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Presented by: VTB Bank, Custody

June 15, 2017 Issue No. 2017/22

Economy

Russia’s inflation stays at 0.1% in June 6-12 On June 15, 2017 the Federal State Statistics Service said that ’s consumer price inflation remained flat at 0.1% from June 6 through 12 for a third week in a row and reached 1.9% since January 1. Gasoline prices rose 0.3% and diesel fuel prices grew 0.2%.

Company News

Tatneft to close deal to buy RUB 14 bln shares in Bank ZENIT in June 2017 On June 8, 2017 it was stated that Russian oil company would close a deal to buy RUB 14 bln worth of Bank ZENIT’s newly issued shares in June. In February, the bank’s shareholders approved issuing RUB 14 bln additional shares to boost the charter capital, which were to be sold privately to Tatneft to raise its stake to 71.12%.

AK BARS Bank completes placement of RUB 10 bln extra shares On June 8, 2017 it was announced that Russia’s AK BARS Bank completed the placement of an additional share issue of RUB 10 bln, and the shares were bought by oil company Tatneft. Before the placement, the charter capital of the bank amounted to RUB 38 bln. president’s state housing fund had a 25.78% stake in the bank before the placement. The combined interest of Tatarstan’s Land and Property Ministry was 51.08%, of which 24.995% belonged directly and the rest through several structures including 4.04% through Svyazinvestneftekhim. Tatneft owned an 8.618% stake in AK BARS Bank via a Cyprus-based company Osmand Holdings Limited. Tatneft said in May that after the purchase of additional shares, its stake in the bank will amount to 17.24%.

Novatek buys back 90,000 common shares in June 5-9, 2017 On June 13, 2017 it was reported that independent gas producer bought back 90,000 common shares, including shares held in the form of global depositary receipts (GDRs), from June 5 through June 9. In May 2016, the board of directors extended a USD 600 mln buyback program, under which the company will buy its shares and GDRs via its unit Novatek Equity (Cyprus) Limited, until June 7, 2017.

Russian watchdog not preparing to fire CEO On June 14, 2017 a government source stated that Russia’s Federal State Property Management Service was not preparing an order to dismiss CEO of power utility Rosseti Oleg Budargin. Several media sorces reported earlier that Rosseti could fire Budargin, since his name was not on the list of candidates to the company’s board of directors to be voted on June 30. The source said that the presidential administration had agreed on a new list of board of directors members with Anatoly Tikhonov replacing Budargin, but this didn’t mean that he was quitting.

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Polyus sets SPO price range at USD 66.5-70.6 per share On June 15, 2017 it was announced that Russian gold producer set the price range for its secondary public offering (SPO) at USD 33.25-35.30 per a global depository share (GDS), which corresponds to USD 66.5-70.6 per share. Based on this price range, the company’s market capitalization will amount to USD 8.482-9.005 bln. Polyus plans to offer 28.6 mln shares with a face value of RUB 1 each on June 30 and will collect bids for the shares from June 15 until June 29. Polyus will offer USD 400 mln worth of new shares and existing securities, including GDS, which will be admitted to trading on the London Stock Exchange. Companies of Suleiman and Said Kerimov are beneficiary owners of Polyus.

Dividends/coupons to pay RUB 67.41 per share in dividends for 2016 On June 8, 2017 shareholders of Russian food retailer Magnit approved paying RUB 67.41 per share, or a total of RUB 6.374 bln, in dividends for 2016. The record date is set for June 23. Magnit paid RUB 29.358 bln in dividends for 2015, including RUB 8.359 bln for January-June, RUB 16.999 bln for January-September and RUB 4 bln in final dividends. In 2016, Magnit paid RUB 8 bln for January-June dividends and RUB 11.926 bln for January-September dividends. CEO Sergei Galitsky owns about 36% in the company with free float reaching about 61%.

Shareholders of Volga Shipping approve dividends at RUB 282 per preferred share On June 9, 2017 shareholders of Volga Shipping, part of Russian billionaire Vladimir Lisin’s UCL Holding, approved paying RUB 282 per preferred share or a total of RUB 135.9 mln in dividends for 2016 at an annual general meeting of shareholders. Shareholders voted for paying no dividends for common shares and using funds for investment projects instead.

Gazprom Neft to pay RUB 10.68 per share in dividends for 2016 On June 9, 2017 shareholders of Russian oil company Neft approved paying RUB 10.68 per common share, or a total of RUB 50.64 bln in dividends for 2016. As a result, the company will allocate 25.3% of its net profit for 2016 calculated under International Financial Reporting Standards (IFRS). Previously, the company paid RUB 6.47 per share in dividends for 2015. According to materials of Gazprom Neft, the stake of Russian gas giant Gazprom amounts to 95.68%, while minority owners - including individuals and companies - own the remaining 4.32%.

Irkutskenergo owners decide against dividends for 2016 On June 9, 2017 shareholders of Russian power producer approved paying no dividends for 2016. Shareholders also approved allocation of RUB 325 mln of the net profit for 2016 on social and charity events. In 2016, the net profit of Irkutskenergo calculated under Russian Accounting Standards (RAS) rose 34.3% on the year to RUB 16.97 bln. EuroSibEnergo, part of Oleg Deripaska’s En+ Group, owns a 50.19% stake in Irkutskenergo, and the Telmamskaya GES hydropower plant, also owned by EuroSibEnergo, has a 40.19% stake in the company. The materials also read that investment of Irkutskenergo stood at RUB 4.209 bln in 2016, with RUB 2.359 bln allocated on a program to maintain reliability and consistency of operation of equipment.

Inter RAO to pay RUB 0.1468 per share in dividends for 2016 On June 9, 2017 shareholders of Russian power holding Inter RAO approved paying 14.68 kopecks per common share, or a total of RUB 15.328 bln, in dividends for 2016. The record date is June 20. The payment accounts for 25% of the company’s net profit for 2016 calculated under International Financial Reporting Standards (IFRS). Previously, Inter RAO paid 1.782 kopecks per share or RUB 1.861 bln in dividends for 2015, which accounted for 50% of the net profit calculated under Russian Accounting Standards (RAS) for the year. According to the company’s Web site, state holding Rosneftegaz owns 27.63% in Inter RAO, Inter RAO Capital has a 19.98% stake, Federal Grid Company of Unified Energy Systems (FGC UES) owns 18.57%, hydropower giant RusHydro has 4.92%, and 28.91% is free float.

TGC-14 shareholders decide against dividends for 2016 On June 9, 2017 shareholders of Russian power producer Territorial Generating Company-14 (TGC-14) approved paying no dividends for 2016. The undistributed net profit amounting to RUB 417.813 mln is planned to be spent on repayment of losses of past years. TGC-14 paid no dividends for 2015 as well. TGC-

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14, controlled by Russian Railways, operates power plants in the Zabaikalsky Region and the republic of Buryatia.

Norilsk Nickel holders approve RUB 446.1 per share in 2016 final dividends On June 9, 2017 shareholders of Russian metals giant approved paying RUB 446.1 per share, or a total of RUB 70.593 bln, in final dividends for 2016 at an annual general meeting. The record date is June 23. The company paid RUB 444.25 per share, or a total of RUB 70.3 bln, in dividends for January- September 2016 and paid no dividends for the first half of the year. Vladimir Potanin’s Interros holds 30.3% in Norilsk Nickel, Oleg Deripaska’s UC has 27.8%, Crispian Investments Ltd. of Roman Abramovich holds 4.95% and Metalloinvest of Alisher Usmanov owns 1.8%.

Severstal owners approve RUB 44 bln in October-December 2016, January-March 2017 dividends On June 13, 2017 shareholders of Russian metals producer approved paying RUB 23.23 bln, or RUB 27.73 per share, in dividends for October-December 2016 and RUB 20.5 bln, or RUB 24.44 per share, for January-March 2017. The record date is June 20. In 2016, the company paid RUB 8.25 per share, or a total of RUB 6.91 bln, in dividends for January-March, RUB 19.66 per share, or a total of RUB 16.47 bln, in dividends for April-June, and RUB 24.96 per share, or a total of RUB 20.91 bln, in dividends for July- September. Alexei Mordashov, chairman of the board of directors, indirectly holds 79.2% in Severstal. The company paid a total of RUB 49.32 bln in dividends for 2015.

TMK shareholders approve final 2016 dividends at RUB 1.96 per share On June 13, 2017 shareholders of oil and gas pipe maker TMK approved final dividends for 2016 at RUB 1.96 per common share, or a total of RUB 2.025 bln, at the annual general meeting of shareholders. The record date is June 20. TMK paid RUB 1.94 per share, or RUB 2.004 bln, in dividends for January-June 2016. Under the company’s policy, it must pay at least 25% of annual International Financial Reporting Standards (IFRS) net profit in dividends. In 2016, TMK’s net profit amounted to USD 166 mln. In 2015, the company paid no final dividends, but disbursed RUB 2.4 bln for interim January-June dividends at RUB 2.42 per share.

Vanino Port shareholders approve no dividends for 2016 On June 14, 2017 shareholders of Russia’s Vanino Commercial Sea Port, the largest stevedoring company in the country’s Far East, approved paying no dividends for 2016. The net profit of the port was RUB 1.97 bln under Russian Accounting Standards (RAS) in 2016.

Enel Russia to pay RUB 2.4 bln in dividends for 2016 On June 15, 2017 shareholders of power producer Russia voted for payment of 6.822 kopecks per common share, or a total of RUB 2.4 bln, in dividends for 2016. The record date for the dividends is June 28. , controlled by Italian energy firm Enel, did not pay dividends for 2015 due to RUB 48.629 bln net loss calculated under International Financial Reporting Standards (IFRS). The company paid RUB 2.86 ln in dividends for 2014 using undistributed profit of previous years. In 2016, the company received RUB 4.4 bln net profit calculated under IFRS.

Eurobonds / DRs Russian Promsvyazbank may offer new Eurobond issue in June 2017 On June 9, 2017 a banking source said that Promsvyazbank might offer a new Eurobond in June. The source said the offering’s volume had not been disclosed yet, but might be significant. The bank sold USD 250 mln worth of 3-year Eurobonds at 5.25% annually in October 2016. Promsvyazbank has four bond issues totally worth USD 1.133 bln in circulation.

Tinkoff Bank to place USD 300 mln perpetual Eurobonds at 9.25% On June 9 %, a banking source stated that Russia’s would place USD 300 mln of perpetual Eurobonds at 9.25%. The initial yield guidance was set at 9.75%, and was later cut to 9.25-9.375%. Demand for the Eurobonds exceeded USD 800 mln. The bank started a road show for the Eurobonds on June 2 in Russia and Europe. The subordinate issue carries an offer in 5.25 years. J.P. Morgan, UBS, BCP Securities, BCS Global Markets, Pareto Securities, brokerage company Region, and Renaissance Capital act as

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organizers. Simultaneously, Tinkoff Bank plans to buy back dollar-denominated Eurobonds that mature in 2018.

Tinkoff Bank to buy back USD 62.9 mln Eurobonds maturing 2018 On June 9, 2017 it was announced that Russian Tinkoff Bank plans to buy back USD 62.9 mln worth of dollar-denominated Eurobonds maturing in 2018 at USD 1,107.5 per security to leave USD 95.7 mln worth of Eurobonds in circulation. The bank sold USD 200 mln worth of Eurobonds at 14% annually in 2012.

Russia’s Finance Ministry plans no Eurobond offering next week On June 9, 2017 Anton Siluanov, Minister of Russia’s Finance Ministry, stated that the ministry did not plan to offer Eurobonds next week. The Russian budget envisages placement of up to USD 7 bln Eurobonds in 2017. The Finance Ministry said earlier it planned to offer USD 3 bln worth of new securities and to swap USD 4 bln worth of paper in circulation for the new issues. Bloomberg reported in late May citing sources that the Finance Ministry plans to offer Eurobonds over the next few weeks. A financial source stated that the ministry might offer investors sovereign Eurobonds with a maturity in 2028 for a swap this year.

VimpelCom gets USD 1.3 bln bids for 2018, 2021, 2022 Eurobond buyback On June 13, 2017 it was announced that VimpelCom Holdings B.V., a unit of Amsterdam-based giant VEON, received USD 1.257 bln worth of bids to buy back its 2018, 2021, and 2022 Eurobonds at a reduced price. VimpelCom Holdings B.V. received USD 332.881 mln worth of bids to sell 2018 Eurobonds; USD 273.865 mln worth of bids for the 2021 bonds and USD 650.685 mln for the 2022 paper. VimpelCom Holdings B.V. said earlier it would buy back the Eurobonds and offer a new issue. At present, the company has outstanding securities maturing in 2018 for USD 499.149 mln out of a total volume for USD 1 bln; in 2021 for USD 650.57 mln out of a USD 1 bln initial volume; and in 2022 for USD 1.28 bln out of a USD 1.5 bln issue. If the bonds are offered for the buyback by Monday, the purchase price for the 2018 issue will be USD 1,070 per bond; USD 1,151 per bond for the 2021 issue; and USD 1,156 per bond for the 2022 issue. VimpelCom Holdings B.V. will announce results of the buyback on June 27.

Executive says Russia’s VEB may buy back Eurobonds in 2017 On June 14, 2017 Nikolai Tsekhomsky, First Deputy CEO at Russia’s state-owned Vnesheconombank (VEB), stated that the bank had enough liquidity to buy back Eurobonds in 2017. VEB currently has nine Eurobond issues totaling USD 7.7 bln in circulation.

VimpelCom places USD 600 mln 4-year, USD 900 mln 7-year Eurobonds On June 14, 2017 a banking source said that VimpelCom Holdings B.V., a unit of Amsterdam-based giant VEON, was to place two Eurobond tranches on June 13, comprising 4-year securities for USD 600 mln and 7-year securities for USD 900 mln. The four-year tranche had a yield of 3.95%, and the seven-year tranche had a yield of 4.95%. The yield guideline was earlier narrowed for the four-year securities to 4.000-4.125% from about 4.00-4.25% and for the seven-year securities to 5.125% from about 5.0-5.5%. VimpelCom Holdings B.V. started a roadshow for the Eurobonds in Europe and the U.S. on May 31. Barclays, HSBC, ING, and J.P. Morgan acted as organizers.

PIK Group completes delisting from London Stock Exchange On June 15, 2017 it was announced that Russian real estate developer PIK Group completed the delisting from the London Stock Exchange (LSE). The company announced the delisting in March. It offered to buy back a total of 49.991 mln GDRs from holders located outside the U.S. at USD 5.101 per security. The price envisaged a 13% premium to an average price of the past three months or a 3% premium to the closing price on March 10. At the end of March, PIK Group said it had bought almost 50 mln GDRs for USD 255 mln. After delisting, the program will continue under management of BNY Mellon. The holders of the securities can retain them, sell on the over the counter market or convert into common shares on the Exchange.

Deripaska’s En+ Group sees USD 2 bln IPO not before September 2017 On June 15, 2017 it was reported that Russian billionaire businessman Oleg Deripaska’s En+ Group plans USD 2 bln (IPO) in En+ London and Moscow no earlier than in September. The company, which earlier planned an IPO in June, seeks to receive a more attractive valuation and additional time to prepare the deal. En+ declined to comment. In April, the Financial Times reported citing sources that En+ Group hired Citibank, JP Morgan, Credit Suisse, Societe Generale, Sberbank and VTB Capital to

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organize an IPO on the London Stock Exchange (LSE) and plans to raise USD 1.8-2 bln. En+ Group holds 48.13% in aluminum giant UC RUSAL and owns power utility EuroSibEnergo, among other assets.

Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; “Kommersant”, "Rossiyskaya Gazeta”, “Izvestiya, "”, ““ newspapers, and others.

For more information kindly contact: Anna Enfiandzhiants Evgenia Sakr Julia Dombrovskaya T +7 (495) 783 13 91 T +7 (495) 783 13 64 T +7 (495) 783 13 15 F +7 (495) 783 13 89 F +7 (495) 783 13 89 F +7 (495) 783 13 20 E [email protected] E [email protected] E [email protected] This document has been prepared exclusively for internal use of VTB Bank (PJSC) customers. The information should not be further distributed or duplicated in whole or in part by any means without the prior written consent of VTB Bank (PJSC). The information contained herein has been prepared on the basis of information which is either publicly available or obtained from a source which VTB Bank (PJSC) believes to be reliable at the time of publication. Information provided herein may be a summary or translation. The content of the material contained herein is subject to change without notice, and such changes could affect its validity. VTB Bank (PJSC) is not obligated to update the material in light of future events. Furthermore, VTB Bank (PJSC) does not warrant, expressly or implicitly, its veracity, accuracy or completeness. VTB Bank (PJSC) and its affiliates accept no liability whatsoever for any use of this communication or any action taken based on or arising from the material contained herein. Additional information may be available upon request. The material in this communication is for information purposes only. Therefore, this communication should not be interpreted as investment, tax or legal advice by VTB Bank (PJSC) or any of its officers, directors, employees or agents and customers should consult with appropriate professional advisers for these specific matters. Nothing expressed or implied herein is intended to create any obligation of VTB Bank (PJSC) and/or impose any liability on VTB Bank (PJSC) and/or create legal relations between VTB Bank (PJSC) and VTB Bank (PJSC) customers.

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