Social report 2012

World Without Barriers. VTB Group

It is taking part that counts 2012 Social report Social Social report 2012

World Without Barriers. VTB Group VTB Social Report 2012

2 Table of Contents 3.4. Accessibility and Quality of Banking Services 44 3.4.1. Expanding the Geography of Operations 44 3.4.2. Development of the Integrated ATM Network 45 3.4.3. Development of Remote Banking Services 46 3.4.4. Security of Banking Transactions 47 4. Our Team 50 4.1. Human Resource Management System at VTB Group 50 4.1.1. Personnel Profile 51 4.2. Employee Selection 52 4.3. Employee Motivation and Development 53 4.3.1. Employee Training 53 4.3.2. Social Benefits 55 Statement of President and Chairman of the Management Board of JSC VTB Bank 4 4.3.3. Employee Evaluation 55 1. About Us 8 4.3.4. Internal Communications 55 1.1. VTB Group Profile 8 4.3.5. Corporate Events 56 1.2. Key Events and Awards Received by VTB Group in 2012 10 4.4. Occupational Health and Safety 56 1.2.1. Key Events 10 5. Our Contribution to the Society 60 1.2.2. Key Awards 10 5.1. Approach to Charity 61 1.3. Our Strategy 12 5.2. Development of Business Environment 62 1.4. VTB Group Governance and Management System 13 5.3. Supporting Sports 64 1.4.1. Corporate Governance 14 5.3.1. Supporting Sports Infrastructure 65 1.4.2. Functional Management of the Business 17 5.4. Supporting Culture and the Arts 65 1.4.3. Sustainability Management System 18 5.4.1. Supporting Theatrical and Musical Art 66 2. Our Stakeholders 22 5.4.2. Supporting Visual Arts 67 2.1. Approach to Stakeholder Engagement 22 5.4.3. Supporting Cinematography and Television 67 2.2. Engagement with Key Stakeholder Groups 24 5.4.4. Supporting Literary, Multimedia, and Other Arts 68 2.2.1. Relations with Shareholders 24 5.5. Key Social Projects 68 2.2.2. Relations with Institutional Investors 30 5.5.1. World without Tears 68 2.2.3. Government Relations 32 5.5.2. Supporting Vulnerable Social Groups 69 3. Our Customers 36 6. Our Contribution to the Environment 72 3.1. Supporting Key Economic Sectors 36 6.1. Environmental Performance in Management of Administrative and Housekeeping Activities 72 3.1.1. Construction and Real Estate 36 6.2. Resource Efficiency and Waste Management 73 3.1.2. Energy and Public Utilities 37 6.3. Financing New Energy, Energy Efficiency and Environmental Projects 75 3.1.3. Manufacturing 37 6.3.1. Innovative Financing Mechanisms 75 3.2. Supporting Small and Medium Business Development 38 6.3.2. Environmental Financing 76 3.2.1. VTB Group Approach to Supporting Small and Medium Business 38 6.3.3. Financing Renewable Energy Projects 77 3.2.2. Small Business Support at VTB24 39 7. About this Report 78 3.2.3. Small and Medium Business Support at the Bank of Moscow 40 8. Annexes 80 3.3. Socially Significant Retail Banking Products and Services 41 8.1. Independent Assurance Report on 2012 VTB Group Social Report 80 3.3.1. Mortgage Loans 41 8.2. GRI Table 82 3.3.2. Socially Significant Card Products 43 Contact Details 84 VTB Social Report 2012 Statement of President and Chairman of the Management Board of JSC VTB Bank

4 Statement of President and Chairman 5 of the Management Board of JSC VTB Bank

VTB reputation in Russia and abroad, unite the The high quality of customer service is our Russian bank operating in six APEC economies. Group companies around the shared values, and imperative. Therefore, we are proud to note that At present, we are the only Russian bank that minimise reputational and operational risks. The VTB for the fourth time in a row became the operates in China while also having branches in key principle of the Group activities is to assume leader of the annual customer service ranking Singapore, Hong Kong and Vietnam. Furthermore, responsibility for their consequences since our of banks by The Retail Finance magazine, whereas in 2012, the Group investment arm, VTB Capital, long-term success directly depends on the trust of the service Mobile Bank offered by VTB24 was opened its office in the United States of America. our customers, partners, shareholders, and investors. recognised the best in the market according Being one of the largest financial organisations to the study Mobile Banking Rank 2012. As a facilitator of the government policy, VTB actively in Europe, we realise that our activities have contributes to addressing the most important impact on all the regions where we operate. A truly key event to VTB and a significant challenges faced by the society. One such challenge development to the Russian retail banking sector is the improvement of energy efficiency of the To us social responsibility implies, among other was the launch, in October 2012, of OJSC Leto Bank Russian economy — one of the most energy-intensive aspects, the efficient and successful running targeting the mass and the lower-mass segments economies among BRICS countries with its great of our business and the ability to maintain global of the retail market typically left out of the intended potential for reducing energy consumption. competitiveness. It is only by being a transparent audience of banking projects. The distinct features Therefore, a technology breakthrough in the field company to shareholders, a reliable service of VTB Group new bank include prompt service, of resource and energy efficiency will have a great provider to customers, and an attractive employer customer focus and accessibility of banking influence over the entire economy. In that context, to our employees that we can meet expectations services. In designing this project, we intended VTB started to pay serious attention to creating of all our stakeholders. And, being a responsible to depart from the traditional image of a bank mechanisms for financing energy efficiency projects. corporate citizen, we strive to run our business making the new financial institution as open and in such a way as to conform to sustainability friendly to potential customers as possible. And The report brought to your attention makes it principles to the maximum extent possible. our initiative has already been appreciated by possible to evaluate the contribution we made in experts: according to the study by the information 2012 to sustainable development of Russia and We greatly value the trust of our stakeholders. agency Bankir.ru, Leto Bank was recognised as other areas where we operate. I am convinced that Therefore, in 2012, responding to demands of our the Best Banking Project of 2012. Our plans for this document will help readers better understand Dear Readers! shareholders, we initiated a programme of stock the development of Leto Bank business involve the role of VTB as a responsible corporate citizen. buyback from individual shareholders who took the creation of a sales network comprising several I am pleased to bring to your attention the fifth part in VTB Bank IPO in 2007. Within the framework thousand offices and tens of thousands service VTB Group Social Report. It has already become of the programme, unprecedented for Russian outlets at retail stores all over the country, including a good tradition for us to release it simultaneously business, 75,000 minority shareholders chose the remotest regions. This will have a significant with our Annual Report for the upcoming General to sell back their stock at the original IPO price positive impact on the quality and accessibility Shareholders Meeting. This is another evidence which exceeded the market price at the moment of banking services in the Russian Federation. of our commitment to the highest transparency of the buyback almost twofold. Whereas the standards and our willingness to maintain dialogue number of minority shareholders decreased as Last year was marked by Russia’s presidency with the broadest possible range of stakeholders. a result of the buyback, the rate of participation of APEC — an organisation bringing together the in shareholders’ meetings increased. We are glad world’s largest and fastest growing economies. VTB Bank President and We see social responsibility as an essential element to notice that new shareholders showing active VTB works to expand its business in the most Chairman of the of corporate conduct which helps us strengthen interest in the Bank activities have come on board. dynamic regions of the world, being the only Management Board Andrey L. Kostin Every step is important even at a long distance VTB Social Report 2012 1. About Us

8 9 1. About Us The Group operates outside Russia through: Share capital of VTB Bank: key facts 15 subsidiary banks located in the CIS (Armenia, The Bank charter capital is divided into Ukraine (two banks), Belarus (two banks), 1.1. VTB Group Profile 10,460,541,337,338 ordinary registered shares Kazakhstan, and Azerbaijan) and Georgia, Europe of nominal value RUB 0.01 per share (Austria, Cyprus, Germany, France, the UK, and The international financial group VTB (“VTB Group”, business customers, financial institutions, as Serbia), and Africa (Angola); the “Group”, or “VTB”)1 comprised of JSC VTB Bank well as to government and municipal authorities. The government holds 75.5% of the Bank two representative offices based in Italy and China; (“VTB Bank” or the “Bank”) and its subsidiary Corporate and investment banking services include, equity; around 16.1% is represented by global two branches of VTB Bank in China and India; companies provides integrated financial services in among others, deposit taking and commercial depository receipts nominally held by The Bank two branches of VTB Capital Plc in Singapore and the the CIS, Europe, Asia, Africa, and in the USA. In the lending, support of customers’ export/import of New York International Nominees; the UAE. recent years, the Group has maintained leading transactions, foreign exchange, securities trading, remaining shares are held by minority positions in the Russian market of banking and trading in derivative financial instruments. shareholders, including over 103,000 Through VTB Capital the Group also performs services, also being the market leader in individuals2. broker/dealer operations in the US, financial investment business. The core areas of VTB Group The second core area of VTB Group business is retail operations in Hong Kong, and investment business are represented by two business lines: banking services targeting individuals (consumer banking operations in Bulgaria. corporate and investment banking, and retail and mortgage lending, bank cards and other banking. services) and small businesses (lending, cash and settlement services, etc.). At present, VTB operates one of the largest retail banking business in Russia. Key Performance Indicators of VTB Group (IFRS) Geography of operations: key facts Furthermore, the Group actively expands its as of December 31, 2011, as of December 31, 2012, RUB billion RUB billion 22 countries (CIS, Europe, Asia, Africa, the USA) non‑banking business (including leasing, factoring, Over 1,800 sales outlets insurance, and pension management services) VTB Group assets 6,789.6 7,415.7 73 regions of the Russian Federation in order to offer the most comprehensive range VTB Group loan portfolio 4,590.1 5,084.8 of financial services to individuals and corporate VTB Group customer deposits 3,596.7 3,672.8 customers. With its broad customer base VTB VTB Group equity 625.1 766.1

seeks to become a preferred partner bank in VTB Group net profit 90.5 90.6 VTB Group companies carry out banking and international markets and attract businesses from other financial transactions, provide securities other regions of the world to Russia and the CIS. market services and other types of financial Key Ratings of VTB Bank in 2012 services. The subsidiaries of the Group include In Russia, the Group provides banking services lending and financial institutions, management through VTB Bank and five subsidiary banks Rating agency Outlook Rating companies of pension and mutual funds, with their network of 147 branches, including Credit ratings

leasing companies, and other entities. 63 branches of VTB Bank, 8 branches of CJSC Standard & Poor’s “Stable” BBB

Bank VTB24 (“VTB24”), 40 branches of OJSC Moody’s Investors Service “Negative” Baa1 The corporate and investment banking business TransCreditBank (“TransCreditBank” or “TCB”), National corporate governance rating comprises the investment, lending and transaction and 36 branches of OJSC Bank of Moscow (the “Bank segments providing services to large and medium of Moscow”) located in the Russian Federation. Russian Institute of Directors (RID) «7+»

1 More details on the Group composition are available in the section About this Report. 2 As of April 26, 2012. VTB Social Report 2012 1. About Us

10 1.2. Key Events and Awards 11 Received by VTB Group in 2012 Award Competition or organisation granting the award

VTB Bank (Belarus)

1.2.1. Key Events Gold medal in the category Socially Responsible Brand Centre of System Business Technologies SATIO, Ministry of Economy of Belarus, National Centre of Intellectual Property

March — April 2012: share buyback from launched which became the year’s key event VTB Bank (Ukraine)

VTB Bank shareholders who had taken part in to the Group retail banking business. Ranked 5th in the ranking of Most Efficient Ukrainian Banks Forbes the Bank IPO was carried out. As a result, the Ranked 9th in the reliability ranking Pillars of the Banking Sector The magazine Correspondent and the investment company Dragon proportion of the Bank shares held by individuals October 2012: VTB Bank became the Capital

decreased from 3% to 2.28%, while the number leading Russian company in Green Rankings VTB24 of corporate shareholders increased. 2012 — a ranking of the world’s largest Leader of the annual ranking of the quality of customer service in retail The Retail Finance 500 public companies demonstrating banking (for the 4th time)

April 2012: the project VTB Team aimed at a well-developed practice of sustainability Award “For Supporting Lending to Small Businesses” Expert RA Rating Agency

supporting Russian athletes in their preparation reporting and environmental responsibility. Golden Website in the category Innovation, Services, and Technologies Runet Award for the London Olympics was launched. Attractive Employer 2012 Superjob.ru December 2012: VTB took part in the Business Mobile Banking Rank 2012 Markswebb September 2012: Group management took part 20 meeting held as part of Russia’s G20 presidency. in the APEC CEO Summit, a forum of the global Mortgage Lender of the Year RREF AWARDS business elite, chaired by Andrey Kostin, VTB Bank Events planned for 2013: completion VTB Capital President and Chairman of the Management Board. of TransCreditBank integration with its retail Best Management Strategy Financial Olympus 2012 Awards by RBC Holding

business to be included into VTB24 and its Best Investment Bank in Russia and Countries of the Central and Eastern World’s Best Investment Banks ranking by Global Finance October 2012: Leto Bank targeting the mass corporate banking business to be integrated Europe and the lower-mass market segments was into VTB and the Bank of Moscow. Best Investment Company in the Russian Direct Investment Market Private Equity International Awards by PEI Media High Reliability and Quality of Services, High Growth Rate Expert RA Rating Agency

The highest efficiency rating for the management of funded component New Economic School of state pension 1.2.2. Key Awards European Toll Road Deal of the Year Euromoney Project Finance

Leto Bank

Key awards received by VTB Group companies in 2012 Best Banking Project of 2012 Bankir.ru

VTB-Leasing Award Competition or organisation granting the award Attractive employer 2012 Superjob.ru VTB Bank Leader in the Rolling Stock Market 2012 Expert RA Rating Agency Most Accessible Senior Management in the Central and Eastern Europe Euromoney Leader in the Aircraft Leasing Market 2012 Expert RA Rating Agency Marina Oleshek, Head of HR Department, Russian Managers Association and Kommersant Publishing House Senior Vice President of VTB Bank, received the prestigious award Vehicle Park of the Year Award Business Petersburg newspaper ARISTOS-2012 in the category Best HR Director CJSC VTB Registrar Best Online Corporate Disclosure by a Public Company National Association of Corporate Secretaries and the magazine nd Joint-Stock Company: Corporate Governance Ranked 2 among Russia’s best registrars on the basis of the international IR agency Interfax Business Service methodology CSI (Customer Satisfaction Index) Best Annual Report in the Financial Sector Expert RA Rating Agency VTB Pension Fund High Transparency National Procurement Transparency Rating Financial Elite of Russia Award in the category Non-State Pension Fund Financial Elite of Russia Awards VTB Bank (Armenia) of the Year in the Field of Mandatory Pension Insurance

Best Cooperation with Financial Services Ombudsman of Armenia Office of Financial Services Ombudsman of Armenia Diploma for High Quality of Risk Monitoring Expert RA Rating Agency VTB Social Report 2012 1. About Us

12 13 1.3. Our Strategy where its companies operate. Most significant 1.4. VTB Group Governance results of this strategic initiative will include and Management System In 2012, VTB Group continued the implementation the social significance of retail banking, VTB works better manageability of Group companies in the of its medium-term development strategy towards improving the accessibility of its retail key areas of operations, increased revenues, through the year 2013 which was adopted by the services. In particular, in 2012, VTB launched and replication of best practices for optimising The on-going improvement of the VTB management Supervisory Council of VTB Bank in May 2010. The a new project, Leto Bank, targeted at mass retail internal processes and procedures across the system aimed at supporting effective implementation development strategy is aimed at strengthening lending. Its aim is to boost the Group share Group. These achievements are made possible of its strategy implies transition from managing of VTB Group positions in the key markets. In line of the retail banking market, its retail revenue by forming the unified centres responsible for the legal entities comprising the Group to managing with the defined strategic goals, the Group ensures and overall profitability of VTB business. performance of each business line, maximising business lines defined across the boundaries the growth of its assets, effectively achieves synergy between the Group businesses, and of individual subsidiaries. The advantages of the objectives for the development of key business integrating its business support and controlling new management model include risk reduction, segments and diversification of their revenues More details on strategic goals and objectives functions (finance, risk management and IT). effective coordination of each business line in all and profits, and successfully introduces a new of various business segments are available on regions of operation, and building a global service management system organised around global VTB Group website at the following page: Furthermore, in the reporting period, the Group was model for core customers. The new model implies: business lines. The Group-wide strategy defines http://www.vtb.ru/group/strategy/ implementing a number of other initiatives aimed specific objectives for each area of VTB business. at achieving objectives set by its strategy. The most shared development strategy for VTB Group important initiatives included the following: companies; While retaining the leading market positions in single brand; the corporate banking business segment, the VTB Group continued working towards integrating continued development of the transaction banking centralised financial efficiency and risk management; Group works towards increasing revenues and the Bank of Moscow and TransCreditBank into segment: regional teams are being formed, new unified compliance systems; diversifying their sources. To that end, in 2012, the overall Group business in order to achieve products have been introduced and remote banking coordinated planning and reporting processes; the Group approved a transaction business maximum synergy from recent strategic acquisitions. services have been improved, functionality of the focus on implementing best practices and developing strategy intended to ensure a substantial growth At the current stage, the Bank of Moscow is Customer Settlement Centre has been extended; common standards. of commission income in the medium term. developing as a universal commercial bank within VTB Group; the efforts are focused on continuation of the regional network reform: the VTB Group management system is based on In 2012, the Group also retained its leading positions improving the bank manageability and efficiency process of transformation of branches into operating the matrix approach which implies managing in investment banking; according to Dealogic, it of its business processes, and on reducing offices has been launched, three operating support business along two axes: administrative was ranked first among the banks of Central and non-performing loans. TCB is at the final stage centres were created as part of the consolidation (using corporate governance mechanisms) and Eastern Europe in terms of the volume of its debt of its integration planned to be completed by the of back-office function; functional (managing by areas of business). The capital deals. VTB Capital team of analytics was end of 2013. TCB corporate banking business Group provides administrative management the highest ranked among Russian companies will be integrated into VTB Bank and the Bank continuation of the credit procedure reform aimed at by governing its subsidiaries as legal persons. on the Institutional Investor Top Global Research of Moscow, whereas its retail banking business reducing the target decision time by 30–70%; The processes of functional management are Firms ranking in 2012. Seeking to expand the will be included into VTB24. In the process of this organised along business lines and other Group international operations, thus providing integration a special focus is placed on maintaining optimisation of the credit scoring system to functional areas of the Group business. a platform for the continued growth of business high standards of service for TCB customers. incorporate the best practices of the industry and the of Russian companies in the US and Europe, VTB Group own companies. VTB Group Management Committee (“VTB GMC”)3 is Capital opened new offices in New York and Sofia. The Group continues to work on strengthening responsible for coordination of management system functional coordination within the two global In 2013, it is planned to develop and approve at the Group level. The specific responsibilities In the reporting period, the Group successfully business lines: corporate and investment banking a new VTB Group Development Strategy which of VTB GMC, which acts on the basis of the Regulation pursued strategic objectives focused on enhancing and retail banking. The project aimed at enhancing will support further efficient and profitable on VTB Group Management Committee, include the efficiency of its retail business, as well as the overall efficiency of the Group business business growth in the interest of shareholders. among others the following: increasing its share of the retail banking market features many approaches new to the Russian and the proportion of retail banking in the Group banking system. The new management model overall business which resulted in a substantial helps VTB Group offer products and services 3 The area of responsibility of VTB GMC does not include a number of companies mentioned in this Social Report (Non-State Pension Fund VTB, increase of profits in this segment. Considering meeting high quality standards in any region NGO; CJSC “VTB Arena”; LLC “VTB Real Estate”). VTB Social Report 2012 1. About Us

14 15 creating effective mechanisms for management and conditions acting as a centre of communications with the existing legislation, requirements the Supervisory Council members conducted oversight of individual subsidiary companies and the between the functional coordinators at the Group of the Bank of Russia, recommendations of the the corporate governance system evaluation. Group as a whole; level and the subsidiaries. VTB Group Credit Russian Federal Financial Markets Service, reviewing and approving development strategies for Committee operating under the GMC is responsible and on the international best practices. The Corporate Social Responsibility Policy various lines of business, as well as business plans for the management and control of VTB credit risks. of JSC VTB Bank (the “CSR Policy”) adopted in of the Group and its companies; The Strategy and Corporate Development Department VTB Bank has put in place an effective system 2012 defined the concept of corporate conduct considering financial aspects of the Group business; is responsible for preparation and monitoring of corporate governance and internal control over as activities ensuring management of and control developing and coordinating cooperation between of the development strategy and VTB Group its financial and economic affairs as a means over the Bank performance and including a system VTB Group companies. management mechanisms ensuring consistency of safeguarding the rights and legitimate interests of relations between the Bank management and coordination of the respective approaches at of its shareholders. The supreme governing and control bodies, shareholders, and other The new Group management system enables better the individual subsidiaries and at the Group level. body of VTB Bank is the General Shareholders stakeholders. The Bank views corporate conduct access to the Group global experience and resources Meeting. The Bank Supervisory Council elected as an instrument of enhancing its business, for all subsidiary banks and companies and allows 1.4.1. Corporate Governance by and accountable to the shareholders provides increasing capitalisation, and reducing borrowing them to offer their customers integrated solutions strategic guidance and oversight of activities costs. According to the CSR Policy, the Bank which embody expertise of VTB Bank best specialists. Corporate governance, the main governance of the executive bodies: President and Chairman priorities in corporate conduct management mechanism used at VTB Group, is the of the Management Board and the Management include facilitating performance of its Supervisory VTB GMC has a number of coordination exercise of the Bank rights as a major Board. To ensure representation of different Council and executive bodies, safeguarding commissions — collegial consultative bodies that shareholder through participating in the shareholder groups, five out of eleven members shareholders’ interests, promoting the highest level provide a platform for discussing the respective management bodies of its subsidiaries. of the Supervisory Council are independent of management responsibility, and ensuring stringent functions’ development, as well as common members; the Council is led by a non-executive accountability. Once implemented, these priorities standards and principles. The commissions are A number of documents regulating various aspects Chairman. The executive bodies manage day-to-day will result in the maximum possible increase in chaired by Heads of the respective divisions of VTB of corporate governance have been developed at activities of the Bank and accomplish objectives the Bank capitalisation and shareholder value. Bank and comprise relevant functional specialists the Group and the Bank levels. They include: set by the shareholders and the Supervisory from the Group subsidiaries. They facilitate the Council. The Bank Supervisory Council has three VTB has the information policy applicable to all dissemination of best practices and initiatives for Regulation on the Supervisory Council committees: the Audit Committee, the HR and the Group members and developed in accordance sharing expertise between the Group companies. The of JSC VTB Bank; Remuneration Committee, and the Strategy with the applicable Russian legislation, the commissions also develop measures for streamlining Regulation on the Management Board and Corporate Governance Committee. Code of Corporate Conduct and the Charter and standardisation of the Group internal processes of JSC VTB Bank; of VTB Bank, as well as the rules and listing and make operating decisions for improving the Regulation on the Corporate Secretary In 2011, the Bank introduced a position of the requirements of the stock exchanges where the effectiveness of cooperation between the Bank and of JSC VTB Bank; Corporate Secretary whose key functions include Bank stock is traded. The key principles of VTB its subsidiaries within the respective function. Regulation on the Statutory Audit Commission coordinating the preparation and holding information policy, information and documents of JSC VTB Bank; of General Shareholder Meetings, organising the to be disclosed, and disclose procedures are Individual subsidiaries have autonomy in Regulation on Preparing and Holding General activities of the Supervisory Council, ensuring defined by the Regulation on VTB Bank Information their day-to-day operations, implementation Shareholders Meetings of JSC VTB Bank; the disclosure of information about the Bank, Policy approved by the Supervisory Council on July of business processes, provision of customer Code of Corporate Conduct of JSC VTB Bank; and coordinating and overseeing the interaction 15, 2008. The Bank protects the confidentiality services and operating support, development Code of Ethics of JSC VTB Bank; between the Bank and its shareholders. of information containing business, trade or of technologies, design of product lines, and Concept of the Corporate Governance Function state secrets in accordance with the applicable other aspects of their activities. As a shareholder Management of JSC VTB Bank; In the reporting period, the Bank continued legislation and the Bank internal documents. of its subsidiaries and a participant of its Regulation on Conflicts of Interest Management; to adjust the responsibilities of the Corporate governing bodies, the Bank provides guidance Regulation on Information Policy of JSC VTB Bank; Secretary and enhance the corporate governance The aspects of corporate governance are becoming with regard to goal-setting and continual Regulation on Dividend Policy of JSC VTB Bank; system as a whole. Among other measures, particularly important to VTB at the present moment management of their financial efficiency, as well as Corporate Social Responsibility Policy the practice of information exchange with the when the Group strengthens the strategic approach coordinates planning and oversight processes. of JSC VTB Bank. Supervisory Council members and a number towards its business lines development in all of organisational procedures were improved the regions of operation. The quality of corporate VTB Subsidiaries Department helps the subsidiaries VTB corporate governance system is based and the practice of briefing the newly elected governance is directly linked to the quality to adapt the Group-wide programmes to their specific on the principle of unconditional compliance Council members was introduced. Furthermore, of business management in the broad sense and VTB Social Report 2012 1. About Us

16 17 transactions aimed at legalisation (laundering) of compliance risks, monitoring of changes in the information and manipulation of the market, and on Enhancement of corporate governance systems at the Group of proceeds of crime and terrorism financing. legislation for the purpose of keeping internal making amendments to certain legislative acts of the companies documents up-to-date, preventing corruption, Russian Federation. The Group uses the entire range of available counteracting illegitimate use of insider information To facilitate the improvement of corporate governance systems of VTB measures to actively combat the penetration and market manipulation, managing conflicts VTB Group introduces common standards of ethical subsidiaries in the period of transition to the new Group management of criminal capital into the economies of all of interest, ensuring fair treatment of customers, business conduct and compliance across all its system based on global business lines, in July 2012 VTB Bank countries where it operates ensuring compliance liaising with relevant regulatory bodies, and providing subsidiaries to the extent those standards conform Subsidiaries Department, Strategy and Corporate Development with the applicable AML/CTF legislation and compliance control training to the Bank employees. to local legislation of the respective countries. Department, and HR Department conducted a workshop for the maintaining necessary control procedures subsidiary banks’ employees. to reduce the risk of the use of VTB products As part of the Bank actions to counteract corruption, Being active members of the banking community, and services for illegitimate purposes. its employees undergo training in the anti-corruption the Group Russian banks make significant The participants were presented with the main stages of the Group measures put in place at the Bank. In the process contribution to the work of the AML/CTF and management system reform involving the establishment of global VTB continuously maintains and improves of training the employees receive the information Compliance Committee of the Association of Russian business lines and measures to support the transition to the new its internal system of AML/CTF controls and on procedures to prevent corruption, anti-corruption Banks. They also actively participate in a dialogue management model. coordinates the activities of its subsidiaries rules of business conduct, ways of identifying between business community, regulators, and promoting common standards, principles and rules and reporting cases of corruption, and liability legislators on the standardisation and improvement The workshop agenda covered a broad range of topics, including of internal AML/CTF control across the Group. The for corruption. Being an essential element of VTB of internal AML/CTF control procedures and the the system of functional coordination of corporate governance, Group-wide approaches to the implementation corporate culture, the compliance culture affects development of the relevant Russian legislation adaptation of motivation systems to the matrix management structure, of internal AML/CTF controls are set forth by activities of every staff member of the Bank. VTB taking into account the world best practices. and the introduction of standards for the Corporate Secretary’s VTB Group Consolidated Policy on Prevention Bank trains its employees in compliance practices activities at VTB Group. of Money Laundering and Terrorist Financing. and ethical business conduct on a regular basis. 1.4.2. Functional Management of the Business The policy compliant with the recommendations of the FATF (Financial Action Task Force on Money The Group internal documents aimed at counteracting Functional coordination of the key areas of VTB Laundering) is applied by the Group banks even corruption and ensuring compliance with the legal business is a supporting governance mechanism in the countries where the local legislation does requirements and corporate policies include: which ensures synergy between VTB Group affects substantially the value (capitalisation) not fully conform to the recommendations. companies and sharing the best practices in of individual subsidiaries and the entire VTB Group. Compliance Policy; specific business lines. Functional coordination Furthermore, VTB subsidiaries have their own facilitates knowledge transfer and experience For more detailed information on the Bank policies with regard to internal AML/CTF controls Rules of Reporting Actual or Potential Cases sharing among VTB Group companies. corporate governance system, responsibilities which define detailed procedures of customers’ of Non‑Compliance via the Non‑Compliance and of governing bodies and their composition identification and their activities’ monitoring, Abuse Hotline by the Bank Employees; The key role in the functional management please see Section Corporate Governance risk management procedures, techniques of the Group is played by functional coordinators of VTB Bank Annual Report 2012. of the assessment of AML/CTF risks, and Corruption Counteraction Policy; responsible for the coordination of respective other aspects of AML/CTF activities. business lines, their development and oversight. AML/CTF and Compliance Risk Management Regulation on Managing Conflicts of Interest; It is the respective units of VTB Bank or its In its operations, VTB adheres to high standards subsidiaries that act as functional coordinators. An important aspect of the business of financial and complies with applicable legal requirements Regulation on the Use of Information about Activities VTB Bank, VTB Capital and VTB24 act as corporate institutions is Anti-Money Laundering / to safeguard the interests of its shareholders, of JSC VTB Bank, Securities of JSC VTB Bank, and centres and functional expertise centres with Counter‑Terrorism Financing activities (the “AML/CTF”). customers and employees. To improve the Deals with them; regard to the respective major business lines. effectiveness of internal controls, VTB Bank has As a leading Russian universal banking group set up Compliance Control Division responsible for Regulation on the Rules of Accessing Insider The coordination according to business lines offering a broad range of financial services minimising risks of regulatory sanctions, reputational Information of JSC VTB Bank and Protecting its involves management by strategic objectives across the world, VTB in its activities relies on risks and compliance risks (i.e. risks associated Confidentiality; and key performance indicators (KPIs) the international best practices of managing with failure to comply with legal requirements, (targets for profit, revenue, market share, legal and reputational risks associated with internal policies and professional standards). The Rules of Oversight of Compliance with the Federal etc.), as well as defining common standards potential involvement of a financial institution in Division key responsibilities include the management Law on counteracting the illegitimate use of insider and facilitating best practice sharing. VTB Social Report 2012 1. About Us

18 19 Corporate social responsibility management system document defined the Bank key principles with regard to corporate social responsibility Key CSR Principles at VTB (CSR), major stakeholders and approaches to engaging with them, and priority areas of CSR Dedication to the Bank mission, shared values and vision management (see the scheme on Page 18). Provision of world-class services based on high professionalism of the Bank team Managing impacts The Policy pays particular attention to the Respect for the worth and dignity of a human person on the market development of the Bank non‑financial reporting Fair play and mutual respect in stakeholder relations practices. The Bank seeks to release annual social Equitable decision-making in management reports based on the Sustainability Reporting Compliance with law and responsibility for the Guidelines by the Global Reporting Initiative (GRI) consequences of actions taken continuously increasing the quality and scope Profitability of disclosure by means of, among other measures, Protection of employees’ health external verification of the data provided. In full Openness for engagement with stakeholders agreement with the declared intent, while preparing Managing Managing Social Report 2012 covering the sustainability impacts Corporate conduct social performance of the entire Group5, VTB for the first on employees impacts time requested external verification of the selected material sustainability performance indicators presented in the Report.

Despite the fact that the CSR Policy technically applies to sustainability management at VTB Bank only, the document is recommended for use by other companies of the Group. Further implementation Managing of the Policy across VTB subsidiaries will be environmental impacts the next step towards the improvement of the CSR management system at the Group level.

In support and control areas, the coordination 1.4.3. Sustainability Management System is achieved through the introduction of common standards, principles and approaches, As a systemically important financial organisation delineation of responsibilities, establishment at the national level, VTB Group fully recognises its of common limits, and oversight of compliance responsibility for the consequences of its activities, with them. The degree of coordination depends as well as for sustainable development of the regions on the specific function. Priority areas include where it operates and the society as a whole. the management of capital, liquidity, risks (interest, currency, and credit) and brand, as In order to introduce a more formal approach to well as the establishment of a unified corporate sustainability and social responsibility management governance system and a shared system at the Bank, the Corporate Social Responsibility of internal controls. Policy of VTB Bank was adopted in 20124. The

4 The document is available at http://www.vtb.ru/docs/vtb/we/soc_report/VTB_CSR_Policy_2012.doc. 5 More details on the boundary of Social Report 2012 are available in the section About this Report. VTB Social Report 2012 1. About Us

20 21

Personal victories make team success story VTB Social Report 2012 2. Our Stakeholders

22 23 2. Our Stakeholders VTB Group communication with key stakeholders

Key stakeholders Key stakeholder communication channels Disclosure of information material of VTB Group to stakeholders in Social Report 2012

2.1. Approach to Stakeholder customers, employees, business partners, Shareholders and • General Shareholders Meeting 2.2.1. Relations with Shareholders local communities in the areas where the investors • Website, mailing lists, email 2.2.2. Relations with Institutional Investors Engagement • Annual Report, Social Report Group operates, government authorities and • Controlling Interest newspaper regulators, society at large, and mass media. • Meetings, workshops, roadshows and conferences • Shareholders Consultative Council VTB Group views continuous and open stakeholder • Shareholder relations centres dialogue as a key factor of success and sustainability The use of stakeholder communication • Call centre of its business. VTB has built a well-developed system channels listed above helps VTB fully meet Business partners • Meetings and conferences 2.2.2. Relations with Institutional Investors of communications which helps the Group fully meet information needs of all stakeholder groups. • Business associations • Energy of Success magazine the information expectations of stakeholders. • Annual Report, Social Report

The key principles of the Group communication Government authorities • Supervisory Council 2.2.3. Government Relations In identifying its stakeholders, VTB Group relied policy are set forth in the Regulation on and regulators • Participation in commissions and working groups • Meetings on the following definition of the term: Information Policy of JSC VTB Bank. The Group • Annual Report, Social Report

establishes a standard approach applicable to Employees • Intranet (hotline, forum) 4. Our Team Stakeholders are individuals or groups that have all its subsidiaries by systematically defining • Employee/management meetings • Corporate events impact on VTB or are impacted by its activities. common techniques and principles which • Labour union support correct understanding of stakeholders’ • Energy of Success magazine • Mailing lists According to the CSR, VTB bases its stakeholder information needs. The Group respective • Social Report engagement activities on the following principles: functional units are responsible for handling Customers • Website 3. Our Customers stakeholder enquiries, disclosure and building • Call centre Materiality. VTB aspires to maintain productive, long-term effective relationships with each • Satisfaction surveys • Energy of Success magazine timely, and effective engagement with its stakeholder group. More detailed information • Annual Report, Social Report stakeholders, and performs qualitative and on organisational units responsible for the • Social media quantitative analysis of its business processes engagement with specific stakeholder groups Communities and society • Social Report 2.1. Approach to Stakeholder Engagement at large • Website 5. Our Contribution to the Society seeking to continually improve their efficiency. is provided below in the sections Relations • Facebook with Shareholders, Relations with Institutional • Twitter • Instagram Collaboration. VTB seeks for mutually beneficial Investors, and Government Relations. • Volunteer actions forms of collaboration based on the CSR • Energy of Success magazine • Controlling Interest newspaper principles and on meeting the expectations Press conferences on the performance of both the • Meetings, workshops, conferences of the Group and its stakeholders, which would entire Group and individual subsidiaries and units Environment Not applicable 6.1. Environmental Performance in Management support the profitability of its business and are carried out on a regular basis. The corporate of Administrative and Housekeeping Activities the growth of its intangible assets value. Press Service prepares press releases on significant 6.2. Resource Efficiency and Waste Management 6.3. Financing New Energy, Energy Efficiency and individual transactions made by VTB. At the Environmental Projects Cooperation. VTB seeks to enhance the effectiveness regional level local PR divisions ensure coverage of its management system through cooperating of the Group activities through local media. activities of divisions of the Group companies, Seeking to further strengthen the trust of its the corporate governance systems at the reducing decision-making time, and providing Over time, VTB has been improving its internal and shareholders, employees, investors and the subsidiary companies promoting the principles its employees with the entire range of resources external stakeholder communication system. The general public, VTB maintains continuous of openness and transparency and maintains and opportunities necessary for effective work Bank annual reports have traditionally been highly process of stakeholder communications. its commitment to the Group-wide standards and coordination of business processes. regarded by the professional financial community. The Group makes energetic efforts to improve based on international best practice. In 2012, VTB Bank won the Best Annual Report VTB key stakeholders are listed in the table Award by Expert RA rating agency in the category below. They include: shareholders and investors, Best Annual Report in the Financial Sector. VTB Social Report 2012 2. Our Stakeholders

24 25 A priority area of the Service activities is organising Categories of minority shareholders, 2008–2012 VTB and new media in 2012: meetings with minority shareholders. In 2012, the Service organised 30 events, including meetings 180,000 167,126 The Group official website, vtb.ru had 3,372,570 unique visitors. The with shareholders, master classes, and meetings 163,952 160,000 157,708 website design was updated based on the results of a user survey. of the Shareholders Consultative Council. 153,218

The number of subscribers of VTB Facebook page exceeded 50,000. 140,000 According to the independent analytical agency Frank Research Group, Over the year, representatives of the Shareholder VTB page ranks first among all Russian-language pages of banks in Relations Service held meetings with shareholders 120,000 terms of the number of engaged users. in nine Russian regions. In most locations such 103,110 The website vtbrussia.ru dedicated to VTB social projects had meetings were held for the first time and received 100,000 2,172,388 unique visitors. positive feedback from many participants. The The number of subscribers of the corporate Twitter account @vtb at the meetings in Kaliningrad, Yekaterinburg and 80,000 end of 2012 was around 6,000. Moscow conducted during the share buyback 60,000 The total number of views on VTB corporate YouTube channel was were particularly popular, whereas the meeting about 1,000,000. held in St. Petersburg on November 24, 2012 40,000 VTB official account in the social network Instagram was created. set an attendance record — 497 participants.

20,000 In organising the meetings, the Service took into account shareholder feedback to the previous 0 2,517 0 1,872 19 1,562 18 1,548 7 1,635 4 events: the agenda was substantially expanded and 2008 2009 2010 2011 2012 2.2. Engagement with Key adjusted to accommodate the interests of those Stakeholder Groups investors who already had some experience with Individuals shares. The Group representatives who participated Legal persons 2.2.1. Relations with Shareholders in the meetings included Vasily Titov, First Deputy Nominee holders President and Chairman of the Management Board Shareholders are a key stakeholder group to of VTB Bank, Evgeny Ignatyev, VTB Bank Corporate VTB. The Bank has adopted a number of internal Secretary, representatives of the Finance Department The geographic distribution of shareholders Shareholders Meeting, workshop meetings and Open regulations and policies aimed at safeguarding and the Shareholder Relations Service, as well as has not changed significantly since 2011: as Days) increased by 15 percentage points reaching 35%. rights and legitimate interests of its shareholders. representatives of the relevant subsidiaries such previously, most shareholders live in Moscow and In its relations with minority shareholders, the Bank as VTB24, VTB Insurance and VTB Registrar. St. Petersburg. At the same time, VTB shareholders In 2013, VTB plans to expand the outreach to relies on the international best practices in the are present in virtually every Russian region. shareholders residing in the country’s remote field of information disclosure and transparency. The meetings with shareholders received broad areas and the regions where the Shareholder media coverage at the federal and regional VTB considers the geographic distribution of its Relations Service is not represented. To that The Bank Code of Corporate Conduct is aimed at levels with a total of 127 materials. In addition shareholders when planning its communications end, the Group intends to increase the number safeguarding interests of all the shareholders, to 25 articles in printed media and 92 articles activities including, among other events, of printed materials for the target audience ensuring transparency of the Bank activities, and in online media, the events were covered by regional meetings with shareholders. (newspapers, brochures and booklets distributed maintaining high corporate governance standards. four TV networks (Russia 24, Business TV, RBC at local offices of VTB24). VTB will also continue to and TV Finansist) and six radio stations. To better understand expectations of its shareholders, conduct events for raising financial literacy of its The Bank has a dedicated Shareholder Relations the Bank carries out regular shareholder surveys. shareholders further developing this practice. Service designed to identify shareholders’ The share buyback led to changes in the age The results of the 2012 survey demonstrate the needs, duly respond to their requests, and build distribution of individual shareholders. While effectiveness of VTB investment in the development In addition to the development of the Group long-term effective relationships with them. prior to the buyback the largest single group of shareholder communications and an increased system of shareholder communications, Over the reporting period, the Service received had been shareholders aged 50–65, in 2012 popularity of corporate events for shareholders. Among the Shareholder Relations Service has some 30,000 enquiries via different channels, the prevailing group was those between other results, the proportion of survey respondents a number of other functions ultimately including regular mail, email, corporate call 35 and 50 years of age who accounted for who took part in at least two out of the three types aimed at assisting shareholders in centre, and the Service own telephones. a third of individual shareholders. of events available to shareholders (General exercising their rights and interests. VTB Social Report 2012 2. Our Stakeholders

26 Age distribution of VTB Bank shareholders, 2011–2012 27 Remote channels of shareholder communication 60,000

Controlling Interest newspaper: 53,611 54,227 15,000 copies quarterly 50,000

Information newsletter: 22,000 email addresses monthly 40,000 39,343 Targeted mailing (newsletters, notifications of dividend, invitations to meetings, stock buyback): 35,547 some 280,000 letters 30,000 30,310 Information materials in VTB24 offices 25,931 in 37 Russian regions

20,000 18,289 Shareholders Website vtb.ru, Shareholders and Investors section Shareholders Relation Service Over 77,000 page views per month 10,000 10,202

Unified reference desk: 560 1,050 777 over 2,400 communications per month 0 276

Email address [email protected]: Under 20 20–35 30–50 50–65 65–80 Over 80 some 300 enquiries per month 2011 2012 Phones of the Service and the Centres: some 50 calls per day

Written enquiries: some 60 letters per month Share Buyback

The key event of the year 2012 in the field of minority shareholder relations was the share buyback programme. The offer was valid for individuals who took part in the 2007 IPO and held their stakes as of beginning of February 2012 meaning that some 114,000 individuals, or 93% of all the shareholders, were eligible for the programme. Shareholders Consultative Council dividend to be paid for 2011, as well as comments and suggestions regarding a new VTB strategy to During the buyback period the number of calls from shareholders increased four times whereas the number of mail enquiries In 2012, VTB Shareholders Consultative be approved in 2013. Among other comments, it grew six times. The Shareholder Relations Service worked hard to maintain adequate awareness of terms and conditions of the Council continued its work. Four Council was proposed to increase the strategic planning buyback among individual shareholders. In order to reach shareholders, the maximum possible range of communication meetings were held in the reporting period. horizon to at least five years and continue the channels was used, including: targets performance system improvement. publication of an offer in Rossiyskaya Gazeta, an official government newspaper, on March 2; The key items discussed at the meetings target mailing campaign to inform about the offer terms and condition; included VTB Bank share buyback programme, Another form of interaction with shareholders several rounds of a target email campaign; VTB Group performance in 2011 and the is VTB Open Days allowing shareholders to special sections on the websites of VTB, VTB24 and VTB Registrar; progress of the implementation of 2010–2013 receive personal consultations on a broad federal media; Development Strategy, as well as the tour range of questions. In 2012, such events presentations at workshop meetings with shareholders; of shareholders and media representatives were carried out at Shareholder Relations special telephone hotline. to the locations where the drilling rigs owned Centres in Moscow, St. Petersburg and by VTB Leasing were installed or stored. Yekaterinburg. Consultations to shareholders Representatives of the Shareholder Relations Service focused their efforts on providing detailed explanations of the key terms were provided by representatives of the Bank and timeframe of the offer, as well as the procedure of transferring the funds. As a result, some 80% of the shareholders eligible At the meetings, the Council members presented and its subsidiaries, as well as by the members for the programme (74,302 in total) accepted the offer. The buyback procedure was organised so as to make it as convenient as their recommendations on the amount of the of the Shareholders Consultative Council. possible for the participants: for example, the entire process required a single visit to an office of VTB24. VTB Social Report 2012 2. Our Stakeholders

28 29 Key areas of activities of the Shareholder Relations Service in 2012 Geographic distribution of individual shareholders, 2012

25,000

21,447 Shareholder 20,000 communications

Preparation and holding Liaising with of the GSM, meetings stock exchanges with minority 15,000 and regulators shareholders

10,452 10,000

7,014

5,000 Supporting the activities Dividend calculation of the Shareholders and payment 3,238 Consultative Council 2,574 2,554 2,470 2,347 2,084 2,073 2,026 1,865 1,774 1,725 1,660 1,553 1,542 1,458 1,421 1,411 Key areas of activities 0

Moscow Perm Region Tula Region St. Petersburg Rostov Region Kursk Region Moscow Region Samara Region Voronezh Region Belgorod Region Stavropol Region SverdlovskLeningrad Region Region Krasnodar Region Volgograd Region Republic of Tatarslan Krasnoyarsk Region Nizhny Novgorod RegionKhanty Mansi AA— Yugra Republic of Bashkortostan Oversight Information disclosure of the Bank’s registrar — VTB Registrar, CJSC Meetings with shareholders In 2013, it is planned to introduce new forms Fifteen VTB Open Day events: Moscow— 8 of meetings with shareholders, including St. Petersburg— 4, Yekaterinburg— 3 round table meetings, video conferences Enhancement of the regulatory allowing those present at Shareholder Relation Participation framework in the field in corporate procedures Stock buyback Centres to participate remotely in workshop of shareholder relations and disclosure Holding consultations meetings, and webcasting of the annual General Collection of applications in the Centres by VTB staff Shareholders Meeting to the audience at Over 2,000 shareholders filed applications Yekaterinburg Shareholder Relations Centre.

Shareholder Relations Centres General Shareholders Meeting VTB plans to further develop the practice Holding consultations of regional meetings with shareholders and In 2012, VTB expanded the functions of Shareholder Consultations on shareholder rights, dividend A total of 174 shareholders reviewed the materials expand the geography of these events. In 2013, Relation Centres adding the role of a transfer agent payment etc. of the annual General Shareholders Meeting the programme of events will be adjusted to to the list of their responsibilities. As a result, Collection and provision of documents better meet shareholders’ needs. In addition full‑fledged points of transfer agent services Distribution of materials on GSM agenda and other Master class to existing shareholders, it is planned to supporting document exchange between the registrar topics Jointly with the Urals State Economic University, invite to the meeting the potential investors and shareholders were established at each centre. Assistance in preparing and conducting Open Days a training course on personal finance management who will be able to experience first-hand the and other events using VTB stock as an example was carried out in transparency of VTB shareholder relations. Participation of Shareholder Relations Centres December 2012 in VTB Bank corporate events in 2012: VTB Social Report 2012 2. Our Stakeholders

30 6 31 The number of interactions with institutional investors Visit to the locations of VTB Leasing drilling rigs 2011 2012 In the reporting period, some shareholders raised questions regarding an earlier deal for the acquisition Andrey Kostin 178 98 of 30 drilling rigs by VTB Leasing, a subsidiary of VTB Group. On 4–6 September, 2012, a visit to the locations Herbert Moos 197 164 in Orenburg Region and Yamal-Nenets Autonomous Area where the rigs were used or stored was organised for shareholders to learn about the conditions of the acquisition, storage and operation of the rigs. The tour was Yuri Soloviev 80 183 organised by VTB Leasing, the Shareholder Relations Service and the Bank Press Service. Mikhail Zadornov 50 154 Investor Relations team 296 374 All the interested shareholders were able to see that the rigs are operated in a production mode thus yielding profits. Meetings with investment funds 347 374 The shareholders were also provided with a comprehensive document package on the rigs deal, including financial and legal documentation. As a result of the tour, the shareholders’ information needs were met. of the British Financial Services Authority (FSA) and VTB CFO; Alexei Yakovitsky, Global CEO at Russian regulators of security markets; VTB Capital; Riccardo Orcel, Head of Client Controlling Interest Newspaper VTB shareholders are able to receive release of statements of facts for investors; Coverage and Global Banking; Gurinder Nihal, a prompt and detailed consultation from the maintenance and updating of information resources Head of Global Transaction Banking. At the In 2012, Controlling Interest, VTB newspaper for Shareholder Relations Service specialists for institutional investors and analysts in the section London event, Igor Shuvalov, First Deputy Prime shareholders, underwent a major makeover. Responding by sending their requests to the email Shareholders and Investors of VTB corporate website. Minister of the Russian Federation, answered to target audience increase and growing interest of VTB address [email protected]. In 2013, it questions about the Russian Government customers to the publication, the Shareholder Relations is planned to add an option for sending In 2012, the Group paid special attention to privatisation programme, macroeconomic Service and the Press Service revamped the content an enquiry from a shareholder’s Personal personal meetings with shareholders and investors. situation, and the Russian banking sector. of the newspaper adding new sections covering VTB Account in the section Shareholders and In particular, 347 meetings with representatives Participants of the Moscow meeting discussed business, including forecasts and comments by leading Investors of VTB corporate website. of investment funds were held. A number of roadshows a number of narrower, more professional analysts, and increasing the proportion of material were conducted in the world’s largest financial problems of the financial and banking sectors. on business-related topics. The publication visual 2.2.2. Relations with Institutional Investors centres, including Moscow, London, New York and design has become more modern and attractive. Singapore. The Group also took part in 15 conferences In the reporting year, one of the priorities Systemic engagement with the international for investors from the US, Europe and Asia. of engagement with institutional investors was In 2013, it is planned to increase the newspaper investment community is a fundamental strengthening relationships with European circulation from 15,000 to 17–18,000 and start principle of VTB development. The Group seeks In 2012, VTB Group Investor Day, one of the most investors. distributing the publication via VTB24 offices for free. to continually improve the transparency and significant events in the field of institutional Plans for the coming year also include the creation quality of its investor communications. investor relations, was held in two major financial The key achievements of the year 2012 in of a web portal for VTB shareholders built around an centres: Moscow and London. The broad geography the field of investor relations include: extended and more frequently updated version of the In 2012, the main forms of the Group engagement of the event helped to engage a large number newspaper. The web-based version of Controlling Interest with institutional investors included: of actual and potential investors: in London, the increased engagement of top executives in will feature additional analytical and informational Investor Day was attended by 83 participants, communications with the investment community as materials, as well as provide for user feedback. participation in investment conferences; whereas the Moscow event drew 54 investors. a result of expanded geography of VTB Group Investor roadshows for investors; Day; Other Remote Channels annual VTB Group Investor Days; At the meetings, VTB was represented by the of Shareholder Communications personal and group meetings with investors; Group top executives: Andrey Kostin, VTB Bank improved transparency due to better disclosure in conference calls for investors and analysts on President and Chairman of the Management IFRS financial statements. Since 2012, VTB Shareholder Newsletter informing quarterly and annual IFRS statements of VTB Group; Board; Yuri Soloviev, First Deputy President and its readers of the key events and news of VTB disclosure by circulating press releases at the London Chairman of the Management Board; Mikhail As part of its initiative on the improvement Group is released not on a monthly basis, as Stock Exchange and the Moscow Exchange; Zadornov, VTB24 President and Chairman of transparency and the quality of disclosure in 2012 it used to, but as soon as any newsworthy preparation of presentation materials for investors of the Management Board; Herbert Moos, VTB Group: information becomes available. Over 2012, and required issuer’s documentation; 16 issues of the newsletter were released and preparation of VTB Group Annual Report compliant circulated to some 22,000 shareholders. with the disclosure and transparency requirements 6 Meetings and conference calls without recurrent meetings with companies. VTB Social Report 2012 2. Our Stakeholders

32 33 Geographic distribution of investors participating on substantive aspects and issues of interest to the VTB Group executives and specialists serve on in meetings with VTB in 2012 investors instead of the number of interactions. a number of government and non-governmental The Bank of Moscow: supporting municipal and regional companies commissions, governing bodies of industry and projects In the reporting period, VTB was more active in associations, and sector-specific working groups. dealing with debt investors than in 2011. The forms For example, Andrey Kostin, VTB Bank President Historically, providing financial resources to municipal and regional of engagement with debt investors included group and Chairman of the Management Board, and companies and projects has been an important area of activities meetings with VTB senior executives, conferences, Vasily Titov, his First Deputy, are members of the of the Bank of Moscow. The Bank extensive experience of working with exchange of information via email, and other means Interregional Banking Council under the Federation municipal and regional companies and institutions helps it effectively of communication. With the help of institutional Council of the Federal Assembly of Russia, a body work with a broad range of sectors: from kindergartens to major investors buying VTB debt instruments the Group established to facilitate the improvement of the metallurgical plants being regional monopolists. carried out two roadshows and took part in seven Russian banking system and the development investment conferences in the reporting period. of banking legislation. Andrey Kostin and Vasily Within the framework of the Bank strategy for supporting municipal Titov also serve on governing bodies of the companies and regional projects, in 2012, the Bank of Moscow signed 2.2.3. Government Relations Russian Union of Industrialists and Entrepreneurs 10 cooperation agreements with the governments of Russian regions (RUIE), an association supporting the development (including Novosibirsk, Nizhny Novgorod, Rostov, Sverdlovsk and The Russian Federation represented by the of relations between business, the government, Khabarovsk regions, the Republic of Bashkortostan, and the Republic Federal Agency for State Property Management and the public in Russia. The RUIE activities cover of Tatarstan) and municipal authorities. is the majority shareholder of VTB Bank which a broad range of topics, including the improvement

Russia (15%) imposes certain responsibilities with regard of environmental performance of Russian For example, within the framework of the agreement signed in Africa/M. East/Asia/S. America (6%) to the Group ways of doing business. businesses, development of the construction Sverdlovsk Region, in 2012, the Bank provided loan guarantee USA/Canada (18%) and the financial industries, as well as support limits totalling RUB 700 million to two regional companies for the Great Britain (34%) To maintain the effective process of engagement of the defence industry and high-tech economic construction, maintenance and repair of a number of motorways, Europe (w/o Great Britain) (27%) with the government, Andrey Kostin, VTB Bank sectors. Furthermore, Andrey Kostin chairs the including Yekaterinburg — Tyumen and Perm — Yekaterinburg roads, President and Chairman of the Management RUIE Joint Commission on Corporate Ethics the a road in Chkalovsk District of Yekaterinburg, and a number of access According to VTB Group Consolidated Financial Statements (IFRS). Board, participates on a regular basis in objective of which is enhancing the climate in roads to smaller municipalities in Sverdlovsk Region. meetings with Russia’s top officials discussing the Russian business community, and sits on the optimised the disclosure of analysis by segment the state of financial markets, approaches to the Presidium of the Association of Russian Banks. in IFRS financial statements by defining the main improvement of Russia’s investment climate, operating segments on the basis of global business achieved results, and development prospects. An important aspect of the Bank relations with well as priority programmes and projects at lines, including Corporate and Investment Banking Meetings of VTB senior executives with leaders the government is VTB contribution to the priority the federal, regional, and municipal levels. (with the sub-segments Investment Banking, Loans of the CIS countries play an important role in national projects. The Group finances a range and Deposits, and Transaction Banking), Retail strengthening the Group international positions. of projects aimed at the development of the In the reporting period, the Bank actively Banking, and Other; Agendas of such meetings include plans for agro-industrial complex, support of education contributed to social and economic life of Russian VTB business development in the CIS countries and healthcare services, enhancement of the regions providing financial resources for budget disclosed in IFRS financial statements the amount and the role of VTB at the post-Soviet space. business environment, and construction expenditures of 26 Russian regions (including, of non-performing loans with repayments overdue by of affordable and comfortable housing. among others, Omsk Region — RUB 5.3 billion, over 90 days and the proportion of such loans in the In planning its activities, VTB Group considers Astrakhan Region — RUB 5.3 billion, and Krasnodar gross loan portfolio; objectives set by the government and strategic Cooperation with government authorities is Region — RUB 5.1 billion) and 24 regional capitals. national goals. VTB Supervisory Council a strategically important area of VTB activities. disclosed information on VTB Group capital adequacy comprises, among other members, representatives VTB has traditionally financed public-private The overall geography of VTB banking services to ratio as defined by the Basel Accord. of government authorities having necessary partnership projects, budget expenditures regional and municipal governments includes the experience and skills in the management of municipal and regional governments, as majority of regions of the Russian Federation. VTB approach to institutional investor relations is of government finances. In its strategic based on the principles of openness and readiness decision‑making, the Group takes into account for cooperation. In 2012, VTB modified its approach the state policy priorities and thoroughly assesses to engagement with institutional investors focusing the effects of its actions on the national scale. Fair play is the basis for every deserved victory VTB Social Report 2012 3. Our Customers

36 37 3. Our Customers the company. The Western High-Speed Diameter of Moscow power grids, to finance both operating project is the world’s largest public-private costs and investment projects. partnership project for the construction of a toll road in terms of the investment amount; it was 3.1.3. Manufacturing 3.1. Supporting Key Breakdown of VTB Group loan portfolio by sector recognised by prestigious international awards. Economic Sectors as of December 31, 2012 The support of this project exemplifies VTB VTB Bank has traditionally paid serious attention Bank contribution to the economic and social to the development of the manufacturing sector. In development of the city and the region. the existing economic environment the Bank views Being one of Russia’s largest banks and supporting such key sectors of the Russian industry a facilitator of the government economic policy, Furthermore, the Bank for several years has been as defence, aircraft, and automotive industries as one VTB boosts development of various sectors providing financial support for the construction of its priority objectives. The most significant projects of the national economy. The key methods of infrastructure for the 2014 Winter Olympics in the manufacturing sector include the following. of such support include lending to the real in Sochi. One example of such support is the sector of the economy and investing. The main guarantees extended to OJSC RZhDstroy which Defence industry: VTB Bank provided an over components of the Group portfolio of loans was contracted by Olympstroy State Corporation to RUB 1 billion loan to the Federal Research and to economic sectors include: financial sector build several facilities for the upcoming games. Production Centre of Gas Turbine Manufacturing which accounts for 16.3% of the portfolio, “Salut” for the financing of an export contract. In 2012, construction — 15.7%, manufacturing — 13.6%, 3.1.2. Energy and Public Utilities the Bank also extended a total of RUB 4.57 billion loan trade — 12.9%, metals — 9.8%, to OJSC Saturn Research and Production Association transportation — 9.5%, oil and gas industry — 5.5%, Public utilities: the Bank of Moscow continues to specialising in the design and manufacturing of gas energy — 5.3%, chemicals — 3.6%, etc. work closely with public utility companies thus turbine engines. The loans were intended to finance

Finance (16.3 %) making a substantial contribution to the support current operations of the manufacturer, including the 3.1.1. Construction and Real Estate Construction (15.7 %) of one of the most socially significant economic execution of export contracts. Manufacturing (13.6 %) sector. For example, a RUB 300 million loan Financing housing and commercial construction is Trade (12.9 %) provided by the Bank of Moscow to Volgograd Aircraft industry: VTB Bank finances projects a priority area of VTB Bank business which accounts Metals (9.8 %) Municipal Utilities allowed the company to of CJSC Sukhoi Civil Aircraft for the modernisation for the largest single portion of the loan portfolio. Transportation (9.5 %) repay its debt to a natural gas supplier for of production facilities and technology upgrading. Oil and Gas (5.5 %) June–July 2012 which helped to reduce the For example, the Khabarovsk Branch of VTB Bank The Bank has a dedicated Department Energy (5.3 %) social tension around public utility services. extended two credit facilities up to RUB 9 billion to of Construction Projects responsible for the financing Chemicals (3.6 %) CJSC Sukhoi Civil Aircraft. The loans are intended to of the following segments of construction business: Food and Agriculture (2.7 %) Energy: in the reporting period, the Bank of Moscow support the implementation of the most advanced

Telecommunications and media (1.8 %) financed, by means of newly extended or revolving Russian civil aircraft project — Sukhoi Super Jet 100. housing construction (Economy, Business and Coal Mining (1.1 %) lines of credit, a number of companies in the energy Premium class property); Aircraft Industry (0.4 %) sector, including, among others, the following: Automotive industry: in 2012, VTB Bank expanded Other (1.8 %) its cooperation with Russia’s leading car construction of commercial property (office and retail a total of RUB 1.6 billion was extended to OJSC manufacturer, OJSC AvtoVAZ, focusing on financing property, hotels, warehouses). Autonomous Heat Company, the main operator technology upgrade projects. For that purpose, VTB Bank also expands its financing of infrastructure responsible for heat generation and supply to industrial the Bank provided over RUB 1.5 billion facility As part of its support of the construction sector, projects. VTB Group is the majority shareholder, operations, public utility companies, and households in in the form of letters of credit and signed a loan in December 2012, the Bank approved a large financial advisor, and a lender of Northern a number of communities in Krasnodar Region, including agreement worth the equivalent of RUB 2 billion RUB 2.7 billion loan to finance the construction Capital Highway Ltd. which signed an agreement Krasnodar, Novorossiysk, Abinsk, and Maykop; which will allow drawing funds in three currencies: of the first stage of Savelovsky City, a multi‑purpose with St. Petersburg government for the design, Euros, US Dollars, and Rubles. This facility matures complex in Moscow to be developed by construction, and operation of the Western over RUB 5 billion loans were extended to OJSC in five years and is intended primarily for financing MR Group. The first instalment of the three High-Speed Diameter, a new toll road. VTB Bank United Energy Company, one of the largest operators the acquisition of state-of-the-art manufacturing year facility amounted to RUB 500 million. also provided guarantees and hedging services to 7 Hereinafter the amounts denominated in foreign currencies were converted into roubles using annual average exchange rates for 2012. VTB Social Report 2012 3. Our Customers

38 39 equipment from the world’s leading suppliers. The development of SMBs, VTB Group seeks to support One of the key partners of VTB24 and the Bank financing of AvtoVAZ modernisation is of utmost this sector by providing funding on special terms. of Moscow in the field of servicing SBs is the “In 2012, VTB24 changed its definition of a small importance both to the company and to the entire Moscow Small Business Credit Assistance Fund business customer: the previous annual sales Russian automotive industry which gets access According to the VTB Group 2010–2013 Development created by the Moscow Government in 2006. threshold of RUB 90 million was raised to to the most advanced technology thus becoming Strategy approved in 2010, the Group uses a tailored The two banks have partnered with the Fund RUB 300 million. Re-defining small business able to improve the quality of its final products approach to servicing each customer segment to since the moment of its establishment. customers marked a turning point for VTB24 and, consequently, customer satisfaction. meet customer needs in the most effective manner. helping it substantially expand its customer Over the period of cooperation with the Fund, base”. Pharmaceutical industry: in 2012, VTB Bank VTB Group entities involved in servicing small the Bank of Moscow extended to SMBs about Nadezhda Karisalova, extended financial guarantees to a number businesses (SBs) include VTB24, the Bank a thousand loans totalling over RUB 3.9 billion. Vice President, Director of External Relations of pharmaceutical companies, including of Moscow, and Group banks in the CIS and Georgia. In 2012, 56 loan agreements totalling to of Small Business Department, VTB24 OJSC Pharmstandart, CJSC R-Farm, and the Services to medium businesses (MBs) are provided RUB 860 million were signed, whereas the amount Federal Research and Production Centre by the Bank of Moscow, VTB Bank, and Group banks of guarantees by the Moscow Small Business “Pharmzashchita” of the Federal Medical and in the CIS and Georgia. In 2012, the Group portfolio Credit Assistance Fund was RUB 400 million. Biological Agency. These companies have been of loans to SMBs totalled over RUB 540 billion. including 162 regional outlets and 30 additional contracted by the Russian Ministry of Health Since 2006, VTB24 extended a total of RUB 7.4 billion offices in Moscow and Moscow Region. and Social Development and its regional and VTB Group companies actively partner with loans guaranteed by the Moscow Small Business municipal divisions to supply vitally important government authorities and non-profit organisations Credit Assistance Fund. Out of this amount, the In the reporting period, VTB24 expanded pharmaceuticals for groups of citizens eligible involved in SMB support. For example, on portfolio of current loans at the end of 2012 included its loan portfolio to small businesses for government social benefits. Moreover, the 14 May, 2012, VTB Bank, the Bank of Moscow, 134 loan agreements totalling to RUB 1.8 billion. by 60%; as of December 31, 2012, responsibilities and commitments of these TransCreditBank, and the Agency for Strategic the portfolio amounted to RUB 179.5 billion companies include the development of new Initiatives signed a cooperation agreement aimed VTB24 and the Bank of Moscow partner with major (including Kommersant loan product). pharmaceuticals and medical equipment within at the joint development and implementation non-profit organisations, including the Russian the framework of the federal target programme of priority innovative projects, including those Chamber of Commerce and Industry, OPORA Russia, VTB24 offers its small business customers a full “Development of the Pharmaceutical and focusing on the development of the Russian and the Business Russia. Joint activities of the partners range of banking services, including lending, cash Medical Industry of the Russian Federation SMB sector. Joint efforts of the parties within the are aimed at facilitating the development of small and settlement services, card-based services, until 2020 and for the Subsequent Period”. framework of the agreement will remove obstacles business in Russia, improving accessibility of financial guarantees and letters of credit, and leasing. By supporting the pharmaceutical industries, for the development of the small and medium services to small businesses, and enhancing VTB, in addition to pursuing its business businesses and facilitate the dissemination financial literacy in the small business sector. In providing services to small business customers, objectives, is able to contribute to the of the best practices in the field of supporting VTB24 makes broad use of available instruments improvement of the nation’s health. entrepreneurship at the regional level. In 2012, an important objective for Group banks of government support, including services was the introduction of new technologies for the of guarantee funds, business incubators, technology In July 2012, VTB24 and the Bank of Moscow signed servicing of small and medium business customers. parks, leasing companies, and other elements 3.2. Supporting Small and cooperation agreements with the Moscow Small To reduce loan approval time, more decision-making of business support infrastructure, subsidisation Medium Business Development Business Support Agency. The agreements defined power was delegated to local branches of the of loan interest, financial literacy programmes, etc. mechanisms of banks’ participation in the small Bank of Moscow and VTB24: they were allowed to Combination of products and services offered by business support programme managed by the Agency extend loans within the established limits without VTB24 and instruments of government support 3.2.1. VTB Group Approach to Supporting Small and and intended to improve small businesses’ access an approval from the headquarters; faster lending has good synergy: for example, customers Medium Businesses to credit resources. One of the key instruments procedures for recurring customers were introduced. coming to the bank for loans obtain them at envisioned by the programme is the reduction a state-subsidised interest rate which may have Small and medium businesses (SMB) is an important of financial burden through partial subsidisation 3.2.2. Small Business Support at VTB24 a significant effect on their bottom line. sector of the Russian economy which helps address of interest on bank loans. In accordance with the a number of social and economic problems, agreement, VTB24 also provides consultations According to Expert RA rating agency, VTB24 is At the beginning of the reporting period, VTB24 in particular, by creating jobs and increasing to its customers on support options offered by one of the top three Russian lenders to small launched Business Express — a new loan product employment. Since the lack of financial resources the Agency and conducts public discussions businesses. VTB24 provides banking services targeting small business customers. Its distinct is one of the most common problems hindering the in the form of meetings and round tables. to small businesses through 192 offices, features include a uniquely short approval time VTB Social Report 2012 3. Our Customers

40 41 (2–3 days), a broad geography of lending, and In the framework of the new model of sales to purchase of vehicles and equipment secured by RUB 710 million with over RUB 320 million the use of automated procedures for servicing medium businesses, customers standard loan and the acquired property, two types of overdrafts guaranteed by the regional SMB support funds. of standard small business customers. guarantee products were developed. The transition to and the product “Microcredit”, allowing to the new model for small business customers involved provide credit facilities of up to RUB 5 million In August 2012, VTB24 launched a pilot project changes to the sales strategy and responsibilities based on a scoring evaluation of the borrower 3.3. Socially Significant Retail for lending to regional developers of Economy and of employees, formation of new customer service within the shortest period of time (2–3 days). Banking Products and Services Economy Plus class housing. Another property-related teams, and introduction of new lending processes product is the new offering Business Mortgage which Considering the needs of SMB customers, the involves a long-term loan for commercial property Bank of Moscow expanded its range of deposits for In 2012, VTB Group completed the formation acquisition with the property used as collateral. Supporting SME participation in government legal entities, its competitive advantages are easy of the retail banking global business line. The procurement deployment dates and a wide range of service functions. Group banks use a flexible approach to customers To improve the effectiveness of servicing customers and offer them integrated banking services. involved in international trade, in 2012, a pilot A unique product offered by the Bank of Moscow The Bank of Moscow current objectives with regard to project for the development of trade finance business is based on the joint project with the United the development of its SMB services include improving The service model based on customer segmentation was launched. The project has demonstrated that Electronic Trading Venue (UETV) which was the quality of customer service, developing remote allows banks to offer different products tailored the new product is in high demand from small launched in 2011 and successfully tested in sales channels, introducing a longer banking day, and to specific customer segments, improve the business customers, and in 2013 it is planned a pilot phase. The electronic tendering system developing new services for corporate customers. The quality of service, and systematically develop to replicate it across all Russian regions. for government procurement was developed Bank of Moscow maintains mechanisms for collecting customer communication channels. to provide access to government contracts for customer feedback on the quality of services and Seeking to improve the accessibility of loan small and medium businesses in addition to conducts surveys of existing and potential customers. The bulk of banking services to retail customers financing to its customers, VTB24 engages large ones. At present, 89% of e-tendering is provided by VTB24, the Bank of Moscow guarantee funds in the lending process. participants represent small businesses. One of the key instruments employed by the Bank and TransCreditBank. At the end of 2012, Leto To that end, in 2012, the bank signed 11 In 2012, the Bank of Moscow introduced of Moscow for the promotion of its services targeting Bank — a unique banking project of high social cooperation agreements and 31 supplementary the practice of extending lines of credit to small and medium business customers is organising significance — was launched to provide retail agreements with the funds; at present, recurrent participants of electronic tenders thus business conferences for regional SMBs. The bank uses banking services to customers in the mass VTB24 cooperates with 54 regional guarantee relieving them of the requirement to obtain the conferences to disseminate information about new and lower-mass segments of the market. funds. As of December 31, 2012, the number a separate accreditation for each offer. In the banking products and services for business customers of loans guaranteed by the funds increased future, the Bank of Moscow plans to expand and municipal enterprises. In 2012, seven business Customers of VTB Group retail business line are by 16% compared to 2011, whereas the total the range of its services for participants of the conferences attended by representatives of 449 offered such products and services as consumer amount of such loans increased by 26.7%. electronic procurement process offering them enterprises were held in Moscow, Moscow Region, and loans, car loans, mortgage loans, deposit full management of their contracts, providing other regions. The results of a conference participant products, commission-based services, card-based 3.2.3. Small and Medium Business Support at the guarantees of advance repayment and contract survey demonstrate a high effectiveness of this method services, and remote banking services. Bank of Moscow execution, cash and settlement services, custody of reaching potential customers. Of those surveyed, services, and other banking services. 53% expressed their interest in participating in 3.3.1. Mortgage Loans To the Bank of Moscow, the main event of the a future conference on loan products, 27% — on cash year 2012 was the fundamental change of the flow management products and cash and settlement Mortgage lending is one of the most significant areas approach to servicing corporate customers services, 9% — on export and import finance services. of the Group business from the social standpoint. of small and medium businesses: introduction and techniques based on management reporting The Group entities providing home loans include of two new sales models and the launch of new data. The bank has developed a new line of loan To further expand its SMB services, the Bank VTB24, the Bank of Moscow, TransCreditBank and product lines. Over the reporting period, the loan products which allows to extend large long-term of Moscow partners with regional SMB support other Group banks based in the CIS and Georgia. portfolio more than doubled and amounted to loans while relaxing collateral requirements to the funds. In 2012, the bank signed 12 cooperation RUB 89 billion, the number of small and medium maximum extent possible. The new line involved agreements with regional funds; guarantee limits for VTB24 business customers of the Bank of Moscow “Turnover” — for working capital financing, “For 29 funds were established and confirmed. As a result reached 116,500 at the end of the year. Since the business development” — for the acquisition of fixed of this work at the regional level, in 2012, the bank VTB24 is one of the leading participants of the beginning of 2012, 13,000 clients were attracted. assets, “Transport” and “Equipment” — for the signed 100 loan agreements totalling approximately government mortgage support programme VTB Social Report 2012 3. Our Customers

42 43 Total number of mortgage loans Total amount of mortgage loans Mortgage portfolio of VTB Group market. In 2012, all mortgage outlets of the extended in 2012 extended in 2012, RUB million as of December 31, 2012, RUB million Bank of Moscow started offering the entire line of VTB24 mortgage products. By the end of the year, all real estate transactions of the bank customers obtaining home loans under VTB24 programmes in Moscow and the Moscow Region were handled by three Mortgage Services Centres of the Bank of Moscow.

In addition, the Bank of Moscow expanded its network of mortgage outlets to cover 23 Russian regions. As a result, 2,106 loans totalling RUB 4.7 billion were extended in the reporting year. A discount of 0.65% has been introduced for participants of the bank payroll programmes and corporate customers.

In 2012, the bank introduced a new product — Home VTB24 (108,819) VTB24 (157,574) VTB24 (331,291) Construction Loan. Borrowers are able to choose Bank of Moscow (375) Bank of Moscow (953) Bank of Moscow (17,619) lending limits depending on the collateral TransCreditBank (4,836) TransCreditBank (8,076) TransCreditBank (34,965) and receive funds in several instalments. Other banks (2,296) Other banks (1,882) Other banks (CIS) (6,826) TransCreditBank

which is managed by Vnesheconombank. Over immensely popular with the customers. The Under the programme Beat the Formalities, The main target audiences of TransCreditBank (TCB) the entire period of the programme, VTB24 programme allows them to obtain a mortgage customers are required to produce as few mortgage programmes are employees of OJSC “Russian extended over RUB 50 billion of mortgage loans loan using government-funded maternity documents as possible; no proof of income Railways”. In 2012, the bank extended 4,836 helping more than 34,000 Russian families capital instead of their own funds as a down is necessary. In 2012, the bank was able mortgage loans totalling RUB 8,076 billion. improve their housing conditions. In 2012, the payment. In 2012, VTB24 extended over 7,000 to substantially expand the programme range of property types eligible for financing such loans amounting to RUB 9 billion. reducing the required down payment from 3.3.2. Socially Significant Card Products under the programme was expanded. 50 to 35%; some 26,000 loans worth In 2012, VTB24 also continued developing a total of RUB 35 billion were extended. VTB Group retail banks regularly bring to market Over 2012, VTB24 extended 110,000 mortgage loans another mortgage programme — Mortgage socially significant card products. For example, worth a total of RUB 157.6 billion which exceeded with a 10% Down Payment. In 2011, VTB24 A socially significant area of VTB24 mortgage in 2012, TransCreditBank jointly with the Charity the respective value for the previous year almost became the first Russian bank to offer mortgage business is providing home loans to military service Foundation Spread the Wings! introduced a new card twofold setting a new record in the bank history. As loans on completed housing with liability members. In 2012, about RUB 3.5 billion of loans I’m Helping Children! In the weeks leading to the a result, by December 31, 2012, the volume of VTB24 insurance; in September 2012, it was the were extended to this category of customers New Year holidays, TCB supported the foundation mortgage portfolio reached 248,000 loans totalling first in the market to offer a similar option for under the bank mortgage programmes. by inviting its customers and employees to make RUB 331.3 billion, whereas the bank share of the housing under construction. The programme a present to orphaned children. To take part in Russian mortgage lending market reached 15.7%. allows the customers of VTB24 to obtain The Bank of Moscow the action, a customer simply had to register as a home loan with a lower down payment. a participant and pay for goods and services with In the reporting period, VTB24 continued In 2012, the Bank of Moscow successfully the card. The bank used its own funds to donate to maintain and develop special mortgage In the reporting period, over 3,300 borrowers expanded its partnership with VTB24 which, the amount equal to 10% of each transaction to programmes. A programme Mortgage + took advantage of this offering collectively among other factors, helped VTB Group the foundation Spread the Wings! A total of 1,350 Maternity Capital launched in 2011 has been obtaining RUB 6.3 billion of loans. increase its share in the mortgage lending persons, including 400 employees of the bank, took VTB Social Report 2012 3. Our Customers

44 45 part in the action. As a result, the bank donated card and a universal access key to the companies. VTB offers its customers integrated RUB 3 million to support children in difficulty. Integrated Government Services Portal. The banking and financial services in 20 countries Leto Bank: improving accessibility of loans card holders will be able to access a broad of the CIS, Europe, Asia, Africa, and America. In the reporting year, VTB24 added to its line range of government e-services, e.g. apply In October 2012, VTB launched a new consumer of retail products a plastic card with parental for an external passport, pay traffic tickets, VTB Group is the second largest player in the Russian lending project — OJSC Leto Bank. The new control for children. Using the card, children submit a tax declaration, request a statement banking market in terms of all key indicators. bank target audience is low-income customers aged 10–14 can make common cash and from the Pension Fund of Russia, etc. living in cities and towns with a population non-cash transactions. The parents (legal In Russia, VTB Group companies are represented of 50 thousand or less. The bank loan products representatives of a child) are able not only to in 73 regions thus having access to over (cash loans and POS loans) are characterised add money to the account, e.g. using Telebank 3.4. Accessibility and Quality 70% of the country’s urban population. In by a high level of transparency and simplicity system, but also to track their children’s of Banking Services 2012, VTB24 opened 88 new offices, and of use. Their distinct feature is a simplified transactions and establish spending limits. This at the end of the reporting period its branch approval process. A borrower needs only helps children to develop a responsible attitude network included 695 outlets. The network a passport to apply for a loan; lending decision to shopping and personal finance planning. According to the CSR Policy, VTB priorities in of the Bank of Moscow comprised 298 is made within an hour; and a customer is managing its impact on the market environment outlets, including sub-offices and cash desks, notified of the decision via text messaging. In In 2012, the Bank of Moscow offered its are: to fully meet its customers’ demands whereas TransCreditBank had 276 offices. order to reduce waiting time and cost of service, customers a new product — Student’s Card. The and enhance their loyalty, as well as to build approved funds are provided to the customer card designed specifically for school students stable and mutually beneficial relations with 3.4.2. Development of the Integrated ATM Network through ATMs installed across the broad can be used to make non-cash payments for stakeholders. In this regard, an important strategic network of Leto Bank customer service centres. school meals, as a school entry pass, a reader’s objective of VTB Group banks is improving the In 2012, the Group completed a unique project for card in a school library, a Metro season ticket, accessibility and quality of banking services creating VTB Integrated International ATM Network. At the end of 2012, Leto Bank branch network and an electronic school diary allowing parents which, first of all, implies the development As a result, holders of plastic cards issued by comprised 57 service centres in 27 cities of the to track academic performance of the child. of customer service infrastructure. the Group banks based in Azerbaijan, Armenia, Central Federal District. Leto Bank was able Belarus, Georgia, Kazakhstan and Ukraine, as to extend around 12,000 retail loans; its loan Another unique product offered by the Bank Group companies on a regular basis evaluate well as by Russian VTB24, are able to withdraw portfolio reached RUB 700 million. It is planned of Moscow is the Muscovite’s Social Card customer satisfaction using polls, paper-based cash from VTB and VTB24 ATMs in any country on to increase the number of customer service which allows citizens eligible for social and online surveys, and other techniques. the terms established for the local region of the centres to 400, to expand the range of products benefits provided by the Moscow Government For example, VTB Bank (Armenia) practices issuer bank. The network comprises over 7,200 and to introduce card products, as well as to access these benefits. The latter include: quarterly telephone surveys of its customers ATMs in seven countries and, for the time being, payment and transfer services by 2015. partially or fully (for pensioners) subsidised and uses the Mystery Shopper technique remains unparalleled among the major Russian use of all types of Moscow public transport to assess the quality of services. The key banks doing business at the international level. and Moscow Regional Railway; significant method of evaluating customer satisfaction discounts in shops, pharmacies, and service in the large and medium business segments Customers travelling in the CIS and Georgia are outlets; additional income due to increased used by VTB Bank (Belarus) is an annual able to locate the nearest ATM using mobile interest rate on card account balance; overdrafts survey which includes three components: geolocation services. To provide this opportunity, repaid from future benefit payments to the evaluation of the quality of customer service; in April 2012, VTB Group in cooperation with the card accounts. In addition, pensioners visiting evaluation of banking products and services; processing company Multicarta Ltd. released free an outpatient clinic can use the card instead and problems and difficulties faced by the applications for two leading smartphone platforms: of a Mandatory Medical Insurance policy since customers in dealing with the bank. Android and iOS. Using the app VTB ATMs on their all the policy data are encoded on the card. phones, customers are able not only to locate the 3.4.1. Expanding the Geography of Operations nearest ATM in VTB Integrated ATM Network in the In 2013, the Bank of Moscow plans to launch CIS and Georgia, but also to obtain information a new card product, Electronic Government, VTB Group is a large international network about the ATM working hours and services, and combining the functions of a payment comprised of over 30 banks and financial build a shortest walking or car route to it. VTB Social Report 2012 3. Our Customers

46 47 Total number of users of VTB24 Telebank system Total number of VTB24 customers using online the client. The new system, more robust and To educate their customers about security aspects banking services secure, will be able to service an increased of remote banking, VTB Group subsidiary banks customer base and ensure the quality of remote post security guidelines and recommendations 1,400,000 2,500,000 banking services even at maximum loads. on their websites. For example, VTB24 developed 1,248,755 1,200,000 2,000,000 2,005,735 a number of guides on ensuring security of banking 1,000,000 3.4.4. Security of Banking Transactions transactions, including, among others, Security

800,000 837,561 1,500,000 1,432,761 Guidelines for Users of Telebank/Teleinfo Systems By its nature, the provision of banking services and Rules of Using Electronic Signatures by 600,000 1,000,000 involves access to personal data and sensitive Individuals Accessing Services of VTB24 via Telebank 400,000 information about customers’ income. This imposes System. Customers of TransCreditBank can use 500,000 200,000 the responsibility for ensuring confidentiality and Security Rules for Users of the Online Banking reliability of the information exchanged between System and Rules of Providing Remote Banking 0 0 the customer and VTB Group companies involved Services to Individuals at OJSC TransCreditBank. December 31, 2011 December 31, 2012 December 31, 2011 December 31, 2012 in banking business. To that end, the Group Customers of the Bank of Moscow are offered such banks build their information systems using freely available materials as Ten Rules of Safe Use 3.4.3. Development of Remote Banking Services their accounts and cards, make payments and state-of-the-art means of protecting customer of the Bank of Moscow Products and Services transfers, open deposits and virtual cards, and information from unauthorised access. and How to Use Bank Cards Securely. Moreover, The development of remote banking services is receive up-to-date currency exchange rates. customers of the Group banks who use online a priority objective of VTB Group banks with regard to To ensure the security of transactions conducted banking services receive periodic recommendations improving the accessibility and quality of services. The Bank of Moscow maintains an online banking over remote banking channels, the Group banks on securing their personal computers via email. system which allows customers to receive account also use diverse means and methods of information To better service its customers, in 2012, VTB Bank and card statements; make payments, bank-to-bank protection ranging from password protection expanded the functionality of its remote banking transfers, transfers within the bank, transfers to multi-level security architectures based on system. Now the customers are able to remotely between their own accounts (including those in advanced cryptographic protocols and algorithms. negotiate the terms of deposit services, open different currencies); and open deposits. In addition, Specific approaches and techniques are chosen deposits and letters of credit in rubles. In the next the customers of the Bank of Moscow are able to depending on the type of the remote banking system year, the Bank plans to launch a service allowing pay utility bills remotely (using an ATM or online in question and the method used to access it. its customers to fill and send structured electronic banking system) without commission fees. forms for guarantee transactions. In the reporting To add an extra security level to online payments, period, the Bank launched Mobile Client, a new Remote banking services offered by VTB24 the Bank of Moscow and VTB24 use 3-D Secure product allowing customers to access information include Telebank and Teleinfo systems. Users Technology. The technology, made available to on their accounts and view transaction details of Telebank are able to make various payments and customers free of charge, helps to protect them using a mobile phone or a tablet with Internet transactions over the Internet, a mobile or a landline against card fraud involving online shopping. access. The new product helps the customers phone at any time. Teleinfo, a free information to better track banking transactions and make service, allows them to receive up‑to‑date The Group banks regularly update security timely decisions. Corporate customers in the information on their accounts, cards or loans. subsystems of their remote banking applications medium business and other segments were offered which make use of strict user authentication and a new service allowing them to draw loans within In 2013, VTB24 plans to launch Bank — Client — cryptographic protection of Internet traffic. For a pre‑approved limit through a remote banking Online, a new information system featuring an example, in 2012, VTB24 updated its smartphone system without the need to sign paper documents. updated, more intuitive user interface and new mobile banking app adding a new feature — account functionality: remote sales of banking products activity monitoring. Using the new feature, the Customers of TransCreditBank can use the for corporate customers and access to up‑to‑date customers are able to see when and from what Mobile Bank service to access information about information on banking products purchased by IP addresses their accounts were accessed. Producing motion energy creates harmony VTB Social Report 2012 4. Our Team

50 51 4. Our Team VTB Group* headcount by region Breakdown of VTB Group* personnel by age Breakdown of VTB Group* personnel by gender as of December 31, 2012 as of December 31, 2012 as of December 31, 2012

4.1. Human Resource Management System at VTB Group

The key factor of the Group success is a cohesive and professional team capable of accomplishing VTB objectives. Therefore, the Group is interested in attracting talented employees and works to create opportunities for their professional and personal development.

According to the CSR Policy, VTB priorities in managing impact on its internal environment — its employees — include increasing the

employees’ motivation, protecting their JSC VTB Bank (12,341) Under 30 (32,948) Women (51,373) health and enhancing labour efficiency. Subsidiary banks in Russia (47,521) 30–50 (34,236) Men (22,443) Subsidiary banks in Europe, Asia and Africa (1,011) Over 50 (6,632) It is the HR Management Commission of VTB Group Subsidiary banks in CIS and Georgia (8,561) Management Committee that is responsible for HR Other companies (4,382) management at the Group level. The key principles, The new approach is aimed at increasing employee’s 4.1.1. Personnel Profile areas, approaches, and methods of HR management * According to the Report boundary. motivation for performance and, consequently, for are determined by VTB Group HR Management contributing to business results of their units and the As of December 31, 2012, the number of VTB Concept. In order to track the effectiveness of HR Bank of Moscow as a whole. For TransCreditBank, Group employees (within the Report boundary) management, the Commission regularly collects area and enhancing cooperation between all main approaches towards future integration was √73,8168, the Group largest companies being relevant reports and evaluates the performance participants of those processes to achieve of the bank staff into VTB and VTB24 teams were VTB24 (28,975), JSC VTB Bank (12,341), the Bank of the Group units responsible for this area. the Group strategic objectives. The reform of determined; in particular, principles of cooperation of Moscow (10,534), and TransCreditBank (8,012). the HR Management Commission carried out in and delineation of competence with regard to the reporting period has improved the timeliness motivation and remuneration were defined. Given the current large-scale integration processes “The Group transition to a matrix management structure alongside the and transparency of decision-making processes at within the Group, VTB recognises the importance introduction of a system of global business lines required an enormous the Group level with regard to HR management. In 2013, it is planned to expand the corporate of comfortable personnel adaptation to new working amount of work in the field of HR management”. long-term motivation system (stock options) and conditions and standards. A clear indication of the In the context of integration processes that took continue the KPI system development. The HR effectiveness of VTB adaptation approaches is a low Marina Oleshek, place at the Group in 2012, an important objective Management Coordination Commission will place level of staff turnover which in 2012 was 12.1%9. Senior Vice President, Head of JSC VTB Bank HR Department in the field of HR management was the unification a special focus on the completion of integration of policies and procedures with regard to employee processes within the Group, particularly in the light VTB Group seeks to maintain an optimal balance remuneration and social programmes at subsidiary of the planned full integration of TransCreditBank. between the number of young employees and that companies on the basis of the Group-wide standards. It is also planned to implement a system of more experienced specialists thus providing In 2012, the Group implemented a number For example, in 2012, the Bank of Moscow of measures to facilitate the development of internal equal development opportunities for both of projects and measures aimed at improving the introduced employee performance evaluation on communications at VTB Group subsidiaries. groups and ensuring continuity within the team. existing business processes in the HR management the basis of key performance indicators (KPIs). 8 VTB Group headcount according to the IFRS reporting boundary at the end of 2012 was 80,860; at the end of 2011 — 67,912. 9 The indicator was calculated according to VTB own methodology as a median turnover value across the most significant Group companies. VTB Social Report 2012 4. Our Team

52 53 In 2012, the average employee age at the Group the Bank of Moscow annually engages with financial In addition to searching for external candidates and conditions were set forth in trilateral cooperation (within the Report boundary) was 35 years. universities based in Moscow targeting their final- working with students and young specialists, VTB memoranda signed by heads of global business year students. The six-month long internship involves expands the practice of filling vacancies by means lines (functions), heads of subsidiary companies, successive placement of participants at different of staff rotation within the Group. For example, in and local heads of business lines (functions). 4.2. Employee Selection units of the Bank of Moscow. Based on their mentors’ 2012, Leto Bank, a new retail bank specialising in reports, outcomes and quality of the work done, and fast-track lending, was launched as a part of the retail One important priority was the adaptation Rapid development of VTB Group business feedback from immediate supervisors and co- banking global business line. This made it necessary of corporate policies with regard to requires strengthening the teams of subsidiary workers, a number of university graduates who to attract a large number of managers and specialists; remuneration and social programmes at banks and companies both by using the Group participated in the Internship Programme in 2012 a substantial portion of the new vacancies was recently acquired subsidiaries, the Bank own significant internal resources through staff were recruited by the Bank of Moscow to work at the filled using the Group internal resources. VTB of Moscow and TransCreditBank, in order to rotation and by attracting external candidates. respective business units. effective staff rotation system helps to provide align them with the Group standards. In order to enhance the effectiveness of staff newly created business units with highly skilled staff selection and recruitment, in 2012, a number The year 2012 saw the beginning of the final stage having relevant work experience with the Group. The Group subsidiaries based in the countries of events for the Group specialists working in this of an international training programme run jointly where relevant regulatory requirements area were carried out, including training events by VTB Bank and the Financial University under the changed over the reporting period also on selection tools and techniques, as well as Government of the Russian Federation. Programme 4.3. Employee Motivation updated their compensation policies. round table meetings for sharing best practices. participants include 11 best students from and Development Angola, Vietnam, India, China, and Namibia who 4.3.1. Employee Training One outreach channel targeting potential passed a competitive selection in 2007. The key candidates is the Group specialised career objectives of the programme include the following: The Group compensation system is aimed at In 2012, the Group made changes to its corporate portal — www.vtb-career.com. This portal allows formation of VTB Group candidate pool in the fostering employee loyalty and motivation by training system in accordance with VTB Group specialists interested in working at VTB to obtain countries where the Group operates; improvement providing a competitive remuneration level and Development Strategy for 2010–2013. general information about VTB Group companies, of the effectiveness of VTB cooperation with the an integrated package of social benefits. get access to a list of current vacancies, and financial sectors of Asian and African countries; The introduction of two global business lines add their own CVs to the Group database. promotion of Russian business standards; and VTB general approach to building remuneration has resulted in the need for targeted training building a positive perception of Russia and its systems at the Group companies is based on the programmes covering specific aspects relevant to In selecting personnel, it has become a good tradition banking system internationally. Over the course key performance indicators (KPIs) aligned with each business line. An assessment of corporate to communicate with university students and young of the programme, the participants received intense the overall goals and strategy of VTB Group and training needs was carried out with the results specialists. The forms of such communication include training in various aspects of banking business linked to the specific objectives of the respective demonstrating the need to modify the training VTB Open Days and participation in similar events at the Financial University. In 2012, they started unit and the nature of its activities. The size of the system in order to better link corporate training organised by universities, a work placement system, their pre-graduation internship at VTB Bank. variable component of remuneration directly programmes to business objectives. and a corporate scholarship programme for the most depends on meeting KPI targets. The motivation talented students. At annual Open Day events carried Alongside attracting talented students from the and remuneration systems at individual Group Therefore, the Group has made a transition to out by the Group companies, students can learn countries where it operates, the Group closely companies are based on common principles and a new corporate training model based on the about VTB Group and conditions of work placements cooperates with a number of universities based corporate standards of VTB Group at the same Corporate University functioning as a core of the with the Group. They are also able to take advantage in the Russian regions. VTB assistance is aimed time taking into account the specific features integrated corporate training system. The key of a face-to-face dialogue with VTB managers and at the development and strengthening of the of the company and its region of operation. advantages of the new system include: unified specialists, and ask them any question of interest. research base and training infrastructure of selected quality standards for training programmes; universities, support of their innovation and In 2012, the Group continued to systematically integrated management of the programme In the reporting period, the Group continued to research programmes, and professional training develop its motivation system viewing this process portfolio based on the matrix principle; a clear maintain and further develop its work placement of specialists for the financial sector. The most in the context of developing the new Group training structure easy to understand for both programmes: over 1,600 university students received promising students of regional universities management system based on global business employees and business units; involvement work placements at several banks and companies receive corporate scholarships and are offered lines. The focus was on the adjustment of principles of representatives of business units in the of the Group10. As part of its Internship Programme, work placements at VTB Group companies. of remuneration and performance evaluation activities of the respective functional faculties; of heads of global business lines and heads and a mechanism for adaptation of the training 10 VTB Bank, VTB24, TransCreditBank, the Bank of Moscow, VTB Capital, VTB Leasing, VTB Ukraine, VTB Armenia, VTB Belarus, and VTB Georgia. of functions at the Group companies. The respective system to changes in the business strategy. VTB Social Report 2012 4. Our Team

54 55 The year 2012 saw an increase in the amount 4.3.2. Social Benefits internal candidates, identification of employee Training programmes for VTB Group top managers of both classroom and distance training at training needs, creation of development and career the Bank (by 24% and 18% respectively). The social policy of VTB Group is aimed at ensuring plans, identification of the most promising staff In March 2012, a training workshop titled Matrix Management At VTB Bank, a total of 15,265 employees social security of its employees and is based on the members and formation of the internal candidate Systems at Global Companies was carried out to acquaint the Group received corporate training with, on average, principles of responsibility and partnership. The main pool, as well as performance evaluation. top managers with the main principles, advantages, and development 6.92 training hours per employee. principles of the Group relations with its employees prospects of global businesses making use of a matrix management include respect for the worth and dignity of a human In order to measure the fit between the employee structure. The workshop was delivered by Marcus Alexander, In 2012, the Group launched new training person, legal compliance, and responsibility. In line competencies and the respective position a professor at London Business School and a world-class expert in programmes aimed at developing personal with the social responsibility principles, VTB seeks profiles, in 2012 the Assessment Centre such fields as development and implementation of business strategy, effectiveness skills and managerial competencies. to guarantee social security of its employees offering technique was used to evaluate regional customer relationship between individual business units and the “corporate The programmes for VTB Group middle-level them a package of social benefits formed on the basis service teams, operations support staff, and centre”, and management of global companies. managers are focused on effective cooperation of common principles defined at the Group level. members of lending and risk management units. between different functions, customer focus Competency-based interviews and professional In line with the Development Strategy of the Banking Sector of the in servicing internal clients, collaboration Overall, in 2012, the structure and size of the key testing are used for selecting candidates. Russian Federation, VTB Bank implements a project for introducing within a matrix management system, and social benefits at VTB Group remained unchanged. the Basel banking standards. One requirement of these standards change management. The Group also updated The main benefits included voluntary medical Employee performance evaluation is the foundation is active involvement of the bank top managers in the introduction a number of functional training courses offered insurance (VMI) programmes, pension schemes, of effectiveness and motivation management at VTB of the standards and ensuring compliance with them, as well as in to specialists at different levels in such areas as and one-time allowances associated with special Group. The Group companies strive to ensure an analysis and forecasting of indicators characterising the bank capital risk management, IT, business planning, internal family circumstances. The specific benefit package objective and professional approach to performance and capital adequacy. To support these processes, in November 2012, control, financial monitoring, and lending. offered by each Group company depends on the evaluation on the basis of common principles a workshop for VTB Group top managers was conducted. The workshop national and regional context, applicable legal standardised across the Group. The corporate was delivered by independent consultants who presented international To improve the effectiveness of corporate training, requirements, and available funds. In the event competency model which is at the core of VTB practices in the fields and discussed the experience of introducing the the Group launched a number of blended learning of an accident or other exceptional circumstances employee evaluation system not only provides Basel standards in comparable jurisdictions and banks. projects involving a combination of classroom employees are offered an additional allowance. criteria for employee selection and evaluation at and distance learning. Distance learning which the Group, but also serves as a common foundation is an integral part of such programmes can be VTB Group continues to develop corporate for evaluation procedures at the Group banks used in several ways: to deliver core content, programmes intended to ensure social security in Russia, the CIS, Europe, and Asia. The model VTB Group Corporate University comprises four provide supporting modules, or evaluate the of its employees after their retirement. VTB reflecting the Group values helps employees better faculties, each of them being a system of training level of knowledge and skills acquired. Pension Fund, the Group non-state pension understand corporate behaviour standards and activities in a particular training area. fund, allows employees to manage their pension receive feedback regarding their effectiveness. In 2012, the Group also launched a new training savings within the framework of mandatory Activities of Corporate University faculties programme on change management aimed at pension insurance and manages personal In 2012, the most significant change in this field was are grouped in two different ways: managers at all levels of the organisational hierarchy. plans under corporate pension schemes. the automation of many staff evaluation procedures. The key objectives of the programme include: The introduction of the Assessment Centre technique a department — a set of training activities enhancing the speed and quality of response to In 2000, the Labour Union Organisation of JSC VTB at several Group companies increased the speed intended for a large target audience or having changes; improving the manageability of business Bank (until 2007 — the Labour Union Organisation of decision making when evaluating external and special significance to VTB (e.g. Risk Management processes; developing managerial skills of the Group of JSC Vneshtorgbank) was established as a body internal candidates for a large number of vacancies. department, IT department, Finance department, managers; qualitative transforming of cross‑functional representing the Bank employees. The mission of the Operations Support department); cooperation; and developing of unified standards Labour Union Organisation is representing employees 4.3.4. Internal Communications of corporate training at the Group. The programme and safeguarding their social and labour rights. a programme package — a set of training activities strength is that it is delivered to mixed trainee The improvement and development of existing intended for a relatively small target audience, or groups comprised of representatives of different 4.3.3. Employee Evaluation instruments of internal communications is training activities available to any employee (e.g. the business functions which helps to improve the the Group another priority in the field of HR package Team Management, a package on banking quality and effectiveness of cooperation — an VTB Group maintains an employee evaluation management. In 2012, the main channels of internal products). essential pre-requisite for productive teamwork. system based on state-of-the-art evaluation communications included employee meetings techniques used for the selection of external and with VTB senior executives, Energy of Team VTB Social Report 2012 4. Our Team

56 57 corporate publication, information memos and VTB Group also pays special attention to its veterans. terms of working conditions; a total of 8,290 surveys on topics of interests, as well as video In 2012, it carried out several special events for workplaces were certified in 2012. Corporate volunteering at VTB announcements. To improve the effectiveness veterans. Among them was a festive tea party to of cross-functional cooperation, a number commemorate Victory Day with students of Gnesin In 2012, a total of 20 minor injuries and one VTB Group employees have traditionally paid serious attention to of conferences for managers representing different State Musical College playing at the event. serious injury took place at VTB Bank and its various volunteer actions, including blood donation events, urban levels and units were held in the reporting period. subsidiaries; all of them were investigated. The improvement actions and support to hospitals, children’s homes, number of lost days due to diseases (according to nursery homes for the elderly, the Great Patriotic War veterans, and Over the year, a number of employee surveys were 4.4. Occupational Health and Safety sickness certificates) totalled to 21,392 days. those affected by natural disasters. conducted through social networks and corporate Intranet portals to collect employee feedback Ensuring workplace safety and healthy working In 2013, it is planned to update the corporate In 2012, VTB Group employees took part in a charity bicycle ride at on team building and sports events, the quality conditions is among the Group fundamental HR distance learning course on OHS and implement the festival Sports for the Good organised by Downside Up Charity of services provided under the voluntary medical management principles. The actions of the Group a number of actions to create VTB Group Foundation to provide aid to children with Down syndrome. insurance system, and various social and cultural companies in this field are aimed at training integrated OHS management system. issues (social networks, acquired knowledge and employees in safe working practices and safety The funds raised by VTB employees allowed the children from skills, etc.). For example, over 3,600 employees standards, workplace certification in terms Vyshegorod Correctional Residential School to come to Moscow just took part in online surveys at the Intranet portal of working conditions, preventing accidents, before the New Year holidays. During the visit, the children watched of VTB Bank (between 260 and 674 respondents injuries, and occupational diseases, investigating a festive show and were presented numerous gifts. took part in each of 10 surveys), whereas over injuries and occupational diseases, and 900 persons took part in a paper-based survey. implementing medical and preventive measures.

4.3.5. Corporate Events In 2012, in addition to traditional OHS activities, the Group was taking actions to keep its OHS system In order to support the development of horizontal up-to-date with numerous changes in legislation. internal communications between the Group A new corporate procedure of workplace certification employees, a number of traditional corporate in terms of working conditions and a procedure events, including family and sports festivals and of medical check-ups were adopted, among other tournaments, were held over the reporting year. documents. In addition, in 2012, the corporate regulations on the organisation of OHS activities and Among the important events were sports festivals OHS training at VTB Bank were revised and updated. titled RUN&FUN held on July 14, 2012 in 25 Over the reporting year, a total of 1,789 managers Russian cities to support VTB Team competing and specialists of the Bank and its subsidiaries in the London Olympics. The festival involved received OHS training.11 runner’s races with a total of 1,139 participants which were certified by the International Agency The Group continues its work on developing of Records and Achievements as the largest a common approach to relevant OHS objectives running event in the world’s financial sector. and preparing a Group-wide OHS standard. The key objective of this work is the adaptation of the system On the New Year’s Eve, a project titled The to major systemic changes within the Group and Workshop of New Year Wonders was organised changing requirements of the Russian legislation. for employees and their children. The unique educational, development, and entertainment VTB Bank and its subsidiaries continued art space was attended by over 600 visitors. a staged process of workplace certification in

11 Hereafter in the section Occupational Health and Safety the quantitative data apply only to the Group companies based in the Russian Federation since differences in OHS legislation make it impossible to provide a correct interpretation of data for other countries where VTB Group operates. Successful tactics is impossible without precise strategy VTB Social Report 2012 5. Our Contribution to the Society

60 √ 61 5. Our Contribution to the Society Charitable donations of VTB Bank by category, 2012

Areas of VTB Bank charity activities Amount, RUB million Sports 510.97 Contribution to sustainable development of the Breakdown of the Group* charitable donations Banking associations and labour unions 505.45 society is an integral part of VTB corporate strategy. by company, 2012 √ Education 369.11 According to the CSR Policy, VTB priorities in managing its social impact include improving the Culture and arts 295.57 quality of life in local communities of the regions Religious organisations 72.77 where VTB operates and strengthening its reputation Government institutions and bodies 45.73 of a trustworthy and reliable financial institution Health care 25.80 actively engaged in the life of the society. Financial aid to individuals 25.11

Veterans and persons with disabilities 18.51 According to the CSR Policy, VTB priorities in TOTAL 1,869.02 supporting local communities of the regions where it operates include the following: 5.1. Approach to Charity Committee members present at the meeting. The improving financial literacy of local households; Committee meetings are held as necessary, but at supporting healthcare, healthy lifestyle and sports; Historically, charity has been one of the key least once a quarter. The Committee has a non-voting promoting education and research; areas of VTB corporate social responsibility. secretary who provides day-to-day oversight of the sponsoring culture and arts; implementation of the Committee decisions. assisting vulnerable social groups in the regions The Bank charity strategy is managed by the

where VTB operates. VTB Bank (90%) Charity Committee (the “Committee”) — a standing Bank of Moscow (6%) collegial working body. The Committee is also “Our objective as a facilitator of the Group-wide charity policy is to In the reporting period, the Group companies TransCreditBank (2%) responsible for the development and implementation encourage initiatives of all Group subsidiaries reflecting the uniqueness continued to provide support to socially significant Other companies (2%) of the effective charity policy of the Bank. of every region where VTB operates”. institutions and projects in accordance with the corporate priorities. The overall charitable In the process of determining priority areas of charity Elena Melikhova, donations across the Group (according to the Charitable donations of the Group companies* activities, the Committee submits proposals on charity Deputy Head of Advertising and Marketing Division, Report boundary) amounted to RUB √ 2,1 billion. in 2011–2012, RUB billion expenditures to the Management Board of VTB Bank. Head of Sponsorship and Special Projects Unit, JSC VTB Bank Other functions of the Committee include: 2.2 In 2012, VTB Bank, the key donor of the Group social 2.1 √ investments, spent over RUB 1,869 million on 2.0 1.9 submitting quarterly reports on the Committee In its charity and sponsorship activities, the Group supporting the national culture, arts, health services, activities to VTB Bank President and Chairman of the follows common principles. The management 1.8 as well as education and business environment. Management Board; structure of charity and special-purpose projects 1.6 at subsidiary companies is similar to the one in participating in the development of the Bank place at VTB Bank. The subsidiaries regularly inform 1.4 internal regulations determining procedures of the VTB Bank about their charity and sponsorship 1.2 management of charity projects, in-kind donations to plans; however, final decisions on finding legal entities, etc. specific activities are made by the subsidiaries 1.0 themselves within the limits of their budgets. 2011 2012 The Committee members represent different units *According to the Report boundary of the Bank, including Legal Department, Regional The Committee reviews annual reports on charity Network Department, Central Accounting Department, activities provided by the Group companies Finance Department, etc. Decisions on providing and submits them to VTB Bank President and charity support are made by a majority vote of the Chairman of the Management Board. VTB Social Report 2012 5. Our Contribution to the Society

62 63 Decision-making process on providing sponsor and charity support construction of roads, bridges, and university buildings. After the event, VTB handed over to the Far Eastern “This year we were able, for the fourth time already, to gather in Moscow Federal University the equipment brought to Russky leading international experts, heads of companies and politicians from all over the world in order to support and continue our dialogue for the Application for support / charitable aid Island when preparing for the APEC CEO Summit 2012. VTB Bank development of the Russian economy. This year’s forum definitely made Russia Calling! a serious contribution to the improvement of the investment climate of Russia and development of the country’s international business Legal person Chairman V. Titov The annual investment forum “Russia Calling!” relationships”. Special Department has been organised by VTB Capital since 2009. of Document Support Alexei Yakovitsky, Individual Secretary N. Fedosova In 2012, representatives of the top government and business elite for the fourth time came to the Global CEO, VTB Capital

• accumulates forum to discuss strategic priorities of Russia’s incoming Charity Committee of the Bank development against the backdrop of changes information in the global markets, creation of the Common ceremony that drew over 600 guests became the Economic Space, Russia’s WTO accession and other largest event of the year in Russia’s air transport important financial and infrastructure issues. industry. Some 100 independent experts selected winners in 15 categories by a secret ballot. Funds, payment The actual number of the participants beat the Decision on providing Donation agreement support / charitable aid expectations: the forum was attended by over The awards granted to the best companies annually 1,800 guests, including about 400 international have attracted sustained interest from Russian and and Russian investors, top executives of the foreign air companies and media, representatives leading Russian companies, and representatives of aviation authorities, the Russian Ministry of government authorities. The final day of the of Transport, the Federal Air Transport Agency, Research and Production Association, the Agency forum was dedicated to individual meetings of the the Federal Service for Supervision of Transport, 5.2. Development of Business for Strategic Initiatives, and the International Russian companies’ executives with international the Interstate Aviation Committee, and heads Environment Association for Business Cooperation. investors. VTB Capital analysts shared their of various Russian and foreign organisations. opinions on the key aspects of the current state APEC CEO Summit of the economy and market development. Both The 23rd Congress of the Association of Russian Participation in the key events held to present organisational and substantive aspects of the Banks the Russian markets at the international level On the national scale, one of the most important events forum were highly appreciated by foreign guests strengthens the Group relationships with of the year 2012 was the Economic Leaders’ Meeting and representatives of major businesses. VTB Bank was the general sponsor of the 23rd Congress foreign investors and government authorities, of the Asia-Pacific Economic Cooperation (APEC) which of the Association of Russian Banks held in Moscow raises awareness of the existing investment was held in Russia for the first time. The event took The event attracted the attention of international and on April 5, 2012. The theme of the event that drew over climate in Russia among the foreign business place in Vladivostok on September 2–9. The APEC Russian media outlets. The sessions were broadcast 1,000 top executives of Russian financial institutions community, and builds a good international CEO Summit was chaired by Andrey Kostin, VTB Bank by major Russian and foreign news agencies; live was “Increasing the Role of Banks in Promoting reputation of the Group and Russian business. President and Chairman of the Management Board. webcasts were available via the forum portal. The Russia’s Economic Growth amidst the Global Financial Over 540 representatives of the largest companies in event was covered in over 2,000 media articles. Turbulence”. The speakers included Garegin Tosunyan, VTB seeks to contribute to the largest business the Asia-Pacific region took part in the event. Topics President of the Association of the Russian Banks, forums and events. In 2012, VTB participated in discussed at the summit included globalisation Wings of Russia Sergey Ignatyev, Chairman of the Bank of Russia, the APEC CEO Summit, St. Petersburg International and economic integration, cooperation in the field leaders and representatives of the Russian government, Economic Forum, the International Investment of currency and finance, transport infrastructure, For several years VTB has sponsored the award the Federal Assembly of the Russian Federation, Forum of the CIS Member States Yalta Business energy, food, and water resources, and development ceremony of the National Airline Award Wings ministries and agencies, and commercial banks. Meetings, and the Second International Forum of new technology. Such a large international event of Russia. “Engineering Technologies”. The Bank also provided had a positive impact on the Russian Far East VTB supported the 10th International Research financial support to the National Foundation for leading to a dramatic improvement in the state of the In 2012, 90 participants (42 foreign and 48 Russian and Practical Conference “Improvement of the the Development of the Banking System, Saturn infrastructure: the preparation for the summit involved airlines) competed for the awards. The award Effectiveness of the Russian AML/CTF System: New VTB Social Report 2012 5. Our Contribution to the Society

64 65 Challenges and Strategic Objectives” organised by for upcoming tournaments, development of sports the Association of Russian Banks which was held Key sports sponsored by VTB Group companies: infrastructure, and renovation of facilities used by The Bank of Moscow project VeloRussia on April 26, 2012. The participants focused on the children’s and youth sports clubs. The recipients key trends in developing AML/CTF legislation and Motorsport — the general sponsor of KAMAZ-Master included the Russian Alpine Ski and Snowboard The Bank of Moscow sponsored a free bicycle hire action which improving the national AML/CTF system. At a plenary rally team Federation, the Russian Chess Federation, United was carried out in Moscow’s largest recreation zones (Gorky Park, meeting, a member of VTB Management Board Basketball — a sponsor of the Russian Basketball Hockey Club Dynamo Moscow, Non-Commercial Sokolniki, Fili, and Northern Tushino) in August 2012. By supporting made a presentation on VTB position regarding the Federation, the general sponsor of the women’s Partnership Volleyball Centre, the Russian the initiative, the bank contributed to improving the traffic situation priority legislative initiatives in AML/CTF area which national team, the titular sponsor of the VTB United Football Union and other organisations aimed at in Moscow and promoting the environmentally friendly transport and attracted significant interest from the participants. League developing sports and sports infrastructure. healthy lifestyle. Volleyball — a sponsor of the Volleyball Federation of Russia, the general sponsor of the men’s The Bank of Moscow has been the general As part of the action, the Bank of Moscow arranged six free bicycle 5.3. Supporting Sports national team sponsor of the Kremlin Cup International Tennis parking sites for 30 bicycles each and donated a total of 200 bicycles Gymnastics — the general sponsor of the Russian Tournament; for seven years it has contributed made of strong anti-vandal materials and having puncture-resistant Creating a sustainable resource base for high Federation of Artistic Gymnastics, an official sponsor to the development and achievements tires. The Bank overall investment in the initiative amounted to achievements of Russian athletes in diverse of the International Federation of Gymnastics (FIG), of Basketball Club Dynamo Moscow. RUB 10 million. sports all over the world is an important the general sponsor of the Georgian Gymnastics objective of VTB social activities. Federation (JSC VTB Bank (Georgia)) VTB Bank (Belarus) sponsors Football Club The project was met with much interest from the public and broad Athletics — an official partner of the International Dynamo Minsk, Basketball Club Minsk-2006, media coverage. The Bank of Moscow plans to continue the initiative The project VTB Team exemplifies VTB systemic Association of Athletics Federations (IAAF) the Belarusian Basketball Federation, and for developing the city’s bicycle infrastructure in 2013. It is planned approach to supporting Russian sports. The Football — the general sponsor of Football Club the Belarusian Table Tennis Federation. to create a special company for renting bicycles and building parking 2012 Summer Olympics was the second Olympic Dynamo Moscow and Futsal Club Dynamo Moscow, racks for two-wheeled transport. cycle in which the Bank sponsored Russian a sponsor of Football Club Dynamo Minsk VTB views supporting sports federations and federations of volleyball, basketball, and Ice hockey — the general sponsor of Hockey Club sport-related NGOs as an activity necessary for artistic gymnastics. By investing in the future Dynamo Moscow and the German hockey team promoting a healthy lifestyle and reinforcing the of sport VTB contributes to success of Russian Lowen Frankfurt (VTB Bank (Deutschland AG) Group reputation as a responsible business that Academy which will host children’s sports schools teams in the international tournaments. cares for the future of the Russian society. and training facilities for amateurs and professionals.

Over the last few years VTB Bank has been the 5.3.1. Supporting Sports Infrastructure 5.4. Supporting Culture and the Arts general sponsor of KAMAZ-Master, the most Federation of Artistic Gymnastics providing decorated rally team. In 2012, racers from funds for strengthening its resource base, VTB invests in VTB Arena Park — a major project for Supporting the national culture and arts is an Naberezhnye Chelny won the truck class in the Silk training Russia’s national teams and their the integrated redevelopment of the Dynamo Central essential aspect of the Group social policy. By Road Rally. In the 2012 Dakar Rally, while yielding participation in international tournaments. Stadium in Moscow and the surrounding area. financing cultural institutions, VTB contributes to winning places to more experienced teams, two the long-term goal of preserving society long-term young crews of KAMAZ-Master were able to enter the The year 2012 was also marked by achievements After FIFA decision to exclude the arena from the list values. Partnering with the country’s largest top five placing fourth and fifth. The team coach said of VTB-sponsored teams at the national level: for of the FIFA World Cup 2018 stadiums, the efforts museums and theatres, the Group facilitates he viewed the result as a success and noted that the example, Hockey Club Dynamo won the Gagarin Cup. to optimise the project were made. According to the implementation of cultural projects in other experience acquired during the 2012 Dakar Rally Futsal Club Dynamo won the Russian championship the new design, the capacity of the main stadium regions and development of international cultural would help KAMAZ-Master to win the 2013 rally. for the eighth time in its ten-year history. is over 27,000 people, of the multi-purpose small connections. For several years VTB Bank has arena — between 11,000 and 14,000 depending on provided financial support to the Bolshoi Theatre, Since 2006, Andrey Kostin, VTB Bank President The Bank provided financial support for the specific configuration: hockey, basketball or concert. the Mariinsky Theatre, Pyotr Fomenko Workshop and Chairman of the Management Board, has been Autumn Run Cycling Race 2012, a sports and Theatre, the Tretyakov Gallery, and the Russian President of the Russian Federation of Artistic educational event for pre-schoolers organised In is planned to fully rebuild the historic wall and Museum. The Bank also has supported a number Gymnastics. The goal of the Bank financial support by the Moscow Cycling Federation. restore the preserved facade of the old stadium. of cultural institutions and projects outside is to achieve a high level of artistic gymnastics The architects designed the new stadium with Russia, including the environmental, historical and in Moscow and other regions of Russia. In 2012, The Bank donated funds to support mass state-of-the-art technologies in mind. The project cultural reserve M.A.Voloshin’s Cimmeria in the the Bank continued to support the Russian participation sports events, preparation of teams also provides for the construction of Dynamo Sports Crimea, Russian Club International Cultural and VTB Social Report 2012 5. Our Contribution to the Society

66 67 with Roland Petit’s ballet Le Jeune homme et la Winter Palace, the Great Courtyard of Peterhof, Mobile Academy of Arts mort (The Young Man and the Death). The New the Catherine Palace in Tsarskoye Selo, and the Sponsoring the series of documentary films In Time and Space… York City Ballet presented George Balanchine’s Pavilion of Roses in Pavlovsk. The programme Mobile Academy of Arts is an innovative educational programme which ballet Prodigal Son to music by Sergei Prokofiev of the festival included evenings of symphony and VTB sponsored a project for the production and release of In Time and includes a range of cultural and artistic activities aimed at spiritual created for Diaghilev’s Russian Seasons in 1929. chamber music, both instrumental and vocal. Space… — a series of documentary films dedicated to the centennial and moral upbringing of the youth, realisation of creative potential, Soloists of London’s Royal Ballet performed anniversary of the Pushkin Museum of Fine Arts, one of the largest and attracting interest to Russia’s history and cultural heritage. In the lead roles in the ballet La Sylphide. The Group companies based in other countries collections of the world’s cultural heritage. The series which form 2012, the Bank traditionally supported activities of the programme festival culminated with a performance by the also sponsor theatrical art. For example, in a kind of a video archive tell stories about the history of the museum, which were held in Belgorod, Omsk, Tula, and various communities company of Maurice Be´jart, the Be´jart Ballet the reporting period, VTB Bank (Belarus) its heroes, and the most famous exhibitions. It was produced with the of the Tula Region and the Republic of Khakassia. Lausanne, now directed by Gil Roman. supported Brest Academic Drama Theatre, aim of bringing together the cultural community: artists, collectors, VTB Bank (Armenia) — Yerevan Stanislavsky and ordinary art lovers. In 2012, the programme Mobile Academy of Arts included master VTB supported the 20th Stars of the White State Russian Drama Theatre, VTB Bank classes and open lessons for students of children’s musical and art Nights festival in the Mariinsky Theatre (Georgia) — Rustaveli Theatre in Tbilisi. Russian Museum specialists, actors, directors, artists, writers, and many other schools, creative workshops for teachers of choral music, musicology, which opened with a premiere of Modest Commercial Bank (Cyprus) Ltd. sponsored people were interviewed for the series. The films released in Russian choreography, and acting skills, as well as classes in visual arts Mussorgsky’s opera Boris Godunov. the festival Great Ballet Productions which and English feature rare artefacts and materials from archives of the and musical disciplines. The programme participants in Moscow was conducted in Limassol in April 2012. Pushkin Museum. were offered a unique opportunity to visit one of the oldest artistic VTB Bank also has provided continued support educational institutions — Gnesin Russian Academy of Music. to Pyotr Fomenko Workshop Theatre in Moscow. 5.4.2. Supporting Visual Arts In 2012, the Bank donated RUB 82.35 million for the creation of new productions, acquisition VTB Bank has traditionally supported museums 5.4.3. Supporting Cinematography and Television of equipment, and provision of targeted social and art centres seeking to educate the public Educational Association, and Lavrenev Sevastopol aid to theatre actors and other employees. about the national artistic heritage and VTB Group is a long-time partner of major Drama Theatre of the Russian Black Sea Fleet. The Bank also supports international tours promote it both within Russia and abroad. cultural events and projects in the field of the theatrical collective to Ukraine, Armenia, of Russian cinematography and television. 5.4.1. Supporting Theatrical and Musical Art Belgium, France, Japan, and other countries. Since 2004, VTB Bank has been a member of the Board of Trustees of the State Russian Museum In 2012, when Culture television network celebrated VTB Bank has been a long-time partner of the In the reporting period, VTB24 also actively providing annual sponsor support. In 2012, the its 15th anniversary, VTB Bank sponsored several Bolshoi Theatre contributing to the activities sponsored cultural institutions and projects. In Bank sponsored an exhibition of the outstanding regular programmes on the network, including of the non-profit Bolshoi Theatre Foundation. particular, it partnered with Chekhov International Russian and Soviet artist Mikhail Nesterov dedicated News of Culture, The Leading Role, and Context. In the reporting period, VTB sponsored the Theatre Festival becoming an official sponsor to his 150th anniversary. The exhibition held in the restoration of the ballet Ivan the Terrible, a 1975 of its 2013 regional programme. As part of its Benois Wing of the museum attracted numerous VTB Bank sponsored the 17th National Television production by Yuri Grigorovich who celebrated long-term partnership with cultural institutions, it visitors. Furthermore, the Bank supported an Awards TEFI 2012 and TEFI Region 2012 — the most his 85th anniversary in January 2012. continued cooperation with the Theatre of Moscow exhibition of Vladimir Korbakov — People’s Artist prestigious awards in the Russian television industry. South-West, Yevgeny Vakhtangov State Academic of Russia who celebrated his 90th anniversary on VTB Bank has supported creative projects of Boris Theatre, Moscow Theatrical College at Oleg June 5, 2012 in the Marble Palace of the Museum. Being a member of the Board of Trustees of the Eifman — the famous St. Petersburg choreographer. Tabakov’s Theatre, and other organisations. Russian Union of Cinematographers, VTB supports The most recent premiere at his theatre, the The Bank sponsored an exhibition of Konstantin traditions of the national cinematography. VTB ballet Rodin, was also sponsored by the Bank. The Bank of Moscow for many years in a row has Korovin, a Russian impressionist, at the Tretyakov Bank sponsored the 34th Moscow International Furthermore, the Bank financed the acquisition of the sponsored productions, concerts, and theatre Gallery. Over several months the exhibition Film Festival which was held in July 2012. advanced stage lighting equipment which added evenings at the Bolshoi Theatre. Furthermore, dedicated to the 150th anniversary of the artist A total of 46 films took part in the Main an innovative lighting score for the production. the Bank of Moscow for seven straight years was attended by 200,000 visitors. The Bank also Competition and other competitions, including has supported the International Music Festival financed the restoration of Korovin’s panel painting Perspectives, Short Films, and Documentaries. Following an established tradition, in 2012, Great Waltz organised by the State Hermitage Fishing at the Sea of Murmansk (1896) and the VTB Bank supported the International Mariinsky Museum. In 2012, the festival concerts were held decorative panel painting Old Monastery (1906), The Bank of Moscow has sponsored What? Where? Ballet Festival in St. Petersburg which opened in the Hermitage Theatre, the Armorial Hall of the as well as the publication of a catalogue album. When? — a popular edutainment game show VTB Social Report 2012 5. Our Contribution to the Society

68 69 broadcast on Channel One. To attract potential On 01 December, 2012 — 19 January, 2013, the the reporting period, VTB Bank also donated medical of items handcrafted by orphaned children. The participants of the show and to build loyalty to the festival Russian Winter supported by the Bank equipment for rehabilitation and remedial treatment proceeds are used to support children’s homes and Bank of Moscow among the programme audience, the of Moscow and the Association of Russian Arts and to children’s hospitals. For example, modern residential schools, and to reward the young artisans. bank has launched a special online resource bringing Crafts was held in Revolution Square, Moscow. medical equipment, oxygen concentrators, and The Bank of Moscow employees on a regular basis together numerous fans of the game — telezriteli.tv. The guests of the festival were offered free tours, inhalers were donated to the cystic fibrosis centre raise funds to finance New Year presents for orphans, concerts and master classes. In 2012, the Bank of Kemerovo Regional Children’s Clinical Hospital. collect various necessary items and equipment. VTB Bank (Ukraine) provides support to the of Moscow also was the main sponsor of Strasbourg The offices and branches of the bank distribute TV studio of the Russian Black Sea Fleet. Christmas Market in Manezhnaya Square, Moscow. For several years the Bank has provided charity the Foundation leaflets inviting to help children. support to the First Hospice for Children The Bank of Moscow also provides aid to such 5.4.4. Supporting Literary, Multimedia, and Other Arts with Oncologic Diseases where the staff vulnerable social groups as the Great Patriotic War 5.5. Key Social Projects works to create decent living conditions at veterans, people with disabilities and pensioners. In September 2012, the 7th International Multimedia home for children with those diseases. Festival Living Word was held in Bolshoye Boldino VTB finances social and humanitarian projects In 2012, VTB Bank (Belarus) developed a target village. The event sponsored by VTB was made aimed at supporting health care and educational Following an established tradition, the characters programme titled From Our Work Today to Children’s possible by the efforts of representatives of 18 institutions, as well as religious organisations, from Good Night, Kids, a national children’s Happy Tomorrow intended to support the Mozyr countries and all Russian regions. The programme and also provides aid to individuals in need. television show, take part in World without Tears. Children’s Home and, specifically, its reorganisation of the event traditionally included presentations, They participate in festivals held in hospitals into a family-type village. In order to engage creative contests, and master classes. 5.5.1. World without Tears presenting gifts sponsored by VTB Bank to little bank employees, an illustrated presentation patients. Show business and sports celebrities about the initiative was sent to corporate The August of 2012 saw the completion of the Since 2003, VTB Bank has supported children’s invited by VTB also come to visit children in hospitals. email addresses. As a result, the employees first stage of a long-term project for the translation health care institutions within the framework of VTB Bank (Belarus) were able to raise some and publishing of Russian classical and modern of World without Tears, a specially developed The charity projects implemented as part of World RUB 300,000 for supporting the children’s home. literature in Vietnamese, and the translation and corporate charitable programme. without Tears have been acknowledged by publishing of Vietnamese literature in Russian. regional media which highly appreciated the Bank VTB24 provides aid to orphaned children and Supporting the project initiated at the request In 2012, the geography of World without contribution to the social sector. In 2013, VTB children left without parental care, children with of the Russian President, VTB Bank partnered Tears included Nizhny Novgorod, Cheboksary, plans to expand the geography of the programme serious diseases, people with disabilities, veterans with Rossotrudnichestvo (Federal Agency for the Komsomolsk-on-Amur, Kazan, Izhevsk, supporting health care institutions in 15 regions of the Great Patriotic War, and people in difficult CIS, Compatriots Living Abroad and International Yekaterinburg, Samara, Kemerovo, and Moscow. and increasing the programme budget accordingly. life situations. Such actions are traditionally Humanitarian Cooperation). As a result of joint The annual budget of the Bank largest social initiated by employees at the bank branches efforts, four volumes of Fyodor Dostoevsky’s writings project amounted to RUB 15 million. All the 5.5.2. Supporting Vulnerable Social Groups whose donations are then matched by VTB24. were translated and published in Vietnamese, funds were used to acquire medical equipment whereas Butterfly Soul, a novel by the Vietnamese and pharmaceuticals for children’s hospitals. The Group companies provide aid to In the reporting period, VTB Insurance made author Khai Hung, was published in Russian. low‑income and vulnerable social groups. a donation to the charity foundation Gift of Life In 2012, the aid was provided to Nizhny within the framework of the action Charity instead Over the last few years, the Bank has contributed Novgorod Regional Children’s Clinical Hospital, The Bank of Moscow partners with the Charitable of Souvenirs. The funds were used to acquire to the development of the environmental, historical Kemerovo Regional Children’s Clinical Hospital, Foundation of the Central Federal District for Labofuge centrifuges for medical and biological and cultural reserve M.A.Voloshin’s Cimmeria in Komsomolsk-on-Amur City Children’s Hospital, Supporting Children and Families in Difficult Life laboratories at D. Rogachev Federal Centre Koktebel, Crimea. In the reporting year, it donated G.N. Speransky Children’s Clinical Hospital No. 9, Situations to which it is also a founder. Jointly with of Pediatric Hematology, Oncology and Immunology, funds for the restoration of Voloshin’s triptych T.S. Zatsepin Children’s Clinical Hospital No. 19, the Foundation, the Bank organises exhibitions-fairs and to buy the necessary pharmaceuticals. Yayla, repair works, development of the reserve, and many other health care institutions. and financing of the International Voloshin Awards in the category For Contribution to the Culture. Using funds provided by VTB, the participants of World without Tears were able to acquire necessary VTB Bank (Ukraine) has traditionally supported the medical equipment, undertake renovation projects, Charity Foundation for Supporting the Literary and and finance skills upgrading programmes for medical Memorial Museum of Mikhail Bulgakov in Kiev. professionals. As part of its charity programme, in Lightness of execution is refined by everyday practice VTB Social Report 2012 6. Our Contribution to the Environment

72 73 6. Our Contribution to the Environment performance in property management, as well as reducing fuel, paper, water, electricity, and heat inventory and logistics management. The main consumption by the Bank and the Group companies. mechanisms of coordination include the adoption of the Group-wide standards and regulations, In 2012, VTB continued implementing According to the Corporate Social Responsibility 6.1. Environmental Performance establishment of common resource consumption its Energy Conservation and Efficiency Policy, VTB priority in managing its environmental in Management of Administrative limits, and oversight of compliance with them. Programme. As part of the Programme, an impact is cost efficiency achieved through reduced energy audit of 19 buildings used by the resource consumption. The Group not only improves and Housekeeping Activities In 2012, VTB took steps to standardise the corporate Bank in Moscow and St. Petersburg was its own resource and energy management system, regulations across the Group in order to improve carried out successfully; heating systems but also facilitates environmental responsibility in the Since resource and energy consumption coordination with regards to administrative aspects of three buildings were renovated, and broader business community by introducing special is an important aspect of management of property management. The Administrative lighting systems of three other buildings were financing criteria for energy efficiency projects. of administrative and housekeeping activities, Department in cooperation with the Property replaced with more efficient solutions. in 2012, VTB Group defined the following Management Coordination Commission approved The CSR Policy also declares VTB intent to subscribe priorities in this area: control of administrative four corporate documents defining standards In 2012, the Group continued to deploy an to internationally recognised environmental and and housekeeping costs and improvement for premises occupied by the Group companies, electronic document management system at its social principles — the Equator Principles applied of the efficiency of property management. a procedure of approval of property transactions, companies aiming to reduce paper consumption by the International Finance Corporation (IFC). In cost limits for construction and renovation works, in preparation and approval of draft documents. order to fulfil this commitment, in early 2013, VTB It is the Administrative Department that is workplace arrangement, and rental rates. plans to begin the revision of the existing corporate responsible for property management and VTB Group puts special emphasis on tracking and policies, rules and procedures in order to align them administrative and housekeeping activities. One of the year 2012 achievements was the reducing direct and indirect fuel consumption with the requirements of the Equator Principles, According to VTB Group corporate policies, the completion of pilot testing of a computerised by vehicles. In order to control direct fuel in particular, those with regard to decision- Department acts as a functional coordinator in property management system which allows for better consumption, the Group companies have making on financing projects and companies such areas as energy efficiency and environmental monitoring and controlling resource consumption. introduced coordinated systems for monitoring (including both loan and equity financing). compliance, improvement of environmental In 2013, it is planned to deploy the system at fuel consumption and establishing consumption VTB24 and the Bank of Moscow and to approve targets on a monthly basis. Moreover, the Group Resource consumption by VTB Group in 2011–201212 a comprehensive plan for its rollout across the Group. has continued to deploy a videoconferencing system to reduce the amount of business travel Resource 2011 2012 VTB pays serious attention to environmental and by VTB staff and consequently the indirect fuel Heat, Gcal 139,193.20 158,005.70 energy performance in property construction, consumption associated with that travel. √ Electricity, kWh 165,681.66 186,600.51 modernisation and maintenance setting stringent √ Paper, t 3,695.93 4,164.01 standards in this area for the Group companies. For The corporate videoconferencing system can be example, in 2012, the Cost Limits for Construction and used for holding conferencing events with VTB Renovation Works for VTB Group Entities were approved partners and subsidiaries in virtually every point as the environmental performance benchmark of the world. In 2012, the total videoconferencing applicable to all the Group companies in the CIS. time at VTB Bank alone amounted to 6,232 hours. Fuel consumption on business travel of VTB Bank employees in 2011–2012 VTB Group seeks to comply with environmental 2011 2012 6.2. Resource Efficiency and legislation with regard to waste management. √ Fuel consumption, thousand litres 7,154.09 8,046.06 The Group companies select licensed waste √ Waste Management Fuel consumption, GJ 243,239.29 273,566.07 disposal contractors for collecting hazardous VTB Group strives to ensure, among other measures, waste, including used mercury lamps, batteries, the most efficient use of natural resources by maintenance waste, vehicle tires and spare parts. 12 Hereinafter in this Chapter all the numerical data is given according to the Report boundary. VTB Social Report 2012 6. Our Contribution to the Environment

74 75 Electricity consumption Paper consumption Fuel consumption 6.3. Financing New Energy, Energy by the Group companies in 2012 √ by the Group companies in 2012 √ by the Group companies in 2012 √ Efficiency and Environmental Projects

VTB Group pays special attention to energy efficiency both in its own internal operations and in its lending business. A sign of VTB growing interest in this area is the creation of a dedicated New Energy, Energy Efficiency and Environmental Finance (NEEF) unit at VTB Capital. VTB concept of new energy includes renewable energy; more efficient generation, transmission, and distribution of energy from traditional sources; small-scale generation; and smart grids. To improve the effectiveness in this area, the new unit closely cooperates with the Special Programmes Service.

VTB24 (34.1%) VTB24 (44.1%) TransCreditBank (26.2%) Improving energy efficiency and reducing energy 13 14 VTB Bank (24.8%) TransCreditBank (16.5%) VTB Bank (24.8%) intensity of the national economy is one of Russia’s Bank of Moscow (12.5%) VTB Bank (14.6%) VTB24 (23.0%) strategic objectives. If efficiency improvements TransCreditBank (9.6%) Bank of Moscow (11.5%) VTB Bank (Ukraine) (9.7%) are not achieved, Russian manufacturers will risk Other banks (19.0%) Other banks (13.3%) Other banks (16.3%) losing their competitiveness. A further growth of energy tariffs, which already affect the prices Electricity consumption Paper consumption Fuel consumption of final products, and high energy intensity may by the Group companies in 2011 by the Group companies in 2011 by the Group companies in 2011 adversely impact the competitiveness of the entire national economy. VTB Group closely cooperates with government authorities on implementing relevant government programmes and enhancing the national legal framework in the field of energy efficiency.

6.3.1. Innovative Financing Mechanisms

Energy efficiency projects are often characterised by a relatively low demand for loan capital which makes them unattractive customers for major banks, despite a significant potential of such projects. Seeking to remove these obstacles, in 2012, VTB actively worked on creating innovative mechanisms for financing energy efficiency projects, including approaches based on energy service

VTB24 (32.7%) VTB24 (42.3%) TransCreditBank (28.2%) contracting. The Bank explores the opportunities VTB Bank (24.3%) TransCreditBank (19.5%) VTB Bank (24.1%) for using such mechanisms within the Group, e.g. Bank of Moscow (11.6%) VTB Bank (15.7%) VTB24 (23.4%) for financing the replacement of lighting systems TransCreditBank (10.3%) Bank of Moscow (10.7%) VTB Bank (Ukraine) (12.9%) at the Bank offices with the more efficient ones. Other banks (21.1%) Other banks (11.8%) Other banks (11.4%)

13 Electricity consumption volume of VTB Bank partially includes consumption of other Group companies leasing office space of VTB Bank 14 Paper consumption volume of TransCreditBank is calculated based on the amount of paper purchased in 2012. VTB Social Report 2012 6. Our Contribution to the Environment

76 * 77 Overall value of the global carbon market, USD billion, “As a responsible corporate citizen, VTB believes The Bank experts actively participate in working Project for Pulkovo Airport modernisation that carbon finance is both a source of income groups on carbon emission regulation in Russia. for the Group and an effective way of attracting 180 176 In 2012, the new terminal building of Pulkovo Airport in St. Petersburg, financing for addressing global environmental Moreover, VTB Capital carbon trading unit, a project in which VTB Group invested a total of RUB 49 billion, became 175 challenges and modernisation of the Russian established at the company London office in one of the first infrastructure projects in Russia to receive a rating economy”. 2012, already buys and sells carbon units. 170 according to BREEAM — a European standard of building energy The unit also actively participates in emission efficiency. 165 Vladimir Litvak, allowance trading within the EU Emission Trading 159 Head of New Energy, Energy Efficiency Scheme. VTB Capital explores opportunities for 160 The project includes a number of other energy efficiency initiatives, and Environmental Finance, VTB Capital future participation in the financing of companies such as the construction of the airport own highly efficient power plant. 155 implementing emission reduction measures. In 2012, the Pulkovo project was listed among 100 of the most 150 innovative infrastructure projects from around the world,15 which Another important achievement of the year 6.3.3. Financing Renewable Energy Projects contribute to creating a favourable urban environment and sustainable 2010 2011 2012 was obtaining a status of the Russian urban development. * According to the World Bank executive agency for the implementation of the Financing renewable energy projects is one of VTB programmes of the Arctic Council Project Support priorities. For example, VTB Capital provided loan (GEF), a financial mechanism of UN conventions Instrument (PSI) — a collective initiative focusing financing to Active Solar to implement one of the aimed at addressing global environmental on the prevention and mitigation of environmental world’s largest solar energy projects — construction Moreover, in 2012, VTB was making serious efforts challenges. In 2012, the Bank successfully passed damage to the Arctic. As an executive agency, of Perovo Solar Park in Crimea with an installed to build its energy efficiency project portfolio carrying the first stage of the accreditation process and VTB will manage the funds provided within the capacity of 100 MW. The total loan amount was about out negotiations with companies and other entities submitted an application for the second stage.16 PSI framework to support Arctic programmes. RUB 7 billion, or 80% of the overall project cost. to identify and secure opportunities for participating in various efficiency programmes. As an example, The accreditation with the GEF will allow VTB to Carbon market is an organised system for the trading Moreover, as at the end of 2012, VTB provided VTB started working with the government of a major manage funds provided for developing projects of greenhouse gas emission rights. In 2011, the loans to a number of small hydropower Russian region on the preparation for financing and programmes in such areas as climate global carbon market was worth over USD projects in Russia. In 2013, it is planned of a regional energy efficiency programme to be change mitigation and adaptation, biodiversity 170 billion17. to expand loan financing in this area. implemented based on public-private partnership. conservation, combating desertification and soil degradation, as well as preventing pollution Despite Russia’s decision not to take on the new VTB also considers opportunities for financing 6.3.2. Environmental Financing of international water basins and transboundary quantitative emission reduction targets in the Kyoto a number of bioenergy and wind energy projects in pollution. Getting involved in such projects will help Protocol’s second commitment period, VTB Group the Russian Federation, as well as a number of wind The amount of environmental financing across VTB to expand its contribution to both addressing is interested in participating in carbon markets and solar energy projects in South-Western Europe. the globe has been continuously growing driven global environmental challenges and improving and studies the experience of the European Union, by the desire of the developed countries to fulfil environmental quality in the Russian Federation. Kazakhstan, Australia, the US (California), and The Group representatives are on the their environmental commitments. In line with This is going to be the first case of a commercial other countries with regard to establishing and Management Board of the Bioenergy the international trends, in 2012, VTB established bank accreditation as a GEF project agency. maintaining such markets. VTB closely cooperates Technology Platform established by the Russian environmental finance as a segment of its business Obtaining such a status will allow VTB to increase with the Russian Government on the development Government and contribute to other technology thus marking the beginning of a new chapter in many times the amount of funds channelled into of market-based emission reduction mechanisms. programmes related to renewable energy. the history of the Russian financial sector. environmental projects from both Russian and international sources. It is supposed that one Developing this segment, in 2012, VTB Bank started of the first projects managed by VTB as a GEF its efforts to get accredited as a national project agency will be a programme for the conservation agency of the Global Environmental Facility of Amur tiger and other felines in Russia.

15 According to Infrastructure 100: World Cities Edition, a publication by KPMG. 17 According to the World Bank. 16 http://www.unep.org/dgef/Portals/43/news/C4209Rev_01_Secretariat_Recommendations_of_Project_Agencies_for_Accreditation.pdf. VTB Social Report 2012 7. About this Report

78 79 7. About this Report Overseas branches

VTB Bank, JSC Branch in New Delhi (India) In order to ensure the Report quality, VTB Group VTB Bank, JSC Branch in Shanghai (China) relied on the principles of balance, comparability, The 2012 VTB Group Social Report is the fifth Russia Branch of VTB Capital, Plc (UAE) accuracy, timeliness, clarity, and reliability as defined non-financial report published by JSC VTB Bank. Branch of VTB Capital, Plc (Singapore) by the GRI Guidelines. The responsibility for collecting The previous Social Report was published in VTB Bank, JSC and consolidating information for this Report was June 2012. The Bank has published its 2012 Bank VTB24, CJSC The financial information presented in this Report distributed among the functional units of VTB Bank. Social Report for the General Shareholders Bank of Moscow, OJSC applies to VTB Group as defined by VTB Bank Meeting to be held on June 28, 2013. TransCreditBank, OJSC consolidated financial statements prepared under In 2013, VTB management decided to undertake VTB-Leasing, OJSC International Financial Reporting Standards (IFRS). an independent assurance of the Group Social The main objectives of the preparation and Insurance Company VTB-Insurance, Ltd. Report. Taking into account that such external publication of this Report include the analysis VTB Factoring, Ltd. The content of this Report has been defined assurance of the Social Report is carried out for of the corporate social responsibility performance Non-State Pension Fund VTB, NGO on the basis of the principles of materiality, the first time, it was decided to verify externally of VTB Group in the reporting period by the Holding VTB Capital, CJSC18 stakeholder inclusiveness, sustainability a limited subset of indicators provided in the Group management and communicating VTB Specialised Depository, CJSC context and completeness as defined by the Report. The following indicators reflecting information about this performance to MultiCarta, Ltd. Global Reporting Initiative’s Sustainability VTB sustainability performance (the Material stakeholders. The reporting period of this Report VTB Debt Centre, Ltd. Reporting Guidelines (the GRI Guidelines). Indicators) were selected for the assurance: is the calendar year beginning on January 1, VTB Arena, CJSC 2012 and ending on December 31, 2012. VTB Real Estate, Ltd. VTB Registrar, CJSC

VTB Group Social Report is published on an annual Group employee headcount The number of employees of all VTB Group companies within the boundary of the Report as of 31.12.12. basis as part of the Group annual reporting. CIS and Georgia The headcount includes full-time employees with foreign citizens working under an employment agreement (contract) and performing a permanent, temporary or seasonal work for one day or more. The headcount The target audience of this Report includes includes both employees at work and those who were absent for any reason. shareholders and investors, customers and VTB Bank, PJSC (Ukraine) Charitable donations Volume of charitable donations of all VTB Group companies within the boundary of the Report in the reporting employees, business partners and government VTB Bank, OJSC (Kazakhstan) period (2012), in RUB. Charitable donations in foreign currencies were converted into RUB using average CBR authorities. In preparing the 2012 Social Report, VTB Bank, CJSC (Armenia) rate of 2012. its structure was enhanced to better represent the VTB Bank, CJSC (Belarus) Paper consumption Paper consumption volume of all VTB Group companies within the boundary of the Report during the reporting period (2012). The volume is calculated using the conversion of number of packages consumed into Group engagement with its key stakeholders. VTB Bank, OJSC (Azerbaijan) metric tons. When the weight of A4 and A3 packages is unknown the average values of 2.45 kg and 4.8 kg is VTB Bank, JSC (Georgia) applied to calculation. The companies are included in the Report Fuel consumption (gasoline Fuel consumption volume, thousand liters, of all motor vehicles on the books of all VTB Group companies boundary on the following grounds: Europe and diesel fuel) within the boundary of the Report in the reporting period (2012). Electric energy consumption Electricity consumption volume of all VTB Group companies within the boundary of the Report in the reporting 19 period (2012). When electricity consumption is calculated by the landlord of the property, an average value direct control by JSC VTB Bank (over 50% of voting VTB Bank (Austria) AG of 1 kW*h per 1 employee is applied. Electricity consumption volume of VTB Bank includes consumption shares owned by the Bank) if not stated otherwise; Russian Commercial Bank (Cyprus), Ltd. of other Group companies leasing office space of VTB Bank. significant impact on corporate social responsibility performance of VTB Group. Asia and Africa

The information and facts presented in this Report Banco VTB Africa, SA apply, unless otherwise stated, to JSC VTB Bank (without representative offices and service branches) and the following dependent organisations:

18 Including subsidiaries: VTB Capital CJSC and VTB Capital, Plc. 19 Including subsidiaries: VTB Bank (Deutschland) AG and VTB Bank (France) SA. VTB Social Report 2012 8. Annexes

80 81 8. Annexes Interviews with the managers and specialists We believe that our procedures provide responsible for sustainability policies, activities a basis on which we can provide limited and reporting where relevant to the Indicators at the assurance. Our evidence gathering headquarters of the Bank and OJSC Bank of Moscow; procedures are more limited than for 8.1. Independent Assurance Report that those criteria are appropriate given the a reasonable assurance engagement, and, on 2012 VTB Group Social Report purpose of our assurance engagement. Review of sustainability reports of selected national therefore, less assurance is obtained than and international financial institutions; in a reasonable assurance engagement. Management responsibilities Independent Assurance Report on Selected Review of a selection of corporate and external Conclusion Sustainability Indicators for the year ended The management is responsible for the Bank publications with respect to the Bank sustainability 31 December, 2012 preparation of the Indicators in compliance with policies, activities and related events in 2012; Based on our work described in this report, the sustainability reporting principles, scope nothing has come to our attention that causes us To the Supervisory Council of JSC VTB Bank and methods for preparation of the Indicators Identification of sustainability issues material for the to believe that the Indicators have not been fairly as disclosed in the chapter About the Report Bank based on the procedures described above; stated, in all material respects, in compliance Identification and description of the subject matter on pages 78–79 of the Report. This with the sustainability reporting principles, responsibility includes designing, implementing Evaluation of the procedures at the Bank used for scope and methods for preparation of the At the request of JSC VTB Bank (the “Bank”) and maintaining internal controls relevant collection, preparation, collation and reporting Indicators as disclosed in the chapter About the we have provided a limited level assurance to the preparation of the Indicators that are of data related to the Indicators; Report on pages 78–79 of the Report. on the following five material sustainability free of material misstatements, selecting and performance indicators published in VTB Group applying appropriate reporting principles and Review, on a sample basis, of evidence and Social Report 2012 (the “Report”) and identified using measurement methods and estimates supportive documentation regarding the Indicators Ernst & Young (CIS) B.V. in it by the symbol √ (the “Indicators”): that are reasonable in the circumstances. at the Bank and its subsidiaries. Moscow, 17 June 2013

Employee headcount at the year end (page 51 Our Responsibilities of the Report); Charitable donations made (page 60–61 Our responsibility is to independently express of the Report); a conclusion that the Indicators have been fairly Electric energy consumed (pages 72 and 74 stated, in all material respects, in compliance of the Report); with the sustainability reporting principles, Fuel (petrol and diesel) consumed (page 72 and scope and methods for preparation of the 75 of the Report); Indicators as disclosed in the chapter About the Paper consumed (pages 72 and 74 of the Report). Report on pages 78–79 of the Report.

The Indicators have been selected and Summary of the work performed prepared by the Bank management based on the relevant sustainability reporting Our engagement was conducted in accordance principles, scope and methods. with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Identification of the criteria Engagements Other than Audits or Reviews of Historical Financial Information and, The criteria of our engagement were the accordingly, included the following procedures: sustainability reporting principles, scope and methods for preparation of the Indicators as Analysis of the Bank internal regulatory documents disclosed in the chapter About this Report on related to sustainability policies, activities and pages 78–79 of the Report. We believe relevant reporting; VTB Social Report 2012 8. Annexes

8.2. GRI Table

This Report fulfills the requirements for a GRI Guidelines Application level C (self-declared)

GRI Disclosure Definition Report Section Pages Notes GRI Disclosure Definition Report Section Pages Notes Disclo­ Disclo­ sure sure

1. Strategy and Analysis 4.9 Procedures of the highest governance body for overseeing the organisation Chapter 1. About Us 12–13 identification and management of economic, environmental and social 1.1 Statement from the most senior decision-maker of the organisation Statement of President 4–5 performance, including relevant risks and opportunities, and adherence or and Chairman of the compliance with internationally agreed standards, codes of conduct and Management Board principles

82 2. Organisational Profile 4.12 Externally developed economic, environmental and social charters, principles, VTB Group joined the declaration Banks against 83 or other initiatives to which the organisation subscribes or endorses Money Laundering 2.1 Name of the organisation Chapter 1. About Us 8 4.14 List of stakeholder groups engaged by the organisation Chapter 2. Our Stakeholders 23 2.2 Primary brands, products and/or services Chapter 1. About Us 8–9 4.15 Basis for identification and selection of stakeholders to be engaged with Chapter 2. Our Stakeholders 22–23 2.3 Operational structure of the organisation, including main divisions, operating Chapter 1. About Us 8–9 companies, subsidiaries, and joint ventures 4.16 Approaches to stakeholder engagement, including frequency of engagement by Chapter 2. Our Stakeholders 22–31 type and by stakeholder group 2.4 Location of organisation headquarters VTB Group Headquarters: 12 Presnenskaya Nab., Moscow, 123100 Russia Performance Indicators Mailing address: 29 Bolshaya Morskaya St., St. Petersburg, 190000 Russia Economic Performance EC3 Coverage of the organisation defined benefit plan obligations Chapter 4. Our Team 55 Partially disclosed 2.5 Number of countries where the organisation operates Chapter 1. About Us 8 EC8 Development and impact of infrastructure investments and services provided Chapter 5. Our Contribution 60–69 2.6 Nature of ownership and legal form Chapter 1. About Us 8 primarily for public benefit through commercial, in-kind, or pro bono to the Society engagement 2.7 Markets served by the organisation Chapter 1. About Us 8–9 EC9 Understanding and describing significant indirect economic impacts, including Chapter 3. Our Customers 41–44 2.8 Scale of the reporting organisation Chapter 1. About Us 8–9, the extent of impacts Chapter 5. Our Contribution 60–69 Chapter 3. Our Customers 36–41, to the Society Chapter 4. Our Team 50–51 Environmental Performance 2.9 Significant changes during the reporting period regarding size, structure, or Chapter 1. About Us 8–9 ownership EN3 Direct energy consumption by primary energy source Chapter 6. Our Contribution 72 to the Environment 2.10 Awards received in the reporting period Chapter 1. About Us 10–11 EN4 Indirect energy consumption by primary source Chapter 6. Our Contribution 72 3. Report Parameters to the Environment

3.1 Reporting period for information provided Chapter 7. About this Report 78–79 Labour Practices and Decent Work

3.2 Date of the most recent previous report Chapter 7. About this Report 78–79 June 8, 2012 LA1 Total workforce by employment type, employment contract and region Chapter 4. Our Team 50 Partially disclosed

3.3 Reporting cycle Chapter 7. About this Report 78–79 LA2 Total number and rate of employee turnover Chapter 4. Our Team 51 Partially disclosed. The methodology used by VTB for calculating employee turnover is 3.4 Contact point for questions regarding the report or its contents Chapter 7. About this Report 84 different from the GRI approach

3.5 Process for defining report content Chapter 7. About this Report 78–79 LA13 Composition of governance bodies and breakdown of employees per category As of December 31, 2012, there was one 3.6 Boundary of the report Chapter 7. About this Report 78–79 according to gender, age group, minority group membership, and other female member of VTB Management Board that indicators of diversity corresponds to 9% of the number of members 3.7 Any specific limitations on the scope or boundary of the report Chapter 7. About this Report 78–79 Human Rights (The Group does not conduct any activity with potential risks described in HR6, HR7 и HR9) 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced Chapter 7. About this Report 78–79 operations, and other entities that can significantly affect comparability from HR4 Total number of incidents of discrimination and actions taken No incidents of discrimination were identified in period to period and/or between organisations the reporting period

3.10 Explanation of the effect of any re-statements of information provided in earlier There were no re-statements Product Responsibility reports, and the reasons for such re-statement PR5 Practices related to customer satisfaction, including results of surveys Chapter 3. Our Customers 41–44 Partially disclosed 3.11 Significant changes from previous reporting periods in the scope, boundary, or Chapter 7. About this Report 78–79 measuring customer satisfaction measurement methods applied in the report PR6 Programmes for adherence to laws, standards and voluntary codes related to Chapter 1. About Us 14–15 Partially disclosed 3.12 Table identifying the location of the Standard Disclosures in the report Chapter 8. GRI Table 82–83 marketing communications, including advertising, promotion and sponsorship Society 4. Governance, Commitment and Engagement SO5 Public policy positions and participation in public policy development and Chapter 2. Our Stakeholders 32–33 Partially disclosed 4.1 Governance structure of the organisation, including committees under the Chapter 1. About Us 13–16 lobbying highest governance body responsible for specific tasks, such as setting strategy or organisational oversight SO8 Monetary value of significant fines and total number of non-monetary sanctions No significant fines or non-monetary sanctions for non-compliance with laws and regulations were imposed on VTB Group companies in the 4.2 Indicate whether the Chair of the highest governance body is also an executive Chapter 1. About Us 15 reporting period officer Indicators of the Financial Services Sectoral Supplement 4.3 For organisations that have a unitary board structure, state the number Chapter 1. About Us 15 of members of the highest governance body that are independent and/or FS6 Percentage of the portfolio for business lines by specific region, size and by Chapter 3. Our Customers 36 Partially disclosed non-executive members sector

4.4 Mechanisms for shareholders and employees to provide recommendations or Chapter 2. Our Stakeholders 22–33 FS13 Access points in low-populated or economically disadvantaged areas by type Chapter 3. Our Customers 44–45 direction to the highest governance body

4.8 Internally developed statements of mission or values, codes of conduct, and Chapter 1. About Us 12–14 http://www.vtb.ru/we/today/mission/ principles relevant to economic, environmental and social performance and the Chapter 2. Our Stakeholders 19 status of their implementation VTB Social Report 2012

84 Contact Details

JSC VTB Bank

Address: 29 Bolshaya Morskaya Str., St. Petersburg, 190000 Russia

Telephones: 8 (800) 200 77 99, (495) 739 77 99

Fax: (495) 258 47 81

Website: www.vtb.com, www.vtb.ru

E‑mail: [email protected]

Please send your comments and suggestions regarding this Report to Elena Melikhova, Deputy Head of Advertising and Marketing Division, Head of Sponsorship and Special Projects Unit, VTB Bank:

E‑mail: [email protected]

Telephone: +7 (495) 775 54 54, ext. 1 46 48