World Without Barriers. VTB Group Social report 2014 Social
Social report 2014 World Without Barriers. VTB Group Social report 2014 Social
Social report 2014
Abbreviations
GRI Global Reporting Initiative CPMS Computerized Property Management System AOCRMS Automated Operational and Compliance Risk Management System VTB Bank (Azerbaijan) OJSC VTB Bank (Azerbaijan) VTB Bank (Armenia) CJSC VTB Bank (Armenia) VTB Bank (Belarus) CJSC VTB Bank (Belarus) VTB Bank (Belgrade) JSC VTB Bank (Belgrade) VTB Bank (Georgia) JSC VTB Bank (Georgia) VTB Bank (Kazakhstan) JSC VTB Bank (Kazakhstan) VTB Bank (Ukraine) PJSC VTB Bank (Ukraine) VTB Bank JSC VTB Bank Bank of Moscow OJSC Bank of Moscow Bank of Russia Central Bank of the Russian Federation VTB Africa, SA (Angola) Banco VTB Africa, SA (Angola) VTB Bank (Austria) VTB Bank (Austria) AG VTB DC VTB DC, Ltd. VTB Capital CJSC Holding VTB Capital VTB Leasing OJSC VTB Leasing VTB Real Estate LLC VTB Real Estate VTB Pension Fund JSC NPF VTB Pension Fund VTB Registrar CJSC VTB Registrar VTB Specialized Depository CJSC VTB Specialized Depository VTB Insurance Insurance Company VTB Insurance, Ltd. VTB Factoring VTB Factoring, Ltd. VTB Group VTB Group Social Report VTB24 PJSC Bank VTB24 Hals-Development OJSC Hals-Development SUE State Unitary Enterprise GEF Global Environmental Facility CJSC Closed Joint-Stock Company Housing and community Housing and communal services SCC VTB Shareholders Consultative Council CSR Corporate Social Responsibility Leto Bank PJSC Leto Bank SME Small and medium-sized enterprise IFRS International Financial Reporting Standards MultiCarta MultiCarta, Ltd. MUE Municipal unitary enterprise Supervisory Council JSC VTB Bank Supervisory Council NRU HSE FSAEI HPE National Research University Higher School of Economics OJSC Open Joint-Stock Company LLC Limited Liability Company Report VTB Group Social Report 2014 AML/CFT Anti-Money Laundering, Counter-Terrorist Financing Promstroybank OJSC Promstroybank of Russia RIA Russian Implementation Agency RSPP Russian Union of Industrialists and Entrepreneurs GRI management Sustainability Reporting Guidelines Global Reporting Initiative VTB North-West Regional Center North-West Regional Center of JSC VTB Bank CIS Commonwealth of Independent States TransCreditBank OJSC TransCreditBank Dynamo Management Company CJSC Management Company Dynamo VTB GMC VTB Group Management Committee Compliance Control Division VTB Bank's Compliance Control Division USUE FSBEI HPE Ural State University of Economics AGFR Artistic Gymnastics Federation of Russia VTB Group Social Report for 2014
2 Table of Contents Message from President – Chairman of of JSC VTB Bank Management Board 4 1. About VTB Group 7 1.1. Business Profile 11 1.2. Development Strategy 14 1.3. Risk Management 15 2. Corporate Conduct 17 2.1. VTB Group Governance and Management System 21 2.2. Improvement of Corporate Governance System 22 2.3. System of Compliance and Internal Control for Anti-Money Laundering and Counter-Terrorist Financing 23 2.3.1. Compliance System 23 2.3.2. AML/CFT 25 2.3.3. Anti-Corruption Measures 25 2.4. Corporate Social Responsibility Governance 26 2.5. Approach to Stakeholder Engagement 28 2.5.1. Shareholders 30 2.5.2. Institutional Investors 33 2.5.3. Government Relations 35 3. Market Environment 37 3.1. Support for State-Run and Socially Significant Businesses 42 3.1.1. Support for State and Municipal Governments 42 3.1.2. Manufacturing Industry Development 45 3.1.3. Transport Infrastructure Development 45 3.1.4. Modernization of Housing and Communal Services 49 3.1.5. Social Infrastructure Development 51 3.1.6. Agricultural Development 51 3.2. Supporting Small and Medium-Sized Business Development 52 3.2.1. Development of Products and Services for Small and Medium-Sized Businesses 53 3.2.2. Improving Environment for Small and Medium-Sized Business 55 3.3. Provision of Retail Services of High Social Importance 58 3.3.1. Support for Customers in Hardship 59 3.3.2. Support for Specific Population Groups 61 3.3.3. Support for Housing 65 3.4. Availability and Quality of Banking Services 66 3.4.1. Ensuring Availability of Banking Services 67 3.4.2. Customer Satisfaction Survey 68 3.4.3. Improving Service Quality and Individual Data Privacy Protection 70 4. Internal Environment 73 4.1. HR Management at VTB Group 77 4.2. Employee Recruitment and Retention 78
4.2.1. Training for Common Service Staff 81 3 4.2.2. Management Training 82 4.2.3. Distance Learning 83 4.3. Employee Motivation and Remuneration 83 4.3.1. Remuneration System 83 4.3.2. Employee Evaluation 84 4.3.3. Benefits 85 4.3.4. Enhancing Employee Satisfaction and Involvement 86 4.4. Internal Communications and Corporate Culture 86 4.4.1. Corporate Events 88 4.4.2. Volunteer Work 89 4.5. Occupational Health and Safety 90 5. Social Environment 93 5.1. Approach to Sponsorship and Charity 97 5.2. Development of Business Environment 97 5.2.1. Improvement of the Financial and Banking System of the Russian Federation 97 5.2.2. Attraction of Investment in the Russian Economy 98 5.2.3. Strengthening International Cooperation 99 5.3. Support for Sports 100 5.3.1. Support for Professional Sports 100 5.3.2. Investment in Sports Facilities 102 5.3.3. Promotion of a Healthy Lifestyle 102 5.4. Support for Culture and Arts 102 5.4.1. Support for the Fine Arts 102 5.4.2. Support for Theatrical and Musical Art 103 5.4.3. Support for Cinema and Mass Media 105 5.4.4. Preservation of Cultural Heritage and Support for Literature 105 5.5. Key Social Projects 106 5.5.1. Support for Healthcare Institutionsя 106 5.5.2. Support for Education 107 5.5.3. Support for Socially Vulnerable Groups 108 6. Natural Environment 109 6.1. Environmental Performance in Administrative Activities Management 113 6.2. Support for Environmental Financing 116 7. About the Report 119 8. Appendices 125 8.1. Corporate Social Responsibility Performance 126 8.2. VTB Group Companies in Business Associations 128 8.3. GRI Content Index 130 8.4. Independent Assurance Report 134 Contact Information 136 VTB Group Social Report for 2014
4 Message from President – Chairman of JSC VTB Bank Management Board
The VTB Group’s pre-provision operating income saw a growth of 27% in 2014, with the cost-to-income ratio (CIR) decreasing from 49% in 2013 to 44%.
The adoption of a new development strategy for 2014- 16 was one of the Group’s major milestones in 2014. Focused on maximizing profit margins, the strategy aims to improve the revenue structure by shifting emphasis to higher-margin business lines, reducing costs, and boosting the performance of the Group as a whole.
During 2014, gross corporate loans grew by 41% year-on-year and amounted to RUR 7,205 billion. The companies used the loans they received from Group banks to sustain their current business needs and invest in new projects in strategically important sectors of the economy. VTB’s loan portfolio also increased through funding projects of high relevance for Russia’s economic and Ladies and Gentlemen, social development. For example, in 2014, VTB Bank funded the modernization of the airports in We are pleased to present our seventh Social Nizhny Novgorod and Mineralnye Vody, the repair Report, offering a comprehensive view of what VTB of federal and regional motorways in the Republic achieved in 2014. of Bashkortostan and the Irkutsk Oblast, and the construction of modern medical centers in Barnaul The past year was a challenging one for all of us. The and Orsk. In addition, last year the VTB Group drop in oil prices and the volatility of the exchange continued to lend to small businesses, regarding rate and key rate amidst an unstable political them as a key factor in the growth of employment situation had a negative impact on the Russian and the diversification of the economy. economy and banking system in general, including VTB’s financial results. Despite a general downturn By the end of 2014, retail loans and deposits had in the economy, the VTB Group’s business model also increased. Retail loans grew by 28%, while proved to be robust enough to withstand this blow. deposits increased by 17%, demonstrating people’s Message from President – Chairman of JSC VTB Bank Management Board
trust and confidence in the VTB brand. Given the term partners and charity recipients, we helped many 5 unfavorable market situation, Group banks adopted organizations known for their long commitment to a more flexible approach to dealing with retail society, such as the State Tretyakov Gallery, Moscow’s customers, providing them with refinancing and Masterskaya Petra Fomenko Theater, the Kamaz debt restructuring opportunities. We continued Master racing team, and the Dynamo Moscow football our efforts in developing products and services to club. In 2014, we also made a considerable effort to reach pensioners, young people, and other social extend the reach of our flagship corporate program, groups needing support. The Bank of Moscow’s World Without Tears, which provides charity support program People of Action, which provided public- to 26 children’s hospitals in 20 regions of Russia. sector employees with favorable terms for a range of services, was well-received by consumers. We also At the same time, we continued to reduce costs for continued to provide support for housing through a the Group in other areas and efficiently conduct 47% increase in mortgage lending and our continued business. In line with our new strategy, VTB is development of the VTB24 and the Bank of Moscow committed to curtailing administrative costs mortgage benefit programs, like Loans for Military by reducing, among other things, the amount Service Members and Mortgage + Maternity Capital. of resources we consume. To achieve this goal, the efficiency with which the Group’s banks and VTB’s ability to withstand various external stresses companies are using their assets was improved. is the result of (among many factors) the level of coordination and efficiency of the Group employees In conclusion, I would like to say that even though we and the conditions created for development of cannot be too optimistic about the mid-term business their talent. In 2014, we proceeded with the outlook, we are confident that we have the tools we unification of Group members’ approaches towards need to strengthen VTB’s market position and to HR management and competence development make our contribution to the social and economic in line with our strategic goals. The amount of development of Russia and other countries where the training per employee (in hours) grew by 51% in Group operates. Backed by our strong belief that deeper 2014 year-on-year. We also paid close attention to trust and stronger partnerships are the best solution to the development of partnerships with universities any complex problem, social responsibility has always and institutes as a source of talent for our team of been and remains one of the fundamental principles of undergraduate trainees and young professionals. VTB’s business strategy. We are convinced that, working hand-in-hand with our customers and partners, we can The VTB Group has always acted as a socially overcome the challenges we are now facing and further responsible institution heavily engaged in charity. We strengthen our position in the future. believe that targeted support for charitable and social projects in a difficult economic situation is one of our priorities. For us, it was crucial to maintain and even Andrey Kostin increase our support for children's healthcare, sports, President – Chairman culture and the arts in 2014. Giving priority to long- of JSC VTB Bank Management Board
VTB Group*
JSC VTB Bank
VTB 24 (PJSC) CJSC “VTB Capital Holding”
PJSC “Leto Bank” VTB Capital plc
“VTB Capital IB Holding, Ltd.” Bank of Moscow
CJSC “VTB Capital” “VTB Bank”, PJSC
CJSC VTB Bank (Belarus) VTB Factoring, Ltd
“VTB Bank (Armenia)” CJSC JSC NPF VTB Pension Fund
Subsidiary JSC VTB Bank (Kazakhstan) VTB Real Estate LLC
OJSC VTB Bank (Azerbaijan) CJS VTB Specialized Depository
JSC “VTB Bank (Georgia)” “VTB Registrar”, CJSC
Banco VTB Africa, S.A. “Multicarta”, Ltd
VTB Bank (Austria) AG
VTB Bank (Deutschland) AG
VTB Bank (France) SA
JSC VTB Bank’s subsidiaries
VTB Bank JSC Belgrade Subsidiaries of JSC VTB Bank’s subsidiaries VTB Insurance, Ltd.
VTB Life insurance, CJSC
VTB Medical Insurance, JSC
Open joint stock insurance and reinsurance company “Moscow Re”
VTB Pension administrator, Ltd
Business Profile LLC VTB DC Development Strategy
OJSC VTB Leasing Risk Management
VTB Leasing Finance, OJSC
JLLC “VTB Leasing”
VTB Leasing (Europe) Limited
VTB-Leasing Capital Limited
* For scope of the report please see 7. About the report VTB Group is a leader on the Russian and international financial services market. VTB Group’s business activities are corporate investment and retail and non-banking financial services. 1. About VTB Group
1. About VTB Group
1.1. Business Profile providing a wide range of services in Russia, 11 the CIS, Europe, North America, Asia and Africa. VTB Group, which includes JSC VTB Bank and its VTB Group’s business activities are focused on subsidiaries, is one of the leaders on the Russian corporate investment, retail and non-banking and international financial services market financial services. and the second-largest bank group in Russia,
Business model of VTB Group1
Area of business Group companies Brief description Corporate investment VTB Bank ■■Wide presence and a strong market position in Russia VTB Capital ■■Extensive client base and well-developed relationships with major Russian companies Bank of Moscow ■■A full range of investment banking services ■■A separate subdivision dedicated to transaction services Mid-sized corporate VTB Bank A full range of lending, transaction and documentary products customized to meet the business Bank of Moscow ■■demands of mid-sized corporate businesses ■■Rapid growth in the Russian market Retail business VTB24 Second-largest retail banking business in Russia by the size of loans and deposits Bank of Moscow ■■offered to individuals Leto Bank Sustainable growth of the loan portfolio by number of small business customers ■■Wide network of sales offices across Russia, covering over 90% of the country’s ■■population Non-banking financial VTB Leasing ■■Leading position among Russian leasing companies business ■■A wide range of leasing services ■■Regional offices in Russia and subsidiaries in the CIS and Europe VTB Factoring ■■Leading position in the Russian factoring market ■■Regional offices in the 17 largest cities in Russia ■■Consulting on factoring services, also provided through the branch network of VTB Bank VTB Pension Fund Leading positions among non-governmental pension funds of Russia ■■A full range of services related to compulsory pension insurance and non-governmental ■■pension support, including the development and implementation of corporate pension programs
VTB Insurance A full range services in property insurance, civil and professional liability insurance, ■■and personal insurance offered to individuals and legal entities VTB Specialized ■■Leading position in the Russian market of special custodian services Depository ■■A full range of special custodian and depositary services
1 This table includes the Group's largest companies. VTB Group Social Report for 2014
12 VTB Group is the second2 on the Russian banking Direct economic value generated and distributed, market in terms of all key indicators (loans, accounts, RUR billion and deposits of individuals and legal entities) driven 0.8 (0.1%) 0.8 (0.1%) by the following:
rapid natural growth throughout the history of 85.5 (10.7%) ■■ 85.5 (10.7%) 588.7 489.8 VTB, accompanied by successful mergers and 588.7 489.8 acquisitions (VTB24, Promstroybank, TransCreditBank and the Bank of Moscow); 363.3 363.3 589.4 18.4 589.4 18.4 a universal business model based on the 14.9 180.2 ■■ 81.5 diversified structure of business areas; 8174.6.9 180.2 81.5 87.6 124.5 118.8 70.3 124.5 a national and international presence unique for 3.4 17.5 ■■ 70.3 118.8 739.4.3 8197.7.5 a Russian bank (over 7,000 points of sale (POS) 141.6 15.0 289.8 79.3 89.7 in the Russian Federation and 22 other countries 141.6 3135.5.0 289.8 39.1 Generated Distributed3 3.5 Generated Distributed39.1 worldwide). economicGenerated value economicDistributed value economicGenerated value economicDistributed value economic value economic value economic value economic value 2013 2014 2013 2014
Interest income less impairment provisions Interest income less impairment provisions Fee and commission income Fee and commission income Other non-interest income Other non-interest income Interest expenses Interest expenses Fee and commission expenses Fee and commission expenses Other non-interest expenses SalariesOther non-interest and other expenses paymentsSalaries and and other benefits to employees payments and benefits to employees Social investment (charity) Social investment (charity) Other administrative expenses Other administrative expenses Paid out dividends Paid out dividends Payments to the Government (taxes) Payments to the Government (taxes)
Dividends based on the results of 2014 will be calculated in June 2015.
2 Evaluated with the help of the Bank’s own methodology for evaluating market position based on data from the Bank of Russia and the Federal State Statistics Service. 1. About VTB Group
Key Performance Indicators of VTB Group 13
2013 2014 Key Financial Indicators3
Assets, RUR billion 8,768.5 12,190.8
Loan portfolio, RUR billion 6,620.7 9,150.4
Customer deposits, RUR billion 4,383.4 5,669.4
Equity, RUR billion 947.1 1131.0
Net profit, RUR billion 100.5 0.8
Financial assistance provided by the Government (subsidies) 0.3 99.2
2013 2014 Key Non-financial Indicators
Number of corporate customers, thousands 105.4 93.7
Number of SME customers, thousands 411.7 386.7
Individuals, thousands 25,385.2 29,560.6
Total number of sales offices 5,278 7,054
Number of sales offices in the Russian Federation 4,910 6,630
Number of sales offices in under-populated and under-developed regions of the Russian Federation4 485 497
Average headcount, thousands of people 75.7 78.7
Number of shareholders, thousands of people 105.4 96.3
Free-floating voting shares and GDR, % 39.1 39.1
Key ratings of VTB Bank
Rating agency Forecast Rating Credit ratings
Standard & Poor’s “Negative” BB+
Moody`s Investors Service “Stable” BAA2
National Corporate Governance Rating
Russian Institute of Directors – “7+”
3 In accordance with the consolidated financial statements of VTB Group under IFRS. 4 Regions with below-average population density or regions that are in the lowest quartile by per capita income in accordance with state statistics. VTB Group Social Report for 2014
14 1.2. Development Strategy steady growth and maintaining leadership in the market, realizing the potential of key growth points In 2014, VTB's Supervisory Board approved a to achieve the target margin, and developing new VTB Group Development Strategy for the efficient risk management systems. period from 2014 through 2016. This document and the related 2014–18 VTB Bank Long-Term In 2014, as part of solving the challenges defined Development Program define the key priorities for by the strategy, the following results were the development of the VTB Group, which include achieved.
Strategy priorities 2014 Results
Maintaining a strong position in the The growth of key indicators such as loan portfolio size and corporate deposits outperformed the Russian market and improving the banking market in terms of overall growth rates. performance of corporate VTB Capital’s leading position was maintained and its market share increased up to 22% in all key areas of investments investment and banking services, including debt and equity finance and M&A consulting (versus 15% in 2013).
Developing mid-sized corporate Mid-sized corporate business was formed as a separate operating segment and source of profit, which business as a separate source of helped strengthen VTB Group's position and market share in the mid-sized corporate business segment. profit and strengthening the Group's positions in the segment.
Outperforming retail business The Group's retail business outperformed the market, with market share reaching 15% in loans and 10% in growth – increasing market share individual deposits, and the client base exceeding 29.5 million individuals and 380,000 small businesses.5. and the share in the Group's business
Improving operating performance Efforts were made to increase regional network capacity: 14 divisions were closed in regions where the Bank and optimizing costs of Moscow operates, and corporate and retail businesses in these regions were transferred to VTB Bank and VTB24, respectively. A project of joint operation between VTB Bank and VTB24 in this market is in progress. The integration of ex-TransCreditBank is in its final stage.
The payroll pool of VTB's head office and the corporate business of the Bank of Moscow and VTB Capital was optimized.
Measures were taken to centralize purchasing activity and optimize the real estate portfolio.
Improving risk management and The risk function within the Group was centralized, with dedicated divisions established to manage the credit strengthening risk control at the risk of global business lines. Group level "The VTB Group's risk appetite" concept was introduced to systematize and consolidate all key indicators of the risk profile. Risk appetite limits and control values were determined. Risk appetite indicators were integrated into the VTB Group's Development Strategy.
Limits monitoring and control was strengthened for the most significant industry and country risk factors. A common list of VTB Group ratings was introduced. A rating model update based on Basel II requirements is in progress.
Implementing the transition to a As part of building a single banking platform, the bank is strengthening the role of the Group's corporate single banking platform center and is partially centralizing support and control functions.
5 All customers, including those with zero account balance. 1. About VTB Group
In developing the strategy, the scenario of growth functional risk management strategy was 15 slowdown in the Russian banking sector was taken developed and approved for 2014-16, which into account. Meanwhile, such external factors as became a part of the VTB Group's overall strategy. the Ukrainian crisis, the fall of Russia’s credit rating, the sanctions imposed against Russian banks, New vectors of risk function development are declining global energy prices, the Bank of Russia’s mainly aimed at achieving alignment with new increase of the key rate, and the observed slowdown business goals and the business environment. In of economic activity turned out to be more particular, prioritizing global business lines and significant than the basic macroeconomic forecast. centralizing core business and functional processes within the Group led to unification of These factors, in particular, required an adequate risk management approaches. provision for relevant operations, which affected the 2014 financial results. Apart from business road maps, the key goal of risk management is to support the VTB Group's Nevertheless, the above strategic priorities not only risk profile alignment with the interests of all key remain relevant, but are becoming increasingly stakeholders. An important step in this direction more important. Active interaction with customers was the implementation of the "risk appetite" and support from the Government and the Bank of and its cascading to operating margins at the Russia allow VTB Group to attract funds and increase level of global business lines and Group its capital, subject to the restrictions imposed on companies. external investors. Ongoing efforts are made on a daily basis to minimize potential risks when making In 2014, a number of measures were taken to payments, and the Group's infrastructure is being develop the Group's risk management system, improved to reduce its dependency on the influence which included the following: of external factors. ■■VTB's risk management structure was aligned Given the current situation, the focus of 2015 was with global business lines; on the priorities defined by the strategy, such as the further development of an efficient risk management ■■the scope of VTB's centralized risk management and cost optimization system. The Bank will continue system was revised, and financial and industrial to implement measures aimed at centralization and risks were identified; transitioning to a single banking platform. ■■the concept of VTB's "risk appetite" was implemented to systematize and harmonize all 1.3. Risk Management key indicators of the VTB Group's risk profile. Limits and control values were determined and In 2014, the VTB Group’s risk management system the approach to country risk management was entered a new phase of development: a new essentially re-examined; VTB Group Social Report for 2014
16 ■■as part of the development of credit risk In 2014, the focus of non-financial risk management assessment tools, the bank implemented a project in the complex macroeconomic and external political involving the development of default probability environment was on minimizing the impact on the assessment models for non-retail customer bank’s reputation through proactive honest relations segments and implemented a common list of ratings with investors and international rating agencies. and relevant default probability levels to compare Balanced measures were taken in the retail lending the ratings in different borrower categories in area to minimize both banks’ and customers’ risks. comparable values; With regard to operating risks, VTB Group developed and implemented a program aimed at supporting ■■common standards of assessment and retail credit ongoing operations, including the uninterrupted risk management were introduced, and key functioning of VTB’s payment system. performance indicators of risk management divisions were determined for that area; In 2015, there are plans to implement the following strategic goals: ■■a common operating risk management methodology was developed and implemented for ■■transition of the Basel II standards VTB Group; implementation project to the productive phase: incorporate rating models in the business process ■■a number of projects were initiated to develop the and centralize rating approaches in VTB Group; relevant IT infrastructure. ■■restructure the Group's credit committees and In 2014, the Bank also continued to implement Basel build a hierarchy of authorities in accordance with II standards6. In particular, it introduced new rating global business lines; models for assessing default probability for corporate and retail assets, developed a central rating system ■■Ensure the day-to-day management of the Group's for the Group, and implemented a system for risk profile through risk appetite indicators and calculating credit risk based on internal ratings. industrial risk strategies.
6 Basel II is a document published by the Basel Committee on Banking Supervision – The International Convergence of Capital Measurement and Capital Standards: a Revised Framework – which contains practical guidelines to banking control. The key goal of Basel II is to improve risk management in the banking business, which in turn should strengthen the financial system on the whole.
The internal and external impact of VTB’s CSR activitY
Effect on business
Internal environment
and competent ,Motivated, loyal
arket environment M personnel clients,and newservices products
Loyal Corporate conduct
Improved profitability and capitalization, the trust of shareholders and investors Favorable business
conditions Social environment cutting
Resource saving and cost
Natural environment Social impact
VTB Group Governance and Management System
Improvement of THE Corporate Governance System
System of Compliance and INTERNAL CONTROL TO COUNTER MONEY LAUNDERING Sustainable economic AND THE FINANCING development OF TERRORISM Employment and personal Corporate Social fulfillment Responsibility Improved quality of life Governance
Social assistance Approach to Stakeholder Reduced environmental Engagement impact VTB Group consistently integrates corporate social responsibility (CSR) principles into its strategy and operations to take the interests of all stakeholders into account. 2. Corporate Conduct
2. Corporate Conduct
2.1. VTB Group Governance and was used at a specific time based on the Group's 21 Management System strategic goals at that period of time and on the Group's overall development. VTB Group is the only large-scale financial group in Russia built as a holding comprising both large ■■Stage 1: Introduce corporate governance tools for companies (VTB24, Bank of Moscow, VTB Capital) protecting shareholders’ rights in subsidiaries; in and small companies (VTB Leasing, VTB Insurance, particular, through the formation of efficient VTB Factoring, etc.) Currently, VTB Group has an supervisory boards. international network of banks – which is unique for a Russian company – and includes over 30 banks ■■Stage 2: Implement a matrix governance system and financial organizations in over 20 countries that facilitates the coordination of Group companies worldwide. in key business and functional areas.
The existing governance system provides for ■■Stage 3: Maximize synergies between the Group's a common development strategy for Group business areas, build global business lines, and companies, a common brand, centralized financial launch the retail business management project in management, a focus on implementing best subsidiary banks. practices, and developing common standards. Currently, the Group has a "corporate center" that The system implemented in the reporting period develops a common strategic vision and facilitates implied exercising control along two lines: the implementation of best practices with a limited level of integration and centralization of key ■■Administrative Management: the management of functions. subsidiaries within the Group’s organizational structure by exercising VTB Bank’s rights as the main This model was efficiently used by the Group to shareholder through the participation of its successfully implement its growth strategy and representatives in the management bodies of develop key business areas such as corporate subsidiaries. investment and retail. In 2014, another global business line – mid-sized business – was ■■Functional Management: the coordination of launched according to the strategy. It will be business lines and areas of support and control in responsible for the financial result relative to mid- the Group as a whole, which is an additional control sized corporate customers in all regions where mechanism providing expert examination of VTB operates. administrative decisions during the preparation phase. That year, the bank also continued to further centralize responsibility and integrate the The Group's management system has developed management of key support and control functions, one stage at a time. Each management model mainly risks, finance, IT and operations. VTB Group Social Report for 2014
22 In order to unify approaches to VTB's asset ■■New regulatory documents were approved. management, management at the level of the Group During the year, the Bank approved its Rules for the is effected by the Group Management Committee global functional line Business Coordination with (VTB GMC), which considers development Financial Institutions, Procedures for VTB Group’s strategies for different business areas, the Group's cooperation in terms of information disclosure on and Group members' business plans, analyzes the securities market, and the Regulations on the progress reports and oversees the implementation coordination of PR and mass media relations in of the Group's priority projects, and approves VTB Bank's subsidiaries. As resolved by the standards, approaches and principles. There are VTB GMC, Group companies developed in-house 12 Coordination Committees of the VTB GMC in regulations that govern procedures for forecasting charge of key business areas that are involved in capital adequacy and liquidity ratios and building the expert discussion of the Group's performance. corporate portfolio provisions in VTB Group in The committees are headed by the managers of compliance with IFRS. the Bank's relevant subdivisions. The committees' scope of authority also includes the identification The implemented Group management model of best practices and the development of related contributes to risk reduction and building a truly implementation proposals to be later submitted to global system to serve major customers and the VTB GMC. Please find below the most important streamline the coordination of each business line achievements of the VTB GMC in 2014: in all regions of operation, as well as to increase income through implementing synergies between ■■The Coordination Committee for mid-sized business lines and best practice sharing and business development was established at VTB GMC. cost reduction through the more intensive use of The Committee was set up to improve the quality the Group's shared infrastructure and resources. and competitiveness of the Group's products and Moreover, the new management model is a services for mid-sized businesses, implement platform for efficiently integrating VTB’s acquired efficient management practices in the Group, assets. develop mid-sized businesses, and improve practical interaction between Group members on mid-sized business development. 2.2. Improvement of Corporate Governance System ■■The corporate secretary position was created in the Group companies. The corporate secretary position In 2014, the Bank continued to improve its was set up to create conditions for more efficient corporate governance system. One of the most management and control over the Group’s important activities in this area was the approval performance and ensure the compliance of the Group's of the 2014–16 Development Strategy by the corporate governance systems with best practices and Supervisory Board, including the development regulatory requirements. Corporate secretaries were strategy for the corporate governance system as introduced in ten companies in 2014. well as the adoption of the Bank's revised Charter 2. Corporate Conduct
that stipulates the expansion of the scope of functions and manual data processing. According 23 authority of the Supervisory Board, which includes to end-of-year statistics, the system serviced 40 the following: subsidiaries and affiliates of the Group.
■■approving risk management strategies and the As a result of measures taken by the Bank, it Bank’s capital; maintained its high position in the National Rating of corporate governance at the "7+" level, corresponding ■■approving the procedure for preventing conflicts of to the “developed corporate governance practices” interest; indicator. The rankings are based on the results of annual monitoring conducted by the Russian Institute ■■approving the Bank's remuneration policy and of Directors. The "7+" level is assigned to a company controlling its implementation; that abides by the relevant requirements of Russian legislation and has a fairly low risk of loss in corporate ■■approving procurement regulation. governance quality.
The Supervisory Board evaluated the corporate The Bank's progress with information disclosure was governance system in 2014 using the methodology again awarded the first prize for the Best Disclosure recommended by the Bank of Russia. The of Corporate Information on a Website contest in deliverable was an action plan (Road Map) aimed the Public Company category. The contest is held at implementing a new Code of Corporate Conduct. once every two years by the National Association of The Road Map was developed based on the best Corporate Secretaries and the Joint-Stock Company: corporate governance practices, and was approved Corporate Governance magazine to improve the role by the Bank of Russia. of Russian companies’ websites for shareholder and potential investor relations. Furthermore, the new revisions of some key in- house documents were adopted in the reporting period. They include the Regulation on Preparing, 2.3. System of Compliance and Convening, and Holding JSC VTB Bank General Internal Control for Anti-Money Shareholders Meeting and the Regulation on JSC VTB Bank Supervisory Board. Laundering and Counter-Terrorist Financing In 2014, the Bank also continued to implement the automated corporate governance information exchange system within the Group. The key 2.3.1. Compliance System goals of the system were to improve the quality, transparency and efficiency of management The prerequisite for upholding VTB Group's reports and financial statements, as well as to impeccable reputation and improving its curtail operating expenses by reducing overlapping investment attractiveness is compliance risk VTB Group Social Report for 2014
24 management7. VTB Group defines "compliance" consolidated compliance management at VTB Group as an activity primarily aimed at ensuring the and the Protocol for Interaction between VTB Group compliance of any actions of the Group companies companies in the functional areas of compliance were with the legislation in its country of operation, updated; internal regulations, and standard business practices. A major focus is placed on creating and ■■in order to ensure efficient communication, the Bank operating a reliable and timely management report updated its procedures for the urgent notification of system. increased regulator risk events within VTB Group;
In order to ensure the efficiency of regulatory ■■the Bank started testing the Automated Operational (compliance) risk management, a Coordinating and Compliance Risk Management System (AOCRMS) Committee for Compliance and Internal Control was in some Group companies. AOCRMS is the key to established within the VTB GMC to combat money ensuring a uniform approach to regulatory laundering and the financing of terrorism (AML/ (compliance) risk management within the Group, and CFT). The functional compliance coordinator for VTB is designed to collect and process the details of risk Group is VTB Bank's Compliance Control Division events of regulatory (compliance) risk and develop (hereinafter referred to as “CCD”). The Coordinating measures to manage the identified risk; Committee conducted two in-praesentia and five in-absentia meetings in 2014, as well as two ■■the Non-Compliance and Abuse Hotline continued to internships and three round tables attended by function on an ongoing basis. Ten calls were received VTB Group representatives. Their efforts were and processed; findings and deficiencies were aimed at further reinforcing VTB's coordinating identified during inspections, and the CCD drafted its role in the Group's compliance and harmonizing recommendations regarding required corrective approaches to internal control (compliance) in actions and followed up on them; the credit organizations and non-credit financial organizations of VTB Group. ■■the Bank completed the development of software for Accounting for External Auditor Inspections. The In 2014, the Bank continued to actively develop implementation of this automated solution will its compliance area within VTB Group, guided by enhance the performance of collection and the quality global best practices and regulatory requirements. of inspection and supervision results communicated Thus, the Bank implemented the following by the Bank's branches and subdivisions, along with activities in the reporting year: control over the timely and complete elimination of all non-compliance; ■■in order to comply with the new requirements of the Bank of Russia for internal control (compliance), a ■■the CDD continued to actively get involved in number of documents, including the concept of lawmaking within the expert panel of the Expert and
7 Regulatory (compliance) risk is the risk of the Bank or VTB Group subsidiary suffering loss due to non-compliance with legislation, internal regulations of the bank/VTB Group, standards of self-regulatory organizations (if such standards or rules are mandatory for the bank/VTB Group) and resulting from the use of sanctions and/or measures imposed by a regulator. 2. Corporate Conduct
Consultancy Board of the Council of the Federation to minimize potential risks by implementing the 25 Budget and Financial Markets Committee and in the required controls. Russian Bank Association Committee on AML/CFT and compliance risk. VTB personnel training is an integral part of the development of the Group's internal control system to meet AML/CFT needs, and is aligned with 2.3.2. AML/CFT statutory requirements.
The implementation of practices regarding anti- The high standards of the internal control system money laundering and counter-terrorist financing is implemented by VTB for AML/CFT purposes helped a prerequisite for VTB Group operations, and is its efficiently prevent violations of AML/CFT laws in contribution to the protection of the rights and legal 2014, avoid fines payable to the regulator, and any interests of citizens, the community and the nation. risks to its reputation.
The functional coordination of VTB's AML/CFT activities includes developing uniform intragroup 2.3.3. Anti-Corruption Measures financial monitoring and compliance assurance in subsidiaries. The ongoing communication VTB Group adheres to a zero tolerance policy for between the Group's core units is an efficient tool corruption and does not accept any manifestations for systemic AML/CFT risk management, and the of corruption, considering it to be one of the existing policies of information exchange in the key systemic risks to the Group’s sustainable Group are targeted to improve the efficiency of operation. financial monitoring within each company. The Bank implements common approaches to While focusing on the quality of its client base, VTB combating bribery and corruption in VTB Group implements all procedures as part of the Identify companies. As at the end of 2014, VTB Group and Know Your Customer program, and consistently companies functionally reporting to Compliance works with financial institutions maintaining bank enacted internal regulations that define key areas correspondent relations. Correspondent banks for fighting against corruption. First of all, it is the exchange information on the measures they take to Bank's Anti-Corruption Policy and addenda to the support AML/CFT. Client transactions monitoring and Code of Ethics and other corporate regulations. control practices are improved on an ongoing basis. The Group takes the following actions to fight corruption: All drafts of internal regulations that establish a procedure for the provision of bank products ■■conducts an anti-corruption expert review of and services are subject to mandatory expert internal regulations under development and new examination to make sure they can be used for anti- internal business processes and procedures to money laundering. If necessary, measures are taken identify corruption involvement risks; VTB Group Social Report for 2014
26 ■■controls compliance with corruption risk to building an integrated and efficient model to minimization procedures; manage its impact on the regions of operation.
■■implements procedures to audit contractors and The key document formalizing the Group's the participants of procurement processes to approach to managing CSR aspects is VTB Bank's identify any corruption risks, including potential Corporate Social Responsibility Policy. It is affiliations with Group employees; aimed at recording the Bank's key principles and approaches to social responsibility. In 2013, the ■■establishes the requirements for giving/receiving Bank of Moscow adopted its own CSR policy based gifts/services; on the corresponding document developed by VTB Bank. The Group's CSR governance is aimed at ■■considers any claims of corrupt actions involving maximizing the benefits from VTB's impact on the Group employees from all stakeholders. Some Group market, internal, social and natural environment. companies provide their employees with the opportunity to send an e-mail (including VTB engages all of its functional units and management anonymously) via the company's official website; bodies at both the Group and Bank level in managing different aspects of corporate social responsibility. ■■contributes to improvement of the anti-corruption There are 12 Coordination Committees at VTB GMC culture through efficient communication and whose scope of authority includes some of VTB's relevant training provided to employees. corporate social responsibility elements. At the level of VTB Bank, it is the Bank's senior management — the In 2014, the Bank developed and implemented Supervisory Board and its Committees — that are in a mandatory anti-corruption training course for charge of the key aspects of CSR, while key specialized new hires and initiated anti-corruption training to departments and divisions of the Bank are involved support the introduction of new internal regulations. in the operational management of these aspects. In The distance learning course developed in 2013 was addition, special units and bodies were established to updated and shared with subsidiaries. More than deal with some of the aspects. 25,000 employees were aware of the Group's anti- corruption policies and methods in 2014. In order to further improve the Group's non-financial reporting, selected sustainability performance indicators in the Report have been audited by an 2.4. Corporate Social Responsibility independent auditor for the third consecutive year. Governance As part of the further evolution of non-financial information disclosure approaches, the decision was VTB Group is consistently integrating corporate made to prepare a 2014 social report in line with the social responsibility (CSR) principles into its strategy requirements set forth in the revised version of the and operations, striving to take into account the Global Reporting Initiative Sustainability Reporting interests of all stakeholders. The Group is committed Guidelines (G4 GRI Guidelines). 2. Corporate Conduct
Corporate social responsibility governance system 27
Market Internal Social Natural Corporate environment environment environment environment conduct
VTB Group Management Committee (GMC)
Coordination Coordination commission Coordination commission Coordination Coordination commission commission under the under the GMC for HR under the GMC for commission under under the GMC for GMC for the development management brand and marketing the GMC for property corporate management of corporate and communications portfolio management Coordination commission investment business management under the GMC for
G roup level Coordination commission internal control/audit under the GMC for retail Coordination business commission under the Coordination GMC for compliance and commission under the internal control purposes GMC for business with of combating money financial institutions laundering and financing terrorism
VTB Supervisory Board
Personnel and Strategy and Corporate Remuneration Committee Management Committee Audit Committee
ank level ank VTB Management Board B
Specialist Employee Relations Public Relations and Administrative Strategy and Corporate departments Department Marketing Department Department Development Charity Committee Special Programs Service Department VTB Group Social Report for 2014
28 2.5. Approach to Stakeholder internal and external communication, which helps Engagement fully meet the information expectations of its stakeholders. VTB strives to maintain a continuous and open dialogue with many different stakeholders. The VTB's integrated communications system includes a wide Group has built a well-developed system of range of tools for informing stakeholders of the Group's
VTB Group’s communication with key stakeholders
Stakeholders Engagement Communication channels Shareholders Local Business Government Clients Employees level and investors communities partners
General Shareholders’ Meeting + Supervisory Council + + Volunteer campaigns + + Meetings with state leaders + Business associations + Shareholders’ Consultative Council + Trade union + Newsletters, social networks + + + + Replies to written enquiries + Involvement in commissions and task forces + Satisfaction surveys + + Corporate events + Meetings, workshops, roadshows, conferences + + + + + + Intranet (hotline and form) + Annual and social reports + + + + + + Web site + + + Contacts center + + Controlling Interest newspaper + + Energy of Success magazine + + + Energy of Team magazine +
Dialog Consultation Information Partnership
8 Key stakeholder groups and principles of interaction are defined in VTB Bank's CSR Policy. 2. Corporate Conduct
activities and obtaining feedback to help timely ■■the total number of publications about the Group 29 identify the most significant issues and efficiently in the Russian press reached almost 300,000, manage their effect. The Group's responsible which is 1.5 times more than the previous year's functional units continued to build long-term and figure (there were 188,000 publications in 2013); efficient relationships with each stakeholder category in 2014 by timely identifying their information needs ■■the audience of vtb.ru and vtb.com grew by 20% and responding to their inquiries. compared to 2013;
In 2014, the Group continued to develop its ■■at the end of the year, the number of subscribers communication channels and improve its information to VTB's official Facebook page exceeded 160,000 disclosure and transparency levels. In particular, people; press events and official and unofficial meetings between VTB's management and journalists from ■■the Bank had more than two million views on its leading Russian and foreign media organizations official YouTube channel; were held on a regular basis, and the work of Group representatives at international and Russian forums ■■by the end of the year, VTB had approximately was covered. Over the course of the year, the Group's 18,000 subscribers to its Twitter account; this top managers had many interviews with major growth was mainly driven by efficient feedback from Russian and international mass media organizations, users, as the @vtb account is used to provide including television and radio-broadcasting support and resolve any issues of VTB and VTB24 companies and business press. Group companies users online; have also actively developed communication through social networks and on the internet. The results of ■■1.5 million unique users took part in VTB Bank's the work done in this area in 2014 were as follows: internet projects.
Group companies' communication with stakeholders in 2013–14
2013 2014
Hotline calls, thousands About 4,900 About 6,100
Messages via electronic means of communication, thousands About 5,000 About 8,100
Round tables About 1,000 About 3,000
Public hearings 395 348
Conferences organized by the Group 254 238 VTB Group Social Report for 2014
30 2.5.1. Shareholders to 96,253 people. Most of the shareholders are individuals (94,987 people). VTB traditionally makes its interaction with shareholders that are the key stakeholder group for The most significant events for the shareholders in the Group a high priority. 2014 were the determination of dividends for 2013 as 15% of the IFRS net income and the increase in VTB Bank's equity underwent changes related to the number of minority shareholders in the Bank's the issue of preferred shares in 2014. The Russian control and management bodies. Elena Popova, Federation, represented by the Federal Agency for a VTB shareholder since the IPO and a member State Property Management, remains the Bank's of the Consultative Council, was re-elected to the largest shareholder, holding a participatory interest Bank's Supervisory Board. Among other Supervisory of 60.9%, which remained unchanged in 2014. The Board members are also Shakhmar Movsumov, total Government participatory interest in the Bank's Head of the State Oil Fund of Azerbaijan, one of share capital, including preferred shares, amounts the largest VTB Bank shareholders. Furthermore, to 85.2%. during the reporting period, a representative of minority shareholders became a member of the The total number of VTB Bank's shareholders fell Bank's Statutory Audit Commission for the first time. by 9% compared to the previous year, amounting The General Shareholders' Meeting elected Leonid Volkov, a minority shareholder who has been a member of VTB Shareholders Consultative Council since 2009. The steps taken to expand the minority VTB Bank's shareholders, % shareholders' participation in management and
100 control bodies are in line with the international best practices and positively perceived by the Bank's shareholders.
60.93 In 2014, VTB Bank's interaction with its minority shareholders was based on maximum transparency and protection of the shareholders' rights and 28.65 interests. The Shareholder Relations Service is
10.42 the main body responsible for interaction with all individual stakeholders. Throughout the year,
Russian Federation, Floating Floating Ministry of Finance the Service implemented a number of important represented shares GDRs of the Russian by Rosimushchestvo Federation projects and activities to ensure the efficient interaction, feedback collection and improvement of financial literacy of minority shareholders. The Ordinary shares interaction with individual shareholders occurred Preference shares both face-to-face and via remote channels. 2. Corporate Conduct
Meetings with Shareholders Remote Channels of Communication 31
As part of developing options for face-to-face The Bank not only maintains personal communication, VTB has been actively promoting communication, but also continues to actively innovative formats for meetings and events with develop remote communication channels. its minority shareholders over the past few years. Shareholder inquiries are handled by VTB to ensure The different formats are a means of reaching the exercise of their rights and legal interests out to both existing shareholders and potential and the identification and analysis of typical and investors, as well as persons who influence the specific issues of minority shareholders in order to investment decisions of customers (analysts) implement efficient handling mechanisms. and the community (mass media). The events were held in six federal districts of the Russian VTB's shareholders can contact the Bank in Federation. any convenient way. The statistics show that shareholders make active use of all available opportunities, which proves that all communication
Key formats for meetings with VTB shareholders in 2014
Meeting format Description 2014 Results
Investor Days A new format of meetings with shareholders since late Nine Investor Days were held in cities including 2013 that covers both matters related to the VTB Group's Samara, Tyumen, Yekaterinburg, St. Petersburg, operations and a securities workshop presented by the Moscow, Khabarovsk, Krasnoyarsk, Ufa, and Kazan. VTB24 Investment Department. A total of 1,167 shareholders and customers of the Bank took part in the event.
Open Days An event for VTB shareholders at the Bank's branches and A record number of such events (26) were held in eight operational offices in various regions of the country. It regions of Russia, including large metropolises, involves personal shareholder consultations provided by regional centers, and small towns. Over 500 minority the Shareholder Relations Service, VTB Shareholders' shareholders took part in the Open Days events in Consultative Council and representatives of the Bank's 2014. subsidiaries. This format provides an excellent opportunity for a detailed study of the issues and concerns of every shareholder.
Meetings with Key Events for the Bank's major shareholders as part of an The meetings were held in Samara, Tyumen and Shareholders individual approach to different shareholder categories. Yekaterinburg, resulting in the establishment of a dialogue with major shareholders.
Student Workshops Events for the students of economics departments, Over 600 students took part in five workshops held at consisting of a two-year workshop cycle aimed at the Peoples' Friendship University of Russia in improving their financial literacy and developing personal Moscow, Baikal State University of Economics and Law financial management skills. During the workshops and in Irkutsk, and Ural State University of Economics trainings, the Bank's experts demonstrate real-time in Yekaterinburg. opportunities in the stock market and hold seminars and lectures to discuss basic principles and concepts. VTB Group Social Report for 2014
32 channels and information resources offered by the representing the interests of minority shareholders Bank are efficient. and presenting their position to the top management of the Bank, continued its work. The Shareholder Relations Service receives an In the reporting period, SCC held four meetings average of about 900 inquiries per month via attended by members of the Management different channels of communication, with over one Board and heads of VTB Bank departments, third of them being phone calls. representatives of the subsidiary VTB24, and heads of structural subdivisions. In order to further develop remote channels of communication, the Bank took the following The meetings were dedicated to issues considered measures in 2014: the most urgent and important for shareholders, including financial performance, the new ■■changed the structure of the Shareholders and development strategy for 2014-16, the dividend Investors webpage on VTB's official website, revised policy, the results of the audit of the Bank’s the Investor and Shareholder Calendar, and internet coverage, the shareholders' relations improved website navigation. A total of 82,800 report and the revised Consultative Council visitors browsed VTB's “Investor Relations” page; Regulations.
■■distributed an electronic newsletter to Shareholder Relations Centers shareholders (ten times a year). The number of recipients grew by over one third due to an increase In order to foster shareholders' relations in major in the subscribers' database, which also included Russian cities such as Moscow, St. Petersburg the participants of meetings with shareholders, and Yekaterinburg, VTB has Shareholder Relations Investor Days, analysts, and representatives of the Centers, where minority shareholders can read press; materials on the Bank's General Shareholders' Meeting and receive required consultations on ■■developed and regularly published an interactive any matters related to their shares in VTB and the electronic version of The Controlling Interest Bank's activities. newspaper. Its circulation of 17,000 copies is distributed across 37 regions of Russia; The Shareholder Relations Centers also offer the following services: issuing depository account ■■developed interaction with shareholders on statements (when shares are recorded by VTB24 Facebook and Twitter. Depository), issuing extracts from the register (when shares are recorded by VTB Registrar) and Shareholders Consultative Council making amendments to the depositor's form for the depository account or the form completed by In 2013, the Shareholders Consultative Council a registered person. Over 100 Bank shareholders (SCС), a body whose activities are focused on contact the Centers on a monthly basis. 2. Corporate Conduct
In 2014, the Shareholder Relations Centers ■■the teleconference of the Moscow Investor Day 33 participated in the following VTB corporate and held on September 27: Investors in Yekaterinburg social events: had the opportunity to personally ask Bank representatives their questions for the first time. The ■■Open Days: Over 100 minority shareholders event was attended by 30 minority shareholders; received individual consultations from Shareholder Relations Center employees and the representatives ■■a round table in Yekaterinburg with financial of subsidiaries directly responsible for interacting market experts, leading professors from the Ural with VTB shareholders; State University of Economics, and the Bank's key shareholders, entitled Current “Status of the ■■financial aid to shareholders who are survivors of Financial System of the Russian Federation: the Siege of Leningrad: the St. Petersburg Recession or New Opportunities for Investment?”; Shareholder Relations Center compiled a list of Bank shareholders to be assigned the Survivor of the ■■SCC reception day (Q2–Q4): During the event, Siege of Leningrad status. Center employees shareholders had an opportunity to meet SCC personally contacted each program participant and members and learn about SCC activities, ask supported and assisted veterans, providing financial questions and make proposals in relation to a aid to 313 people; number of matters within the SCC's scope of authority. ■■themed meetings: Two themed meetings dedicated to VTB's new development strategies and attended by SCC members were held for 2.5.2. Institutional Investors shareholders in Moscow and St. Petersburg; Investors' interest in the Russian market in 2014 ■■shareholders were provided with the opportunity was substantially impacted by external factors: to study materials from the Annual General the slowdown in economic growth and expected Shareholders' Meeting (AGSM), and AGSM voting contraction of the Russian economy, the challenging ballots were received; geopolitical situation, and the EU’s and US’s sectoral sanctions against the Russian banks. ■■AGSM was broadcasted live in Yekaterinburg: the event was highly praised by attending shareholders In July 2014, VTB Bank and the Bank of Moscow were and proved important, with 34 shareholders added to the US Sectoral Sanctions List, and VTB Bank watching the meeting broadcasts; and its subsidiaries outside the European Union were added to the EU Sectoral Sanctions List. ■■shareholders were provided with an opportunity to study the materials of the Extraordinary General Under the conditions of the sanctions, persons within Shareholders Meeting (EGSM), and EGSM voting the jurisdiction of the US and EU may not provide new ballots were received; equity or borrowings to the Bank for a period exceeding VTB Group Social Report for 2014
34 30 days, or conclude transactions with VTB's shares ■■maximum investor awareness of the VTB Group's and debt instruments issued after 1 August 2014. operations and financial performance, as well as any In 2014, the Bank directed its efforts associated drivers and conditions for the Group's operations; with interacting with the investment community and contractors on the international capital markets at ■■further diversification of the shareholder base and minimizing the adverse impacts of the sanctions on stronger cooperation with investors in Asia and Russia. VTB's shareholding structure and investor relations. In 2014, VTB Bank's management focused on The sanctions against VTB challenged its relations with relations with debt investors and analysts. The institutional investors. In current conditions, VTB's number of meetings with these stakeholder groups priorities in investor relations are as follows: increased dramatically.
Geographical distribution of VTB investors, % VTB investors by investment strategy, %
Russian Federation Strategic and anchor investors 30.0 49.0 48.0 57.0
Asia and the Middle East Cost 28.0 27.0 18.0 21.0
Europe (excl. UK) Growth 20.0 1.0 15.0 5.0
USA and Canada Index 9.0 8.0 12.0 9.0
UK Broker/Dealer 5.0 6.0 3.0 4.0
Others Others 8.0 9.0 4.0 4.0
0 5 10 15 20 25 30 35 40 45 50 0 10 20 30 40 50 60
2014 2014 2013 2013 2. Corporate Conduct
VTB Bank's efforts in investor relations in 2014 current and potential investors in Russia. The number 35 helped minimize the adverse recessionary impacts of meetings and conference calls increased. As a on the Bank's shareholding structure. The anchor result, the share of Russian investors reached 48% in investor share did not change in 2014, although the terms of free float in 2014 versus 30% in 2013. share of Russian investors increased significantly.
As before, the Bank maintained the quality of its 2.5.3. Government Relations investor base in 2014. These are mostly strategic and anchor investors and investors oriented at long- The Russian Federation, represented by the term income (57%). Federal Agency for State Property Management (Rosimushchestvo), is VTB Bank's majority shareholder, Investor Relations which implies certain commitments and significantly impacts the Bank's policy. In its activities, VTB strives to The Bank's management and Investor Relations take into account the tasks set by the Government and Service traditionally place high emphasis on work to achieve national strategic goals. communicating with the investment community. The VTB Group's management participated in In accordance with the provisions of the VTB Group 13 conferences and five roadshows in 2014. Development Strategy for 2014–16, the Bank is The focus shifted towards communication with actively involved in solving current challenges of the Bank’s current and potential investors in national development, facilitating the functioning of Russia. The number of meetings and conference different Russian industries and thus contributing calls increased. As a result, the share of Russian to the social and economic stability of the Russian investors reached 48% in terms of free float in Federation. 2014 versus 30% in 2013. The Bank coordinates the fulfillment of tasks set by The Bank's management and Investor Relations the federal authorities by finding the most efficient Service traditionally place high emphasis on ways and forms of mutually beneficial cooperation. communicating with the investment community. Therefore, VTB's Supervisory Board includes the The VTB Group's management participated in 13 representatives of federal agencies and financial conferences and five roadshows in 2014. The focus and economics professionals, including those from shifted towards communication with the Bank’s the core ministries of the Bank of Russia.
Meetings with institutional investors in 2014 Quantity
Conferences and roadshows, total 18
Conference calls related to the quarterly disclosure of IFRS results and other key events 5
Meetings for investment funds, total 316 VTB Group Social Report for 2014
36 For the purpose of improving interaction with The Bank regularly arranges meetings with Government authorities, Andrey Kostin, President the management of the Ministry of Economic and Chairman of VTB Bank's Management Board, Development and Ministry of Finance. The Bank's regularly took part in meetings with national management and specialists were actively leadership and the Government in 2014. The involved in lawmaking, coordinating the activity following aspects were discussed during the with core State Duma committees, the Ministry of meetings with Russian President Vladimir Putin and Finance, the Ministry of Economic Development, Russian Prime Minister Dmitry Medvedev in the the Bank of Russia, the Russian Union of reporting period: Industrialists and Entrepreneurs (RSPP) and the Association of Russian Banks. The deliverables ■■lending to real sector enterprises, as well as were amendments to a series of regulations assistance with the fulfillment of government initiated by VTB jointly with the business contracts; community.
■■contribution to the development of the National VTB leaders and specialists are members of certain Payment System; public and government-backed organizations, commissions, industry working groups, and ■■financing social programs; management bodies of professional associations. Thus, Andrey Kostin, President-Chairman of VTB ■■different aspects of the Bank's international Bank Management Board, is a member of the RSPP activity. Management Bureau and the Presidium of the Board of Association of Russian Banks.
The social impact of VTB’s core activities
VTB's services
Corporate services
■■ Lending ■■ Financial consulting ■■ Banking services ■■ Leasing ■■ Insurance
Retail services
■■ Cards and special services ■■ Lending ■■ Deposits ■■ Insurance Social impact
SUPPORT FOR GOVERNMENT Sustainable economic and Socially Significant development Businesses
Employment and personal SUPPORT FOR SMALL fulfillment AND MEDIUM-SIZED Improved standards of living BUSINESSES Social assistance SOCIALLY SIGNIFICANT RETAIL SERVICES Reduced environmental impact Availability and Quality OF RETAIL BANKING SERVICES
Improved standards of living Social assistance VTB strives to develop products that satisfy the current needs of its customers and to promote the sustainable economic development of all markets where the Group operates. 3. Market Environment
3. Market Environment
Due to the wide array of financial services it provides The most important aspects of VTB’s activity in terms of 41 to the general public and enterprises, VTB Group social significance are as follows: has a measurable influence on the socioeconomic development of the Russian Federation and other ■■supporting significant sectors; countries. In this regard, VTB strives to develop products that satisfy the actual needs of its ■■promoting small and medium-sized businesses; customers and to promote sustainable economic development, employment and personal fulfillment, ■■providing retail services of high social importance; as well as improvements in the quality of life and social support to the general public and the ■■improving the availability and quality of banking environmental protection of all markets where the services for customers in all segments. Group is present.
Number of customers of Group companies, 2013-14 9
2013 2014
Corporate customers, thousands 105.4 93.7
Small businesses, thousands 411.7 386.7
Individuals, thousands 25,385.2 29,560.6
VTB Group loan portfolio breakdown by industry as Individuals (21.3%) of 31 December 2014 Construction (11.4%) Industrial production (10.1%) Trade and commerce (6.6%) Finance (5.3%)
Metallurgy (8.6%) Energy (4.4%) Chemical industry (5.7%) Oil and gas industry (8.5%) Transport (4.4%) Government authorities (6.8%) Coal industry (1.6%)
Food industry and agriculture (1.5%) Telecommunications and mass media (1.7%) Aircraft engineering (0.3%) Others (1.8%)
9 All customers, Individuals including (21.3%) those with zero account balance. Construction (11.4%) Industrial production (10.1%) Trade and commerce (6.6%) Finance (5.3%)
Metallurgy (8.6%) Energy (4.4%) Chemical industry (5.7%) Oil and gas industry (8.5%) Transport (4.4%) Government authorities (6.8%) Coal industry (1.6%)
Food industry and agriculture (1.5%) Telecommunications and mass media (1.7%) Aircraft engineering (0.3%) Others (1.8%) VTB Group Social Report for 2014
42 3.1. Support for State-Run and 3.1.1. Support for State and Municipal Governments Socially Significant Businesses State and municipal executive authorities often The Government’s participation in VTB imposes special need to obtain extra-budgetary funds to cover obligations on the Bank with respect to providing running costs for regional needs and to implement support for socially significant businesses in Russia. socially important investment projects. This support is becoming increasingly important in the context of macroeconomic instability and economic The most important of these are projects for sanctions. the development of transport and communal infrastructure, as well as granting donations and In 2014, the corporate loan portfolio of the Group budgetary loans to enterprises in the real sector. increased by 41% and amounted to RUR 7,205 billion VTB provides donations to regional and municipal administrations in the Russian Federation and In 2014, VTB continued lending to its corporate other countries customers using a personalized approach. In the context of the shortage in lending resources, guarantee In 2014, the Bank entered into agreements with and documentary credit operations became key for several regional administrations that detailed the businesses, as they enabled the Group’s corporate basic collaboration and coordination of efforts customers to take part in tendering procedures and towards the joint resolution of socio-economic meet their contractual obligations, including those development challenges in the regions. Among to foreign partners. Thus, the ability and readiness of them are the Perm Krai, the Kaluga Oblast, the VTB to provide available documentary instruments Novosibirsk Oblast, the Voronezh Oblast, the is an important factor in preserving the stability Khanty-Mansi Autonomous District, and the of systemically important branches of the Russian Republic of Karelia. economy.
Financing to Russian and foreign state and municipal authorities
As at 31 As at 31 Indicator, RUR billion December 2013 December 2014
Debt securities to state and municipal authorities 23.1 49.5
Debt securities to Russian state and municipal authorities 8.7 16.7
Debt securities to foreign state and municipal authorities 14.4 32.8
Loans to state and municipal authorities 157.4 622.2 3. Market Environment
The social impact of VTB’s activities with state-run and socially significant businesses 43
Significance for Socially important VTB services business business segments Social impact
Contribution to sustainable economic development Employment and personal fulfillment State Improvement of the living and municipal standards for the population governments Social support to the general public Reduction of environmental footprint
Contribution to sustainable economic development Manufacturing Employment and personal fulfillment Funding to cover current expenses and development Contribution to sustainable Transport economic development infrastructure Improvement of the living ■■ Lending standards for the population ■■ Finance consulting Guarantee ■■ Bank servicing support Improvement of the living Housing ■■ Leasing standards for the population and municipal ■■ Insurance services Reduction of environmental footprint
Risk Improvement of the living management Social standards for the population infrastructure Social support to the general public
Contribution to sustainable Agriculture economic development Employment and personal fulfillment VTB Group Social Report for 2014
44 Lending to regional and municipal budgets in 2014
Lending to regional budgets Lending to municipal budgets
Krasnoyarsk Krai RUR 7.0 billion Nizhny Novgorod RUR 1 billion
Krasnodar Krai RUR 5.0 billion Krasnodar RUR 900 million
Kaluga Oblast RUR 3.5 billion Volgograd RUR 650 million
Samara Oblast RUR 3.0 billion Ulyanovsk RUR 419 million
Yaroslav Oblast RUR 2.9 billion Severodvinsk RUR 300 million
Rostov Oblast RUR 2.5 billion
Komi Republic RUR 1.2 billion
The Bank of Moscow, in turn, also traditionally the Bank of Moscow and OJSC Special Economic supports municipal authorities. In particular, in 2014, Zones concluded an agreement for cooperation the Bank entered into an agreement for cooperation that provides for the development of banking with the Sochi City Administration in raising funds to infrastructure, the organization of efficient lending to implement investment projects and to ensure social residents, and the attraction of Russian and foreign stability in the municipal district. In addition, in 2014, private investments in special economic zones.
The Bank of Moscow: Implementing a Unified Electronic Trading Platform and Unified Centers for Contract System Tracking Objective Promote transparency and efficiency in the State Procurement System and improve the access of small and medium-sized enterprises to the State Procurement System. Approach In 2014, the Bank of Moscow continued to implement the development of the Unified Electronic Trading Platform (UETP), which is an electronic system for holding public tenders. In 2014, on the basis of the Commerce and Industry Chamber of the Russian Federation and the Unified Electronic Trading Platform, special Unified Centers for Contract System Tracking were opened in Perm and Krasnodar with the support of the Bank of Moscow. These centers provide entrepreneurs participating or planning to participate in the fulfillment of state or municipal contracts with a whole range of services, from tender consulting and a review of state contracts to the certification of origins of goods and commodity and technical expert reviews. Outcome During 2014, within the framework of UETP, the Bank of Moscow funded state contracts for about RUR 29 billion, providing about 120 loans. 3. Market Environment
3.1.2. Manufacturing Industry Development ■■a loan to LLC MC Lysvenskaya Iron and Steel 45 Company (Togliatti) in the amount of RUR 1.2 billion In the context of macroeconomic instability and for the construction of a sheet-rolling complex; economic sanctions, maintaining and enhancing the growth of the manufacturing industry, which ■■a credit limit for the Metal Technology Group of produces value-added goods, has become Companies (Pskov) in the amount of RUR 930 million increasingly important for the sustainable to develop machinery, cable, electrical and development of the economy of the Russian metallurgical products; Federation. Providing support to companies in the manufacturing industry also creates better ■■a credit limit for OJSC PSKOVVTORMET (Pskov) in employment opportunities in industrial regions the amount of RUR 600 million to develop production around the country. for the collection, storage, processing and sale of scraps and iron-and-steel waste in the territory of the In 2014, the largest manufacturing enterprise Pskov and Leningrad Regions for resale to the financing projects were as follows: Republic of Belarus and the European Union;
■■a loan facility to OJSC Chelyabinsk Electric ■■a loan facility to Research and Production Integrated Iron and Steel Works (Chelyabinsk) in the Enterprise ELSIB (Novosibirsk) in the amount of RUR amount of RUR 7 billion to develop the production of 450 million to develop the production of turbo ferrous-based alloys; generators, hydro generators and large electrical machinery. ■■a loan to OJSC KAMAZ (Naberezhnye Chelny) in the amount of RUR 1.7 billion (total allocated loan funds) to widen the product range of KAMAZ trucks and to 3.1.3. Transport Infrastructure Development develop manufacturing facilities for their production, as well as to launch the production of Euro-4 Transport infrastructure construction and reconstruction ecological standard vehicles; is being supported by VTB to provide economic unity to the country, facilitate increasing trade volumes, and ■■a loan to CJSC Sukhoi Civil Aircraft (Moscow) in the enhance the mobility of citizens. In 2014, among the amount of RUR 2 billion to develop the production of largest projects implemented in this field are: the Sukhoi Superjet 100 aircraft; ■■a loan to CJSC MC Regional Airports (Moscow) in ■■a loan to CJSC Russian Copper Company the amount of RUR 3 billion for the construction of a (Yekaterinburg) in the amount of RUR 1.5 billion to new terminal in Nizhny Novgorod; develop production and implement innovative technologies; ■■a loan to LLC Aeroinvest (Moscow) in the amount of RUR 2 billion for the construction of a new airport terminal in Mineralnye Vody; Examples of companies/projects that have received funding or warranty cover from VTB in 2014
Loan Loan Loan facility facility facility Loan Loan 1. 6. 11. 16. 21. RUR RUR RUR RUR RUR 1.0 bln 213.0 mln 301.0 mln 1.5 bln 310.0 mln
Loan Lines Loan of credit facility Loan Loan 2. facility 7. 12. 17. 22. RUR RUR RUR RUR RUR 46 900.0 mln 550.0 mln 450.0 mln 1.2 bln 234.0 mln
Loan Loan Loan facility Loan facility Loan 3. 8. 13. 18. 23. RUR RUR RUR RUR RUR 940.0 mln 350.0 mln 1.7 bln 930.0 mln 750.0 mln
Letter Loan Loan of credit limit Loan facility Loan 4. 9. 14. 19. 24. RUR RUR RUR RUR RUR 500.0 mln 4.9 bln 2.0 bln 600.0 mln 32.0 mln
Loan Loan Letter Loan facility facility Loan of credit limit 5. 10. 15. 20. 25. RUR RUR RUR RUR AMD 1.6 bln 150.0 mln 7.0 bln 700.0 mln 9.7 bln
St. Petersburg Petrozavodsk Mytishchi 36 5 42 6 Petropavlovsk- Moscow Kamchatsky Pskov 9 14 31 24 18 19 29 42 36 37ВладимирVladimir TulaТула 3 40 41 10 Yakutsk Mytishchi 2 8 Moscow Vladimir Tula Nizhny Kirov 21 22 Kursk Novgorod 221 3922 33 Perm Kazan 3 11 Naberezhnye Yekaterinburg Yuzhno-Sakhalinsk Chelny 13 16 30 17 Ufa Volgograd Chelyabinsk Togliatti 7 35 Krasnodar 23 15 30 Orenburg 28 Omsk 20 Novosibirsk 12 34 Mineralnye Vody 4 38 Irkutsk Tbilisi 27 26 Barnaul
32 25 Yerevan Loan Loan Loan Loan 26. 31. 36. 41. * GEL RUR RUR RUR 3.5 mln 168.0 mln 17.0 bln 55.0 bln
Bank guarantee Loan Loan Funding 27. 32. 37. 42. RUR AMD RUR * RUR 780.0 mln 710.0 mln 15.0 bln 83.0 bln 47
Letter Loan Loan of credit limit 28. 33. 38. RUR RUR RUR 133.5 mln 3.0 bln 700.0 mln
Loan facility Loan Loan 29. 34. 39. RUR RUR RUR 1.2 bln 2.0 bln 164.4 mln
Bank Bank Bank guarantee guarantee guarantee 30. 35. 40. RUR RUR RUR 97.5 mln 1.4 bln 2.5 bln
St. Petersburg Petrozavodsk Mytishchi 36 5 42 6 Petropavlovsk- Moscow Kamchatsky Pskov 9 14 31 24 18 19 29 42 36 37ВладимирVladimir TulaТула 3 40 41 10 Yakutsk Mytishchi 2 8 Moscow Vladimir Tula Nizhny Kirov 21 22 Kursk Novgorod 221 3922 33 Perm Kazan 3 11 Naberezhnye Yekaterinburg Yuzhno-Sakhalinsk Chelny 13 16 30 17 Ufa Volgograd Chelyabinsk Togliatti 7 35 Krasnodar 23 15 30 Orenburg 28 Omsk Housing and communal Transport Agriculture 20 Novosibirsk services Infrastructure 12 34 Mineralnye Vody Manufacturing Social VTB Bank Industry Infrastructure 4 38 Irkutsk Bank of Moscow Tbilisi 27 VTB Capital 26 Barnaul International Constituent entities of the VTB Bank (Georgia) Russian Federation presence 32 25 VTB Bank (Armenia) Yerevan * Total project cost. VTB Group Social Report for 2014
48 ■■a loan to OJSC Metrovagonmash (Mytishchi) and ■■a loan to КRSE Vyatavtodor (Kirov) in the CJSC Transholdleasing (Moscow) in the amount of amount of RUR 164.4 million to repair regional RUR 17 billion for the supply of SUE Moscow Metro and intermunicipal highways in the Kirov with a modern fleet of metro trains; Oblast;
■■a loan to OJSC Mostotrest (Moscow) in the amount ■■a bank guarantee to JSC Russian Railways of RUR 15 billion for the construction of federal (Moscow) in the amount of RUR 2.5 billion for the transport infrastructure, including the M-11 highway fulfilment of obligations under a state contract for and the reconstruction of the M9 and M4 roads; the construction of a dry cargo area at the Taman seaport, in addition to a loan in the amount of ■■a bank guarantee to OJSC Bashkiravtodor (Ufa) in RUR 55 billion. the amount of RUR 1.4 billion for the reconstruction of regional and intermunicipal highways in the At the end of 2014, in order to support the Republic of Bashkortostan; airline industry and secure tourist flow, a loan in the amount of RUR 9 billion was granted to ■■a letter of credit limit to OJSC Highway Service of OJSC TRANSAERO Airlines. In the same period, Irkutsk Region (Irkutsk) in the amount of RUR 700 support was provided to Aeroflot, the country’s million for the maintenance of federal highways and largest airline, as a loan in the amount of regional roads in the Irkutsk Oblast; USD 40 million.
VTB Bank and VTB Capital: Construction of the M11 Moscow-St. Petersburg Motorway Objective Develop transport links between the central areas of Russia and St. Petersburg, as well as seaports in Scandinavia. Approach In 2014, VTB Group companies supported the implementation of a key federal-level investment project for the construction of the Moscow- St. Petersburg Motorway. Within the framework of the project, VTB Bank served as a lender and shareholder, while VTB Capital was a financial consultant. Outcome Capital investment in the project will be about RUR 83 billion; financing will be provided by receiving a capital grant from the state, as well as by raising external financing and shareholder funds. The beginning of the construction of the motorway section is projected for 2015, with the road being put into operation in 2018. 3. Market Environment
The Bank of Moscow is also rapidly developing ■■RUR 900 million loan facility for SUE Housing and 49 cooperation with businesses engaged in road Communal Services of the Republic of Sakha (Yakutsk) maintenance and repair. In 2014, the Bank provided to upgrade the communal infrastructure in Yakutia; funds for the reconstruction and repair of roads in and around Moscow, Novosibirsk, Tyumen, ■■RUR 940 million loan for the Russian Communal Irkutsk, Krasnoyarsk and other regions of Russia. Systems Group (Moscow) to repair and upgrade the In addition, with a view to developing the transport communal infrastructure in Perm and Vladimir; sector, the Bank provided financing for aircraft under the Development of the Transportation Complex ■■RUR 500 million loan for MUE Vodokanal (Irkutsk) to in the Primorsky Krai state-backed program for repair and upgrade communal infrastructure in Irkutsk; 2013-21, as well as financing to acquire 100 buses for maintaining socially important routes in the ■■RUR 1.6 billion loan for SUE Fuel and Energy Voronezh Oblast. The Bank's participation in the Complex of St. Petersburg to finance the daily transaction allowed rural transportation to continue, activities of the monopoly thermal power supplier supported regular traffic, and considerably improved in St. Petersburg; the satisfaction of the population in the region in terms of transportation service quality. ■■a loan facility up to RUR 213 million to OJSC Prionezhskaya Grid Company (Petrozavodsk) to upgrade Substation 71 Onego, which provides 3.1.4. Modernization of Housing and Communal electricity to the residential estate at Drevlyanka in Services Petrozavodsk and to the nearby university campus.
The modernization of housing and communal services The Bank of Moscow also provides active support has a direct influence on quality of life, and affects for the implementation of projects in the housing the interests of many citizens and businesses. sector. Some of the largest projects in 2014 The implementation of projects in this field also included: contributes to environmental causes by improving resource and energy efficiency. Group companies have ■■loan facilities up to RUR 550 million to MUE Ufa Utility traditionally financed projects aimed at reforming and Networks to replenish current assets and repay its modernizing housing and communal services. previous loan obligations as part of the modernization of heat- and water-supply systems in Ufa; Some of the largest projects implemented in this sector in 2014 with the support of VTB Bank included: ■■RUR 350 million loan facility to OJSC Namkommunteploenergo (Yakutsk) to cover ■■RUR 1 billion loan facility for OJSC Kirovo-Chepetsk expenses related to the investment program for Construction Department (Kirov) to implement a 2013-17 (purchase of equipment, materials, waterworks modernization project in Kirov; components) in the Republic of Sakha; VTB Group Social Report for 2014
50 ■■a letter of credit limit up to RUR 4.9 billion for ■■the Bank of Moscow granted a RUR 301 million OJSC Moslift to maintain and replace lifting loan facility for MUE Kazan Energy Service Center to equipment. acquire and install energy-efficient equipment in apartment blocks in Kazan; as a result of the Group companies also contributed to the project, heat consumption is expected to reduce by implementation of some projects in the housing 20%–30%. sector aimed at improving energy efficiency and recycling municipal waste, in particular the following: 3.1.5. Social Infrastructure Development ■■the Bank of Moscow granted a RUR 150 million loan facility for MKP Tulagorsvet to reconstruct The development of social infrastructure facilities street lighting in Tula; after the return on contributes to the improvement of the quality of life investments, street lighting budget expenses are of the general public and social stability by means of projected to decrease by approximately satisfying social needs. RUR 31 million per year;
VTB Bank and the Bank of Moscow: Opening and maintaining accounts to raise funds for repairs to apartment towers Objective Provide support to housing owners in apartment blocks during repairs. Approach In 2014, in connection with the changes in the housing legislation of the Russian Federation, VTB Bank and the Bank of Moscow started to provide housing owners in apartment blocks with accounts to raise funds for renovation. Housing owners can accumulate their monetary resources for renovation either on the regional operator’s account (so-called "pool" account), a special bank account which is owned by the regional operator, or in a special bank account owned by some partnership of property owners (homeowner associations, housing cooperatives, and housing development cooperatives). Customers were offered the following special conditions: An individual approach, due to flexible rates for settlement services; An additional source of financing for account holders in the form of calculation and payment of interests on the cash balance in the account; Control over the targeted spending of funds from the account.
Outcome VTB Bank and the Bank of Moscow won 26 tenders for the provision of services to local regional operators, which amounts to 46% of all tenders held in 2014. 3. Market Environment
In 2014, as part of this effort, VTB Bank provided: ■■a RUR 168 million loan for CJSC GERA (Moscow) to 51 complete contract activities aimed at the ■■RUR 780 million bank guarantee for LLC SELF reconstruction of the Moscow Zoo utility lines. (Barnaul) to construct a perinatal clinical center in Barnaul, Altai Krai, for 190 beds with an VTB Bank (Armenia) also supported a number of social advisory clinic capable of handling 120 visitors infrastructure projects. In particular, it granted an per shift; AMD 710 million loan to Henry Trade LLC to develop a multifunctional entertainment center for children. ■■RUR 963 million loan for ListPromStroy, LLC (Orenburg), as well as a RUR 133.5 million bank guarantee to construct a cancer treatment center in 3.1.6. Agricultural Development Orsk (Orenburg Oblast); Agriculture is key to the national economy and ■■RUR 1.2 billion non-revolving facility for LLC guarantees employment in rural areas. At the current Pskov Alliance a LUG Group company (Pskov), to moment, in the context of the embargo on agricultural finance the construction of Pskov’s first sports and exports from the EU and considering the necessity recreation center, with a water park, shopping mall of improving food safety, supporting domestic food and street and underground parking. producers has become more relevant than ever.
The Bank of Moscow, in turn, also takes an active VTB Bank provides loans to agricultural and field role in the implementation of social infrastructure enterprises throughout Russia. Projects in this development projects in the cities and regions sector include: of the Russian Federation. In 2014, the Bank provided the following: ■■a loan to the Ruskom Group of Companies (Omsk) in the amount of RUR 700 million for the ■■funds for the construction of kindergartens in reconstruction of a turkey processing plant in the Krasnodar, Rostov-on-Don, and on Sakhalin Omsk Oblast; Island; ■■a loan to LLC Russkiy Jachmen (Kursk) in the ■■financing the construction of a sports and amount of RUR 310 million for the construction and recreation center in Nizhny Novgorod; outfitting of a simultaneous storage elevator, as well as RUR 234 million for the expansion of existing ■■a RUR 97.5 million bank guarantee for OJSC agricultural production in the Kursk Oblast; Sakhalin-Engineering (Yuzhno-Sakhalinsk) to secure obligations under the contract for the ■■a loan in the amount of RUR 750 million for the reconstruction of the Oktyabr Cinema Complex on construction of a 20 hectare greenhouse complex for Sakhalin Island; vegetable production in the Volgograd Oblast; VTB Group Social Report for 2014
52 ■■a loan in the amount of RUR 32 million for the 3.2. Supporting Small and reconstruction of a 44,000-chicken storage facility in Medium-Sized Business the Kamchatka Krai. Development VTB Bank (Georgia)’s contribution to development of The development of small and medium- agriculture included loans of USD 1.9 million and GEL sized businesses (SMEs) is important for the 0.1 million to Kvarlis Baga LLC for development and diversification of the economy and the reduction modernization of a milk production farm off Tbilisi. of unemployment. However, small and medium- sized businesses are the most vulnerable VTB Bank (Armenia) also supports agriculture segments of the market in dealing with the enterprises in different parts of the country. One economic crisis. In order to develop SMEs, of its key projects in 2014 was an AMD 9,690 loan VTB Group banks provide credit and document facility for MAVAS GROUP LLC to increase the farming services tailored to these customers' needs, capacity in the Kotayk Marz. propose favorable terms of settlement and cash
The social impact of VTB’s work with small and medium-sized businesses
VTB services Significance for business Social impact
Improved business performance
Contribution to ■■ Bank servicing sustainable economic Funding for covering current expenses development ■■ Lending and development Employment and ■■ Leasing personal fulfillment
Warranty cover (ensuring tender requirements) 3. Market Environment
services, and contribute to the formation of a In 2014, in its work with small and medium-sized 53 positive business environment. businesses, VTB Group achieved the following results: Within the Group, support for small businesses is provided by VTB24, the Bank of Moscow ■■the total number of customers which are small and the Group's banks in the CIS and Georgia. business entities amounted to 386,700; Relationships with medium-sized enterprises are supported by VTB Bank, the Bank of Moscow and ■■the SME portfolio of the Group amounted to RUR the Group's banks in the CIS and Georgia. 237 billion, having increased by 16.1% despite the general slowdown in the corporate lending market;
■■SME guarantees (documentary portfolio) amounted VTB Group SE loan portfolio by company to RUR 24.6 billion at year-end. as of 31 December 2014
3.2.1. Development of Products and Services for Small and Medium-Sized Businesses
In 2014, Group banks worked on improving product lines and approaches to customer service for small and medium-sized businesses.
Product Line Development
In the reporting period, in order to improve the availability of borrowings for SME customers, Group banks developed and implemented the following products:
Fast Overdraft, which allows VTB Bank ME VTB24 (78,1%) ■■ customers to get funding for a minimum period with Bank of Moscow (12,9%) the presentation of the minimum number of VTB Bank (Kazakhstan) (1,8%) documents; in 2014, overdrafts amounted to RUR VTB Bank (Armenia) (0,8%) 1,341 million under 203 transactions; VTB Bank (Belarus) (0,8%) VTB Bank (Azerbaijan) (2,8%) State Contract is a loan product from the Bank of VTB Bank (Georgia) (0,6%) ■■ Moscow for SE customers to facilitate the execution VTB Bank (Ukraine) (2,1%) of state contracts; VTB Group Social Report for 2014
54 Examples of products and services for SMEs introduced or upgraded in 2014
VTB products and services Advantages Significance for business
Simplified bank VTB Bank Short-term Warranty Product guarantee processing Warranty support
VTB Bank Mobile Client Service Options for making payments
1С integration, new functionality for VTB24 Bank-Client Online Service foreign exchange control
Getting information on accounts Improved business Bank of Moscow Mobile app BMbusiness from mobile devices performance
24-hour Intrabank Payments Bank of Moscow Expedition of interbank Service payments through the RBS system
Integration of remote Bank of Moscow Internet Bank-Client Service banking services
Immediate and easy access to VTB Bank Fast Overdraft Product borrowed funds
Special lending terms for concluding Bank of Moscow State Contract Loan Product state contracts Funding for covering current expenses and development Buyout of Leased State- or Special lending terms for the Bank of Moscow Municipal-Owned Premises redemption of premises
Loans to Homeowners Bank of Moscow Associations/Housing Special overhaul financing terms Development Cooperative 3. Market Environment
■■Buyout of Leased State- or Municipal-Owned (Business to Business) electronic document exchange 55 Premises is a loan product of the Bank of Moscow system, which allows its customers to manage for SE customers, offering a long-loan term and the documents with contractors in electronic format and deferral of principal repayment; to share contracts, accounts, and certificates, as well as free-format messages with one another. ■■Loans to Homeowner Associations/Housing Development Cooperatives of the Bank of Moscow The Bank of Moscow also expanded opportunities provide participants of the apartment building for small businesses with such new services as its renovation system with special renovation financing off-line version of PC-Banking and BMbusiness apps terms. for mobile devices. In addition, the bank started making interbank payments on a twenty-four-hour In 2014, VTB Bank also developed a special product basis and launched a text message notification which provides support to medium-sized businesses service for its corporate customers. The remote when participating in tender procedures. The main service channels of the Bank of Moscow have been advantages of the Short-Term Guarantee product used by more than 103,500 corporate customers. offering include an accelerated decision-making process, reduced package of documents and the VTB24 has considerably expanded the functionality non-coverage of loans. In the fourth quarter of of its remote banking services for small businesses. 2014, transactions amounting to RUR 518 million The Bank provided a Client-Bank Online System for were developed and implemented, as well as popular browsers, the implementation of convenient several general agreements with similar guarantees. integration with 1C, and the servicing of electronic The Bank of Moscow also reduced the guarantee forms of currency exchange control and individual provision term in the reporting period. purchase/sale rates for foreign currency. In 2014, the system was used by 183,000 customers. Improving Services
In addition to improving the product line for SMEs, 3.2.2. Improving Environment for Small and Medium- Group banks also developed various services which Sized Business enabled its customers to manage liquidity and make payments more effectively. It is important for VTB Group banks to create a favorable business environment for small and In particular, VTB Bank updated its Mobile Client medium-sized businesses. With this in mind, VTB application. The updated application allows develops partnerships with government authorities, customers to not only get detailed information on large non-profit organizations and community accounts and transactions, but also to accept, create associations. Together with its partners, VTB Group and save payment orders. In addition, the service banks organize themed events, propose and discuss allows customers to exchange free-format messages legal developments, and foster best practices for with the Bank. The Bank also launched a B2B supporting entrepreneurs in the regions. VTB Group Social Report for 2014
56 VTB partners in SME support
VTB VTB Group partner Group bank Results of cooperation in 2014
Governments of constituent entities of the VTB24 7 new agreements, 45 agreements in total Russian Federation and municipalities Bank of Moscow 12 new agreements, 22 agreements in total
Regional guarantee funds for small and VTB24 5 new agreements, 61 partner funds in total medium-sized business development Bank of Moscow 3 new agreements, 25 partner funds in total
Government structures for SME support and development: Small Businesses of Moscow State Budget Institution, Moscow Small Business Lending Support Fund, JSC Russian Bank for Small and Medium Enterprises Support
:Business associations at the national and regional level Chambers of Industry and Commerce (CIC), the Russian Union of Industrialists and Entrepreneurs (RSPP), the OPORA RUSSIA All-Russian Public Organization of Small and Medium-Sized Enterprises, Delovaya Rossiya All-Russian Public Organization, and others
Other non-profit organizations: Agency for Strategic Initiatives to Promote New Projects Autonomous Non-Commercial Organization, and others
Cooperation between VTB and state institutions in the development, including conferences, seminars, support and development of SMEs allows customers panel discussions and presentations. The of Group banks to learn about opportunities for following were the most significant of these getting public support and how to get this support in events in 2014. the form of subsidies for a partial recovery of interest on loans obtained in Group banks. Conference series “Moving to Success. Ahead of Time. Beyond the Distances.” In 2014, VTB Agreements on cooperation with the OPORA RUSSIA Bank organized four thematic conferences in All-Russian Public Organization of Small and Medium- Khabarovsk, Novosibirsk and Krasnoyarsk. Sized Enterprises signed by VTB24 and the Bank of The conferences were attended by VTB Bank Moscow became an important achievement in 2014. management, the representatives of local Under these agreements, collaborative awareness authorities, regional ministers, rectors of state activities have been planned with SMEs, as have financial universities, local analytical experts, legislative improvement initiatives in order to reduce and about 900 medium-sized businesses. The excessive administrative barriers and improve the event program discussed issues concerning availability of banking services for SMEs in the regions. the peculiarities of economic growth in the represented regions and raising funds for business Organization of Themed Events development and expansion. The conferences also provided effective platforms for receiving customer VTB Group banks hold regular events on feedback in order to improve VTB’s product line issues regarding small and medium business and services. 3. Market Environment
VTB24: Niche Per Billion 57 Objective Promote unique small business projects. Approach In 2014, VTB24, together with the Kommersant Publishing, launched an interactive project competition for entrepreneurs called Niche Per Billion. The competition invited small business representatives of the following five most popular and promising business segments: Environmental goods and services Health and beauty Pets Street food Child and adult education The best participant in the project was determined by votes from the Kommersant Online audience. Business scalability was chosen as the major criterion. The prize for first place was an exclusive package of business banking services from VTB24, including one year of free banking services and special business loan terms. Outcome The competition attracted over 100 entrepreneurs; 17,000 people voted in total. First place was awarded to the Murmulet Cattery for exotic cats. The winner in the additional category from VTB24, which determined the best business model in the market, was the online shop for farm products called Seasonal Market, specializing in the delivery of eco-friendly farm products from different regions of Russia to Moscow and the Moscow Oblast.
Improvement of customer financial literacy “The Territory of Business as the Territory of Life.” in foreign exchange legislation. In 2014, VTB In April 2014, as a part of its cooperation with the Bank held a number of workshops in the regions, OPORA RUSSIA All-Russian Public Organization informing its customers about major changes in of Small and Medium-Sized Enterprises, VTB24 foreign exchange legislation with respect to SMEs. participated as an official partner of “The Territory When exercising foreign trade activity, compliance of Business as the Territory of Life” forum. During with foreign exchange legislation is an important the forum, over 1,500 business representatives, aspect for SME operations, since, when detecting as well as the representatives of federal, regional any document traffic violations, businesses see and local authorities, public and research significant punitive sanctions. About 40 similar organizations, discussed key tendencies in seminars in total took place in different regions the SME market, as well as specific developed of Russia. The seminars resulted in a significant measures to promote the development of small and reduction in the number of violations committed by medium business in Russia. The program included customers and, consequently, a reduction of the a business portion and master classes by leading related fines. business consultants. VTB Group Social Report for 2014
58 3.3. Provision of Retail Services of are both specially developed for vulnerable social High Social Importance groups and available to all citizens.
VTB provides individual customers with a wide In 2014, the loan portfolio for retail customers of range of services of high social importance, which the Group increased by 21% and amounted to RUR 1,945.1 billion.
Examples of VTB retail products and services introduced or upgraded in 2014
VTB products and services Advantages Significance for citizens
Refinancing of mortgages in Bank of Moscow Conversion of mortgages to rubles foreign currency Support for customers in hardship VTB Support in the event Manage Your Health! Program Insurance of a critical illness
The maximum rate regardless of Bank of Moscow Pension deposits deposit amount
Bank of Moscow People of Action Program Special lending and service terms
0% per annum subject to debt Leto Bank Leto-card repayment on a specified date Special terms for specific categories of citizens Tool for welfare payments, discounts Bank of Moscow Moscow Social Card and benefits
Tool to enter schools and pay Bank of Moscow Electronic Cards in Education for food
Social Assistant Program Assistance in paying for social Bank of Moscow (pilot version) services over the internet
Social Taxi Service Payment for social taxi services Bank of Moscow (pilot version) by bank card 3. Market Environment
The social impact of VTB retail banking 59
VTB services Significance for citizens Social impact
Support in hardship Social support to the general public Improvement of the Cards living standards for the ■■ and special Special terms for specific categories of citizens population ,services (pensioners, students, low-income people ■■ Lending state-paid workers, etc.) ■■ Deposits ■■ Insuring Improvement of the Housing support living standards for the population
3.3.1. Support for Customers in Hardship financial situation. The Bank of Moscow met such customers halfway by offering them special loan Contingent circumstances (income reduction, loss of refinancing and restructuring conditions. property, health problems, etc.) can affect anyone. Part of the Russian population became vulnerable The Bank of Moscow proposed a program to its in this respect, particularly under the current currency borrowers for concessional mortgage complicated economic conditions. refinancing in Swiss francs and Japanese yen, as well as a program for mortgage refinancing in US In 2014, Group companies continued to provide dollars and euros. Bank customers were provided services that mitigate the effects of adverse events with the opportunity to reduce loan interest for its customers. rates, and extend the loan term, as well as take advantage of "payment vacations" for temporary Support for Retail Borrowers deleveraging. In 2014, the Bank of Moscow held over 300 such consultations for its customers; 51 Due to the sharp rise in foreign exchange rates at applications for refinancing were granted. During the end of 2014, as well as the general economic the period from 2011 to 2014, 874 loans in total recession, many retail borrowers, especially were restructured, which is about 30% of the those citizens who took out foreign currency currency portfolio. loans, found themselves in a complicated VTB Group Social Report for 2014
60 Leto Bank, in turn, continued to work with Insurance low–income customers, offering them simple and transparent conditions on small loans. An VTB Insurance continued to develop insurance important advantage for borrowers facing a programs for supporting customers in difficult complicated financial situation is the opportunity situations. The company provides both a wide proposed by Leto Bank to change payment dates, range of traditional insurance programs and several skip monthly payments and reduce the amount products which are unique for the Russian market. of an installment by increasing the loan period. By the end of 2014, the loan portfolio with Skip One of VTB Insurance's priorities is mortgage Payment or Reduce Payment services amounted insurance, which allows the borrower to insure to RUR 10.4 billion, and 72,800 customers took the risk of his liability to the bank in the event of advantage of the offer. non-performance or improper performance of his obligation to repay the loan.
VTB Insurance: Manage Your Health! insurance program Objective Provide financial and consultant support to customers diagnosed with cancer or other critical diseases. Approach In 2014, VTB Insurance developed a new product called Manage Your Health! which provides for a one-time insurance payment immediately after diagnosis. The insured is entitled to dispose of the entire amount of insurance payments at its sole and absolute discretion to pay for expensive modern medicines, family maintenance, or to use as compensation for a loss of income. Another unique advantage of the product is the provision of complete medical and psychological support for the patient from the moment of his or her request to the insurance company, including: assistance in organizing annual examinations at the most qualified clinics; provision of a free diagnosis confirmation by the best doctors at a national level; selecting a medical center; independent treatment consultations; arranging legal, psychological and other necessary support for both the insured and their family. Outcome In 2014, VTB Insured signed more than 10 thousand agreements within the Manage Your Health! Program. The insurance premium amounted to more than RUR 85 million. 3. Market Environment
Examples of socially significant areas of insurance 61
Insurance program Description Results of 2014
Life and health insurance Compensates the material costs of the family, and 147,000 life and health insurance contracts supports a stable income level in the event of the loss of were signed; the insurance premium the breadwinner. amounted to RUR 13.7 billion.
Real estate insurance Compensates material costs in the event of fire, natural 206,000 contracts were signed; the disasters, theft and other unforeseen destruction of or insurance premium amounted to RUR 392 damage to movable and immovable property. million.
Car insurance Protects the car from all risks associated with theft, 30,000 contracts were signed; the damage in the event of an accident, and injury to life and insurance premium amounted to RUR 1.5 health of the driver of the car. billion.
Travel insurance Compensates the costs of unforeseen circumstances 84,000 contracts were signed; the (illness, accidents and emergency cases, loss of luggage, insurance premium amounted to RUR 231 etc.) when travelling out of the Russian Federation, as well million. as at a distance of over 100km from the permanent place of residence.
The key advantage of this type of insurance is that the Support for Pensioners mortgage loan becomes not only more affordable, but also safer for the borrower. The mortgage borrower Group companies offer pensioners special with a minimum of capital has no risk of losing conditions for various financial products tailored to existing assets and will be able to repay the loan even their specific needs. in the event of a sharp decline in property prices, as in this case the proceeds from selling the apartment In 2014, the Bank of Moscow continued that was purchased with a small down payment will implementing the Pension Card Project for be enough to pay off the outstanding debt. people of preretirement and retirement age living in Moscow and the Moscow Oblast. The In 2014, about 353,000 mortgage insurance contracts main advantages of the product are free annual were signed, and insurance premiums amounted to as services, a 4% annual interest rate on card much as RUR 4 billion. balances and free text message notifications for all transactions. The product proved to be popular with pensioners: in 2014, the bank 3.3.2. Support for Specific Population Groups issued over 45,000 pension cards, and their total portfolio was 65,000 cards. This year, cards Retail banks of VTB Group regularly develop products have started to be issued in new locations, like of special social significance, including card products to residents in the Kursk Oblast. In 2015, this with bonuses and special programs for pensioners, product will be offered in other areas where the public sector employees, students, and low income Bank of Moscow operates. persons, among others. VTB Group Social Report for 2014
62 The Bank of Moscow: People of Action program Objective Support healthcare workers, educational, government, and law enforcement officers – people whose work is important for our daily well-being, health, safety, and the future of society. Approach In 2014, the Bank of Moscow launched a unique program called People of Action, which is a package of financial services on favorable terms, including: Loan products and deposits on special terms Payroll cards with a set of free services and features: interest on the account balance; . no-fee cash withdrawal from any ATM; . free text message notifications; . PayPass distance payment technology; . secure online payment system with 3D Secure; . special application to pay for public transport in Moscow. Outcome The program proved to be very popular: within six months of launching, the bank issued credit products for over RUR 9 billion. The payroll service attracted over 220 organizations – 54% from the education sector, 36% from the healthcare sector, 5% from the public administration sector and 5% from law enforcement authorities.
Loan products issued under "People of Action," by segment
Education (46,0%) Healthcare (20,0%) Law enforcement (20,0%) Public administration (14,0%)
По результатам 2014 г. программа «Люди дела» была удостоена международногоAccording to the results признания, of 2014, получив the People награду of Action как program was «Лучшееinternationally сегментное recognized, предложение having received года» the на awardмеждународном for Best Segment банковскомOffer of the Year форуме at the Adam International Smith Conferences Banking Forum’s в г. Лондоне. Adam Smith Conferences in London.
Education (46,0%) Healthcare (20,0%) Law enforcement (20,0%) Public administration (14,0%)
По результатам 2014 г. программа «Люди дела» была удостоена международного признания, получив награду как «Лучшее сегментное предложение года» на международном банковском форуме Adam Smith Conferences в г. Лондоне. 3. Market Environment
In addition, the Bank proposed many other The VTB Pension Fund provides citizens of the 63 favorable conditions for pensioners, including: Russian Federation with the opportunity to invest pension assets and/or sign a non-state pension ■■a maximum interest rate, regardless of the actual provision contract, and, therefore, to increase deposit amount, that was set on base line deposits the amount of a future pension. According to the in RUR and foreign currency for pensioners; the total results of 2014, the volume of funded pension amount of funds placed by pensioners in 2014 assets amounted to RUR 69.2 billion, gross pension exceeded RUR 115 billion; reserves amounted to RUR 1.08 billion, and the total number of customers served was 1.1 million people. ■■for all credit products, the maximum age of the borrower was increased from 65 to 70; as a result, Support for Younger Customers pensioner customers received more than 23,000 loans in 2014. Group banks developed a number of special banking products for younger customers. In particular, In 2014, Leto Bank also developed a special VTB Bank (Georgia) and VTB Bank (Armenia) product for pensioners titled Summer of Useful offer students the following favorable loan terms: Gifts. The product’s advantage is its diminishing unsecured borrowing, a convenient and flexible interest rate if a customer makes all of his or her repayment schedule, and attractive interest rates. payments on time; then, every six months the According to the results of 2014, the offer from VTB interest rate and monthly payment are reduced. Bank (Armenia) was embraced by 236 customers, As a result, the rate is reduced almost three times, and gross loans amounted to AMD 63 million. For VTB reaching its unique value of 11.9%. The product Bank (Georgia), 414 customers took advantage of this includes an updated insurance protection program offer, and gross loans amounted to GEL 202,000. which covers personal injury and hospitalization. In addition, the maximum age to take part in the VTB Bank (Georgia) offers parents the opportunity to program was increased to 82. In 2014, gross loans accumulate considerable savings for their children by under the program amounted to RUR 183 million, setting aside small amounts every month. The deposit and 3,400 customers took advantage of the offer. benefits are capitalization of interest (the accrued interest to be added to the principal amount and the VTB Bank (Armenia) offers its retired customers interest in the next period is accrued on the increased a special Social Deposit Account. The advantage amount) and high interest rates. According to the of this deposit account is the ability to have an results of 2014, 69 customers opened these deposit unlimited number of deposits and withdrawals while accounts, totaling GEL 134,000. maintaining the interest rate and receiving interest on a monthly basis. In 2014, gross deposits under In 2014, the Bank of Moscow continued developing the program, considering prolongation, amounted the Electronic Cards in Education project, which to AMD 3.3 billion, and 4,100 customers took is designed to monitor attendance and handle advantage of the offer. non-cash payments for food at school. In 2014, the VTB Group Social Report for 2014
64 bank expanded opportunities for students to place Implementation of Universal Social Products deposits into their personal accounts in order to pay for food through various mobile tools, as well as Group banks also develop and offer other products through My Account at the Moscow Public Services that can be used by representatives of different portal. The volume of card payments for 2014 social groups, including pensioners, disabled increased sevenfold. people, students, pupils, young mothers, etc. The
The Bank of Moscow: The Moscow Social Card Objective Issue a convenient multifunctional bank card for residents of Moscow entitled to benefits, which is to be spread gradually to other Russian regions. Approach Since 2003, the Bank of Moscow has issued the Moscow Social Card provided by the Government of Moscow, which allows the cardholder to receive pensions and social benefits provided by the Government of Moscow. The cards are provided not only to pensioners and those entitled to benefits, but also for young mothers, school, college and university students, and persons receiving housing subsidies. Since 2014, officers of the Main Internal Affairs Directorate and the Federal Migration Service have also become card recipients. In 2014, the functionality of social cards was considerably expanded: the card can now be used to make purchases all over the world and on the internet; the MasterCard PayPass contactless payment system was integrated into the program; the municipal loyalty program was extended, which provides discounts to Moscow social cardholders in over 3,300 retailers in the capital (pharmacies, optometrists, medical centers, shops, catering establishments, etc.); a mobile Android-based app was developed that enables utility and services payments, as well as money transfers; cardholders who were not entitled to preferential transportation were able to use Troika tickets on the Moscow Social Card; an electronic signature can also be tied to the card. Outcome Since the start of the project, with the participation of the Bank, more than 14 million cards were issued, of which over 4 million cards are currently in use. Every month about 200,000 transactions are made using Moscow Social Cards for over RUR 200 million. In 2014, over 1.5 million next-generation social cards were issued. As a result of the enhancement, the number of active cards was increased by 27%, while the number of transactions increased by 52% compared to last year. 3. Market Environment
most important universal product is the Moscow information on risks for the borrower and his or her 65 Social Card, issued by the Bank of Moscow together obligations to the bank. with the Government of Moscow. In 2014, Leto Bank launched its first credit card. The Given its successful experience of cooperation main advantage of the card is the ability to make with the Government of Moscow in the issuance purchases and withdraw cash without paying interest. of Moscow Social Cards, the Bank of Moscow The card has special low limits (maximum of RUR continued to develop cooperation in this direction 15,000) to prevent over-borrowing by inexperienced and started to develop new products for citizens borrowers. Other advantages of the card include entitled to benefits in 2014. In particular, in 2014, its reasonable issuance price, the fixed amount of the bank was working on the following projects: commission for a partial payment of the invoice and for cash withdrawals ranging from RUR 300 to RUR ■■Social Assistant is a program to make e-payments 500. By the end of 2014, the credit card portfolio for chargeable social services on home care and amounted to RUR 2 billion, and 154,600 customers hospitals using mobile tablets. Using the Social took advantage of the offer. Assistant app, social workers serve citizens and allow them to pay for social and other services VTB Bank (Armenia) offers its customers the (paying for housing and communal services, mobile opportunity to take an agricultural micro-loan with communications, the internet, etc.) through bank gold jewelry as pledge. The advantage is a reduced cards. In 2014, the project was in the pilot phase, interest rate. According to the results of 2014, the and is expected to be rolled out in 2015; offer from VTB Bank (Armenia) was embraced by 16,700 customers, and the loan portfolio amounted ■■Social Taxi is a payment system for social taxi to AMD 10 billion. services using bank cards. In 2014, the bank helped to equip all Social Taxi cars used to transport people with impaired mobility with terminals for credit 3.3.3. Support for Housing cards. The project will allow the coupon system to be abandoned and improve the quality of social The improvement of housing conditions for the services. The full-scale launch of the project is population is still a top priority for the state, and planned for the spring of 2015. mortgage lending is an essential tool to address this issue. Over ten years, VTB Group has maintained Leto Bank also continued to develop its product dominant positions in the mortgage market. line for people with low income. Realizing that those customers who do not have much experience Every year, the amount of mortgage loans by VTB in using banking services may become loan- Group banks increases by 40%-50%. By the end dependent, Leto Bank offers them a Borrower of 2014, over 180,000 residential loans had been Liability Declaration to sign in addition to the loan issued with a total value of more than RUR 350 agreement. This document provides available billion. In Russia, the Group consistently ranks VTB Group Social Report for 2014
66 second in the mortgage market, making every fifth sector of the country, and the Group's loan in the country. VTB's mortgage portfolio reached customers have the opportunity to purchase RUR 795.3 billion, showing an annual growth of 47%, new, up-to-date high-quality housing on the with a market share of more than 21%. most favorable terms. At the end of 2014, the share of mortgage loans for new buildings New mortgage programs and technologies make the reached 50% of the total amount of mortgage Group's mortgages more accessible and attractive. loans by Group banks. The following are the Group’s major mortgage programs: ■■Lending to military personnel. In 2014, the Group continued to hold its dominant ■■Mortgage lending for housing under positions in lending to military personnel who construction. The Group’s participation in this were participants in the savings and mortgage direction and its cooperation with the largest system. Every third loan being issued under construction companies make a substantial the state program on the provision of housing contribution to the development of the housing to this category of citizens was made by VTB Group. Over 9,000 loans were issued in 2014.
■■Maternity capital. The special Mortgage + VTB Group mortgage portfolio by company Maternity Capital program, which is included as of 31 December 2014, RUR million in the mortgage line of the Group, allows families with two or more children to make the best use of state support to improve their living conditions. The volume of lending under this program amounted to RUR 19 billion.
3.4. Availability and Quality of Banking Services
VTB Group banks seek to expand the availability of their services for customers, developing a network of branches and ATMs, as well as remote banking channels.
Regular customer satisfaction surveys enable VTB24 (89.5%) VTB to respond to customer inquiries on time Bank of Moscow (9.5%) and constantly to improve its products and Others (1%) services. 3. Market Environment
3.4.1. Ensuring Availability of Banking Services centers (272 centers in 2013), 449 sales counters 67 (130 in 2013), and 14,013 POS-points (7,318 in VTB Group is an international network of banks 2013). The most significant growth was achieved and financial companies that provide services to by Leto Bank, which opened not only specialized customers in 23 countries in the CIS, Europe, Asia multiservice centers, but also sales counters in and Africa. In Russia, VTB companies are present in large shopping malls. This year, around 1.1 million 73 regions, providing services to over 90% of the people used the services of Leto Bank in 874 population of the country. Russian cities.
Development of the Service Center Network Development of the ATM Network
The largest retail banks of the Group are VTB24, the The Group’s format enables it to unite the ATM Bank of Moscow, and Leto Bank. Each of them has its networks of its retail banks. own specific features and target audience and provides banking services to certain categories of citizens. While The unified international ATM network of VTB offers the Bank of Moscow and VTB24 mainly focus on large its customers the advantages of the Group’s wide Russian cities with a higher population density, Leto geographic coverage. Cardholders of Group banks Bank has taken to provide banking services to small in the CIS and Georgia can withdraw cash from the towns with a population below 50,000 people. Besides ATMs of VTB Bank, VTB24 and the Bank of Moscow Russia, retail customer service centers are located in on the same terms as in the region where the card Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, was issued, regardless of the country of residence. Serbia and Ukraine. In 2014, Leto Bank joined the unified international ATM network. By the end of 2014, the Group's In 2014, Group banks achieved significant growth ATM network was expanded by 2,000 units. VTB24 in their regional networks: by the end of the year, significantly upgraded its ATM network, provided VTB24 had 1,066 sales offices compared to 1,034 that the number of machines increased to 9,902. in 2013, the Bank of Moscow had 285 sales offices When travelling to the CIS and Georgia, VTB Group compared to 304, and Leto Bank had 361 customer customers may use a free mobile app. These Android,
Number of sales offices of Group companies in 2013-14
2013 2014
Sales offices in all countries of operation 5,278 7,054
Sales offices in the Russian Federation, including: 4,910 6,630
Sales offices in under-populated and economically underdeveloped regions10 485 497
10 Regions with a below-average population density or regions in the lower quartile by per capita revenues according to Government statistics. VTB Group Social Report for 2014
68 iOS and Windows Phone applications will help In 2014, Leto Bank launched a new mobile customers find the nearest ATM, receive information Android-based app which allows customers to on its working hours and available services, and show receive information on loans and cards, to control the shortest way to its location. the flow of funds, view card transactions, and set a spending ban. In 2015, the bank plans to extend Development of Remote Banking its mobile banking functionality and run a full- service online bank. In addition to the development of its branch and ATM network, VTB continues to improve its remote In 2014, VTB Bank (Belarus) launched its online banking service (RBS). bank, enabling customers to receive immediate information on card and account balances, to pay To provide its customers with more opportunities for services, to make interbank transfers between for using RBS, Group banks develop internet and accounts and to get immediate information on all mobile banking systems and improve call center card transactions. services. RBS development allows retail customers of Group banks to get access to the required services anytime and anywhere, to perform various 3.4.2. Customer Satisfaction Survey operations independently, and receive details about operations and implement control over them. VTB Group companies conduct regular customer satisfaction surveys, which allows them to react In 2014, Group banks continued to improve their swiftly to changes in satisfaction and loyalty levels. system of remote banking services for retail customers. Satisfaction surveys are also one of VTB’s customer feedback channels: usually, participants are In the reporting period, VTB24 launched a new provided with the opportunity to not only evaluate application for mobile devices based on the iOS products or services by given parameters, but also operating system. Customers can use it to repay to comment on any aspect of interaction with the loans, manage deposits, send money transfers in bank. The obtained results are used for the further rubles, and pay for various services, including tax development and improvement of product and liabilities and traffic fines. service offers. The methods used in the research included the following: In 2014, the Bank of Moscow improved its approach to the development of RBS: it implemented mobile ■■telephone surveys (VTB Bank, the Bank of banking and a new internet bank. As a result, Moscow, VTB Bank (Armenia), VTB Bank (Belarus), customers got the opportunity to purchase all credit VTB Bank (Georgia), and others); products and deposits without visiting the office, as well as to make different online payments. ■■questionnaires, including on the internet (VTB Consequently, in just one month of mobile bank Bank, VTB24, the Bank of Moscow, VTB Registrar, operations, 11,000 users have been registered. VTB Specialized Depository, and others); 3. Market Environment
Functionality of remote banking services for retail customers of the Group 69 Group bank RBS service Options for retail customers
VTB24 Telebank Various transactions and payments (via the internet, mobile phone or landline), ■■including charitable donations Teleinfo ■■Receive current information on client accounts, cards or loans The Bank of Moscow Internet Banking System Receive account and bank card statements ■■Make payments, interbank and internal transfers, and transfers between client ■■accounts ■■Apply for loans ■■Open deposits and pay cards ■■Repay loans ■■No-fee payments for utility services VTB Bank (Armenia) VTB iB@nking Pay for communication services and utilities ■■Receive account and bank card statements, transfer funds between accounts and ■■cards within VTB Bank (Armenia) ■■Interbank local and international transfers ■■Customer loan and deposit management ■■Cashless currency exchange ■■Loan repayment, deposit replenishment ■■Submit applications for cards/loans/deposits, etc. VTB Bank (Belarus) VTB Internet-Bank ■■Pay for communication services, utilities, etc. ■■Interbank transfers between client accounts ■■Loan repayment, deposit control ■■Control over finances (including settlement of accounts) VTB Bank (Georgia) Internet Banking System Checking accounts and issuing account statements ■■Block/unblock cards ■■Search/print out the history of transactions on the account or details on specific ■■banking operations ■■Customer loan and deposit management ■■Transfer funds ■■Pay for communication services and utilities VTB Bank (Kazakhstan) Online VTB Pay for utilities and services; interbank and intrabank transfers, transfers between ■■client accounts Review accounts and set up account statements ■■Block cards ■■Apply for loans, as well as for the issue and re-issue of payment cards; deposit ■■transactions VTB Bank (Ukraine) VTB Online ■■Transfer funds between client cards or to any other card of the bank ■■Add to or withdraw from a fixed-term deposit ■■Client account management ■■Receive current information on the Bank’s products and services VTB Group Social Report for 2014
70 ■■Net Promoter Score (NPS11 ) survey (the Bank of corporate customers of the Bank of Moscow (86%) Moscow, Leto Bank, VTB Insurance); noted the high quality of services.
■■Mystery Shopper (VTB Bank, VTB24, the Bank of Moscow). 3.4.3. Improving Service Quality and Individual Data Privacy Protection Research conducted in Group banks in 2013 showed a high level of customer satisfaction. Each year, Group banks strive to improve the quality of service by implementing the following measures: For example, for Leto Bank, NPS value increased from 53% in 2013 to 69% in 2014; for VTB ■■simplifying document flow between the bank and Insurance, this figure increased by 30% over the the customer: adopting standard forms, reducing year; for VTB Bank (Georgia) NPS was 83%; in the number of documents required for various VTB Bank (Belarus) and VTB Bank (Armenia) the transactions, enhancing the RBS system, etc; customer satisfaction level was 9.1 points out of 10. ■■conducting employee training on new and existing The annual customer satisfaction survey in relation products and services during seminars and panel to the transactional business which was held in discussions, as well as interactive training for VTB Bank in 2014 showed that more than 80% of employees in regional Points of sales using video- customers were satisfied with the work of the Bank conferencing with product experts from the head and its team. Customers comment on the high office; quality of products and maintenance, as well as the transparency with which products were provided. ■■monitoring price quotations in target markets; the results define the position of the banks with respect In 2014, VTB24 carried out a large-scale customer to their main competitors, and, if required, adjusting satisfaction and loyalty survey. The resulting Net the proposal; Promoter Score value was 79%. According to the customers, the Bank's strengths are its excellent ■■monitoring global best practices when developing banking service, convenience of remote service new products and services in order to meet channels, and availability of special offers. customer expectations to the greatest possible extent. The Bank of Moscow conducts regular separate research for retail and corporate customers. In 2014, VTB Bank continued its work on centralizing a The regular polls of retail customers found that number of operational functions in Operating Support the average satisfaction value for 2014 reached Centers, providing customers with the necessary 9.3 points out of 10, and NPS was 60.6%. For operational maintenance, which in turn greatly the second year in a row, the great majority of improves the quality of their service.
11 The NPS (Net Promoter Score) loyalty index is an index that describes consumer loyalty to a product or a company (indicator of willingness to recommend), and is used to assess readiness to make a repeat purchase. 3. Market Environment
In 2014, the Bank of Moscow continued to develop the tools to reduce the proportion of customers waiting 71 service model introduced in 2013. The model provides in line for more than five minutes; made a list of for personalized corporate customer service on the overloaded sales offices, for which special operational front line. The bank also took measures to administration was organized by the management; improve the professional level of employees working with corporate customers. These include both full- ■■implemented a set of actions to improve service time training to improve sales efficiency and remote quality on Quality Day, and held a regional training courses on such topics as Rules for Telephone competition for Employee of the Year in Service Negotiations, Keeping a Legal File on a Corporate Quality. Customer, and others. VTB makes ongoing efforts to ensure the In 2014, VTB24 implemented the following measures privacy of customer personal data. VTB Group for improving retail customer experience: companies developed and implemented systems for personal data protection, as well ■■developed new training programs, including From as appointed executive officers. In addition, Complaints to Gratitude; conducted full-time training VTB Group companies provide their employees for 1,300 employees, as well as distance training with regular briefings on measures to prevent and testing for 4,700 employees; information leaks, as well as inspections of bank units for compliance with information ■■enhanced self-service devices and call-center security requirements. In addition, many Group transactions, and cancelled additional companies register all machine-readable media administrative requirements for conducting simple for processing personal data and also implement operations; software which monitors and prevents leaks of personal customer data through email ■■analyzed the efficiency of time utilization by and internet websites, as well as through the front-line employees; developed and implemented utilization of removable media.
The social impact of VTB’s HR management
VTB's HR focus areas
Employee recruitment
Employee development
Employee retention and motivation
Occupational health and safety Social impact
VTB GROUP'S HR MANAGEMENT
EMPLOYEE RECRUITMENT, DEVELOPMENT Employment and personal AND TRAINING fulfillment EMPLOYEE MOTIVATION AND RETENTION
Internal Communication and Corporate Culture
Occupational Health and Safety
Social support The key factor in the VTB Group’s success is its well-organized and professional team, which is capable of addressing complex tasks in a fast-paced political and business environment. 4. Internal Environment
4. Internal Environment
The key factor in the VTB Group’s success is to occupational health and safety. VTB regards 77 its effective and professional team, which is investing in personnel as an investment in able to address intricate tasks in a fast-paced its future. political and business environment. Therefore, the Group rapidly develops its human resources In 2014, the average headcount of VTB Group management system, creates opportunities for employees within the scope of the Report was the professional and personal development of 78,744. The Group’s largest employers were VTB24 its employees, ensures employee motivation by (35,772 people), VTB Bank (11,368 people), offering a viable salary package and advanced Bank of Moscow (11,186 people), and Leto Bank corporate culture, and pays strict attention (5,641 people).
Average headcount in VTB Group in 2013-14
40,000 37,997 35,000 35,772 30,000 25,000 20,000
15,000 13,674 14,778 11,612 11,368 11,186 10,000 10,345 5,000 5,641 2,051 0
VTB24 VTB Bank Bank of Moscow Leto Bank Others
2013 2014
VTB not only makes a substantial contribution to 4.1. HR Management at VTB Group ensuring employment thanks to its range of activity, but also helps employees reach their full potential The Group's main goal in HR management is to and provides social support through a compensation create a team of motivated, loyal, and qualified package and various benefits. employees. VTB Group Social Report for 2014
78 The key principles, areas, approaches, and The Group has a team of professional recruiters methods of HR management are determined by that fills most vacancies using the www. the HR Management Concept of VTB Group. vtbcareer.com career portal and external internet resources, and establishes the practice In 2014, a new HR management strategy was of personnel rotation within the Group. Some formed as part of VTB Group's Strategy for 2014- vacancies are filled with the help of recruitment 16. The strategy sets the direction for further agencies. development of the Group's companies with regard to the recruitment, development and motivation The Group regards students and young of specialists. The document puts great emphasis professionals as an important potential human on employee motivation, development and resource. In 2014, the Group was actively evaluation, and activities dealing with recruitment, engaged with leading Russian educational the development of the candidate pool, promoting institutions, took part in Russian and the Group's HR brand, working with young international career events, and organized specialists, and using principles of diversity. internships for students from financial An important measure within the framework of universities. Thus, VTB Capital continued fulfilling this strategy will be implementing a implementing the Fixed Term Analyst (FTA) consistent IT solution for HR management reporting and Elevate programs, whose goal is to attract in the Group’s companies; this project is scheduled senior students and university graduates to to be implemented in 2015. the company. Based on the success of FTA and Elevate, VTB Bank is launching similar Furthermore, in 2014, an integrated HR Committee programs in 2015, such as VTB Junior and made up of the HR managers of VTB Bank, VTB24, R.O.S.T. (Russian acronym for Development, Bank of Moscow and VTB Capital began working to Communication, Perfection, and Creation). ensure a consistent approach to HR management in the Group’s companies, as well as to centralize the VTB cooperates with young people on career HR function. guidance matters in both universities and schools. An example of this is an initiative of the Bank of Moscow, which in 2014 organized a 4.2. Employee Recruitment and Career Day for pupils that was attended by about Retention 60 people. Furthermore, the bank was the first organization in Russia to sign an agreement with VTB Group companies hired almost 29,800 new a pupil, according to which Ian Kharchenko, an employees in 2014. The largest number of new 11th form pupil at Moscow School No. 2006, personnel came from VTB24 (13,800 employees), Leto will get the chance to undertake an internship Bank (5,100 employees) and Bank of Moscow (4,100 at the Bank of Moscow and receive advice from employees). Of these employees, 73.1% were women the bank’s professionals on the development and 69.5% were persons under 30 years of age. of social and professional competencies in the 4. Internal Environment
VTB Capital: Fixed Term Analyst (FTA) and Elevate development programs for young professionals 79 Objective Attract students and graduates to VTB Capital. Approach Senior students and graduates can take part in the FTA program, while only graduates are allowed to participate in the Elevate program. Applications for the FTA program can be submitted in the Moscow and London offices of VTB Capital. The course duration for those who pass the entrance testing in London is two months, while in Moscow it can be increased to one year for the most successful candidates. The program includes, among other courses, an introductory course on investment and banking fundamentals, as well as training on communication and presentation skills. The following year the best FTA graduates can continue their internships in the company as part of the Elevate program. The selection of applicants for participation in the Elevate program is also conducted in both Moscow and London. Graduates who pass entrance testing are placed into an intensive six-week course of studies in London. After this, they complete internships in VTB Capital business units. Young professionals take part in the work of the chosen department first and then participate in the work of related units, which helps them to better understand the business processes of the company as a whole. The program lasts for 15 months altogether. Outcome VTB Capital has received over 6,000 applications from candidates from Russia, Great Britain and the USA since the start of the FTA and Elevate programs in 2011. In 2014, 25 people passed the multi-stage entrance testing for the FTA program, and 9 people passed the entrance testing to the Elevate program.
event of his good progress in studies at school and have been reinforced in some sectors, e.g. in units at university. This example contributes to building that deal with non-performing loan management. a career guidance system across Russia. Some employees have been re-employed in other sectors within VTB Group. At 2014 year-end, average headcount increased slightly (1%), while personnel turnover increased VTB maintains an optimal balance between the from 23.5% to 32.7%. The elimination of number of young employees and that of more certain positions was pursuant to the Group’s experienced specialists, and utilizes the strengths commitment to increase efficiency, as provided of both groups and ensures efficiency in business for in VTB Group's Strategy for 2014-16, and development. refocusing on higher-margin businesses. Teams VTB Group Social Report for 2014
80 Breakdown of VTB Group personnel by employment Breakdown of VTB Group personnel by age as at the end type as at the end of the year, % of the year, %
100 100 1.0 1.6 9.0 7.9 80 80
60 60 45.9 46.7
99.0 98.4 40 40
20 20 45.1 45.4 0 0
2013 2014 2013 2014
Part-time Over 50 Full-time 30–50 Under 30
Breakdown of VTB Group personnel by gender Breakdown of VTB Group senior management by gender as at the end of the year, % and age as at the end of the year 12, %
100 100
80 80
60 69.5 70.4 60 29.1
40 40
20 20 70.5 12.3 30.5 29.6 86.2 0 0 0.4 1.5 2013 2014 Men – 81.1% Women – 19.9%
Women Over 50 Men 30–50 Under 30
12 Senior management includes members of the Boards of Directors (Supervisory Boards) and Management Boards. 4. Internal Environment
Personnel competency is one of the most important helped in developing a further activities plan for 81 contributors to the Group’s success, which is why implementing the corresponding program in that VTB focuses strongly on corporate training based on company. common training standards.
VTB focuses on the following areas in corporate 4.2.1. Training for Common Service Staff training: In 2014, Group companies worked extensively on ■■Functional training for the efficient performance of launching new and updating existing educational job duties by employees; mastering business programs and trainings for common service staff processes, products and methods; developing involved in sales and customer service. Training business efficiency skills; activities were guided by the needs of specific companies. ■■Development of managerial competencies in managers and the formation of a uniform corporate ■■The Bank of Moscow developed a number of new management system. programs for all employees of its sales departments in the retail and corporate business In 2014, the Group's companies were involved in (Financial Protection of Loans with Cash MSK, Sales the development and organization of educational through Telebank, Customer Relations Management and training programs that were important Tools Using the Relevant Sales Channels, etc.); for different groups of employees within the special attention was paid to the training of framework of these focus areas. A total of about mortgage lending and private banking specialists; 28,000 various training activities were organized in the Group's companies in 2014, which ■■One of the priorities in VTB24 was to increase corresponds to approximately 785,000 man- customer satisfaction and reduce the number of courses. The average amount of training per VTB complaints. To that end, classroom and distance employee in 2014 was 47.8 hours, which is 16.2 learning for the Cash Loans, Bank Cards, and hours more than in 2013. Telebank System products was provided to all front-office employees, and two comprehensive In the course of 2014, the Group's companies programs were developed and introduced for were involved in a robust exchange of teaching call-center personnel. Furthermore, employees were aids and practical experience, and HR specialists trained on a new model of sales to affluent from various subsidiaries of VTB Bank were customers; engaged in cooperative development and conducting trainings within the framework of ■■VTB Bank (Belarus) conducted 33 internal training their competencies. Thus, VTB Capital specialists events on the implementation of new products, conducted continuity management training methods and managerial skills as part of internal for their colleagues from VTB Factoring, and training for employees who work directly with clients. VTB Group Social Report for 2014
82 In a number of Group companies, training was 4.2.2. Management Training focused on certain topics that were most important for their business development at that moment. To develop managerial competencies, a series of For example, Hals-Development launched a unique programs were launched in the Group's special training program on important matters companies in 2014. The Bank of Moscow is paying in IT systems as a new focus area in employee serious attention to systematic middle manager training; the VTB Pension Fund conducted training training: The Best Practices Management and on such issues as problems and prospects of Mentoring as a Manager's Function corporate programs pension system development, the corporatization were launched. VTB24 held a series of master classes procedure for non-governmental pension funds, for top managers and launched 10 new training their accession to the insured persons rights programs for middle managers. VTB Bank organized guarantee system, etc. VTB Bank (Ukraine)’s top manager training in the Systems Thinking in Cost priority was training head office personnel in Management program, which was later extended to procedure management and project work, which middle managers. Leadership Under Conditions of helped increase operational efficiency and improve Uncertainty and Change, a new program for managers, interaction among employees. was successfully launched in VTB Capital.
VTB Group: The New Energy for Leadership program for managers Objective Create and promote a new management culture among VTB management at cross-functional and cross-cultural levels. Approach This program began in February 2014 at the Graduate School of Management at St. Petersburg State University (GSOM SPbSU). This was the first VTB training program that provided its graduates with an official advanced professional development certificate. The program lasts for a year and a half and consists of seven-day, two-day and three-day modules, as well as extensive homework. It closely resembles the real world and provides managers with practical tools that they can utilize at once when they come back to the office after finishing training. The ratio of practical topics to theoretical ones during classroom learning is 70% to 30%. The program ends in May 2015 with the presentation of graduates' projects to the management of VTB Group and GSOM SPbSU. Outcome A total of 52 VTB Group managers from the head office, branches and subsidiary banks in CIS countries who successfully passed several stages of entrance testing became program participants. Only managers with established managerial experience were allowed to take part in the entrance testing. As part of the program, the participants execute business projects that are of practical value for VTB Group. 4. Internal Environment
4.2.3. Distance Learning 4.3. Employee Motivation and 83 Remuneration Specialists of Group company training and development departments proactively introduce To increase employee motivation, Group companies new classroom and distance learning and regularly improve the system of motivation and development forms and tools: the webinar remuneration, trying to tie the salary level to the format is used extensively, and development performance of every employee. Furthermore, modules are integrated into operations VTB conducts regular monitoring of employee meetings and business meetings. motivation and involvement, which allows the Group, when making management decisions, to Distance learning has become an integral part take into account, among other things, matters that of the employee competency development are of importance to personnel. process in all companies of the Group, and the number of these trainings is constantly increasing. In 2014, the Bank of Moscow 4.3.1. Remuneration System increased the reach of its distance learning by more than 10 times, from 11,000 to 123,000 Being a responsible employer, VTB takes man-courses. care of its employees, and provides them with a competitive rate of remuneration and In addition, distance learning has a positive comprehensive social assistance. In addition, an effect on reducing employee training and important condition is to provide an appropriate development costs amidst the economic expenditure level for remuneration within the slowdown, and allows the money saved to be framework of the approved business plan of each redirected towards developing new courses and company in the Group. increasing the number of trained employees. For example, the distance learning program that VTB Group has common principles of motivation was launched in 2014 in VTB Insurance made and remuneration. The current system of financial it possible to increase the number of trained incentives is designed to encourage employees employees by almost 5 times (from 12,000 to to achieve a high level of performance and 56,000 people). be committed to achieving results. Thus, the amount of bonus payment is directly linked to Among large-scale projects executed in 2014 the fulfillment of the assigned key performance was the training of the whole VTB24 network indicators (KPIs) and individual tasks of the on how to use the VTB24-Front software using employee, the structural unit, and the company simulator courses, as well as the large-scale of the Group as a whole. Threshold, setting and training of VTB Capital personnel on the adjustment indicators are taken into account when Performance Management issue connected to calculating bonuses. the implementation of the Oracle System. VTB Group Social Report for 2014
84 In 2014, KPIs were adjusted for some companies 4.3.2. Employee Evaluation of the Group due to sales processes and customer service optimization. Furthermore, The basis for improving performance and motivation the procedure for paying bonuses was changed among VTB employees is the evaluation of their for some categories of personnel. These performance results. Most companies of the Group changes concerned VTB24, Bank of Moscow, carry out an annual and quarterly assessment of Hals-Development, VTB Insurance, VTB Bank performance for all personnel categories. (Kazakhstan), and VTB Bank (Armenia). Group companies use various tools and In 2014, the development of a long-term procedures for employee evaluation, but maintain personnel motivation program, which a consistent approach. The assessment of senior started two years earlier in the Corporate and management performance is carried out using KPIs Investment business line, was also continued. which reflect the strategic priorities of the Group, The program makes it possible to combine the and have quantitative and qualitative indicators long-term interests of investors, shareholders, for the year for each manager. The assessment management, and employees, so that they of the performance of VTB units and employees share both risks and returns. Receiving options is based on quantitative and qualitative KPIs is not an additional form of remuneration, but cascaded from the top. an integrated part of each employee’s general compensation package. The right to receive In 2014, VTB was actively engaged in developing shares depends on the employee’s performance, an employee evaluation system. In particular, provided he or she continues their employment Group companies implemented the following relationship with one of VTB Group companies for initiatives: the duration of the program. ■■Updated competency model. VTB24 updated the In some countries where VTB operates, competency model for front-line personnel and the regulatory authority requires deferred senior management, and based on this a new compensation for the employees of investment model for planning employee training and companies. Therefore, VTB Group partially development was created. VTB Capital updated its structured deferred compensation in the form competency model for management. of stock options within the program. To a large extent, this practice enabled VTB to prepare for ■■Special tools were developed for evaluating the new Bank of Russia requirements regarding certain personnel categories. The Bank of Moscow deferred compensation at banking institutions developed and implemented a comprehensive and a combination of cash and non-cash tool for evaluating the knowledge and personal remuneration which is sensitive to performance qualities of employees at sales offices, and VTB results and the risk level established by Leasing started building an employee evaluation the credit institution. system for the Car Leasing business line. 4. Internal Environment
■■Automated evaluation system. The Employee Besides basic benefits, some companies of 85 Evaluation module was implemented in the VTB the Group provide partial reimbursements of Insurance intranet portal in order to transition expenses for fitness, medical aid in offices, and from a manual process of annual evaluation to an special terms for the products of the bank or the automated one. In 2015, automated evaluation company. Thus, in VTB and the Bank of Moscow, will cover all employees of the company. employees receive up to a 70% discount on club cards for fitness centers, and there are first ■■A new evaluation system for back-office aid stations in the offices of the bank where personnel. In 2014, Leto Bank developed and employees can get flu vaccinations. VTB24 implemented an evaluation system for back- provides discounts for fitness centers, as well as office. The Letomer evaluation system makes it travel and mobile phone allowances. possible to evaluate the competency and performance of head office personnel, as well as In 2014, the social support system for the the management and supporting subdivisions of Group's employees was adjusted in accordance the network. with the approved program for optimizing personnel costs. However, financial aid programs for employees were preserved and social 4.3.3. Benefits benefits were adjusted for the most vulnerable categories such as large families and single In an effort to ensure the social security of its parents. employees, Group companies provide them with a social benefits package, including: The social package for some companies in the Group was expanded in the reporting period for ■■Voluntary health insurance program (VHI); the purpose of developing the benefit system. Thus, VTB24 introduced two new benefits: ■■Accident and sickness insurance; voluntary health insurance for employee relatives, and partial reimbursement for industry- ■■One-off payments for family emergencies; specific higher education for employees. VTB Leasing increased the amount of one-off ■■Financial aid in the event of exceptional payments for family emergencies. circumstances;
■■Reimbursement of relocation expenses; 4.3.4. Enhancing Employee Satisfaction and Involvement ■■Additional paid leave; Employee satisfaction and involvement are ■■A corporate pension plan that allows the indispensable aspects of business efficiency. employee’s future pension to be increased. Group companies study and analyze these VTB Group Social Report for 2014
86 indicators, identifying possibilities for long-term 4.4. Internal Communications and employee motivation. Corporate Culture
Employee satisfaction and involvement Group companies strive to create a favorable studies are centrally conducted in the Group's corporate culture that corresponds to the values companies once every two years. Since the of the Group and allows employees to reach their previous study was conducted in 2013, in the maximum potential. course of 2014 Group companies analyzed the findings and implemented measures to address VTB corporate culture is supported, first and the identified issues. In the autumn of 2013, foremost, by an efficient system of internal the employees of VTB Bank, VTB24, the Bank of communication. The Group uses the following key Moscow, VTB Capital, VTB Bank (Ukraine), VTB channels of communication with employees: Factoring, VTB Leasing and VTB Insurance took part in the study. ■■Meetings between senior managers and employees; As part of this work, in 2014, the results of the ■■Distribution of information digests, operational study were communicated: segmented data messages, and video announcements by e-mail; per each department and region were brought to the notice of heads of units. To enhance the ■■Thematic conferences and summits with the satisfaction level for the indicators of potential participation of the Group's company growth, meetings were held with managers and representatives; employees in 2014, and the outcomes of these meetings were used to develop action plans to ■■Energy of the Team intragroup magazine for improve involvement key indicators. Employees employees, and other publications in Group companies; were chosen to be in charge of implementing these plans. ■■Intranet portals.
In particular, based on the outcomes of the In 2014, Energy of the Team magazine, which had involvement study, VTB24 carried out activities in been published since April 2008, was modernized: the area of personnel training and development, the format became more reader-friendly, the improving corporate culture, and the employee columns were updated, and the approach to design, remuneration system. For example, new software illustrations and text styles was changed. In the and sales models training programs were reporting period, the Bank of Moscow released four developed for network personnel. Furthermore, issues of DuPositif corporate magazine, three of changes were made to the current remuneration which were published in electronic format: an online system regarding some standard jobs at the PDF version on the bank's portal, and a version for regional subdivisions of the bank in accordance iOS-based tablets/smartphones. with the business environment. 4. Internal Environment
To improve interaction with employees, Group and forums are started for panel discussions 87 companies actively developed their intranet portals in of important issues for the organization and 2014. These portals are very popular with employees, development of certain projects and initiatives. since they contain sections on the latest news on the VTB Bank employees posted their ideas on the internal life of divisions, as well as corporate events, intranet portal as part of the development of the distance learning modules, vacancies, benefits, and new Group strategy. The same tool was used when other useful information. Thus, in 2014, about 570 collecting ideas from employees regarding which news pieces were published on the internal portal of of its resources the Bank can save to promote a the Bank of Moscow, and sections for 8 divisions were culture of less consumption. Leto Bank invited created. Moreover, the number of unique visitors to employees to generate ideas on fraud detection the portal consistently exceeds 3,000 people per day. and unreliable clients. As a result of employee proposals, the bank introduced public access The most important function of the intranet portals to the 2GIS system, the FMS (Federal Migration is the opportunity to involve employees in a Service) website, and the website of the Federal dialogue and receive timely feedback. The intranet Service of Court Bailiffs. Amendments were also portals are used for unofficial public opinion polls, made to the employee incentive scheme.
VTB24: My Idea Project Objective Promote innovation as a key element of corporate culture, improve the efficiency of processes, and reduce costs through implementing employee ideas, giving incentives, and promoting talented employees. Approach Since October 2013, there has been a special platform for the collection, discussion and expertise of employee ideas at VTB24. Ideas are considered as both part of general proposals on improving products, processes, and the ergonomics of IT systems, and as part of target inquiries from the bank’s business leaders, e.g. on the optimization of mortgage lending, small business lending, or bank expenditures. A core expert reviews every idea that is submitted, and if the expert likes the idea, it is sent for implementation. The creator of an implemented idea with a proven economic effect is paid a reward of up to RUR 100,000. In addition to developing a community of employees involved in the process of ongoing improvement, the bank is building a proactive expert community by holding expert discussions on the execution of cross-functional ideas, and by involving experts in the implementation of proposals. Outcome A year and a half since implementing the My Idea Project, over 20% of VTB24 employees were registered on the platform, and the project’s net economic effect for 2014 reached RUR 79 million. Employees who proved themselves to be active innovators and experts were recommended for inclusion in the bank candidate pool. VTB Group Social Report for 2014
88 4.4.1. Corporate Events corporate events, which included athletic, family, and children’s events. The Bank continued its support of An important area for developing a common corporate employee sports teams in hockey, volleyball, basketball, culture at VTB is the organization of festive and athletic tennis, paintball, chess, kart racing, and cheerleading. corporate events. In 2014, VTB held its traditional
VTB’s biggest corporate events in 2014
Corporate events Number of participants
VTB Group’s winter sports festival at the Leonid Tyagachev ski club in the Moscow Oblast Over 2,600 Group employees and their families
My Family summer family event of VTB Group at the Rus National Equestrian Park in the Over 2,000 Group employees Moscow Oblast
The For Company program of informal team-building events for Bank of Moscow Around 3,500 bank employees employees: group visits to performances, musicals, excursions, and first aid courses
Picnic with the Bank of Moscow in Sokolniki Park to celebrate City Day 5,500 Group employees and residents of Moscow
VTB Global Chess 2014 international online chess tournament Over 500 participants
Epiphany Frosts, a children's event for employees of VTB Bank 600 people, of which 300 were children of Bank employees
The Bank of Moscow: Picnic in Sokolniki Park for City Day Objective Reinforce the Bank of Moscow’s brand name among employees and position the bank for the public. Approach The Picnic with the Bank of Moscow took place on 6 September 2014 in Sokolniki Park. Within the framework of this family event, bank employees and city visitors participated in sporting events, interactive contests and quizzes, and listened to cover bands singing songs about Moscow. A gastronomy festival, the participants of which were local fast food restaurants, was held for guests. Furthermore, workshops were organized for children where they could create crafts using natural materials, and adults could take part in dance workshops. Finally, a photo booth was open during the event where everybody could take a photo using funny props and get their pictures taken with the bank's logo. Branded tents with pouffes were set up all over the territory of the event in case it rained. Outcome All in all, the Picnic was attended by about 1,000 bank employees together with their families, and by about 4,500 city residents. The bank’s total budget for this project was over RUR 3.8 million. 4. Internal Environment
4.4.2. Volunteer Work organize charity fairs where pictures and crafts 89 made by children from orphanages are sold, provide As per tradition, VTB employees participated in material and technical support, and organize visits corporate volunteer programs in 2014. For many to orphanages. Such projects are popular with Group years, Group companies have carried out fundraising employees: in 2014, VTB and VTB Capital employees campaigns for children from orphanages and raised about RUR 1.9 million, VTB24 employees residential care schools in order to get presents raised RUR 1.5 million, and Bank of Moscow for the start of the school year and the New Year, employees raised over RUR 1 million.
VTB24: Support for the volunteer movement Objective Solve social problems and build a corporate culture based on the principles of social responsibility, team spirit, and partnership. Approach Volunteering is a long-standing tradition at VTB24, and the number of bank volunteers is constantly growing. The bank has held a monthly contest for employee volunteer projects since 2013, with the best participants receiving financing from the bank. According to the contest rules, VTB24 volunteers have to provide co- financing for the projects. In all regions where the bank operates, employees build teams, create projects, do preparation work with charity recipients, and submit a presentation to the contest. As the number of employees involved increased, in 2014, VTB24 began to receive more and more questions regarding the format, regularity, and unforeseen complexities of events, as well as ethical issues during volunteer projects. As a result of this, in 2014, the VTB24 Public and Corporate Communications Office developed a training course for VTB24 volunteers that was held in the form of lectures by non-profit sector experts involved in work with orphanages, retirement homes, and environmental organizations. Seven lectures were held in total. Furthermore, in 2014, VTB24 completely updated the Volunteering section of the bank’s corporate portal, adding a Calendar section where information about upcoming volunteer projects and charity events is published, and created the VTB24 Volunteer Gallery section. Outcome The measures taken in 2014 made it possible to considerably increase the success and scope of events proposed within the contest of volunteer projects. Over 170 projects have become winners since the time the contest has been held, with over 1,500 volunteers of the bank participating in the events, and over 10,000 people receiving assistance. In 2013, employees contributed RUR 502,000 to volunteer projects, while in 2014 this figure almost doubled, and reached RUR 919,000. The bank contributed RUR 1.48 million in 2013 and RUR 2.45 million in 2014. The corporate volunteer program and charity work of VTB24 were acknowledged with a certificate for contribution to charity as part of the 2014 Leaders in Corporate Charity competition held by the Vedomosti newspaper, PWC, the Donors Forum, and the St. Petersburg State University Graduate School of Management. VTB Group Social Report for 2014
90 In 2014, VTB bank and VTB Capital employees 4.5. Occupational Health and Safety took part in 23 volunteering projects to support orphanages and retirement homes. The money VTB Group companies are committed to ensuring raised was used to build and equip a gym and a employees’ occupational health and safety. computer classroom in the Vasilyevsky Orphanage. Required medications and hygiene necessities For the purpose of improving the occupational safety were bought for a retirement home in the village management system, in 2014, VTB developed and of Podborki. In turn, employees of VTB North-West implemented a number of internal regulatory documents Regional Center provided support to the Nikolsky that fully comply with the up-to-date requirements. Orphanage in the Leningrad Oblast in 2014. The money raised was spent on clothes and footwear The first stage of special evaluation of the working for children, sports equipment, and preparation for conditions in VTB Group companies was carried out New Year's Day events. during 2014, and included the following events:
Another important volunteering project is blood ■■Preliminary examination of workplaces to discover donation within the framework of donor events. In harmful and/or hazardous occupational factors; 2014, as part of a donor event in the Federation Tower, 160 employees of Group companies ■■Study and measurement of identified harmful donated 57 liters of blood. Three donor events and/or hazardous factors in the working were held by the Bank of Moscow, where 250 environment and in the work flow; employees took part. ■■Evaluation of the provision of personal protective Employees of some companies of the Group took equipment to employees, and an evaluation of part in large-scale events organized by major workplace safety. charity foundations. In 2014, cooperation with the Downside Up charity foundation continued. A total of 4,486 workplaces were evaluated13. Based The foundation assists families and governmental on the results of the evaluation, all of them were and non-profit organizations in teaching, raising classified as working condition class 2 (acceptable). and integrating into society children with Down syndrome. Bank of Moscow employees In order to prevent workplace injuries and participated in a charity bicycle ride, a run, and professional illnesses, the Group provides full- a mini-football tournament. VTB24, together with scale occupational health and safety training to its the foundation, organized a Good Deeds New Year employees. A total of 1,278 managers and specialists charity fair. of VTB Group received OHS training in 2014.
13 Hereinafter, in the Occupational Health and Safety Section, unless otherwise stated, quantitative data applies only to the Group companies that are located in the Russian Federation, since differences in legislation make it impossible to provide a correct interpretation of such OHS data for other countries where the VTB Group operates. 4. Internal Environment
An important condition for reducing occupational safety was the considerable reduction of accidents, 91 illnesses is the dynamic monitoring of employee injuries and occupational illnesses compared to the health and the early detection of illnesses. To that previous year. Thus, in 2014, VTB Group companies end, regular medical examinations are held at Group recorded and investigated 19 occupational companies. A total of 6,075 employees underwent accidents, 2 of which were serious ones (2013: 30 medical examinations in 2014. accidents, 1 of which was serious). The total number of working days missed due to occupational injuries A major result of the activities performed to provide decreased by 32% year over year, and amounted to an injury-free working environment and occupational 779 working days.
The impact of VTB’s social activities
VTB’s areas of social engagement
Improvement of Russia's financial and banking system
Attraction of investments to the Russian economy
Strengthening international cooperation
Support for "high achievement" sports
Investment in sports infrastructure
Promotion of a healthy lifestyle
Support for art
Support for the theater and music
Support for the mass media and cinema
Preservation of the cultural heritage
Support for healthcare
Support for education
Support for socially disadvantaged groups Social impact
Contribution to sustainable economic development Approach to Sponsorship and Charity Federation the Russian
of Development of THE Business Environment Promotion of sports Support for Sports
Support for Culture Improved AND THE ARTS quality of life Key Social Projects
Promotion the attractiveness Increasing of culture and the arts
Social assistance For many years, VTB Group has contributed to social support and development through charity and sponsorship programs and projects. These activities are an essential part of VTB’s business operations. 5. Social Environment
5. Social Environment
5.1. Approach to Sponsorship were 14 meetings in presentia and in absentia of 97 and Charity the VTB Charity Committee in 2014. About 800 requests for charity donations from organizations For many years, VTB Group has been contributing and individuals were considered at the meetings. If to social support and development through charity a charity is selected, the contract for a cash donation and sponsorship programs and projects relating to is signed with the beneficiary. Upon the completion improving the business environment, culture and of the project, the beneficiary is requested to submit art, healthcare, education, and social assistance. an appropriate expenses report. These activities are an indispensable part of VTB’s business operations and, eventually, facilitate 2014, VTB Group charity expenditures reached RUR sustainable economic development, improved 17.5 billion . The Group’s key donors include VTB quality of life, and social support for the population Bank, Bank of Moscow, and VTB24. in the countries where the Group operates. An additional positive effect is the improvement of Russia’s image in the country and abroad, and 5.2. Development of Business the strengthening of international business and Environment humanitarian relations. Traditionally, an important area of VTB’s social VTB’s approach to charity work and sponsorship engagement is its involvement in the development did not change in 2014. This approach continues of Russia’s business environment, which includes to be based on principles of consistency, targeting, the improvement of the Russian financial and openness, and transparency. Priority is given to banking system, attraction of investment in regular partners and beneficiaries whose work the Russian economy, and the strengthening of greatly contributes to social development over the international cooperation. course of many years.
The approaches to charity decision-making at 5.2.1. Improvement of the Financial and Banking VTB Bank and other companies of the Group are System of the Russian Federation basically the same, except for minor adjustments for special features and the scale of their operations. VTB Group traditionally provides financial support Charity requests made with project descriptions for the organization of events on issues that are are considered by charity committees that must important to the financial and banking system of the include senior management representatives. There Russian Federation. VTB Group Social Report for 2014
98 Key events devoted to financial topics, sponsored by VTB in 2014
Event Event topic Number of participants
25th Congress of the Association of Generating proposals regarding banking Over 1,000 bank representatives Russian Banks system development
Russian Securities Forum Securities market and custodian operations Over 120 representatives of banks, stock exchanges, and custodian firms
Banks of Russia in the 21st Century, Models of financial sector development in Over 550 representatives of federal ministries and agencies, 12th International Banking Forum the age of globalization top managers of Russian and foreign banks, representatives of international financial organizations
Russian National Payments Forum Global trends that shape the ecosystem of About 500 visiting experts from Europe, Asia, and North and the electronic payments industry in Russia South America
9th Annual Association of The financial system and business of the About 200 participants representing regional and federal North-Western Banks professional North-West: new realities banks, the Bank of Russia, and public authorities conference
5.2.2. Attraction of Investment in the Russian Economy amidst the imposed sanctions and the crisis of confidence in international relations. ГVTB Group contributes to attracting foreign investment in Russia not only through its core The flagship event of VTB Group with regard to operations, but also through the organization of cooperation with foreign investors is the VTB Capital strategic events at the national level. Continuing RUSSIA CALLING! investment forum. The forum has a long-standing and open dialogue with the been held in Moscow, London and New York since investment community is a priority for VTB Group 2009.
VTB Capital: RUSSIA CALLING! investment forums Objective Increase Russia’s investment attractiveness and provide international experts with an efficient platform for a constructive dialogue and the development of mutually beneficial cooperation. Approach From the moment of its formation, VTB Capital has been actively involved in international markets, acting as a proxy of foreign investments to the Russian economy. VTB Capital has been organizing the RUSSIA CALLING! investment forums in Moscow, London and New York since 2009. Under the conditions of a volatile and unstable global economy, the VTB Capital RUSSIA CALLING! investment forum has proved itself to be a key event on the financial market. Now the forum is one of the main platforms for a direct dialogue between international investors, representatives of Russian business, and the heads of key government agencies. The RUSSIA CALLING! forum helps find ways for mutually beneficial cooperation and sustainable development of the Russian economy. 5. Social Environment
According to participant feedback and reviews in leading publications, the event facilitates an 99 understanding of investment opportunities and the development of the investment climate in Russia. Outcome In 6 years, over 2,000 international investors from more than 60 countries from all over the world were participants of VTB Capital forums. In 2014, the forum gathered a record number of delegates, with over 1,500 guests from over 50 countries, including almost 500 international and Russian investors, heads of key economic and regional agencies, and the heads of major companies. The forum was awarded one of the most distinguished international prizes in the sphere of communications by the Corporate & Financial Awards in the Best Communication Strategy with International Investors and Media category. VTB Capital also became a prizewinner of the IPRA Golden World Awards, a prestigious annual awards ceremony organized by the International Public Relations Association in the Best Event Management category.
5.2.3. Strengthening International Cooperation In addition, VTB supported a number of major international industry events, including: The success of VTB as a financial group that operates in over 20 jurisdictions is related to the ■■Strategic Partnership international rail business development of international cooperation at the forum focused on the development of comprehensive national and company level. Therefore, the Group solutions for the railway industry, such as sponsors events aimed at enhancing cooperation. transportation optimization, infrastructure modernization, the attraction of investment, and the In 2014, the CIS and New Formats of Interaction production of rolling stock. international economic forum, sponsored by VTB, was held in Moscow. Heads of state-owned ■■21st World Petroleum Congress was a major industry corporations and major business, professional event that gathered over 6,000 delegates from 100 industry associations and business partnerships, countries, and focused on sharing experiences and banks and insurance companies of CIS countries the presentation of achievements relating to scientific participated in the forum. A number of specific and technological progress in the oil and gas industry. issues of economic cooperation in the region were discussed at the forum, including the ■■Mechanical Engineering Technologies 2014 implementation of the Free Trade Agreement international forum, which comprised 16 conferences, and the Multinational Program for the Innovative round table discussions and seminars for over 1,500 Cooperation of CIS Countries for the period professionals; the key event of the forum was the until 2020. Cooperation and/or Import Substitution plenary meeting. VTB Group Social Report for 2014
100 5.3. Support for Sports an official partner of the International Gymnastics Federation (FIG) and the International Association of Support for sports has been a significant area of the Athletics Federations (IAAF). In 2014, financial support Group's sponsorship and charity. VTB promotes the was granted to the Alpine Ski and Snowboarding development of volleyball, basketball, motor sports, Federation, the Russian Canoe Federation and the gymnastics, ice hockey and other types of sports in Russian Automobile Federation. The banks of the Group Russia through the sponsorship of sports federations also supported the Belarus Table Tennis Federation, and professional teams, the construction of sports the Belarusian Basketball Federation, the Georgian facilities, and the promotion of a healthy lifestyle. Equestrian Federation, and the Georgian Rugby Union.
Support for national teams and involvement in 5.3.1. Support for Professional Sports athletes’ preparation for international competitions are traditionally on the list of priorities of the Traditionally, VTB Bank sponsors sports federations bank's sponsorship program. Thus, the Bank that develop and promote professional sports in continued its sponsorship of the KAMAZ-Master Russia and around the world. rally team, the Dynamo Moscow football club, and the Dynamo Moscow hockey club. Since 2003, the Bank has been the general sponsor of the Volleyball Federation of Russia, since 2006 has In the reporting period, the Bank of Moscow continued been the general sponsor of the Artistic Gymnastics supporting the Kremlin Cup, which is the only Federation of Russia, and since 2009 has been international tennis tournament with a twenty-year-
VTB Bank: Support for the Artistic Gymnastics Federation of Russia (AGFR) Objective Support talented athletes, increase the popularity of artistic gymnastics, and promote sports. Approach The Bank has been the general sponsor of the AGFR since 2006. Vasily Titov, Vice-President of the International Gymnastics Federation and First Deputy President and Chairman of VTB Bank Management Board became the new leader of the organization in October 2014. In the reporting period, the Bank granted targeted support to 20 athletes and 40 coaches. Furthermore, in 2014, athletes were able to take part in 12 competitions with the help of VTB, and 180 gymnastics schools purchased 35,000 units of equipment using funds provided by the bank. In 2014, AGFR also held 115 events in cooperation with the Bank, which contributed to the development of sports in Russia. Outcome During the period of cooperation with the Bank, the AGFR team achieved 149 wins, 35 of which came in 2014. With VTB’s support, the Russian artistic gymnastics team had a real breakthrough at the 2012 London Olympics, securing a gold, three silver and four bronze medals. In addition, Aliya Mustafina became the most decorated Russian athlete at the Olympics. 5. Social Environment
VTB Bank: Support for the KAMAZ-Master rally team 101 Objective Promote the Russian automotive industry and motorsports, as well as advocate a healthy lifestyle. Approach VTB Bank has been the general sponsor of the KAMAZ-Master rally team since 2005. Apart from financing the team's participation in competitions and developing a research and technology base, VTB Bank actively supports the KAMAZ-Master team’s involvement in social activities and events, such as the Breakthrough festival of extreme sports, the VTB World Without Tears program, meetings with university students, excursions for children and students of the Volga Oblast, and children’s and youth festivals. Furthermore, with the support of VTB, the Gas Engine Sports Truck program was launched, which promotes the use of more environmentally friendly gas and diesel fuel both in sports courses and on public roads. A research and development center was also built in Naberezhnye Chelny, and was fit with equipment that makes it possible to carry out design engineering and research work. Outcome Owing to the direct assistance of VTB Bank, the team gained access to modern technologies that secured its achievements and a design engineering base, as well as made it possible to improve equipment. After VTB joined the list of sponsors, the team won seven out of nine Dakar rallies. long history in Russia. The Bank of Moscow is the best national and international athletes for participation tournament's Title Partner, and offers the entire prize in the tournament and maintain the high status of the pool, the size of which makes it possible to invite the Kremlin Cup in the international sports scene.
VTB Bank: Support for the Dynamo Moscow Football Club Objective Promote FC Dynamo Moscow, develop sport, and increase the popularity of football in Russia. Approach VTB Bank has been the general sponsor and official bank of FC Dynamo Moscow since 2009. Using the Bank’s support, the training process is organized and carried out for the main team and youth team, as well as at the Dynamo Academy. Home games of the main team are held within the framework of the Russian Premier League, and youth team matches are held within the framework of the Youth Championship. The Bank also helps the club in supporting youth sports. One of the areas of cooperation is the involvement of VTB in VTB Arena Park, a huge investment project that provides for the major reconstruction of Dynamo Central Stadium, the football club’s home arena. Outcome With the support of the Bank, FC Dynamo Moscow participated in four major tournaments in 2014, among which were the UEFA Europe League, Russian Football Premier League, Russian Cup, and Youth Championship, and had 44 wins. In 2014, 285 children and teenagers trained at the club's schools. Moreover, with the help of VTB, FC Dynamo Moscow held 38 events for youth, among which was the children's and youth teams’ tournament Dynamo and VTB – Football for All, the Moscow Oblast children's teams’ tournament VTB Cup, the international football tournament Lev Yashin VTB Cup, and others. VTB Group Social Report for 2014
102 5.3.2. Investment in Sports Facilities 150 bike rental stations were set up in the city center, with 1,500 bikes regularly available for VTB continues to fund VTB Arena Park, an rent. In 2014, this successful experience was also innovative town planning project aimed at the full transferred to St. Petersburg. reconstruction of Dynamo Central Stadium and its adjacent areas. The project involves increasing the number of stadium seats to 26,319, as well 5.4. Support for Culture and Arts as arranging a green park and a residential neighborhood. The project is aimed at creating VTB is actively involved in the country's cultural cutting-edge sports infrastructure that is harmonized life. Each year, the Group sponsors unique with the urban space and comfortable for locals. exhibitions and festivals, theatrical and musical premières, and the making of films and series of Construction installation activities commenced at books. the stadium in July 2014. By the end of the year, the foundation work was finished, utility lines were installed, the arrangement of basement floors 5.4.1. Support for the Fine Arts that could be home to a recreational center was completed, and preparation work for the erection of The Bank continued its cooperation with the country's a superstructure was carried out. Dynamo Central leading museums of fine arts, such as the State Stadium is due to open on 22 October 2017. Tretyakov Gallery, the State Russian Museum, the Hermitage, and the Pushkin State Museum of Fine Arts. Each year, these museums host large-scale 5.3.3. Promotion of a Healthy Lifestyle exhibitions and events with the Bank’s support.
The Bank of Moscow has pioneered and participated In 2014, one of the most significant events was the in the development of a bike route network in Georgy Kostakis exhibition Departure from the USSR. the Moscow city environment for several years. In The exhibition was made on the 100th anniversary of 2013, the bank became an official sponsor of the the collector’s birth, and was presented by the State public bike rental system organized by the Moscow Tretyakov Gallery and organized with the support of Department of Transport and Road Infrastructure VTB. The exhibition included works by Kandinsky, Development. The system that has been Malevich, Chagal and other outstanding painters of implemented in the capital is a fourth-generation the Russian avant-garde. The exhibition was visited system that uses special anti-vandal bikes, dock by over 63,000 people. stations, solar batteries, and a convenient payment system for bike rental service with the help of In 2014, the Bank also sponsored two major events in bank cards. The summer of 2014 saw the start of the State Russian Museum. On the 100th anniversary the second season of the Velobike city public bike of Nicholas Roerich, an exhibition was held that rental. With the support of the Bank of Moscow, presented over 300 rare paintings of the artist. 5. Social Environment
VTB Bank: Support for the State Tretyakov Gallery 103 Objective Expand the State Tretyakov Gallery's opportunities for restoration of works of art, hosting exhibitions, increasing funds, and developing the Russian school of painting. Approach VTB Bank and the State Tretyakov Gallery have been partners for many years; the Bank has been a member of the Friends of the Tretyakov Gallery Society since 2002, as well as a member of the Board of Trustees of the museum and a sponsor of key exhibitions. Outcome In recent years, with the support of VTB Bank, the gallery has presented unique exhibitions of Natalya Goncharova, Nikolai Ge, Aleksandr Deyneka, Konstantin Korovin, Pyotr Konchalovsky, and other artists. Altogether, over 650,000 people visited these exhibitions sponsored by the Bank in 2010-14. Furthermore, internet users from all over the world were able to enjoy the museum collection by taking part in virtual excursions on the VTB website.
Secondly, the Imperial Gardens of Russia international Krai State Art Museum, which for the first time festival was held, the goal of which is to revive introduced traditional folk art and contemporary art landscape architecture and garden art in Russia. of Altai in Moscow. The exhibition was organized by the Russian National Decorative Art Museum, the In the reporting period, VTB Bank was the general Altai Krai State Art Museum, and VTB24 as part of sponsor to the State Hermitage Exhibition at the year of culture of the Russian Federation. the Court of the Russian Emperors. The 18th- Century through Early 20th-Century Costume in the Hermitage Collection, as well as the Moscow 5.4.2. Support for Theatrical and Musical Art Design Museum Exhibition British Design: From William Morris to the Digital Revolution, which took VTB Group companies traditionally support leading place in the Pushkin State Museum of Fine Arts. theatrical and musical art institutions in the regions where the Group operates. VTB sponsorship is Since 2011, VTB Capital has been the main strategic provided both to certain productions, and to the partner of the Calvert 22 Foundation, which presents organization of festivals, contests and tours. contemporary Russian art in Great Britain. Calvert 22 projects give British society a chance to learn about Support for première productions is a traditional the new creative class in Russia. practice within the cooperation between VTB Bank and the State Academic Bolshoi Theatre of Russia. The biggest milestone event for VTB24 in the In 2014, the Bolshoi Theatre, sponsored by VTB, reporting period was the Altai – Image – Time presented the première of the ballet Lady of the Exhibition from the collections of the Altai Camellias by John Neumeier with music by Frédéric VTB Group Social Report for 2014
104 VTB Bank: Support for the Fomenko Studio Theatre Objective Support the Moscow Fomenko Studio Theatre’s artistic projects, make theater performances more accessible, develop theatrical art, and facilitate the artistic pursuits of young talent. Approach Since 2006, VTB Bank has fully supported the Moscow Fomenko Studio Theatre in its main activities: touring, staging new productions, making theatrical scenery, making costumes, logistical support, and targeted social aid for theatre workers. In 2008, the theatre moved to a new building at the Tarasa Shevchenko Embankment, which meets all of the modern technical requirements. Its construction was sponsored by VTB. Outcome Through VTB’s involvement, the theatre managed to extend its capacity by 465 new seats, and organize online broadcasts of four performances on the bank’s website. Furthermore, in 2014, 81 actors and employees of the theatre received targeted aid from VTB Bank. In the period of cooperation with VTB, the theatre was awarded the Golden Mask national theatre award and the Crystal Turandot independent theatre award. Moreover, the theatre’s productions have been repeat winners of the Chaika theater award, the Hit of the Season award, and have received prizes and awards at several international festivals.
Chopin, and Arif Melikov's ballet The Legend of Love, also sponsored the Perm Opera and Ballet Theatre. with choreography by Yuri Grigorovich. Over the years, the Bank has sponsored the Theaters to Beslan Children charitable program. Since 2004, In 2014, VTB continued cooperation with the Moscow tours of famous theatres from Russia, Denmark and Fomenko Studio Theatre. The Bank financed the tour the USA have been arranged in the town, and the best of the theatre to Sevastopol and Yerevan, as well as children's productions have been performed. According the production of Last Dates (Posledniye Svidaniya), to psychologists who worked in North Ossetia, a play based on Ivan Bunin's short stories. performances of the children's theatres were one of the most efficient forms of therapy for schoolchildren who VTB Bank sponsored the production of Lermontov's suffered from the terrorist attack. Masquerade at the A. Griboedov Russian State Drama Theatre of Tbilisi (Georgia), and VTB Bank (Armenia) VTB24 has supported the Moscow Drama College supported the next theatrical season of the Stanislavski at the Tabakov Studio Theatre since 2008, and the Russian Theatre of Yerevan. bank has supported the State Academic Vakhtangov Theatre and its tours throughout the country since The Bank of Moscow traditionally supports the Moscow 2011. Furthermore, the bank sponsored a ballet Young Spectators Theatre and Spasskaya Tower, a large festival in honor of Galina Ulanova in Yoshkar-Ola, the international military musical festival. In 2014, the Bank première productions of the Altai music comedy theatre 5. Social Environment
in Barnaul, and the GG JAZZ-III International festival of the Board of Trustees of the Filmmakers Union 105 of jazz music in Krasnodar. In 2014, VTB24 started of the Russian Federation. its cooperation with the International Usadba Jazz Festival and became the official partner of the festival's In 2014, VTB Bank sponsored a number of cultural regional program in Voronezh, Ekaterinburg and St. events, including the 36th Moscow International Petersburg. Apart from entertaining, the festival has a Film Festival, the national cinematography award social mission too: as part of the festival, fundraising Golden Eagle, and the 2014 TEFI television awards. takes place to support talented children from low- income families in remote areas of Russia. As part of its cooperation with the Russia National State Television and Radio Broadcasting Company VTB North-West Regional Center has sponsored the (VGTRK), VTB has supported the Culture TV channel Baltic Star award for ten years. This award is given to over the few last years, being the general sponsor of people of art and business for the development and the Cultural News, Main Role and Context TV programs. strengthening of cultural ties between the countries of the Baltic region. VTB North-West Regional Center VTB Bank has provided sponsorship to the Golden is also the general sponsor of the International Pen award for many years. This is a professional Baltic House theatre festival every year. The Center contest for journalists of St. Petersburg and the is a long-standing partner of the D.D. Shostakovich Leningrad Oblast that aims to support talented St. Petersburg Academic Philharmonic. As part of its journalists and mass media teams whose work sponsorship of the philharmonic program, VTB Bank has achieved recognition and respect. became a partner of the 15th International Winter Festival Arts Square in 2014. The Bank of Moscow continued its long cooperation with the intellectual show What? In 2014, VTB Capital sponsored the Eifman Ballet's Where? When? on TV Channel One. The Bank season in London. The Rodin and Anna Karenina traditionally represents the interests of TV viewers performances at the London Coliseum theatre were and provides the prize pool for the game. viewed by about 14,000 spectators, and received dozens of positive reviews in the media. VTB Capital achievements in the promotion of culture projects were 5.4.4. Preservation of Cultural Heritage and Support acknowledged by Corporate Engagement Awards 2014 for Literature in the Best Arts and Culture Project category. In 2014, VTB24 was a partner of the reconstruction of the guesthouse in the Mikhailovskoye Village 5.4.3. Support for Cinema and Mass Media of the Alexander Pushkin Mikhailovskoye State Memorial History, Literature and Natural Landscape VTB Group is a long-standing partner of Reserve Museum. VTB Bank traditionally provides major cultural events and projects in Russian charitable aid to Voloshyn's Cimmeria, the Koktebel cinematography and television, and is a member Historical and Cultural Reserve. VTB Group Social Report for 2014
106 In the reporting period, the Molodaya Gvardiya 5.5. Key Social Projects publishing house, supported by VTB, published Poetic Russia, a three-volume edition of poetry by VTB regularly supports healthcare and educational Alexander Pushkin, Mikhail Lermontov and Fyodor organizations, as well as organizations working with Tyutchev. The Bank also supported the publication socially disadvantaged groups. of books from the World Literature Classics series, a unique project of the Russian State Library. 5.5.1. Support for Healthcare Institutionsя Since 2012, VTB Bank has implemented a project to translate and publish Russian classical and modern VTB focuses on healthcare issues in Russia. The literature in Vietnamese, and Vietnamese classical Bank has been implementing the corporate charity and modern literature in Russian. The publications program World Without Tears since 2003, which are distributed free of charge in universities and is aimed at supporting children's healthcare libraries of both countries in cooperation with the institutions. The scale of the program significantly Federal Agency for the Commonwealth of Independent increased in 2014. It now covers the capital and States, Compatriots Living Abroad, and International 20 regions of the Russian Federation (in 2013 the Humanitarian Cooperation (Rossotrudnichestvo). program covered Moscow and 15 regions of Russia).
VTB Bank corporate charity program World Without Tears Objective Support children's healthcare institutions in Russia, draw public attention to the problems of regional children's hospitals, and assist orphans and children with special needs. Approach Within the framework of the program, VTB has financed the purchases of expensive equipment, medications, and supplies for children's hospitals since 2003. The Bank selects as beneficiaries either large-scale regional hospitals with a big patient flow or highly specialized medical institutions, e.g. cardiology and oncology centers, psychoneurology hospitals, etc. Outcome Within the nine years of the program’s existence, VTB Bank has assisted a large number of children's hospitals in 50 regions of the Russian Federation. Since 2010, the Bank has supported 69 children's healthcare institutions situated in Moscow, St. Petersburg, Astrakhan, Vladivostok, Vladikavkaz, Yekaterinburg, Magadan, Novorossiysk, Ulan-Ude, and other towns. In 2014, the Bank helped 26 hospitals (21 of which are located in the Russian regions, and 5 in Moscow). As a result, about 180 units of equipment were supplied to the regions and about 50 units were sent to the capital. Based on 2014 performance, the World Without Tears project won the first prize in the Best Social Project in the Financial Sector category at the 3rd ceremony of THE BANKING SECTOR Awards for innovations and achievements in the financial industry. 5. Social Environment
Apart from the World Without Tears program, the educational programs. In 2014, VTB Bank sponsored 107 Bank provides one-off charitable aid to various the St .Petersburg State University Graduate School medical institutions. In 2014, on the 100th of Management, the Bank of Moscow financed the Anniversary of the Foundation of the Republic Moscow Institute of Architecture (State Academy), of Karelia, the Bank financed Petrozavodsk City and VTB24 sponsored the National Research Children's Hospital, Children's Republican Hospital, University Higher School of Economics (NRU HSE). as well as the Republican Infectious Diseases Hospital. Furthermore, over the last few years, VTB Financed by the Bank, the St. Petersburg State Bank has provided charitable aid to the First Hospice University Graduate School of Management for Children with Oncology Diseases. VTB North-West organized Management of the Future 2014, a Regional Center aids St Olga City Children's Hospital conference of talented students and leading Russian in St. Petersburg, and the Bank of Moscow supports companies. The conference participants included Tushino City Children's Hospital, the biggest medical representatives of 23 leading Russian universities center in Moscow, which provides treatment to over and 15 international business schools. 40,000 children and teenagers each year. Starting from 2007, the Bank of Moscow has supported VTB North-West Regional Center has been directly the Financial University under the Government of the involved in the charity project From Heart to Russian Federation in organizing the Russian national Heart since 2007, which is organized by the St. creativity competition Mission Possible. Your calling Petersburg Legislative Assembly and dedicated to is a financier! Talented children from various Russian the International Day for Protection of Children. To regions participate in the competition, and based create a warm atmosphere that facilitates the speedy on their results, they get the opportunity to enter a recovery of little patients in hospitals, children's university and study free of charge. hospitals are given works of art created by students of the Stieglitz St. Petersburg State Art and Industry Starting in 2008, VTB24 has been in close Academy and pupils of Gymnasium No. 190. Over cooperation with NRU HSE. Sponsored by VTB24, the 8 years of the project, over 1,200 works of art the university hosts the annual April International have been donated to hospitals, with 150 of them Conference and implements a scholarship program provided in 2014. within the framework of the Master's program at the NRU HSE International College of Economics and Finance and the London School of Economics. 5.5.2. Support for Education VTB24 annually enables the 18 best students of the program to receive free education and a certificate VTB Group companies promote higher education of both schools of higher education. In 2014, in Russia by introducing corporate scholarships VTB became a long-term partner of the NRU HSE to students of the country's best universities, International Laboratory of Quantitative Finance. supporting the involvement of leading lecturers, Cooperation between the Laboratory and VTB24 and conducting scientific research and developing promotes fundamental theoretical studies and VTB Group Social Report for 2014
108 facilitates the validation and implementation of The Bank of Moscow cooperates with many non- theoretical findings in practice. profit organizations and foundations supporting socially disadvantaged groups. In 2014, the In 2014, VTB was a general sponsor of the project following organizations were among the bank’s to develop and promote the Distance Learning beneficiaries: System of the CIS Finance and Banking Council portal, which is implemented by the CIS Finance ■■GROSSKO, a non-profit organization of people and Banking Council non-profit partnership to with disabilities and parents of children with facilitate cooperation between CIS countries. disabilities supporting children with cerebral palsy;
■■WAY OUT, a charitable foundation assisting in 5.5.3. Support for Socially Vulnerable Groups solving the problems of autism in Russia; the main objective of the foundation is to build a system of VTB Group supports disadvantaged and vulnerable assistance to autistic persons ranging from social groups. diagnosis to independent life in society;
Traditionally, VTB Bank sponsors non-governmental ■■Support for Children and Families in Difficult organizations of veterans and people with Circumstances, the Central Federal District disabilities and provides targeted financial charitable foundation; the foundation's priorities assistance. In 2014, 11 non-governmental are to facilitate the social and labor adaptation of organizations received charitable financing from the children from orphanages, increase the quality of Bank, including the Moscow House of War Veterans their education and career guidance, and provide (pensioners) and the United Country Foundation for financial assistance to the disadvantaged. the support of people with disabilities. In 2014, the Dynamo Management Company The VTB North-West Regional Center, in cooperation financed the non-profit organization Maria’s with the SUPPORT POINT charitable foundation, Children Arts Center, a studio for orphans, children sponsors paralympic athletes and provides funds with special needs and orphanage graduates. for the required sports equipment and preparation Furthermore, the company traditionally sponsors for the Paralympics, as well as assists children with the Dynamo Foundation for the support of disabilities. children's programs.
The social impact of VTB’s environmental activities
VTB's environmental activities
Environmental performance in administrative activities management
Support for environmental financing Social impact
Environmental Performance in Administrative Activities Management
Support for Environmental Financing Reduced environmental impact In order to minimize any negative impact on the environment, the Group is improving its buildings' operating efficiency and implementing resource and energy efficiency measures as well as supporting various environmental projects. 6. Natural Environment
6. Natural Environment
Even though the Group does not operate in sectors Property management and efficient maintenance 113 responsible for significant environmental pollution, control on the Group level is implemented by the the scale of VTB operations may suggest a negative Property Management Coordination Commission environmental impact and thus requires the attached to VTB Group Management Committee. improvement of resource and energy efficiency. It comprises representatives of the ten largest Russian and foreign Group companies. The The Group controls resource and energy Coordination Commission is managed by the VTB consumption and develops various programs Administrative Department, which coordinates aiming at improving resource and energy efficiency administrative activities within the Group. in order to minimize the direct negative impact on the environment. VTB elaborates financing schemes In 2014, the VTB Administrative Department initiated for environmental projects and implements socially a project that covered a wide range of issues significant environmental projects that aim to reduce pertaining to the optimization of administrative the indirect impact on the environment. expenses in the Group's largest companies. The project is due to be finished in 2015-16.
6.1. Environmental Performance Data collection and analysis in the reporting in Administrative Activities period revealed all practical aspects of property management to the fullest extent. Several Management organizational activities were also accomplished. In In administrative activities, Group companies particular, several VTB subdivisions and a number of follow the principle of efficient resource Group companies moved from outmoded buildings management and control over the expediency and into two large business centers: the Federation effectiveness of the respective expenses. In this Tower and a new building on 43 Vorontsovskaya regard, VTB’s main priority is to improve efficient Str., Moscow, which comply with all modern property management by VTB Group companies. requirements for ergonomics, resource and
Resource and energy consumption and waste generation of Group companies in 2013-14
2013 2014
Heat, Gcal 146,102.0 172,348.9
Electricity, MWh 206,298.5 213,297.2
Paper, tons 4,540.5 4,726.5
Fuel consumption, L thousand 9,378.3 7,324.2
Municipal waste generation, tons 21,352.8 22,215.0 VTB Group Social Report for 2014
114 energy efficiency. The centralization ensured the Energy consumption of Group companies improvement in regular personnel movement and in 2013–14, in MWh and in MWh/person document management between locations.
MWh MWh/person In 2014, a joint operation project between VTB Bank 90,000 6.0 and VTB24 was also launched in several regions. The 85,564.7 80,000 5.0 5.2 75,075.6 5.0 project aims to minimize the number of occupied 70,000
premises and optimize the costs of maintenance, 60,000 58,567.6 58,866.5 4.0 communal services, equipment and the workplace. 50,000 3.1 44,704.7 3.0 40,000 2.4 40,175.7 2.2 2.2 30,000 2.0 32,479.6 2.0 Apart from improved efficient property 24,235.0 2.4 20,000 1.0 management, Group companies also take steps 10,000 to reduce the consumption of fuel, paper, water, 0 0.0
electricity, and heat as part of their operations. VTB Bank VTB24 Bank of Moscow Others
Fuel consumption (petrol and diesel) of Group Paper consumption 2013 of Group companies 14 companies in 2013–14, in thousands of liters in 2013–14, 2014 in tons and kg/person and in liters/person 2013 2014 thousands of liters liters/person tons kg/person
2,500 4,000 238.4 250 2,435.1 2,475.6 100 3,500 3,517.3 82.1 2,000 80 3,000 221.4 200 69.2 2,768.4 76.8 64.1 2,500 2,517.4 1,500 60 181.4 2,247.9 2,000 150 1,760.1 43.5 43.8 128.8 1,000 41.2 40.6 40 1,500 1,504.2 892.3 932.9 143.6 1,332.4 828.3 100.7 762.9 1,000 1,054.7 100 82.4 500 450.2 489.7 20 500 94.3 0 50 0 0
VTB Bank VTB24 Bank of Moscow Others VTB Bank VTB24 Bank of Moscow Others
2013 2013 2014 2014 2013 2013 2014 2014
14 VTB24 resource consumption indicators for 2013 include TransCreditBank consumption rates. Significant decrease in fuel consumption is caused by car fleet optimization processes, specifically by disposal of TransCreditBank-owned cars. 6. Natural Environment
In 2014, VTB Bank continued to improve its in Group companies. In the reporting period, apart 115 environmental performance: from VTB Bank and the Bank of Moscow, VTB24, VTB Bank (Ukraine), VTB Bank (Belarus) and VTB ■■In the reporting period, there was a scheduled Insurance were connected to the CPMS. replacement of company cars with higher emission standard cars; all itineraries were revised in order to Group companies also ensure the improvement cut the head office car fleet by 37 cars (2013: 257 of resource efficiency. For example, VTB Insurance cars; 2014: 220 cars). In total, the Bank's affiliates’ continued to integrate to an electronic document car fleet was cut down by 30 cars (220 cars were management system in order to minimize paper included into the Order for 2015; 2014: 250 cars; consumption. The system is used for in-house 2013: 254 cars). document control and communication, contract approval, bidding and HR-related procedures. In ■■VTB Bank, along with ZAO Hewlett-Packard AO, 2014, similar electronic document management reduces, unifies and renews equipment with a view systems were implemented in VTB Pension Fund to reducing costs for printing and scanning, cutting and VTB Bank (Georgia). Most Group companies the amount of equipment by 50%-60%, minimizing send paper waste out for recycling. In 2014, Group energy consumption, and ensuring the more companies took measures to improve energy efficient printing of hard copies. efficiency. In particular, in the reporting period, the Bank of Moscow underwent an energy audit that ■■In 2014, water purifying equipment with formed the basis of the program for energy saving integrated filters was installed in order to gradually and energy efficiency improvement. In 2014, the abandon the use of bottled water and reduce power supply network for safety systems and postconsumer plastics; as a result, the number of emergency lighting was upgraded as part of the bottled water purchased reduced by more than 20%. program at one of the Bank's offices located at 14 Zhukovskogo Str. The following steps were taken In 2014, a Computerized Property Management by VTB Bank (Kazakhstan), VTB Bank (Georgia) and System (CPMS) that facilitates, among other VTB Bank (Austria) AG in order to improve energy issues, more efficient property analysis and cost efficiency: server upgrades with more modern planning, and which is anticipated to monitor energy-saving models and the replacement of resource consumption, was further implemented fluorescent lamps with LED lamps.
Fuel consumption at VTB Bank Apart from this, Group companies organize and Fuel consumption 2013 2014 conduct trainings for employees to promote (L per 100 km) efficient energy consumption. For instance, employee training for energy saving at the office Summer 13.51 13.19 helped reduce energy consumption at Hals-
Winter 14.64 14.30 Development by 5% compared to 2013, and by 10% in the VTB Bank branch in New Delhi. VTB Group Social Report for 2014
116 6.2. Support for Environmental executive agency. The Russian executive agency Financing is focused on: In 2014, VTB Bank continued the development of ■■Preparation management and expert project environmental financing schemes based on the support; Special Programs Service. ■■Fundraising assistance; Fundraising as part of the Arctic Council (AC) Project Support Instrument (PSI) was the main ■■Project monitoring and control. priority of the Service. PSI is an international fund for cooperation in initiating and financing During 2014, PSI, with the active participation of projects aimed at fighting pollution in the VTB, organized and approved co-funding for the Arctic. PSI projects ensure the further social following projects: and environmental development of the northern territories in the Russian Federation ■■Rebuilding of the fuel and energy complex in the and promote the welfare, comfort of living Republic of Karelia, which is aimed at reducing the and healthcare for the population, including negative impact on health and minimizing the indigenous Arctic ethnic groups. impact of climate change in eight small settlements; the introduction of renewable energy As of the end of 2014, PSI funds amounted sources with a view to reducing annual fuel to EUR 16 million. This amount is earmarked consumption and soot emission by 651 tons and for investment project preparation and co- 813 kg, respectively. funding through grants and concessional loans that will accelerate the attraction of ■■Construction of a hybrid wind-diesel power larger investments, such as sponsorship and station at the Tundra agricultural production contributions from project owners, commercial cooperative with a view to improving the energy banks, development banks, and specialized supply to the Polmos deer farm and its inhabitants; corporate charity funds. the annual target for reducing diesel consumption is 3,150 kg, and for СО2 emissions - 9,521 kg. In 2014, VTB Bank, the Ministry of Natural Resources and Environment of the Russian In addition, proposals were approved for financing Federation and the Nordic Environment two technical and economic projects aiming at Finance Corporation (NEFCO) signed replacing outdated diesel power stations in the agreements on the distribution of authority to Russian Arctic regions with power stations that use support the Arctic Council projects. According renewable energy sources. to the agreements, NEFCO became a PSI manager, with VTB Bank represented by the In 2014, VTB Bank continued its cooperation with Special Programs Service, being a Russian the World Wildlife Fund (WWF) and the Ministry of 6. Natural Environment
Natural Resources and Environment of the Russian of USD 60 million from government-backed and 117 Federation in terms of fundraising for the Global private sources, including VTB contributions. VTB Environment Fund (GEF) and the Conservation of Big contributions will be allocated to the following Cats in the Russian Federation project. The project project components: aims to improve the ecological sustainability of natural ecosystems in the Far East, Altai, Sayan and ■■Putting the preservation of biological diversity on the North Caucasus in order to preserve and expand the agenda in strategic documents and in the the natural habitat for the Amur tiger, snow leopard, decision-making process; Persian leopard and Far Eastern leopard. ■■Improving control over specially protected natural This project requires more than USD 12 million areas and the sustainment of local communities in from GEF and additional financial aid in the amount big cat habitats.
Leto Bank: Service for financing tree planting in Russian national parks Objective Promote forest restoration, plant one million trees, and attract the attention of wider audiences to environmental responsibility, highlighting its practical benefits instead of its problems. Approach The IT-platform Maraquia.com-based service for processing contributions for forest planting was integrated with the website and all of the Bank's ATMs as part of the project. Leto Bank's website - http://www.letobank.ru/posadiderevo - provides a map of Russia where visitors can chose a plot of their preference and decide upon the number of trees to plant on the territory of national parks in Russia, name a forest after themselves, and make non-cash payments. Payment can be made from the account or by a cash deposit via an ATM. The average price for ten trees is 300 RURles. Outcome In the nine months since its inception, the service helped recover territories in ten national parks in Russia, with more than 100,000 trees planted. In 2014, President of the Russian Federation Vladimir Putin used the service to plant more than 6,000 trees in Meshera National Park. The support of Leto Bank and the development of this unique technological solution will allow over one million trees to be planted in Russia over the next few years. To illustrate this point, the total height of this number of trees would equal the length of the Equator, and the amount of oxygen produced would cover annual requirements for a city the size of St. Petersburg. VTB Group Social Report for 2014
118 By the end of 2014, the request and supporting ■■Expanding cooperation with the GEF, international documentation were prepared in order to attract funds and national institutes for development in terms of for the GEF as part of the project. fundraising for projects related to RES, energy efficiency and environmental impact reduction. Other key activities of the Special Programs Service in 2014 were the following: Being engaged in allocating the funds of environmental funds and institutes for ■■Filing for Green Climate Fund agent accreditation; the development, VTB provides an opportunity for accreditation allows the Group to attract loans and the Bank's retail customers to contribute to other financial resources to finance and co-fund environmental protection. In 2014, Leto Bank projects related to renewable energy sources (RES), pioneered this activity by allowing customers to energy efficiency in various industries, waste pay through ATMs for tree planting in national management, etc.; parks in Russia. 7. About the Report 119 VTB Group Social Report for 2014
120 The 2014 VTB Group Social Report is the seventh Scope of the Report non-financial report published by VTB Bank. Companies are included in the scope of the Report The main objective of the Report is to inform on the following grounds: stakeholders about VTB Group activities in the area of corporate social responsibility in the reporting ■■Control by VTB Bank (over 50% of voting shares period. are owned by the Bank);
The reporting period of the Report is the calendar ■■Their economic, social, and environmental year beginning on 1 January 2014 and ending on materiality. 31 December 2014. The scope of the Report does not include RCU Bank Non-financial reports are published by VTB Bank Ltd., due to the decrease in ownership by VTB Bank annually and are part of the Group's annual to 46.3%. reporting.
The scope of the Report includes the following companies:
Full name Type of activity VTB Bank share ownership as at 31 December 2014
Russia
JSC VTB Bank15 Bank –
PJSC Bank VTB24 Bank 99.9%
CJSC Holding VTB Capital16 Finances 100.0%
OJSC Bank of Moscow Bank 96.9%
PJSC Leto Bank Bank 100.0%
OJSC Hals-Development Real estate 96.4%
OJSC VTB Leasing Leasing 100.0%
Insurance Company VTB-Insurance, Ltd. Insurance 100.0%
VTB Factoring, Ltd. Factoring 100.0%
JSC Non-state pension fund VTB Pension Fund Finances 100.0%
CJSC VTB Specialized Depository Non-bank custodial institution 100.0%
MultiCarta, Ltd. Processing center 100.0%
VTB DC, Ltd. Finances 100.0%
15 Including branches in Shanghai (China) and New Delhi (India). 16 Including subsidiaries CJSC VTB Capital and VTB Capital plc. 7. About the Report
Full name Type of activity VTB Bank share ownership as 121 at 31 December 2014
CJSC Management Company Dynamo17 Real estate 75.0%
VTB Real Estate, Ltd Real estate 100.0%
CJSC VTB Registrar Registrar 100.0%
CIS and Georgia
PJSC VTB Bank (Ukraine) Bank 99.9%
JSC VTB Bank (Kazakhstan) Bank 100.0%
CJSC VTB Bank (Armenia) Bank 100.0%
CJSC VTB Bank (Belarus) Bank 100.0%
OJSC VTB Bank (Azerbaijan) Bank 51.0%
JSC VTB Bank (Georgia) Bank 98.8%
Europe
VTB Bank (Austria) AG18 Bank 100.0%
JSC VTB Bank (Belgrade) Bank 100.0%
Asia and Africa
Banco VTB Africa, SA (Angola) Bank 50.1%
The financial information presented in this factoring in the data provided by VTB North-West Report applies to VTB Group as defined by Regional Center. The electricity consumption by the VTB Bank’s consolidated financial statements as at branch network of the Bank of Moscow in 2013 was 31 December 2014, prepared in accordance with the calculated based on the average consumption ration International Financial Reporting Standards (IFRS), per employee. unless otherwise indicated. VTB24 resource consumption indicators for 2013 Resource consumption indicators for 2013 (heat, include TransCreditBank consumption rates (joined electricity, paper and fuel) were recalculated VTB24 on 1 November 2013).
17 Formerly CJSC VTB Arena. 18 Including subsidiaries VTB Bank (Deutschland) AG and VTB Bank (France) SA. VTB Group Social Report for 2014
122 Procedure for Determining the Contents of the Report ■■Reviewing the contents of the non-financial sectoral report; This Report complies with the GRI G4 Guidelines. ■■Reviewing the non-financial reports from a number of foreign and Russian banks; The Bank analyzed material aspects in order to ■■Reviewing the Group's references in the media determine the contents of the Report. Material aspects and business press. are aspects that either reflect VTB Group’s major effect on the economy, society and environment, ■■Required assessment of disclosure of material or may have a significant impact on stakeholders' aspects in the Report. Assessment related to the assessment and decision-making. Report on the whole, the limitations of each aspect and information disclosure in the reporting period. The procedure for determining material aspects consisted of the following steps. The material aspects were determined taking into consideration materiality principles, stakeholder ■■Listing potentially material aspects. The list inclusiveness, the context of sustainable includes social responsibility aspects applicable to development, and completeness in accordance with the financial sector included into ISO 26000 and the the GRI Guidelines. GRI Guidelines. High standards of the Report were achieved following ■■Defining aspect priority for the Report. Potentially the principles of balance, comparability, accuracy, material aspects were classified based on the timeliness, clarity and reliability, as defined by the GRI following procedures: Guidelines.
■■Interviewing the senior management of the The responsibility for collecting and consolidating Banks and its subsidiaries; data for the Report is shared by the functional units of VTB Group companies. 7. About the Report
Material aspects of VTB Group in 2014 123 Boundaries of material aspects Material aspects Within VTB Outside VTB
Economic
Economic Performance + +
Indirect Economic Impacts + +
Environmental
Materials +
Energy +
Discharges and Waste +
Social
Labor Practices and Decent Work
Employment +
Relations between Employees/Senior Management +
Training and Education +
Diversity and Equal Opportunities +
Society
Local Communities + +
Anti-Corruption Management +
Compliance +
Product Responsibility
Product and Service Labeling +
Financial Sector Aspect: Product Portfolio + + VTB Group Social Report for 2014
124 Independent Assurance of the Report indicators stipulated in the Report. Some material indicators pertaining to VTB Group performance For the third year in a row, the Bank has undertaken results in the area of corporate social responsibility independent assurance of a limited number of in the reporting period underwent assessment.
VTB indicators subject to independent assurance
Indicator Description
Average headcount The average headcount is calculated by adding Group companies’ number of employees in each calendar day per month in the reporting period (including weekends and holidays) and dividing this sum by the number of calendar days in a month. The average headcount in the reporting period is calculated by adding the average headcount for each month of the reporting period and dividing this sum by the number of months in the reporting period. Part-time employees working in accordance with an employment contract are counted proportionate to the hours of work when the average headcount is being calculated. The average headcount excludes women on maternity leave and extended childcare leave, employees studying in educational institutions while taking unpaid leave, as well as those enrolled in educational institutions and taking unpaid leave in order to pass entrance examinations.
Charitable donations, RUR Charitable contributions made by Group companies (within the scope of the Report) in the reporting period. In cases where charitable donations were made in foreign currency, the average FX rate of the Bank of Russia for the year was used.
Paper consumption, tons Paper consumption by Group companies (within the scope of the Report) in the reporting period. Paper consumption is calculated by converting the number of used paper bundles into metric tons. In cases where the weight of an A4 or A3-size paper bundle is not defined, average amounts were used (2.5 kg or 4.8 kg, respectively).
Fuel consumption (petrol and diesel), Fuel consumption by Group companies (within the scope of the Report) in the reporting period. Includes L thousand fuel consumption for vehicles on the balance sheet only.
Energy consumption, MWh thousand Energy consumption by Group companies (within the scope of the Report) in the reporting period. An average consumption rate equaling 1 kWh per employee per year was applied for facilities where energy consumption is calculated by the provider. Energy consumption for some facilities leased from VTB Bank is included in the total consumption values for VTB Bank. 8. Appendices 125 VTB Group Social Report for 2014
126 8.1. Corporate Social Responsibility Performance
Indicator 2013 2014
Scope of activities as at the end of the year19
Number of corporate customers, thousands 105.4 93.7
Number of customers that are small businesses, thousands 411.7 386.7
Individuals, thousands 25,385.2 29,560.6
Number of sales offices 5,278 7,054
Number of sales offices in the Russian Federation 4,910 6,630
Number of sales offices in under-populated and under-developed regions of the 485 497 Russian Federation
Financial results as at the end of the year
Assets, RUR billion 8,768.5 12,190.8
Loan portfolio, RUR billion 6,620.7 9,150.4
Corporate customers, RUR billion 5,099.9 7,205.3
Retail customers, RUR billion 1,520.8 1,945.1
Mortgages, RUR billion 795.3 539.9
Small businesses, RUR billion 204.1 237.0
Customer funds, RUR billion 4,383.4 5,669.4
Equity, RUR billion 947.1 1,131.0
Financial results for the year
Net profit, RUR billion 100.5 0.8
Financial assistance provided by the Government, RUR billion 0.3 99.2
Personnel indicators
Average headcount, people 75,679 78,744
Headcount as at the end of the year by type of employment
Full-time, people 79,248 81,908
Part-time, people 790 1,347
Breakdown of personnel by gender as at the end of the year
Male, % 30.5 29.6
Female, % 69.5 70.4
19 All customers, including those with zero account balance. 8. Appendices
Indicator 2013 2014 127
Breakdown of personnel by age as at the end of the year
Under 30, % 45.1 45.4
30-50, % 45.9 46.7
Over 50, % 9.0 7.9
Breakdown on senior management by gender as at the end of the year
Male, % 83.3 75.0
Female, % 16.7 25.0
Breakdown of senior management by age as at the end of the year
Under 30, % 3.1 7.3
30-50, % 76.9 76.4
Over 50, % 20.0 16.3
Personnel turnover, % 23.5 32.7
Social contributions for the year
Charity (in compliance with IFRS) 3.4 17.5
Resource consumption for the year
Fuel (petrol and diesel), thousand liters 9,378.3 7,324.2
Fuel (petrol and diesel) per employee, liters/person 123.9 93.0
Paper, tons 4,540.5 4,726.5
Paper per employee, kg/person 60.0 60.0
Electricity, MWh 206,298.5 213,297.2
Energy per employee, MWh/person 2.7 2.7
Heat, Gcal 146,102.0 172,348.9
Solid waste generation, tons 21,352.8 22,215.0
Procurement by VTB Bank for the year
Total agreements concluded 14,972 20,126
Competitive bidding 2,117 1,299
Total cost of agreements concluded, RUR million 14,954 25,425
Competitive bidding, RUR million 7,292 8,637 VTB Group Social Report for 2014
128 8.2. VTB Group Companies in Business Associations
VTB Group companies Business associations
VTB Bank Loan Guarantee Agency Association of Russian Banks (ARB) Asia-Pacific Economic Cooperation Advisory Council International Chamber of Commerce (ICC) National Corporate Governance Council (NCGC) National Financial Market Council (NFMC) Russian Union of Industrialists and Entrepreneurs (RSPP) CIS Finance and Banking Council
VTB24 Association of Russian Banks (ARB) Association of Russian Managers (ARM) National Securities Market Association (NSMA) Nonprofit Partnership Russian Trading System Financial Market Development (NP RTS)
Bank of Moscow Franco-Russian Dialogue Association Association of Regional Banks of Russia (Association Russia) Association of Russian Banks (ARB) Business Council for Cooperation with Cyprus Moscow World Business Association Moscow Chamber of Commerce and Industry (MCCI) Civic Chamber of the Russian Federation Civic Chamber of the Moscow Oblast Ministry of Finance of the Russian Federation Public Council Regional Association of Employers Moscow Confederation of Manufacturers and Entrepreneurs (Employers) Russian Union of Industrialists and Entrepreneurs (RUIE) Trilateral Commission for Social and Labor Relations in the Central Federal District
Hals-Development Association of Russian Managers (ARM) Non-profit partnership Russian Guild of Property Managers and Developers
VTB Insurance All-Russian Insurance Association Russian Association of Motor Insurers National Association of Liability Insurers Russian Association of Aeronautic and Space Insurers Russian Antiterrorist Insurance Pool (RAIP) Russian Nuclear Insurance Pool (RNIP) Russian Association of Nuclear Insurers (RANI)
VTB Factoring Association of Factoring Companies International Factors Group (IFG) Factors Chain International (FCI)
VTB Pension Fund National Association of Non-Governmental Pension Funds Association of Professional Actuaries
VTB Capital British Bankers' Association (BBA) American Chamber of Commerce in Russia (AmCham) National Association of Securities Market Participants (NAUFOR) Association of In-House Lawyers Russo-British Chamber of Commerce (RBCC) Emerging Markets Private Equity Association (EMPEA) International Capital Market Association (ICMA) Association of Foreign Banks (AFB) 8. Appendices
VTB Group companies Business associations 129
VTB Specialized Depository Professional Association of Registrar, Transfer-Agents and Custodians National Association of Non-Governmental Pension Funds
Management Company Dynamo European Stadium and Safety Management Association (ESSMA) Association of Professional Venue Management (A-PVM)
VTB Bank (Ukraine) Independent Association of the Banks of Ukraine
VTB Bank (Kazakhstan) Association of Taxpayers in Kazakhstan Financial Institutions' Association of Kazakhstan (FIAK) National Chamber of Entrepreneurs of the Republic of Kazakhstan Deposit Guarantee Fund Kazakhstan Board of Bank Ombudsmen Representatives
VTB Bank (Armenia) Union of Banks of Armenia (UBA)
VTB Bank (Belarus) Belarus Bankers' Association Association of Securities Market Participants of the Republic of Belarus Belarus Chamber of Commerce and Industry (MCCI)
VTB Bank (Georgia) Georgia Bankers' Association
VTB Bank (Austria) Federation of Austrian Industry (IV)
VTB Bank (Germany) Auditing Association of German Banks (Prüfungsverband deutscher Banken) Association of Foreign Banks in Germany (VAB) Association of Foreign Bank Representatives in Germany (VRAB) Hessen Bankers' Association (Bankenverband Hessen) Federal Association of German Banks (BdB) Deposit Protection Fund (Einlagensicherungsfonds)
VTB Bank (France) French Banking Federation (FBF)
VTB Bank (Belgrade) Belgrade Chamber of Commerce VTB Group Social Report for 2014
130 8.3. GRI Content Index
The Report was prepared in accordance with the ‘Core’ option of the GRI G4 Guidelines.
Report External Indicator Definition Report Section/Notes page Assurance
General Standard Disclosures
Strategy and Analysis
G4-1 Statement from the most senior decision-maker of the Statement of President and Chairman of 4–5 organization about the relevance of sustainability to the VTB Bank Management Board organization and the organization’s strategy for addressing sustainability
Organizational Profile
G4-3 Name of the organization Chapter 1. About VTB Group 11
G4-4 Primary brands, products, and services Chapter 1. About VTB Group 11–13
G4-5 Location of organization’s HQ Contact information 136
G4-6 Countries where the organization operates Chapter 1. About VTB Group 11–13 Chapter 7. About the Report 120–121
G4-7 Nature of ownership and legal form Chapter 1. About VTB Group 11–13
G4-8 Markets serviced Chapter 1. About VTB Group 11–13 Chapter 7. About the Report 120–121
G4-9 Scale of the organization Chapter 1. About VTB Group 11–13 Chapter 3. Market Environment 41 Chapter 4. Internal Environment 76
G4-10 Number of employees Chapter 4. Internal Environment 76 + (average Chapter 8. Appendices 126–127 headcount)
G4-11 Percentage of total employees covered by collective Around 6% of all Group employees bargaining
G4-12 Organization’s supply chain Chapter 8. Appendices 127
The Group’s Procurement Policy is available at the website http://www.vtb. ru/group/purchases/
The procurement record for local suppliers is not kept
G4-13 Significant changes during the reporting period regarding Chapter 1. About VTB Group 11–13 the organization’s size, structure, ownership, or its supply Chapter 2. Corporate Conduct 21–22 chain Chapter 3. Market Environment 41
G4-14 Precautionary approach or principle The Group does not apply the precautionary principle 8. Appendices
Report External 131 Indicator Definition Report Section/Notes page Assurance
G4-15 Externally developed economic, environmental and social VTB Group joined the Banks Against charters, principles, or other initiatives, to which the Money Laundering Declaration. organization subscribes to or which it endorses The Bank of Moscow joined the Anti- Corruption Charter of Russian Business
G4-16 Memberships of associations and national or international Chapter 8. Appendices 128–129 advocacy organizations
Identified Material Aspects and Boundaries
G4-17 Entities included in the organization’s consolidated Chapter 7. About the Report 120–121 financial statements
G4-18 Process for defining the report content Chapter 7. About the Report 122–123
G4-19 All the material Aspects identified Chapter 7. About the Report 123
G4-20 Aspect Boundary within the organization for each material Chapter 7. About the Report 123 Aspect
G4-21 Aspect Boundary outside the organization for each material Chapter 7. About the Report 123 Aspect
G4-22 Restatements of information provided in previous reports, Chapter 7. About the Report 120–124 and the reasons for such restatements
G4-23 Significant changes from previous reporting periods in the Chapter 7. About the Report 120–121 Scope and Aspect Boundaries
Stakeholder Engagement
G4-24 List of stakeholder groups Chapter 2. Corporate Conduct 28–29
G4-25 Basis for identification and selection of stakeholders with Chapter 2. Corporate Conduct 28–29 whom to engage
G4-26 Organization’s approach to stake-holder engagement Chapter 2. Corporate Conduct 28–29
G4-27 Key topics and concerns that have been raised through Chapter 2. Corporate Conduct 28–36 stakeholder engagement Chapter 3. Market Environment 68–71 Chapter 4. Internal Environment 85–86
Report Profile
G4-28 Reporting period Chapter 7. About the Report 120–121
G4-29 Date of most recent previous report Chapter 7. About the Report 120–121
G4-30 Reporting cycle Chapter 7. About the Report 120–121
G4-31 Contact point for questions regarding the report or its Contact information 136 contents
G4-32 ‘In accordance’ option the organization has chosen and GRI Chapter 7. About the Report 121 Content Index Chapter 8. Appendices
G4-33 External assurance Chapter 7. About the Report 124
Governance
G4-34 Governance structure Chapter 2. Corporate Conduct 21–22 Website www.vtb.ru VTB Group Social Report for 2014
132 Report External Indicator Definition Report Section/Notes page Assurance
Ethics and integrity
G4-56 Values, principles, standards and norms of behavior Chapter 1. About VTB Group 11–13 Chapter 2. Corporate Conduct 21–26 http://www.vtb.com/group/mission/
Specific Standard Disclosures
Category: Economic G4-DMA Disclosures on management approach Chapter 1. About VTB Group 11–13 Chapter 2. Corporate Conduct 21–26 Chapter 3. Market Environment 41
Economic Performance
G4-EC1 Direct economic value generated and distributed Chapter 1. About VTB Group 12 + (charitable donations)
G4-EC4 Financial assistance received from government Chapter 1. About VTB Group 13
Indirect Economic Impacts
G4-EC7 Development and impact of infrastructure investments and Chapter 5. Social Environment 97–108 services supported
G4-EC8 Significant indirect economic impacts, including the extent Chapter 3. Market Environment 41–45 of impacts
Category: Environmental G4-DMA Disclosures on management approach Chapter 6. Natural Environment 113–118
Materials
G4-EN1 Materials used by weight or volume Chapter 6. Natural Environment 113–114 + (paper consumed)
Energy
G4-EN3 Energy consumption within the organization Chapter 6. Natural Environment 113–114 + (electric energy and fuel consumed)
Discharges and Waste
G4-EN23 Total weight of waste by type and disposal method Chapter 6. Natural Environment 113
Category: Social
Labor Practices and Decent Work G4-DMA Disclosures on management approach Chapter 4. Internal Environment 76–77
Employment
G4-LA1 Total number and rates of new employee hires and Chapter 4. Internal Environment 78, 80 employee turnover by age group, gender and region Partially disclosed
G4-LA2 Benefits provided to full-time employees and not provided Chapter 4. Internal Environment 85 to temporary or part-time employees 8. Appendices
Report External 133 Indicator Definition Report Section/Notes page Assurance
Labor/Management Relations
G4-LA4 Minimum notice periods regarding operational changes, The minimum period of notification is including whether these are specified in collec-tive defined by the applicable law of the agreements counties of operation and is strictly observed by all Group companies.
Training and Education
G4-LA9 Average hours of training per year per employee by gender, Chapter 4. Internal Environment 81–83 and by employee category
Diversity and Equal Opportunity
G4-LA12 Membership of governance bodies and personnel divided Chapter 1. About VTB Group 80 by sex and age group, minority group membership and 126–127 other diversity indicators
Society G4-DMA Disclosures on management approach Chapter 5. Social Environment 97 Chapter 2. Corporate Conduct 23–26
Local Communities
G4-SO1 Percentage of operations with implemented local The indicator is not applied to financial community engagement, impact assessments, and companies of the Group. Management development programs Company Dynamo holds regular meetings with FC Dynamo Moscow. Gals- Development participates in public hearings on its projects.
Anti-Corruption
G4-SO4 Communication and training on anti-corruption policies and Chapter 2. Corporate Conduct 25–26 procedures
Product Responsibility G4-DMA Disclosures on management approach Chapter 3. Market Environment 41, 66–71
Product and Service Labeling
G4-PR5 Results of surveys measuring customer satisfaction Chapter 3. Market Environment 68, 70
Financial Services Indicators FS6 Percentage of the portfolio for business lines by specific Chapter 3. Market Environment 41 region, size and by sector
FS7 Monetary value of products and services designed to deliver Chapter 3. Market Environment 58–66 a specific social benefit for each business line broken down by purpose
FS13 Access points in low-populated or economically Chapter 3. Market Environment 66–69 disadvantaged areas by type VTB Group Social Report for 2014
134 8.4. Independent Assurance Identification of the criteria Report The criteria of our engagement were the sustainability reporting principles, scope and methods for preparation of the Indicators as disclosed in the chapter About this Report on pages 120–124 of the Report. We believe that those criteria are appropriate given the purpose of our assurance engagement.
Independent Assurance Report on Selected Management responsibilities Sustainability Indicators for the year ended 31 December, 2014 The management of the Bank is responsible for preparation of the Indicators in compliance with To the Supervisory Council of JSC VTB Bank the sustainability reporting principles, scope and methods for preparation of the Indicators Identification and description of the subject matter as disclosed in the chapter About the Report on pages 120–124 of the Report. This responsibility At the request of JSC VTB Bank (the “Bank”) we have includes designing, implementing and maintaining provided a limited level assurance on the following internal controls relevant to the preparation of the five material sustainability performance indicators Indicators that are free of material misstatements, published in VTB Group Social Report 2014 (the selecting and applying appropriate reporting “Report”) and identified in it by the symbol principles and using measurement methods and (the “Indicators”): estimates that are reasonable in the circumstances.
■■►Average headcount (pages 79 and 126 of the Our Responsibilities Report); ■■►Charitable donations made (pages 97 and 127 of Our responsibility is to independently express the Report); a conclusion that the Indicators have been fairly ■■►Electric energy consumed (pages 113 and 127 of stated, in all material respects, in compliance the Report); with the sustainability reporting principles, scope ■■►Fuel (petrol and diesel) consumed (pages 113 and methods for preparation of the Indicators and 127 of the Report); as disclosed in the chapter About the Report ■■►Paper consumed (pages 113 and 127 of on pages 120–124 of the Report. the Report). Summary of the work performed The Indicators have been selected and prepared by the Bank management based on the relevant sustainability Our engagement was conducted in accordance reporting principles, scope and methods. with the International Standard on Assurance 8. Appendices
Engagements (ISAE) 3000, Assurance ■■►Evaluation of the procedures at the Bank used for 135 Engagements Other than Audits or Reviews of collection, preparation, collation and reporting of Historical Financial Information and, accordingly, data related to the Indicators; included the following procedures: ■■►Review, on a sample basis, of evidence and ■■►Analysis of the Bank internal regulatory supportive documentation regarding the Indicators documents related to sustainability policies, at the Bank and its subsidiaries. activities and relevant reporting; We believe that our procedures provide a basis ■■►Interviews with the managers and specialists on which we can provide limited assurance. Our responsible for sustainability policies, activities evidence gathering procedures are more limited and reporting where relevant to the Indicators at than for a reasonable assurance engagement, the headquarters of the Bank, VTB24 PJSC, Bank of and, therefore, less assurance is obtained than Moscow OJSC and Leto Bank PJSC; in a reasonable assurance engagement.
■■►Review of sustainability reports of selected Conclusion national and international financial institutions; Based on our work described in this report, ■■►Review of a selection of corporate and external nothing has come to our attention that causes us publications with respect to the Bank sustainability to believe that the Indicators have not been fairly policies, activities and related events in 2014; stated, in all material respects, in compliance with the sustainability reporting principles, scope ■■►Identification of sustainability issues material and methods for preparation of the Indicators for the Bank based on the procedures described as disclosed in the chapter About the Report above; on pages 120–124 of the Report.
Ernst & Young (CIS) B.V. Moscow, 18.05.2015 136 Contact Information
JSC VTB Bank
Actual address: 12 Presnenskaya Nab. Moscow, 123100 Russia Registered address: 29, Bolshaya Morskaya Str. St. Petersburg, 190000 Russia
ТTel.: 8 (800) 200 77-99, 8 (495) 739 77-99 Fax: 8 (495) 258 47-81 Website: www.vtb.ru, www.vtbrussia.ru E-mail: [email protected]
For comments and suggestions regarding this Report, please address the Deputy Head of Advertising and Marketing, Head of the Sponsorship :and Special Projects Unit at VTB Bank Elena Melikhova
E-mail: [email protected] Telephone: 8 (495) 775 54-54, ext. 1-46-48