemed to, represent and warrant to the Lender, with the intent that such shall form the basis of each Loan Agreement: 9.1.1 RSB and each of its Material Subsidiaries is duly organised and incorporated and validly existing under the laws of its respective jurisdiction of incorporation and has the power and legal right to own its property, to conduct its business as currently conducted and, in the case of RSB only, to enter into and to perform its obligations under each Loan Agreement and to borrow Loans; RSB has taken all necessary corporate, legal and other action required to authorise the borrowing of Loans on the terms and subject to the conditions of each Loan Agreement and to authorise the execution and delivery of each Loan Agreement and all other documents to be executed and/or delivered by it in connection with each Loan Agreement, and the performance of each Loan Agreement in accordance with its respective terms; 9.1.2 the Loan Agreement, including, in relation to a Loan, the Loan Supplement in relation thereto, has been duly executed and delivered by RSB and constitutes a legal, valid and binding obligation of RSB enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights generally, and subject, as to enforceability, (i) to general principles of equity, (ii) to the fact that the gross-up provisions contained in Clause 6.2 or Clause 6.3 may not be enforceable under Russian law and (iii) with respect to the enforceability of a judgment, to the laws of the relevant jurisdiction where such judgment must be enforced and whether there is a treaty in force relating to the mutual recognition of foreign judgments; 9.1.3 the execution, delivery and performance of each Loan Agreement, including, in relation to a Loan, the Loan Supplement in relation thereto, by RSB will not conflict with or result in any breach or violation of (i) any law or regulation or any order of any governmental, judicial, arbitral or public body or authority in the Russian Federation, (ii) the constitutive documents, rules and regulations of RSB or any of its Material Subsidiaries or the terms of the general banking licence granted to RSB by the Central Bank or (iii) any agreement or other undertaking or instrument to which RSB or any of its Material Subsidiaries is a party or which is binding upon RSB or any of its Material Subsidiaries or any of their respective assets, nor result in the creation or imposition of any Liens on any of their respective assets pursuant to the provisions of any such agreement or other undertaking or instrument; 9.1.4 all consents, licences, notifications, authorisations or approvals of, or filings with, any governmental, judicial or public bodies or authorities of the Russian Federation (including, without limitation, the Central Bank) required by RSB in connection with the execution, delivery, performance, legality, validity, enforceability, and admissibility in evidence of each Loan Agreement have been obtained or effected and are and shall remain in full force and effect; 9.1.5 no event has occurred that constitutes, or that, with the giving of notice or the lapse of time, or both, would constitute, an Event of Default or a default under any agreement or instrument evidencing any Indebtedness of RSB or any Material Subsidiary, and no such event will occur upon the making of the relevant Loan; 9.1.6 there are no judicial, arbitral or administrative actions, proceedings or claims (including, but without limitation to, with respect to taxes) which have been commenced or are pending or, to the knowledge of RSB, threatened, against RSB or any of its Material Subsidiaries, the adverse determination of which could reasonably be expected to have a Material Adverse Effect; 9.1.7 except for Liens of the types referred to in the definition of Permitted Liens in Clause 1.1, RSB and each of its Material Subsidiaries has good title to its property free and clear of all Liens and RSB’s obligations under the Loan Agreement will rank at least pari passu with all its other unsecured and unsubordinated Indebtedness, subject to priorities established by bankruptcy, insolvency, liquidation or similar laws of general application;

- 128 - 9.1.8 the latest audited IFRS consolidated financial statements of the Group: (i) were prepared in accordance with IFRS, as consistently applied; (ii) unless not required by IFRS, as consistently applied, disclose all liabilities (contingent or otherwise) and all unrealised or anticipated losses of the Group; and (iii) save as disclosed therein, present fairly in all material respects the assets and liabilities of the Group as at that date and the results of operations of the Group during the relevant financial year; 9.1.9 there has been no material adverse change since the date of the latest audited IFRS consolidated financial statements of the Group in the condition (financial or otherwise), results of business, operations or immediate prospects of RSB or any of its Material Subsidiaries or on RSB’s ability to perform its obligations under any Loan Agreement; 9.1.10 the execution, delivery and enforceability of each Loan Agreement is not subject to any tax, duty, fee or other charge, including, but without limitation to, any registration or transfer tax, stamp duty or similar levy, imposed by or within the Russian Federation or any political subdivision or taxing authority thereof or therein; 9.1.11 neither RSB nor any Material Subsidiary nor their respective property has any right of immunity from suit, execution, attachment or other legal process on the grounds of sovereignty or otherwise in respect of any action or proceeding relating in any way to each Loan Agreement; 9.1.12 RSB and each Material Subsidiary is in compliance in all material respects with all applicable provisions of law; 9.1.13 there are no material strikes or other employment disputes against RSB or any Material Subsidiary which have been started or are pending or, to its knowledge, threatened; 9.1.14 save as disclosed in the Prospectus, in any proceedings taken in the Russian Federation in relation to each Loan Agreement, the choice of English law as the governing law of each Loan Agreement and any arbitration award obtained in England in relation to each Loan Agreement will be recognised and enforced in the Russian Federation after compliance with the applicable procedures and rules and all other legal requirements in Russia; 9.1.15 subject to the performance by the relevant parties of the relevant established procedures in connection with the obtaining of an applicable withholding tax exemption for payments hereunder, no withholding in respect of any taxes is required to be made from any payment by RSB under each Loan Agreement; 9.1.16 all material licences, consents, examinations, clearances, filings, registrations and authorisations which are or may be necessary to enable RSB or any of its Material Subsidiaries to own its assets and carry on its business are in full force and effect and RSB and its Material Subsidiaries are conducting such business in accordance with such licences, consents, examinations, clearances, filings registrations and authorisations; 9.1.17 RSB is subject, without reservation, to civil and commercial law with respect to its obligations under each Loan Agreement, and its execution of each Loan Agreement constitutes, and its exercise of its rights and performance of its obligations thereunder will constitute, private and commercial acts done and performed for private and commercial purposes; and 9.1.18 RSB and each Material Subsidiary has no material overdue tax liabilities other than those which have been disclosed in the Prospectus.

9.2 Lender’s Representations and Warranties The Lender represents and warrants to RSB as follows: 9.2.1 the Lender is a duly incorporated company validly existing under the laws of and is resident for Luxembourg taxation purposes in Luxembourg and has full power and capacity to execute the Lender Agreements and to undertake and perform the obligations expressed to be assumed by it herein and therein and the Lender has taken all necessary action to approve and authorise the same; 9.2.2 the execution of the Lender Agreements and the undertaking and performance by the Lender of the obligations expressed to be assumed by it herein and therein will not conflict with, or result in a

- 129 - breach of or default under, the laws of Luxembourg or any agreement or instrument to which it is a party or by which it is bound or in respect of indebtedness in relation to which it is a surety; 9.2.3 the Lender Agreements have been duly executed by and constitute legal, valid and binding obligations of the Lender subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights generally; and 9.2.4 all authorisations, consents and approvals required by the Lender for or in connection with the execution of the Lender Agreements, the performance by the Lender of the obligations expressed to be undertaken by it herein and therein have been obtained and are in full force and effect.

10. COVENANTS So long as any amount remains outstanding under a Loan Agreement:

10.1 Negative Pledge RSB shall not, and shall not permit any of its Material Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Liens, other than Permitted Liens, on any of its assets, now owned or hereafter acquired, or any income or profits therefrom, securing any Indebtedness, unless, at the same time or prior thereto, RSB’s obligations hereunder are to the satisfaction of the Trustee secured equally and rateably with such other Indebtedness.

10.2 Mergers (i) RSB shall not enter into any reorganisation (by way of a merger, accession, division, separation or transformation, or other bases or procedures for reorganisation contemplated or as may be contemplated from time to time by Russian legislation, as these terms are construed by applicable Russian legislation), and (ii) RSB shall ensure that, without the prior written consent of the Lender, no Material Subsidiary (A) enters into any reorganisation (whether by way of a merger, accession, division, separation or transformation as these terms are construed by applicable Russian legislation), or (B) in the case of a Material Subsidiary incorporated in a jurisdiction other than Russia participates in any type of corporate reconstruction or other analogous event (as determined under the legislation of the relevant jurisdiction), if (in the case of either (i) or (ii) above) any such reorganisation or other type of corporate reconstruction might have a Material Adverse Effect. For the avoidance of doubt, any such reorganisation or other type of corporate reconstruction contemplated by this Clause will not be considered to be capable of having a Material Adverse Effect for the purposes of this Clause in the event that it does not lead to a downgrading of either the senior unsecured issuer rating given to RSB by Standard & Poor’s or the issuer rating of RSB given to RSB by Moody’s or, in the circumstances under (i) above where RSB is not the surviving entity following such reorganisation or other type of corporate reconstruction, the ratings granted to such surviving entity immediately following such reorganisation by Moody’s and Standard & Poor’s are no less than the ratings granted to RSB by each of Moody’s and Standard & Poor’s immediately prior to such reorganisation or other type of corporate reconstruction.

10.3 Disposals RSB shall not and shall ensure that its Material Subsidiaries do not (in each case disregarding sales of stock in trade on an arm’s length basis in the ordinary course of business) sell, lease, transfer or otherwise dispose of, by one or more transactions or series of transactions (whether related or not), the whole or any part (the book value of which is 10 per cent. or more of the book value of the whole) of its revenues or its assets unless, without prejudice to Clause 10.12, such transaction(s) is/are (a) on an arm’s length basis and on commercially reasonable terms and (b) has/have been approved by a resolution of the appropriate decision making body of RSB resolving that the transaction complies with the requirements of this Clause 10.3 and such resolution has been adopted by a majority of the members of such appropriate decision making body disinterested with respect to such transaction or series of transactions or, if there are insufficient disinterested members, by an Independent Appraiser. For the avoidance of doubt, this Clause 10.3 shall not apply to (i) any revenues or assets (or any part thereof) the subject of any securitisation of receivables, asset-backed financing or similar financing structure originated by RSB whereby all payment obligations are to be discharged solely from such assets or revenues, provided that the aggregate value of assets or revenues which are the subject of all such securitisations of receivables, asset-backed financing or similar financing structures, when added to the aggregate value of assets or revenues subject to any Lien

- 130 - described under (d) in the definition of “Permitted Liens” and permitted under the terms of the Loan Agreements, does not at any time exceed 30 per cent. of loans and advances to customers, as determined at any such time by reference to the most recent quarterly balance sheet of RSB prepared in accordance with IFRS (or the RUB amount equivalent in other currencies), or (ii) any defaulted or non-performing loans transferred to Debt Collection Agency.

10.4 Transactions with Affiliates RSB shall not and shall ensure that none of its Subsidiaries shall, directly or indirectly, conduct any business, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, transfer, assignment, lease, conveyance or exchange of any property or the rendering of any service) with, or for the benefit of, any Affiliate (an “Affiliate Transaction”) including, without limitation, intercompany loans unless (a) the terms of such Affiliate Transaction are no less favourable to RSB or such Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s length transaction with a person that is not an Affiliate of RSB or such Subsidiary; or (b) such Affiliate Transaction is made pursuant to a contract existing on the date of this Facility Agreement (excluding any amendments or modifications thereof). With the exception of any Affiliate Transaction involving the transfer of defaulted or non-performing loans to Debt Collection Agency, with respect to an Affiliate Transaction involving aggregate payments or value in excess of ten per cent. of the Net Asset Value (or its equivalent in other currencies), RSB shall deliver to the Lender a written opinion from an Independent Appraiser to the effect that such Affiliate Transaction is fair, from a financial point of view, to RSB or the relevant Subsidiary, as the case may be. This Clause 10.4 does not apply to (a) compensation or employee benefit arrangements with any officer or director of RSB or a Subsidiary, as the case may be, arising as a result of their employment contract, or (b) any Affiliate Transaction between RSB and any of its Subsidiaries or between any Subsidiaries of RSB.

10.5 Maintenance of Authorisations (i) RSB shall, and shall procure that each of its Material Subsidiaries shall, take all necessary action to obtain and do or cause to be done all things reasonably necessary, in the opinion of RSB or the relevant Material Subsidiary, to ensure the continuance of its corporate existence, its business and intellectual property relating to its business and (ii) RSB shall take all necessary action to obtain, and do or cause to be done all things reasonably necessary to ensure the continuance of, all consents, licences, approvals and authorisations, and make or cause to be made all registrations, recordings and filings, which may at any time be required to be obtained or made in the Russian Federation for the execution, delivery or performance of the Loan Agreements or for the validity or enforceability thereof, provided that, in any case if RSB and/or the relevant Material Subsidiary, as the case may be, can remedy any failure to comply with this Clause 10.5 within 90 days of such failure or of the occurrence of such event, then this covenant shall be deemed not to have been breached.

10.6 Maintenance of Property RSB shall cause all property used in the conduct of its or their business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of RSB, may be reasonably necessary so that the business carried on in connection therewith may be properly conducted at all times, provided that if RSB can remedy any failure to comply with the above within 90 days or any failure relates to property with a value not exceeding U.S.$20,000,000 (or its equivalent in other currencies), this covenant shall be deemed not to have been breached.

10.7 Payment of Taxes and Other Claims RSB shall, and shall ensure that its Material Subsidiaries will, pay or discharge or cause to be paid or discharged, before the same shall become overdue and without incurring penalties, (a) all taxes, assessments and governmental charges levied or imposed upon, or upon the income, profits or property of, RSB and its Material Subsidiaries and (b) all lawful claims for labour, materials and supplies which, if unpaid, might by law become a Lien (other than a Permitted Lien) upon the property of RSB or any of its

- 131 - Material Subsidiaries; provided, however, that none of RSB nor any Material Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim (a) whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with IFRS, as consistently applied or other appropriate provision has been made, or (b) whose amount, together with all such other unpaid or undischarged taxes, assessments, charges and claims, does not in the aggregate exceed U.S.$20,000,000 (or its equivalent in other currencies).

10.8 Withholding Tax Exemption RSB shall give to the Lender all the assistance it reasonably requires to ensure that, prior to the first interest payment and at the beginning of each calendar year the Lender can provide RSB with the documents required under Russian laws for the relief of the Lender from Russian withholding tax in respect of payments hereunder.

10.9 Maintenance of Insurance So long as any amount remains outstanding under any Loan Agreement, RSB shall and shall ensure that each of its Material Subsidiaries will, keep those of their properties which are of an insurable nature insured with insurers of good standing against loss or damage to the extent that property of similar character is usually so insured by corporations in the same jurisdictions similarly situated and owning like properties in the same jurisdictions.

10.10 Financial Information 10.10.1 RSB shall as soon as the same become available, but in any event within 150 days after the end of each of its financial years, deliver to the Lender the IFRS consolidated financial statements of the Group for such financial year, in each case audited by the Auditors. 10.10.2 RSB shall as soon as the same become available, but in any event within 120 days after the end of each half of each of its financial years, deliver to the Lender the IFRS consolidated financial statements of the Group for such period. 10.10.3 RSB shall, so long as any amount remains outstanding under any Loan Agreement, deliver to the Lender, without undue delay, such additional information regarding the financial position or the business of RSB and its Subsidiaries as the Lender may reasonably request including providing certification and a report of the Auditors addressed to the Directors of the Lender as to the definition of “Material Subsidiary”. 10.10.4 RSB shall ensure that each set of IFRS consolidated financial statements of the Group delivered by it pursuant to this Clause 10.10 is: (i) prepared on the same basis as was used in the preparation of its Original Financial Statements and in accordance with IFRS and consistently applied; and (ii) in the case of the statements provided pursuant to sub-Clause 10.10.1, accompanied by a report thereon of the Auditors referred to in sub-Clause 10.10.1 (including opinions of such Auditors with accompanying notes and annexes) in each case, in a form satisfactory to the Lender; and (iii) in the case of the statements provided pursuant to sub-Clause 10.10.2, certified by an Authorised Signatory of RSB as giving a true and fair view of the Group’s consolidated financial condition as at the end of the period to which those IFRS consolidated financial statements of the Group relate and of the results of the Group’s operations during such period. 10.10.5 RSB shall from time to time, on the request of the Lender or the Trustee, furnish the Lender with such information about the business and consolidated financial condition of RSB or the Group as the Lender or the Trustee may reasonably require or such Officer’s Certificate as either the Lender or the Trustee may request.

- 132 - 10.11 Financial covenants RSB shall (except as otherwise specifically provided or agreed by the Lender) at all times (save in respect of sub-Clause 10.11.2 below, which will apply in respect of the time periods set out therein) maintain: 10.11.1 full compliance with prudential supervision ratios and other requirements of the Central Bank; and 10.11.2 a ratio of Capital to Risk Weighted Assets: (i) at any time that either (a) each of the senior unsecured issuer rating given to RSB by Standard & Poor’s is below BB and the issuer rating of RSB given to RSB by Moody’s is below Ba2, or (b) neither Moody’s nor Standard & Poor’s is rating RSB, of not less than 11 per cent.; or (ii) at any time that either the senior unsecured issuer rating given to RSB by Standard & Poor’s is at BB or above, or the issuer rating of RSB given to RSB by Moody’s is at Ba2 or above, of not less than 10 per cent..

10.12 Change of business RSB shall procure that no material change is made to the general nature of the business of itself or any of the Material Subsidiaries from that carried on at the date of this Facility Agreement.

10.13 Ranking of Claims RSB shall ensure that at all times the claims of the Lender against it under each Loan Agreement rank at least pari passu with the claims of all its other unsecured creditors, save those whose claims are preferred by any bankruptcy, insolvency, liquidation or similar laws of general application.

11. EVENTS OF DEFAULT 11.1 Events of Default If one or more of the following events of default (each, an “Event of Default”) shall occur, the Lender shall be entitled to the remedies set forth in Clause 11.3. 11.1.1 RSB fails to pay any amount payable under the Loan Agreement as and when such amount becomes payable in the currency and in the manner specified herein, provided such failure to pay continues for more than five Business Days. 11.1.2 RSB fails to perform or observe any covenant or agreement under the Loan Agreement to be performed or observed by it, provided such failure continues for more than 30 Business Days. 11.1.3 Any representation or warranty of RSB or any statement deemed to be made by RSB in connection with the Loan Agreement, certificate or notice delivered by RSB in connection with the Lender Agreements or the issue of Notes proves to have been inaccurate, incomplete or misleading in any material respect in the opinion of the Lender at the time it was made or repeated or deemed to have been made or repeated unless remedied by RSB within 30 days. 11.1.4 (i) Any Indebtedness of RSB or any of its Material Subsidiaries is not paid when due (after the expiry of any applicable grace period); or (ii) any such Indebtedness becomes due and payable prior to its stated maturity otherwise than at the option of RSB or (as the case may be) the relevant Material Subsidiary or (provided that no event of default, howsoever described, has occurred) any person entitled to such Indebtedness, provided that the amount of Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above, individually or in the aggregate, exceeds U.S.$20,000,000 (or its equivalent amount in any other currency or currencies). 11.1.5 The occurrence of any of the following events: (i) any of RSB, or any of its Material Subsidiaries seeking or consenting to the introduction of proceedings for its liquidation or the appointment of a liquidation commission (likvidatsionnaya komissiya) or a similar officer of any of RSB, or any of

- 133 - its Material Subsidiaries as the case may be; (ii) the presentation or filing of a petition in respect of any of RSB or its Material Subsidiaries in any court, arbitration court or before any agency alleging, or for, the bankruptcy, insolvency, dissolution, liquidation (or any analogous proceedings) of any of RSB or its Material Subsidiaries, unless such petition is demonstrated to the reasonable satisfaction of the Lender to be vexatious or frivolous; (iii) the institution of the supervision (nablyudeniye), financial rehabilitation (finansovoye ozdorovlenie), external management (vneshneye upravleniye), bankruptcy management (konkursnoye proizvodstvo) over RSB or any of its Material Subsidiaries, (iv) the entry by RSB or any of its Material Subsidiaries into, or the agreeing by RSB or any of its Material Subsidiaries to enter into, amicable settlement (mirovoe soglashenie) with its creditors, as such terms are defined in the Federal Law of Russia No. 127-FZ “On Insolvency (Bankruptcy)” dated 26 October 2002 (as amended or replaced from time to time); (v) the institution of the financial rehabilitation (finansovoye ozdorovlenie), pursuant to the request of the Central Bank, temporary administration (vremennoye upravleniye) or reorganisation (reorganizatsiya) with respect to RSB or any of its Material Subsidiaries as such terms are defined in the Federal Law of the Russian Federation No- 40-FZ “On Insolvency (Bankruptcy) of Credit Organisations” dated 25 February 1999 (as amended or replaced from time to time); (vi) any judicial liquidation in respect of RSB or any of its Material Subsidiaries; and/or (vii) revocation of the general banking licence or the licence for taking deposits from individuals of RSB or, if applicable, of any of its Material Subsidiaries. 11.1.6 RSB or any of its Material Subsidiaries is unable or admits inability to pay its debts as they fall due, generally suspends making payments on its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness; the value of the assets of any of RSB or its Material Subsidiaries is less than its liabilities; and/or a moratorium is declared in respect of any Indebtedness of any of RSB or its Material Subsidiaries. 11.1.7 Any expropriation, attachment, sequestration, execution or distress is levied against, or an encumbrancer takes possession of or sells, the whole or any material part of, the property, undertaking, revenues or assets of RSB or any of its Material Subsidiaries. 11.1.8 Any governmental authorisation necessary for the performance of any obligation of RSB under the Loan Agreement fails to be in full force and effect. 11.1.9 Any government, Agency or court takes any action that, in the opinion of the Lender, has a Material Adverse Effect on RSB or any of its Material Subsidiaries, including, without prejudice to the foregoing: (i) the management of any member of the Group is wholly or partially displaced or the authority of any member of the Group in the conduct of its business is wholly or partially curtailed; or (ii) all or a majority of the issued shares of any member of the Group or the whole or any part (the book value of which is 20 per cent. or more of the book value of the whole) of its revenues or assets is seized, nationalised, expropriated or compulsorily acquired; or (iii) RSB’s banking licence or its licence for taking deposits from individuals is revoked. 11.1.10 The shareholders of RSB shall have approved any plan of liquidation or dissolution of RSB. 11.1.11 The aggregate amount of unsatisfied judgments, decrees or orders of courts or other appropriate law-enforcement bodies for the payment of money against RSB and other Material Subsidiaries in the aggregate exceeds U.S.$20,000,000, or the equivalent thereof in any other currency or currencies and there is a period of 60 days following the entry thereof during which such judgment, decree or order is not appealed, discharged, waived or the execution thereof stayed and such default continues for 10 days after the notice specified in Clause 11.2. 11.1.12 At any time it is or becomes unlawful for RSB to perform or comply with any or all of its obligations under the Loan Agreement or any of such obligations (subject as provided in sub-Clause 9.1.2) are not, or cease to be, legal, valid, binding and enforceable. 11.1.13 RSB or any of its Material Subsidiaries ceases to carry on the principal business it carried on at the date hereof. 11.1.14 RSB repudiates or evidences an intention to repudiate any of the Lender Agreements. 11.1.15 The charter of RSB is amended in a way which would contravene or result in the contravention of any material provision of the Loan Agreement. 11.1.16 Any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing Clauses.

- 134 - 11.2 Notice of Default RSB shall deliver to the Lender within (i) 10 days of any written request by the Lender or (ii) within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate, substantially in the form set out in Schedule 2, stating whether any Potential Event of Default or Event of Default has occurred, its status and what action RSB is taking or proposes to take with respect thereto.

11.3 Default Remedies If any Event of Default shall occur and be continuing, the Lender may, by notice to RSB, (a) declare the obligations of the Lender under the relevant Loan Agreement to be terminated, whereupon such obligations shall terminate, and (b) declare all amounts payable under such Loan Agreement by RSB that would otherwise be due after the date of such termination to be immediately due and payable, whereupon all such amounts shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or notice of any kind, which are expressly waived by RSB; provided, however, that if any event of any kind referred to in sub-Clauses 11.1.5, 11.1.6, 11.1.7 or 11.1.10, occurs, the obligations of the Lender under such Loan Agreement shall immediately terminate, and all amounts payable under such Loan Agreement by RSB that would otherwise be due after the occurrence of such event shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or notice of any kind, which are expressly waived by RSB.

11.4 Rights Not Exclusive The rights provided for in the Loan Agreement are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law.

12. INDEMNITY 12.1 Indemnification RSB undertakes to the Lender, that if the Lender or any of its Affiliates, each director, officer, employee or agent of the Lender and each person controlling the Lender within the meaning of the United States securities laws (each an “indemnified party”) incurs any loss, liability, cost, claim, charge, expense (including without limitation taxes, legal fees, costs and expenses), demand or damage (a “Loss”) as a result of or in connection with the Loan, the Loan Agreement (or enforcement thereof), and/or the issue, constitution, sale, listing and/or enforcement of the Notes and/or the Notes corresponding to such Loan or Loan Agreement being outstanding, RSB shall pay to the Lender on demand an amount equal to such Loss and all costs, charges and expenses which it or any indemnified party may pay or incur in connection with investigating, disputing or defending any such action or claim as such costs, charges and expenses are incurred unless such Loss was either caused by such indemnified party’s negligence or wilful misconduct or arises out of a breach of the representations and warranties of the Lender contained in the Dealer Agreement. The Lender shall not have any duty or obligation whether as fiduciary or trustee for any indemnified party or otherwise, to recover any such payment or to account to any other person for any amounts paid to it under this Clause.

12.2 Independent Obligation Clause 12.1 constitutes a separate and independent obligation of RSB from its other obligations under or in connection with each Loan Agreement or any other obligations of RSB in connection with the issue of the Notes by the Lender and shall not affect, or be construed to affect, any other provision of any Loan Agreement or any such other obligations.

12.3 Evidence of Loss A certificate of the Lender setting forth the amount of losses, expenses and liabilities described in Clause 12.1 and specifying in full detail the basis therefor shall, in the absence of manifest error, be conclusive evidence of the amount of such losses, expenses and liabilities.

12.4 Currency Indemnity To the fullest extent permitted by law, the obligation of RSB under this Facility Agreement and any Subscription Agreement in respect of any amount due in the currency (the “first currency”) in which the

- 135 - same is payable shall, notwithstanding any payment in any other currency (the “second currency”) (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the first currency that the Relevant Dealer may, acting reasonably and in accordance with normal banking procedures, purchase with the sum paid in the second currency (after any premium and costs of exchange) on the Business Day immediately following the day on which the Relevant Dealer receives such payment. If the amount in the first currency that may be so purchased for any reason falls short of the amount originally due (the “Due Amount”), RSB hereby agrees to indemnify and hold harmless each Relevant Dealer against any deficiency in the first currency. Any obligation of RSB not discharged by payment in the first currency shall, to the fullest extent permitted by applicable law, be due as a separate and independent obligation and, until discharged as provided in this Facility Agreement and any Subscription Agreement, shall continue in full force and effect.

12.5 Survival The obligations of RSB pursuant to Clauses 6.2, 6.3, 12 and 14.2 shall survive the execution and delivery of each Loan Agreement and the drawdown and repayment of the relevant Loan, in each case by RSB.

13. EXPENSES 13.1 Reimbursement of Front-end Expenses for the Extension of the Loan by the Lender RSB shall, pursuant to Clause 3.2 hereof and the relevant Loan Supplement, reimburse the Lender in the Specified Currency for all reasonable costs and expenses incurred by the Lender in connection with the negotiation, preparation and execution of each Loan Agreement and all related documents and other expenses connected with the extension of each Loan, including, without limitation, the fees and expense of its counsel.

13.2 Payment of Ongoing Expenses In addition, RSB hereby agrees to pay to the Lender on demand in the Specified Currency all ongoing commissions, costs, fees and expenses (including, without limitation, enforcement costs), payable by the Lender under or in respect of the Lender Agreements and the Fee Side Letter. RSB shall also pay the Lender for any indemnification or other payment obligations of the Lender under or in respect of the Agency Agreement, Trust Deed and/or the Fee Side Letter (other than the obligation of the Lender to make payments of principal, interest or additional amounts in respect of the corresponding Series of Notes). Payments to the Lender referred to in this Clause 13.2 shall be made by RSB at least one Business Day before the relevant payment is to be made or expense incurred.

14. GENERAL 14.1 Evidence of Debt The entries made in the relevant Account shall, in the absence of manifest error, constitute prima facie evidence of the existence and amounts of RSB’s obligations recorded therein.

14.2 Stamp Duties 14.2.1 RSB shall pay all stamp, registration and documentary taxes or similar charges (if any) imposed on RSB by any person in the United Kingdom, the Russian Federation, Luxembourg or the United States of America which may be payable or determined to be payable in connection with the execution, delivery, performance, enforcement, or admissibility into evidence of any Loan Agreement and shall indemnify the Lender against any and all costs and expenses which may be incurred or suffered by the Lender with respect to, or resulting from, delay or failure by RSB to pay such taxes or similar charges. 14.2.2 RSB agrees that if the Lender incurs a liability to pay any stamp, registration and documentary taxes or similar charges (if any) imposed by any person in the United Kingdom, the Russian Federation, Luxembourg or the United States of America which may be payable or determined to be payable in connection with the execution, delivery, performance, enforcement, or admissibility into evidence of any Loan Agreement and any documents related thereto, RSB shall repay the Lender on demand an amount equal to such stamp or other documentary taxes or duties and shall

- 136 - indemnify the Lender against any and all costs and expenses which may be incurred or suffered by the Lender with respect to, or resulting from, delay or failure by RSB to procure the payment of such taxes or similar charges.

14.3 Waivers No failure to exercise and no delay in exercising, on the part of the Lender or RSB, any right, power to privilege under any Loan Agreement, and no course of dealing between RSB and the Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies provided in each Loan Agreement are cumulative and not exclusive of any rights, or remedies provided by applicable law.

14.4 Notices All notices, requests, demands or other communications to or upon the respective parties to each Loan Agreement shall be given or made in writing and in English by e-mail, by facsimile, by hand or by courier, to the party to which such notice, request, demand or other communication is required or permitted to be given or made under such Loan Agreement addressed as follows: 14.4.1 if to RSB: Joint Stock Company “Russian Standard Bank” 36 Tkatskaya Street Moscow 105187 Russian Federation Fax: +7 495 797 8440 E-mail: [email protected], [email protected] Attention: Mr. Maxim Timoshenko, Vice-President, Director Financial Markets 14.4.2 if to the Lender: Russian Standard Finance S.A. 2, Bd. Konrad-Adenauer L-1115 Luxembourg Fax: +352 421 22718 Email: [email protected]; [email protected] Attention: The Directors or to such other address, fax number or electronic address as any party may hereafter specify in writing to the other. Any notice sent by post as provided in Clause 14.4 shall be deemed to have been given, made or served when delivered and any notice sent by facsimile transmission as provided in this Clause 14.4 shall be deemed to have been given, made or served when the relevant delivery receipt is received by the sender and any notice sent by electronic communication as provided in this Clause 14.4 shall be deemed to have been given, made or served when the relevant receipt of such communication being read is given, or where no read receipt is requested by the sender, at the time of sending, provided that no delivery failure notification is received by the sender within 24 hours of sending such communication; provided that any communication which is received (or deemed to take effect in accordance with the foregoing) outside business hours or on a non-business day in the place of receipt shall be deemed to take effect at the opening of business on the next following business day in such place. Any communication delivered to any party under this Agreement which is to be sent by facsimile transmission or electronic communication will be written legal evidence.

14.5 Assignment 14.5.1 Each Loan Agreement shall inure to the benefit of and be binding upon the parties, their respective successors and any permitted assignee or transferee of some or all of a party’s rights or obligations under such Loan Agreement. Any reference in a Loan Agreement to any party shall be construed accordingly and, in particular, references to the exercise of rights and discretions by the Lender, following the enforcement of the security and/or assignment referred to in sub-Clause 14.5.3 below, shall be references to the exercise of such rights or discretions by the Trustee (as Trustee). Notwithstanding the foregoing, the Trustee shall not be entitled to participate in any

- 137 - determinations by the Lender, or any discussions between the Lender and RSB or any agreements of the Lender or RSB pursuant to Clauses 6.4 or 6.6 or Clause 8. 14.5.2 RSB shall not to be entitled to assign or transfer all or any part of its rights or obligations hereunder to any other person. 14.5.3 subject to Clause 25 of the Trust Deed, the Lender may not assign or transfer, in whole or in part, any of its rights and benefits or obligations under any Loan Agreement (other than the Reserved Rights) except (i) the charge by way of first fixed charge granted by the Lender in favour of the Trustee (as Trustee) of certain of the Lender’s rights and benefits under such Loan Agreement and (ii) the absolute assignment by the Lender to the Trustee of certain rights, interests and benefits under such Loan Agreement, in each case, pursuant to Clause 6 of the relevant Supplemental Trust Deed.

14.6 Prescription Subject to the Lender having received the principal amount thereof or interest thereon from RSB, the Lender shall forthwith repay to RSB the principal amount or the interest amount thereon, respectively, of any Series of Notes upon such Series of Notes becoming void pursuant to Condition 11 of such Notes.

14.7 Contracts (Rights of Third Parties) Act 1999 A person who is not a party to a Loan Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of such Loan Agreement.

14.8 Governing Law This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, the laws of England.

14.9 Jurisdiction The parties irrevocably agree that any dispute arising out of or in connection with this Agreement, including a dispute as to the validity, existence or termination of this Agreement or the consequences of its nullity and/or this Clause 14.9 (a “Dispute”), shall be resolved: 14.9.1 subject to sub-Clause 14.9.2 below, by arbitration in London, England, conducted in the English language by three arbitrators, in accordance with the rules set down by the LCIA (formerly the London Court of International Arbitration) (“LCIA Rules”), which rules are deemed to be incorporated by reference into this Clause, save that Article 5.6 of the LCIA Rules shall be amended as follows: unless the parties agree otherwise, the third arbitrator, who shall act as chairman of the tribunal, shall be nominated by the two arbitrators nominated by or on behalf of the parties. If he is not so nominated within 30 days of the date of nomination of the later of the two party-nominated arbitrators to be nominated, he shall be chosen by the LCIA. Save as provided in sub-Clause 14.9.2 below, the parties agree to exclude the jurisdiction of the English court under sections 45 and 69 of the Arbitration Act 1996; or 14.9.2 at the sole option of the Lender, by proceedings brought in the courts of England, which courts are to have exclusive jurisdiction. If the Lender is in the position of a Respondent and wishes to exercise this option, it must do so by notice to the other parties to the Dispute within 30 days of service on it of the Request for Arbitration. For the avoidance of doubt, sub-Clause 14.9.2 is for the benefit of the Lender alone and shall not limit the right of the Lender to bring proceedings in any other court of competent jurisdiction.

14.10 Appropriate Forum Each of the parties irrevocably waives any objection which it might now or hereafter have to the courts of England being nominated as the forum to hear and determine any Dispute, and agrees not to claim that any such court is not a convenient or appropriate forum.

- 138 - 14.11 Process Agents 14.11.1 The Lender irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, United Kingdom to accept service of process in England in any Dispute (whether that Dispute is to be resolved by arbitration or litigation), provided that: (i) service upon the Lender’s Agent shall be deemed valid service upon the Lender whether or not the process is forwarded to or received by the Lender; (ii) the Lender shall inform all other parties to this Agreement, in writing, of any change in the address of the Lender’s Agent within 28 days of such change; (iii) if the Lender’s Agent ceases to be able to act as a process agent or to have an address in England, the Lender irrevocably agrees to appoint a new process agent in England acceptable to the other parties to the Agreement and to deliver to the other parties to the Agreement within 14 days a copy of a written acceptance of appointment by the new process agent; and (iv) nothing in this Agreement shall affect the right to serve process in any other manner permitted by law. 14.11.2 RSB irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, United Kingdom to accept service of process in England in any Dispute (whether that Dispute is to be resolved by arbitration or litigation), provided that: (i) service upon RSB’s Agent shall be deemed valid service upon RSB whether or not the process is forwarded to or received by RSB; (ii) RSB shall inform all other parties to this Agreement, in writing, of any change in the address of RSB’s Agent within 28 days of such change; (iii) if RSB’s Agent ceases to be able to act as a process agent or to have an address in England, RSB irrevocably agrees to appoint a new process agent in England acceptable to the other parties to the Agreement and to deliver to the other parties to the Agreement within 14 days a copy of a written acceptance of appointment by the new process agent; and (iv) nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.

14.12 Waiver of Immunity To the extent RSB or the Issuer may, in relation to any Dispute, claim in any jurisdiction, for itself or its assets or revenues, immunity from the jurisdiction of any court or tribunal, service of process, injunctive or other interim relief, or any process for execution of any award or judgment against its property, RSB and the Issuer irrevocably waive such immunity.

14.13 Counterparts Each Loan Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same agreement.

14.14 Language The language which governs the interpretation of each Loan Agreement is the English language.

14.15 Amendments Except as otherwise provided by its terms, each Loan Agreement may not be varied except by an agreement in writing signed by the parties hereto.

14.16 Partial Invalidity The illegality, invalidity or unenforceability to any extent of any provision of each Loan Agreement under the law of any jurisdiction shall affect its legality, validity or enforceability in such jurisdiction to such extent only and shall not affect its legality, validity or enforceability under the law of any other jurisdiction, nor the legality, validity or enforceability of any other provision.

- 139 - 14.17 Severability In case any provision in or obligation under any Loan Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

- 140 - FORM OF LOAN SUPPLEMENT

This Loan Supplement is made on [SIGNING DATE] between: (1) RUSSIAN STANDARD FINANCE S.A., a société anonyme established under the laws of Luxembourg whose registered office is at 2, Bd. Konrad-Adenauer L-1115 Luxembourg, registered with the Register of Commerce and Companies of Luxembourg under number B - 107.255 (the “Lender”); and (2) JOINT STOCK COMPANY “RUSSIAN STANDARD BANK”, a company established under the laws of the Russian Federation whose registered office is at 36 Tkatskaya Street, Moscow 105187, Russian Federation (“RSB”).

Whereas: (A) RSB has entered into a third amended and restated facility agreement dated 29 May 2012 (the “Facility Agreement”) with the Lender in respect of RSB’s U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes (the “Programme”). (B) RSB proposes to borrow [Š] (the “Loan”) and the Lender wishes to make such Loan on the terms set out in the Facility Agreement and this Loan Supplement.

It is agreed as follows:

1. Definitions Capitalised terms used but not defined in this Loan Supplement shall have the meaning given to them in the Facility Agreement save to the extent supplemented or modified herein.

2. Additional Definitions For the purpose of this Loan Supplement, the following expressions used in the Facility Agreement shall have the following meanings: “Account” means the account in the name of the Lender with the Principal Paying Agent (account number [Š], [Š]) or such other account as may from time to time be agreed between the Lender and the Trustee pursuant to the Trust Deed and notified to the Borrower in writing at least 5 Business Days in advance of such change; [“Calculation Agent” means Deutsche Bank AG, London Branch;] “Closing Date” means [Š]; “Loan Agreement” means the Facility Agreement as amended and supplemented by this Loan Supplement; “Notes” means [Š][[Š] per cent.][Floating Rate] Loan Participation Notes due [Š] issued by the Lender as Series [Š] under the Programme; [“Put Settlement Date” means [Š];] [include if Put Option applicable, otherwise delete] “Repayment Date” means [Š][amend as required for Floating Rate Notes]; “RSB Account” means the account in the name of RSB (account number [Š][FURTHER DETAILS]); “Specified Currency” means [Š]; “Subscription Agreement” means an agreement between the Lender, RSB and [MANAGERS] dated [Š] relating to the Notes; and “Trust Deed” means the Third Amended and Restated Principal Trust Deed between the Lender and the Trustee dated 29 May 2012 as amended and supplemented by a Supplemental Trust Deed dated [Š] constituting and securing the Notes.

3. Incorporation by Reference Except as otherwise provided, the terms of the Facility Agreement shall apply to this Loan Supplement as if they were set out herein and the Facility Agreement shall be read and construed, only in relation to the Loan constituted hereby, as one document with this Loan Supplement.

- 141 - 4. The Loan 4.1 Drawdown Subject to the terms and conditions of the Loan Agreement, the Lender agrees to make the Loan on the Closing Date to RSB and RSB shall make a single drawing in the full amount of the Loan.

4.2 Interest The Loan is a [Fixed Rate][Floating Rate] Loan. Interest shall be calculated, and the following terms used in the Facility Agreement shall have the meanings, as set out below: 4.2.1 Fixed Rate Loan Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Commencement Date [Š] (ii) Rate[(s)] of Interest: [Š] per cent. per annum [payable [annually/semi- annually] in arrear] (iii) Interest Payment Date(s): [Š] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of “Business Day”]/not adjusted] (iv) Fixed Amount[(s)]: [Š] per [Š] in principal amount (v) Broken Amount: [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Amount [(s)] and the Interest Payment Date(s) to which they relate] (vi) Day Count Fraction (Clause 4.9): [Š] (Day count fraction should be Actual/Actual-ICMA for all fixed rate loans other than those denominated in U.S. dollars, unless specified) (vii) Determination Date(s) (Clause 4.9) [Š] in each year. [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last interest period]** (viii) Other terms relating to the method [Not Applicable/give details] of calculating interest for Fixed Rate Loans: 4.2.2 Floating Rate Loan Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Commencement Date [Š] (ii) Interest Period(s): [Š] (iii) Specified Interest Payment Dates: [Š] (iv) Business Day Convention: [Floating Rate Business Day Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (v) Business Centre(s) (Clause 4.9): [Š] (vi) Manner in which the Rate(s) of [Screen Rate Determination/ISDA Determination/ Interest is/are to be determined: other (give details)] (vii) Interest Period Date(s): [Not Applicable/specify dates] (viii) Party responsible for calculating [Š] the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): (ix) Screen Rate Determination (sub- Clause 4.3.3):

** Only to be completed for a Loan where Day Count Fraction is Actual/Actual-ICMA.

- 142 - — Relevant Time: [Š] — Interest Determination Date: [[Š] [TARGET] Business Days in [specify city] for [specify currency] prior to [the first day in each Interest Accrual Period/each Interest Payment Date]] — Primary Source for Floating [Specify relevant screen page and rate or “Reference Rate: Banks”] — Reference Banks (if Primary [Specify four] Source is “Reference Banks”): — Relevant Financial Centre: [The financial centre most closely connected to the Benchmark - specify if not London] — Benchmark: [LIBOR, LIBID, LIMEAN, EURIBOR or other benchmark] — Representative Amount: [Specify if screen or Reference Bank quotations are to be given in respect of a transaction of a specified notional amount] — Effective Date: [Specify if quotations are not to be obtained with effect from commencement of Interest Accrual Period] — Specified Duration: [Specify period for quotation if not duration of Interest Accrual Period] (x) ISDA Determination (Clause 4.3): — Floating Rate Option: [Š] — Designated Maturity: [Š] — Reset Date: [Š] — ISDA Definitions: (if [Š] different from those set out in the Conditions) (xi) Margin(s): [+/-][Š] per cent. per annum (xii) Minimum Rate of Interest: [Š] per cent. per annum (xiii) Maximum Rate of Interest: [Š] per cent. per annum (xiv) Day Count Fraction (Clause 4.9): [Š] (xv) Rate Multiplier: [Š] (xvi) Fall back provisions, rounding [Š] provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Loans, if different from those set out in the Facility Agreement: 4.2.3 Put Option [Applicable / Not Applicable]

5. Fees and Expenses Pursuant to Clause 3.2 of the Facility Agreement and in consideration of the Lender making the Loan to RSB, RSB hereby agrees that it shall, one Business Day before the Closing Date, pay to the Lender, in Same-Day Funds, the total amount of [Š], being the “Arrangement Fee” in respect of the Loan, representing the reasonable costs and expenses incurred by the Lender in connection with such Loan, increased by front-end fees, commissions and expense, which shall include the amount of all of the

- 143 - commissions, fees, costs and expenses as set forth in Clause 5.1 of the Subscription Agreement, paragraph 1 of the Fee Side Letter and Clauses 3.2 and 13.1 of the Facility Agreement pursuant to an invoice submitted by the Lender to RSB in the total amount.

6. Governing Law This Loan Supplement and any non-contractual obligations arising out of it or in connection with it shall be governed by, and construed in accordance with, English law. The provisions of Clauses 14.9 to 14.12 (inclusive) of the Facility Agreement shall apply to the parties to this Agreement as if specifically incorporated herein.

- 144 - TERMS AND CONDITIONS OF THE NOTES

The following is the text of the Terms and Conditions of the Notes, which contain summaries of certain provisions of the Trust Deed, and which (subject to completion and amendment in accordance with the provisions of Part A of the relevant Final Terms) will be attached to the Notes in definitive form, if issued, and (subject to the provisions thereof) apply to the Global Notes representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of Part A of the Final Terms or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such definitive Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the Trust Deed and the relevant Final Terms. Those definitions will be endorsed on the definitive Notes. References in the Conditions to “Notes” are to the Notes of one Series only, not to all Notes that may be issued under the Programme.

The Notes are constituted by, are subject to, and have the benefit of, a supplemental trust deed dated the Issue Date specified hereon (the “Supplemental Trust Deed”) supplemental to a third amended and restated trust deed (as further amended or supplemented as at the Issue Date, the “Principal Trust Deed”) dated 29 May 2012, each made between Russian Standard Finance S.A. (the “Issuer”) and Deutsche Trustee Company Limited (the “Trustee”, which expression shall include any trustee or trustees for the time being under the Trust Deed) as trustee for the holders of the Notes (the “Noteholders”). The Principal Trust Deed and the Supplemental Trust Deed as modified from time to time in accordance with the provisions therein contained and any deed or other document expressed to be supplemental thereto, as from time to time so modified, are together referred to as the “Trust Deed”.

The Issuer has authorised the creation, issue and sale of the Notes for the sole purpose of financing a loan (the “Loan”) as specified hereon to Joint Stock Company “Russian Standard Bank” (“RSB”). The Issuer and RSB have recorded the terms of the Loan in a third amended and restated facility agreement (the “Facility Agreement”) dated 29 May 2012, as supplemented on the Issue Date specified hereon by a loan supplement (the “Loan Supplement” and, together with the Facility Agreement, the “Loan Agreement”) each between the Issuer and RSB. In each case where amounts of principal, interest and additional amounts (if any) are stated herein or in the Trust Deed to be payable in respect of the Notes, the obligations of the Issuer to make any such payment shall constitute an obligation only to account to the Noteholders on each date upon which such amounts of principal, interest and additional amounts (if any) are due in respect of the Notes, for an amount equivalent to sums of principal, interest and additional amounts (if any) actually received by or for the account of the Issuer pursuant to the Loan Agreement, less any amounts in respect of the Reserved Rights (as defined below). Noteholders must therefore rely solely and exclusively on the covenant to pay under the Loan Agreement and the credit and financial standing of RSB. Noteholders shall have no recourse (direct or indirect) to any other assets of the Issuer. None of the Noteholders, the Trustee or the other creditors (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, administration, moratorium, reorganisation, controlled management, arrangement, insolvency, winding-up or liquidation proceedings or similar insolvency proceedings under any applicable bankruptcy or similar law in connection with any obligation of the Issuer relating to the Notes or otherwise owed to the creditors or the Trustee for so long as the Notes are outstanding, save for lodging a claim in the liquidation of the Issuer which is initiated by another party or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer.

The Issuer has charged by way of first fixed charge in favour of the Trustee certain of its rights and interests as lender under the Loan Agreement (other than any rights and benefits constituting Reserved Rights) as security for its payment obligations in respect of the Notes and under the Trust Deed (the “Charge”) and has assigned absolutely certain other rights under the Loan Agreement to the Trustee (together with the Charge, the “Security Interests”). “Reserved Rights” are the rights excluded from the Charge, being all and any rights, interests and benefits of the Issuer in respect of the obligations of RSB under Clauses 3.4, 5.3 (other than the right to receive any amount payable under such Clause), 6.2 (to the extent that RSB shall reimburse the Issuer on demand for any amount paid by the Issuer in respect of Russian Federation taxes, penalties or interest), 6.3 (only to the extent that the Issuer has received amounts to which the Noteholders are not entitled), 3.2, 8, 10.8, 12.1-12.3, 13.1 and 14.2 (to the extent that RSB shall reimburse the Issuer for any amount paid by the Issuer in respect of such taxes, charges or costs) of the Facility Agreement and, for the avoidance of doubt, Clauses 6.4, 6.5 and 6.6 of the Facility Agreement.

In certain circumstances, the Trustee can (subject to it being indemnified and/or secured to its satisfaction) be required by Noteholders holding at least one quarter of the principal amount of the Notes outstanding or by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders to exercise certain of its powers under the Trust Deed (including those arising under the Security Interests).

- 145 - The Notes have the benefit of, and payments in respect of the Notes will be made (subject to the receipt of the relevant funds from RSB) pursuant to, the third amended and restated paying agency agreement (the “Agency Agreement”) dated 29 May 2012 and made between the Issuer, Deutsche Bank Luxembourg S.A., Deutsche Bank Trust Company Americas, and Deutsche Bank AG, London Branch. Deutsche Bank AG, London Branch will act as principal paying agent (the “Principal Paying Agent”anda“Paying Agent”), a transfer agent (a “Transfer Agent”) and calculation agent (the “Calculation Agent”). Deutsche Bank Luxembourg S.A. will act as Luxembourg paying agent (the “Luxembourg Paying Agent”anda“Paying Agent”), a transfer agent (a “Transfer Agent”) and registrar in respect of Regulation S Notes (the “Luxembourg Registrar”). Deutsche Bank Trust Company Americas will act as United States paying agent (the “U.S. Paying Agent”anda“Paying Agent”), a transfer agent (a “Transfer Agent”) and registrar in respect of the 144A Notes (the “U.S. Registrar”). The U.S. Registrar and the Luxembourg Registrar are together the “Registrars”. Copies of the Trust Deed, the Loan Agreement, the Agency Agreement and the Final Terms are available for inspection by Noteholders during normal business hours at the principal office of the Trustee being, at the date hereof, at Winchester House, 1 Great Winchester Street, London EC2N 2DB, at the specified office of the Principal Paying Agent and at the specified office of the Luxembourg Paying Agent. Certain provisions of these terms and conditions (the “Conditions”) include summaries or restatements of, and are subject to, the detailed provisions of the Trust Deed, the Final Terms, the Loan Agreement (the form of which is scheduled to and incorporated in the Trust Deed) and the Agency Agreement. Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions thereof.

1. STATUS The sole purpose of the issue of the Notes is to provide the funds for the Issuer to finance the Loan. The Notes constitute the obligation of the Issuer to apply the proceeds from the issue of the Notes solely for financing the Loan and to account to the Noteholders for an amount equivalent to sums of principal, interest and additional amounts (if any) actually received by or for the account of the Issuer pursuant to the Loan Agreement, less any amount in respect of Reserved Rights. The Trust Deed provides that payments in respect of the Notes equivalent to the sums actually received by or for the account of the Issuer by way of principal, interest or additional amounts (if any) pursuant to the Loan Agreement, less any amounts in respect of the Reserved Rights, will be made pro rata among all Noteholders, on the date of, and in the currency of, and subject to the conditions attaching to, the equivalent payment pursuant to the Loan Agreement. The Issuer shall not be liable to make any payment in respect of the Notes other than as expressly provided herein and in the Trust Deed. As provided therein, neither the Issuer nor the Trustee shall be under any obligation to exercise in favour of the Noteholders any rights of set-off or of banker’s lien or to combine accounts or counterclaim that may arise out of other transactions between the Issuer and RSB. Noteholders have notice of, and have accepted, these Terms and Conditions, the Final Terms and the contents of the Trust Deed the Agency Agreement and the Loan Agreement. It is hereby expressly provided that, and Noteholders are deemed to have accepted that: 1.1 neither the Issuer nor the Trustee makes any representation or warranty in respect of, or shall at any time have any responsibility for, or, save as otherwise expressly provided in the Trust Deed or in paragraph 1.6 below, liability or obligation in respect of the performance and observance by RSB of its obligations under the Loan Agreement or the recoverability of any sum of principal or interest (or any additional amounts) due or to become due from RSB under the Loan Agreement; 1.2 neither the Issuer nor the Trustee shall at any time have any responsibility for, or obligation or liability in respect of, the financial condition, creditworthiness, affairs, status or nature of RSB; 1.3 neither the Issuer nor the Trustee shall at any time be liable for any representation or warranty or any act, default or omission of RSB under or in respect of the Loan Agreement; 1.4 neither the Issuer nor the Trustee shall at any time have any responsibility for, or liability or obligation in respect of, the performance and observance by the Principal Paying Agent, any of the Paying Agents, the Registrars or the Transfer Agents, of their respective obligations under the Agency Agreement; 1.5 the financial servicing and performance of the terms of the Notes depend solely and exclusively upon performance by RSB of its obligations under the Loan Agreement and its covenant to make payments under the Loan Agreement and its credit and financial standing. RSB has represented and warranted to the Issuer in the Loan Agreement that the Loan Agreement constitutes a legal, valid and binding obligation of RSB; and

- 146 - 1.6 the Issuer and the Trustee shall be entitled to rely on certificates signed by two duly authorised officers of RSB (and, where applicable, certification by third parties) as a means of monitoring whether RSB is complying with its obligations under the Loan Agreement and identifying Material Subsidiaries and shall not otherwise be responsible for investigating any aspect of RSB’s performance in relation thereto and, subject as further provided in the Trust Deed, the Trustee will not be liable for any failure to make the usual or any investigations which might be made by a security holder in relation to the property which is the subject of the Trust Deed and held by way of security for the Notes, and shall not be bound to enquire into or be liable for any defect or failure in the right or title of the Issuer to the assigned property which is subject to the Security Interests whether such defect or failure was known to the Trustee or might have been discovered upon examination or enquiry or whether capable of remedy or not, nor will it have any liability for the enforceability of the security created by the Security Interests whether as a result of any failure, omission or defect in registering or filing or otherwise protecting or perfecting such security and the Trustee has no responsibility for the value of such security. The obligations of the Issuer in respect of the Notes rank pari passu and rateably without any preference among themselves. In the event that the payments under the Loan Agreement are made by RSB to, or to the order of, the Trustee or (subject to the provisions of the Trust Deed) the Principal Paying Agent, they will pro tanto satisfy the obligations of the Issuer in respect of the Notes. Save as otherwise expressly provided herein and in the Trust Deed, no proprietary or other direct interest in the Issuer’s right under or in respect of the Loan Agreement or the Loan exists for the benefit of the Noteholders. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce the Loan Agreement or direct recourse to RSB except through action by the Trustee pursuant to the relevant Security Interests granted to the Trustee in the Trust Deed. Neither the Issuer nor, following the enforcement of the Security Interests created in the Trust Deed, the Trustee shall be required to take proceedings to enforce payment under the Loan Agreement unless it has been indemnified and/or secured by the Noteholders to its satisfaction.

2. FORM, DENOMINATION AND TITLE The Notes will be issued in fully registered form, and in the Specified Denomination shown hereon (which shall be not less than EUR100,000 or its equivalent in other currencies) or integral multiples in excess thereof, without interest coupons, provided that (i) interests in the Rule 144A Notes shall be held in amounts of not less than U.S.$200,000 and (ii) Notes with a maturity of less than 365 days shall be held in amounts not less than £100,000 (or its equivalent in other currencies). A Note issued under the Principal Trust Deed may be a Fixed Rate Note, a Floating Rate Note, a combination of the foregoing or any other kind of Note, depending upon the Interest and Redemption/ Payment Basis specified hereon.

3. REGISTER, TITLE AND TRANSFERS 3.1 Registers The Luxembourg Registrar will maintain a register in respect of the Regulation S Notes (the “Regulation S Register”) and the U.S. Registrar will maintain a register in respect of the Rule 144A Notes (the “Rule 144A Register” and, together with the Regulation S Register, the “Registers”), all in accordance with the provisions of the Agency Agreement. In these Conditions the “holder” of a Note means the person in whose name such Note is for the time being registered in the relevant Register (or, in the case of a joint holding, the first named thereof) and “Noteholder” shall be construed accordingly. A Note will be issued to each Noteholder in respect of its registered holding. The Issuer will also maintain a register (the “Issuer’s Register”) at its registered office. Under the terms of the Agency Agreement, the Registrars will provide to the Issuer such information about changes in the Registers as shall enable the Issuer to maintain the Issuer’s Register up-to-date. In case of inconsistency between the Registers and the Issuer’s Register, the Issuer’s Register shall prevail.

- 147 - 3.2 Title The holder of each Note shall (except as otherwise required by law) be treated as the absolute owner of such Note for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing on the Note relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft of such Note) and no person shall be liable for so treating such holder.

3.3 Transfers Subject to Conditions 3.6 and 3.7, a Note may be transferred upon surrender of the relevant Note, with the endorsed form of transfer duly completed, at the specified office of the relevant Registrar or at the specified office of a Transfer Agent, together with such evidence as the relevant Registrar or such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer. Where not all the Notes represented by the surrendered Note are the subject of the transfer, a new Note in respect of the balance of the Note will be issued to the transferor.

3.4 Registration and Delivery of Notes Within five Business Days of the surrender of a Note in accordance with Condition 3.3, the relevant Registrar will register the transfer in question and deliver a new Note to each relevant holder for collection at its specified office or (at the request and risk of such relevant holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant holder. In this paragraph, “Business Day” means a day on which commercial banks are open for business (including dealings in foreign currencies) in the city where the relevant Registrar has its specified office.

3.5 No Charge The transfer of a Note will be effected without charge but against such indemnity as the relevant Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.

3.6 Closed Periods Noteholders may not require transfers to be registered during the period of 15 days ending on the due date for any payment of principal or interest in respect of the Notes.

3.7 Regulations Concerning Transfers and Registration All transfers of Notes and entries on the Registers are subject to the detailed regulations concerning the transfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Lender with the prior written approval of the Trustee and the Registrars. A copy of the current regulations will be mailed (free of charge) by either Registrar to any Noteholder who requests in writing a copy of such regulations.

4. RESTRICTIVE COVENANTS As provided in the Trust Deed, so long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer will not, without the prior written consent of the Trustee, agree to any amendments to or any modification or waiver of, or authorise any breach or proposed breach of, the terms of the Trust Deed or the Loan Agreement and will act at all times in accordance with any instructions of the Trustee from time to time with respect to the Loan Agreement, except as otherwise expressly provided in the Loan Agreement. Any such amendment, modification, waiver or authorisation made with the consent of the Trustee shall be binding on the Noteholders and, unless the Trustee agrees otherwise, any such amendment or modification shall be notified by the Issuer to the Noteholders in accordance with Condition 14. Save as provided above, so long as any Note remains outstanding, the Issuer, without the prior written consent of the Trustee, shall not, inter alia, incur any indebtedness for borrowed moneys (other then issuing further Notes (which may be consolidated and form a single series with Notes of any Series) and/or creating or incurring further obligations relating to such Notes), engage in any business (other than entering into the Programme, issuing Notes thereunder from time to time for the sole purpose of financing Loans to RSB in accordance with the Facility Agreement and each Loan Supplement, entering into related agreements and transactions and performing any act incidental or necessary in connection with any of the

- 148 - foregoing) declare any dividends, have any subsidiaries or employees, purchase, own, lease or otherwise acquire any real property (including office premises or like facilities), consolidate or merge with any other person or convey or transfer its properties or assets substantially as an entity to any person (otherwise than as contemplated in these Conditions and the Trust Deed), issue any shares (other than such shares as are in issue at the date of the Principal Trust Deed), give any guarantee or assume any other liability, or subject to the laws of Luxembourg, petition for any winding-up or bankruptcy.

5. INTEREST 5.1 Interest on Fixed Rate Notes Each Fixed Rate Note bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate(s) per annum (expressed as a percentage) equal to the Rate(s) of Interest specified hereon which shall be equal to the rate per annum at which interest under the Loan accrues. Accordingly, on each Interest Payment Date or as soon as thereafter as the same is received the Issuer shall account to the Noteholders for an amount equivalent to amounts of interest under the Loan received by or for the account of the Issuer pursuant to the Loan Agreement. If a Fixed Coupon Amount is specified in the relevant Final Terms, the amount of interest per Calculation Amount payable on each Interest Payment Date shall be an amount equal to the Fixed Coupon Amount, provided that if a Broken Amount is specified in the relevant Final Terms as being payable on any Interest Payment Date, the amount of interest per Calculation Amount payable on such Interest Payment Date shall be an amount equal to the Broken Amount. If no Fixed Coupon Amount or Broken Amount is specified in the relevant Final Terms, the amount of interest payable shall be determined in accordance with Condition 5.4.

5.2 Interest on Floating Rate Notes (i) Interest Payment Dates: Each Floating Rate Note bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest specified hereon, which shall be equal to the rate per annum at which interest under the Loan accrues, such interest being payable in arrear on each Interest Payment Date or as soon as thereafter as the same is received. Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which falls the number of months or other period shown hereon as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. Accordingly, on each such date, the Issuer shall account to the Noteholders for an amount equivalent to amounts of interest under the Loan received by or for the account of the Issuer pursuant to the Loan Agreement. (ii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (C) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day. (iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period (as defined in the Loan Agreement) shall be determined in the manner specified hereon and as set out in the Loan Agreement.

- 149 - 5.3 Accrual of Interest Interest shall cease to accrue on each Note on the due date for redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in this Condition 5 to the Relevant Date (as defined in Condition 8).

5.4 Calculations The amount of interest payable per Calculation Amount in respect of any Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount specified hereon and the Day Count Fraction for such Interest Accrual Period as specified hereon and in the Loan Agreement, unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case the amount of interest payable per Calculation Amount in respect of such Note for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated, the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.

5.5 Publication of Rates of Interest and Interest Amounts As soon as practicable after calculating or determining the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date as set out in the Loan Agreement, the Calculation Agent shall cause such Rate of Interest and Interest Amounts to be notified to the Trustee, the Issuer, RSB, each of the Paying Agents, the Noteholders, any other Calculation Agent appointed in respect of the Notes that is to make a further calculation upon receipt of such information and, if the Notes are listed and/or admitted to trading on a stock exchange and the rules of such exchange or other relevant authority so require, such exchange or other relevant authority as soon as possible after their determination, but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 5.2(ii), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If a Loan become due and payable under Clause 11 of the relevant Loan Agreement, the accrued interest and the Rate of Interest payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.

5.6 Determination or Calculation by Trustee If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Period or any Interest Amount pursuant to the Loan Agreement, the Trustee shall do so (or shall appoint an agent on its behalf to do so) and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee shall apply the foregoing provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.

6. REDEMPTION 6.1 Scheduled redemption Unless the Loan is previously prepaid or repaid pursuant to Clause 5.2 or 5.3 of the Facility Agreement, RSB will be required to repay the Loan one Business Day (as defined in the Loan Agreement) before its Repayment Date (as defined in the Loan Agreement) and, subject to such repayment, as set forth in the

- 150 - Loan Agreement, all the Notes then remaining outstanding will be redeemed or repaid by the Issuer in the relevant Specified Currency on the Maturity Date specified hereon at their Final Redemption Amount (which, unless otherwise specified hereon, is 100 per cent. of the principal amount thereof).

6.2 Early redemption If the Loan should become repayable (and be repaid) or be prepaid pursuant to the Loan Agreement prior to its scheduled repayment date, all Notes then remaining outstanding will thereupon become due and redeemable or repayable at their Early Redemption Amount (which, unless otherwise specified hereon is par together with interest accrued to the date of redemption) and the Issuer will endeavour to give not less than fifteen nor more than thirty days’ notice thereof to the Trustee and the Noteholders in accordance with Condition 14. To the extent that the Issuer receives amounts of principal, interest and/or additional amounts, if any, (other than amounts in respect of the Reserved Rights) following acceleration of the Loan pursuant to Clause 11 of the Loan Agreement, the Issuer shall pay an amount equal to and in the same currency as such amounts on the Business Day following receipt of such amounts, subject as provided in Condition 7.

6.3 Rule 144A notes The Issuer may compel any beneficial owner of an interest in the Rule 144A Notes to sell its interest in such Notes, or may sell such interest on behalf of such holder, if such holder is a U.S. person that is not a qualified institutional buyer (as defined in Rule 144A under the Securities Act) and a qualified purchaser (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940).

6.4 Cancellation The Facility Agreement also provides that the RSB may, among other things, from time to time deliver Notes to the Issuer, having an aggregate principal value of at least U.S.$1,000,000, together with a request for the Issuer to present such Notes to the relevant Registrar for cancellation, whereupon the Issuer shall, pursuant to the Agency Agreement, request the relevant Registrar to cancel such Notes. Upon any such cancellation by or on behalf of the relevant Registrar, the principal amount of the Loan corresponding to the principal amount of such Notes surrendered for cancellation shall be extinguished as of the date of such cancellation and no further payment shall be made or required to be made by the Issuer in respect of such Notes.

6.5 Put Option If a Put Option is specified hereon, the Issuer shall, at the option of any Noteholder, redeem such Note on the Put Settlement Date specified hereon (the “Put Option”) at its principal amount together with accrued interest. To exercise such option a Noteholder must deposit the Note or Notes to be redeemed with any Paying Agent together with a duly completed put option notice (“Put Option Notice”) in the form obtainable from any of the Paying Agents, not more than 60 but not less than 30 days prior to the Put Settlement Date (the “Put Period”) save in circumstances where an alternative put period is specified in the relevant final terms (an “Alternative Put Period”). No Note so deposited may be withdrawn. Provided, however, that if, prior to the Put Settlement Date, a Relevant Event has occurred or, upon due presentation of any Note on the Put Settlement Date, payment of the redemption moneys is improperly withheld or refused, such Note shall, without prejudice to the exercise of the Put Option, be returned to the Noteholder by uninsured first class mail (airmail if overseas) at such address as may have been given by such Noteholder in the relevant Put Option Notice. The Issuer shall notify the Borrower, not more than three Business Days after receipt of notice thereof from the Paying Agent, of the amount of the Loan to be prepaid as a consequence of the exercise of the Put Option. Subject to timely receipt of the relevant amounts from the Borrower under the Loan Agreement, the Issuer shall redeem the Notes in accordance with this Condition 6.5 on the Put Settlement Date, subject as provided in Condition 7.

7. PAYMENTS AND AGENTS 7.1 Principal Payments of principal shall be made against presentation and surrender of the relevant Notes at the specified office of the Principal Paying Agent or at the specified office of any Transfer Agent or Registrar and in the manner provided in the Condition below.

- 151 - 7.2 Interest Interest shall be paid to the person shown on the relevant Register at the opening of business on the fifteenth day before the due date for payment thereof (the “Record Date”). Payments of interest shall be made in the Specified Currency by cheque drawn on a bank in the principal financial centre for the Specified Currency or, in the case of euro, in a city in which banks have access to the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System or any successor thereof (a “Bank”) and mailed to the Noteholder (or to the first named of joint Noteholders) of such Note at its address appearing in the relevant Register. Upon application by the holder to the specified office of the relevant Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank, or by transfer to an account in the Specified Currency maintained by the payee with, a Bank in the principal financial centre of such Specified Currency or in the case of euro, a Bank specified by the payee or at the option of the payee, by a euro-cheque and (in the case of interest payable on redemption) upon surrender of the relevant Notes at the specified office of the Principal Paying Agent or at the specified office of any Transfer Agent.

7.3 Payments Subject to Fiscal Laws All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 8. No commissions or expenses shall be charged to the Noteholders in respect of such payments.

7.4 Payments on Business Days If the due date for payments of interest or principal is not a Business Day, a Noteholder shall not be entitled to payment of the amount due until the next following Business Day and shall not be entitled to any further interest or other payment in respect of any such delay. In this paragraph, “Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation, in such jurisdictions as shall be specified as “Financial Centres” hereon, and (i) (in the case of a payment in a currency other than euro) where payment is to be made by transfer to an account maintained with a bank in the relevant currency, on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency or (ii) (in the case of a payment in euro) which is a TARGET Business Day.

7.5 Accrued Interest The names of the initial Paying Agents and their initial specified offices are set out below. The Agency Agreement provides that the Issuer may at any time, with the prior written approval of the Trustee, vary or terminate the appointment of the Principal Paying Agent or any of the Paying Agents, and appoint additional or other paying agents provided that (i) so long as the Notes are listed and/or admitted to trading on any stock exchange or admitted to listing by any other relevant authority, there will be a paying agent and transfer agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority and (ii) there will be a Paying Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN Council meeting of 26–27 November 2000 on the taxation of savings income or any law implementing or complying with or introduced in order to conform to such Directive. Any such variation, termination or appointment shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not more than 45 days’ and not less than 30 days’ notice thereof shall have been given to the Noteholders in accordance with Condition 14. In addition, if the due date for redemption or repayment of a Note is not an Interest Payment Date, interest accrued from the preceding Interest Payment Date or, as the case may be, from the Issue Date as specified hereon shall be payable only as and when actually received by or for the account of the Issuer pursuant to the Loan Agreement.

7.6 Payments by RSB Save as otherwise directed by the Trustee at any time after any of the Security Interests created in the Trust Deed becomes enforceable, the Issuer will, pursuant to Clause 6 of the Agency Agreement require RSB to make all payments of principal and interest and any additional amounts to be made pursuant to the Loan

- 152 - Agreement to the Principal Paying Agent to an account in the name of the Issuer (the “Account”). Under the Charge, the Issuer will charge by way of first fixed charge all the rights, title and interest in and to all sums of money then or in the future deposited in the Account in favour of the Trustee for the benefit of the Noteholders.

8. TAXATION All payments in respect of the Notes by or on behalf of the Issuer will be made without deduction or withholding for or on account of any present or future taxes, duties or assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Luxembourg or any political subdivision or any authority thereof or therein having the power to tax, unless the deduction or withholding of taxes or duties is required by law. In such event, the Issuer shall make such additional payments as shall result in the receipt by the Noteholders of such amount as would have been received by them if no such withholding or deduction had been required but only to the extent and only at such time as the Issuer receives an equivalent amount from RSB under the Loan Agreement. To the extent that the Issuer receives a lesser additional amount from RSB, the Issuer will account to each Noteholder for an additional amount equivalent to a pro rata proportion of such additional amount (if any) as is actually received by, or for the account of, the Issuer pursuant to the Loan Agreement on the date of, in the currency of, and subject to any conditions attaching to the payment of such additional amount to the Issuer, provided that no additional amount will be payable in respect of any Note: 8.1 to a Noteholder who (a) is able to avoid such deduction or withholding by satisfying any statutory requirements or by making a declaration of non-residence or other claim for exemption to the relevant tax authority; or (b) is liable for such taxes or duties by reason of his having some connection with Luxembourg other than the mere holding of such Note or the receipt of payments in respect thereof; 8.2 in respect of any tax or amounts owed pursuant to an agreement with taxing authority that would not have been imposed but for a failure by the Noteholder or beneficial owner (or any financial institution through which the Noteholder or beneficial owner holds any Note or through which payment on the Note is made) to (i) enter into an agreement described in Section 1471(b)(1) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise comply with Sections 1471 through 1474 of the Code or any regulations promulgated thereunder (or under any implementing legislation adopted by Luxembourg), (ii) provide information sufficient for the Issuer to determine whether the Noteholder or beneficial owner (or financial institution through which the Noteholder or beneficial owner holds any Note or through which payment on the Note is made) is a U.S. person or should otherwise be treated as holding a “United States account” of the Issuer (or comply with similar requirements under any implementing legislation adopted by Luxembourg) or (iii) consent, where necessary, to have information about it reported to the U.S. taxing authorities; 8.3 presented for payment of principal more than 30 days after the Relevant Date except to the extent that such additional payment would have been payable if such Note had been presented for payment on such 30th day; 8.4 where such withholding or deduction is imposed on a payment to an individual or a residual entity within the meaning of the Council Directive 2003/48/EC and is required to be made pursuant to (i) European Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive (ii) the law of 23 December 2005 introducing a 10 per cent. final withholding tax as regards Luxembourg resident individuals and (iii) the agreements on savings income concluded by the State of Luxembourg with several dependant or associated territories of the EU (being Jersey, Guernsey, the Isle of Man, the British Virgin Islands, Montserrat, the former Dutch Antilles and Aruba); or 8.5 presented for payment by or on behalf of a Noteholder who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Paying Agent in a Member State of the European Union. As used herein, “Relevant Date” (i) means the date on which any payment under the Loan Agreement first becomes due but (ii) if the full amount payable by RSB has not been received by, or for the account of, the Issuer pursuant to the Loan Agreement on or prior to such date, it means the date on which such moneys shall have been so received and notice to that effect shall have been duly given to the Noteholders by or on behalf of the Issuer in accordance with Condition 14.

- 153 - Any reference herein or in the Trust Deed to payments in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable in accordance with the Trust Deed and this Condition 8 or any undertaking given in addition thereto or in substitution therefor pursuant to the Trust Deed.

9. ENFORCEMENT The Trust Deed provides that only the Trustee may pursue the remedies under the general law, the Trust Deed or the Notes to enforce the rights of the Noteholders and no Noteholder will be entitled to pursue such remedies unless the Trustee (having become bound to do so in accordance with the terms of the Trust Deed) fails or neglects to do so within a reasonable time and such failure or neglect is continuing. At any time after the occurrence of an Event of Default (as defined in the Facility Agreement) or of a Relevant Event (as defined in the Trust Deed), the Trustee may, at its discretion and without notice and shall, if requested to do so by Noteholders holding 25 per cent. in aggregate principal amount of the Notes outstanding, or if directed to do so by an Extraordinary Resolution and, in either case, subject to it being secured and/or indemnified to its satisfaction, declare all amounts payable under the Loan Agreement by RSB to be due and payable (in the case of an Event of Default), or enforce the security created in the Trust Deed in favour of the Trustee (in the case of a Relevant Event). Upon repayment of the Loan following an Event of Default and a declaration as provided herein, the Notes will be redeemed or repaid at their principal amount together with interest accrued to the date fixed for redemption and thereupon shall cease to be outstanding.

10. MEETINGS OF NOTEHOLDERS; MODIFICATION OF NOTES, TRUST DEED AND LOAN AGREEMENT; WAIVER; SUBSTITUTION OF THE ISSUER; APPOINTMENT/REMOVAL OF TRUSTEES 10.1 Meetings of Noteholders The Trust Deed contains provisions for convening meetings of Noteholders to consider any matter affecting their interests, including any modification of, or any arrangement in respect of, the Notes, the Loan Agreement or the Trust Deed. Noteholders will vote pro rata according to the principal amount of their Notes. Special quorum provisions apply for meetings of Noteholders convened for the purpose of amending certain terms concerning, inter alia, the amounts payable on, and the currency of payment in respect of, the Notes and the amounts payable and currency of payment under the Loan Agreement. Any resolution duly passed at a meeting of Noteholders will be binding on all the Noteholders, whether present or not. The Trust Deed provides that a written resolution signed by the holders of 75 per cent. in nominal amount of the Notes outstanding shall take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

10.2 Modification and Waiver The Trustee may agree, without the consent of the Noteholders, to any modification of the Notes and the Trust Deed or the Loan Agreement which in the opinion of the Trustee is of a formal, minor or technical nature, is made to correct a manifest error or is not materially prejudicial to the interests of the Noteholders (as a class). The Trustee may also waive or authorise or agree to the waiving or authorising of any breach or proposed breach by the Issuer of the Conditions or the Trust Deed or by RSB of the terms of the Loan Agreement, or determine that any event which would or might otherwise give rise to a right of acceleration under the Loan Agreement shall not be treated as such, if, in the opinion of the Trustee, to do so would not be materially prejudicial to the interests of the Noteholders (as a class); provided always that (subject to certain exceptions) the Trustee may not exercise such power of waiver in contravention of any express direction by an Extraordinary Resolution of the Noteholders. Any such modification, waiver or authorisation shall be binding on the Noteholders and, unless the Trustee agrees otherwise, any such modification shall be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 14.

10.3 Substitution The Trust Deed contains provisions to the effect that the Issuer may, and at the request of RSB shall, having obtained the consent of RSB (if such substitution is not to be made at the request of RSB) and the Trustee (which latter consent may be given without the consent of the Noteholders) and having complied with such certain requirements as the Trustee may direct in the interests of the Noteholders, substitute any entity in place of the Issuer as creditor under the Loan Agreement, as issuer and principal obligor in respect

- 154 - of the Notes and as principal obligor under the Trust Deed, subject to the relevant provisions of the Trust Deed and the substitute’s rights under the Loan Agreement being charged and assigned, respectively, to the Trustee as security for the payment obligations of the substitute obligor under the Trust Deed and the Notes. Not later than 14 days after compliance with the aforementioned requirements, notice thereof shall be given by the Issuer to the Noteholder in accordance with Condition 14 or RSB shall use its best endeavours to ensure that the substitute obligor does so.

10.4 Exercise of Powers In connection with the exercise of any of its powers, trusts, authorities or discretions, the Trustee shall have regard to the interests of the Noteholders as a class and, in particular, shall not have regard to the consequences of such exercise for individual Noteholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory. No Noteholder is entitled to claim from the Issuer, RSB or the Trustee any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders.

10.5 Appointment and Removal of Trustee The Trust Deed contains provisions for the appointment or removal of a Trustee by a meeting of Noteholders passing an Extraordinary Resolution, provided that, in the case of removal of a Trustee, at all times there remains a trustee in office after such removal. Any appointment or removal of a Trustee shall be notified to the Noteholders by the Issuer in accordance with Condition 14. The Trustee may also resign such appointment giving not less than three months’ notice to the Issuer provided that such resignation shall not become effective unless there remains a trustee in office after such resignation.

11. PRESCRIPTION Notes will become void unless presented for payment within 10 years (in the case of principal) or five years (in the case of interest) from the due date for payment in respect thereof.

12. INDEMNIFICATION OF TRUSTEE The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility in certain circumstances, including provisions relieving it from taking proceedings to enforce payment unless indemnified to its satisfaction and to be paid its costs and expenses in priority to the claims of Noteholders. The Trustee is entitled to enter into contracts or transactions with the Issuer and/or RSB and any entity related to the Issuer and/or RSB without accounting for any profit, fees, corresponding interest, discounts or share of brokerage earned, arising or resulting from any such contract or transactions. The Trustee’s responsibilities are solely those of trustee for the Noteholders on the terms of the Trust Deed. Accordingly, the Trustee makes no representations and assumes no responsibility for the validity or enforceability of the Loan Agreement or the security created in respect thereof or for the performance by the Issuer of its obligations under or in respect of the Notes and the Trust Deed or by RSB in respect of the Loan Agreement. The Trustee has no liability to Noteholders for any shortfall arising from the Trustee being subject to tax as a result of the Trustee holding or realising the Security Interests.

13. REPLACEMENT OF NOTES If any Note shall become mutilated, defaced, lost, stolen or destroyed it may, subject to all applicable laws and regulations and stock exchange requirements, be replaced at the specified office of either Registrar or at the specified office of the Principal Paying Agent in London on payment of such costs, expenses, taxes and duties as may be incurred in connection therewith and on such terms as to evidence, security and indemnity and otherwise as may reasonably be required by or on behalf of the Issuer or the Trustee. Mutilated or defaced Notes must be surrendered before replacements will be issued.

14. NOTICES All notices to the Noteholders shall be deemed to have been duly given if (i) posted to such Noteholders at their respective addresses as shown on the relevant Register and (ii) so long as the Notes are admitted to trading on the London Stock Exchange and the rules of that exchange so require, published in a daily newspaper of general circulation in London approved by the Trustee, currently expected to be the Financial Times. Any such notice shall be deemed to have been given on the first date on which both conditions shall have been met.

- 155 - In case by reason of any other cause it shall be impracticable to publish any notice to holders of Notes as provided above, then such notification to such holders as shall be given with the approval of the Trustee shall constitute sufficient notice to such holders for every purpose hereunder.

15. FURTHER ISSUES The Issuer may from time to time, without the consent of the Noteholders, create and issue further Notes having the same terms and conditions as the Notes in all respects (or in all respects except for the amount and the date of the first payment of interest) so as to be consolidated and form a single series with the Notes. Such further Notes shall be constituted by a deed supplemental to the Trust Deed between the Issuer and the Trustee. The Trust Deed contains provisions for convening a single meeting of Noteholders and the holders of Notes of other series in certain circumstances where the Trustee so decides. In relation to any further issue which is to be consolidated and form a single series with the Notes, the Issuer will enter into a loan agreement supplemental to the Loan Agreement with RSB on substantially the same terms as the Loan Agreement (or in all respects except for the amount and the date of the first payment of interest on the further Notes). The Issuer will provide a further fixed charge in favour of the Trustee and amend the existing Security Interests in respect of certain of its rights and interests under such loan agreement and will assign absolutely certain of its rights under such loan agreement which will secure both the Notes and such further Notes and which will amend and supplement the Security Interests in relation to the existing Notes of such Series.

16. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999.

17. GOVERNING LAW The Notes, the Agency Agreement, the Trust Deed and any non-contractual obligations arising out of or in connection with any of them shall be governed by, and construed in accordance with, English law. The Issuer has submitted in the Trust Deed to the jurisdiction of the courts of England and has appointed an agent for the service of process in England. For the avoidance of doubt, the provisions of articles 86 to 94-8 of the Luxembourg law of 10 August 1915, as amended, on commercial companies are excluded.

- 156 - FORM OF FINAL TERMS

Final Terms dated [Š]

Joint Stock Company “Russian Standard Bank”

Issue of [Aggregate Principal Amount of Series] [Title of Loan Participation Notes] by Russian Standard Finance S.A. for the purpose of financing a Loan to Joint Stock Company “Russian Standard Bank” under a U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes

PART A - CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”) set forth in the Base Prospectus dated 29 May 2012 [and the supplemental Base Prospectus dated [Š]] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Base Prospectus [as so supplemented]. Full information on the Issuer and RSB and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus. [The Base Prospectus [and the supplemental Base Prospectus] [is] [are] available for viewing at [address] [and] [website] and copies may be obtained from [address].]1

The following alternative language applies if the first tranche of an issue which is being increased was issued under a Base Prospectus with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the [date] Conditions (the “Conditions”) incorporated by reference into the Base Prospectus dated [Š] and which are attached hereto. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”) and must be read in conjunction with the Base Prospectus dated 29 May 2012 [and the supplemental Base Prospectus dated [Š]], which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive. [The Base Prospectus [and the supplemental Prospectuses] are available for viewing at [address] [and] [website] and copies may be obtained from [address].]1.

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]

[When completing final terms or adding any other final terms or information consideration should be given as to whether such terms or information constitute “significant new factors” and consequently trigger the need for a supplement to the Base Prospectus under Article 16 of the Prospectus Directive.]

1 Article 14.2 of the Prospectus Directive provides that a Prospectus is deemed available to the public when, inter alia, made available (i) in printed form free of charge at the offices of the market on which securities are being admitted to trading; OR (ii) at the registered office of the Issuer and at the offices of the Paying Agents; OR (iii) in an electronic form on the Issuer’s website. Article 16 of the Prospectus Directive requires that the same arrangements are applied to supplemental Prospectuses.

- 157 - 1 (i) Issuer: Russian Standard Finance S.A. (ii) Borrower: Joint Stock Company “Russian Standard Bank” 2 [(i)] Series Number: [Š] [(ii) Tranche Number: [Š] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible)] 3 Specified Currency or Currencies: [Š] (If Notes are being cleared through DTC with interest and/or principal payable in a currency other than U.S. Dollars, check whether DTC will accept payments in such currency) 4 Aggregate Nominal Amount of Notes admitted to [Š] trading: [(i)] Series: [Š] [(ii)] Tranche: [Š] 5 Issue Price: [Š] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date](in the case of fungible issues only, if applicable)] 6 (i) Specified Denominations: [Š]2 (ii) Calculation Amount [Š] 7 (i) Issue Date: [Š] (ii) Interest Commencement Date: [Š] 8 Maturity Date: [specify date or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year] 9 Notes Interest Basis: [[Š] per cent. Fixed Rate] [[specify reference rate] +/- [Š] per cent Floating Rate] (further particulars specified below) 10 Redemption/Payment Basis: [Redemption at par/other (specify)] 11 Change of Interest or Redemption/Payment Basis: [Specify details of any provision for convertibility of Notes into another interest or redemption/payment basis] 12 [(i)] Status and Form of the Notes: Senior, Registered [(ii)] [Date [Board] approval for issuance of Notes [Š] [and [Š], respectively]] (N.B. Only relevant obtained: where Board (or similar) authorisation is required for the particular tranche of Notes)] 13 Method of distribution: [Syndicated/Non-syndicated] 14 Financial Centres (Condition 7): [Š]

PROVISIONS RELATING TO INTEREST PAYABLE UNDER THE LOAN 15 Fixed Rate Note Provisions: [Applicable/Not Applicable] (if not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Rate [(s)] of Interest: [Š] per cent. per annum payable [annually/semi- annually] in arrear

2 Section 6: The issue of Notes with a maturity of less than one year by the Issuer, where the issue proceeds are to be accepted in the United Kingdom, will be subject to S19 FSMA unless their denomination is £100,000 or more (or its equivalent in other currencies) and they are only issued to "professionals" within Article 9(2) of the Financial Services and Markets Act (Regulated Activities) Order 2001: Notes (including Notes denominated in Sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of S19 FSMA and] which have a maturity of less than one year must have a minimum redemption value of £100,000 (or its equivalent in other currencies). Add appropriate provisions to terms and conditions if included.

- 158 - (ii) Interest Payment Date(s): [Š] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of “Business Day”]/not adjusted] (iii) Fixed Coupon Amount [(s)]: [Š] per Calculation Amount (iv) Broken Amount: [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Coupon Amount [(s)] and the Interest Payment Date(s) to which they relate] (v) Day Count Fraction (Condition 5): [Š] [Day count fraction should be Actual/Actual- ICMA for all fixed rate issues other than those denominated in U.S. dollars] (vi) Determination Date(s) (Condition 5): [Š] in each year. [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon]3 (vii) Other terms relating to the method of [Not Applicable/give details] calculating interest for Fixed Rate Notes: 16 Floating Rate Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Period(s): [Š] (ii) Specified Interest Payment Dates: [Š] (iii) Business Day Convention: [Floating Rate Business Day Convention/ Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day/Convention/other (give details)] (iv) Additional Business Centre(s): [Š] (v) Manner in which the Rate(s) of Interest is/ are [Screen Rate Determination/ISDA to be determined: Determination/ other (give details)] (vi) Interest Period Date(s): [Not Applicable/specify dates] (vii) Party responsible for calculating the Rate(s) of [Š] Interest and Interest Amount(s) (if not the Calculation Agent): (viii) Screen Rate Determination: As set out in the attached Loan Supplement (ix) ISDA Determination: As set out in the attached Loan Supplement (x) Margin(s): [+/-] [Š] per cent. per annum (xi) Minimum Rate of Interest: [Š] per cent. per annum (xii) Maximum Rate of Interest: [Š] per cent. per annum (xiii) Day Count Fraction (Condition 5): [Š] (xiv) Rate Multiplier: [Š] (xv) Fall back provisions, rounding provisions, [Š] denominator and any other terms relating to the method of calculating interest on Floating Rate Loans, if different from those set out in the Conditions:

3 Only to be completed for an issue where Day Count Fraction is Actual/Actual-ICMA

- 159 - PROVISIONS RELATING TO REDEMPTION 17 Final Redemption Amount of each Note: [[Š] per Note of [Š] specified denomination/Other] 18 Early Redemption Amount(s) of each Note payable if [Principal amount/Other] the Loan should become repayable under the Loan Agreement prior to the Maturity Date: 19 Put Option [Applicable/Not Applicable] [if not applicable, delete the remaining sub-paragraphs of this paragraph] (i) Put Settlement Date(s): [Š] (ii) Alternative Put Period: [Not Applicable/[Š]]

GENERAL PROVISIONS APPLICABLE TO THE NOTES 20 Form of the Notes: Registered Notes 21 Other final terms: [Not Applicable/give details] (When adding any other final terms consideration should be given as to whether such terms constitute a “significant new factor” and consequently trigger the need for a supplement to the Base Prospectus under Article 16 of the Prospectus Directive.)

DISTRIBUTION 22 (i) If syndicated, names of Managers: [Not Applicable/give names] (ii) Stabilising Manager(s) (if any): [Not Applicable/give name] 23 If non-syndicated, name of Dealer: [Not Applicable/give name] 24 U.S. Selling Restrictions [Reg. S Compliance Category [1] [2]] [Not] Rule 144A Eligible 25 Additional selling restrictions: [Not Applicable/give details]

GENERAL 26 Additional steps that may only be taken following [Not Applicable/give details] approval by an Extraordinary Resolution in accordance with Condition 10: 27 The aggregate principal amount of Notes issued has [Not Applicable/U.S.$[Š]] been translated into U.S. dollars at the rate of [Š], producing a sum of (for Notes not denominated in U.S. dollars):

[LISTING AND ADMISSION TO TRADING APPLICATION

These Final Terms comprise the final terms required to list and have admitted to trading the issue of Notes described herein pursuant to the U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes of RSB.]

- 160 - RESPONSIBILITY The Issuer and RSB accept responsibility for the information contained in these Final Terms [[Š] has been extracted from [Š]]. [Each of the Issuer and RSB confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by [Š], no facts have been omitted which would render the reproduced inaccurate or misleading.]

Signed on behalf of the Issuer: Signed on behalf of RSB:

By: By: Director Duly authorised

By: By: Director Duly authorised

- 161 - PART B - OTHER INFORMATION

1 LISTING (i) Listing: [London other (specify)/None] (ii) Admission to trading: [Application has been made for the Notes to be admitted to trading on [Š] with effect from [Š].] [Not Applicable.] (iii) Estimate of total expenses related [Š] to admission to trading:

2 RATINGS Ratings: The Notes to be issued have been rated: [S&P*: [Š]] [Moody’s*: [Š]] [[Other]*: [Š]] [*The full name of the rating agency providing the rating should be inserted] (The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating.) [Insert legal name of credit rating agency] is established in the EU and registered under Regulation (EC) No 1060/2009, as amended (the “CRA Regulation”).] [Insert legal name of credit rating agency] is established in the EU and is not registered under Regulation (EC) No 1060/2009 (the “CRA Regulation”).] [Insert legal name of credit rating agency] is not established in the EU but the rating it has given to the Notes is endorsed by [insert legal name of credit rating agency], which is established in the EU and registered under Regulation (EC) No 1060/2009 (the “CRA Regulation”).] [Insert legal name of credit rating agency] is not established in the EU but is certified under Regulation (EC) No 1060/2009 (the “CRA Regulation”).] [Insert legal name of credit rating agency] is not established in the EU and is not certified under Regulation (EU) No 1060/2009, (the “CRA Regulation”) and the rating it has given to the Notes is not endorsed by a credit rating agency established in the EU and registered under the CRA Regulation.]

3 [NOTIFICATION The [include name of competent authority in EEA home Member State] [has been requested to provide/has provided - include first alternative for an issue which is contemporaneous with the establishment or update of the Programme and the second alternative for subsequent issues] the [include names of competent authorities of host Member States] with a certificate of approval attesting that the Base Prospectus has been drawn up in accordance with the Prospectus Directive.]

- 162 - 4 [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER] If applicable a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest is to be included. This may be satisfied by the inclusion of the following statement: “Save as discussed in [“Subscription and Sale”], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.”]4

5 [Fixed Rate Notes only - YIELD Indication of yield: [Š]. The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.]

6 OPERATIONAL INFORMATION ISIN Code (Reg S Notes): [Š] ISIN Code (Rule 144A Notes): [Š] Common Code (Reg S Notes): [Š] Common Code (Rule 144A Notes): [Š] Rule 144A CUSIP number: [Š] Any clearing system(s) other than Euroclear [Not Applicable/give name(s) and number(s) [and Bank SA/NV and Clearstream Banking addresses])] societe anonyme [or DTC] and the relevant identification number(s): Delivery: Delivery [against/free of] payment Names and addresses of additional Paying [Š] Agent(s) (if any):

[THE FINAL FORM OF LOAN SUPPLEMENT WILL BE ATTACHED]

4 If there are material interests, but they are not discussed in "Subscription and Sale", insert the section name where they are discussed instead. If there are no material interests, delete the whole of paragraph 4.

- 163 - SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM

The Global Notes Each Series of Notes will be evidenced on issue by (i) in the case of Regulation S Notes, a Regulation S Global Note deposited with, and registered in the name of a nominee for, a common depositary for Euroclear and Clearstream, Luxembourg and (ii) in the case of Rule 144A Notes, a Rule 144A Global Note deposited with a custodian for, and registered in the name of Cede & Co. as nominee of, DTC.

Beneficial interests in a Regulation S Global Note may be held only through Euroclear or Clearstream, Luxembourg at any time. See “Book-Entry Procedures for the Global Notes”. By acquisition of a beneficial interest in a Regulation S Global Note, the purchaser thereof will be deemed to represent, among other things, that it is not a U.S. person and that, prior to the expiration of 40 days after completion of the distribution of the Series of which such Notes are a part as determined and certified to the Principal Paying Agent by the relevant Dealer (or in the case of a Series of Notes sold to or through more than one relevant Dealer, each of such relevant Dealers as to the Notes of such Series sold by or through it, in which case the Principal Paying Agent shall notify each such relevant Dealer when all relevant Dealers have so certified (the “distribution compliance period”), it will not offer, sell, pledge or otherwise transfer such interest except to a person whom the seller reasonably believes to be a non-U.S. person in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S. See “Transfer Restrictions”. Beneficial interests in a Rule 144A Global Note may only be held through DTC at any time. See “Book-Entry Procedures for the Global Notes”. By acquisition of a beneficial interest in a Rule 144A Global Note, the purchaser thereof will be deemed to represent, among other things, that if it is a U.S. person (within the meaning of Regulation S), it is a QIB that is also a QP and that, if in the future it determines to transfer such beneficial interest, it will transfer such interest in accordance with the procedures and restrictions contained in the Agency Agreement. See “Transfer Restrictions”.

Beneficial interests in each Global Note will be subject to certain restrictions on transfer set forth therein and in the Agency Agreement, and with respect to a Rule 144A Global Note, as set forth in Rule 144A, and the Rule 144A Notes will bear the legends set forth thereon regarding such restrictions set forth under “Transfer Restrictions”. A beneficial interest in a Regulation S Global Note may be transferred to a person who takes delivery in the form of an interest in a Rule 144A Global Note in denominations greater than or equal to the minimum denominations applicable to interests in a Rule 144A Global Note and only upon receipt by the Registrar of a written certification (in the form provided in the Paying Agency Agreement) to the effect that the transferor reasonably believes that the transferee is a QIB that is also a QP and that such transaction is in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. Beneficial interests in a Rule 144A Global Note may be transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note only upon receipt by the Registrar of a written certification (in the form provided in the Paying Agency Agreement) from the transferor to the effect that the transfer is being made to a non-U.S. person located outside of the United States in an offshore transaction in accordance with Regulation S.

Any beneficial interest in a Regulation S Global Note that is transferred to a person who takes delivery in the form of an interest in a Rule l44A Global Note will, upon transfer, cease to be an interest in the Regulation S Global Note and become an interest in the Rule 144A Global Note, and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in the Rule 144A Global Note for as long as it remains such an interest. Any beneficial interest in a Rule 144A Global Note that is transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note will, upon transfer, cease to be an interest in the Rule 144A Global Note and become an interest in the Regulation S Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in the Regulation S Global Note for so long as it remains such an interest. No service charge will be made for any registration of transfer or exchange of Notes, but the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Except in the limited circumstances described below, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of certificated Notes in definitive form (the “Definitive Notes”). The Notes are not issuable in bearer form.

Amendments to Conditions Each Global Note contains provisions that apply to the Notes that they represent, some of which modify the effect of the above Terms and Conditions of the Notes. The following is a summary of those provisions: • Payments. Payments of principal and interest in respect of Notes evidenced by a Global Note will be made against presentation for endorsement by the Principal Paying Agent and, if no further payment falls to be

- 164 - made in respect of the relevant Notes, surrender of such Global Note to or to the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to the relevant Noteholders for such purpose. A record of each payment so made will be endorsed in the appropriate schedule to the relevant Global Note, which endorsement will be prima facie evidence that such payment has been made in respect of the relevant Notes. All payments in respect of the Notes represented by a Global Note will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday (inclusive) except 25 December and 1 January. • Notices. So long as any Notes are evidenced by a Global Note and such Global Note is held by or on behalf of a clearing system, notices to the Noteholders may be given by delivery of the relevant notice to that clearing system for communication by it to entitled account holders in substitution for delivery thereof as required by the Terms and Conditions of such Notes provided that, in the case of Notes listed, traded or quoted on any listing authority, stock exchange and/or quotation system, the requirements of such listing authority, stock exchange or quotation system are complied with. • Meetings. The holder of each Global Note will be treated as being one person for the purposes of any quorum requirements of, or the right to demand a poll at, a meeting of Noteholders and in any such meeting as having one vote in respect of Notes for which the relevant Global Note may be exchangeable. • Trustee’s Powers. In considering the interests of the Noteholders while the relevant Global Note is held on behalf of a clearing system, the Trustee, to the extent it considers it appropriate to do so in the circumstances, may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to such Global Note and may consider such interests as if such accountholders were the holders of such Global Note. • Cancellation. Cancellation of any Note required by the Terms and Conditions of the Notes to be cancelled will be effected by reduction in the principal amount of the applicable Global Note.

Exchange for Definitive Notes Exchange Each Global Note will be exchangeable, free of charge to the holder, in whole but not in part, for Notes in definitive, registered form if: (i) a Global Note is held by or on behalf of (A) DTC, and DTC notifies the Issuer that it is no longer willing or able to discharge properly its responsibilities as depositary with respect to the Global Note or ceases to be a “clearing agency” registered under the Exchange Act or if at any time it is no longer eligible to act as such, and the Issuer is unable to locate a qualified successor within 90 days of receiving notice or becoming aware of such ineligibility on the part of DTC or (B) Euroclear or Clearstream, Luxembourg, and Euroclear or Clearstream, Luxembourg, as the case may be, is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so, by the holder giving notice to the Registrar or any Transfer Agent or (ii) if the Issuer would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations (taxation or otherwise) of any jurisdiction referred to in Condition 8 which would not be suffered were the Notes in definitive form and a notice to such effect signed by two directors of the Issuer is delivered to the Trustee, by the Issuer giving notice to the Registrar or any Transfer Agent and the Noteholders, of its intention to exchange the Global Note for Definitive Notes on or after the Exchange Date (as defined below) specified in the notice.

On or after the Exchange Date, the holder of the relevant Global Note may surrender such Global Note to or to the order of the Registrar or any Transfer Agent. In exchange for the relevant Global Note, as provided in the Paying Agency Agreement, the Registrar will deliver, or procure the delivery of, an equal aggregate amount of duly executed and authenticated Definitive Notes in or substantially in the form set out in the relevant schedule to the Trust Deed.

The Registrar will not register the transfer of, or exchange of interests in, a relevant Global Note for Definitive Notes for a period of 15 calendar days ending on the date for any payment of principal or interest or on the date of optional redemption in respect of the Notes.

“Exchange Date” means a day falling not later than 90 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Registrar or the Transfer Agent is located.

- 165 - Delivery In such circumstances, the relevant Global Note shall be exchanged in full for Definitive Notes and the Issuer will, at the cost of RSB (but against such indemnity as the relevant Registrar or any relevant Transfer Agent may require in respect of any tax or other duty of whatever nature which may be levied or imposed in connection with such exchange), cause sufficient Definitive Notes to be executed and delivered to the Registrar for completion, authentication and dispatch to the relevant Noteholders. A person having an interest in a Global Note must provide the Registrar with (a) a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Notes and (b) in the case of a Rule 144A Global Note only, a fully completed, signed certification substantially to the effect that the exchanging holder is not transferring its interest at the time of such exchange or, in the case of simultaneous sale pursuant to Rule l44A, a certification that the transfer is being made in compliance with the provisions of Rule l44A to a QIB that is also a QP. Definitive Notes issued in exchange for a beneficial interest in a Rule 144A Global Note shall bear the legend applicable to transfers pursuant to Rule 144A, as set out under “Transfer Restrictions”.

Legends The holder of a Definitive Note may transfer the Notes evidenced thereby in whole or in part in the applicable minimum denomination by surrendering it at the specified office of the relevant Registrar or any Transfer Agent, together with the completed form of transfer thereon. Upon the transfer, exchange or replacement of a Rule 144A Note in definitive form (“Rule 144A Definitive Note”) bearing the legend referred to under “Transfer Restrictions”, or upon specific request for removal of the legend on a Rule 144A Definitive Note, the Issuer will deliver only Rule 144A Definitive Notes that bear such legend, or will refuse to remove such legend, as the case may be, unless there is delivered to the Issuer and the relevant Registrar such satisfactory evidence, which may include an opinion of counsel, as may reasonably be required by the Issuer that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act and the Investment Company Act.

Book-Entry Procedures for the Global Notes For each Series of Notes evidenced by both a Regulation S Global Note and a Rule 144A Global Note custodial and depository links are to be established between DTC, Euroclear and Clearstream, Luxembourg to facilitate the initial issue of the Notes and cross-market transfers of the Notes associated with secondary market trading. See “Book Entry Ownership-Settlement and Transfer of Notes”.

Euroclear and Clearstream, Luxembourg Euroclear and Clearstream. Luxembourg each hold securities for their customers and facilitate the clearance and settlement of securities transactions through electronic book-entry transfer between their respective accountholders. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions which clear through or maintain a custodial relationship with an accountholder of either system. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective customers may settle trades with each other. Their customers are worldwide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Investors may hold their interests in such Global Notes directly through Euroclear or Clearstream, Luxembourg if they are accountholders (“Direct Participants”) or indirectly (“Indirect Participants” and together with Direct Participants, “Participants”) through organisations which are accountholders therein.

DTC Depository Trust Company (“DTC”) has advised the Issuer as follows: DTC is a limited purpose trust company organised under the laws of the State of New York, a “banking organisation” under the laws of the State of New York, a member of the U.S. Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its Participants and facilitate the clearance and settlement of securities transactions between Participants through electronic computerised book entry changes in accounts of its Participants, thereby eliminating the need for physical movement of certificates.

- 166 - Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to DTC is available to others, such as banks, securities brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a DTC Direct Participant, either directly or indirectly.

Investors may hold their interests in Rule 144A Global Notes directly through DTC if they are Direct Participants in the DTC system, or as Indirect Participants through organisations which are Direct Participants in such system.

DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Direct Participants and only in respect of such portion of the aggregate principal amount of the relevant Rule 144A Global Notes as to which such Participant or Participants has or have given such direction. However, in the circumstances described under “Exchange for Definitive Notes,” DTC will surrender the relevant Rule l44A Global Notes for exchange for individual Rule 144A Definitive Notes (which will bear the legend applicable to transfers pursuant to Rule 144A).

Book-Entry Ownership Euroclear and Clearstream, Luxembourg The Regulation S Global Note representing Regulation S Notes of any Series will have an ISIN and a Common Code and will be registered in the name of a nominee for, and deposited with a common depositary on behalf of, Euroclear and Clearstream, Luxembourg. The address of Euroclear is 1 Boulevard du Roi Albert II, B1210 Brussels, Belgium, and the address of Clearstream, Luxembourg is 42 Avenue J.F. Kennedy, L 1855, Luxembourg.

DTC The Rule 144A Global Note representing interests in Rule 144A Notes of any Series will have a CUSIP number and will be deposited with a custodian for and registered in the name of Cede & Co. as nominee of, DTC. The Custodian and DTC will electronically record the principal amount of the Notes held within the DTC System. The address of DTC is 55 Water Street, New York, New York 10041, USA.

Relationship of Participants with Clearing Systems Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the holder of a Note evidenced by a Global Note must look solely to Euroclear, Clearstream, Luxembourg or DTC (as the case may be) for his share of each payment made by the Issuer to the holder of such Global Note and in relation to all other rights arising under the Global Note, subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg or DTC (as the case may be). The Issuer expects that, upon receipt of any payment in respect of Notes evidenced by a Global Note, the common depositary by whom such Note is held, or nominee in whose name it is registered, will immediately credit the relevant participants’ or accountholders’ accounts in the relevant clearing system with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant Global Note as shown on the records of the relevant clearing system or its nominee. The Issuer also expects that payments by Direct Participants in any clearing system to owners of beneficial interests in any Global Note held through such Direct Participants in any clearing system will be governed by standing instructions and customary practices. Save as aforesaid, such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are evidenced by such Global Note and the obligations of the Issuer will be discharged by payment to the registered holder, as the case may be, of such Global Note in respect of each amount so paid. None of the Issuer, the Trustee or any Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of ownership interests in any Global Note or for maintaining, supervising or reviewing any records relating to such ownership interests.

Settlement and Transfer of Notes Subject to the rules and procedures of each applicable clearing system, purchases of Notes held within a clearing system must be made by or through Direct Participants, which will receive a credit for such Notes on the clearing system’s records. The ownership interest of each actual purchaser of each such Note (the “Beneficial Owner”) will in turn be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from any clearing system of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which such Beneficial Owner entered into the transaction.

- 167 - Transfers of ownership interests in Notes held within the clearing system will be affected by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in such Notes, unless and until interests in any Global Note held within a clearing system are exchanged for Definitive Notes.

No clearing system has knowledge of the actual Beneficial Owners of the Notes held within such clearing system and their records will reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by the clearing systems to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

The laws of some jurisdictions may require that certain persons take physical delivery in definitive form of securities. Consequently, the ability to transfer interests in a Global Note to such persons may be limited.

Because DTC can only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants, the ability of a person having an interest in a Rule l44A Global Note to pledge such interest to persons or entities that do not participate in DTC, or otherwise take actions in respect of such interest, may be affected by a lack of physical certificate in respect of such interest.

Trading between Euroclear and/or Clearstream, Luxembourg Participants Secondary market sales of book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and Clearstream, Luxembourg and will be settled using the procedures applicable to conventional Eurobonds.

Trading between DTC Participants Secondary market sales of book-entry interests in the Notes between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to United States corporate debt obligations in DTC’s Same-Day Funds Settlement (“SDFS”) system in same-day funds, if payment is effected in U.S. Dollars, or free of payment, if payment is not effected in U.S. Dollars.

Where payment is not effected in U.S. Dollars, separate payment arrangements outside DTC are required to be made between the DTC participants.

Trading between DTC seller and Euroclear/Clearstream, Luxembourg purchaser When book-entry interests in Notes are to be transferred from the account of a DTC participant holding a beneficial interest in a Rule 144A Global Note to the account of a Euroclear or Clearstream, Luxembourg accountholder wishing to purchase a beneficial interest in a Regulation S Global Note (subject to the certification procedures provided in the Agency Agreement), the DTC participant will deliver instructions for delivery to the relevant Euroclear or Clearstream, Luxembourg accountholder to DTC by 12 noon, New York time, on the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg participant. On the settlement date, the custodian of the Rule l44A Global Notes will instruct the Registrar to (i) decrease the amount of Notes registered in the name of Cede & Co. and evidenced by the Rule 144A Global Note of the relevant Series and (ii) increase the amount of Notes registered in the name of the nominee of the common depositary for Euroclear and Clearstream, Luxembourg and evidenced by Regulation S Global Note of the relevant Series. Book-entry interests will be delivered free of payment to Euroclear or Clearstream, Luxembourg, as the case may be, for credit to the relevant accountholder on the first business day following the settlement date.

Trading between Euroclear/Clearstream, Luxembourg Seller and DTC Purchaser When book-entry interests in the Notes are to be transferred from the account of a Euroclear or Clearstream, Luxembourg accountholder to the account of a DTC participant wishing to purchase a beneficial interest in a Rule 144A Global Note (subject to the certification procedures provided in the Agency Agreement), the Euroclear or Clearstream, Luxembourg participant must send to Euroclear or Clearstream, Luxembourg delivery free of payment instructions by 7:45 p.m., Brussels or Luxembourg time, one business day prior to the settlement date. Euroclear or Clearstream, Luxembourg, as the case may be, will in turn transmit appropriate instructions to

- 168 - the common depositary for Euroclear and Clearstream, Luxembourg and the Registrar to arrange delivery to DTC participant on the settlement date. Separate payment arrangements are required to be made between DTC participant and the relevant Euroclear or Clearstream, Luxembourg accountholder, as the case may be. On the settlement date, the common depositary for Euroclear and Clearstream, Luxembourg will (a) transmit appropriate instructions to the custodian of the Rule 144 A Global Note who will in turn deliver such book-entry interests in the Notes free of payment to the relevant account of DTC participant and (b) instruct the Registrar to (i) decrease the amount of Notes registered in the name of the nominee of the common depositary for Euroclear and Clearstream, Luxembourg and evidenced by a Regulation S Global Note; and (ii) increase the amount of Notes registered in the name of Cede & Co. and evidenced by a Rule 144A Global Note.

Although Euroclear, Clearstream, Luxembourg and DTC have agreed to the foregoing procedures in order to facilitate transfers of beneficial interests in Global Notes among participants and accountholders of Euroclear, Clearstream, Luxembourg and DTC, they are under no obligation to perform or continue to perform such procedure, and such procedures may be discontinued at any time. None of the Issuer, the Trustee or any Agent will have the responsibility for the performance by Euroclear, Clearstream, Luxembourg or DTC or their respective Direct or Indirect Participants of their respective obligations under the rules and procedures governing their operations.

Pre-issue Trades Settlement It is expected that delivery of Notes will be made against payment therefor on the Closing Date thereof, which could be more than three business days following the date of pricing. Under Rule 15c6-1 under the Exchange Act, trades in the United States secondary market generally are required to settle within three business days (T+3), unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes in the United States on the date of pricing or the next succeeding business days until three days prior to the relevant Closing Date will be required, by virtue of the fact the Notes initially will settle beyond T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement.

Settlement procedures in other countries will vary. Purchasers of Notes may be affected by such local settlement practices, and purchasers of Notes between the relevant date of pricing and the relevant Closing Date should consult their own advisers.

- 169 - TAXATION The following is a general description of certain tax considerations relating to the Notes. It does not purport to be a complete analysis of all tax considerations that may be relevant to each Series of the Notes or any particular Noteholder, including tax considerations that arise from rules of general application or that are generally assumed to be known to Noteholders. Prospective purchasers of any Series of the Notes should consult their own tax advisers as to which countries’ tax laws could be relevant to acquiring, holding and disposing of any Series of the Notes and receiving payments of interest, principal and/or other amounts under any Series of the Notes and the consequences of such actions under the tax laws of those countries. This summary is based upon the law as in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date. Neither RSB nor the Issuer assumes any obligation to update this section after the date of this Base Prospectus for any such changes in law. The information and analysis contained within this section are limited to taxation issues, and prospective investors should not apply any information or analysis set out below to other areas, including (but not limited to) the legality of transactions involving any Series of the Notes.

Russian Taxation General The following is a summary of certain Russian tax considerations relevant to the purchase, ownership and disposition of any Series of Notes as well as taxation of interest payments on any corresponding Loan. The summary is based on the laws of Russia in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date (possibly with retroactive effect). The information and analysis contained within this section are limited to taxation issues, and prospective investors should not apply any information or analysis set out below to other areas, including (but not limited to) the legality of transactions involving any Series of Notes. The summary does not seek to address the applicability of, and procedures in relation to, taxes levied by regions, municipalities or other non-federal authorities of Russia. Nor does the summary seek to address the availability of double tax treaties and the eligibility of double tax treaty relief in respect of any Series of Notes, and it should be noted that there may be practical difficulties, including satisfying certain documentation requirements, involved in claiming and obtaining such double tax treaty relief. Prospective investors should consult their own tax advisers regarding the tax consequences of investing in any Series of Notes in their own particular circumstances. No representation with respect to the Russian tax consequences of investing, owning or disposing of the Notes to any particular Noteholder is made hereby. Many aspects of Russian tax law are subject to significant uncertainty and lack interpretive guidance. Further, the substantive provisions of Russian tax law applicable to financial instruments and the interpretation and application of those provisions by the Russian tax authorities may be subject to more rapid and unpredictable change (possibly with retroactive effect) and inconsistency than in jurisdictions with more developed capital markets or more developed taxation systems. In particular, the interpretation and application of such provisions will in practice rest substantially with local tax inspectorates. In practice, interpretation by different tax inspectorates may be inconsistent or contradictory and may result in the imposition of conditions, requirements or restrictions not provided for by the existing legislation. Similarly, in the absence of binding precedents court rulings on tax or related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. For the purposes of this summary, a “Non-Resident Noteholder” means: • an individual Noteholder actually present in Russia for an aggregate period of less than 183 calendar days (including days of arrival to Russia and including days of departure from Russia) in any period comprising 12 consecutive months. Presence in Russia for tax residency purposes is not considered interrupted for an individual’s short term departure (less than 6 months) from Russia for medical treatment or education. The interpretation of this definition by the Ministry of Finance of the Russian Federation states that for tax withholding purposes an individual’s tax residence status should be determined on the date of income payment (based on the number of Russian days in the 12-month period preceding the date of payment). The individual’s final tax liability in the Russian Federation for the reporting calendar year should be determined based on the number of days spent in Russia in such calendar year; or • a legal entity or organisation, in each case not organised under Russian law, which purchases, holds and/or disposes of the Notes otherwise than through a permanent establishment in Russia (as defined by Russian tax law). A“Resident Noteholder” means any Noteholder (including any individual and any legal entity or organisation) who is not a Non-Resident Noteholder.

- 170 - Russian tax residency rules may be affected by an applicable double tax treaty. Based on published comment of the Russian authorities, it is anticipated that the Russian tax residency rules applicable to legal entities may change in the future.

The Russian tax treatment of interest payments made by RSB to the Issuer (or to the Trustee, as the case may be) under any Loan Agreement may affect the Noteholders. See “Taxation of Interest on the Loan” below.

Taxation of the Notes Non-Resident Noteholders A Non-Resident Noteholder should not be subject to any Russian taxes in respect of payments of interest and repayments of principal on the Notes of any Series received from the Issuer, subject to what is stated in “Taxation of Interest on the Loan”.

A Non-Resident Noteholder also generally should not be subject to any Russian taxes in respect of the purchase of the Notes of any Series, any gain or other income realised on redemption, sale or other disposition of the Notes of any Series outside Russia, provided that the proceeds from such redemption, sale or other disposition are not received from a source within Russia.

In the event that proceeds from a sale, redemption or disposition of the Notes of any Series are received from a source within Russia, a Non-Resident Noteholder, that is a legal entity or organisation, should not generally be subject to Russian withholding tax on any gain on the sale or other disposition of the Notes of any Series, although there is some residual uncertainty regarding the treatment of the portion of the proceeds, if any, that is attributable to accrued interest on the relevant Notes. If the payment upon the sale or other disposal of the Notes is received from within Russia, accrued interest may be distinguished from the total gain and taxed at a rate of 20 per cent. Russian withholding tax. The separate taxation of the interest accrued may create a tax liability in relation to interest even in a situation of a capital loss on the disposal of the Notes of any Series. The withholding tax on any part of the payment relating to interest may potentially be reduced or eliminated under the terms of an applicable double tax treaty depending on the residence of the Non-Resident Noteholder.

If income from a sale, redemption or disposition of the Notes of any Series is received from a source within Russia, a Non-Resident Noteholder who is an individual will generally be subject to Russian personal income tax at a rate of 30 per cent. on the gain from such disposal (the gain generally being calculated as the gross proceeds from such disposal less any available cost deduction which includes the purchase price of the Notes), subject to any available double tax treaty relief. According to Russian tax legislation, income received from a sale, redemption or disposition of the Notes of any Series should be treated as having been received from a Russian source if such sale, redemption or disposition occurs in Russia. Russian tax law gives no clear indication as to how to identify the source of income received from a sale, redemption or disposition of securities except that income received from the sale of securities “in Russia” will be treated as having been received from a Russian source. The taxable base should be calculated in roubles and, therefore, may be affected by changes in the exchange rate between the currency of acquisition of the Notes of any Series, the currency of disposition of the Notes and roubles. The tax may be withheld at source of payment or, if the tax is not withheld, the Non-Resident Noteholder may be liable to declare its income in Russia and to pay the tax.

Additionally, acquisition of the Notes by a non-resident Noteholder who is an individual may constitute a taxable event pursuant to provisions of the Russian Tax Code relating to the material benefit (deemed income) received by individuals as a result of acquisition of securities. If the acquisition price of the Notes is below the lower margin of fair market value calculated under a specific procedure for the determination of market prices of securities for tax purposes, the difference may be subject to the Russian personal income tax at a rate of 30 per cent. (arguably, this would be subject to reduction or elimination under the applicable double tax treaty).

As noted above with respect to the disposal of the Notes, under Russian tax legislation, taxation of the income of non-resident Noteholders who are individuals will depend on whether this income would be assessed as received from Russian or non-Russian sources. Although Russian tax legislation does not contain any provisions on how the related material benefit should be sourced, the tax authorities may infer that such income should be considered as Russian source income if the Notes are purchased “in Russia”. In the absence of any additional guidance as to what should be considered as a purchase of securities “in Russia”, the Russian tax authorities may apply various criteria in order to determine the source of the related material benefit, including looking at the place of conclusion of the acquisition transaction, the location of the Issuer, or other similar criteria.

- 171 - Non-Resident Noteholders should consult their own tax advisers with respect to the tax consequences of an acquisition and disposition of the Notes of any Series and the tax consequences of the receipt of proceeds from a source within Russia in respect of a disposition of the Notes of any Series.

Double Tax Treaty Relief Russia has entered into double tax treaties with a number of countries and honours some double tax treaties entered into by the former USSR. These tax treaties may contain provisions that reduce or eliminate Russian tax due with respect to income received from a source within Russia by a non-resident Noteholder on disposition of the Notes of any Series.

Where proceeds from the disposition of Notes of any Series are received from a Russian source, withholding tax on interest or on capital gains (if applicable under Russian domestic tax law) may be reduced or eliminated in accordance with the provisions of an applicable double tax treaty. Advance treaty relief should be available for those eligible, subject to the requirements of the laws of Russia. In order for a Non-Resident Noteholder, whether an individual, legal entity or organisation, to enjoy the benefits of an applicable double tax treaty, documentary evidence is required to confirm the applicability of the double tax treaty for which benefits are claimed. Currently, to rely on tax treaty benefits, a Non-Resident Noteholder which is a legal entity or organisation would need to provide a certificate of tax residence issued by the competent tax authority of the relevant treaty country in advance of the first payment of income in each calendar year. This certificate should be apostilled or legalised and needs to be renewed on an annual basis. A notarised Russian translation of the certificate would also be required. A Non-Resident Noteholder who is an individual must provide to the tax authorities (together with other documents) a tax residency certificate issued by the competent authorities in his/her country of residence for tax purposes and a confirmation certified by the relevant foreign tax authorities of income received and the tax payment made outside Russia on income with respect to which treaty benefits are claimed. Because of uncertainties regarding the form and procedures for providing such documentary proof, individuals in practice may not be able to obtain an advance relief on receipt of proceeds from a source within Russia and obtaining a refund can be extremely difficult.

Non-Resident Noteholders should consult their own tax advisers regarding possible tax treaty relief and procedures for obtaining such relief with respect to any Russian taxes imposed on proceeds received from a disposition of Notes of any Series.

Refund of Tax Withheld Where double tax treaty relief is available but Russian income tax has nevertheless been withheld at source by the payer of the proceeds, an application for the refund of the taxes withheld may be filed by the Non-resident Noteholders which are legal entities or organisations within three years from the end of the tax period in which the tax was withheld for Non-Resident Noteholders.

In order to obtain a refund, the Non-Resident Noteholder would need to file with the Russian tax authorities a duly notarised, apostilled and translated certificate of tax residence issued by the competent tax authority of the relevant treaty country, as well as documents confirming receipt of income and withholding of Russian tax. In addition, a Non-Resident Noteholder who is an individual would need to provide appropriate documentary proof of tax payments made outside of Russia on income with respect to which tax refund is claimed. The supporting papers shall be provided within one year after the year to which the treaty benefits relates for Non-Resident Noteholders who are individuals. The Russian tax authorities may, in practice, require a wide variety of documentation confirming a Noteholder’s right to benefit under a double tax treaty. Such documentation, in practice, may not be explicitly required by the Tax Code. Obtaining a refund of Russian tax withheld may be a time-consuming process and can involve considerable practical difficulties.

Noteholders, whether individuals or organisations, should consult their own tax advisers should they need to obtain refund of tax withheld on any payments from the Notes.

Resident Noteholders A Resident Noteholder will generally be subject to all applicable Russian taxes in respect of the purchase of the Notes of any Series and income received on the Notes of any Series, including gains from a disposition of the Notes and interest received on such Notes. Resident Noteholders should consult their own tax advisers with respect to their tax position regarding Notes of any Series.

- 172 - Taxation of Interest on the Loan

In general, payments of interest on borrowed funds by a Russian entity to a non-resident legal entity or organisation are subject to Russian withholding tax at a rate of 20 per cent., subject to reduction or elimination pursuant to the terms of the applicable double tax treaty. RSB believes, based on (i) arguments supporting the application of benefits under the Russia-Luxembourg Tax Convention, and (ii) the likely effect of the proposed changes to the Russian Tax Code expected to come into force, that payments of interest to the Issuer on each Loan should not be subject to withholding tax. However, in relation to (i) above and because of a recent change in the approach of the Russian tax authorities towards application of benefits envisaged by double tax treaties, there can be no assurance that such treaty relief will be available and/or that such relief will continue to be obtained in practice during the terms of Notes of any Series. See “Risk Factors - Risks Related to the Notes and the Trading Market - RSB’s payments under Loans may be subject to Russian withholding tax”.

If interest under the relevant Loan becomes payable to the Trustee pursuant to the Trust Deed, any benefit of the Russia-Luxembourg Tax Convention will cease and payments of interest may be subject to Russian withholding tax at a rate of 20 per cent. (or, potentially, at a rate of 30 per cent. in respect to Non-Resident Noteholders who are individuals) or such other rate as may be in force at the time of payment. It is not expected that the Trustee will, or will be able to, claim a withholding tax exemption under any double tax treaty under such circumstances. In such cases, Noteholders may seek a reduction or refund of withholding tax under double taxation treaties entered into between their countries of residence and Russia, where such treaties exist and to the extent they are applicable. There is no assurance that treaty relief will be available.

Application of tax benefits under the double tax treaty could be influenced by the recently-proposed changes to Russian tax legislation (as discussed in section “Risk Factors - Risks Related to the Notes and the Trading Market - RSB’s payments under Loans may be subject to Russian withholding tax”). Currently, it is not clear when or if such changes will come into force and how they will be applied in practice. At this time it is not possible to determine the extent to which such amendments could impact the application of the double tax treaty benefits to the interest payments made by RSB under any Loan. Therefore, there can be no assurance that such double tax treaty relief will continue to be available.

If payments under any Loan are subject to any Russian withholding tax (as a result of which the Issuer would reduce payments under the corresponding Series of Notes, as the case may be, by the amount of such withholding), RSB is obliged (subject to certain conditions) to increase payments as may be necessary so that the net payments received by the Issuer and Noteholders will be equal to the amounts they would have received in the absence of such withholding (the “Additional Amounts”). It should be noted, however, that the tax gross-up provisions may not be enforceable under Russian law. In the event that RSB fails to make increased payments, such failure would constitute an Event of Default pursuant to the relevant Loan Agreement. If RSB is obliged to increase payments, it may (without premium or penalty), subject to certain conditions, prepay such Loan in full. In such case, all outstanding Notes of the corresponding Series would each be redeemable at par together with accrued and unpaid interest and Additional Amounts, if any, to the date of redemption.

Value Added Tax

Russian VAT is not applied to the rendering of financial services involving the provision of a loan in monetary form. Therefore, no VAT will be payable in Russia in respect of interest and principal payments under each Loan.

EU Savings Directive on the Taxation of Savings Income in the Form of Interest Payments (Directive 2003/48/EC) (the “Savings Directive”)

Under the Savings Directive, each Member State of the European Union (“Member State”) is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a paying agent within the meaning of the Savings Directive (the “Paying Agent”) to an individual resident or certain types of entities called “residual entities”, within the meaning of Article 4.2 of the Savings Directive (the “Residual Entities”) established in that other Member State (or certain dependent or associated territories). However, for a transitional period, Austria and Luxembourg were permitted to apply an optional information reporting system whereby if a beneficial owner, within the meaning of the Savings Directive, does not comply with one of the procedures for information reporting, the relevant Member State will levy a

- 173 - withholding tax on payments to such beneficial owner. The withholding tax system applies for a transitional period during which the rate of withholding is 35 per cent. as from 1 July 2011 and will apply until the end of the transitional period. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments.

A number of non-EU countries (Switzerland, Andorra, Liechtenstein, Monaco and San Marino) have agreed to adopt similar measures (either provision of information or transitional withholding) relating to payments made by a Paying Agent within its jurisdiction to, or collected by such a Paying Agent for, an individual resident or a Residual Entity established in a Member State. In addition, Luxembourg has entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories (Jersey, Guernsey, Isle of Man, Montserrat, British Virgin Islands, the former Netherlands Antilles, Turks and Caicos Islands, Anguilla, Cayman Islands and Aruba) in relation to payments made by a Paying Agent in a Member State to, or collected by such a paying agent for, an individual resident or a Residual Entity established in one of those territories.

On 13 November 2008, the European Commission published a proposal for amendments to the Savings Directive, which included a number of suggested changes. The aim of this proposal is to reinforce the scope and the perimeter of application of the Savings Directive. The European Parliament approved an amended version of this proposal on 24 April 2009. If implemented, the proposed amendments would, inter alia, (i) extend the scope of the Savings Directive to payments made through certain intermediate structures (whether or not established in an EU Member State) for the ultimate benefit of EU resident individuals, and (ii) provide for a wider definition of interest subject to the Savings Directive.

Noteholders should consult their own tax advisers regarding the implications of the Savings Directive in their particular circumstances.

Luxembourg Taxation Withholding tax All payments of interest and principal by the Issuer in the context of the holding, disposal, redemption or repurchase of the Notes can be made free and clear of any withholding or deduction for or on account of any taxes of whatsoever nature imposed, levied, withheld, or assessed by Luxembourg or any political subdivision or taxing authority thereof or therein, in accordance with applicable Luxembourg law, subject to exceptions in the following regulations: (i) the application of the laws dated 21 June 2005 implementing the Savings Directive and several agreements concluded with certain dependent or associated territories, providing for the possible application of a withholding tax (35 per cent. as from 1 July 2011) on interest paid to certain non-Luxembourg resident investors (individuals and certain types of entities called “Residual Entities”) in the event of the Issuer appointing a paying agent in Luxembourg within the meaning of the above-mentioned directive or agreements; and (ii) the application of the law of 23 December 2005 which introduced a 10 per cent. withholding tax on interest paid by a Luxembourg paying agent on savings income as regards Luxembourg resident individuals. The law of 23 December 2005 introduced a withholding tax of 10 per cent. on interest derived from certain transferable securities and paid to Luxembourg resident individuals through a paying agent located in Luxembourg. Such withholding tax will be in full discharge of income tax if the beneficial owner is an individual acting in the course of the management of his/her private wealth. This withholding tax also applies on accrued interest received upon sale, redemption or repurchase of the Notes.

Pursuant to the law of 23 December 2005 as amended by the law of 17 July 2008, Luxembourg resident individuals can opt to self-declare and pay a 10 per cent. tax on interest payments made by paying agents located in a Member State of the European Union other than Luxembourg, a Member State of the European Economic Area or in a State or territory which has concluded an agreement directly relating to the Savings Directive on the taxation of savings income. This 10 per cent. tax is final when Luxembourg resident individuals are acting in the context of the management of their private wealth.

Responsibility for the withholding of tax in the application of the above-mentioned Luxembourg laws of 21 June 2005 and 23 December 2005 (and the agreements concluded by the State of Luxembourg with several dependent or associated territories) is assumed by the Luxembourg paying agent within the meaning of these laws and not by the Issuer.

- 174 - Taxes on income and capital gains A holder of a Note who derives income from such Note or who realises a gain on the disposal or redemption thereof will not be subject to Luxembourg taxation on such income or capital gains (subject to the application of the Savings Directive and the Luxembourg law of 23 December 2005 which introduced a 10 per cent. final withholding tax on savings income as regards Luxembourg-resident individuals and the agreements concluded by the State of Luxembourg with several dependent or associated territories) unless: (i) such holder is, or is deemed to be, resident in Luxembourg for Luxembourg tax purposes (or for the purposes of the relevant provisions); or (ii) such income or gain is attributable to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg.

Net wealth tax Luxembourg resident individuals holders As regards to individuals, the Luxembourg law of 23 December 2005 abrogated the net wealth tax starting with the year 2006.

Luxembourg resident companies holders Luxembourg net wealth tax will not be levied on a holder of a Note unless: (i) such holder is, or is deemed to be, a Luxembourg fully taxable resident company for the purpose of the relevant provisions; or (ii) such Note is attributable to an enterprise or part thereof which is carried on by a non-resident company through a permanent establishment or a permanent representative in Luxembourg.

Inheritance and gift tax Where the Notes are transferred for no consideration: (i) no Luxembourg inheritance tax is levied on the transfer of the Notes upon death of a holder of a Note in cases where the deceased holder was not a resident of Luxembourg for inheritance tax purposes. (ii) Luxembourg gift tax will be levied on the transfer of a Note by a way of a gift by the Noteholder if this gift is registered in Luxembourg (e.g., if it is made pursuant to a notarial deed signed before a Luxembourg notary).

Value Added Tax There is no Luxembourg VAT payable in respect of payments in consideration for the issue of the Notes or in respect of the payment of interest or principal under the Notes or the transfer of a Note. Luxembourg VAT may, however, be payable in respect of fees charged for certain services rendered to the Issuer, if for Luxembourg VAT purposes such services are rendered, or are deemed to be rendered, in Luxembourg and an exemption from VAT does not apply with respect to such services.

Other taxes and duties There is no Luxembourg registration tax, capital tax, stamp duty or any other similar tax or duty (other than nominal court fees and contributions for the registration with the Chamber of Commerce) payable in Luxembourg in respect of or in connection with the execution, delivery and enforcement by legal proceedings (including any foreign judgement in the courts of Luxembourg) of the Notes except that in the case of court proceedings in a Luxembourg court or the presentation of the documents relative to the Notes issue to an “autorité constituée,” such a court or “autorité constituée” may require registration thereof, in which case the documents will be subject to registration duties depending on the nature of the documents (in particular, a loan will be subject to an ad valorem registration duty of 0.24 per cent. calculated on the amounts mentioned therein whilst the Notes would be subject to a fixed EUR 12 duty).

Residence A holder of a Note will not become resident, or deemed to be resident, in Luxembourg by reason only of the holding of such Note or the execution, performance, delivery and/or enforcement of that or any other Note.

- 175 - U.S. Taxation THE DISCUSSION OF U.S. TAX MATTERS SET FORTH IN THIS BASE PROSPECTUS WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THIS OFFERING AND WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING TAX-RELATED PENALTIES UNDER U.S. FEDERAL, STATE OR LOCAL TAX LAW. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.

The following is a summary of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes by a U.S. Holder (as defined below). This summary does not address the U.S. federal income tax consequences of every type of Note which may be issued under the Programme, and the relevant Final Terms may contain additional or modified disclosure concerning the material U.S. federal income tax consequences relevant to such type of Note as appropriate. This summary deals only with purchasers of Notes that are U.S. Holders and that will hold the Notes as capital assets (generally, property held for investment). The discussion does not cover all aspects of U.S. federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of Notes by particular investors, and does not address state, local, non-U.S. or other tax laws. This summary does not discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, investors liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organisations, dealers in securities or currencies, investors that will hold the Notes as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. Dollar). Moreover, the summary deals only with senior unsubordinated Series of Notes with a term of 30 years or less and denominated in a single currency (which is not a hyperinflationary currency). The U.S. federal income tax consequences of owning other types of Notes will be discussed in the applicable Final Terms.

As used herein, the term “U.S. Holder” means a beneficial owner of Notes that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organised under the laws of the United States or any State thereof, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.

The U.S. federal income tax treatment of a partner in a partnership that holds Notes will depend on the status of the partner and the activities of the partnership. Prospective purchasers that are partnerships should consult their tax adviser concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of Notes by the partnership.

The summary is based on the tax laws of the United States including the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect.

The summary of U.S. Federal income tax consequences set out below is for general information only. Prospective purchasers should consult their tax advisers as to the particular tax consequences to them of owning the notes, including the applicability and effect of state, local, foreign and other tax laws and possible changes in tax law.

U.S. Federal Income Tax Characterisation of the Notes The characterisation of a Series or Tranche of Notes may be uncertain and will depend on the terms of those Notes. The determination of whether an obligation represents debt, equity, or some other instrument or interest is based on all the relevant facts and circumstances. There may be no statutory, judicial or administrative authority directly addressing the characterisation of some of the types of Notes that are anticipated to be issued under the Programme or of instruments similar to the Notes.

Depending on the terms of a particular Series or Tranche of Notes, the Notes may not be characterised as debt for U.S. federal income tax purposes despite the form of the Notes as debt instruments. For example, Notes of a

- 176 - Series or Tranche may be characterised as equity, or as representing an undivided proportionate ownership interest in the assets of, and share of the liabilities of the Issuer. If the Notes were treated as equity interests in the Issuer, U.S. Holders may be treated as owning interests in a passive foreign investment company (or “PFIC”), which could have materially adverse tax consequences for a U.S. Holder. Additional alternative characterisations may also be possible. Further possible characterisations, if applicable, may be discussed in the relevant Final Terms or any Prospectus or series prospectus. Prospective investors should seek advice from their own tax advisers as to the consequences to them of alternative characterisations of the Notes and the possibility that the Notes will be classified as equity interest in a PFIC and the consequences of owning an equity interest in a PFIC.

No rulings will be sought from the Internal Revenue Service (the “IRS”) regarding the characterisation of any of the Notes issued hereunder for U.S. federal income tax purposes. Each holder should consult its own tax adviser about the proper characterisation of the Notes for U.S. federal income tax purposes and consequences to the holder of acquiring, owning or disposing of the Notes.

The following summary applies to Notes that are properly treated as debt for U.S. federal income tax purposes.

Payments of Interest General Interest on a Note, whether payable in U.S. Dollars or a currency, composite currency or basket of currencies other than U.S. Dollars (a “foreign currency”), other than interest on a “Discount Note” that is not “qualified stated interest” (each as defined below under “Original Issue Discount-General”), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on the holder’s method of accounting for tax purposes. Interest paid by the Issuer on the Notes and original issue discount (“OID”), if any, accrued with respect to the Notes (as described below under “Original Issue Discount”) generally will constitute income from sources outside the United States. Prospective purchasers should consult their tax advisers concerning the applicability of the foreign tax credit and source of income rules to income attributable to the Notes.

Original Issue Discount General The following is a summary of the principal U.S. federal income tax consequences of the ownership of Notes issued with OID. The following summary does not discuss Notes that are characterised as contingent payment debt instruments for U.S. federal income tax purposes. In the event the Issuer issues contingent payment debt instruments the applicable Final Terms may describe the material U.S. federal income tax consequences thereof.

A Note, other than a Note with a term of one year or less (a “Short-Term Note”), will be treated as issued with OID (a “Discount Note”) if the excess of the Note’s “stated redemption price at maturity” over its issue price is equal to or more than a de minimis amount (0.25 per cent. of the Note’s stated redemption price at maturity multiplied by the number of complete years to its maturity). An obligation that provides for the payment of amounts other than qualified stated interest before maturity (an “instalment obligation”) will be treated as a Discount Note if the excess of the Note’s stated redemption price at maturity over its issue price is equal to or greater than 0.25 per cent. of the Note’s stated redemption price at maturity multiplied by the weighted average maturity of the Note. A Note’s weighted average maturity is the sum of the following amounts determined for each payment on a Note (other than a payment of qualified stated interest): (i) the number of complete years from the issue date until the payment is made multiplied by (ii) a fraction, the numerator of which is the amount of the payment and the denominator of which is the Note’s stated redemption price at maturity. Generally, the issue price of a Note will be the first price at which a substantial amount of Notes included in the issue of which the Note is a part is sold to persons other than bond houses, brokers, or similar persons or organisations acting in the capacity of underwriters, placement agents, or wholesalers. The stated redemption price at maturity of a Note is the total of all payments provided by the Note that are not payments of “qualified stated interest.” A qualified stated interest payment is generally any one of a series of stated interest payments on a Note that are unconditionally payable at least annually at a single fixed rate (with certain exceptions for lower rates paid during some periods), or a variable rate (in the circumstances described below under “Variable Interest Rate Notes”), applied to the outstanding principal amount of the Note. Solely for the purposes of determining whether a Note has OID, the Issuer will be deemed to exercise any call option that has the effect of decreasing the yield on the Note, and the U.S. Holder will be deemed to exercise any put option that has the effect of increasing the yield on the Note.

- 177 - U.S. Holders of Discount Notes must include OID in income calculated on a constant-yield method before the receipt of cash attributable to the income, and generally will have to include in income increasingly greater amounts of OID over the life of the Discount Notes. The amount of OID includible in income by a U.S. Holder of a Discount Note is the sum of the daily portions of OID with respect to the Discount Note for each day during the taxable year or portion of the taxable year on which the U.S. Holder holds the Discount Note. The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Note may be of any length selected by the U.S. Holder and may vary in length over the term of the Note as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Note occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Note’s adjusted issue price at the beginning of the accrual period and the Discount Note’s yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (b) the sum of the payments of qualified stated interest on the Note allocable to the accrual period. The “adjusted issue price” of a Discount Note at the beginning of any accrual period is the issue price of the Note increased by (x) the amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Note that were not qualified stated interest payments.

Acquisition Premium A U.S. Holder that purchases a Discount Note for an amount less than or equal to the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, but in excess of its adjusted issue price (any such excess being “acquisition premium”) and that does not make the election described below under “Election to Treat All Interest as Original Issue Discount”, is permitted to reduce the daily portions of OID by a fraction, the numerator of which is the excess of the U.S. Holder’s adjusted basis in the Note immediately after its purchase over the Note’s adjusted issue price, and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, over the Note’s adjusted issue price.

Short-Term Notes In general, an individual or other cash basis U.S. Holder of a Short-Term Note is not required to accrue OID (as specially defined below for the purposes of this paragraph) for U.S. federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis U.S. Holders and certain other U.S. Holders are required to accrue OID on Short-Term Notes on a straight-line basis or, if the U.S. Holder so elects, under the constant-yield method (based on daily compounding). In the case of a U.S. Holder not required and not electing to include OID in income currently, any gain realised on the sale or retirement of the Short-Term Note will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant-yield method) through the date of sale or retirement. U.S. Holders who are not required and do not elect to accrue OID on Short-Term Notes will be required to defer deductions for interest on borrowings allocable to Short-Term Notes in an amount not exceeding the deferred income until the deferred income is realised.

For purposes of determining the amount of OID subject to these rules, all interest payments on a Short-Term Note are included in the Short-Term Note’s stated redemption price at maturity. A U.S. Holder may elect to determine OID on a Short-Term Note as if the Short-Term Note had been originally issued to the U.S. Holder at the U.S. Holder’s purchase price for the Short-Term Note. This election will apply to all obligations with a maturity of one year or less acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the IRS.

Market Discount A Note, other than a Short-Term Note, generally will be treated as purchased at a market discount (a “Market Discount Note”) if the Note’s stated redemption price at maturity or, in the case of a Discount Note, the Note’s “revised issue price”, exceeds the amount for which the U.S. Holder purchased the Note by at least 0.25 per cent. of the Note’s stated redemption price at maturity or revised issue price, respectively, multiplied by the number of complete years to the Note’s maturity (or, in the case of a Note that is an installment obligation, the Note’s weighted average maturity). If this excess is not sufficient to cause the Note to be a Market Discount Note, then the excess constitutes “de minimis market discount”. For this purpose, the “revised issue price” of a Note generally equals its issue price, increased by the amount of any OID that has accrued on the Note and decreased by the amount of any payments previously made on the Note that were not qualified stated interest payments.

- 178 - Under current law, any gain recognised on the maturity or disposition of a Market Discount Note (including any payment on a Note that is not qualified stated interest) will be treated as ordinary income to the extent that the gain does not exceed the accrued market discount on the Note. Alternatively, a U.S. Holder of a Market Discount Note may elect to include market discount in income currently over the life of the Note. This election will apply to all debt instruments with market discount acquired by the electing U.S. Holder on or after the first day of the first taxable year to which the election applies. This election may not be revoked without the consent of the IRS. A U.S. Holder of a Market Discount Note that does not elect to include market discount in income currently will generally be required to defer deductions for interest on borrowings incurred to purchase or carry a Market Discount Note that is in excess of the interest and OID on the Note includible in the U.S. Holder’s income, to the extent that this excess interest expense does not exceed the portion of the market discount allocable to the days on which the Market Discount Note was held by the U.S. Holder.

Under current law, market discount will accrue on a straight-line basis unless the U.S. Holder elects to accrue the market discount on a constant-yield method. This election applies only to the Market Discount Note with respect to which it is made and is irrevocable.

Variable Interest Rate Notes Notes that provide for interest at variable rates (“Variable Interest Rate Notes”) generally will bear interest at a “qualified floating rate” and thus will be treated as “variable rate debt instruments” under Treasury regulations governing accrual of OID. A Variable Interest Rate Note will qualify as a “variable rate debt instrument” if (a) its issue price does not exceed the total noncontingent principal payments due under the Variable Interest Rate Note by more than a specified de minimis amount, (b) it provides for stated interest, paid or compounded at least annually, at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate, and (c) it does not provide for any principal payments that are contingent (other than as described in (a) above).

A“qualified floating rate” is any variable rate where variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Interest Rate Note is denominated. A fixed multiple of a qualified floating rate will constitute a qualified floating rate only if the multiple is greater than 0.65 but not more than 1.35. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Interest Rate Note (e.g., two or more qualified floating rates with values within 25 basis points of each other as determined on the Variable Interest Rate Note’s issue date) will be treated as a single qualified floating rate. Notwithstanding the foregoing, a variable rate that would otherwise constitute a qualified floating rate but which is subject to one or more restrictions such as a maximum numerical limitation (i.e. a cap) or a minimum numerical limitation (i.e., a floor) may, under certain circumstances, fail to be treated as a qualified floating rate.

An “objective rate” is a rate that is not itself a qualified floating rate but which is determined using a single fixed formula and which is based on objective financial or economic information (e.g. one or more qualified floating rates or the yield of actively traded personal property). A rate will not qualify as an objective rate if it is based on information that is within the control of the Issuer (or a related party) or that is unique to the circumstances of the Issuer (or a related party), such as dividends, profits or the value of the Issuer’s stock (although a rate does not fail to be an objective rate merely because it is based on the credit quality of the Issuer). Other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Variable Interest Rate Note will not constitute an objective rate if it is reasonably expected that the average value of the rate during the first half of the Variable Interest Rate Note’s term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Interest Rate Note’s term. A “qualified inverse floating rate” is any objective rate where the rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate. If a Variable Interest Rate Note provides for stated interest at a fixed rate for an initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period and if the variable rate on the Variable Interest Rate Note’s issue date is intended to approximate the fixed rate (e.g., the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be.

- 179 - A qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a “current value” of that rate. A “current value” of a rate is the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day.

If a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a “variable rate debt instrument”, then any stated interest on the Note which is unconditionally payable in cash or property (other than debt instruments of the Issuer) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a “variable rate debt instrument” will generally not be treated as having been issued with OID unless the Variable Interest Rate Note is issued at a “true” discount (i.e. at a price below the Note’s stated principal amount) in excess of a specified de minimis amount. OID on a Variable Interest Rate Note arising from “true” discount is allocated to an accrual period using the constant yield method described above by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note.

In general, any other Variable Interest Rate Note that qualifies as a “variable rate debt instrument” will be converted into an “equivalent” fixed rate debt instrument for purposes of determining the amount and accrual of OID and qualified stated interest on the Variable Interest Rate Note. Such a Variable Interest Rate Note must be converted into an “equivalent” fixed rate debt instrument by substituting any qualified floating rate or qualified inverse floating rate provided for under the terms of the Variable Interest Rate Note with a fixed rate equal to the value of the qualified floating rate or qualified inverse floating rate, as the case may be, as of the Variable Interest Rate Note’s issue date.

Any objective rate (other than a qualified inverse floating rate) provided for under the terms of the Variable Interest Rate Note is converted into a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In the case of a Variable Interest Rate Note that qualifies as a “variable rate debt instrument” and provides for stated interest at a fixed rate in addition to either one or more qualified floating rates or a qualified inverse floating rate, the fixed rate is initially converted into a qualified floating rate (or a qualified inverse floating rate, if the Variable Interest Rate Note provides for a qualified inverse floating rate). Under these circumstances, the qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the Variable Interest Rate Note as of the Variable Interest Rate Note’s issue date is approximately the same as the fair market value of an otherwise identical debt instrument that provides for either the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Subsequent to converting the fixed rate into either a qualified floating rate or a qualified inverse floating rate, the Variable Interest Rate Note is converted into an “equivalent” fixed rate debt instrument in the manner described above.

Once the Variable Interest Rate Note is converted into an “equivalent” fixed rate debt instrument pursuant to the foregoing rules, the amount of OID and qualified stated interest, if any, are determined for the “equivalent” fixed rate debt instrument by applying the general OID rules to the “equivalent” fixed rate debt instrument and a U.S. Holder of the Variable Interest Rate Note will account for the OID and qualified stated interest as if the U.S. Holder held the “equivalent” fixed rate debt instrument. In each accrual period, appropriate adjustments will be made to the amount of qualified stated interest or OID assumed to have been accrued or paid with respect to the “equivalent” fixed rate debt instrument in the event that these amounts differ from the actual amount of interest accrued or paid on the Variable Interest Rate Note during the accrual period.

If a Variable Interest Rate Note, such as a Note the payments on which are determined by reference to an index, does not qualify as a “variable rate debt instrument”, then the Variable Interest Rate Note will be treated as a contingent payment debt obligation. The proper U.S. federal income tax treatment of Variable Interest Rate Notes that are treated as contingent payment debt obligations will be more fully described in the applicable Final Terms.

Notes Purchased at a Premium A U.S. Holder that purchases a Note for an amount in excess of its principal amount, or for a Discount Note, its stated redemption price at maturity, may elect to treat the excess as “amortisable bond premium”, in which case the amount required to be included in the U.S. Holder’s income each year with respect to interest on the Note

- 180 - will be reduced by the amount of amortisable bond premium allocable (based on the Note’s yield to maturity) to that year. Any election to amortise bond premium will apply to all bonds (other than bonds the interest on which is excludable from gross income for U.S. federal income tax purposes) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of the IRS. See “Original Issue Discount-Election to Treat All Interest as Original Issue Discount”.

Election to Treat All Interest as Original Issue Discount A U.S. Holder may elect to include in gross income all interest that accrues on a Note using the constant-yield method described above under “Original Issue Discount-General,” with certain modifications. For purposes of this election, interest includes stated interest, OID, de minimis OID, market discount, de minimis market discount and unstated interest, as adjusted by any amortisable bond premium (described above under “Notes Purchased at a Premium”) or acquisition premium. This election will generally apply only to the Note with respect to which it is made and may not be revoked without the consent of the IRS. If the election to apply the constant-yield method to all interest on a Note is made with respect to a Market Discount Note, the electing U.S. Holder will be treated as having made the election discussed above under “Market Discount” to include market discount in income currently over the life of all debt instruments with market discount held or thereafter acquired by the U.S. Holder. U.S. Holders should consult their tax advisers concerning the propriety and consequences of this election.

Purchase, Sale and Retirement of Notes A U.S. Holder’s tax basis in a Note will generally be its cost, increased by the amount of any OID or market discount included in the U.S. Holder’s income with respect to the Note and the amount, if any, of income attributable to de minimis OID and de minimis market discount included in the U.S. Holder’s income with respect to the Note, and reduced by (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortisable bond premium applied to reduce interest on the Note.

A U.S. Holder will generally recognise gain or loss on the sale or retirement of a Note equal to the difference between the amount realised on the sale or retirement and the tax basis of the Note. The amount realised does not include the amount attributable to accrued but unpaid interest, which will be taxable as interest income to the extent not previously included in income. Except to the extent described above under “Original Issue Discount- Market Discount”or“Original Issue Discount-Short Term Notes” or attributable to changes in exchange rates (as discussed below), gain or loss recognised on the sale or retirement of a Note will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period in the Notes exceeds one year. The ability of U.S. Holders to use capital losses is subject to limitations.

Gain or loss realised by a U.S. Holder on the sale or retirement of a Note generally will be U.S. source. Therefore, a U.S. Holder may have insufficient foreign source income to utilise foreign tax credits attributable to any Russian tax imposed on a sale or disposition. Prospective purchasers should consult their tax advisers as to the availability of and limitations on any foreign tax credit attributable to this Russian tax.

U.S. Holders should consult their tax advisers concerning the U.S. federal income tax consequences to them of a change in obligor with respect to the Notes.

Foreign Currency Notes Interest If an interest payment is denominated in, or determined by reference to, a foreign currency, the amount of income recognised by a cash basis U.S. Holder will be the U.S. Dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. Dollars.

An accrual basis U.S. Holder may determine the amount of income recognised with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year).

- 181 - Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year). Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. Dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the IRS.

Upon receipt of an interest payment (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Note) denominated in, or determined by reference to, a foreign currency, the U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

OID OID for each accrual period on a Discount Note that is denominated in, or determined by reference to, a foreign currency, will be determined in the foreign currency and then translated into U.S. Dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder, as described above. Upon receipt of an amount attributable to OID (whether in connection with a payment on the Note or a sale or disposition of the Note), a U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

Market Discount Market discount on a Note that is denominated in, or determined by reference to, a foreign currency, will be accrued in the foreign currency. If the U.S. Holder elects to include market discount in income currently, the accrued market discount will be translated into U.S. Dollars at the average exchange rate for the accrual period (or portion thereof within the U.S. Holder’s taxable year). Upon the receipt of an amount attributable to accrued market discount, the U.S. Holder may recognise U.S. source exchange gain or loss (which will be taxable as ordinary income or loss) determined in the same manner as for accrued interest or OID. A U.S. Holder that does not elect to include market discount in income currently will recognise, upon the disposition or maturity of the Note, the U.S. Dollar value of the amount accrued, calculated at the spot rate on that date, and no part of this accrued market discount will be treated as exchange gain or loss.

Bond Premium Bond premium (including acquisition premium) on a Note that is denominated in, or determined by reference to, a foreign currency, will be computed in units of the foreign currency, and any such bond premium that is taken into account currently will reduce interest income in units of the foreign currency. On the date bond premium offsets interest income, a U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the amount offset multiplied by the difference between the spot rate in effect on the date of the offset, and the spot rate in effect on the date the Notes were acquired by the U.S. Holder. A U.S. Holder that does not elect to take bond premium (other than acquisition premium) into account currently will recognise a market loss when the Note matures.

Sale or Retirement As discussed above under “Purchase, Sale and Retirement of Notes”, a U.S. Holder will generally recognise gain or loss on the sale or retirement of a Note equal to the difference between the amount realised on the sale or retirement and its tax basis in the Note. A U.S. Holder’s tax basis in a Note that is denominated in a foreign currency will be determined by reference to the U.S. Dollar cost of the Note. The U.S. Dollar cost of a Note purchased with foreign currency will generally be the U.S. Dollar value of the purchase price on the date of purchase, or the settlement date for the purchase, in the case of Notes traded on an established securities market, as defined in the applicable Treasury Regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects).

The amount realised on a sale or retirement for an amount in foreign currency will be the U.S. Dollar value of this amount on the date of sale or retirement, or the settlement date for the sale, in the case of Notes traded on an

- 182 - established securities market, as defined in the applicable Treasury Regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). Such an election by an accrual basis U.S. Holder must be applied consistently from year to year and cannot be revoked without the consent of the IRS.

A U.S. Holder will recognise U.S. source exchange rate gain or loss (taxable as ordinary income or loss) on the sale or retirement of a Note equal to the difference, if any, between the U.S. Dollar values of the U.S. Holder’s purchase price for the Note (or, if less, the principal amount of the Note) (i) on the date of sale or retirement and (ii) the date on which the U.S. Holder acquired the Note. Any such exchange rate gain or loss will be realised only to the extent of total gain or loss realised on the sale or retirement (including any exchange gain or loss with respect to the receipt of accrued but unpaid interest).

Disposition of Foreign Currency Foreign currency received as interest on a Note or on the sale or retirement of a Note will have a tax basis equal to its U.S. Dollar value at the time the foreign currency is received. Foreign currency that is purchased will generally have a tax basis equal to the U.S. Dollar value of the foreign currency on the date of purchase. Any gain or loss recognised on a sale or other disposition of a foreign currency (including its use to purchase Notes or upon exchange for U.S. Dollars) will be U.S. source ordinary income or loss.

Backup Withholding and Information Reporting Payments of principal, interest and accrued OID on, and the proceeds of sale or other disposition of Notes, as well as dividends and other proceeds with respect to Shares, by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding may apply to these payments and to accruals of OID if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its U.S. federal income tax returns. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Reportable Transactions A U.S. taxpayer that participates in a “reportable transaction” will be required to disclose its participation to the IRS. Under the relevant rules, if the Notes are denominated in a foreign currency, a U.S. Holder may be required to treat a foreign currency exchange loss from the Notes as a reportable transaction if this loss exceeds the relevant threshold in the regulations (US$50,000 in a single taxable year, if the U.S. Holder is an individual or trust, or higher amounts for other non-individual U.S. Holders), and to disclose its investment by filing Form 8886 with the IRS. A penalty in the amount of US$10,000 in the case of a natural person and US$50,000 in all other cases is generally imposed on any taxpayer that fails to timely file an information return with the IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective purchasers are urged to consult their tax advisers regarding the application of these rules.

U.S. Holders should consult their own tax advisers regarding any reporting obligations they may have as a result of their acquisition, ownership or disposition of Notes. Failure to comply with certain reporting obligations could result in the imposition of substantial penalties.

- 183 - CERTAIN ERISA CONSIDERATIONS

The U.S. Employees Retirement Income Security Act of 1974 (“ERISA”) imposes fiduciary standards and certain other requirements on employee benefit plans subject thereto (collectively, “ERISA Plans”), including collective investment funds, separate accounts, and other entities or accounts whose underlying assets are treated as assets of such plans pursuant to the U.S. Department of Labor “plan assets” regulation, 29 CFR Section 2510.3-101, as modified by Section 3(42) of ERISA (the “Plan Assets Regulation”) and on those persons who are fiduciaries with respect to ERISA Plans.

Section 406 of ERISA and Section 4975 of the United States Internal Revenue Code of 1986 (the “Code”) prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code (together with ERISA Plans, “Plans”)) and certain persons (referred to as “parties in interest”or“disqualified persons”) having certain relationships to such Plans, unless a statutory or administrative exemption applies to the transaction. In particular, an extension of credit between a Plan and a “party in interest” or “disqualified person” may constitute a prohibited transaction. It is possible that the Notes, even if regarded as equity for purposes of the Plan Assets Regulations (as discussed below) would nevertheless be regarded as debt for purposes of the prohibited transaction rules of ERISA and Section 4975 of the Code. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes or other liabilities under ERISA and the Code.

The Issuer or the Trustee, directly or through affiliates, may be considered a party in interest or disqualified person with respect to many Plans. Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if the Notes are acquired by a Plan with respect to which the Issuer or the Trustee or any of their respective affiliates is a party in interest or a disqualified person, unless the Notes are acquired pursuant to and in accordance with an applicable exemption. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may apply depending in part on the type of Plan fiduciary making the decision to acquire a Note and the circumstances under which that decision is made. However, Notes may not be acquired by any Plans as discussed below.

Under a “look-through rule” set forth in the Plan Assets Regulations, if a Plan invests in an “equity interest” of an entity and no other exception applies, the Plan’s assets include both the equity interest and an undivided interest in each of the entity’s underlying assets. This rule will only apply where equity participation in an entity by benefit plan investors is “significant”. Equity participation by benefit plan investors is significant if 25 per cent. or more of the value of any class of equity interest in the entity is held by benefit plan investors. An equity interest does not include debt (as determined by applicable local law) which does not have substantial equity features. The term “benefit plan investor” includes (a) an employee benefit plan (as defined in Section 3(3) of ERISA) and subject to Title I, Subtitle B, Part 4 of ERISA, (b) a plan subject to Section 4975(e)(1) of the Code or (c) an entity whose underlying assets include “plan assets” by reason of any such plan’s investment in the entity. Where the value of an interest in an entity relates solely to identified property of the entity, that property is treated as the sole property of a separate entity.

Because the Notes do not represent an interest in any property of the Issuer other than the relevant Loan, they may be regarded for ERISA purposes as equity interests in a separate entity whose sole asset is the relevant Loan. Further, the Issuer will not be able to monitor the Noteholders’ possible status as benefit plan investors. Accordingly, the Notes should not be acquired by any benefit plan investor or any governmental, church or non-U.S. Plans which are subject to any federal, state, local or non-U.S. law that is substantively similar to the prohibited transaction provisions of Section 406 of ERISA or Section 4975 of the Code.

BY ITS PURCHASE AND HOLDING OF A NOTE OR ANY INTEREST THEREIN, THE PURCHASER AND/OR HOLDER THEREOF AND EACH TRANSFEREE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED AT THE TIME OF ITS PURCHASE AND THROUGHOUT THE PERIOD THAT IT HOLDS SUCH NOTE OR INTEREST THEREIN, THAT (1) IT IS NOT (I) A BENEFIT PLAN INVESTOR (AS DEFINED IN THE PLAN ASSETS REGULATION) OR (II) A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW THAT IS SUBSTANTIVELY SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE; AND (2) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY SUCH NOTE OR INTEREST TO ANY PERSON WITHOUT FIRST OBTAINING THESE SAME FOREGOING REPRESENTATIONS AND WARRANTIES FROM THAT PERSON.

- 184 - GOVERNMENTAL PLANS, CERTAIN CHURCH PLANS, NON-U.S. PLANS, AND OTHER PLANS, WHILE NOT SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROVISIONS OF SECTION 4975 OF THE CODE, MAY NEVERTHELESS BE SUBJECT TO FEDERAL, STATE, LOCAL, NON-U.S, OR OTHER LAWS THAT ARE SUBSTANTIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA AND THE CODE. FIDUCIARIES OF ANY SUCH PLANS SHOULD CONSULT WITH THEIR COUNSEL BEFORE PURCHASING NOTES.

- 185 - SUBSCRIPTION AND SALE

Summary of Dealer Agreement Subject to the terms and on the conditions contained in a Third Amended and Restated Dealer Agreement dated 29 May 2012 (the “Dealer Agreement”) between the Issuer, RSB, the Permanent Dealers and the Arrangers, the Notes will be offered from time to time by the Issuer to the Permanent Dealers or such other Dealers as may be appointed from time to time in respect of any Series of Notes pursuant to the Dealer Agreement. Any agreement for the sale of Notes will, inter alia, make provision for the form and terms and conditions of the relevant Notes, whether the placement of the Notes is underwritten or sold on an agency basis only, the price at which such Notes will be purchased by the Dealers and the commissions or other agreed deductibles (if any) which are payable or allowable by the Issuer in respect of such purchase and the form of any indemnity to the Dealers against certain liabilities in connection with the offer and sale of the relevant Notes. The Notes may be resold at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Dealer Agreement also provides for Notes to be issued in syndicated Series that may be jointly and severally underwritten by two or more Dealers.

Each of the Issuer and RSB has agreed to indemnify the Dealers against certain losses, as set out in the Dealer Agreement. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe for the Notes in certain circumstances prior to payment for such Notes being made to the Issuer.

Selling Restrictions United States The Notes and the corresponding Loans have not been and will not be registered under the Securities Act or the securities laws of any State or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act.

Each Dealer has agreed that it will not offer or sell the Notes of a Series (i) as part of their distribution at any time and (ii) otherwise until 40 days after the completion of the distribution of the Series of which such Notes are a part, as determined and certified by the relevant Dealer (or, in the case of a sale of a Series of Notes through more than one Dealer by the Lead Manager on behalf of the relevant Dealers) only in accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act, and, at or prior to confirmation of a sale of Notes (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.

In addition, until 40 days after the commencement of the offering of each Series of Notes, an offer or sale of Notes of such Series within the United States by a dealer that is participating in the offering may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

Each Dealer has represented and agreed that neither it nor any of its affiliates (as defined in Rule 501 (b) of Regulation D), nor any person acting on its or their behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer and sale of the Notes in the United States.

Each Dealer has represented that it has not entered and agrees that it will not enter into any contractual arrangement with any distributor with respect to the distribution or delivery of Notes, except with its affiliates or with the prior written consent of the Issuer and RSB.

Terms used in the preceding five paragraphs have the meanings given to them by Regulation S under the Securities Act.

Notes offered and sold outside the United States may be sold in reliance on Regulation S. The Dealer Agreement provides that the Dealer(s) may directly or through their respective U.S. registered broker-dealer affiliates arrange for the offer and resale of Notes within the United States only to persons whom they reasonably believe

- 186 - are QIBs and who are QPs who can represent that (a) they are QPs who are QIBs within the meaning of Rule 144A, (b) they are not broker-dealers who own and invest on a discretionary basis less than U.S.$25 million in securities of unaffiliated issuers, (c) they are not a participant-directed employee plan, such as 401 (k) plan, (d) they are acting for their own account, or the account of one or more QIBs each of which is a QP, (e) they are not formed for the purpose of investing in the Issuer or the Notes, (f) each account for which they are purchasing will hold and transfer at least U.S.$200,000 in principal amount of Notes at any time, (g) they understand that the Issuer may receive a list of participants holding positions in its securities from one or more book-entry depositories; and (h) they will provide notice of the transfer restrictions set forth in this base prospectus to any subsequent transferees.

This Base Prospectus has been prepared by the Issuer and RSB for use in connection with the offer and sale of the Notes outside the United States and the resale of the Notes in the United States and for the listing of Notes on the London Stock Exchange. The Issuer and the Dealers reserve the right to reject any offer to purchase the Notes, in whole or in part, for any reason. This Base Prospectus does not constitute an offer to any person in the United States or to any U.S. person other than any QIB who is also a QP and to whom an offer has been made directly by one of the Dealers or its U.S. registered broker-dealer affiliates. Distribution of this Base Prospectus by any non-U.S. person outside the United States or by any QIB that is a QP within the United States to any U.S. person or to any other person within the United States, other than to a QIB that is a QP and to those persons, if any, retained to advise such non-U.S. person or such QIB that is a QP with respect thereto, is unauthorised and any disclosure without the prior written consent of the Issuer of any of its contents to any such U.S. person or other person within the United States, other than any QIB that is a QP and those persons, if any, retained to advise such non-U.S. person or QIB that is a QP, is prohibited.

Italy The offering of the Notes has not been registered with the Commissione Nazionale per le Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, each Dealer has represented and agreed that it has not offered, sold or distributed, and will not offer, sell or distribute any Notes or any copy of the Final Terms and/or the Base Prospectus or any other offer document in the Republic of Italy (“Italy”) in an offer to the public of financial products under the meaning of Article 1, paragraph 1, letter t) of Legislative Decree No. 58 of 24 February 1998 (the “Consolidated Financial Services Act”), unless an exemption applies. Accordingly, the Notes shall only be offered, sold or delivered in Italy: (a) to qualified investors (investitori qualificati), pursuant to Article 100 of the Consolidated Financial Services Act and Article 2.1(e) (i) to (iii) of the Prospectus Directive; or (b) in any other circumstances where an express exemption from compliance with the restrictions on offers to the public applies, as provided under the Consolidated Financial Services Act or CONSOB Regulation No. 11971 of 14 May 1999, as amended.

Moreover, and subject to the foregoing, any offer, sale or delivery of the Notes or distribution of copies of the Final Terms or the Base Prospectus or any other document relating to the Notes in Italy under (a) or (b) above must be: (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Consolidated Financial Services Act, Legislative Decree No. 385 of 1 September 1993 (the “Banking Act”), CONSOB Regulation No. 16190 of 29 October 2007, all as amended; (ii) in compliance with Article 129 of the Banking Act and the implementing guidelines, pursuant to which the Bank of Italy may request information on the offering or issue of securities in Italy; and (iii) in compliance with any other applicable laws and regulations, including any limitation or requirement which may be imposed from time to time, inter alia, by CONSOB or the Bank of Italy.

Any investor purchasing the Notes in this offering is solely responsible for ensuring that any offer or resale of the Notes it purchases in this offering occurs in compliance with applicable laws and regulations.

United Kingdom Each Dealer has represented and agreed that: (a) in relation to any Notes which have a maturity of less than one year, (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for

- 187 - the purposes of its business; and (b) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of section 19 of the FSMA by the Issuer; (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to such Notes in, from or otherwise involving the United Kingdom.

Russia Each Dealer has represented and agreed that it has not offered or sold or otherwise transferred, and will not offer or sell or otherwise transfer as part of their initial distribution or at any time thereafter, any Notes to or for the benefit of any persons (including legal entities) resident, incorporated, established or having their usual residence in Russia, or to any person located within the territory of Russia unless and to the extent otherwise permitted under Russian law.

Hong Kong Each Dealer has represented and agreed it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to any Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance.

Singapore Each Dealer has acknowledged that the Base Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented and agreed that it has not offered or sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, the Base Prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”); (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (i) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (ii) where no consideration is or will be given for the transfer;

- 188 - (iii) where the transfer is by operation of law; or (iv) as specified in Section 276(7) of the SFA.

General No action has been taken or will be taken in any jurisdiction by the Issuer, RSB, the Arrangers or any of the Dealers that would, or is intended to, permit a public offer of the Notes or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required.

Each Dealer has undertaken to the Issuer and RSB that it will (to the best of its knowledge and belief) comply with all applicable laws and regulations in each country or jurisdiction in which it purchases, offers, sells or delivers Notes or has in its possession or distributes such offering material, in all cases at its own expense.

These selling restrictions may be modified by the agreement of the Issuer, RSB and the Dealers. Any such modification will be set out in the Final Terms issued in respect of the issue of Notes to which it relates or in a supplement to this Base Prospectus.

Certain of the Arrangers, the Dealers and their respective affiliates have engaged in transactions with RSB and other members of the Group (including, in some cases, credit agreements and credit lines) in the ordinary course of their banking business and certain of the Arrangers and the Dealers have performed various investment banking, financial advisory, and other services for RSB and other members of the Group, for which they received customary fees, and certain of the Arrangers, the Dealers and their respective affiliates may provide such services in the future.

- 189 - TRANSFER RESTRICTIONS

Because of the following restrictions, you are advised to consult legal counsel prior to making any offer, resale or other transfer offered hereby.

Rule 144A Notes Each purchaser of a beneficial interest in a Rule 144A Global Note, by accepting delivery of this Base Prospectus and the interest in such Rule 144A Global Note, will be deemed to have represented, agreed and acknowledged that: (1) If it is a U.S. person within the meaning of Regulation S it is (a) a QIB that is also a QP, (b) not a broker- dealer which owns and invests on a discretionary basis less than U.S.$25 million in securities of unaffiliated issuers, (c) not a participant-directed employee plan, such as a 401 (k) plan, (d) acquiring such Notes for its own account, or for the account of one or more QIBs each of which is also a QP, (e) not formed for the purpose of investing in the Notes or the Issuer, and (f) aware, and each beneficial owner of such Notes has been advised, that the seller of such Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. (2) It is (a) purchasing not less than U.S.$200,000 principal amount of such Notes and (b) will provide notice of the transfer restrictions set forth herein to any subsequent transferees. In addition, it understands that the Issuer may receive a list of participants holding positions in the Issuer’s securities from one or more book entry depositories. (3) It understands that the Rule 144A Notes have not been and will not be registered under the Securities Act and may not be offered, sold, pledged or otherwise transferred except (a) in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believe is a QIB and that is also a QP purchasing for its own account or for the account of one or more QIBs, each of which is also a QP or (b) to a non-U.S. person within the meaning of Regulation S in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States. (4) It understands that the Issuer has the power to compel any beneficial owner of Rule 144A Notes that is a U.S. person and is not a QIB and a QP to sell its interest in the Rule l44A Notes, or may sell such interest on behalf of such owner. The Issuer has the right to refuse to honour the transfer of an interest in the Rule 144A Notes to a U.S. person who is not a QIB and a QP. (5) It understands and acknowledges that its purchase and holding of such Notes constitutes a representation and agreement by it that at the time of its purchase and throughout the period in which it holds such Notes or any interest therein (a) it is not an employee benefit plan as described in Section 3(3) of ERISA, and subject to the provisions of Title I, Subtitle B, Part 4 of ERISA, a plan subject to Section 4975 of the Code, a governmental, church or non-U.S. plan which is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or an entity whose underlying assets include plan assets by reason of a plan’s investment in the entity and (b) it will not sell or otherwise transfer any such Note or interest to any person without first obtaining the same foregoing representations and warranties from that person. (6) It understands that the Rule 144A Global Note and any Rule 144A Definitive Notes issued in respect thereof, unless otherwise agreed between the Issuer and the Trustee in accordance with applicable law, will bear a legend to the following effect: THIS NOTE AND THE LOAN IN RESPECT THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE l44A (A “QIB”) AND THAT IS A QUALIFIED PURCHASER (“QP”) WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS EACH OF WHICH IS A QP WHOM THE HOLDER HAS

- 190 - INFORMED, IN EACH CASE, THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, AND IN AN AMOUNT FOR EACH ACCOUNT OF NOT LESS THAN U.S.$200,000 PRINCIPAL AMOUNT OF NOTES OR (2) IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”) IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, AND, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES IN RESPECT HEREOF OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE OR EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER OF THIS NOTE, THE TRUSTEE OR ANY INTERMEDIARY. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF ANY EXEMPTION UNDER THE SECURITIES ACT FOR RESALES OF THIS NOTE. IF THE BENEFICIAL OWNER HEREOF IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S, SUCH BENEFICIAL OWNER REPRESENTS THAT (1) IT IS A QIB THAT IS ALSO A QP; (2) IT IS NOT A BROKER-DEALER WHICH OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN U.S.$25,000,000 IN SECURITIES OF UNAFFILIATED ISSUERS; (3) IT IS NOT A PARTICIPANT-DIRECTED EMPLOYEE PLAN, SUCH AS A 401(k) PLAN; (4) IT IS HOLDING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS, EACH OF WHICH IS A QP; (5) IT WAS NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER OR THIS NOTE; (6) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN ITS SECURITIES FROM ONE OR MORE BOOK-ENTRY DEPOSITARIES AND (7) IT WILL PROVIDE NOTICE OF THE FOREGOING TRANSFER RESTRICTIONS TO ITS SUBSEQUENT TRANSFEREES. THE BENEFICIAL OWNER HEREOF HEREBY ACKNOWLEDGES THAT IF AT ANY TIME WHILE IT HOLDS AN INTEREST IN THIS NOTE IT IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S THAT IS NOT A QIB AND A QP, THE ISSUER MAY (A) COMPEL IT TO SELL ITS INTEREST IN THIS NOTE TO A PERSON WHO IS (I) A U.S. PERSON WHO IS A QIB AND A QP THAT IS, IN EACH CASE, OTHERWISE QUALIFIED TO PURCHASE THIS NOTE IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OR (II) NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S OR (B) COMPEL THE BENEFICIAL OWNER TO SELL ITS INTEREST IN THIS NOTE TO THE ISSUER OR AN AFFILIATE OF THE ISSUER OR TRANSFER ITS INTEREST IN THIS NOTE TO A PERSON DESIGNATED BY OR ACCEPTABLE TO THE ISSUER AT A PRICE EQUAL TO THE LESSER OF (X) THE PURCHASE PRICE THEREFOR PAID BY THE BENEFICIAL OWNER, (Y) 100 PER CENT OF THE PRINCIPAL AMOUNT THEREOF OR (Z) THE FAIR MARKET VALUE THEREOF. THE ISSUER HAS THE RIGHT TO REFUSE TO HONOUR A TRANSFER OF AN INTEREST IN THIS NOTE TO A U.S. PERSON WHO IS NOT A QIB AND A QP. THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT. EACH BENEFICIAL OWNER HEREOF REPRESENTS AND WARRANTS THAT FOR SO LONG AS IT HOLDS THIS NOTE OR ANY INTEREST HEREIN (1) IT IS NOT AND WILL NOT BE A BENEFIT PLAN INVESTOR (AS DEFINED IN 29 CFR SECTION 2510.3-101) AND (2) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY NOTE OR INTEREST THEREIN TO ANY PERSON WITHOUT FIRST OBTAINING THE SAME FOREGOING REPRESENTATIONS, WARRANTIES AND COVENANTS FROM THAT PERSON. THE ISSUER MAY COMPEL EACH BENEFICIAL OWNER OF THIS NOTE THAT IS A U.S. PERSON WITHIN THE MEANING OF REGULATIONS TO CERTIFY PERIODICALLY THAT SUCH BENEFICIAL OWNER IS A QIB AND A QP. (7) It acknowledges that the Issuer, RSB, the Registrar, the Dealers and their respective affiliates, and others, will rely upon the truth and accuracy of the above acknowledgements, representations and agreements and agrees that, if any of the acknowledgements, representations or agreements deemed to have been made by it by its purchase of Rule 144A Notes is no longer accurate, it shall promptly notify the Issuer, RSB and the applicable Dealer(s). If it is acquiring any Notes as a fiduciary or agent for one or more investor

- 191 - accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the above acknowledgements, representations and agreements on behalf of each account. (8) It understands that Rule l44A Notes of a Series will be represented by interests in one or more Rule 144A Global Notes. Before any interest in a Rule l44A Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws.

Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

Regulation S Notes Each purchaser of a beneficial interest in the Regulation S Notes, by accepting delivery of this Base Prospectus and the Regulation S Notes, will be deemed to have represented, agreed and acknowledged that: (1) It is, or at the time Regulation S Notes are purchased it will be, the beneficial owner of such Regulation S Notes and (a) it is not a U.S. person and it is located outside the United States (within the meaning of Regulation S) and (b) it is not an affiliate of the Issuer, RSB or a person acting on behalf of the Issuer, RSB or such an affiliate. (2) It understands that the Regulation S Notes have not been and will not be registered under the Securities Act and, prior to the expiration of the applicable distribution compliance period for such Notes, it will not offer, sell, pledge or otherwise transfer such Notes except in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, in each case in accordance with any applicable securities laws of any State of the United States. (3) It understands that Regulation S Notes of a Series will be evidenced by a Regulation S Global Note. Before any interest in a Regulation S Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Rule 144A Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws. (4) It understands and acknowledges that its purchase and holding of such Notes constitutes a representation and agreement by it that at the time of its purchase and throughout the period it holds such Notes or any interest therein (a) it is not an employee benefit plan as described in Section 3(3) of ERISA, and subject to Title I, Subtitle B, Part 4 of ERISA, a plan subject to Section 4975 of the Code, a governmental, church or non-U.S. plan which is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or an entity whose underlying assets include plan assets by reason of a plan’s investment in the entity and (b) it will not sell or otherwise transfer any such Note or interest to any person without first obtaining the same foregoing representations and warranties from that person. (5) It acknowledges that the Issuer, RSB, the Registrar, the Dealer(s) and their respective affiliates, and others, will rely upon the truth and accuracy of the above acknowledgements, representations and agreements and agrees that, if any of the acknowledgements, representations or agreements deemed to have been made by it by its purchase of Regulation S Notes is no longer accurate, it shall promptly notify the Issuer, RSB and the applicable Dealer(s). If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the above acknowledgements, representations and agreements on behalf of each account.

- 192 - GENERAL INFORMATION

1. The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg and DTC. The Common Code and the International Securities Identification Number (ISIN) and (where applicable) the CUSIP number and the identification number for any other relevant clearing system for each Series of Notes will be set out in the relevant Final Terms. 2. Any Series of Notes intended to be admitted to listing on the Official List and admitted to trading on the Regulated Market will be so admitted to listing and trading upon submission to the UK Listing Authority and the London Stock Exchange of the relevant Final Terms and any other information required by the UK Listing Authority and the London Stock Exchange, subject in each case to the issue of the relevant Notes. Prior to official listing, dealings will be permitted by the London Stock Exchange in accordance with its rules. Transactions will normally be effected for delivery on the third working day in London after the day of the transaction. However, Notes may be issued pursuant to the Programme which will not be admitted to listing, trading and/or quotation by the UK Listing Authority or the London Stock Exchange or any other listing authority, stock exchange and/or quotation system or which will be admitted to listing, trading and/or quotation by such listing authority, stock exchange and/or quotation system as the Issuer and the relevant Dealer(s) may agree. 3. RSB and the Issuer have obtained or will obtain all necessary consents, approvals and authorisations in Russia and Luxembourg in connection with any Loan, and the issue and performance of the corresponding Series of Notes. The Issuer’s board of directors approved the Programme’s establishment on 5 April 2005, its first update on 21 September 2005, its second update on 21 April 2006, its third update on 11 June 2007, its fourth update on 24 July 2008 and its fifth update on 16 May 2012. 4. No consents, approvals or orders of any regulatory authorities are required by the Issuer under the laws of the Grand Duchy of Luxembourg for the maintenance of the Loan and for the issue of the corresponding Series of Notes. 5. There has been no significant change in the financial position or trading position of RSB or the Group since 31 December 2011. 6. There has been no significant change in the financial position or trading position of the Issuer since 31 December 2011. 7. There has been no material adverse change in the prospects of RSB or the Group since 31 December 2011. 8. There has been no material adverse change in the prospects of the Issuer since 31 December 2011. 9. There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which RSB is aware) which may have or have had during the 12 months prior to the date of this Base Prospectus a significant effect on the consolidated financial position or profitability of RSB or the Group. 10. There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) which may have or have had since incorporation, a significant effect on the financial position or profitability of the Issuer. 11. The Group’s consolidated financial statements as at and for the years ended 31 December 2011 and 2010 have been audited by PwC, as stated in their reports appearing herein. 12. The Issuer’s financial statements as at and for the years ended 31 December 2011 and 2010 have been audited by Fiduciaire Patrick Sganzerla S.a.r.l., external and independent auditor, as stated in their reports appearing herein. 13. For the life of this document, copies (and certified English translations where documents at issue are not in English) of the following documents may be inspected at the offices of the Principal Paying Agent in London during usual business hours on any weekday (Saturdays and public holidays excepted): (a) a copy of this Base Prospectus along with any supplement to this Base Prospectus; (b) the Articles of Incorporation of the Issuer; (c) the charter of RSB;

- 193 - (d) the Group’s audited consolidated financial statements as at and for the years ended 31 December 2011 and 2010, together with PwC’s audit reports thereon; and (e) the Dealer Agreement, the Facility Agreement, the Trust Deed and the Agency Agreement. 14. Copies of the following documents are available for inspection at the office of the Luxembourg Paying Agent and at the registered office of the Issuer: (a) a copy of this Base Prospectus along with any supplement to this Base Prospectus; (b) the Articles of the Issuer; (c) the Issuer’s audited financial statements as at and for the years ended 31 December 2011 and 2010, together with audit reports thereon; and (d) the Dealer Agreement, the Facility Agreement, the Trust Deed and the Agency Agreement. 15. Deutsche Bank Trust Company Americas will act as Registrar in relation to the Rule 144A Notes and Deutsche Bank Luxembourg S.A. will act as Registrar in relation to the Regulation S Notes. A register of the Notes will be kept at the Issuer’s registered office. In case of inconsistency between the register of the Notes kept by either of the Registrars and the one kept by the Issuer at its registered office, the register kept by the Issuer at its registered office shall prevail.

- 194 - OVERVIEW OF THE BANKING SECTOR AND BANKING REGULATION IN RUSSIA

The following information relating to the Russian banking sector and regulation in Russia is for background purposes only. This information has been extracted from publicly available sources. RSB has not independently verified the following information. Although RSB accepts responsibility for extracting and reproducing such information accurately, none of RSB or the Lead Manager accepts responsibility for the accuracy of such information.

Introduction to the Russian Banking Sector History and Development of the Russian Banking Sector Prior to the reorganisation in 1987, the Soviet banking system consisted of the former State Bank of the USSR, or Gosbank (the predecessor to the CBR), which allocated resources from the state budget according to the prevailing economic plan and in whose regional branches all production and trading entities held their current accounts, and Stroibank of the USSR and Vneshtorgbank of the USSR, which primarily serviced payments relating to capital construction projects and the foreign trade of Soviet entities, respectively. Gosbank operated a network of “savings branches” (sberegatelnyie kassy), the predecessors to Sberbank, that offered retail banking services, mainly deposit taking and the processing of utility payments, throughout the country.

In 1987, the Soviet banking system was partially liberalised. A few specialised banks developed to service specific industries, namely, Agroprombank (Farming Production Bank), Promstroibank (Production and Construction Bank), Zhilsotsbank (Bank for Housing Maintenance and Utilities Sector and Social Development), Vnesheconombank of the USSR (Bank for Foreign Economic Activity) and Sberbank of the USSR (Bank for Labour Savings and Lending to the Population).

Vnesheconombank of the USSR became the full successor of Vneshtorgbank of the USSR pursuant to Resolution No. 745 of the Council of Ministers of the USSR dated 14 June 1988.

During 1988 - 1989, many regional commercial banks emerged, primarily in the form of co-operatives or joint stock companies. In 1991, three of the specialised state banks were transformed into joint stock companies. Some regional branches of these specialised state banks became independent from their head offices through management buy-outs. Furthermore, after the collapse of the Soviet Union in November 1991, the CBR assumed all of Gosbank’s functions in Russia, and the Russian Government liquidated Gosbank one month later.

During 1991 - 1998, the Russian banking system experienced rapid growth. The number of commercial banks in Russia increased from approximately 350 in 1990 to more than 2,500 in 1998. Several large privately-held banking groups were formed, including UNEXIM Bank, Inkombank, Menatep, Russian Credit and SBS-Agro. Although most private banks focused on providing banking services to newly privatised companies and governmental bodies, certain of these private banks started to compete with state-owned banks by offering banking products to retail customers.

In 1998, the Russian financial market crisis, which occurred largely because of the Russian Government’s default on much of its short-term domestic debt, exposed the weakness of the Russian banking sector.

Many banks were subsequently reorganised, went bankrupt or were placed under the administration of the Agency for the Restructuring of Credit Organisations (“ARCO”), a state corporation established in 1999 to restructure defaulting banks and protect their creditors. In 2002, 14 banks were under ARCO’s administration, and by 31 December 2002, 11 of them had completed the financial restructuring process. Other defaulting banks were liquidated. As the Russian banking sector was stabilising during 2000-2004, ARCO’s role decreased substantially. On 18 October 2003, the last credit organisation was withdrawn from ARCO’s administration, and pursuant to Federal Law No. 87-FZ dated 28 July 2004, ARCO itself was liquidated. Pursuant to the Retail Deposit Insurance Law, the assets of ARCO were transferred to the Deposit Insurance Agency which was established in January 2004 under the Retail Deposit Insurance Law.

The 1998 financial crisis revealed a lack of proper regulation of the Russian banking sector and reinforced concerns about the integrity of the banking system. However, during 1999 - 2003, the Russian banking system gradually recovered from the 1998 financial crisis. Higher liquidity levels and a shift in emphasis from investments in Russian Government securities to loans to companies and other legal entities characterised this recovery.

- 195 - From April to July 2004, the Russian banking sector experienced its first serious turmoil since the financial crisis of August 1998. As a result of various market rumours and, in some cases, regulatory and liquidity problems, several privately-owned Russian banks, including Guta Bank, experienced liquidity problems and were unable to attract funds on the interbank market or from their client base. Simultaneously, these banks faced large withdrawals of deposits by both retail and corporate customers. Several of these privately-owned Russian banks collapsed or ceased or severely limited their operations. The CBR took several measures in response to the crisis, including reducing the rate of mandatory reserves that banks must deposit with the CBR from 7 per cent. to 3.5 per cent. To implement these measures, the CBR permitted banks to reduce their mandatory reserves to the lower level immediately. Accordingly, banks borrowing costs declined. In addition, the Russian Government passed legislation pursuant to which the CBR became responsible for payments to retail customers of insolvent Russian banks that did not participate in the retail deposit insurance system before their insolvency. The CBR was also given a power to impose, for a period of one year, a limit on interest rates on retail deposits. In addition, banks became obliged to disclose certain information concerning the interest rates on retail deposits, their liabilities in respect of deposits and amounts of cash withdrawals by private depositors. According to the CBR, as of 1 April 2012, the total assets of the Russian banking sector were RUB 41,532.5 billion as compared to RUB 34,009.4 billion as of 1 April 2011, with capital of the banking sector of RUB 5,242.1 billion as of 1 January 2012. As of 1 March 2012, the total charter capital of Russian credit organisations was RUB 1,285.4 billion as compared to RUB 1,205.0 billion as of 1 March 2011 (Source: the CBR website).

One of the main sources of recent growth of the banks’ financial resources is the increasing number of retail deposits. According to the CBR, the aggregate amount of retail deposits in the Russian banking sector increased from RUB 7,485.0 billion as of 1 January 2010 to RUB 9,818.0 billion as of 1 January 2011 and to RUB 11,793.4 billion as of 1 March 2012 (of which deposits in Russan roubles amounted to RUB 9,703.0 billion and deposits in foreign currencies totalled RUB 2,090.5 billion). According to the CBR, the aggregate amount of corporate deposits increased from RUB 5,466.6 billion as of 1 January 2010 to RUB 6,035.6 billion as of 1 January 2011, and further to RUB 7,325.3 billion as of 1 March 2012 (of which deposits in Russian roubles amounted to RUB 4,768.4 billion and deposits in foreign currencies totalled RUB 2,556.9 billion) (Source: the CBR website).

The remaining sources of growth of the banking sector’s funding base are the increasing volumes of loans, deposits and other funds received from the CBR and interbank borrowings, amounting to RUB 1,257.7 billion and RUB 4,130.0 billion, respectively, as of 1 March 2012, as compared to RUB 325.7 billion and RUB 3,754.9 billion, respectively, as of 1 January 2011 and RUB 1,423.1 billion and RUB 3,117.3 billion, respectively, as of 1 January 2010 (Source: the CBR website). As of 1 January 2012, the total amount of loans and other funding in Russian roubles provided by Russian banks to their customers that are not credit organisations increased to RUB 24,741.2 billion (of which loans in the amount of RUB 5,988.8 billion were provided to retail customers, loans and other funding in the amount of RUB 17,963.0 billion were provided to corporate customers and loans and other funding in the amount of RUB 367.7 billion were provided to state financial agencies and non-budgetary funds) as compared to RUB 19,219.1 billion as of 1 January 2011 and RUB 17,121.2 billion as of 1 January 2010. The total amount of loans and other funding provided by Russian banks in foreign currencies amounted to RUB 7,320.7 billion as of 1 January 2012 (of which loans in the amount of RUB 330.6 billion were provided to retail customers, loans and other funding in the amount of RUB 4,522.3 billion were provided to corporate customers) as compared to RUB 6,041.0 billion as of 1 January 2011 and RUB 5,974.4 billion as of 1 January 2010 (Source: the CBR website).

In accordance with the Federal Law No. 175-FZ “On Additional Measures for Strengthening the Stability of the Banking System for the Period until 31 December 2011” dated 27 October 2008, as amended (the “Banking System Stability Law”) and decisions taken in September and October 2008 prior to the effective date of this law, Russian authorities and the CBR introduced certain measures intended to prevent bankruptcy of credit organisations. The number of credit organisations subject to such measures increased from 7 (with assets of RUB 576.2 billion, or 2.3 per cent. of the total assets of Russian credit organisations) as of 1 November 2008 to 20 (with assets of RUB 749.2 billion, or 2.7 per cent. of the total assets of Russian credit organisations) as of 1 January 2009, but then decreased slightly to 18 as of 1 June 2010 and further to 12 as of 1 April 2011 (with assets of RUB 511.2 billion or 1.5 per cent. of the total assets of Russian credit organisations) and 8 as of March 2012 (with assets of RUB 1,734.3 billion or 4.2 per cent of the total assets of Russian credit organisations) (Source: the CBR website).

- 196 - Structure of the Russian Banking Sector The Russian banking sector consists of the CBR and credit organisations which, in turn, consist of banks, which provide a wide range of banking services, and non-bank credit organisations, which provide only limited banking services, such as maintaining accounts and making payments. As of 1 March 2012, there were 974 credit organisations operating in Russia (Source: the CBR website). Poor corporate governance, inadequate risk management, lack of transparency, absence of developed regional networks and weak management remain main characteristics of many Russian banks.

State-owned banks State-owned banks continue to play a leading role in the Russian banking sector. Several state-owned banks focus on the implementation of Russian Government programmes, such as Russian Agricultural Bank in the agriculture sector and Roseximbank in respect of import-export operations.

Retail banks Sberbank and, to a lesser extent, VTB 24 (former Guta Bank purchased and renamed by VTB (former Vneshtorgbank)) are the leaders in retail banking operations. The collapse of large privately-owned banks, such as SBS-Agro and Inkombank, after the August 1998 financial crisis considerably undermined the credibility of privately-owned retail banks among retail customers. State-owned banks currently dominate this sector, partially because of the indirect state guarantee of their retail deposits and partially because of their large branch networks. It is unclear whether participation by privately-owned banks in the retail deposit insurance scheme will restore their credibility among retail customers.

Foreign owned banks The presence of foreign owned banks in the Russian market had been kept limited until 2002 in order to protect the newly formed Russian banks. However, given that foreign banks were later prohibited to directly conduct business in Russia, many major foreign banks have established subsidiaries in Russia.

Currently, foreign owned banks may need to comply with certain additional requirements that may be established by the CBR. The maximum aggregate participation limit of foreign shareholders in the Russian banking system may be determined by a federal law proposed by the Russian Government in conjunction with the CBR, however no such law has been enacted.

As of 1 March 2012, 113 credit organisations controlled by foreign groups holding more than 50 per cent. of their shares were operating in Russia, of which several ranked in the top 30 of all banks operating in the country by value of their assets. Of these 113 credit organisations, 77 were wholly-owned subsidiaries of foreign groups as of 1 March 2012 (Source: the CBR website).

Although certain foreign owned banks focus primarily on cash and settlement services to non-residents and interbank operations, many foreign owned banks, such as UniCredit Bank (formerly International Moscow Bank), Raiffeisenbank, Citibank, Delta Bank and Bank DeltaCredit, offer full scope services to their Russian customers, including retail deposits and loans to retail customers.

Legislative Framework for the Russian Banking Sector The Banking Law The Federal Law No. 395-1 “On Banks and Banking Activity” dated 2 December 1990, as amended (the “Banking Law”) is the main law regulating the Russian banking sector. Among other things, it defines credit organisations, sets forth the list of banking operations and other transactions that credit organisations may perform and establishes the framework for the registration and licensing of credit organisations and the regulation of banking activity by the CBR.

The Association of Russian Banks, a non-profit, self-regulatory organisation established pursuant to the Banking Law, offers technical support to its members and lobbies for the interests of commercial banks in various governmental bodies, including the Russian Parliament, the Russian Government and the CBR. As of 23 April 2012, it consisted of 706 members, including 512 credit organisations.

- 197 - Banking operations The Banking Law sets forth the following services as “banking operations” that require an appropriate licence from the CBR: • taking deposits from individuals and legal entities (both demand and fixed-term deposits); • investing the deposited funds as a principal; • opening and maintaining bank accounts for individuals and legal entities; • performing settlements in accordance with the instructions of individuals and legal entities, including correspondent banks, from and to their bank accounts; • services involving the handling of cash, cheques, promissory notes, and payment documents, and other cash services to individuals and legal entities; • the purchase and sale of foreign currency (including banknotes and coins); • taking deposits in precious metals and investing them; • issuing bank guarantees; and • making money transfers in accordance with the instructions of individuals without opening bank accounts (excluding payments by post).

The Banking Law provides that a credit organisation may be authorised to take deposits from individuals only after it has been registered for two years unless it meets certain criteria allowing it to take deposits from individuals earlier.

Other activities In addition to banking operations, credit organisations may: • guarantee monetary obligations of third parties; • purchase rights to demand payments by way of assignment; • engage in the fiduciary management (which differs from the concept of trust under English law) of monetary funds and other property for individuals and legal entities; • engage in operations with precious metals and stones (in accordance with Federal Law No. 41-FZ “On Precious Metals and Precious Stones” dated 26 March 1998, as amended, and other legal acts); • rent out special premises and safe deposit boxes to individuals and legal entities to store documents and valuables; • engage in leasing operations; • provide consultancy and informational services; and • enter into any other transactions in accordance with Russian law.

Under the Banking Law, a credit organisation cannot engage in production, commodities trading (excluding precious metals) or insurance activities. Article 15.26 of the Administrative Offences Code of Russia dated 30 December 2001, as amended, (the “Administrative Offences Code”) envisages a fine in an amount of between RUB 40,000 and RUB 50,000 for non-compliance with this requirement.

The Securities Market Law A banking licence does not authorise a credit organisation to act as a securities broker or dealer or to provide custody services (other than acting as a paying agent). To perform mentioned functions, pursuant to Federal Law No. 39-FZ “On the Securities Market” dated 22 April 1996, as amended, (the “Securities Market Law”) a credit organisation must obtain a respective licence from the FSFM. The operations of Russian banks in the securities market are subject to Russian securities laws and regulations adopted by the FSFM or its predecessor that govern activities of brokers, managers and securities custodians, as well as the relationship between professional market participants and investors. The FSFM also oversees the compliance of all professional market participants, including banks, with Russias securities laws and regulations. The FSFM issues licences to Russian credit organisations to perform the following professional functions on the Russian securities markets: (i) broker,

- 198 - (ii) dealer, (iii) securities manager, (iv) custodian, (v) clearing organisation, (vi) registrar and (vii) arranger of trade in the securities market. The licensing procedures are established in FSFM Regulation No. 10-49/PZ-N of 20 July 2010, as amended. In addition, the FSFM has the right to conduct audits of credit organisations from time to time to check their compliance with the requirements of applicable laws and regulations. The FSFM is responsible for setting up certain additional reporting requirements for licensed credit organisations and has a right to monitor their operations.

The National Payment System Law For the purposes of development and modernisation of the Russian banking sector and financial market, in light of establishment of International Financial Centre in Russia, the Federal Law No. 161-FZ “On the National Payment System” dated 27 June 2011 (the “National Payment System Law”) was adopted. The National Payment System Law generally came into force on 29 September 2011 with some provisions entering into force later in 2012.

The National Payment System Law sets out legal and administrative basis of the national payment system, regulates the procedure of rendering payment services, including transfer funds services, the employment of the electronic payment instruments, the activity of the participants of the national payment system, as well as determines the requirements with respect to organisation and functioning of payment systems, the procedure of the supervision in the national payment system.

The National Payment System Law provides, inter alia, that a bank may act as an operator of the transfer of monetary funds, i.e an operator of the electronic monetary resources and an operator of the payment system. The National Payment System Law envisages that the CBR performs the function of supervision over the functioning of the national payment system.

The Retail Deposit Insurance Law The Retail Deposit Insurance Law introduced a mandatory retail deposit insurance scheme for Russian banks that offer retail deposit services pursuant to a licence granted by the CBR. In order to be eligible to participate in the deposit insurance scheme, banks were required to apply with the CBR before 27 June 2004. The Retail Deposit Insurance Law prescribed the requirements for admission to the deposit insurance scheme, and compliance with these requirements was verified by the CBR on a case-by-case basis.

The Retail Deposit Insurance Law provides that in case of insured accident (i.e. revocation of the baking licence and imposition by the CBR of the moratorium on payments) each individual should receive the compensation of his retail deposit in the amount of 100 per cent. but no more than RUB 700,000. Insurance proceeds are payable from the retail deposit insurance fund. All participating banks must make quarterly contributions to the retail deposit insurance fund. The amount of each bank’s contribution to the deposit insurance scheme is assessed based on the quarterly average of daily balances of its retail deposits (excluding bearer deposits), i.e the contribution basis. Standard contribution premiums cannot exceed 0.15 per cent. of the contribution basis. In certain circumstances, the premium can be increased up to 0.3 per cent. of the contribution basis, but not for more than two quarters in any 18-month period. When the size of the insurance fund exceeds 5 per cent. of all Russian banks’ combined retail deposits, all subsequent contribution premiums cannot exceed 0.05 per cent. of the contribution basis. When the size of the insurance fund exceeds 10 per cent. of all Russian banks’ combined retail deposits, no contributions will need to be made, but contributions must be resumed if the size of the insurance fund falls below 10 per cent. of the combined retail deposits.

The Deposit Insurance Agency collects fund contributions, manages the funds, calculates insurance premiums and monitors insurance payments. The Deposit Insurance Agency maintains a register of all banks that hold a retail banking licence. According to the Deposit Insurance Agency, as of 23 April 2012, the CBR had admitted 993 banks to the deposit insurance scheme (Source: the Deposit Insurance Agency website). A bank that does not participate in the deposit insurance scheme is not permitted to accept retail deposits or open accounts for individuals.

The Insider Dealing Law Federal Law No. 224-FZ “On Combating the Unlawful Use of Inside Information and Market Manipulation and Introducing Amendments to Certain Legislative Acts of the Russian Federation” dated 27 July 2010 (the “Insider Dealing Law”) generally enumerates categories of persons that can be considered insiders, including,

- 199 - among others, issuers, professional market participants (including brokers and dealers) and other persons who transact on behalf of their clients with financial instruments, foreign currency and/or goods, and have received inside information from their clients. Under the Insider Dealing Law, any person who illegally uses the inside information and publishes misleading information may be held liable for misuse of information and/or market manipulation. Furthermore, insiders must comply with certain new disclosure requirements, including keeping the insiders list and sending notices of transactions by the insiders to the FSFM. In implementation of the Insider Dealing Law and pursuant to the CBR Regulation No. 2723-U dated 31 October 2011, the CBR started disclosing certain facts relating to banks on its website, including (i) status and results of inspections, (ii) revocation of a licence, (iii) administrative liability of a credit organisation or its sole executive body, (iv) invalidation of the CBR’s approval for taking retail deposits and opening and maintaining bank accounts for individuals, and (v) phases of issuance of securities. Given that the Insider Dealing Law is relatively new and vaguely drafted, its application is not yet settled.

The Banking System Stability Law The Banking System Stability Law came into effect on 28 October 2008. The Banking System Stability Law envisages that the Deposit Insurance Agency will assist distressed banks through: (i) attracting investors for credit organisations which are experiencing financial difficulties; and (ii) liaising with the CBR regarding the provision of financial assistance to such credit organisations.

The Banking System Stability Law expands the list of bankruptcy prevention measures available for Russian credit organisations under the Law on Insolvency (Bankruptcy) of Credit Organisations by introducing the following additional procedures: • provision of financial assistance to private investors that have agreed to acquire a controlling stake in a credit organisation in distress; • financial assistance to other credit organisations that have agreed to acquire certain assets and obligations of a credit organisation in distress; • acquisition of a controlling stake in a credit organisation in distress directly by the Deposit Insurance Agency; • provision of financial assistance to a credit organisation in distress subject to acquisition of a controlling stake in such credit organisation by either a private investor or the Deposit Insurance Agency; • making arrangements for public sale of the assets securing obligations of a credit organisation owed to its creditors, including the CBR; and • appointment of the Deposit Insurance Agency by the CBR to act as temporary administrator in relation to a credit organisation.

The decision as to whether bankruptcy prevention measures should be launched in respect of a particular credit organisation rests with the CBR.

The analysis of the financial position of a credit organisation for the purpose of provision of state support will be jointly performed by the CBR and the Deposit Insurance Agency. Based on the results of the analysis the Deposit Insurance Agency will develop a rehabilitation plan for that credit organisation which will then need to be approved by the CBR.

According to Deposit Insurance Agency as of 23 April 2012 the CBR and the Deposit Insurance Agency have launched rehabilitation measures in respect of 7 credit organisations.

Currency Laws Federal Law No. 173-FZ “On Currency Regulation and Currency Control” dated 10 December 2003, as amended (the “Currency Law”), introduced an existing currency control regime. The Currency Law is generally aimed at the gradual liberalisation of Russian currency control regulations. Pursuant to the Currency Law, the CBR has the power to regulate certain currency operations (including non-banking operations performed by Russian banks) by introducing a “special account requirement”, which, as of 1 January 2007, along with the major remaining restrictions envisaged in the Currency Law, has been abolished.

- 200 - However, there can be no assurance that the Currency Law itself will not be revised or amended in the future or that no new restrictive measures will be implemented in Russia, taking the current economic situation into account.

The Anti-Money Laundering Law In August 2001, Russia adopted Federal Law No. 115-FZ “On Combating the Legalisation (Laundering) of Income Obtained by Criminal Means” dated 7 August 2001, as amended (the “Anti-Money Laundering Law”), to comply with the requirements of the Financial Action Task Force on Money Laundering (“FATF”). The Anti-Money Laundering Law entered into force on 1 February 2002. Credit organisations must comply with the provisions of the Anti-Money Laundering Law relating to, among other things, the development of appropriate internal standards and procedures, customer identification, control over customer operations and reporting of suspicious activities.

Under the Anti-Money Laundering Law, one of a bank’s main obligations is the “control function”, which involves identification of the bank’s clients, gathering information with respect to client operations and reporting certain operations to the Federal Service for Financial Monitoring, anti-money laundering authority of Russia. The Anti-Money Laundering Law requires that banks exercise the “control function” over any operations in the amount of RUB 600,000 or more (or its equivalent in foreign currencies) when such operations involve: • cash transactions; • transactions where one of the counterparties is resident or has a bank account in a country that does not participate in international efforts to combat money-laundering; • making certain bank deposits that do not identify beneficiaries; • deposits to or debiting money from the account of legal entities with less than three months existence and performing such operations in relation to the account for the first time since its opening; and • similar transactions with moveable property involving precious stones, precious metals and other property.

In addition, banks must exercise the “control function” over any operation involving an individual or organisation that is known to participate in extremist or terrorist activities, as well as any legal entity that such organisations control or the agents of such organisations.

If bank officers suspect that an operation is conducted in order to legalise any funds received from illegal activities or to finance terrorist activities, their banks must report such operations to the Federal Service for Financial Monitoring whether or not they qualify as controlled operations. Banks have right not to inform customers that transactions are being reported to the Federal Service for Financial Monitoring.

Measures to Support the Liquidity and Solvency of Russian Banks and Legal Entities Since October 2008, the Russian Government and the CBR have announced and, in many cases, fully implemented measures intended to support the liquidity and solvency of Russian banks and to increase the availability of credit to businesses, which have been seen as critical for restoring investor confidence and supporting the medium-term economic growth of the Russian economy. These measures were primarily introduced by the Federal Law No.173-FZ “On the Additional Measures to Support the Financial System of Russia” dated 13 October 2008, as amended (the “Rescue Measures Law”). According to the Rescue Measures Law, the following measures are being implemented: • The Russian Government through the CBR and VEB may provide up to RUB 910 billion in subordinated loans to state-owned and private banks under certain conditions. The RUB 910 billion state contribution to banking sector capital in the form of long-term subordinated loans with a term of at least five years is one of the key economic initiatives announced by the Russian Government to restore confidence in the Russian banking sector. State-owned banks such as Sberbank, VTB and Russian Agricultural Bank received RUB 500 billion, RUB 200 billion and RUB 25 billion, respectively, as part of this initiative. The remaining RUB 185 billion have been distributed among privately-owned Russian banks subject to certain conditions. The CBR is authorised to enter into agreements with privately owned banks to partially compensate such banks for the losses suffered during the period from 14 October 2008 to 31 December 2010 as the result of operations on the interbank market with banks whose licences are revoked. On 20 October 2008, the Supervisory Board of VEB approved the “Procedure for realising by VEB the measures set out in Articles 4 and 6 of the Rescue Measures Law” which details the measures implemented

- 201 - to finance Russian banks through VEB (the “Procedure”). The Procedure lists certain criteria that a Russian bank must meet to qualify for VEB financing, including but not limited to, a minimum credit rating of “B-” for Fitch and Standard & Poor’s and “B3” for Moody’s, no overdue tax liabilities at the federal or regional level and no applicable CBR sanctions. • VEB had the right, until 31 December 2009, to originate foreign currency loans up to U.S.$50 billion to Russian legal entities to repay and/or refinance the loans received from foreign lenders prior to 25 September 2008.

A set of federal laws and subordinated legislation complements the following measures were introduced by the Rescue Measures Law: • Federal Law No. 317-FZ “On Amending Articles 46 and 76 of the Federal Law on the Central Bank of the Russian Federation (Bank of Russia)” dated 30 December 2008 vested the CBR with the right to appoint its authorised representatives to the banks and credit institutions which, inter alia, have received any foreign currency loans and/or subordinated loans under the Rescue Measures Law. The CBR Regulation No. 2182-U “On Procedure for Nomination, Operation and Termination of Authorised Representatives of Bank of Russia” dated 9 February 2009 provides for the procedure for such authorised representatives appointment, their rights and obligations including, inter alia, the right to participate in the meetings of the management bodies of such banks and credit institutions and the right to request information on management remuneration and the provision of loans to third parties. • CBR Regulation No. 2092-U “On Determination of Mandatory Reserve Requirements of the Bank of Russia” dated 15 October 2008 temporarily decreased the reserve requirements for all types of financial obligations, namely funds in Roubles and foreign currencies payable to non-resident banks, funds in Roubles payable to individuals and other obligations, to 0.5 per cent. from 4.5 per cent., 1.5 per cent. and 2 per cent., respectively. However, the CBR increased them starting from 1 March 2011 to 4.5 per cent. for the bank’s obligations to non-residents in Roubles or foreign currency and 3.5 per cent. for the bank’s other obligations in Roubles or foreign currency, including those to individuals, and starting from 1 April 2011 to 5.5 per cent. and 4.0 per cent., respectively. See “Management of the CBR–Reserve requirements”. • The Retail Deposit Insurance Law has been amended to increase the amount of the secured deposits of individuals with Russian banks included to the state system of deposits insurance up to RUB 700,000. See “Legislative Framework for the Russian Banking Sector–The Retail Deposit Insurance Law”. • Russian Government Decree No. 18 “On the Procedure of National Welfare Fund Assets Management” has been amended in 2008, 2009 and 2010 to widen the scope of financial instruments in which funds from the National Welfare Fund can be invested. The National Welfare Fund was established in 2008 using oil revenues, with a view to partially funding contributions to pensions of Russian citizens and to make up shortfalls in other contributions from the federal budget to federal pension funds. As a consequence, up to RUB 655 billion of such funds may be deposited in Vnesheconombank to support the Russian financial markets. • The number of instruments eligible for the CBR’s collateralised facility and for refinancing transactions with the CBR has been increased and the CBR may accept, among other things, the pledge of certain bonds and suretyships granted by certain Russian banks as collateral under its facilities to credit organisations. • The provision of additional liquidity to the Russian banks by the Russian Government and the CBR has caused massive attacks on the Russian rouble and its significant devaluation against the U.S. Dollar. The financial aid received by the banks in the end of 2008 and the beginning of 2009 did little to improve the access of Russian corporates or individuals to credit. At the end of January 2009, the CBR changed its policy and placed particular emphasis on stopping further devaluation of the Rouble by turning to a tighter monetary policy and significantly limiting the access of Russian banks to liquidity.

Role of the CBR The CBR was established on 13 July 1990 as a successor to the Russian Republican Bank of the State Bank of the USSR, or Gosbank. After the collapse of the USSR in 1991, the CBR inherited Gosbanks operational facilities and resources, including its subsidiaries and branches.

The CBR operates under the Federal Law No. 86-FZ “On the Central Bank of the Russian Federation” dated 10 July 2002, as amended (the “CBR Law”). According to the CBR Law, the Russian Government is not liable for the CBRs obligations, and nor is the CBR liable for the obligations of the Russian Government, unless the relevant liability has been assumed or is required under other Russian laws. The assets of the CBR are under federal ownership.

- 202 - Management of the CBR The CBR is a legal entity which is operationally independent from the Russian Government. The CBR has a Moscow head office and regional branches in the constituent subjects of Russia, as well as local branches. (in the case of some constituent subjects that are republics, the CBR’s regional branch is called a “National Bank”.) The management of the CBR consists of the Chairman of the CBR, the Board of Directors and the National Banking Council.

The Russian President nominates the Chairman of the CBR, whom the State Duma, one of the chambers of the Russian Parliament, then confirms for a four-year term in office. The Chairman of the CBR, whom the President and State Duma can replace, using the same procedure, has the right to participate in meetings of the Russian Government.

The Board of Directors of the CBR performs general management functions, such as allocating the CBR’s annual budget, determining the CBR’s organisational structure and formulating internal policies and procedures. It also performs certain external regulatory functions, such as: • establishing rules for the conduct of banking operations; • establishing accounting rules for Russian banks; • determining mandatory economic ratios and provisioning policies for Russian banks; and • determining pricing policies for the CBR’s open market operations.

The Board of Directors of the CBR consists of the Chairman of the CBR and twelve members. The Chairman of the CBR nominates, with the approval of the Russian President, each director, whom the State Duma then confirms for a four-year term in office.

The National Banking Council performs certain policy-making functions, such as determining the CBR’s maximum capital expenditures, appointing the CBR’s auditors and approving its accounting procedures and allocation of the CBR’s expenses. Of the twelve members of the National Banking Council, the Council of Federation, the upper chamber of the Russian Parliament, appoints two from among its members, the State Duma appoints three from among its members, and the President and the Russian Government each appoints three from among its members. The Chairman of the CBR is an ex officio member of the National Banking Council.

Functions of the CBR Pursuant to the CBR Law, the Banking Law and the Currency Law, the CBR has the authority to issue and implement binding regulations in respect of banking and currency operations.

Under current legislation, the CBR performs the following main functions:

Monetary Policy The CBR determines monetary policy in Russia. It can finance banks by extending short-term loans to them at a discount (refinancing) rate set by the CBR. It also establishes reserve requirements, capital adequacy requirements and mandatory economic ratios. It also conducts currency interventions, issues its own bonds, which it can offer only to credit organisations, and trades in the Russian Government securities.

Bank Regulation The CBR issues, suspends or revokes banking licences and registers new securities issuances by commercial banks. The CBR also oversees banks compliance with ratio and reserve requirements, imposes sanctions for violations thereof, establishes reporting requirements and accounting rules and procedures for banks, oversees banks operations and transactions, appoints temporary administrations of banks that are facing insolvency, regulates the acquisition or trust management of significant stakes in banks (for stakes between 1 per cent. and 20 per cent., the CBR requires notification; in respect of stakes that equal or exceed 20 per cent., the CBR must give its prior approval of the transaction) and assesses the financial standing of banks founders.

Transactions with Banks The CBR: • extends loans to banks at the discount (refinancing) rate; • maintains Rouble-denominated correspondent accounts of other banks;

- 203 - • provides cash and settlement services and issues guarantees to banks; • purchases and sells Russian state securities, its own bonds, certificates of deposit, precious metals and stones; • purchases and sells foreign currency and foreign currency-denominated payment instruments issued by Russian and foreign banks; and • registers securities issued by banks.

Except under the limited circumstances set forth in the CBR Law, the CBR may not participate in the charter capital of banks and other commercial entities.

Issue of Currency and Regulation of Its Circulation The CBR has the exclusive authority to issue currency in Russia and to regulate its circulation. The CBR arranges for the printing of banknotes and the engraving of coins, establishes rules for their transportation and storage and regulates over-the-counter cash operations.

Foreign Currency Operations The CBR has substantial power to regulate foreign currency operations in Russia and foreign currency operations conducted by Russian residents abroad. It administers Russia’s international reserves. It also establishes rules governing Rouble- and foreign currency-denominated bank accounts in Russia of both residents and non-residents.

Domestic Government Debt Service and Federal Budget Administration The CBR acts as placement agent for and services domestic sovereign debt issued by the Ministry of Finance of Russia. It also administers federal budget accounts. However, under the CBR Law, the CBR cannot, unless the federal budget expressly authorises it to do so, extend loans to the Russian Government to finance Russian Government budget deficits.

Licensing A credit organisation must hold a CBR licence to conduct “banking activities”, as defined in the Banking Law. Licence applicants must submit to the CBR a feasibility study, detailed information on their senior management and compliance with qualification requirement and documents certifying the source of funds contributed to their charter capital.

The credit organisation must be incorporated in Russia. Under the Banking Law, credit organisations may be incorporated as joint stock companies, limited liability companies or companies with additional liability. The last form, however, is uncommon, since it envisages joint liability of the company’s owners for the credit organisations’ obligations.

The CBR may refuse to register a credit organisation and to issue a banking licence if, among other things: • application materials do not comply with Russian law; • the financial standing of the credit organisations’ founders is unsatisfactory; • candidates for a position of a chief executive officer or chief accountant of the credit organisation fail to meet qualification requirements; or • a candidate for a position of a member of the credit organisation’s board of directors has a business reputation which does not correspond to the established qualification requirements.

Additional requirements have been introduced for obtaining a licence for taking deposits from individuals. The licence could be granted to a newly established bank or to a bank existing for more than two years from the date of its registration provided that: (i) the charter capital of a newly established bank or the regulatory capital of an existing bank is not less than RUB 3,600 million, and (ii) the bank complies with the CBR’s requirement to publicly disclose all information relating to persons having significant influence over decisions made by the bank’s management bodies.

- 204 - The charter (regulatory) capital requirement of RUB 900 million has been introduced for obtaining a general licence which allows to conduct banking operations in Roubles and foreign currencies and taking deposits from individuals in Roubles and foreign currencies.

Capital requirements The basic concept underlying Russian capital requirements is the amount of the capital base (own funds) of a credit organisation which is defined as the sum of the “main capital” and “additional capital” of the credit organisation minus certain obligations as determined by the CBR.

The main capital and the additional capital are defined by way of an exhaustive list of different types of debt and equity that qualify for treatment as the main and additional capital, as applicable. For example, the amount of the charter capital of the credit organisation is included into the main capital of the credit organisation and constitutes a part of the credit institutions capital base.

Capital base of a credit organisation must not be less than RUB 180 million with an exception for banks whose capital base constituted less than RUB 180 million as of 1 January 2007. Each bank whose capital base was below RUB 180 million as of 1 January 2007 is required to increase its capital base to (i) a minimum of RUB 90 million by 1 January 2010; and (ii) a minimum of RUB 180 million by 1 January 2012. Failure to comply with this requirement will result in revocation of a bank’s banking licence.

The Banking Law establishes minimum charter capital for banks. Under the Banking Law the minimum charter capital both for newly-established and foreign owned banks is equivalent to RUB 180 million. A bank whose capital base falls below its nominal charter capital must increase its capital base (or, if impossible, reduce its nominal charter capital) in accordance with the CBR’s regulations establishing the procedures for such adjustment.

The capital base required for a newly established bank seeking to obtain a general banking licence should be not less than RUB 900 million or, if an exemption from the two year period of existence requirements is sought, RUB 3,600 million.

Reserve requirements Under the CBR Law, the CBR’s Board of Directors may establish reserve requirements for banks. Reserve requirements must not exceed 20 per cent. of the bank’s liabilities and may vary for different types of banks.

Banks are currently required to post mandatory reserves to be held in non-interest bearing accounts with the CBR. To stabilise local financial market, and to support the liquidity of the Russian banking sector, the CBR decreased in October 2008 mandatory reserves for various obligations of credit organisations to 0.5 per cent. However, the CBR increased them starting from 1 March 2011 to 4.5 per cent. for the bank’s obligations to non-residents in Roubles or foreign currency and 3.5 per cent. for the bank’s other obligations in Roubles or foreign currency, including those to individuals, and starting from 1 April 2011 to 5.5 per cent. and 4.0 per cent., respectively.

From 1 November 2009, mandatory cash balances are calculated by banks in accordance with the CBR Regulation No. 342-P dated 7 August 2009 and Regulation No. 2295-U dated 17 September 2009 (the “Reserves Regulations”). The Reserves Regulations do not require creation of reserves for certain long-term borrowings. The Reserves Regulations also require banks to report the calculation of reserves to the CBR and its regional branches promptly after the end of each calendar month, as well as to post additional reserves, if necessary.

The CBR may fine a bank that fails to comply with reserve requirements and debit the insufficient reserve from its correspondent account maintained with the CBR. The CBR and its regional branches may also conduct audits to assess a bank’s compliance with the reserve requirements.

Amounts deposited with the CBR pursuant to reserve requirements are not subject to seizure for the satisfaction of judgments against the bank. In the event of the revocation of the banks licence, mandatory reserves are included in the pool of assets available for distribution to the banks creditors according to the priority ranking established by law.

- 205 - Loss provisions The CBR regulates the creation of provisions for bank loan losses. The CBR Regulation No. 254-P “On the Procedure for Making Provisions for Possible Losses on Loans and Similar Indebtedness by Credit Organisations” dated 26 March 2004, as amended (“Regulation No. 254-P”) requires banks to adopt procedures for calculating and posting provisions for loan losses and to monitor the financial position of borrowers.

This regulation requires credit organisations to classify their loans into the following categories and to create provisions for such loans in the corresponding amounts:

On a standalone basis (with respect to the particular loan):

Category Status of Loan Provision Category I ...... Standard loans, without credit risk 0 per cent. Category II ...... Nonstandard loans, moderate credit risk 1 per cent.—20 per cent. Category III ...... Doubtful loans, considerable credit risk 21 per cent.—50 per cent. Category IV ...... Problem loans, high credit risk 51 per cent.—100 per cent. Category V ...... Badloans 100 per cent.

On the aggregate basis (with respect to the portfolio of similar loans):

Category Status of Loan Provision Category I ...... Standard loans, without credit risk 0 per cent. Category II ...... Nonstandard loans, moderate credit risk Up to 3 per cent. Category III ...... Doubtful loans, considerable credit risk More than 3 per cent.—up to 20 per cent. Category IV ...... Problem loans, high credit risk More than 20 per cent.—up to 50 per cent. Category V ...... Badloans More than 50 per cent.

Loans should be classified on the basis of professional judgment by the credit organisation taking into account the borrowers financial standing and debt servicing level. The credit organisation must evaluate at its discretion the borrowers financial standing and debt servicing level as good, average or bad. Regulation No. 254-P sets forth the relevant tests to be applied towards a particular loan and borrower. Regulation No. 254-P is applied subject to the order of the CBR No. 2459-U “On Peculiarities of the Credit Risk Assessment in relation to Single Loans, Loan and Similar Indebtedness” dated 3 June 2010.

Regulation No. 254-P expands the range of loans to be so classified to include rights assigned under contracts, mortgages acquired in the secondary market, claims relating to purchase of financial assets with deferred payment, and others. Under Regulation 254-P, credit organisations do not need to make provisions for Category I loans (standard loans). Additionally, credit organisations must classify loan collateral into two categories on the basis of its quality. Finally, the regulation provides for a somewhat simplified procedure in respect of writing off bad debts, especially minor debts, as compared with the former procedures.

Provisions for loan losses are calculated at the end of each calendar month. Such provisions only cover losses relating to the principal amount of loans and exclude interest and any discount. The CBR and its regional branches may audit banks compliance with requirements relating to provisions for loan losses and verify the correct calculation of such provisions.

The CBR also regulates the creation of provisions for possible losses other than loan losses, which may include losses from investments in securities, funds held in correspondent accounts of other banks, contingent liabilities and other transactions. The CBR Instruction No. 283-P dated 20 March 2006, as amended, require banks to classify such activities into the following five risk categories and to make provisions in the corresponding amount at their discretion: • no real or potential possibility of losses (0 per cent.); • moderate potential possibility of losses (1 per cent. - 20 per cent.); • serious potential or moderate real possibility of losses (21 per cent. - 50 per cent.); • simultaneous potential and moderate real possibility of losses or material real possibility of losses (51 per cent. - 100 per cent.); and • complete possibility (100 per cent.).

Banks must report to the CBR the amount of new non-loan provisions within ten days after the end of each reporting month. The CBR and its regional branches monitor banks’ compliance with these rules.

- 206 - Mandatory economic ratios The CBR Instruction No. 110-I “On Banks Mandatory Economic Ratios” dated 16 January 2004, as amended, establishes mandatory economic ratios for banks.

The following table sets forth the mandatory economic ratios that banks must observe on a daily basis and periodically report to the CBR. Unless stated otherwise, such ratios are calculated on the basis of RAS, as formulated by applicable Russian laws and CBR regulations.

As mentioned above, a bank’s capital base consists of main capital and additional capital. Main capital includes, among other items, charter capital, share premium, retained earnings and certain reserve funds. Additional capital includes, among other items, reserves for asset revaluations, reserves for loan losses, certain preferred shares and subordinated debt.

CBR Mandatory Economic Ratio Mandatory Economic Ratio Description Requirements Capital adequacy ratio (N1) This ratio is intended to limit the risk For banks whose capital base is of a banks insolvency and to less than RUB 180 million, establish the minimum size of the 11 per cent. For banks whose bank’s capital base necessary to capital base is RUB 180 million cover credit and market risks. or more, 10 per cent. It is defined as the ratio of a bank’s capital base to its aggregate risk weighted assets and off-balance sheet liabilities. (Assets and off- balance sheet liabilities are weighted according to five broad risk categories.) Instant liquidity ratio (N2) This ratio is intended to limit the Minimum 15 per cent. banks liquidity risk within one operational day. It is defined as the minimum ratio of a bank’s highly liquid assets to its liabilities payable on demand. Current liquidity ratio (N3) This ratio is intended to limit the Minimum 50 per cent. banks liquidity risk within 30 calendar days preceding the date of the calculation of this ratio. It is defined as the minimum ratio of a bank’s liquid assets to its liabilities payable on demand and liabilities with terms of up to 30 calendar days. Long-term liquidity ratio (N4) This ratio is intended to limit the Maximum 120 per cent. banks liquidity risk from placement of funds into long-term assets. It is defined as the maximum ratio of the bank’s credit claims maturing in more than one year to the sum of its capital base and liabilities maturing in more than one year. Maximum exposure to a single This ratio is intended to limit the Maximum 25 per cent. borrower or a group of related credit exposure of a bank to one borrowers (N6) borrower or a group of related borrowers (defined as persons who belong to the same banking or financial industrial group, are close relatives, or persons who can directly or indirectly materially influence the decisions of corporate borrowers).

- 207 - CBR Mandatory Economic Ratio Mandatory Economic Ratio Description Requirements It is defined as the maximum ratio of the aggregate amount of the bank’s various credit claims to a borrower (or a group of related borrowers) to its capital base. The CBR issued Letter No. 106-T dated 10 September 2004 recommending that Russian banks implement an exposure limit for economically related borrowers. Under this letter, borrowers are “economically related” if a decline in the financial condition of one borrower affects or may affect the financial condition of the other borrowers; and may result in such other borrower’s inability to perform its obligations to the bank (e.g., if the borrower is simultaneously a creditor of a bank and a debtor to another creditor of the bank). However, the limit has not been officially introduced yet and the banks failing to comply with the recommendations are not subject to the CBR sanction. Maximum amount of major credit This ratio is intended to limit the Maximum 800 per cent. risks (N7) aggregate amount of a banks major credit risks (defined as the sum of loans to, and guarantees or sureties in respect of, clients with exposure exceeding 5 per cent., of a bank’s capital base). It is defined as the maximum ratio of the aggregate amount of major credit risks to a bank’s capital base. Maximum amount of loans, bank This ratio is intended to limit a Maximum 50 per cent. guarantees and sureties extended by bank’s credit exposure to the banks the bank to its owners. It is defined as the participants(shareholders) (N9.1) maximum ratio of the amount of loans, bank guarantees and sureties extended by the bank to its participants or shareholders to its capital base. Aggregate amount of exposure to This ratio is intended to limit the Maximum 3 per cent. the banks insiders (N10.1) aggregate credit exposure of a bank to its insiders (defined as individuals capable of influencing credit decisions). It is defined as the maximum ratio of the aggregate amount of the bank’s credit claims against its insiders to its capital base. Ratio for the use of the bank’s This ratio is intended to limit the Maximum 25 per cent. capital base to acquire shares aggregate risk of a bank’s (participation interests) in other investments in shares (participation legal entities (N12) interests) of other legal entities. It is defined as the maximum ratio of the banks investments in shares (participation interests) of other legal entities to its capital base.

- 208 - In addition, CBR Regulation No. 112-I describes the methods of calculation of additional ratios that, pursuant to the Federal Law No. 152-FZ “On Mortgage Backed Securities” dated 11 November 2003, as amended (the “Mortgage Backed Securities Law”), apply to banks that issue mortgage-backed securities. Among these additional ratios are the following: • the ratio of loans secured by mortgages to a bank’s capital base (N17) must be at least 10 per cent.; • the ratio of claims relating to principal and interest on loans secured by mortgages to the principal and interest of mortgage-backed securities (N18) must be at least 100 per cent.; and • the ratio of a banks aggregate obligations to creditors with priority to satisfy their claims before the holders of mortgage-backed securities to a bank’s capital base (N19) must not exceed 50 per cent.

A bank must comply with these special ratios from the time of the decision to issue mortgage-backed securities until the complete redemption of securities.

Regulation of currency exposure CBR Instruction No. 124-I dated 15 July 2005, as amended, governs bank’s exposure to foreign currency and precious metals (together, “currency exposure”). Banks calculate their currency exposure in respect of net balance sheet positions, spot market positions, forward positions, option positions, guarantees, suretyships and letters of credit. An “open currency position” is the sum of these net amounts. Banks calculate their exposure for each currency and each precious metal and then convert it into Roubles in accordance with CBR’s official exchange rates and CBR’s prices for precious metals.

At the end of each operational day, the aggregate amount of all long and short currency positions must not exceed 20 per cent. of the bank’s capital base. Concurrently, at the end of each operational day, the long and short position in respect of any single currency or precious metal must not exceed 10 per cent. of the bank’s capital base.

Reporting requirements Under CBR Regulation No. 2332-U dated 12 November 2009, as amended, routine reporting is performed by credit organisations on a daily, five-day, ten-day, monthly, quarterly, half-yearly and yearly basis, and certain reporting is effected on a non-regular basis. Specific reporting requirements apply to credit organisations in liquidation pursuant to CBR Regulation No. 1594-U of 14 July 2005, as amended.

Financial statements must be disclosed to the public by the bank on a quarterly and yearly basis. Annual financial statements must be published only after their certification by an independent auditor. Quarterly financial statements may be published without their certification by an independent auditor.

Under the Banking Law, banking groups (i.e. alliances of banks in which one bank directly or indirectly controls decisions of the management bodies of other banks within the alliance) and holdings (i.e. alliances of legal entities in which a legal entity that is not a bank, directly or indirectly, controls decisions of the management bodies of the bank within such an allowance) must regularly submit their consolidated accounts to the CBR.

The CBR may at any time conduct full or selective audits of any banks filings and may inspect all of its books and records. The CBR, however, is prohibited from conducting a secondary audit of matters covered by the previous audit within a single reporting period, save for limited circumstances provided in the CBR Law.

Accounting practices The CBR establishes a standard format for presentation of financial and statistical data and recording banking transactions. The CBR also establishes accounting rules and procedures for banks.

The accounting practices are regulated by the CBR Regulation No. 302-P dated 26 March 2007, as amended. Pursuant to this document, financial statements of credit organisations must be prepared in accordance with RAS.

Pursuant to CBR Regulation No. 1363-U dated 25 December 2003, as amended, credit organisations are required to submit their financial statements for the period from 1 January to 31 December to the regional representatives of the CBR prior to 1 July of the following year.

- 209 - Pursuant to Regulation No. 1363-U and CBR Letter No. 169-T dated 24 November 2011, credit organisations must prepare financial statements in accordance with IFRS on the basis of financial statements prepared in accordance with RAS and submit them to the CBR prior to 1 July of the following year. The CBR Letter No. 169-T dated 24 November 2011 that contains pro forma IFRS financial statements and examples of typical adjustments to RAS financial statements.

Data Protection Bank Secrecy Pursuant to the Civil Code banks shall guarantee the secrecy of bank accounts and bank deposits operations under the bank accounts and customer related information.

In accordance with the Russian Banking Law, a bank’s employees are obliged to keep confidential information about operations, accounts and deposits of the bank’s customers and correspondent banks, and any other information determined by the bank so long as keeping this information confidential does not contradict federal laws.

Disclosure of data constituting banking secrets by a bank is permitted only to a limited circle of third parties. These include the courts, tax bodies, customs bodies, investigation authorities and anti money laundering authorities. Due to the absence of the explicit regulation it is not entirely clear whether the bank may disclose the data with the consent of the respective customer. However, there is a view that a bank may disclose banking secrets to third parties when the consent of the respective customer has been obtained, since in this case the privacy of the customer is not violated.

Personal Data and Commercial Secrets Pursuant to the Federal Law No. 152-FZ “On personal data” (the “Russian Personal Data Law”), personal data may be disclosed to third parties only when the consent of the respective customer has been obtained or in cases stipulated by the applicable law.

Failure to comply with the Russian Personal Data Law and banking secrecy requirements may result in the following liability of the data operator and/or its executives: • civil liability: a claim for damages and moral harm from a participant who considers his or her rights to be violated; • administrative liability: a penalty of up to RUB 10,000 for the data operator and RUB 1,000 for the data operator’s executives; and/or • criminal liability: the data operator’s executives may face a penalty, disqualification or arrest for (a) illegal collection or dissemination of data constituting a personal secret of an individual without his or her consent, or illegal public dissemination of such information and/or (b) unlawful refusal to provide an individual with information directly affecting that individual’s rights and freedoms.

Consumer Protection Laws Rospotrebnadzor, under the supervision of the Russian Ministry of Health and its territorial subdivisions, is responsible for monitoring compliance with mandatory requirements of Russian law concerning consumer markets and consumers’ rights.

The Russian Consumer Protection Law establishes a general framework for the relationship between retailers, producers and consumers and sets out the rights of consumers. The law provides that any limitation of consumer rights in a contract is invalid. In addition, the law imposes on retailers additional obligations in relation to consumers. Retailers must provide customers with all necessary information about goods for purchase, this information must be accurate and purchasers are entitled to examine goods and receive a demonstration on the use of the goods. A violation of the law may result in administrative, civil or criminal liabilities. The Russian Civil Code contains rules aimed at the protection of consumers’ rights that place additional obligations on retailers. For example, retailers are obligated to provide consumers with factually correct information about the services they purchased.

- 210 - Further Reform of the Russian Banking Sector The 1998 financial crisis revealed a lack of proper risk management in the Russian banking sector and heightened public anxiety about the integrity of the banking system, with misleading advertisements, money laundering, corruption and criminal penetration of the banking sector all being major concerns. From 1999 to 2001, the Russian banking sector gradually recovered from the 1998 financial crisis. Higher liquidity levels, as well as a shift in emphasis from investing in government securities to loans to companies and other legal entities, characterised this recovery.

Strategic Plans for Banking Sector Reform At the end of 2001, the Russian Government and the CBR issued a joint declaration entitled “The Strategy of the Development of the Banking Sector of Russia”, setting forth the strategy for banking reform in the Russian Federation and calling for certain legislative steps and structural changes during the subsequent five years (the “Joint Declaration”). In August 2003, the Russian Government adopted a programme for the social and economic development of the Russian Federation for the years from 2003 to 2005, which also sets forth goals for the Russian banking sector reform. The programme contemplates, among other things, the simplification of procedures for banks’ reorganisation and the introduction of regulation of syndicated lending, financing of affiliates, credit bureaus and pledges of money held in a bank account.

On 5 April 2005, the Russian Government and the CBR published a new strategy for the development of the Russian banking sector for the period from 2005 to 2008 (the “2005 Russian Banking Sector Strategy”), which replaced the Joint Declaration. The main objective of the 2005 Russian Banking Sector Strategy was to increase the stability and effectiveness of the banking system. Among other things, the 2005 Russian Banking Sector Strategy analysed current conditions in the Russian banking sector, outlined goals for the sector’s reform and forecasted the results of such reform. The main objectives of the 2005 Russian Banking Sector Strategy included: • improving legislative oversight of banking activities and increasing the efficiency of bank regulation; • developing banking infrastructure, including increasing the effectiveness of deposit taking and lending activities of banks, and facilitating banks’ roles as financial intermediaries; • strengthening investors’, depositors’ and creditors’ trust in the Russian banking sector and protecting the interests of banks’ depositors and creditors; • strengthening market discipline in the banking sector and ensuring fair competitive conditions for all credit organisations; • increasing the competitiveness of Russian credit organisations; and • ensuring the transparency of banking activities and preventing the use of credit organisations for unlawful purposes, including money laundering.

As part of measures taken to improve legislative oversight of banking activities, the 2005 Russian Banking Sector Strategy outlined, among other things, the following steps: • improving the protection of creditors’ rights (in particular, those secured by collateral); • improving procedures for liquidation of credit organisations whose banking licences have been revoked; • simplifying procedures for mergers between, and acquisitions of, credit organisations; • facilitating an efficient system for collecting and using credit history data; and • improving the regime for taxation of credit organisations.

The 2005 Russian Banking Sector Strategy envisioned the following as high priority reforms: • increasing the minimum amount of a bank’s charter capital to €5 million; • increasing the minimum amount of a bank’s capital adequacy ratio (mandatory economic ratio N1) to 10 per cent. commencing in 2007, regardless of the type of credit organisation and its existing capital adequacy ratio; • simplifying procedures for the participation of non-residents in the capital of Russian banks, without, however, lifting existing restrictions on foreign banks’ ability to open branches in the Russian Federation; and • introducing a simplified procedure for the assignment of bank loans.

- 211 - The first two goals have been achieved by introducing amendments to the Banking Law.

On 5 April 2011, the Russian Government and the CBR issued a declaration on “The Strategy of the Developments of the Banking Sector of Russia for the period till 2015” (the “2011 Russian Banking Sector Strategy”). 2011 Russian Banking Sector Strategy was developed in the course of the implementation of the Plan for Implementation of the Main Directions of the Anticrisis Activities and Modernisation Policy of the Russian government for 2010 approved by the Russian Prime Minister Vladimir Putin on 2 March 2010. It was prepared by the Ministry of Finance and Ministry of Economic Development with the assistance of the CBR.

According to the 2011 Russian Banking Sector Strategy, the main purpose of the new period of the development of the Russian banking sector will include the improvement of the quality of the banking business by expanding the range of banking products and services, improving of their quality, using modern technologies and, improving of the longterm effectiveness and stability of the banking business.

The 2011 Russian Banking Sector Strategy sets out the switch of the banking sector from the extensive to the intensive model of development as one of the key targets. It will, in particular, include the following features: • a high level of competition in the banking and financial sector; • the provision of a wide range of modern banking services to clients; • level of banking sector capitalisation that will support the development of the banking sector, increasing a competition and efficiency; • developed systems of corporate governance and risk management; • a high level of transparency and market discipline of credit organizations and other market participants; • liability of senior management, members of the board of directors and owners of banks for the business’s operation and the accuracy of disclosed information and information provided to the regulators.

The above mentioned targets are expected to be achieved by the Russian government and the CBR through the improvement of regulations, establishment of relevant infrastructure, improvement of corporate governance and risk management quality in credit organizations, as well as the maintenance of financial stability. As practical steps, the 2011 Russian Banking Sector Strategy envisages in particular a decrease in the participation of the Russian state in the charter capital of Russian banks (in particular Sberbank, VTB and Russian Agricultural Bank), the adoption of certain laws establishing minimum charter capital requirement for newly established banks from 1 January 2012, and a minimum own capital requirement for existing banks of RUB300 million, starting from 1 January 2015. The 2011 Russian Banking Sector Strategy also envisages certain measures to further develop banking supervision.

Credit Reporting The Federal law No. 218-FZ “On Credit Histories” dated 30 December 2004, as amended (the “Credit Histories Law”) provides for the establishment, for the first time in Russia’s recent history, of “credit bureaus” that will maintain a database of borrowers credit histories. The Credit Histories Law requires all credit organisations, starting from 1 September 2005, to provide at least one credit bureau with the credit histories of all borrowers that have consented to the distribution of such credit histories. The borrower’s credit history will consist both of public and confidential parts and must include, among other things, information on the borrowers outstanding debt and interest thereon, the terms of repayment and legal proceedings involving the borrower in respect of loans and credits. The FSFM will oversee the credit bureaus and maintain a general catalogue of credit histories. As of 12 November 2012, the FSFM had registered 31 credit bureaus.

Regulation of Mortgage Backed Securities In addition to the Credit Histories Law and as part of the development of consumer lending legislation, the Mortgage Backed Securities Law and amendments to the Civil Code, Tax Code and the Federal law “On Mortgages” were enacted in 2003 – 2004. By means of these laws, Russian legislators attempted to make mortgage lending attractive to banks and affordable to individuals by simplifying the applicable procedures and making them more transparent and less costly. Another intention of this legislation was to introduce improved regulation of mortgage-backed securities in order to make them more attractive for investors. Several issues of mortgage-backed securities were placed in accordance with the Mortgage Backed Securities Law between 2006 and 2008.

- 212 - In addition, under a separate Federal Law No. 264-FZ dated 22 December 2008, important procedural changes were introduced to the process of recording mortgage certificates in order to facilitate transactions with such certificates (which is expected to facilitate the issuance of mortgage backed securities).

An owner of mortgage certificates may submit them to a depositary for recording rights to such mortgage certificates and, as such, facilitating transactions with them. If mortgage certificates are recorded with a depositary, their transfer and pledge is effected by making entries in the relevant depositary account instead of endorsing the original mortgage certificates.

It is now possible to publish pro-forma conditions of mortgage certificates on an Internet website or in a publication and incorporate such conditions into the mortgage certificates by reference.

Developments in Regulation of Pledge and Pledge Enforcement The Federal Law No. 306-FZ dated 30 December 2008 “On Amending Certain Legislative Acts of Russia in Connection With Perfecting the Procedure for Levying of Execution Against Pledged Property” that came into effect on 11 January 2009, amends no less than seven key laws and alters significantly the concept of pledge (and mortgage being pledge of immovable property) as it relates to enforcement rights against pledged property (the “Amendments”).

A further Federal Law No 312-FZ dated 30 December 2008 introduced amendments that took effect on 1 July 2009 concerning the pledge of participation interests in Russian limited liability companies.

Significant changes have been made to the enforcement procedure of pledged property. Under Russian law, the enforcement of a pledge occurs in two stages: (a) first, the levying of execution against the pledged property; and (b) second, its subsequent realisation (or sale).

The Amendments: (a) confirm the availability of an out-of-court enforcement procedure for pledges of movable property; (b) extend the right to use an out-of-court procedure to mortgages, and (c) provide a mechanism for securing compliance with the out-of-court enforcement procedure.

The Amendments remove the requirement that the pledged property has to be sold at a public auction in all cases. Instead, the Civil Code now explicitly states that claims of a creditor secured by a pledge over property can be satisfied by the transfer of ownership in the pledged property to the secured creditor except where the mortgaged property is land plot of one of the specified. This is a fundamental development in the concept of pledge under Russian law and creates a more creditor-friendly enforcement mechanism.

Parties to a pledge agreement now have several options to choose from as to how to sell or dispose of the pledged property in order to discharge the secured claims.

The Insolvency Regime for Credit Organisations Overview Credit organisations, including banks, are subject to special insolvency rules set forth in the Law on Insolvency (Bankruptcy) of Credit Organisations. In addition, the Law on Insolvency (Bankruptcy) regulates issues not expressly addressed in the Law on Insolvency (Bankruptcy) of Credit Organisations.

Pre-bankruptcy Proceedings Before commencement of insolvency proceedings, a credit organisation may be subject to the following Pre-bankruptcy proceedings: • financial rehabilitation, which include the restructuring of assets and liabilities, organisational restructuring and capital injections from third parties, including shareholders or creditors; • the appointment of a temporary administration; or • reorganisation.

The credit organisation’s creditors or its shareholders may initiate financial rehabilitation or reorganisation at their discretion or after a request by the CBR. However, only the CBR can appoint a temporary administrator to the credit organisation.

- 213 - Insolvency Proceedings Revocation of the banking licence and filing the insolvency petition with arbitrazh court A pre-requisite to initiation of bankruptcy proceedings in respect of a credit organisation is the revocation of its licence by the CBR. Under the Law on Insolvency (Bankruptcy) of Credit Organisations, if a credit organisation cannot satisfy creditors’ claims within 14 days of when they come due, the following persons may petition the CBR (the “Licence Revocation Petition”) for revocation of the credit organisations licence: • the credit organisation itself; • its creditors; or • an authorised governmental agency.

Under the Banking Law, the CBR must revoke a licence of a credit organisation if, among other things: • the credit organisation’s capital adequacy ratio falls below 2 per cent.; • the credit organisations capital base is less than the minimum nominal charter capital requirement established by the CBR; • the credit organisation fails to adjust its capital base and nominal charter capital within the established time period; or • the credit organisation fails to satisfy the monetary claims of its creditors, including taxes and other mandatory payments, in the aggregate amount of at least RUB 100,000 within 14 days of when they come due.

In addition, in certain other cases the CBR may revoke the banking licence of a credit organisation.

If the CBR revokes the credit organisation’s licence, the following persons can petition an arbitrazh court to declare the credit organisation insolvent (the “Insolvency Petition”): • the credit organisation itself; • its creditors; • an authorised governmental agency; or • the CBR.

If the CBR fails to respond to the Licence Revocation Petition within two months after its submission, the applicant may file an Insolvency Petition with the arbitrazh court.

Upon revocation of the credit organisation’s licence, the CBR must appoint a temporary administration for the credit organisation if the temporary administration is not already in place. Upon revocation of the credit organisation’s licence, the credit organisation may not enter into certain new transactions or perform certain transactions pursuant to existing obligations.

The CBR must make a public announcement of the revocation of a credit organisations banking licence within one week from the revocation date.

Insolvency proceedings After a court hearing on the Insolvency Petition, the arbitrazh court may declare the credit organisation insolvent if certain tests established in the Law on Insolvency (Bankruptcy) of Credit Organisations are satisfied.

Upon initiation of bankruptcy proceedings, a moratorium on payments to existing creditors is introduced, and the credit organisation may perform its transactions and make any payments only in accordance with the ranking of claims satisfaction set forth in the Law on Insolvency (Bankruptcy) of Credit Organisations and the Law on Insolvency (Bankruptcy).

Appointment of a receiver Along with the initiation of bankruptcy proceedings, the arbitrazh court must appoint a receiver for the credit organisation. If it did not have a licence to take the deposits from individuals, the court will choose one of the receivers accredited by the CBR. If it did, a representative of the Deposit Insurance Agency will be appointed.

- 214 - The receiver assumes management over the credit organisations operations. The receiver: • analyses the credit organisation’s financial standing; • evaluates its assets; • identifies creditors and notifies them of the credit organisations insolvency; • identifies debtors and requests performance of their obligations to the insolvent credit organisation; and • performs other functions pursuant to the Law on Insolvency (Bankruptcy) of Credit Organisations.

The receiver reports to a committee of creditors and to the CBR, subject to supervision by the arbitrazh court.

Priority of claims of bankruptcy creditors Under the Civil Code, the Law on Insolvency (Bankruptcy) of Credit Organisations and the Law on Insolvency (Bankruptcy) the creditor’s claims of a credit organisation rank in the following order of priority:

Claims in respect of insolvency proceedings (current payment claims). Claims related to administration of insolvency proceedings, including salaries of personnel involved in insolvency proceedings, utilities bills, legal expenses and other payments arising after the revocation of the credit organisations banking licence.

First priority. The following claims: • claims for reimbursement of damages caused to individuals life or health, as well as moral damages; • claims of individuals holding deposits and current accounts with the credit organisation (except for individual entrepreneurs and claims relating to lost profits and penalties); • claims of the Deposit Insurance Agency in respect of deposits and current accounts transferred to it pursuant to the Retail Deposit Insurance Law; and • claims of the CBR relating to the CBR payments to retail depositors of insolvent credit organisations that do not participate in the deposit insurance system.

Second priority. Claims under employment contracts and other social benefits and copyright claims.

Claims secured by a pledge of the credit organisations assets. Any residual claims of secured creditors that remain unsatisfied after the sale of such collateral rank pari passu with claims of unsecured creditors.

Third priority. Claims of all other creditors except for claims of subordinated creditors (including, among others, claims of retail depositors for lost profits and penalties). Generally, under the Russian Bankruptcy Law, taxes and similar payment obligations rank pari passu with the claims of unsecured creditors. These provisions, however, contradict the Civil Code, which ranks taxes and similar payment obligations above the claims of unsecured creditors. The outcome of this conflict remains untested.

Last priority. Claims of subordinated creditors.

Claims of each category of creditors must be satisfied in full before claims of the next category are considered.

Changes to Russian Bankruptcy Law The amendments to the Russian Bankruptcy Law that took effect on 5 June 2009 (the “Bankruptcy Law Amendments”) have significantly contributed to the development of Russian law relating to insolvency in the following areas: • clarifying the circumstances under which the management and shareholders of a bank must act to liquidate the bank; • establishing tests for imposing liability on the management of a bank for the debts to its creditors; and • expanding and clarifying the grounds for challenging transactions entered into by the debtor.

- 215 - The Bankruptcy Law Amendments significantly modify the provisions relating to the challenge by an arbitrazh manager in court of transactions concluded by the debtor by expanding the grounds under which such transactions may be challenged and clarifying the lengths of the applicable hardening periods. The arbitrazh manager can challenge a transaction on its own initiative or pursuant to a request made at the creditors’ meeting or by the creditors’ committee.

The Bankruptcy Law Amendments provide that the new rules for challenging transactions under the Russian Bankruptcy Law. It also provide that if in relation to a bank there is “evidence of insolvency” pursuant to the applicable law, the management and shareholders must liquidate the bank. The “workout” measures to restore the solvency of a bank, which are available under the Law on Insolvency (Bankruptcy) of Credit Organisations, are not available at this stage.

If the chief executive officer, the members of the management board, the directors or the shareholders fail to initiate liquidation of the bank after the “evidence of insolvency” becomes available, the Bankruptcy Law Amendments impose joint and several secondary (subsidiary) liability for the debts of the bank that arise after the “evidence of insolvency” became available.

In addition, under the Bankruptcy Law Amendments, if the accounting and other reporting documentation of a bank debtor which must be maintained under Russian law have not been transferred to the temporary administration or a bankruptcy manager or are fully or partially missing, the bank’s management, which is under an obligation to ensure the safekeeping of its documentation and property, bears secondary (subsidiary) liability for the debts of the bank debtor.

Completion of Insolvency Proceedings Upon, to the extent possible, the collection of debts and satisfaction of claims, the receiver submits a report to the arbitrazh court, which extends or closes the insolvency proceedings. Insolvency proceedings terminate when a formal entry is made into the legal entities register upon the liquidation of the credit organisation.

Basel Implementation in Russia Current Russian regulation of capital is based on the Basel Accord. It is, however, less sophisticated in certain respects. Over the recent years, the CBR in cooperation with Russian banks, has started preparing the implementation of international approaches of capital adequacy of credit organisations under Basel II as issued by the Basel Committee. Currently, the standardised approach for credit risks of Basel II as set forth in Pillar 1 “Minimum Capital Requirements”, is being applied in Russia. The CBR Letter No. 96-T dated 29 June 2011 issued as part of introducing Pillar 2 “Supervisory Review Process” (the “Methodical Recommendations”) recommends credit organisations to elaborate and use the respective internal procedures for capital adequacy assessment comprise the process of assessment by a credit organisation of adequacy of its own capital, i.e. its internal capital to cover accepted and potential risks, as well as constitute a part of such credit organisation’s corporate culture. It is expected that Basel II Pillar 2 will be gradually implemented not earlier than within the next five years.

Under the 2011 Russian Banking Sector Strategy, the implementation of Basel II in Russia may begin approximately in 2014. The 2011 Russian Banking Sector Strategy also contemplates an introduction in Russia of Basel III that will be applied as follows: (i) requirements for capital between 2013 and 2015, (ii) capital conservation buffer within 2016-2018, (iii) leverage ratio starting from 1 January 2018, (iv) liquidity coverage ratio commencing from 1 January 2015, and (v) net stable funding ratio starting from 1 January 2018.

- 216 - INDEX TO FINANCIAL STATEMENTS

Page Consolidated Financial Statements of the Group as of and for the year ended 31 December 2011 ... F-2 Independent Auditors’ Report ...... F-4 Consolidated Statement of Financial Position as at 31 December 2011 ...... F-5 Consolidated Statement of Comprehensive Income for the year ended 31 December 2011 ...... F-6 Consolidated Statement of Changes in Equity for the year ended 31 December 2011 ...... F-7 Consolidated Statement of Cash Flows for the year ended 31 December 2011 ...... F-8 Notes to the Consolidated Financial Statements as of and for the year ended 31 December 2011 ...... F-9 Consolidated Financial Statements of the Group as of and for the year ended 31 December 2010 ... F-59 Independent Auditors’ Report ...... F-61 Consolidated Statement of Financial Position as at 31 December 2010 ...... F-62 Consolidated Statement of Comprehensive Income for the year ended 31 December 2010 ...... F-63 Consolidated Statement of Changes in Equity for the year ended 31 December 2010 ...... F-64 Consolidated Statement of Cash Flows for the year ended 31 December 2010 ...... F-65 Notes to the Consolidated Financial Statements as of and for the year ended 31 December 2010 ...... F-66

F-1 F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 F-10 F-11 F-12 F-13 F-14 F-15 F-16 F-17 F-18 F-19 F-20 F-21 F-22 F-23 F-24 F-25 F-26 F-27 F-28 F-29 F-30 F-31 F-32 F-33 F-34 F-35 F-36 F-37 F-38 F-39 F-40 F-41 F-42 F-43 F-44 F-45 F-46 F-47 F-48 F-49 F-50 F-51 F-52 F-53 F-54 F-55 F-56 F-57 F-58 F-59 F-60 F-61 F-62 F-63 F-64 F-65 F-66 F-67 F-68 F-69 F-70 F-71 F-72 F-73 F-74 F-75 F-76 F-77 F-78 F-79 F-80 F-81 F-82 F-83 F-84 F-85 F-86 F-87 F-88 F-89 F-90 F-91 F-92 F-93 F-94 F-95 F-96 F-97 F-98 F-99 F-100 F-101 F-102 F-103 F-104 F-105 F-106 F-107 F-108 F-109 F-110 F-111 F-112 F-113 F-114 F-115 F-116 RSB

JSC Russian Standard Bank 36 Tkatskaya Str. Moscow 105187 Russia Tel.: +7 495 797 8402

THE ISSUER

Russian Standard Finance S.A. 2, Bd. Konrad Adenauer L-1115 Luxembourg Tel: +352 421 22 462

ARRANGERS & PERMANENT DEALERS

Citigroup Global Markets Limited J.P. Morgan Securities Ltd. Citigroup Centre 125 London Wall Canary Wharf London EC2Y 5AJ London E14 5LB United Kingdom United Kingdom

TRUSTEE PRINCIPAL PAYING AGENT, CALCULATION AGENT AND TRANSFER AGENT

Deutsche Trustee Company Limited Deutsche Bank AG, London Winchester House Branch 1 Great Winchester Street Winchester House London EC2N 2DB 1 Great Winchester Street United Kingdom London EC2N 2DB United Kingdom

LUXEMBOURG PAYING AGENT, U.S. PAYING AGENT, U.S. LUXEMBOURG REGISTRAR REGISTRAR AND TRANSFER AND TRANSFER AGENT AGENT

Deutsche Bank Luxembourg, S.A. Deutsche Bank Trust Company 2, Boulevard Konrad Adenauer Americas L-1 115 Luxembourg 60 Wall Street New York, New York 10005 U.S.A.

LEGAL ADVISORS TO THE ARRANGERS AND PERMANENT DEALERS As to U.S. and English law As to Russian law

Linklaters LLP Linklaters CIS One Silk Street Paveletskaya Square 2/2 London EC2Y 8HQ Moscow 115054 United Kingdom Russia LEGAL ADVISORS TO RSB As to U.S. and English law As to Russian law

Clifford Chance LLP Clifford Chance CIS Limited 10 Upper Bank Street Ul. Gasheka 6 London E14 5JJ Moscow 125047 United Kingdom Russia

LEGAL ADVISOR TO THE ISSUER As to Luxembourg law

Clifford Chance 2-4 Place de Paris B.P. 1147, L-1011 Luxembourg Grand Duchy of Luxembourg

AUDITORS TO RSB AUDITOR TO THE ISSUER

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