Sberbank Slovensko, A.S. Worldreginfo - Fab5d859-8Db0-4D93-A1b8-6756145Aa787 Content

Annual Report 2012 Sberbank Slovensko, a.s. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Content

International Network 2 Foreword 3 Management Board 4 Development of the Macro-Economic Environment 5 Business Activity 7 Key Figures 2008 - 2012 8 Shareholders 9 Financial Statements 10 Governing Bodies 11 Independent Auditors’ Report 12 Statement of financial position as at 31 December 2012 13 Income Statement Year ended 31 December 2012 14 Statement of comprehensive income Year ended 31 December 2012 15 Statement of Changes in Equity Year ended 31 December 2012 16 Statement of Cash Flows Year ended 31 December 2012 17 Notes to the Financial Statements Year ended 31 December 2012 20 Supervisory Board Report 84 Declaration on Corporate Governance of Sberbank Slovensko, a.s. 85 Our network 98 Organisation structure 102 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 International Network

In February 2012 former Volksbank International employees (as at 31. 12. 2012). Sberbank is one of the AG – now Sberbank Europe AG – was acquired by most profi table fi nancial institutions in the world and a Sberbank of Russia. leading market player in delivering innovative products based on excellence and state-of-the-art technology. Sberbank is the largest bank in Russia that accounts for Combined with the local expertise and customer focus almost one third of all Russian banking sector assets. The of our employees, Sberbank Europe is building bridges to Central Bank of the Russian Federation is the founder Eastern business and is a unique banking partner in the and major shareholder of Sberbank, owning 50% of the CEE region, Russia and CIS countries. Since the acquisi- total share capital plus one voting share. Other shares tion by Sberbank we have started a significant transfor- are held by more than 245.000 individual and institu- mation. As an important part of one of the largest, fast- tional est growing, and dynamic banking organisations in the world – we at Sberbank Europe aspire to be recognized investors in Russia and internationally. The bank has the as a game-changing innovator, an emerging leader in largest distribution network in Russia with over 18.000 CEE banking with growing presence and recognition in offi ces as well as subsidiaries in 20 countries includ- Western Europe. We aim to build enduring relationships ing the CIS, Central and Eastern Europe. In September with our customers by being attentive to their needs. As 2012, Sberbank completed the acquisition of DenizBank Sberbank Europe, we are striving to become a bank that AS which is ranked 6th among private and 9th among never stops in further developing itself and its operations all Turkish banks by consolidated total assets. Sberbank for the benefi t of our customers. was named by The Banker magazine as “Bank of the Year” and placed second in a ranking of company stock returns over the past ten years by The Economist. Sber- bank Europe AG manages a banking network of nine universal banks in eight Central and Eastern European countries: Slovakia, Czech Republic, Hungary, Slovenia, Croatia, Bosnia and Herzegovina, Serbia and the Ukraine. In total the bank operates 280 branches and has 4,400

02 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | INTERNATIONAL NETWORK WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Foreword

Dear Shareholders, Customers and Friends, steps from the past will not have any impact whatso- the year 2012 was critical for our bank in all aspects. ever. However, the financial result for 2012 – the loss of The acquisition of the Volksbank International Group 47.7 million € – is the price, which had to be paid by us. by Sberbank, the largest Russian bank, was completed The new majority shareholder, Sberbank Europe AG, fully in February. We have become part of the third strong- supported such measures and increased the Bank’s reg- est bank in Europe (in terms of market capitalisation). Its istered capital by 75 million €. Thus his intention of long- capital strength, as well as quality products and services, term operation in the Slovak market has been proved. provide us with a good basis for further development. It was an important step for Sberbank itself in perfor- The Sberbank Group has proved its enduring interest in mance of its international strategy and set-up of a global Slovakia also thorough the unique agreement on coop- corporation. eration, which was signed by Igor Lichnovsky, CEO of the Eximbank of the Slovak Republic, and Herman Gref, The new owner has brought a whole series of innova- CEO of Sberbank of Russia, on 21st November 2012. This tions and changes. The Bank’s management and sen- agreement is mainly aimed to support exporters from ior officers were changed significantly. Several projects Slovakia in their penetration to foreign markets through have been commenced, which transfer the latest bank- insurance, guarantee and credit products. ing technology, developed by Sberbank of Russia, to everyday life of our Bank, e.g. in the area of risks man- The transformation process started to reflect in our most agement, or automated approval process of consumer important activity – business as well. The last quarter loans. The Bank’s new strategy was drawn – up, dis- of 2012 was very successful for us, as we managed to cussed and adopted. It is focused on areas, which we increase corporate loans by 4.5%, while the overall mar- know best and where we can use our expertise, contacts ket went down by 1.7%. Individual deposits rose by 10.7%, and strength of our banking group. We would like to be- which is a quadruple growth over the market. Such good come a bridge to the East for Slovak entrepreneurs, who results are promising and constitute a good base for operate in the markets of Russia and the Community of 2013. Independent States and provide commercial and investment flows between Slovakia and the Russian and CIS Return to profit after two years, through performance of markets. Based on our history, we are predestined to the Bank’s new strategy, is the Bank’ s main assignment focus on SMEs, being a backbone of our economy. Indi- for 2013, while we will adhere to the basic principle – we vidual customers are also very important for us. We pro- respect you as a customer and will treat you as a friend. vide them with first grade products, which use current We will pursue open and friendly approach and strive to technologies with minimal administrative burden. We improve our products and services to the benefit of our plan to enhance our customer base significantly, based customers. on such approach.

We had to cope with the heritage of the past in the last year. We created provisions on our credit portfolio, worth 70.9 million €, while this decision guarantees that wrong

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | FOREWORD 03 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Management Board

JUDr. Samuel Vlčan – Chairman of the Management Board

Dipl.-Kfm. Manfred Gram – Member of the Management Board

Nedialko Radikov – Member of the Management Board

04 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | MANAGEMENT BOARD WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Development of the Macro-Economic Environment

volume of resources for production inputs in the export On the Threshold of industry. Moreover, we have to expect that while the last year’s foreign trade surplus benefited from the sta- the Year of Challenges tistical impact of a lower comparable base, this year will be contrariwise, and this year’s foreign trade results will Slowdown in economic growth at the end of the be compared with the last year’s record foreign trade year reminded us of risks, Slovakia’s economy surplus. will have to face in 2013. Six out of thirteen sectors of the industrial production in The Slovak economy reported the slowest real y/y GDP Slovakia faced the y/y slump in the industrial production growth since the previous recession in the last quarter in the last year already. of 2012. Although the result (+0.7%) has corresponded with our forecast (the prognosis of Sberbank Slovensko The environment of the increased unemployment rate, a.s. within the survey of Thomson Reuters agency was which reports the highest levels since May 2004, com- +0.6%), together with the last-year slump in the regis- bined with uncertain prospects of the employment tered unemployment and diminished industrial produc- market, usually results in dropped consumer confidence tion, it represented another issue before a demanding and increased saving tendency of households. year, Slovakia will be confronted with. Moreover, it is also required to add that there is a delay over compara- Thus the most important factor of the growth in Slova- ble neighbours in the Czech Republic and Hungary, who kia will be prospects for gradual economic recovery in experienced the slip back into recession in the last year. the eurozone in the second half of 2013, as indicated by several advanced indices, including the IFO, the German The prognosis of the real GDP growth for this year is ac- business confidence index, which has reported improve- companied by a higher than usual uncertainty due to ment within three consecutive months already. poor prospects of domestic demand, evolution of investments, as well as a threat of slowed external demand for The IFO, the German business confidence index, is based our exports. on a conducted survey of 7,000 German companies. It has proved to be a very good barometer of further de- Not taking into account positive impacts of the largest velopment of the real economy of Germany in the last export sectors, household final consumption, companies’ twenty years. The business confidence index comprises investments, as well as industrial production in six out of two main components: entrepreneurs’ sentiment about thirteen sectors in Slovakia reported evolution, typical of current business situation and their expectations for the recession, which effected the comparable economies of next six months. Hungary and the Czech Republic. Mainly the component of the index, mapping future ex- Therefore expectations for this year may be designated pectations, shows a relatively high and positive correla- as the utmost fragile. Owing to a required stabilisation of tion with a further current real growth of GDP in Ger- the public debt growth, final consumption of the public many: however, while information on a reported GDP administration will also record a y/y decline, similar to is available only ex post and with a several-week delay, the last year. We witnessed y/y real slump of gross fixed business sentiment measurement is available on a con- investments in the environment of uncertain prospects tinuous basis, namely each month. Therefore this index for export markets already in the last year. The only in- is indicated as an advanced one–i.e. which signals pos- creasing item of GDP in Slovakia – net exports – will be sible trends of future economic evolution. moderated significantly not only due to a mild recession in the eurozone, but also due to expended extraordinary The PMI index is a similar advanced index for the whole contributions of the last year, such as start-up of pro- eurozone, which is derived from a survey, conducted be- duction in new export capacities, as well as decreased tween purchasing managers among the member states

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DEVELOPMENT OF THE MACRO-ECONOMIC ENVIRONMENT 05 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 of the whole eurozone. It reports a trend of gradual im- provement in the last months, while still moving under the level, which separates the expansion territory from deterioration.

Both the advanced indices give evidence of the stabilised situation in Germany and in the eurozone, and support expectations of a gradual recovery of the economic growth in the second half of the year.

The stabilised situation in the eurozone is attributable to the consolidation of the bond markets in the eurozone, the extraordinary monetary easing policy of our Europe- an Central Bank, as well as the continued mild economic growth in the USA, that belongs to the largest export partners of the eurozone.

One fifth of the Slovak exports are directed to Germany, being also the largest business partner of the export- oriented Czech Republic, which is a destination of 14% of the exports from Slovakia, while Germany is also the largest economy and the engine of the eurozone’s economy.

Evolution of the economy in Slovakia usually follows that of our business partners with a delay of two or three quarters, as proved also during the last phases of the economic cycle.

In addition, the last quarter recorded a repeated increased tension in the bond market with respect to the unprecedented conditions of the Cyprus bailout. Al- though it has been ranked among the smallest economies of the eurozone, one of the key issues for 2013 ap- pears to be, whether and to what extent the local events in Cyprus are going to disrupt business and investor confidence in the old continent.

06 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DEVELOPMENT OF THE MACRO-ECONOMIC ENVIRONMENT WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Business Activity

price oriented bank and the one, which brings values to Corporate Banking its customers. The Bank has also concentrated on the preparations for rebranding and required funds. The new The entry of the new shareholder impacted the opera- branch concept, which will be experienced by customers tion and results of the corporate banking for 2012. Se- from the beginning of the next year, should present the veral organizational changes, which were aimed to cre- new brand, as it is known by customers in other markets, ate assumptions for the sound and sustainable growth where Sberbank is present on one hand, and also bring and the Bank’s integration into the Sberbank’s Group the fresh and modern spirit. As for the financial and busi- were reported in the last two quarters.. ness indicators, retail banking will be concentrated on the recovery of credit portfolio aimed to prepare founda- Several new departments were established at the end tions for the future growth. As for sales, we aim to col- of 2012, focusing on trade finance, export credit finance, lect sufficient customer deposits, which would enable to syndicated transactions and payment system. The Bank meet the ambitious targets in the area of market shares. enabled its customers to open accounts and make payments in Russian Roubles. It started to support business and entrepreneurial activities, related to Russia and the Treasury Community of Independent States, actively. The increased collaboration with other banks in financing of larger The year 2012 was for Terasury mainly characterised by projects was recorded within Sberbank Europe, being the shareholder change and preparations for the infor- just the areas, where an added value is perceived by the mation system replacement. Bank and where a significant potential for a planned growth may be seen. The new majority shareholder has brought about the increased trust of depositors, which reflected in the higher Thanks to the above-mentioned measures, the corpo- volume of funds, deposited mainly through the Trea- rate banking succeeded to reach the increase of deposits sury, as classic term deposits or through the successful and credits in the last quarter of 2012, which significantly product, Progress Deposit, which has been the unique exceeded the evolution in the banking market in Slova- product in the market until recently. Thanks to the new kia in the last quarter. We managed to connect to the shareholder, the Treasury has strengthened its relation- results, posted in the last quarter 2012, also in the first ship with institutional investors in the Slovak Republic, quarter of 2013 successfully. who welcomed such change.

The Assets and Liabilities Management continued to Retail Banking support mainly the Bank’s deposit base, hence performing the Bank’s strategy, which relies on own liquidity After the entry of the new shareholder, the Bank has fo- funds, and thus completing the mosaic of the strategy of cused on the preparations for the strategy, which would the Sberbank Europe Group. The Treasury Department secure a long-term increase of a customer number and has also placed the mortgage bonds, totalling further 99 quality of provided services, while the entry of the new m EUR, within this strategy, thus contributing to deve- shareholder brought about the changeover from the lopment of the Bank’s mortgage deals. product-oriented approach to the customer – oriented one. At the end of the year, the Treasury, together with other involved units, has prepared conditions for the Kondor+ The target customer group has been clearly defined, business information system replacement for the Murex as well as the basic values, which are to be delivered system, which is used within the Sberbank Group. through all sales points. The Bank started to change all its products and processes under this strategy, so that its customers could clearly feel the difference between the

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | BUSINESS ACTIVITY 07 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Key Figures 2008 – 2012

Total Assets Amounts Owed to Clients million EUR million EUR

1 748 1 530 1 597 1 378 1 412 1 330 1 184 1 167 1 001 1 014

2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

Loans and Advances to Clients Operating Income million EUR million EUR

1 227 57 53 1 145 49 44 1 019 993 978 31

2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

Operating Expenses Profit Before Taxation million EUR million EUR 41 39 36 39 38 16 3

-7 -6

-66 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

08 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | KEY FIGURES 2008 - 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Number of Empoyees Number of Branches headcount branches & expositurs

47 646 41 41 41 41 590 573 578 589

2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

Shareholders of Sberbank Slovensko, a. s.

Shareholders Stake in registered capital Stake in registered in EUR capital in % Sberbank Europe AG 52 479 536 99,3934 Small shareholders 320 310 0,6066 Total 52 799 846 100,0000

Shareholders Ordinary shares Priority shares No. Sum in EUR Share in % No. Sum in EUR Share in % Sberbank Europe AG 193 853 36 056 658 99,4694 98 933 16 422 878 99,2267 Small shareholders 1 034 192 324 0,5306 771 127 986 0,7733 Total 194 887 36 248 982 100,000 99 704 16 550 864 100,0000

31. 12. 2012.

SBERBANK SLOvensko | ANNUAL REPORT 2012 | Shareholders 09 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Financial

Statements

Prepared in accordance with International Financial Reporting Standards as adopted by the European Union

Year ended 31 December 2012

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | FINANCIAL STATEMENTS WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Governing Bodies

The Bank’s Management Board

JUDr. Samuel Vlčan Chairman from 31. 8. 2012 to 31. 8. 2015.

Dipl.-Kfm. Manfred Gram Member from 15. 9. 2010 to 15. 9. 2013.

Nedialko Radikov Member from 15. 8. 2012 to 15. 8. 2015.

The Bank’s Supervisory Board

Valentin Lubomir Mihov Financial Chairman from 30. 10. 2012 to 29. 4. 2015. Prof.Ing.Milan Buček, DrSc. Member from 29. 4. 2010 to 29. 4. 2015.

Marianna Danilina Member from 27. 4. 2012 to 29. 4. 2015. Statements Ing. Slavomír Cyprich Member from 24. 5. 2012 to 29. 4. 2015.

Thoraf Arlt Member from 28. 9. 2012 to 29. 4. 2015.

David Joseph O´Mahony Member from 30. 10. 2012 to 29. 4. 2015.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | GOVERNING BODIES 11 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Independent Auditors’ Report

12 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | INDEPENDENT AUDITORS’ REPORT WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Statement of financial position as at 31 December 2012

Assets Note 2012 2011 € ‘000 € ‘000 Cash and cash equivalents 7 111 395 232 925 Receivables from financial derivatives 9 7 690 6 317 Loans and advances to banks 10 104 297 46 948 Loans and advances to customers 11 1 226 689 1 145 483 Investment securities 12 249 513 134 335 Investment property 13 - 790 Tangible assets 14 15 462 15 761 Intangible assets 14 5 190 5 272 Current tax 15 1 963 205 Deferred tax asset 21 21 581 5 844 Other assets 4 589 3 463 1 748 369 1 597 343 Liabilities Payables from financial derivatives 9 2 585 2 178 Deposits by banks 16 14 644 126 123 Loans received 17 75 380 25 084 Customer accounts 18 1 378 447 1 167 171 Debt securities issued 19 105 720 114 827 Provisions 20 1 681 479 Other liabilities 22 6 748 4 323 Subordinated liabilities 23 - 30 006 1 585 205 1 470 191 Equity Share capital 24 52 800 33 207 Share premium 24 94 254 38 847 Reserves and retained earnings 25 16 110 55 098 163 164 127 152 1 748 369 1 597 343 The financial statements, which include the notes on pages 9 to 67, were approved on 27 March 2013 by:

Dipl.-Kfm. Manfred Gram, MBA Ing. Beáta Dorociaková Ing. Martin Sýkora Ing. Marta Ráczová Member of the Board Director of the Finance Person responsible for the Person responsible for Department financial statements accounting

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 13 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Statement of comprehensive income Year ended 31 December Assets Note 2012 2011 € ‘000 € ‘000 Interest income 27 62 733 58 664 Interest expense 28 (23 161) (18 774) Net interest income 39 572 39 890 Fee and commission income 30 13 742 15 005 Fee and commission expense 30 (3 711) (3 139) Net fee and commission income 10 031 11 866 Net trading income 31 630 979 Net income/(expense) 32 (6 285) 74 Net non-interest income (5 655) 1 053 Operating income 43 948 52 809 Administrative expenses 33 (33 335) (33 542) Depreciation 14 (4 745) (5 126) Operating expenses (38 080) (38 668) Operating profit before impairment 5 868 14 141 losses and provisions Impairment losses on loans and advances to customers 29 (70 900) (19 803) (Creation)/release of provisions 20 (1 202) (41) (Loss)/profit before taxation (66 234) (5 703) Income tax 34 18 508 1 119 (Loss)/profit for the year (47 726) (4 584)

14 SBERBANK SLOvensko | ANNUAL REPORT 2012 | Income Statement Year ended 31 December 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Statement of comprehensive income Year ended 31 December 2012 2012 2011 € ‘000 € ‘000 (Loss)/profit for the year (47 726) (4 584) Other comprehensive income Net change in fair value of available-for-sale securities 7 653 (917) Net change from revaluation of hedging derivatives 3 858 6 658 Income tax on other comprehensive income (2 773) (1 091) Other comprehensive income, net of income tax 8 738 4 650 Total comprehensive income for the year (38 988) 66

The notes on pages 9 to 67 form part of these financial statements.

SBERBANK SLOvensko | ANNUAL REPORT 2012 | Statement of comprehensive income Year ended 31 December 2012 15 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Statement of Changes in Equity Year ended 31 December 2012

Share Share Legal Other Fair Hedging Retained Total capital premium reserve reserves value re- derivative earnings € ‘000 € ‘000 € ‘000 fund € ‘000 valuation reva- € ‘000 € ‘000 reserve luation € ‘000 reserve € ‘000

At 1 January 2011 33 207 38 847 6 724 1 145 (228) (1 886) 49 277 127 086 Comprehensive income for the year Profit for 2010 ------(4 584) (4 584) Other comprehensive income Net change in fair value of available-for-sale securities, - - - - (743) - - (743) net of tax Net change from revaluation of hedging derivatives, - - - - - 5 393 - 5 393 net of tax At 31 December 2011 33 207 38 847 6 724 1 145 (971) 3 507 44 693 127 152 Loss for 2012 ------(47 726) (47 726) Increase of basic capital 19 593 55 407 - - - - - 75 000 Other comprehensive income Net change in fair value of available-for-sale securities, - - - - 5 941 - - 5 941 net of tax Net change from revaluation of hedging derivatives, - - - - - 2 797 - 2 797 net of tax As at 31 December 2012 52 800 94 254 6 724 1 145 4 970 6 304 (3 033) 163 164 The notes on pages 9 to 67 form part of these financial statements.

16 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Statement of Cash Flows Year ended 31 December 2012

Cash flows from operating activities Note 2012 2011 € ‘000 € ‘000

Profit before changes in operating assets and liabilities 35 15 938 22 391 Decrease in receivables from financial derivatives 146 569 Increase in loans and advances to banks (57 344) (22 470) Increase in loans and advances to customers (151 852) (146 727) (Increase)/decrease in other assets (1 126) (822) Decrease in payables from financial derivatives (436) (1 210) Increase/(decrease) in deposits by banks (111 257) 90 160 Increase in customer accounts 207 807 150 752 (Decrease)/increase in other liabilities 2 425 (422) Corporate income tax (paid)/received (1 754) (2 564) Net cash flows from operating activities (97 453) 89 657 Cash flows from investing activities

Purchase of investment securities 36 574 59 694 Repayment of investment securities (142 092) (73 103) Purchase of property and equipment (3 812) (2 117) Proceeds from sale of property and equipment 33 40 Net cash flows from investing activities (109 297) (15 486)

Cash flows from financing activities

Increase in capital 75 000 - Issue of debt securities 96 753 52 112 Repayment of debt securities (106 822) (52 735) Loans received 50 296 - Loans repaid - (23) Issue of subordinated liabilities - 30 000 Repayment of subordinated liabilities (30 006) - Net cash flows from financing activities 85 220 29 354

SBERBANK SLOvensko | ANNUAL REPORT 2012 | Statement of Cash Flows Year ended 31 December 2012 17 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Cash flows from operating activities Note 2012 2011 € ‘000 € ‘000 Net increase/(decrease) in cash and cash equivalents 121 530 103 525 Cash and cash equivalents at the beginning of the year 232 925 129 400 Cash and cash equivalents at the end of the year 7 111 395 232 925

The notes on pages 9 to 67 form part of these financial statements.

18 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | STATEMENT OF CASH FLOWS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | STATEMENT OF CASH FLOWS YEAR ENDED 31 DECEMBER 2012 19 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Notes to the Individual Financial Statement WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Notes to the Financial Statements Year ended 31 December 2012

Supervisory Board 1. General Information Valentin Lubomir Mihov – chairman (from 30 October VOLKSBANK Slovensko, a.s. (hereinafter also the “Bank”) 2012) was formed on 26 August 1991 and incorporated in the Commercial Register in Bratislava on 30 August 1991. Prof. Ing. Milan Buček, DrSc. Sberbank Europe AG, a company with registered office at Renngasse 10, 1012 Vienna, Austria owns 99.39% of the Thoralf Arlt (from 28 September 2012) Bank’s shares. The ultimate parent company is Sberbank Russia with registered office in Russia. The remaining Marianna Danilina (from 27 April 2012) Notes to the 0.61% of shares is owned by minority shareholders. Ing. Slavomír Cyprich (from 24 May 2012) The principal activities of the Bank are the provision of banking and financial services to commercial and private David Joseph O´Mahony (from 30 October 2012) customers in Slovakia. Christophe Marcel Descos, MSc. (until 28 September Individual The Bank operates 41 branches in Slovakia. 2012) Mag. Gerhard Wöber (until 28 September 2012)

Other information on the Bank: Konstantin Kolpakov (until 28 September 2012)

Registered office: Vysoká 9, 810 00 Bratislava Dr. Wolfgang Hofstetter (until 24 May 2012) Company ID No.: 17 321 123 Financial Tax ID No.: 2020412460 Dr. Fausto Maritan (until 27 April 2012)

Peter Bernhard Tötzer (until 27 April 2012)

Board of Directors Statement JUDr. Samuel Vlčan – chairman (from 31 August 2012) Audit Committee Dipl.-Kfm. Manfred Gram, MBA Valentin Lubomir Mihov (from 28 September 2012)

Nedialko Radikov (from 15 August 2012) Thoralf Arlt (from 28 September 2012)

Ing. Rastislav Murgaš (from 1 January 2013) Mag. Gerhard Wöber (until 28 September 2012)

Dr.iur. Barbara Neiger, MBA (until 30 August 2012) Christophe Marcel Descos, MSc. (until 28 September 2012) Ing. Richard Szabó, MBA, PhD (until 31 October 2012) Konstantin Kolpakov (until 28 September 2012)

Peter Bernhard Tötzer (until 27 April 2012)

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 21 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The financial statements for the year ended 31 Decem- (b) Basis of Measurement ber 2011 were approved on 27 April 2012 by the General The financial statements have been prepared on the his- Meeting of shareholders. torical cost basis except for the following: • derivative financial instruments are measured at fair The financial statements are prepared as individual fi- value; nancial statements, the Bank has one affiliate company, • financial instruments at fair value through profit or whose activities and returns are immaterial to the Bank loss are measured at fair value; and therefore the Bank does not prepare consolidated • available-for-sale financial assets are measured at fair financial statements. The Bank has owned a 100% sub- value; sidiary ALPHA plus, s.r.o. as at 31 December 2012 and 31 • investment properties are measured at fair value. December 2011, with registered seat Vysoká 9, 810 00 Bratislava, Slovakia. Its’ primary activity is property man- (c) Functional and Presentation Currency agement. The investment is carried at cost of EUR 5 These financial statements are presented in Euros, which thousand and reported within „Other assets“. is the Bank’s functional currency. Except as otherwise indicated, financial information is presented in Euros and The Bank’s financial statements are included in the con- has been rounded to the nearest thousand. solidated financial statements of ultimate parent company Sberbank Russia, whose registered office is at 19 (d) Use of Estimates and Judgements Vavilova St., 117997 Moscow, Russia. The consolidated fi- The preparation of financial statements requires man- nancial statements of Sberbank for 2012 will be available agement to make judgements, estimates and assump- after they are prepared at its registered office or on the tions that affect the application of accounting policies webpage www.sbrf.ru. and reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those esti- The Bank is subject to the regulatory requirements of the mates. National Bank of Slovakia, which include limits and other restrictions pertaining to minimum capital adequacy re- Estimates and underlying assumptions are reviewed on quirements, provisioning to cover credit risk, liquidity, an ongoing basis. Revisions to accounting estimates are interest rate and foreign currency position. recognised in the period in which the estimate is revised and in any future periods affected. The financial statements were prepared pursuant to Ar- ticle 17 (a) of Act No. 431/2002 Coll. on Accounting, as In particular, information about significant areas of esti- amended. mation uncertainty and critical judgements in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is provided in Note 4.

2. Basis of preparation (e) Changes in accounting policies There were no changes in accounting policies during the (a) Statement of Compliance year ended 31 December 2012. The financial statements of the Bank for 2012 have been prepared in accordance with International Financial Re- Changes in classification porting Standards (“IFRS”) as adopted by the European Some of the comparable data in the cash flow statement Union (“EU”). were adjusted in order to give better view of the sub- stance of transactions. The adjustment had no impact on profit, equity or financial position of the Bank.

22 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 2011 2011 difference € ‚000 € ‚000 (restated)

Cash-flows from operating activities 90,362 89,657 -705 Cash-flows from investing activities -12,871 -15,486 -2,615 Cash-flows from financing activities 26,034 29,354 3,320 103,525 103,525 -

(f) Going Concern Assumption to the carrying amount of the financial asset or liability. These financial statements were prepared using the go- The effective interest rate is established when the finan- ing concern assumption that the Group will continue in cial asset and liability is first recognised and it is not re- operation for the foreseeable future. vised subsequently.

On 15 February 2012 Volksbank International AG (‘VBI’ The calculation of the effective interest rate includes all later Sberbank international AG – ‘SBI’) was sold to the fees paid or received, transaction costs, and discounts or open joint-stock company Sberbank of Russia. premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue, or disposal of a financial asset or liability.

3. Significant Accounting (c) Fees and Commissions Fees and commissions income and expenses that are in- Policies and Methods tegral to the effective interest rate on a financial asset or liability are included in the calculation of the effective The accounting policies and methods set out below have interest rate. been applied consistently to both periods presented in these financial statements. Other fees and commissions income, including account servicing fees, investment management fees, placement (a) Foreign Currency fees and syndication fees, are recognised when the re- Transactions denominated in foreign currencies are lated services are performed. When a credit facility is not translated into Euros at the exchange rates ruling on expected to be drawn down, commitment fees are rec- the transaction date. Monetary assets and liabilities de- ognised on a straight-line basis over the credit facility nominated in foreign currencies are translated at the term. exchange rates ruling on the reporting date. Resulting gains and losses are recorded in Net trading income in Other fees and commissions expense relates mainly to the profit or loss. transaction costs and service fees, which are expensed as the services are received. (b) Interest Income and Expense Interest income and expense are recognised in the in- (d) Net Trading Income come statement using the effective interest method ex- Net trading income comprises gains less losses related to cept for financial instruments at fair value through profit assets and liabilities held for trading and includes all real- or loss. The effective interest rate is the rate that ac- ised and unrealised fair value changes, interest, dividends curately discounts the estimated future cash payments and foreign exchange differences. and receipts over the life of the financial asset or liability

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 23 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (e) Dividends (h) Financial Assets and Liabilities Dividend income is recognised when the right to receive income is established. (i) Recognition

(f) Lease Payments The Bank initially recognises loans and advances to banks Payments made under operating leases are recognised in and customers, deposits from banks, loans received, cus- profit or loss on a straight-line basis over the term of the tomer accounts, issued debt securities and subordinated lease. Lease income is recognised as an integral part of liabilities on the date that they are originated. Other fi- the total lease expense, over the term of the lease. nancial assets and liabilities (including assets and liabilities designated at fair value though profit or loss) are Minimum lease payments made under finance leases are initially recognised on the trade date at which the Bank apportioned between the finance expense and the re- becomes a contractual party with respect to the instru- duction of the outstanding liability. The finance expense ment. is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the re- Financial assets and liabilities are recognised at fair value maining balance of the liability. including transaction costs directly related to procurement (for items not classified at fair value through profit (g) Income Tax or loss). Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except for items recog- (ii) Derecognition nised in other comprehensive income. The Bank derecognises a financial asset when the con- Current tax is the expected tax payable on the taxable tractual rights to the cash flows from the financial -as income for the year calculated using the tax rate valid set expire, or it transfers the contractual rights to receive as at the reporting date, adjusted for amounts related to the cash flows from the financial asset in a transaction in previous years. Current tax is revised for amounts related which substantially all the risks and rewards of owner- to previous accounting periods. ship of the financial asset are transferred. Any interest in transferred financial assets that is created or retained Deferred tax is calculated using the statement of finan- by the Bank is recognised as a separate asset or liability. cial position method at the origin of temporary differences between the carrying amounts of assets and lia- The Bank derecognises a financial liability when its con- bilities for financial reporting purposes and the amounts tractual obligations expire or when they are discharged used for taxation purposes. or cancelled.

Deferred tax is calculated using the tax rates expected The Bank enters into transactions whereby it transfers as- for the following years, i.e. 23%. sets recognised on its statement of financial position, but retains all risks and rewards arising from the transferred When recognising deferred tax assets and liabilities, the assets or a portion of them. If all or substantially all risks Bank follows the approach under which all deferred tax and rewards are retained, then the transferred assets are liabilities are recognised in the full amount. Deferred tax not derecognised from the statement of financial position. assets are recognised only to the extent it is probable Transfers of assets with retention of all or substantial- that conditions for future tax deductibility of temporary ly all risks and rewards include, for example, securities differences will be met and future taxable profits will be lending and repurchase transactions. generated against which these assets can be utilised. The Bank also derecognises certain assets when it writes The utilisation of a deferred tax asset is re-assessed as at off balances related to the assets deemed to be unre- the reporting date. coverable.

24 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (iii) Offsetting mitment, changes in the fair value of the derivative are recognised immediately in profit or loss together with Financial assets and liabilities are set off and the net changes in the fair value of the hedged item that are at- amount is presented in the statement of financial posi- tributable to the hedged risk (in the same profit or loss tion when, and only when, the Bank has a legal right to line as the hedged item). set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simul- Hedge accounting is discontinued if the derivative ex- taneously. pires or is sold, terminated, or exercised, no longer meets the criteria for fair value hedge accounting, or the desig- Income and expenses are presented on a net basis only nation is revoked. Any adjustment to a hedged item for when permitted by the reporting standards, or for gains which the effective interest method is used is amortised and losses arising from a group of similar transactions to income as part of the recalculated effective interest such as in the Bank’s trading activity. rate of the item over its remaining life.

(i) Financial Assets and Liabilities at Fair Value • Cash Flow Hedge Through Profit or Loss When a derivative is designated as a hedge of the vari- (i) Financial Assets Held for Trading ability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly Assets held for trading are those assets that the Bank ac- probable forecast transaction that could affect income, quires or incurs principally for the purpose of selling in the effective portion of changes in the fair value of the the near term, or holds as part of a portfolio that is man- derivative is recognised directly in other comprehensive aged together for short-term profit or position taking. income and presented in the hedging reserve in equity.

Assets held for trading are initially recognised and sub- The relationship between the hedging instrument and sequently measured at fair value in the statement of fi- the hedged item, risk management objectives, and the nancial position with transaction costs taken directly to implementation strategy of various hedging transactions profit or loss. All changes in fair value are recognised as are documented at the beginning of the hedge relation- part of Net trading income in profit or loss. Assets held ship. From the origin of the hedging, the Bank continu- for trading are not reclassified subsequent to their initial ously documents whether the hedging instrument is recognition. highly effective in offsetting changes in the fair values or cash flows of the hedged item. (ii) Receivables and Payables from Financial Derivatives Any ineffective portion of changes in the fair value of the Financial derivatives are measured at fair value on the derivative is recognised immediately in profit or loss. statement of financial position. Derivatives with positive fair values are recognised as receivables from financial • Derivatives Held for Trading derivatives, while derivatives with negative fair values are recognised as liabilities from financial derivatives. When a derivative providing effective economic hedg- The treatment of changes in their fair value depends on ing in the Bank’s risk management does not qualify for their classification into the following categories: a hedge relationship, all changes in its fair value are recognised directly in profit or loss as a component of “Net • Fair Value Hedge trading income”.

When a derivative is designated as a hedge of the change in fair value of a recognised asset or liability or a com-

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 25 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 • Embedded Derivatives set or liability is the amount at which the financial asset or liability is measured at initial recognition, less principal Derivatives may be embedded in another contractual ar- repayments, plus or minus cumulative amortisation us- rangement (hereinafter the “host contract”). Embedded ing the effective interest method of any difference -be derivatives are separated from the host debt instruments tween the initial amount recognised and the maturity if amount, minus any impairment losses.

• the economic characteristics of the derivatives are not Any sale or reclassification of a significant amount of closely related to the economic characteristics and risks held-to-maturity investments before their maturity re- of the host debt instruments; sults in the reclassification of all held-to-maturity investments as available for sale and prevents the Bank from • the embedded derivative meets the IAS 39 definition of classifying investment securities as held to maturity for derivative; and the current and following two reporting periods.

• the hybrid instrument is not financial asset or liability (k) Available-for-Sale Financial Assets held for trading or designated at fair value through profit Available-for-sale financial assets are non-derivative in- or loss. vestments that are not classified as another category of financial assets but are recognised in the statement of (iii) Financial Assets and Liabilities at Fair Value Through financial position as “Investment securities”. Profit or Loss Equity securities not traded on active markets whose fair The Bank initially classified financial assets and liabilities value cannot be reliably determined are carried at cost. as through profit or loss provided that such recognition All other available-for-sale investments are carried at eliminates or reduces an accounting inconsistency that fair value. would otherwise arise. Interest income is recognised in profit or loss using the Financial assets at fair value through profit or loss are effective interest method. Dividend income is recognised recognised in the statement of financial position as In- in profit or loss when the Bank becomes entitled to the vestment securities (Note 12) and financial liabilities at dividend. Foreign exchange gains or losses on available- fair value through profit or loss as Customer accounts for-sale debt securities are recognised in profit or loss as (Note 18). Net trading income.

Assets and liabilities are initially recognised and subse- Other fair value changes are recognised directly in other quently measured at fair value in the statement of finan- comprehensive income until the investment is sold or cial position. All changes in fair value are recognised as impaired. The cumulative gain and loss previously recog- part of Net trading income in profit or loss. nised in other comprehensive income is then recognised in profit or loss. (j) Held-to-Maturity Investments Held-to-maturity investments are non-derivative assets Impairment losses on available-for-sale securities are with fixed or determinable payments and fixed matu- recognised by transferring the difference between the rity that the Bank has the positive intent and ability to amortised cost and present fair value from equity to in- hold to maturity and that are not designated at fair value come. When a subsequent event causes the amount of through profit or loss or available for sale. impairment loss on an available-for-sale debt security to decrease, the impairment loss is reversed through the in- Held-to-maturity investments are carried at amortised come statement. cost using the effective interest method after reflecting impairment, if any. The amortised cost of a financial as- Any subsequent increase in the fair value of an impaired

26 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 available-for-sale equity security is recognised directly identified. Assets that are not individually significant are in other comprehensive income. Changes in impairment also collectively assessed for impairment by grouping to- losses attributable to the time value of money are recog- gether financial assets (carried at amortised cost) with nised as part of interest income. similar risk characteristics. l) Loans and Receivables Objective evidence that financial assets (including Receivables are non-derivative financial assets with shares) are impaired can include default or delinquen- fixed or determinable payments that are not quoted in cy by a borrower, a benefit granted by the Bank to the an active market and that the Bank does not intend to borrower for economic or legal reasons concerning the sell immediately or in the near term. borrower’s financial difficulties on terms that the Bank would not otherwise consider, the probability that a bor- When the Bank is the lessor in a lease agreement that rower or issuer will enter bankruptcy, the disappearance transfers substantially all of the risks and rewards of of an active market for a security, or other observable ownership of an asset to the lessee, the agreement is data relating to a group of assets such as adverse chang- presented in receivables. es in the payment status of borrowers or issuers in that group or deterioration in economic conditions. When the Bank purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a In assessing collective impairment losses (specifically in similar asset) at a fixed price on a future date (hereinafter the case of portfolio provisions recorded for receivables the “reverse repo or stock borrowing”), the agreement is overdue from 30 to 90 days and IBNR provisions record- recognised as a receivable and the underlying asset is not ed for loans overdue up to 30 days), the Bank uses sta- recognised in the Bank’s financial statements. tistical models. These models reflect historical trends of probability of significant financial difficulties, the timing Receivables are initially measured at fair value plus incre- of payments and amounts of the existing loss adjusted mental direct transaction costs and subsequently meas- for management’s judgment on whether current eco- ured at their amortised cost using the effective interest nomic and loan conditions cause that the actual loss will method after reflecting any impairment. likely be higher or lower than the loss calculated using historical modelling. Probabilities of significant financial (i) Identification and Measurement of Impairment difficulties, the loss level and the anticipated timing of future payments are regularly compared with the actual At each reporting date, the Bank assesses whether there results in order to ensure they are up to date. is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial Impairment losses on financial assets carried at amor- assets are impaired when objective evidence demon- tised cost are measured as the difference between the strates that a loss event has occurred after the initial carrying amount of the financial asset and the present recognition of the asset, and that the loss event has an value of estimated future cash flows discounted at the impact on the future cash flows from the asset that can asset’s original effective interest rate. The stated losses be reliably estimated. are recognised in profit or loss and reflected as impairment losses on loans and advances. Specifically in the The Bank assesses the evidence of impairment at both case of loans, these losses decrease the amount of re- a specific asset and collective level. For each individually ceivables through value adjustments recognised in the significant financial asset an impairment loss is assessed profit or loss line “Impairment losses on loans and ad- by the Bank on an individual basis. All individually signifi- vances to customers”. Interest on the impaired financial cant financial assets for which no impairment loss was asset continues to be recognised through the dissolution individually found are then assessed on a collective basis of the discount. for any impairment that has been incurred but not yet

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 27 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 When a subsequent event causes the amount of impair- (iii) Depreciation ment loss to decrease, the impairment loss is reversed through profit or loss. Depreciation is recognised in income on a straight-line basis over the estimated useful lives of each item of If the loan is considered non-recoverable, it is written property and equipment. Leased assets are depreciated off against the recorded provisions. If, after the loans are over the shorter of the lease term and their useful lives. written off, the Bank collects additional payments from Land is not depreciated. the customer, the income is recognised in “Impairment losses on loans and advances to customers”. The estimated useful lives for the current and compara- tive periods are as follows: (m) Cash and Cash Equivalents Years Method Cash and cash equivalents comprises cash, unrestricted balances held with the National Bank of Slovakia and Buildings 20 Straight-line depreciation highly liquid financial assets with original maturities of Furniture, less than three months, which are not subject to signifi- fittings and cant risk of changes in their fair value and are used by the equipment 4 - 12 Straight-line depreciation Bank to manage short-term commitments. Motor vehicles 5 Straight-line depreciation Cash and cash equivalents are carried at amortised cost Software 4 Straight-line depreciation in the statement of financial position. Depreciation methods, useful lives, and residual values (n) Property and Equipment are reassessed at the reporting date.

(i) Recognition and Measurement (o) Leased Assets Leases under which the Bank assumes substantially all Items of property and equipment are valued at cost less the risks and rewards of ownership are classified as -fi accumulated depreciation and impairment losses. nance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair Cost includes expenditures that are directly attributable value and the present value of the minimum lease pay- to the acquisition of the asset. Purchased software that ments. Subsequent to initial recognition, the asset is rec- is integral to the functionality of the related equipment is ognised in accordance with the accounting policies and recognised as part of that equipment. methods applicable to that asset.

When parts of an item of property or equipment have All other leases are operating leases and the leased as- different useful lives, they are recognised as separate sets are not recognised on the Bank’s statement of fi- items (major components) of property and equipment. nancial position.

(ii) Subsequent Costs (p) Investment Property

The cost of replacing an item of property or equip- Investment properties are properties that are held either ment is recognised in the carrying amount of this to earn rental income or for capital appreciation or for item if it is probable that the future economic ben- both. Investment properties are initially stated at acqui- efits embodied within the part will flow to the Bank sition costs. Subsequently, they are revalued to fair value. and its costs can be reliably measured. The costs of the day-to-day servicing of property and equip- Fair value estimates are based on the income method, ment are recognised in profit or loss when incurred. which means that the internal appraiser should deter-

28 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 mine the market value that can be achieved in the short- the Bank is demonstrably committed, without realistic term horizon (6 months), i.e. the price at which the prop- possibility of withdrawal, to a formal detailed plan to ter- erty can be sold to another entity. Any gain or loss arising minate employment before the normal retirement date. from a change in fair value is recognised in “Net trading income” and lease income is recognised in “Net other in- (iii) Short-Term Benefits come”. Short-term employee benefits obligations are measured q) Deposits, Customer accounts, Debt Securi- on an undiscounted basis and are expensed as the re- ties Issued, Loans Received and Subordinated lated service is provided. liabilities A provision is recognised in the amount expected to be Deposits, customer accounts, debt securities issued, paid under a short-term cash bonus or profit-sharing loans received and subordinated liabilities are initially plans if the Bank has a present legal or constructive obli- measured at fair value plus transaction costs, and sub- gation to pay this amount as a result of past service pro- sequently measured at their amortised cost, including vided by the employee and the obligation can be reliably accrued interest. Accrued interest is recognised in “Net estimated. interest income”. (t) Segment Reporting When the Bank sells a financial asset and simultaneously The Bank applies IFRS 8 – ‘Operating Segment’ for seg- enters into a “repo” or “stock lending” agreement to re- ment reporting. The recognition is based on the “man- purchase the asset (or a similar asset) at a fixed price on agement approach”, i.e. the classification into segments future date, the arrangement is recognised as a deposit, respects the internal principle of providing the informa- and the underlying asset continues to be recognised in tion about a segment to management. It also reflects the the Bank’s financial statements. majority shareholder’s segmentation principle.

(r) Provisions for Liabilities A segment is a set of the Bank’s assets and activities A provision for liabilities is recognised if, as a result of a that is engaged either in providing products or services past event, the Bank has a present legal or constructive (business segment), or in providing products or services obligation that can be estimated reliably, and it is proba- within a particular economic environment (geographi- ble that an outflow of economic benefits will be required cal segment), which is subject to risks and rewards that to settle the obligation. Provisions for liabilities are de- are different from those of other segments, the results of termined by discounting the expected future cash flows which are regularly reviewed owing to decisions made at a pre-tax rate that reflects current market assessment about resources to be allocated to segments and to as- of the time value of money and, where appropriate, the sess their performance, and for which financial informa- risks specific to the liability. tion is available.

(s) Employee Benefits Geographically, operating income is primarily generated by the provision of banking services in Slovakia. Some (i) Defined contribution pension plans assets and liabilities are located outside of Slovakia. The summary of the most significant exposures of total as- Obligations for contributions to defined contribution sets to foreign entities is included in Note 5b “Exposure pension plans are recognised as an expense in “General of receivables by countries”. administrative expenses” as they become due. The Bank’s primary format for segment reporting is (ii) Termination Benefits based on business segments.

Termination benefits are recognised as an expense when

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 29 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (u) Off- balance sheet assets and liabilities has there no impact on the Bank’s financial position or Loan commitments and letter of credits are recognised performance. The amendment becomes effective for an- at cost. Received and granted collaterals are presented nual periods beginning on or after 1 July 2012. up to the amount of receivable/payable. • IAS 32 Offsetting Financial Assets and Financial Liabili- In the ordinary course of business, the Bank gives finan- ties – Amendments to IAS 32 cial guarantees, consisting of various types of letters of credit and guarantees. According to IAS 39, a financial These amendments clarify the meaning of “currently has guarantee is a contract that requires the guarantor to a legally enforceable right to set-off”. It will be neces- make specified payments to reimburse the holder for sary to assess the impact to the Bank by reviewing set- a loss it incurs because a specified debtor fails to make tlement procedures and legal documentation to ensure payment when due in accordance with original or modi- that offsetting is still possible in cases where it has been fied terms of a debt instrument. If the Bank is in a posi- achieved in the past. In certain cases, offsetting may no tion of being a guarantee holder, the financial guaran- longer be achieved. In other cases, contracts may have tee is not recorded in the balance sheet but is taken into to be renegotiated. The requirement that the right of consideration as collateral when determining impair- set-off be available for all counterparties to the netting ment of the guaranteed asset. agreement may prove to be a challenge for contracts where only one party has the right to offset in the event Financial guarantees are initially measured at fair value. of default. The amendments also clarify the application Generally the initial measurement is the premium re- of the IAS 32 offsetting criteria to settlement systems ceived for a guarantee. If no premium is received at con- (such as central clearing house systems) which apply tract inception the fair value of a financial guarantee is gross settlement mechanisms that are not simultane- nil, as this is the amount at which the guarantee could ous. Offsetting on the grounds of simultaneous settle- be settled in an arm’s length transaction with an unrelat- ment is particularly relevant for the Bank as to where it ed party. Subsequent to initial recognition the financial engages in large numbers of sale and repurchase trans- guarantee contract is reviewed for the possibility that actions. Currently, transactions settled through clearing provisioning will be required under IAS 37. systems are, in most cases, deemed to achieve simultaneous settlement. While many settlement systems are The premium received is recognised in the income state- expected to meet the new criteria, some may not. Any ment in the line ‘Net fee and commission income’ on a changes in offsetting are expected to impact leverage straight-line basis over the life of the guarantee. ratios, regulatory capital requirements, etc. As the impact of the adoption depends on the Bank’s examina- (v) New standards and unapplied interpretations tion of the operational procedures applied by the central Some newly issued standards, amendments to stand- clearing houses and settlement systems it deals with to ards and interpretations were not effective at 31 determine if they meet the new criteria, it is not practical December 2012 and were not applied in prepar- to quantify the effects. ing these financial statements. The Bank intends to These amendments become effective for annual periods adopt these standards when they become effective. beginning on or after 1 January 2014.

• IAS 1 Financial Statement Presentation – Presentation • IFRS 7 Disclosures – Offsetting Financial Assets and of Items of Other Comprehensive Income (‘OCI’) Financial Liabilities – Amendments to IFRS 7

The amendments to IAS 1 change the grouping of items These amendments require an entity to disclose infor- presented in OCI. Items that could be reclassified (or mation about rights to set-off and related arrangements ‘recycled’) to profit or loss at a future point in time (for (e.g., collateral agreements). The disclosures would example, upon derecognition or settlement) would be provide users with information that is useful in evalu- presented separately from items that will never be re- ating the effect of netting arrangements on an entity’s classified. The amendment affects presentation only and financial position. The new disclosures are required for

30 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 all recognised financial instruments that are set off in Following listing of standards and interpretations issued accordance with IAS 32 Financial Instruments: Presen- are those that the Bank expects not to have any impact tation. The disclosures also apply to recognised financial on disclosures, financial position or performance when instruments that are subject to an enforceable master applied at a future date: netting arrangement or similar agreement, irrespective • IAS 19 Employee Benefits (Amendment) of whether they are set off in accordance with IAS 32. These amendments will not impact the Bank’s financial • IAS 27 Separate Financial Statements (as revised in position or performance and will become effective for 2011) annual periods beginning on or after 1 January 2013. • IAS 28 Investments in Associates and Joint Ventures • IFRS 9 Financial Instruments: Classification and (as revised in 2011) Measurement • IFRS 1 Government Loans — Amendments to IFRS 1 IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classifica- • IFRS 10 Consolidated Financial Statements tion and measurement of financial assets and financial liabilities as defined in IAS 39. Based on the IASB’s decision • IFRS 11 Joint Arrangements from December 2011 the standard mandatory effective date has been postponed to annual periods beginning on • IFRS 12 Disclosure of Involvement with Other Entities or after 1 January 2015 with early application permitted. In subsequent phases, the IASB will address hedge ac- • IFRIC 20 Stripping Costs in the Production Phase of counting and impairment of financial assets. The Board a Surface Mine is deferring the mandatory effective date as a result of recent changes in the expected timing of completion of The Bank has elected not to adopt these standards, re- the remaining phases of the financial instruments provisions and interpretations in advance of their effective ject. The Board intends to allow entities to apply all phas- dates. es concurrently. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Bank’s financial assets and on classification and measurements of financial liabilities. The Bank is in process of assessment of the first phase and evaluating 4. Use of Estimates impact of the other phases as known to date. It is the intention of the Bank to adopt the standard in its entirety and Judgements once issued and endorsed. The presentation of financial statements in accordance • IFRS 13 Fair Value Measurement with IFRS requires the Bank’s management to make estimates and assumptions that affect the reported amounts IFRS 13 establishes a single source of guidance under IFRS of assets and liabilities and the disclosure of contingent for all fair value measurements. IFRS 13 does not change assets and liabilities as at the reporting date and the re- when an entity is required to use fair value, but rather ported amounts of revenues and expenses during the re- provides guidance on how to measure fair value under porting period. Actual results could differ from those es- IFRS when fair value is required or permitted. Adoption timates, and future changes in the economic conditions, of the standard is not expected to have a material impact business strategies, regulatory requirements, accounting on the financial position or performance of the Bank. This rules and/or other factors could result in a change in es- standard becomes effective for annual periods beginning timates that could have a material impact on the future on or after 1 January 2013. reported financial position and results of operations.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 31 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (a) Impairment loss allowances requires the use of valuation techniques. For financial instruments that trade infrequently and have little price These disclosures supplement the commentary on finan- transparency, fair value is less objective and requires cial risk management (Note 5b). varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing as- Assets recognised at amortised cost are evaluated for sumptions and other risks affecting the specific instru- impairment on the basis of the accounting policies and ment. methods as described in Note 3. Fair values of financial assets and financial liabilities that Provisioning for incurred loan losses involves many un- are traded in active markets are based on quoted mar- certainties concerning the outcomes of the risks and re- ket prices or dealer price quotations. For all other finan- quires the Bank’s management to make many subjective cial instruments the Bank determines fair values using assessments when estimating the amount of losses. The valuation techniques. The valuation techniques include Bank creates impairment loss allowances where there is the net present value and discounted cash flow mod- objective evidence that, as a result of past events, the esti- els, a comparison to similar instruments for which mar- mated future cash-flows are impacted negatively. These ket observable prices exist, and other valuation models. provisions are based on the Bank’s historical experience Assumptions and inputs used in valuation techniques and current information concerning defaults, recovery include risk-free and benchmark interest rates, credit of loans, or time needed from a loss event to crystallise spreads, and other premiums used in estimating discount in loan default, as well as subjective judgments of the rates, bond and equity prices, foreign currency exchange Bank’s management about estimated future cash flows. rates, equity and equity index prices and expected price When determining prudent and appropriate loss impair- volatilities and correlations. The objective of valuation ment estimates under the given conditions, the Bank’s techniques is to arrive at a fair value determination that management considered all significant circumstances reflects the price of the financial instrument at the -re that could have an impact on the financial statements porting date and that would have been determined by in connection with the current status of the economic market participants acting at arm’s length. environment. Given the current economic conditions, the result of such estimates may differ from impairment The Bank measures fair values using the following hier- provisions recognised in the financial statements. archy of methods:

(b) Income Tax • Level 1 – Quoted market price in an active market for In recent years, income tax rules and regulations under- an identical instrument. went significant changes. With regard to the vast and • Level 2 – Valuation techniques based on observable complex issues affecting the banking industry there are inputs. This category includes instruments valued using: no historical precedents and/or interpretation rulings. In quoted market prices in active markets for similar instru- addition, tax authorities have broad powers as regards ments; quoted prices for similar instruments in markets the interpretation of the effective tax laws and regu- that are considered less than active; or other valuation lations during the tax audits of a taxpayer. As a result, techniques where all significant inputs are directly or in- there is a higher degree of uncertainty as to the final out- directly observable from market data. come of the potential reviews by tax authorities. • Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments (c) Valuation of Financial Instruments where the valuation technique includes inputs not based The Bank’s accounting policies and methods on fair value on observable data and the unobservable inputs could are discussed under Note 3. have a significant effect on the instrument’s valuation. This category includes instruments that are valued based The determination of fair value for financial assets and on quoted prices for similar instruments where signifi- liabilities for which there is no observable market price cant unobservable adjustments or assumptions are re-

32 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 quired to reflect differences between the instruments. description of held for trading financial assets and liabilities as set out in the accounting policies in Note 3 (i) (i). In 2012 the Bank did not transfer any items within the • In designating financial assets or liabilities at fair value fair value hierarchy levels. At 31 December 2012 and through profit or loss the Bank determines whether one 2011, there were no financial instruments disclosed in of the criteria for this designation is met: the financial statements at fair values established using ‒ The assets or liabilities are managed, evaluated and re- valuations techniques employing unobservable inputs ported internally on a fair value basis; (level 3). ‒ The designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or Classification of Financial Assets and Liabilities ‒ The asset or liability contains an embedded derivative that significantly modifies the cash flows under the con- The Bank’s accounting policies and methods provide the tract. scope for assets and liabilities to be designated on incep- • In classifying financial assets as held to maturity, man- tion into different accounting categories in certain cir- agement determines whether the Bank has both the cumstances: positive intention and ability to hold the financial assets • In classifying financial assets or liabilities as “trading”, until their maturity date as required by the accounting management determines whether the Bank meets the policies in Note 3 (j).

The reported amounts of financial instruments stated at fair value analysed according to the fair value hierarchy were as follows: Level 1 Level 2 Total Note € ‘000 € ‘000 € ‘000

31 December 2012 Receivables from financial derivatives 9 - 7 690 7 690 Loans hedged against changes in fair value - 2 001 2 001 Investment securities 12 222 626 26 887 249 513 222 626 36 578 259 204 Payables from financial derivatives 9 - 2 585 2 585 - 2 585 2 585 31 December 2012 Receivables from financial derivatives 9 - 6 317 6 317 Loans hedged against changes in fair value - 198 198 12 125 437 8 898 134 335 Liabilities 125 437 15 413 140 850 Payables from financial derivatives 9 - 2 178 2 178 Customer accounts at fair value through profit or loss 18 - 838 838 - 3 016 3 016

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 33 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (d) Deferred tax asset The Board of Directors has the overall responsibility for Deferred tax asset is recognized under the probability that the establishment and oversight of the Bank’s risk man- in the future the Bank will demonstrate sufficient amount agement framework. The Risk Committee, Risk Con- of future tax profit against which deferred tax asset trolling Department, the Asset and Liability Committee might be applicable. The Bank estimated future taxable (ALCO) and the Credit Committee are bodies (authori- profit based on financial plan for next 3 years (point 21). ties), which are responsible for developing and monitoring risk management policies in their specific areas. (e) Litigations Litigations are considered as common regarding the The Bank’s risk management policies are established to Bank business. The Bank regularly reconsiders their sta- identify and analyse the risks faced by the Bank, to set tus and the amount of recognized provision is update appropriate risk limits and controls, and to monitor risks (point 20). and adherence to limits. Risk management policies and systems are reviewed regularly, based on the annual re- vision plan that reflects changes in market conditions, products, services, processes and systems in the Bank. 5. Financial Risk The Bank, through process standardisation, continuous training, management standards and procedures, aims Management to develop and maintain a disciplined and constructive control environment in which all employees understand (a) Introduction their roles and obligations. The Bank has defined principles for handling the risks, processes and technical-organisational structures, risk The Supervisory Board is responsible for monitoring objectives and limits. The Bank identifies on a regular compliance with the Bank’s risk management policies basis, and subsequently manages monitors, minimises and procedures, and for reviewing the adequacy of the and reports all risks relating to its use of financial instru- risk management framework in relation to the risks ments, as well as the risks arising from carrying on its faced by the Bank. The Supervisory Board is assisted in activities. The Bank has exposure to the following main these functions by Internal Audit. Internal Audit under- risks: takes both regular and random reviews of risk management controls and procedures, the result of which is re- • Credit risk ported to both the Supervisory Board and the Board of • Liquidity risk Directors. • Market risk • Operational risk (b) Credit Risk Credit risk is the risk of financial loss to the Bank if a bor- The Bank is monitoring and analysing the short-term rower or counterparty fails to meet its contractual obli- and long-term evolution of all risks, their impacts and is gations. The Credit Risk Management Division sets the continuously adjusting its processes in order to have a acceptable level of credit risk exposure and ensures po- forward looking approach to risk management. At the tential losses for the Bank that can arise from the credit same time, the Bank places a great emphasis on mana- transaction concluded with a client are minimised. This ging liquidity risk and complying with regulatory require- is ensured by the organisation of credit risk management ments set out in this area by the National Bank of Slo- in the Bank, i.e. by procedures set out in the system of in- vakia. ternal guidelines governing credit risk management, and supported by credit risk management systems. The Risk Information on the processes of monitoring, measuring, Controlling Division is responsible for credit risk monito- managing and reporting the above risks and on mana- ring and management on portfolio level. The Credit Risk ging the Bank’s capital is set out below. Management is responsible for the credit risk of individual loans to be approved. Loan Business and credit risk

34 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 management are independent up to the highest mana- ratings and updates and the process of reviewing rating gement level. assignments in its internal guidelines. The Bank continuously monitors, assesses and reflects in its activities com- The basis for credit risk management is the credit risk pliance with the limits on country, segment, maximum strategy, which is derived from the overall risk manage- exposure, rating level, industry group and related party. ment strategy and the business policy of the Bank. The credit risk strategy sets out the general framework, prin- Limit System ciples for handling risks, procedure designs, technical and organisational structures, operational management pa- The Bank has a defined limit system in its guide- rameters, such as the business focus, risk objectives and lines governing credit risk management. Credit ap- limits. The Credit Risk Management Division has direct proval procedures include assessing individual bor- control over the internal guidelines governing the provi- rowers, establishing counterparty credit limits, and sion of credit and is involved in their design. obtaining collateral with the aim to mitigate credit risk. The Bank also continually monitors the perfor- These guidelines define: mance of the credit portfolio to ensure that prompt • Authorisation of a credit trade action can be taken to minimise potential losses. • Assessment of credit risk arising from a credit trade • Authorisation competences The Bank has defined credit risk limits according to: • Risk measurement methods • Limits a. Segment of the client • Monitoring and evaluation of loan portfolio perfor- b. Client’s rating mance c. Client, Group and related clients • Projection of changes in the loan portfolio in relation d. Client – related parties to the Bank to changes in conditions for loan provision or launch of e. Industry segments new loan products f. States • Back and stress testing of rating and scoring models g. Banks • Methods for calculating and creating provisions • Recovery of impaired receivables As at 31 December 2012, the Bank recognises amounts due from banks in the amount of EUR 188,340 thousand Credit risk is strictly monitored, and the separate (2011: EUR 182,745 thousand). All the banks had an in- management of credit risk from the business ac- vestment rating as at 31 December 2012. tivities and activities related to transactions settlement is provided within the organisational structure. The bank subsumes its clients into a respective class based on the risk of default of the client: Methods for Measuring Credit Risk class 1 – clients with excellent creditworthiness, mostly clients with external ratings The Bank assesses the creditworthiness of each client/ class 2 – clients with very good creditworthiness trade at the provision and during the life of a credit deal class 3 – clients with good to average creditworthiness using a rating tool with parameters specific for each cli- class 4 – clients with acceptable creditworthiness and ent segment with the aim to minimise credit risk. The watch list rating level relating to a client/trade reflects the level of class 5 – clients already in default quality of the client, type, amount and maturity of the loan. The Bank sorts clients/trades according to their rating from the best to the worst, where the worst level represents the highest probability of a loss. Risks arising from mortgage loans are monitored and managed separately. The Bank has defined the process of determining

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 35 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Past due but not Impaired Loans Impaired Loans and Securities These are loans and securities where contractual inter- Impaired loans are those for which the Bank does not est or principal payments are past due but the Bank be- anticipate repayment of the principal and interest in line lieves that impairment is not appropriate on the basis of with the contractual terms of the loan. These loans are the level of the collection status of amounts owed to the classified into individual categories in the Bank’s internal Bank and/or the collateral available. Past due but not im- rating system. paired loans represent receivables overdue from 1 to 30 days.

The loans and advances to customers assessed on a specific and portfolio basis and their impairment loss allowances are as follows: 2012 2011 € ‚000 € ‚000

Individually assessed impaired loans Rating classification: Grade 1 (lowest risk) - - Grade 2 - - Grade 3 3 590 8 160 Grade 4 71 589 13 447 Grade 5 (default) 105 675 72 450 Without rating - - Gross amount 180 854 94 057 Impairment loss (allowances) (97 899) (36 112) Carrying amount 82 955 57 945 Portfolio-assessed impaired loans Rating classification: Grade 1 (lowest risk) - - Grade 2 80 433 Grade 3 1 198 974 Grade 4 4 254 3 009 Grade 5 (default) 11 272 14 629 Without rating 2 - Gross amount 16 806 19 045 Impairment loss (allowances) (7 521) (9 855) Carrying amount 9 285 9 190

36 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 2012 2011 € ‚000 € ‚000

Neither past due nor impaired loans Rating classification: Grade 1 (lowest risk) 12 399 8 337 Grade 2 66 714 92 500 Grade 3 659 390 551 118 Grade 4 376 239 410 551 Grade 5 (default) 3 - Without rating 3 350 2 106 Gross amount 1 118 092 1 064 612 Impairment loss (‘IBNR’ allowances) (516) (1 545) Carrying amount 1 117 576 1 063 067 Past due but not impaired loans Rating classification: Grade 1 (lowest risk) - - Grade 2 268 1 255 Grade 3 4 429 3 976 Grade 4 12 296 10 265 Grade 5 (default) - - Without rating - 5 Gross amount 16 993 15 501 Impairment loss (‘IBNR’ allowances) (120) (220) Carrying amount 16 873 15 281 Total gross amount 1 332 745 1 193 215 Total impairment loss (allowances) (106 056) (47 732) Total carrying amount 1 226 689 1 145 483

Renegotiated loans Impairment loss (allowances)

The class 5 includes renegotiated loans, either legally or The Bank creates impairment loss allowances that rep- contractually. The amount of renegotiated loans was resent its best estimate to cover existing losses in its loan EUR 58,928 thousand as at 31 December 2012 (2011: EUR portfolio. The Bank has established a methodology that 44,207 thousand). defines triggers of impairment of receivables and de- faulted receivables, identification thereof, evaluation and

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 37 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 subsequent method of calculation of impairment provi- is LGD (Loss Given Default) estimation. It is the ratio of sions in compliance with IFRS. The Bank creates portfolio total loss resulting from the debtor‘s failure and EAD (Ex- provisions for non-significant receivables, where calcu- posure at Default). LGD reflects the rate of default relation parameters are revalidated regularly, based on the ceivable enforcement. methodology. Provisions for significant items are created on an individual basis through discounting expected fu- Influence of a change in LGD parameter (loss given de- ture cash flows using the initial effective interest rate of fault) on the total amount of impairment loss allowances: the instrument.

In portfolio impairment loss allowances the key variable

The rating classification of the issuers of investment securities based on external rating agencies as at 31 December 2012 is as follows: 31 December 2012 € ‘000 Rating Agency Debt securities available-for-sale: Bonds of Slovak banks 28 350 A Fitch Bonds of Slovak banks 6 594 Baa3 Moody’s Bonds of foreign banks 1 378 Baa3 Moody’s Government bonds – Slovak 192 274 A S & P Corporate bonds - Slovak 3 669 N/A Government bonds - foreign 15 614 AA+ S & P 247 879 Share securities (Note 12a) 1 634 249 513

The rating classification of the issuers of investment securities based on external rating agencies as at 31 December 2012 is as follows: 31 December 2012 € ‘000 Rating Agency Debt securities available-for-sale: Bonds of Slovak banks 12 124 A Fitch Bonds of Slovak banks 6 518 Baa2 Moody’s Bonds of foreign banks 1 373 Baa2 Moody’s Government bonds – Slovak 92 561 A+ S & P Government bonds – foreign 19 649 AAA S & P 132 225 Investments at fair value through profit or loss Bonds of foreign banks 838 Baa2 Moody’s Equity securities (Note 12a) 1 272 134 335

38 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Increase of LGD by 10% 2012 2011 based on the collateral value prepared when a loan is € ‘000 € ‘000 granted. The collateral fair value estimates are reassessed in line with the Bank’s internal guidelines, which match Creation of additional impaired 576 1 124 the requirements for reassessing collateral values stipu- loss (allowances) lated in the relevant documents of the National Bank of Slovakia and/or legislation valid in the Slovak Republic. In The Bank assesses impairment of commitment and con- general, receivables from banks are not secured, except tingencies on an individual basis and creates a portfolio for securities that are subject to reverse repo transac- provision. tions and securities borrowings.

Recovery of Default Receivables

Receivables whose repayment is at risk are worked out within the authority of the Work Out/Restructuring and Collection division. Depending on the type of receivable and customer, receivables are worked out either by the Collection department (loan receivables from retail customers) or Work Out/Restructuring department (loan receivables from corporate customers). In the event of a negative result of loan receivables restructuring, the Bank usually forwards receivables for administration to an external law office or to the in-house Legal department. The relevant person takes the necessary legal steps to obtain the highest possible recovery from de- faulted receivables, including realisation of collateral. Such person also acts as a repre- sentative of the Bank in all relevant proceedings. In the event of unsecured receivables, the Bank also assigns those to third parties.

Write-off Policy

The Bank writes off a receivable from loans and securities (and any related impairment loss allowances) when it determines that the loan/security is uncollectible. This determination is reached after considering information such as the occurrence of significant changes in the borrower/issuer’s financial position, inability to pay obligations, or the assessment that proceeds from collateral received will not be sufficient to pay back the entire liability. For smaller balance standardised loans, write-off decisions generally are based on a product-specific past due status. The Bank received collateral for receivables from customers in the form of a pledge over assets, another form of encumbrance of assets, and in the form of guarantees. Fair value estimates of the collateral are

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 39 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 An estimate of the fair recoverable value of collateral held against financial assets is shown below: Loans and advances to customers 2012 2011 € ‘000 € ‘000

Received for individually impaired loans Pledge over real estate 107 434 63 866 Pledged accounts and term deposits 1 256 - Guarantees (bank, state) 5 753 553 Received for collectively impaired loans Pledge over real estate 8 915 7 842 Pledge over movables 19 - Pledged accounts and term deposits 96 - Guarantees (bank, state) 21 - Received for neither past due nor impaired loans Pledge over real estate 506 492 546 074 Pledge over movables 157 - Guarantees (bank, state) 24 012 20 953 Securities 47 18 401 Pledged accounts and term deposits 4 935 3 991 Received for loans past due but not impaired Pledge over real estate 12 618 7 009 Pledged accounts and term deposits 12 1 657 Guarantees (bank, state) - 180 671 767 670 526

Collateral collateral is based on independent expert appraisals prepared internally by the Bank’s expert. This applies only to The Bank requires during credit approval process the fol- the real estate, but not to any other above listed types lowing types of collateral in order to mitigate credit risk of collateral. Other types of collaterals than real estate and as secondary repayment source: have their accepted values defined in the internal guide- • Securities line and this accepted value is to be confirmed by the re- • Real estate spective responsible risk manager before loan approval. • State and bank guarantees The estimate of net realizable value of collateral requires • Pledge over chattels, receivables management judgments and the estimate can differ • Financial deposit from actually realized values. • Guarantees • Insurance In 2012, the Bank received collateral proceeds in the amount of EUR 2,091 thousand (2011: € 2,246 thousand). The Bank’s assessment of the net realisable value of the The third party is not entitled to the collateral proceeds.

40 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Bank monitors credit risk concentrations by industry sector and by geographic location. An analysis of credit risk concentrations (gross) according to industry sector and location is shown below: Loans and advances to customers Loans and advances to customers 2012 2011 2012 2011 € ‘000 € ‘000 € ‘000 € ‘000

Private individuals 383 968 347 567 - - Real estate activities 330 929 338 425 149 149 Retail and wholesale distribution 147 624 126 599 3 669 - Other industrial production 105 844 87 906 - - Mining industry and power engineering 77 688 54 293 - - Motor vehicle production and sale 55 275 42 868 - - Financial services 49 055 36 003 37 808 21 976 Non-financial services 36 295 34 249 - - Consumer goods 53 427 32 120 - - Buildings construction 27 442 31 320 - - Transport 26 421 22 279 - - Tourism and gastronomy 17 799 21 542 - - Agriculture 2 622 4 874 - - Information and communications 9 187 5 554 - - Other 9 169 7 616 207 887 112 210 1 332 745 1 193 215 249 513 134 335

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 41 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Concentration by location for loans and advances is measured based on the location of the borrower (net). Concentration by location of investment securities is measured based on the location of the issuer of the security. Loans and advances to customers Loans and advances to banks Investment securities 2012 2011 2012 2011 2012 2011 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Slovakia 1 249 116 1 140 829 23 220 36 948 231 037 111 353 France 166 2 288 - - - - Czech Republic 691 613 - - - - Austria 871 75 70 012 10 000 16 991 21 860 USA 1 3 - - 1 470 1 107 Italy 51 - - - - - Belgium 931 931 - - 15 15 Russia 11 409 1 11 065 - - - Ukraine 88 1 - - - - Hungary 145 146 - - - - Croatia 12 665 - - - - - Slovenia 41 504 - - - - - Other 15 107 596 - - - - 1 332 745 1 145 483 104 297 46 948 249 513 134 335

Concentration risk is a risk that may arise within or In 4th quarter 2012, the Bank has provided loans of EUR across various types of risks with the potential conse- 65 million to clients from Russia and post Yugoslavia quence of a sufficiently high loss that would jeopardise countries as a result of cooperation with SBERBANK the Bank’s existence and functioning or that could ma- group. terially change the Bank’s risk profile. The Bank regularly identifies the concentration risk of its portfolio, and reg- Liquidity Risk ularly monitors and reports the concentration risk to the The Bank’s activities may give rise to a settlement risk at Bank’s management at quarterly meetings of the Risk the time transactions and trades are settled. Settlement Committee. If the monitoring detects an increased con- risk is the risk of loss due to the failure of the Counter- centration risk, adverse developments in the overall loan party to honour its obligations to deliver cash, securities portfolio or one of its components in light of the con- or other assets as contractually agreed. For certain types centration risk or if internally set limits are exceeded, the of transactions, the Bank mitigates such risk by conduct- Bank carries out escalation process measures defined in ing settlements through a settlement/clearing agent an internal guideline. to ensure that a trade is settled only when both parties

42 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The credit exposure in individual segments according to main product types is as follows: 31. dec 2012 31. december 2011 Gross Carrying Gross Carrying amount Impairment amount amount Impairment amount € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 Mortgage loans 133 309 1 838 131 471 144 135 1 305 142 829 Other loans to individuals Small business loans 257 280 2 242 255 038 208 392 1 335 207 057 (Micro) 166 951 7 615 159 336 163 826 9 842 153 984 Large loans (Corporate) 775 205 94 361 680 844 676 862 35 250 641 613 1 332 745 106 056 1 226 689 1 193 215 47 732 1 145 483 have fulfilled their contractual obligations. Settlement Treasury Division ensures on a daily basis optimal cover- limits form part of the credit approval/limit monitoring age of the compulsory minimum reserves account, and process. in the case of foreign currencies, optimal coverage of the Bank’s individual nostro accounts. (c) Liquidity Risk Liquidity means the Bank’s ability to meet its obligations Other relevant departments of the Bank participate at in the required amount and time. Liquidity risk means the meetings of the Assets and Liabilities Committee (here- risk that the Bank’s ability to meet its obligations by the re- inafter the “ALCO Committee”), which is responsible for quired deadline or in the required amount will deteriorate. strategic liquidity management. Committee members provide information on matters that could have an im- Management of Liquidity Risk pact on the Bank’s liquidity. The Risk Controlling department submits regular reports on liquidity risk develop- The management of liquidity risk is included in the Bank’s ments. procedures for managing its assets and liabilities. Pro- cedures include regular monitoring of matching future Daily liquidity management by the Bank includes meet- cash flows according to currencies, monitoring of indi- ing regulatory requirements defined by the National vidual indicators of liquidity development and liquidity Bank of Slovakia as a limit for liquid positions falling due risk, and stress testing of liquidity risk. The Treasury Divi- within one month. sion is responsible for managing the assets and liabilities structure. The Risk Controlling Division is responsible In addition to the aforementioned limit, the Bank has for liquidity risk monitoring and management. Liquidity defined an internal process for monitoring and evaluat- management and liquidity risk management are inde- ing liquidity indicators. The liquidity indicators are used pendent up to the highest management level. to predict negative trends in the Bank’s liquidity position and also serve as the key information basis in the liquidity Information on cash flows is obtained from the Bank’s management and strategic decision-making processes reporting system, as well as from regular monitoring in this area (ALCO). of individual cash flows from realised transactions that have an impact on the Bank’s liquidity. Liquidity is managed according to currencies; the euro positions have the largest share. Positions in other currencies have an insignificant share in the total amount of assets. The

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 43 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The remaining period to maturity in respect of financial assets and liabilities as at 31 December 2012 is set out in the following table, which shows the discounted cash flows on the basis of their earliest contractual maturity: Current Non-current Together € ‘000

Assets Cash and cash equivalents 111 395 - 111 395 Receivables from financial derivatives 655 7 035 7 690 Loans and advances to banks 93 240 11 057 104 297 Loans and advances to customers 429 797 796 892 1 226 689 Investment securities 130 082 119 431 249 513 Tangible assets - 15 462 15 462 Intangible assets - 5 190 5 190 Current tax asset 1 963 - 1 963 Deferred tax asset - 21 581 21 581 Other assets 4 589 - 4 589 771 721 976 648 1 748 369 Liabilities Payables from financial derivatives 1 084 1 501 2 585 Deposits by banks 14 644 - 14 644 Loans received 6 75 374 75 380 Customer accounts 1 369 312 9 135 1 378 447 Debt securities issued 7 200 98 520 105 720 Provisions 1681 - 1681 Other liabilities 6 748 - 6 748 Subordinated liabilities - - - 1 400 675 184 530 1 585 205

44 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The following table provides an analysis of the earliest possible contractual maturity of financial liabilities, i.e. under the worst case scenario as at 31 December 2012 (in non-discounted amounts). The Bank’s expected cash flows may vary significantly from this analysis. For example, customer account liabilities are expected to maintain a stable or increasing balance: Less than 3 months 1 to 5 More than Not Total 3 months to 1 year years 5 years specified € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Liabilities Payables from financial derivatives 1 268 1 244 1 365 (130) - 3 747 Deposits by banks 7 637 7 037 - - - 14 674 Loans received 6 - 75 773 - - 75 779 Customer accounts 963 206 412 713 18 896 - - 1 394 815 Debt securities issued 916 7 659 88 719 18 280 - 115 574 Other liabilities 6 748 - - - - 6 748 979 781 428 653 184 753 18 150 - 1 611 337

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 45 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The remaining period to maturity in respect of financial assets and liabilities as at 31 December 2011 was as follows: Current Non-current Together € ‘000

Assets Cash and cash equivalents 232 925 - 232 925 Receivables from financial derivatives 737 5 580 6 317 Loans and advances to banks 36 948 10 000 46 948 Loans and advances to customers 392 885 752 598 1 145 483 Investment securities 14 130 120 205 134 335 Investment property - 790 790 Tangible assets - 15,761 15,761 Intangible assets - 5,272 5,272 Current tax asset 205 - 205 Deferred tax asset - 5 844 5 844 Other assets 3 463 - 3 463 681 293 916 050 1 597 343 Liabilities Payables from financial derivatives 1 907 271 2 178 Deposits by banks 124 123 - 126 123 Loans received 78 25 006 25 084 Customer accounts 1 072 608 94 563 1 167 171 Debt securities issued 56 556 58 271 114 827 Provisions 479 - 479 Other liabilities 4 323 - 4 323 Subordinated liabilities 6 30 000 30 006 1 262 080 208 111 1 470 191

46 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The following table provides an analysis of the earliest possible contractual maturity of financial liabilities, i.e. under the worst case scenario as at 31 December 2011 (in non-discounted amounts). The expected cash flows may have varied significantly from this analysis.

Less than 3 months 1 to 5 More than Not Total 3 months to 1 year years 5 years specified € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Liabilities Payables from inancial derivatives 1 277 963 1 834 1 269 - 5 343 Deposits by banks 111 301 15 831 - - - 127 132 Loans received 116 439 26 175 - - 26 730 Customer accounts 866 439 216 074 97 754 - - 1 180 267 Debt securities issued 15 841 43 092 57 897 2 502 - 119 332 Current tax liability - - - - 4 323 4 323 Other liabilities 254 926 4 035 30 347 - 35 562 995 228 277 325 187 695 34 118 4 323 1 498 689

The remaining period to maturity in respect of commitments and contingencies items as at 31 December 2012 is set out in the following table, which shows the undiscounted cash flows on the basis of their earliest contractual maturity: Less than 3 months 1 to 5 More than Total 3 months to 1 year years 5 years € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 Commitments and contingencies

Guarantees issued to banks - - - - - Guarantees issued to customers 3 906 14 614 3 716 504 22 740 Irrevocable letters of credit 365 - - - 365 Loan commitments 166 435 - - - 166 435 170 706 14 614 3 716 504 189 540

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 47 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The remaining period to maturity in respect of commitments and contingencies as at 31 December 2011 is set out in the following table: Less than 3 months 1 to 5 More than Total 3 months to 1 year years 5 years € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 Commitments and contingencies

Guarantees issued to banks - 11 - 40 51 Guarantees issued to customers 1 807 9 423 9 497 704 21 431 Irrevocable letters of credit 217 - - - 217 Loan commitments 201 104 - - - 201 104 203 128 9 434 9 497 744 222 803

(d) Market Risk Management of Market Risk Market risk means the risk of unexpected losses and/or changes in values of assets and liabilities owing to fluctu- Foreign Exchange Risk ations (changes) of market parameters, mainly changes in interest rates, foreign exchange rates, prices of debt Foreign exchange risk is defined as the risk of changes and equity securities and commodity prices. The objec- in the value of certain positions as a consequence of tive of market risk management is to measure, monitor changes in foreign exchange rates. Foreign exchange risk and eliminate the impact of changes in market param- management is understood as a set of rules and activities eters on the value of the Bank’s assets and liabilities in aimed at minimising the negative impact of foreign cur- line with the risk management strategy and the defined rency fluctuations on the position and profit of the Bank. risk appetite of the Bank. The Bank’s market risk management is the responsibility of the Risk Controlling Divi- The Bank’s policy is to maintain an open net foreign cur- sion, which is independent from the business units in the rency position within limits defined internally or by the organisation structure up to the highest level. parent company. Limits are set for each individual currency, individual basket of currencies, as well as for the The focus of the Treasury Division’s activities is compli- overall foreign currency position of the Bank. ance with statutory requirements, liquidity management, covering customer orders (payments, refinancing) Interest Rate Risk and, primarily, the sale of products to Treasury clients. The Treasury Division can trade only with those finan- Interest rate risk is understood as the risk of a (negative) cial instruments (on the regulated markets and through change in the value of positions/portfolios of the Bank OTC) that have been duly approved under the current owing to changes in interest rates. The impact of chang- process for the introduction of treasury products. The in- es in interest rates on the Bank’s positions depends on clusion of transactions in the trading and banking book the overall structure of the statement of financial posi- is based on defined rules and there is a system of internal tion and commitments and contingencies and the overall limits set for positions in the trading and banking book, structure of interest income and expenses. The principal which is regularly monitored. risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates.

48 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Interest rate risk is managed by the Treasury Division using standard money market and capital market instru- To verify the model in use, back testing is performed. This ments. The total acceptable value of the Bank’s interest includes comparing VAR values calculated on a daily ba- rate risk is limited as the maximum acceptable change in sis to the trading results achieved within a defined moni- the interest rate position at a 200 point parallel shift of toring period. the yield curve. That change is compared to the value of the Bank’s equity. The Bank has a defined system for stress testing the overall interest rate position. Stress testing in the Bank is The value of interest rate risk from the banking book is the responsibility of the Risk Controlling Division, which quantified using Value at Risk (VAR). The Bank active- prepares regular reports of the results of stress testing ly manages this position so that it does not exceed the and submits them at Risk Committee meetings. The re- amount of allocated capital. sults of the stress testing are back tested on a regular basis and are included in the reports to the Risk Committee. The quantification of the Value at Risk for positions managed by the Treasury Division is performed daily by the parent company. The calculation is performed for both foreign exchange and interest rate risk, and the limit system is defined for both the individual areas and for the total position.

Impact of Change in Interest Rates on the Bank’s Equity and on profit or loss 200 bb parallel movement As at 31 December 2012 As at 31 December 2011 € ‘000 € ‘000

Estimated impact on equity (11 278) (20 714) Estimated impact on profit or loss 2 543 6 117

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 49 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Bank had the following foreign currency financial assets and liabilities as at 31 December 2012: Euro US dollar Other Total € ‘000 € ‘000 € ‘000 € ‘000

Monetary assets Cash and cash equivalents 63 157 25 225 23 013 111 395 Receivables from financial derivatives 7 523 138 29 7 690 Loans and advances to banks 104 297 - - 104 297 Loans and advances to customers 1 210 833 11 738 4 118 1 226 689 Investment securities 247 879 1 634 - 249 513 Current tax asset 1 963 - - 1 963 Deferred tax asset 21 581 - - 21 581 Other assets 4 268 7 314 4 589 1 661 501 38 742 27 474 1 727 717 Monetary liabilities Payables from financial derivatives 2 417 136 32 2 585 Deposits by banks 14 607 13 24 14 644 Loans received 75 380 - - 75 380 Customer accounts 1 311 139 31 190 36 118 1 378 447 Debt securities issued 105 720 - - 105 720 Other liabilities 6 629 5 114 6 748 1 515 892 31 344 36 288 1 583 524

50 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Bank had the following foreign currency assets and liabilities as at 31 December 2011: Euro US dollar Other Total € ‘000 € ‘000 € ‘000 € ‘000

Monetary assets Cash and cash equivalents 201 443 21 997 9 485 232 925 Receivables from financial derivatives 6 317 - - 6 317 Loans and advances to banks 46 948 - - 46 948 Loans and advances to customers 1 136 763 2 115 6 605 1 145 483 Investments securities 133 228 1 107 - 134 335 Tax asset 205 - - 205 Deferred tax asset 5 844 - - 5 844 Other assets 3 322 115 26 3 463 1 534 070 25 334 16 116 1 575 520 Monetary liabilities Payables from financial derivatives 2 178 - - 2 178 Deposits by banks 126 083 22 18 126 123 Loans received 25 084 - - 25 084 Customer accounts 1 115 609 22 140 29 422 1 167 171 Debt securities issued 114 827 - - 114 827 Other liabilities 4 205 79 39 4 323 Subordinated debt 30 006 - - 30 006 1 417 992 22 241 29 479 1 469 712

(e) Operational risk The principal objective of operational risk management • Operational risk of the Bank is covered by the Bank’s set by the Bank is to create a continuous and transparent capital environment covering all aspects of the Bank’s activities • Development and implementation of procedures for and to monitor the potential losses that could arise from operational risk management weaknesses in procedures, systems or human errors, as well as from external impacts on all of the Bank’s opera- Responsibility for operation risk management and con- tions. tinuous definition of necessary systems and tools is taken over by the Risk ControllingDivision. In the organization The Bank’s operational risk management aims to im- structure it is ensured that monitoring of operation risk plement a standardised approach for the calculation of and business operations are separated up to the highest capital adequacy requirements as established by the na- management level tional regulator. The use of this approach requires the following criteria to be met:

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 51 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Bank uses the following methods in the operational (f) Capital Management risk management process: The National Bank of Slovakia (NBS) sets and monitors capital requirements. 1. Identification, monitoring and management of the risk a. Collection of data relating to loss-making situations With effect from 1 January 2008, the Bank adheres to the b. Risk analysis provisions of the Basel II framework in respect of regula- c. Procedures and strategy for maintaining business tory capital. The Bank uses the standardised approaches operations to credit and operational risk management. d. Information security e. Internal controls The Bank’s capital is analysed into two tiers: f. Key risk indicators g. Evaluation of contracts, cooperation with third par • Tier 1 capital includes share capital, share premium, re- ties (outsourcing) serve funds and other funds created from profit after de- h. Education and training within the Bank ducting losses of the current year, intangible assets and 2. Reporting other specific deductible items. a. Internal reporting • Tier 2 capital includes additional own funds of high b. External reporting quality (e.g. revaluation reserves not included in own funds and transferred to additional own funds, revalua- Specialised units (so-called risk owners) are primarily re- tion funds, positive revaluation reserve from the portfolio sponsible for: of available-for-sale financial instruments) and specific 1. Identification and documentation of operational risk additional own funds of higher quality and additional relevant situations own funds of lower quality (e.g. subordinated liabilities 2. Risk analysis – identification and documentation of and other specific additional own funds of lower quality) relevant procedures, and risk assessment after deduction of items specified in the NBS regulation 3. Incentives for documentation of latent risks 4. Risk management Banking operations are categorised in a trading book or a a. Development of regulations governing manage- banking book, and risk-weighted assets are determined ment of identified operational risks according to specified requirements that seek to reflect b. Implementation of provisions resulting from proce the varying levels of risk attached to assets and commit- dures for maintaining business operations ments and contingencies exposures. c. Ensuring that all procedures resulting from direc- tives, guidelines and instructions are followed The Bank’s policy is to maintain a strong capital base so d. Initiation and implementation of selected provisions as to maintain shareholder, creditor and market confi- 5. Supervision over the results dence and to sustain future development of the business. a. Implementation supervision The impact of the level of capital on the shareholders’ b. Efficiency supervision return is taken into account as the Bank recognises the need to maintain a balance between the higher returns Retrospective supervision over operational risk manage- that might be possible with greater gearing and the ben- ment procedures is performed by the Internal Control efits and security afforded by a sound capital position and Audit department. There were no significant changes in the Bank’s capital management processes, systems, measurement and reporting during the year.

52 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Bank’s regulatory capital position was as follows: Regulatory capital 2012 2011 € ‘000 € ‘000 Regulatory capital ier 1 capital Share capital (Note 24) 52 800 33 207 Share premium (Note 24) 94 254 38 847 Reserve funds and other funds created from profit (Note 25) 7 869 7 869 Retained earnings of prior years (Note 25) 44 693 49 277 Loss for the current reporting period (Note 25) (47 726) (4 584) Negative revaluation reserve from the portfolio of available-for-sale financial instruments measured at fair value (325) (2 547) Less: certain intangible assets (5 167) (3 616) Total 146 398 118 453 Tier 2 capital Subordinated liabilities - 30 000 Positive financial investment revaluation reserve from the portfolio of available-for-sale financial instruments measured at fair value 4 472 1 576 Total 4 472 31 576 Items deductible from the regulatory capital Net book value of the Bank’s investment in other banks or financial insti- - - tutions, greater than 10% ownership 150 870 150 029

Numbers for 2012 come from preliminary prudential returns prepared for the NBS.

Management uses regulatory capital ratios established ment and type of risk is based primarily upon the regula- by the National Bank of Slovakia in order to monitor its tory capital requirement, but in some cases the regulato- capital base. The National Bank of Slovakia’s approach ry requirements do not fully reflect the varying degree of to measurement based on Basel II is now primarily con- risk associated with different activities. In such cases the cerned with monitoring the relationship of the capital capital requirements may be flexed to reflect differing requirement (measured as 8% of risk-weighted assets) risk profiles, subject to the overall level of capital to sup- to available capital resources. port a particular operation or activity not falling below the minimum required for regulatory purposes. The pro- Capital Allocation cess of allocating capital to specific operations and activ- The allocation of capital represents specific operations ities is independent from those responsible for the busi- and activities and is, to a large extent, driven by optimi- ness activities. The Risk Controlling department submits sation of the return achieved on the capital allocated. a proposal for capital allocation to the Risk Committee The amount of capital allocated to each business seg- based on the annual plan of capital and requirements for

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 53 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 regulatory capital of individual business segments and that can be allocated on a reasonable basis. Unallocated risks and is subject to approval by the Risk Committee. items comprise cash, taxes, other assets and prepayments, provisions and other liabilities and the headquar- Although maximisation of the return on risk-adjusted ters’ operating expenses. capital is the principal basis used in determining how capital is allocated within the Bank to particular opera- Business Segments tions or activities, it is not the sole basis used for decision- a) Corporate banking – incorporating direct debt instru- making. Account is also taken of synergies with other ments, current accounts, deposits, overdrafts, loans and operations and activities, the availability of management other credit facilities, foreign currency and derivative and other resources, and the fit of the activity with the products. Bank’s longer term strategic objectives. The Bank’s policies in respect of capital management and allocation are b) Retail banking consisting of private customers and monitored at the Risk Committee’s meetings. MICRO clients – incorporating for private customer current accounts, deposits, credit and debit cards, consumer Requirements for capital adequacy 2012 loans and mortgages, for MICRO clients - incorporat- With regards to Recommendation No 1/2012 of the Fi- ing direct debt instruments, current accounts, deposits, nancial Market Supervision Unit of National Bank of Slo- overdrafts, loans and other credit facilities, foreign cur- vakia of 16 January 2012 on supporting the stability of the rency and derivative products. banking sector (hereinafter Recommendation) issued in accordance with European Banking Authority require- c) Treasury – incorporating T-bills, repo trades with NBS, ments released in late 2011, the Bank will implement receivables from and payables to commercial banks, se- these requirements in accordance with the shareholder curities, foreign currency and derivative products. decision.

6. Segment Reporting

Segment reporting is presented in respect of the Bank’s business segments. The Bank principally operates in Slo- vakia and operations outside Slovakia are not significant.

Measurement of segment assets and liabilities and segment revenues and results is based on the accounting policies and methods set out in Note 3.

Transactions between segments are conducted at arm’s length.

Segment revenues, results, assets and liabilities include items directly attributable to a segment as well as those

54 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Corporate Retail Treasury Unalloca-ted Total Bank banking 2012 banking 2012 2012 2012 2012 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Net interest income 21 591 21 016 (1 875) (1 160) 39 572 Net fee and commission income 3 101 7 386 37 (493) 10 031 Net trading income - - 648 (18) 630 Net other income (4) (65) - (6 216) (6 285) Operating income 24 688 28 337 (1 190) (7 887) 43 948 Administrative expenses (3 797) (11 488) (1 329) (16 721) (33 335) Depreciation (284) (1 248) (111) (3 102) (4 745) Operating expenses (4 081) (12 736) (1 440) (19 823) (38 080) Operating profit before impairment losses and provisions 20 607 15 601 (2 630) (27 710) 5 868 Impairment losses on loans and advances to customers (66 055) (4 845) - - (70 900) Creation of provisions 21 - - (1 223) (1 202) (Loss)/profit before taxation (45 427) 10 756 (2 630) (28 933) (66 234) Income tax 18 508 Loss for the year (47 726) Other information: Assets 685 023 585 333 447 316 30 697 1 748 369 Liabilities 479 567 964 817 17 229 123 592 1 585 205

In 2012 there was no significant income from transactions with other operating segments of the Bank.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 55 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Corporate Retail Treasury Unalloca-ted Total Bank banking 2011 banking 2011 2011 2011 2011 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 Net interest income 17 515 19 648 2 666 61 39 890 Net fee and commission income 3 615 8 038 3 210 11 866 Net trading income - - 979 - 979 Net other income (6) 46 - 34 74 Operating income 21 124 27 732 3 648 305 52 809 Administrative expenses (3 536) (11 650) (1 056) (17 300) (33 542) Depreciation (288) (1 357) (162) (3 319) (5 126) Operating expenses (3 824) (13 007) (1 218) (20 619) (38 668) Operating profit before impairment losses and provisions 17 300 14 725 2 430 (20 314) 14 141 Impairment losses on loans and advan- - - ces to customers (16 965) (2 838) - - (19 803) (39) (2) (41) (Loss) /profit before taxation 296 11 885 2 430 (20 314) (5 703) Income tax 1 119 Profit for the year (4 584) Other information: Assets 645 442 545 981 395 127 10 793 1 597 343 Liabilities 432 406 844 668 153 385 39 732 1 470 191

In 2011 there was no significant income from transactions with other operating segments of the Bank.

7. Cash and Cash Equivalents

2012 2011 € ‘000 € ‘000

Cash and balances with the central bank (Note 8) 27 352 97 128 Loans and advances to banks with original contractual maturity up to 3 84 043 135 797 months (Note 10) 111 395 232 925

56 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 8.Cash and Balances with the Central Bank

2012 2011 € ‘000 € ‘000

Due from the National Bank of Slovakia: Compulsory minimum reserves 23 220 36 948 Term deposit - 70 000 23 220 106 948 Less compulsory minimum reserves (Note 10) (23 220) (36 948) - 70 000 Cash in hand 27 352 27 128 27 352 97 128 The compulsory minimum reserve balance is maintained in accordance with the requirements of the Central Bank and is not available for day-to-day use.

9. Financial Derivatives

2012 2011 € ‘000 € ‘000

Receivables from financial derivatives Derivatives held for trading (a) 656 802 Cash flow hedge: Interest rate swaps (b) 7 034 5 515 7 690 6 317 Payables from financial derivatives Derivatives held for trading (a) 554 1 083 Cash flow hedge: Interest rate swaps (b) - 897 Fair value hedge: Interest rate swaps (c) 2 031 198 2 585 2 178

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 57 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (a) Derivatives Held for Trading Contract/notional 2012 Fair value Contract/notional 2012 Fair value amount Assets Liabili-ties amount Assets Liabili-ties € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Interest derivatives Interest CAPs 4 748 1 1 - - - Currency derivatives: Currency forwards 3 002 19 3 734 6 8 Currency swaps 36 867 256 171 48 902 232 511 Foreign currency options 107 094 380 379 65 869 564 564 656 554 802 1 083

In 2010, the Bank entered into interest rate swap agree- item). Interest rate risk in this case is defined as the po- ments (hedging instrument) with a face value of EUR tential risk of loss resulting from an increase in long-term 100,000 thousand in order to hedge the variable mar- interest rates. ket interest rates exposure on the loan portfolio (hedged

Cash flows arising from the existence of cash flow hedges, the residual maturity of their actual cash flows: Less than 1 to 5 More than Total 3 months years 5 years € ‘000 € ‘000 € ‘000 € ‘000 Cash flows from interest payments 1 670 5 195 222 7 087 1 670 5 195 222 7 087

Cash flows arising from the existence of cash-flow hedge transactions by remaining maturity of influencing profit or loss: Less than 1 to 5 More than Total 3 months years 5 years € ‘000 € ‘000 € ‘000 € ‘000

Cash flows from interest payments 1 389 5 092 219 6 700 1 389 5 092 219 6 700

In 2012, the amount of EUR 2,064 thousand (2011: EUR due to early termination of hedging relationship due to 355 thousand) was reclassified from the revaluation re- default of part of hedged items. In 2012, the Bank has ter- serve to Interest income/expense in profit or loss. The minated interest rate swaps with nominal value of EUR increase was caused by one off release of revaluation re- 15 million due to default of hedged items. serve amounting to EUR 744 thousand into profit or loss

58 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (c) Fair Value Hedge swaps (hedging instrument) to cover interest rate risk The Bank is exposed to interest rate risk arising from from loans, with a carrying amount of EUR 52,447 thou- fixed interest rate corporate loans (hedged item). Inter- sand as at 31 December 212 (2011: 22,919 thousand) , in est rate risk is in this case defined as the potential risk order to hedge the long-term fixed loans (hedged item) of loss resulting from an increase in long-term inter- to changes in market interest rates. Interest rate risk in est rates. To eliminate this loss the Bank uses interest this case is defined as the potential risk of loss resulting rate swaps, which can offset the corresponding market from an increase in long-term interest rates. rates.

In 2012, the Bank gradually entered into interest rate Net change in fair value hedging and hedge tool: 2012 2011 € ‘000 € ‘000

Net change in fair value of loans 1 823 178 Net change in fair value of derivates (1 825) (198) (2) (20)

Based on testing the effectiveness of fair value is consid- value of derivatives is in the range 80-125% range. ered as effective as the ratio of net change in fair value of loans arising from hedged risk and net change in fair

10. Loans and Advances to Banks

2012 2011 € ‘000 € ‘000

Payable on demand 5 130 4 300 Other loans and advances by contractual maturity: - 3 months or less 78 914 131 497 - 5 years or more 70 012 - - over 5 years 11 064 10 000 Compulsory minimum reserves (Note 8) 23 220 36 948 188 340 182 745 Of which: Receivables with original contractual maturity up to 3 months (Note 7) (84 043) (135 797) 104 297 46 948

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 59 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 11. Loans and Advances to Customers

2012 2011 € ‘000 € ‘000

Payable on demand 204 456 195 693 Other loans and advances with original contractual maturity: - 3 months or less 400 16 300 - 1 year or less but over 3 months 49 937 36 316 - 5 years or less but over 1 year 274 965 161 497 - over 5 years 802 987 783 409 1 332 745 1 193 215 Impairment loss allowances (106 056) (47 732) 1 226 689 1 145 483

60 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Impairment loss allowances on Loans and Advances to Customers

The movements in the impairment loss allowances on loans and advances to customers were as follows:

2012 2011 € ‘000 € ‘000

Individual impairment loss allowances: At 1 January 36 112 20 437 Exchange rate movements (3) - Charge for the year 68 283 16 968 Use for loans written-off and assigned (10 808) (4 009) Re-classification 4 315 2 716 At 31 December 97 899 36 112 Portfolio impairment loss allowances At 1 January 9 856 10 487 Exchange rate movements 16 (2) Charge for the year 2 571 7 443 Use for loans written-off and assigned (875) (664) Re-classification (4 047) (7 408) K 31. decembru 7 521 9 856 IBNR impairment loss allowances: At 1 January 1 764 1 613 Exchange rate movements - - Release for the year (860) (4 541) Re-classification (268) 4 692 At 31 December 636 1 764 Total impairment loss allowances 106 056 47 732

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 61 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 12. Investment Securities

2012 2011 € ‘000 € ‘000

Available-for-sale securities Equity securities (a) 1 634 1 272 Debt securities (b) 247 879 132 225 249 513 133 497 Investment securities at fair value through profit or loss Debt securities – index linked (see Note 18) - 838 249 513 134 335 (a) Equity Securities

2012 2011 € ‘000 € ‘000

RVS, a.s. Leisure and training centre 149 149 S.W.I.F.T. International funds transfer 15 15 Victoria Volksbanken Poisťovňa, a.s. Insurance - - Mastercard Credit cards 1 138 881 Visa Inc Credit cards 332 227 1 634 1 272

All shares in other companies are less than 5%. Except for USA, respectively, all companies are registered in Slova- S.W.I.F.T., Mastercard, Visa Inc and VISA Europe, which kia. are registered in Belgium, in the United Kingdom and the (b) Debt Securities

2012 2011 € ‘000 € ‘000

Slovak government 207 888 112 210 Slovak companies 3 669 - Slovak banks 34 944 18 642 Foreign banks 1 378 1 373 247 879 132 225

As at 31 December 2012, a portion of the Slovak and for- security for a loan received (Note 17) and as a security for eign government bonds in the amount of EUR 150,253 other liabilities. thousand (2010: EUR 75,798 thousand) was provided as

62 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 13. Investment Property

Land Building Total € ‚000 € ‚000 € ‚000

At 1 January 2011 49 741 790 Transfers (12) (588) (600) Change in fair value (37) (153) (190) At 31 December 2011 - - -

At the end of 2012 the Bank reconsidered recognising As at 31 December 2012 the Bank accounted revenues investments property as the ratio of rented area to the from rent from investment property amounting to EUR whole area used for administrative purposes decreased. 41 thousand (2011: 40 thousand). The Bank consequently reclassified the investment property into property, plant and equipment within tangible assets, which was stated in amortized value.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 63 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 14. Property and Equipment Land and Furniture Motor Intangible Total buildings fittings and vehicles assets € ‘000 € ‘000 equipment € ‘000 € ‘000 € ‘000 Cost At 1 January 2011 25 477 27 922 911 20 139 74 449 Additions 122 491 158 1 346 2 117 Disposals - (1 789) (180) (8) (1 977) At 31 December 2011 25 599 26 624 889 21 477 74 589 At 1 January 2012 25 599 26 624 889 21 477 74 589 Additions 448 869 185 2 309 3 811 Transfers 600 - - - 600 Disposals - (980) (90) (707) (1 777) At 31 December 2012 26 647 26 513 984 23 079 77 223 Accumulated depreciation and impairment losses At 1 January 2011 11 027 24 930 599 13 786 50 342 Charge for the year 1 235 1 346 118 2 427 5 126 Disposals - (1 747) (157) (8) (1 912) At 31 December 2011 12 262 24 529 560 16 205 53 556 At 1 January 2012 12 262 24 529 560 16 205 53 556 Charge for the year 1 246 1 000 108 2 391 4 745 Disposals - (968) (55) (707) (1 730) At 31 December 2012 13 508 24 561 613 17 889 56 571 Net book value At 31 December 2011 13 337 2 095 329 5 272 21 033 At 31 December 2012 13 139 1 952 371 5 190 20 652

According to the insurance policies concluded, the Bank’s cement of the damaged assets. Insurance of the Bank’s buildings and equipment are insured against fire, burgla- intangible assets is not included in the insurance of as- ry, floods and storms. The insurance premium is calcu- sets.Cars owned by the Bank are insured in line with the lated based on the acquisition cost of assets recognised concluded policies for motor hull insurance (CASCO) and by the Bank as at 31 December of the calendar year. The motor third party liability insurance. Fully depreciated assets are insured for the acquisition value (EUR 52,248 tangible fixed assets amounted to EUR 21,930 thousand thousand), which means that in the case of the afore- (2011: EUR 18,888 thousand) and intangible fixed assets mentioned damage the insured amount is determined amounted to EUR 11,527 thousand (2011: EUR 10,282 based on acquisition cost valid at the moment of repla- thousand).

64 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 15. Current tax

2012 2011 € ‘000 € ‘000 Current income tax for the current reporting period (Note 34) - (1 969) Income tax prepayments 1 961 2 174 Deferred tax paid in 2012 2 Total current income tax (receivable)/payable 1 963 205

16. Deposits by Banks

2012 2011 € ‘000 € ‘000

Payable on demand 7 637 1 521 Deposits by banks with original contractual maturity: - 3 months or less - 35 022 - 1 year or less but over 3 months 7 007 89 580 14 644 126 123

17. Loans Received

2012 2011 € ‘000 € ‘000 Slovenská záručná a rozvojová banka, a.s. (“SZRB”) 6 40 European Investment Bank 25 009 25 044 Slovak National Bank 50 365 - 75 380 25 084

The loan from SZRB was obtained under a framework ropean Investment Bank was secured by debt securities agreement on the implementation of credit to support from the Bank’s portfolio amounting to EUR 31 million small and medium enterprises, signed in 2005. (Note 12).

At the end of 2009, under the contract with the Euro- pean Investment Bank, the Bank received a loan to support providing loans to small and medium enterprises. As at 31 December 2012, the loan received from the Eu-

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 65 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 18. Customer accounts

2012 2011 € ‘000 € ‘000

Customer accounts at fair value through Profit or Loss (Note 12) - 838 Customer accounts at amortised cost 1 378 447 1 166 333 1 378 447 1 167 171

2012 2011 € ‘000 € ‘000

Payable on demand 512 188 542 249 Other customer accounts with original contractual maturity: - 3 months or less 450 757 235 193 - 1 year or less but over 3 months 406 368 244 483 - 5 years or less but over 1 year 9 134 145 226 - over 5 years - 20 1 378 447 1 167 171

Customer accounts are designated at fair value through As at 31 December 2012, customer accounts from the ten profit or loss when the future cash flows are linked to largest customers’ accounts represent 17% of the total equity indices (see also Note 12). bank’s customer accounts (2011: 18.86%).

66 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 19. Debt Securities Issued

2012 2011 € ‘000 € ‘000

Mortgage bonds Issue 4 - 15 336 Issue 5 - 12 720 Issue 8 6 657 6 677 Issue 10 - 28 310 Issue 11 - 30 105 Issue 12 - 20 048 Issue 13 1 822 1 631 Issue 14 15 289 - Issue 15 19 974 - Issue 16 21 973 - Issue 17 40 005 - 105 720 114 827

Issue 4 comprises 4,600 mortgage bonds with a notional Issue 10 comprised 8,573 mortgage bonds with a notional amount of EUR 3,319.39 each, which were issued on 28 amount of EUR 3,319 each, which were issued on 26 No- March 2007 with a floating rate coupon as at 31 Decem- vember 2010with a floating rate coupon as at 31 Decem- ber 2011 of 1.732% per annum (2010: 1.14% per annum). ber 2011 of 2.474% per annum (2010: 2.03% per annum). The mortgage bonds were redeemed on 28 March 2012 The mortgage bonds will be redeemed on 26 November from repayments of mortgage loans provided to cus- 2012 from repayments of mortgage loans provided to tomers. customers.

Issue 5 comprises 3,800 mortgage bonds with a notional Issue 11 comprises 10,000 mortgage bonds with a no- amount of EUR 3,319.39 each, which were issued on 20 tional amount of EUR 3,000 each, which were issued on July 2007 with a floating rate coupon as at 31 December 11 May 2011 with a floating rate coupon as at 31 Decem- 2011 of 1.882% per annum (2010: 1.18% per annum). The ber 2011 of 2.47% per annum. The mortgage bonds will be mortgage bonds were redeemed on 20 July 2012 from redeemed on 12 May 2014 from repayments of mortgage repayments of mortgage loans provided to customers. loans provided to customers.

Issue 8 comprises 2,000 mortgage bonds with a no- Issue 12 comprises 10,000 mortgage bonds with a notional amount of EUR 3,319.39 each, which were issued tional amount of EUR 2,000 each, which were issued on on 26 November 2008 with a floating rate coupon as at 27 May with a floating rate coupon as at 31 December 31 December 2012 of 1.255% per annum (2011: 2.711% per 2011 of 2.474% per annum. The mortgage bonds will be annum). The mortgage bonds were redeemed on 15 Oc- redeemed on 27 May 2013 from repayments of mortgage tober 2013 from repayments of mortgage loans provided loans provided to customers. to customers.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 67 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Issue 13 comprises 2,000 mortgage bonds with a no- deemed on 8 August 2015 from repayments of mortgage tional amount of EUR 1,000 each, which were issued loans provided to customers. on 1 December 2011with payment of 140% of face value at maturity. The mortgage bonds will be redeemed on Issue 16 comprises 22,000 mortgage bonds with a nomi- 1 December 2021 from repayments of mortgage loans nal amount of EUR 1,000 each which were issued on 26 provided to customers. November 2012 with a floating coupon (as at 31 Decem- ber 2012 1.69% per annum). The mortgage bonds will be Issue 14 comprises 15,000 mortgage bonds with a nomi- redeemed on 26 November 2015 from repayments of nal amount of EUR 1,000 each which were issued on 28 mortgage loans provided to customers. March 2012 with a fixed coupon as at 31 December 2012 of 4% per annum. The mortgage bonds will be redeemed Issue 17 comprises 40,000 mortgage bonds with a nom- on 28 March 2018 from repayments of mortgage loans inal amount EUR 1,000 each which were issued on 28 provided to customers. December 2012 with a floating coupon (as at 2012 1.084% per annum). The mortgage bonds will be redeemed on Issue 15 comprises 20,000 mortgage bonds with a nomi- 28 December 2017 from repayments of mortgage loans nal amount of EUR 1,000 each which were issued on 8 provided to customers. August 2012 with a floating coupon (as at 31 December 2012 2.196 % per annum). The mortgage bonds will be re-

20. Provisions for Liabilities Litigations and Retiren-ment Guaran-tees Total claims reserves reserves €‘000 €‘000 €‘000 €‘000

At 1 January 2011 6 432 - 438 Usage - - - Creation 1 - 90 91 Reversal (3) (15) (32) (50) At 31 December 2011 4 417 58 479 At 1 January 2012 4 417 58 479 Usage - - - - Creation 1 081 142 7 1 230 Reversal - - (28) (28) At 31 December 2012 1 085 559 37 1 681

In 2012 the Bank created a restructuralization reserve to end in 2013. The retirement reserve represents the related to change of the brand an reorganisation of pro- right of the employee for extraordinary remuneration cesses and systems. The restructuralisation is expected while retirement, The mother company provides for the

68 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Bank actuarial calculation of the retirement reserve, which for the year 2012 was as following:

2012 2011 € ‘000 € ‘000

At 1.January 417 432 Service costs 77 82 Interests costs 24 24 Payments (74) (26) Actuarial profits and losses 177 (46) Present value at 31 December 2012 621 464 Non recognized actuarial profits and losses (62) (47) At 31 December 559 417

21. Deferred Tax

Deferred tax asset and liability relates to the following items:

Asset € ‘000 Liability € ‘000 Net € ‘000 2012 2011 2012 2011 2012 2011

Loans and advances to customers 24 393 6 213 - - 24 393 6 213 Investment securities - 228 (1 485) - (1 485) 228 Financial derivatives - - (1 883) (822) (1 883) (822) Investment property - - (23) (23) Property and equipment - - (36) (72) (36) (72) Other liabilities 397 157 - - 397 157 Other assets 195 163 - - 195 163 Deferred tax asset/(liability) 24 985 6 761 (3 404) (917) 21 581 5 844

As at 31 December 2012, deferred tax was calculated using a corporate income tax rate of 23% (2011: 19%).

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 69 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The movements in deferred tax asset were as follows: 2012 2011 € ‘000 € ‘000 At 1 January 5 844 3 843 Movement through profit or loss (Note 34) 18 510 3 092 Movement through revaluation reserve in equity (2 773) (1 091) At 31 December 21 581 5 844

22. Other Liabilities

2012 2011 € ‘000 € ‘000

Other creditors 2 562 1 682 Liabilities to employees 1 926 1 072 Accrued expenses and deferred income 546 422 Social and health insurance 417 395 Liabilities to the State 499 (64) Other 798 816 6 748 4 323 2012 2011 € ‘000 € ‘000 Social fund: At 1 January 62 18 Creation 64 160 Withdrawals (117) (116) At 31 December 9 62

23.Subordinated liabilities

2012 2011 € ‘000 € ‘000

Subordinated liabilities - 30 006 - 30 006

70 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 At the end of 2011, the Bank received a loan of EUR clients defined under the Act on Banks No. 483/2001 Coll. 30 million from the parent company with maturity in as amended and under the regulation of National bank 2017, under which the Bank has no obligation to repay of Slovakia No. 4/2007 as amended. the principal or interest in case that the Bank no longer meets the required level of equity and adherence to Before the 2012 year end the Bank increased the amount capital adequacy required by the regulatory or in case of of equity which enabled the reduction of subordinated exceeding the limits of exposure to the client or group of debt.

24. Share Capital

2012 2011 € ‘000 € ‘000

Issued and fully paid: 194,887 ordinary shares of EUR 186 each 36 249 16 656 99,704 preference shares of EUR 166 each 16 551 16 551 52 800 33 207

The structure of the share capital and share premium as at 31 December 2011 was as follows: Share capital Share premium Total € ‘000 € ‘000 € ‘000

Ordinary shares 36 249 71 886 108 135 Preference shares 16 551 22 368 38 919 52 800 94 254 147 054

In addition to the ordinary shares with attached rights not be paid out or from the date of delay with paying out under the Commercial Code, the Bank also issues pref- the dividend, until the General Meeting decides to pay erence shares. The right to preferential payment of the out the dividend and, if the Company was in delay with dividend is attached to the preference shares. No right payment of the preferred dividend, until the date when of voting at the General Meeting is attached to the pref- the dividend is paid out. Preference shareholders are en- erence shares, except as specified below. The owners of titled to vote at the General Meeting, which decides on the preference shares have all other rights as attached to the payment of the preference dividend. the Company’s ordinary shares. If a preferred dividend is not paid out, the shareholder owning a preference share In 2012, the Bank did not pay dividends for 2011 as a re- assumes the voting right to such share with effect from sult of which the holders of preference shares acquired the date following the date on which the General Meet- the right to vote at the General Meeting pursuant to the ing adopts the decision that the preference dividend will Articles of Association.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 71 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 25. Reserves

Retained Legal Fair value Hedging Other Total earnings reserve revalua-tion derivative reserves € ‘000 € ‘000 fund reserve revalua-tion € ‘000 € ‘000 € ‘000 reserve € ‘000

At 1 January 2012 44 693 6 724 (971) 3 507 1 145 55 098 Net change in fair value of securities available-for-sale (a) - - 5 941 - - 5 941 Net net change in revaluation of hedging derivatives (b) - - - 2 797 - 2 797 Loss for 2011 (d) (47 726) - - - - (47 726) At 31 December 2012 (3 033) 6 724 4 970 6 304 1 145 16 110

(a) Fair value revaluation reserve required to maintain a legal reserve fund to cover future The change in fair value of revaluation reserve includes losses. The Bank is obliged to contribute an amount to the cumulative net change in the fair value of available- the fund each year that is not less than 10% of its an- for-sale investment securities except for cases when the nual net profit until the aggregate amount reaches a investment is derecognised or impaired. minimum level equal to 20% of the share capital. The legal reserve fund reached the required amount in 2006. (b) Hedging derivative revaluation reserve The legal reserve fund is not available for distribution to Hedging derivatives revaluation reserve consists of ef- shareholders. fective part of the cumulative change in fair value of the cash flow variability hedging derivatives relative to (d) Proposed Loss Settlement hedging transactions with no impact on profit or loss. The management will propose the following transfer of loss for the year ended 31 December 2012:

2012 € ‘000

Transfer to retained earnings (44 693) Legal reserve fund (3 033) (47 726)

(e) Other reserves Other reserves are not distributable to shareholders.

72 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 26. Contingencies, other financial obligation and derivative financial instruments

2012 2011 € ‘000 € ‘000

Contingent liabilities: Guarantees issued and irrevocable letters of credit 22 723 21 699 Other financial obligations: Loan commitments 166 435 201 104 Derivative financial instruments (note 9) 274 158 266 307 463 316 489 110

27. Interest Income

2012 2011 € ‘000 € ‘000

Loans and advances to banks 1 331 2 035 Loans and advances to customers 54 119 52 119 Debt securities 4 837 3 124 Financial derivatives 2 446 1 386 62 733 58 664

28. Interest Expenses

2012 2011 € ‘000 € ‘000 Deposits by banks 1 976 3 461 Customer accounts 17 786 11 165 Debt securities 2 679 3 320 Financial derivatives 720 828 23 161 18 774

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 73 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 29. Impairment Losses on Loans and Advances to Customers

2012 2011 € ‘000 € ‘000

Net charge for the year (Note 11) (71 804) (19 870) Losses on written-off and assigned receivables (773) (247) Income from written-off and assigned receivables 1 677 314 (70 900) (19 803)

30. Net Fee and Commission Income

2012 2011 € ‘000 € ‘000

Fee and commission income Loans 3 022 3 125 Securities 344 325 Payment transactions 6 756 7 597 Foreign exchange 1 269 1 449 Other 2 351 2 509 13 742 15 005 Fee and commission expenses Loans (383) (383) Securities (200) (147) Payment transactions (209) (210) Foreign exchange (1) (6) Other (2 918) (2 393) (3 711) (3 139) Net fee and commission income 10 031 11 866

74 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 31. Net Trading Income

2012 2011 € ‘000 € ‘000

Transactions with securities available for sale 368 1 055 Change in fair value of fair value hedge (1 822) (198) Change in fair value of loans to fair value hedge 1 823 178 Interest rate derivatives 3 (36) Foreign currency derivatives 448 (20) Financial instruments recognized initially at fair value through profit and loss - (1) Profit on revaluation of investment property (190) 1 630 979

32. Net Other Income/ (Expense)

2012 2011 € ‘000 € ‘000

Net other income: Gain on sale of property and equipment 229 17 Other taxes and fees (35) (39) Other costs (6 481) (145) Other income 2 241 (6 285) 74

The increase of other cost was caused mainly by pay- cial institutions valid since 1 January 2012 amounting to ment of extraordinary tax levy implied on certain finan- EUR 5.4 million for 2012.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 75 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 33. Administrative Expenses

2012 2011 € ‘000 € ‘000 Personnel expenses: Wages and salaries 13 907 12 448 Other employee benefits 366 382 Social insurance, social fund 3 736 3 626 18 009 16 456 Other administrative expenses: Services related to buildings 3 772 3 770 Postage and telecommunications services, materials 1 469 1 541 Advertising and entertainment costs 1 773 1 911 Training 176 110 Professional services 1 602 2 225 IT services 4 808 5 230 Other costs 1 726 2 299 15 326 17 086 33 335 33 542

The headcount as at 31 December 2012 was 598 (2010: 578), of which 20 were members of management (2010: 17).

Services provided by the audit companies during the year were as follows:

2012 2011 € ‘000 € ‘000

Audit of financial statements 86 478 Audit of Group reporting 86 - Other assurance services 43 8 Tax advisory - 2 Other advisory - 88 215 576

In 2012, the Bank changed auditor due to the ongoing process of sale our parent company Volksbank International AG.

76 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 34. Income Tax

2012 2011 € ‘000 € ‘000

Current income tax in the current period: Current period - 1 969 Adjustment in respect of prior years 2 4 Deferred tax (Note 21) (18 510) (3 092) Total income tax (18 508) (1 119)

The accounting profit before taxation at the tax rate is reconciled to the tax expense as follows:

Tax base Tax 19 % Tax base Tax 19 % 2012 2012 2011 2011 € ‘000 € ‘000 € ‘000 € ‘000 (Loss)/profit before taxation (66 234) (12 584) (5 703) (1 084) Non-taxable income: Release of provision for litigation and claims - - (2) - Tax exempt income from equity investments (2) - (2) - State debentures issued before 31.12.2003 (146) (28) - - Impairment loss allowances (14 950) (2 842) (1 306) (248) Other (21) (4) (269) (51) Tax non-deductible expenses: (2 874) (299)

Entertainment costs 71 13 70 13 Impairment loss allowances 1 082 206 - - Write-off and assignment of receivables 1 615 308 749 142 Gifts 2 - 6 1 Fines 21 4 3 1 Motor vehicles 14 3 12 2 Shortages and damages 265 50 13 2 Other 359 67 522 99 651 260 Not recognized deferred tax asset for 2012 tax loss 3 341 635 - - Additional tax for previous period 2 4 Impact of change of income tax rate from 19% to 23% (4 338) - Total income tax (18 508) (1 119) Effective tax rate 27,94 % 19,62 %

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 77 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Deferred tax assets and liabilities were calculated using the corporate income tax rate of 23% (2011: 19%).

35. Profit Before Changes in Operating Assets and Liabilities

2012 2011 € ‘000 € ‘000

(Loss)/profit after tax (66 234) (5 703) Adjustments for non-cash items: Interest incomes (60 923) (58 664) Interest expenses 23 161 18 774 Depreciation 4 745 5 126 Impairment losses on loans and advances to customers 70 766 20 084 Provisions 1 202 41 Gain on sale of property and equipment 14 25 Revaluation of fair value hedge 1 833 206 Fair value adjustment of investment property 190 (1) Net profit on cash-flow hedge transferred to profit or loss 6 10 Received interest 60 948 58 272 Paid interest (19 770) (15 779) 15 938 22 391

36. Lease 37. Related Party Commitments Transactions

As at 31 December 2012, non-cancellable commitments The Bank and its branches were engaged in the normal under operating leases up to 1 year were EUR 1,797 thou- course of business in transactions with other members sand (2011: EUR 1,860 thousand), from 1 to 5 years were of the Sberbank Group and related parties. These trans- EUR 3,475 thousand (2011: EUR 4,169 thousand) and for actions, which include the taking and placing of deposits, more than 5 years were EUR 760 thousand (2011: EUR foreign currency operations and the provision of man- 915 thousand). agement and technology services, are conducted on an arm’s length basis.

78 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Parties with controlling influence Senior management Sberbank Rusko Sberbank Europe AG Board of Directors Oesterreichische Volksbanken Aktiengesellschaft (until The list of the members of the Board of Directors is pro- 15. February 2012) vided in Note 1.

Parties with significant influence Supervisory Board The Bank has no relationship with any parties holding The list of the members of the Supervisory Board is pro- significant influence. vided in Note 1.

Other related parties Parties of the group Sberbank Europe AG 2012 2011 € ‘000 € ‘000

(a) Parties with controlling influence Amounts due from/(due to) Sberbank Europe AG at 31 December were as follows: Loans and advances to bank 70 022 10 002 Subordinated liabilities - (30 006) Liabilities to bank (1 139) - Guarantees received 20 200 9 812 Transactions during the year were as follows: Interest income 255 2 Interest expenses (218) (1 388) Other income 8 9 Other expenses (947) (1 683) Amounts due from/(due to) Sberbank Russia at 31 December were as follows: Loans and advances to bank 11 662 Liabilities to bank - Receivables from derivatives 79 Liabilities from derivatives 1 Guarantees received 20 000 Transactions during the year were as follows: Interest income 293 Interest expense (657)

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 79 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 37. Related Party Transactions (continued)

2012 2011 € ‘000 € ‘000

Amounts due from/(due to) Oesterreichische Volksbanken Aktiengesell- schaft were at 15 February as follows: Loans and advances to bank 52 428 53 033 Liabilities to bank - (80 540) Financial derivatives - assets - 5 545 Financial derivatives - liabilities - (1 277) Guarantees received 1 848 22 323 Transactions during the year were as follows: Interest income 36 1 177 Interest expenses - (865) Fees expenses - (382) Other income - 1 Other expenses - - (b) Other related parties Amounts due from/(due to) other parties of the group Sberbank Europe AG were at 3. December as follows: Loans and advances 12 850 53 Liabilities (45 409) (25 102) Financial derivatives - assets 7 034 - Financial derivatives - liabilities (1 506) 21 Guarantees received 2 400 - Transactions during the year were as follows: Interest income 110 45 Interest expenses (222) (254) Other income - - Other expenses (12) (3)

80 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 2012 2011 € ‘000 € ‘000

(c) Key management Assets Board of Directors - 1 Management 620 795 Supervisory Board 1 - Others 86 80 707 876 Former Board members 136 147 843 1 023 Liabilities Board of Directors (136) (6) Management (591) (715) Supervisory Board (42) (4) Others (372) (257) (1 141) (982) Former Board members - (9) (1 141) (991) Remuneration Board of Directors 198 399 Management 1 614 1 406 Supervisory Board - - 1 812 1 805 Former Board members 393 100 2 205 1 905

38. Custodial Services

The Bank administers securities and other valuables en- trusted by customers to the Bank for custody totalling EUR 135 million (2011: EUR 141 million).

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 81 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 39. Estimated Fair Values

Fair value is the amount at which an asset could be ex- Bank’s financial assets and liabilities at the yearend were changed, or a liability settled, to the other party in an as follows: arm’s length transaction. The estimated fair values of the

Carrying value Estimated fair value Carrying value Estimated fair value 2012 2012 2011 2011 € ‘000 € ‘000 € ‘000 € ‘000 Financial assets Loans and advances to banks 104 297 104 154 46 948 46 925 Loans and advances to customers 1 226 689 1 228 870 1 145 483 1 141 492 Financial liabilities Deposits by banks 14 644 14 654 126 123 127 483 Loans received 75 380 74 735 25 084 23 010 Customer accounts 1 378 447 1 375 418 1 167 171 1 166 851 Debt securities issued 105 720 106 149 114 827 113 773 Subordinated liabilities - - 30 006 30 006

The following methods and assumptions were used in Loans Received estimating the fair values of the Bank’s financial assets The fair values of other loans received are calculated by and liabilities: discounting the future cash flows using current interbank rates. Loans and Advances to Banks The fair value of current account balances with other Customer accounts banks approximates their carrying amount as their bal- The fair values of current accounts and term deposits ances change in relatively short periods. with a remaining maturity of less than three months ap- proximate their carrying amounts. Fair values of other Loans and Advances to Customers customer accounts are calculated by discounting future Loans and advances to customers are stated net of im- cash flows using the applicable interbank rates. pairment losses. For loans and advances to customers with a remaining maturity of less than three months, it is Customer accounts with cash flows linked to equity in- reasonable to use the carrying amount as an approxima- dices are stated at fair value through profit or loss. Valu- tion of the fair value. Fair value of loans and advances to ations are obtained from the movements in the relevant customers is calculated by discounting future cash flows indices. using market interest rates. Debt Securities Issued Deposits by Banks The fair value of debt securities issued is calculated by The fair value of amounts owed to banks are calculated discounting the future cash flows using current market by discounting the future cash flows using current inter- rates. bank rates.

82 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Subordinated liabilities The fair values of the subordinated liabilities are calculated by discounting the future cash flows using market interest rates.

40. Events after the reporting date

With the effect 15 February 2013 the Bank changed its business name to Sberbank Slovensko, a.s., in accordance with its main shareholder (Sberbank Europe, AG) and with the name of the whole Russian Sberbank. This fact regards also re-branding activities including the re- building of branch network and communication network.

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2012 83 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Supervisory Board Report

I. In its activity, the Supervisory Board of Sberbank Slov- II. In its meeting on 26 April 2013, the Supervisory Board ensko, a.s. (hereinafter referred to as „the company“) fol- reviewed the submitted ordinary individual financial lowed legal regulations applicable in the Slovak Republic, statements for FY 2012 and, pursuant to Article 198 of Articles of Association of the company, the Rules of Pro- the Commercial Code and Article 21 (4) of the Articles cedure of the Supervisory Board, as well as the necessity of Association of the company, it unanimously approved to address company-related topical issues. the ordinary individual financial statements for FY 2012, which were confirmed by the auditor of Ernst & Young In 2012, the Supervisory Board of Sberbank Slovensko, Slovakia, spol. s r.o. a.s. held three meetings. In its meetings, it was informed of up-to-date outcomes of the company’s business ac- The Supervisory Board agrees that in the General Meet- tivity, fulfilment of the company’s operative plan, exe- ing of Sberbank Slovensko, a.s., to be held on 26 April cuted transactions approved by the Board of Directors, 2013, the Board of Directors shall present the following status of bad debts, risk management, activity of the Au- proposal for the settlement of the FY loss of Sberbank dit Committee etc. Slovensko, a.s. for the accounting period of FY 2012:

In its meetings, the Supervisory Board reviewed and ap- Loss EURO 47 726 204,97 proved the 2011 annual report of the head of the Internal From undistributed profits Control and Internal Audit staff unit, approved the 2013 plan for the monitoring activity of the Internal Control of preceding periods EURO 44 692 989,15 and Internal Audit staff unit, advised the Board of Direc- From the Reserve Fund EURO 3033 215,82 tors to present the reviewed and approved the 2011 ordinary individual financial statements of the company and the proposal for the settlement of the company’s FY loss to the General Meeting. The Supervisory Board approved a new organizational structure of the company, approved changes related to the Rules of Procedures of the Supervisory Board and the Audit Committee, conferred power of attorney (procuration) to selected employees of the company and approved personal changes in the Board of Directors. In addition, the Supervisory Board removed and appointed the head of the Internal Con- trol and Internal Audit staff unit, approved the planned 2012 budget of the company, reviewed and approved credits and loans subject to an approval of the Supervi- sory Board, approved the issue of mortgage bonds of the company, reviewed and approved loans and borrowings subject to consent of the Supervisory Board etc.

84 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | SUPERVISORY BOARD REPORT WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Declaration on Corporate Governance of Sberbank Slovensko, a.s.

Sberbank Slovensko, a.s., pursuant to Article 20, par. 6 tion of Internal Capital Adequacy, as well as fulfilment of and 7 of Act No. 431/2002 Coll., on Accounting, and pur- the requirements of own resources, cash-flow and ad- suant to the Corporate Governance Code of Slovakia herence to restrictions of capital involvement. issued by the Central European Corporate Governance Association, of which Sberbank Slovensko is a member, The System of Risk Management in Sberbank Slovensko, hereby publishes the Declaration of Corporate Govern- a.s., pursuant to the Banking Act4 consists of the special- ance of Sberbank Slovensko, a.s. ist operations, processes and instruments directed to- wards risk identification, monitoring and management, Sberbank Slovensko, a.s., is governed and managed by covering the market, credit and operational risks, as well the legislation relevant to the area of banking and finan- as other risks. The main objective of these structures is, cial markets within the Slovak Republic. The essential above all, the identification and assessment of individual legislative regulations for the activities pursued thereof types of risk and reduction, or elimination thereof. Us- are the Banking Act1 and the Act on Securities and In- ing the implemented system of risk management an im- vestment Services2. The above legal regulations are provement thereof and as a result of the Internal Capital available at the NBS webpage: www.nbs.sk. Adequacy Assessment Process (ICAAP) all the identified risks can be managed and thereby the losses and dam- Sberbank Slovensko, a.s., in accordance with the avail- ages within the operations of Sberbank Slovensko, a.s., able information, meets all the conditions indicated in can be precluded. The systems, processes and instru- the Corporate Governance Code in Slovakia. The word- ments intended for the performance of internal controls ing of the Code is available for access on the webpage of and risk management are incorporated in the regulatory the Central European Association for Administration and acts of Sberbank Slovensko, a.s.. The regulatory acts are Management of Companies at www.cecga.com. updated regularly, thereby ensuring the implementation of new instruments for the performance of internal controls and risk management.

Part I. Information on Composition and Activities of the General Meeting System of Internal Control and Risk Management The General Meeting is the supreme body of Sberbank Slovensko, a.s. Each shareholder is entitled to attend the The System of Internal Control of Sberbank Slovensko, sessions of the General Meeting. Ordinary and Extraor- a.s., pursuant to the Banking Act3 consists of control dinary General Meetings may be held. Members of the processes and control activities which are part of the op- Board of Directors and Supervisory Board are entitled erational working procedures and are performed by the to take part in General Meetings. The participation of employees and organizational units participating in the guests invited to attend General Meetings is permitted. individual procedures. The managers of these organizational units or personnel authorized by them are respon- Both Ordinary and Extraordinary General Meetings are sible for the control processes and their results. convened by the Board of Directors. The Supervisory Board is entitled to convene an Extraordinary General Control independent of the operational work procedures Meeting in cases of urgency. is performed by the independent unit of internal controls and audit which, above all, monitors compliance with The Board of Directors is obliged to convene an Ordinary the law and other generally binding legal regulations, in- General Meeting every year, not later than within five ternal regulations and procedures within Sberbank Slo- months following the end of a calendar year, unless a vensko, a.s.; in particular, it assesses and evaluates the shorter time is specified by the valid legislation. functionality and effectiveness of the controls system, system of risk management and the system of evalua-

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 85 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 The Extraordinary General meeting shall be con- d) appointment and dismissal of the Audit Committee vened by the Board of Directors, under any of members the following conditions: e) to approve the individual financial statements, ex- a) the previous Ordinary General Meeting has so decided; traordinary individual financial statements or consolidated financial statements, decide upon profit-sharing b) on the presentation of a request in writing from or loss-covering and Directors’ fees; shareholders, or a shareholder having shares with a face value of at least 5% of equity. The request shall include f) to decide on the Company’s dissolution; the reasons, the draft agenda and data on the proposals to be submitted to and decided by the General Meeting. g) to decide on the cessation of trading in the Company’s Should the Board of Directors fail to convene an Extraor- shares and decide on delisting the Company from the dinary General Meeting as requested within 40 days fol- Stock Exchange; lowing the date of delivery of the request to convene the same, the relevant provisions of the Commercial Code h) to decide upon the approval of a contract on the shall apply; transfer of the Company or a part thereof;

c) a loss of more than one third of the equity of the Com- i) to decide upon other issues included by legal regula- pany has been incurred, or may reasonably be expected tions within the responsibilities of the General Meeting. to occur. As a rule, the General Meeting adopts its decisions by a simple majority of votes. To approve the decisions of the The Supervisory Board shall convene an Extraordinary General Meeting in precisely specified instances, pursu- General Meeting, if the serious interests of the Company ant to the Articles of Association of Sberbank Slovensko, so require. a.s., a two-thirds vote of all the voting shareholders present is required; they must be recorded by a Notary Pub- The General Meeting shall decide upon all the issues per- lic. A two-third vote of all the voting shareholders is also taining to Sberbank Slovensko, a.s., unless the Articles of required to approve the General Meeting’s decision. Association or legal regulations should vest the decision- making power in other Sberbank Slovensko, a.s., corpo- Minutes are to be taken at a General Meeting, containing rate governance bodies. all the appurtenances pursuant to the legal regulations applicable in the Slovak Republic. If a legal regulation The performance of the following tasks shall fall should so stipulate, notarial minutes from the General within the responsibility of the General Meeting: Meeting shall be executed.

a) to amend the Articles of Association, unless otherwise The minutes shall be executed in the Slovak language stipulated by law; and, if so required, in the English translation; the notarial minutes shall be executed solely in the Slovak language. b) to decide upon an increase or decrease in equity, provide authorization to the Board of Directors to increase The minutes are to be signed by the minute-taker and the equity, pursuant to the legislation and regulations the Chairperson of the General Meeting. The correctness applicable in the Slovak Republic; issue of priority or ex- of the minutes is to be verified by two verifiers. The Board changeable bonds; of Directors is obliged to produce the minutes within thirty days following the date of the General Meeting. c) to elect and recall the Supervisory Board members ex- The minutes of the General Meeting, the letter of invita- cept those Supervisory Board members elected and re- tion to attend, the notice of the General Meeting, as well called by the employees of the Company; as the attendance list are to be retained for the entire life of the Company. After the Company is dissolved without

86 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 any legal successor, all the minutes are to be submitted are indivisible and transfer of ownership of the shares is by the Company to the relevant state archiving author- not restricted. ity. Each shareholder shall be entitled to request an excerpt from the minutes or a copy thereof together with The shares of Sberbank Slovensko, a.s., are to be divid- the annexes to the minutes. SBERBANK Slovensko, a.s., ed into common and preference shares. The common shall post the results of voting on individual draft resolu- shares entail the rights pursuant to the legislative regulations of the General Meeting on its web site within 15 tion. The preference shares are associated with the right days following the date of the General Meeting. to a priority payment of dividends; however, they do not entail the right to vote in the General Meeting. In the Information on Rights of Shareholders and their event that no preference dividend is paid out, preference Exercise shareholders are to enjoy the voting rights associated with these shares from the date following the date of In proportion to his/her share in the equity, the share- the General Meeting’s decision not to pay out the prefer- holder of Sberbank Slovensko is entitled to take part in ence dividends, or the dividend payment defaulting date, the management of the Company, in its profits (divi- up to the date of the General Meeting’s decision to pay dends) and in its liquidation proceeds upon its dissolution out the dividends, or up to the dividend payment date, in by liquidation. The shareholders exercise their essential the event of the Company’s failure to pay out the prefer- rights, as pertaining to them, at the General Meeting, ence dividends. The preference shareholders are entitled pursuant to the Articles of Association and the relevant to vote on the General Meeting’s decision on payment of legal regulations. preference dividends.

The Shareholders are entitled to take part in the Gen- Information on Composition, Rules Governing eral Meeting, to vote, to require information and expla- Appointment and Recall of Board Members nations related to the of the company or persons managed by the company, which are relevant to the topic The Board of Directors is the statutory body of Sberbank discussed by the General meeting and submit proposals. Slovensko, a.s., managing the operations of Sberbank Those Shareholders having shares amounting to at least Slovensko, a.s., The Board of Directors is composed of 5 % of the equity are entitled to request the Board of Di- three members. The composition of the Board of Direc- rectors to include the agenda as determined by them in tors of Sberbank Slovensko, a.s. as at 31st December 2012 the schedule of the General Meeting. Each Shareholder constitutes an integral part of the Annual Report herein. is entitled to request an excerpt from the Minutes of the General Meeting or a copy thereof, including the Annex- The Board of Directors is composed of a minimum of es to the Minutes. three and not more than five members. The Board of Di- rectors of Sberbank Slovensko, a.s. is elected and recalled Shareholders are entitled to exercise their rights at the by the Supervisory Board of Sberbank Slovensko, a.s., by General Meeting either in person, or via their representa- a simple majority of the votes of the members present. tives, authorized in writing (the “Proxy“). No member of The proposal for the election or recall of a member of the the Supervisory Board may act as a Proxy. The signature Board of Directors may be submitted by a shareholder of the authorizing Shareholder is to be officially validat- of the Company or a member of the Supervisory Board ed. The right to vote is not to be associated with prefer- to the Chairman of the Supervisory Board. A repeat vote ence shares. is admissible. During their term of office, the Superviso- ry Board is entitled to recall individual members of the The shares of Sberbank Slovensko, a.s., are to be in- Board of Directors. During their term of office, the mem- scribed and issued as booked and publicly marketable, bers of the Board of Directors are also entitled to resign pursuant to the relevant valid legislation of the Slovak from their positions. Republic. The shares are registered with the Central Se- curities Depository of the Slovak Republic, a.s. The shares

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 87 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Recall from the position of a member of the Board of Di- The Board of Directors of Sberbank Slovensko rectors is effective as of the date determined by the Su- a.s. is held accountable for the following: pervisory Board as the date for termination of the office of the member of the Board of Directors. In the event of a) creation, implementation, monitoring and inspection resignation from the office of the member of the Board of commercial purposes, whereas, in compliance with the of Directors, the office terminates as of the date of the regulatory requirements, the executive powers are divi- next session of the Supervisory Board, convened pursu- ded into the respective divisions, internally managed by ant to the previous Section. Where the member of the the respective members of the Board of Directors. The Board of Directors steps down from office when the -Su separation of commercial activities from risk manage- pervisory Board is in session, the resignation shall be with ment is ensured up to the highest possible managing immediate effect. level, which is the second managing level (managers directly reporting to the Board of Directors), In the event of an early termination of the term of office of a member of the Board of Directors, a new member of b) the system of company management while complying the Board of Directors is to be elected at the next session with the rule, within the meaning of which, in each trade of the Supervisory Board, which is to take place not later on behalf of the company, the company shall be repre- than within three months following the date on which sented by at least two persons, as well as thereto related the member of the Board of Directors was recalled by authority and responsibility is incorporated in the internal the Supervisory Board or the date of delivery of the no- rules of the company; tice of the resignation from office in writing to the Com- pany. When the number of the members of the Board of c) the system of internal control, including the dedicated Directors elected by the Supervisory Board drops below and independent unit of internal control and audit corre- one half, the Board of Directors may appoint a substitute sponding with the complexities and risks of banking busi- member for the period up to the next session of the Su- ness, pervisory Board. d) segregation of risk management from banking business, The Supervisory Board appoints the Chairman of the including the management of risks the bank is exposed Board of Directors from among the members of the to by approval, implementation and compliance with the Board of Directors. The Supervisory Board may also ap- organizational structure reflecting the regulatory require- point the Vice-Chairman of the Board of Directors who ments concerning organizational division of the company; would act for the Chairman in his/ her absence, or his/her inability to perform the office. The Supervisory Board is e) the segregated performance of credit transactions and entitled to determine on changes to the subject-matter investment transactions by drafting, approving, introduc- competency of the members of the Board of Directors tion and compliance with the organizational structure within individual resorts, provided that such changes are reflecting the regulatory requirements for the organisa- required by the Company’s operation and such a decision tional division of a company. is compliant with the valid legislation. The names of the members of the Board of Directors are to be registered in f) segregated monitoring of risks to which the bank is ex- the Commercial Register. posed in performing banking transactions with persons with a special relationship to the Company is subject to The Board of Directors acts on behalf of Sberbank Sloven- the wording of the internal regulation of the Company sko, a.s.. It is accountable for the creation, implementa- governing the scope of authority and responsibility in the tion and control of business plans of Sberbank Slovensko, sphere of monitoring persons with a special relationship a.s.. as well as organization of the activities of Sberbank to the Bank, as well as those in the sphere of risk monito- Slovensko, a.s., pursuant to the generally binding regula- ring ; tions as well as extraordinary regulations, and performs the rights of an employer.

88 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 g) for a functional and transparent information system Board; and implementation of efficient distribution mechanisms to assure that the information in relation to customers d) to provide all means required to support the develop- and authorized third parties are updated, truthful, com- ment and profitability of the Company’s business; plete and correct, whereas the method of obtaining information and the mode of the information system comply e) to determine on the establishment, change or termina- with the current legal regulations, h) for an overall protection of the capital participation of the Company in other tion of the Company from legalization of proceeds from companies, including equity interests in foreign compa- criminal activity and terrorist financing. nies;

Authority and responsibility for managing the protection f) to decide on the use of reserve funds ; of the Company against legalization of proceeds from criminal activity and terrorist financing is vested in the g) to produce and disclose: managing employee of the Company appointed by the Board of Directors. The practical implementation of main ga) an annual report including the report on the Com- task, compliance with and continuous updating of proce- pany’s business performance and state of assets and to dures of the Company, pursuant to legal regulations, the present the same to the Supervisory Board and the Ge- Articles of Association herein and international standards neral Meeting; is the responsibility of a person appointed by the Board of Directors, who is the Company’s employee. The tasks gb) the consolidated financial statements and the consoli- of organizational units and definition of tasks, authori- dated annual report; ties and responsibilities of employees, as well as the procedures in reporting unusual business transactions and h) to prepare: performance of other duties are governed by the internal regulation of the Company. ha) organizational rules;

The competences of the Board of Directors include the hb) information on the main aims and objectives of the following: Board of Directors for the upcoming period, as well as on the projected development of assets, cash flows, and re- a) to convene a General Meeting and implement its deci- venues for meetings of the Supervisory Board; sions i) to confer and cancel Procuracy and other permanent b) to prepare drafts, proposals and suggestions for se- powers and authorizations in writing; procuracy shall be ssions of the General Meeting with regard to the follo- conferred with a prior consent of the Supervisory Board wing issues: and the national Bank of Slovakia; ba) amendments to the level of equity, Articles of Associa- j) to ensure proper maintenance of the Company’ action, and scope of business; counting, bb) principal issues relating to the Company’s financing; k) to approve rules of remuneration of selected persons bc) the ordinary individual annual financial statements under the Company’s Articles of Association and respon- and extraordinary individual financial statements and sibility for their exercise proposals for profit-sharing or loss coverage, l) to appoint the Company’s managers who have powers c) to decide on the issue of mortgage bonds and deben- and responsibilities in selected areas, tures that are not subject to the decision of the General Meeting, by virtue of the prior approval of the Supervisory

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 89 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Meetings of the Board of Directors shall be convened by 7. Frauds Prevention and Operational Risk Committee of the Chairperson. Meetings of the Board of Directors are Sberbank a.s. held on a regular basis. Upon a written request from any member of the Board of Directors or Supervisory Board, a The Assets and Liabilities Committee of Sberbank Slov- meeting of the Board of Directors may be convened ur- ensko, a.s., is intended to ensure effective approval and gently. The meeting of the Board of Directors is deemed optimum decision-making in processes related to con- to form a quorum only when at least half of the members trolling the assets and liabilities of Sberbank Slovensko, are present. The Board of Directors takes its decisions by a.s. The Committee meetings are attended by the mem- a simple majority of votes cast; however, whatever the bers of the Board of Directors and selected members of number of the members of the Board of Directors, the the senior management of Sberbank Slovensko, a.s.. minimum number of votes for/ against a decision is to be two. In the event of an even division of votes, the Chair- The Risk Committee of Sberbank Slovensko, a.s., is in- man of the Board has the casting vote. In urgent, pressing volved in managing risks and the capital structure of matters, the Board of Directors may take decisions ‘per Sberbank Slovensko, as well as in communicating the rollam’ – in writing, by e-mail, or fax. A simple majority generally accepted risk policy to the public through the of votes of all the members of the Board of Directors is risk strategies, as well as through decisions on the allo- necessary for the adoption of a decision per rollam. All cation of capital to the respective risk areas, or through meetings and decisions of the Board of Directors are to be the provisions related to specific types of client seg- recorded and minutes taken; the minutes are to be signed ments/products. The Committee meetings are attended by all the Board members present. Upon request, any by members of the Board of Directors and authorized opinion of any Board member differing from the decision members of the senior management of Sberbank Slov- of the Board is also to be recorded in the minutes. ensko, a.s..

Information on Committees The Damage Committee is the advisory body of the of the Board of Directors Board of Directors of Sberbank Slovensko, a.s. The Dam- age Committee has no independent decisive authority. To perform its activities, the Board of Directors estab- The role of the Damage Committee is to evaluate the lished a number of specialist Committees of the Board set of damages incurred as a result of the operations of Directors. The Committees as established, their crea- of Sberbank Slovensko, a.s., the assessment of employ- tion, operation and powers, are constituted within the ees’ responsibility and the proposal for the manner and Internal Regulation of the Bank. The committees are as amount of the damage coverage. The Committee has follows: three members appointed by the Bank’s Board of Direc- tors. The Committee holds ordinary quarterly meetings 1. Assets and Liabilities Committee of Sberbank Slovensko, and, in the event of a substantiated reason, it holds ex- a.s., traordinary meetings.

2. Risk Committee of Sberbank Slovensko, a.s., The Decommissioning Committee is the advisory body of Sberbank Slovensko, a.s. The Decommissioning Com- 3. Damage Committee of Sberbank Slovensko, a.s., mittee has no independent decisive authority. The role of the Decommissioning Committee is, on the basis of pro- 4. Decommissioning Committee of Sberbank Slovensko, posals for decommissioning property, to assess the jus- a.s., tification for the proposals and recommend manners for dealing with the decommissioned property of Sberbank 5. Credit Committee of Sberbank Slovensko, a.s., Slovensko, a.s.. The recommendations serve as the basis for the Board of Directors’ deliberation. The Decom- 6. Security Committee of Sberbank Slovensko, a.s. missioning Committee has five members and holds two ordinary meetings per year. If required, it may hold an

90 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 extraordinary meeting. Information on Composition and Activities of the Supervisory Board The Credit Committee of Sberbank Slovensko, a.s., deals with revising and approving loans provided by Sberbank The Supervisory Board is the supervisory body of Sber- Slovensko. The committee meetings are attended by the bank Slovensko, a.s. The Supervisory Board supervises all members of the Board of Directors and members of the the operations of Sberbank Slovensko, a.s., and manages senior management of Sberbank Slovensko, a.s.. the Internal Controls and Audit Department. The prior approval of the Supervisory Board is required for the ap- The Security Committee is the advisory body of Sberbank pointment as well as the recall of the Head of this De- Slovensko, a.s. The Security Committee has an independ- partment by the Board of Directors. ent decisive authority. The recommendations of the Se- curity Committee serve as information for the delibera- The Supervisory Board is entitled to review the processes tion of the Board of Directors. The main function of the and procedures of the Company, including the review of Security Committee is analyses of the security incidents adherence to remuneration rules of selected persons un- as identified, the preparation of measures and prepara- der the Company’s Articles of Association, consult books tion of recommendations requiring the deliberation of and accounts, or any records of the Company made the Board of Directors. At the same time, the Security available for reference at any time, and to further exam- Committee acts as the advisory body in developing work ine the status of the Company. processes and procedures required for enforcing and maintaining the Security Policy and Information Security The Supervisory Board approves the agreement on the standards. The Security Committee has six permanent performance of the office of members of the Board of members appointed by the Bank’s executive regulation Directors as well as their remuneration scheme. The The Security Committee has two ordinary meetings per Supervisory Board ensures the collection of damages year and may hold a meeting at any time if so required incurred by the Company and caused by a member of to make an urgent decision or to adopt a measure within the Board of Directors in accordance with the legislation the capacity of the Security Committee. valid in the Slovak Republic.

The Frauds Prevention and Operational Risk Committee The Supervisory Board is obliged to review the ordinary, is the advisory Body of the Board of Directors of Sber- extraordinary, and consolidated financial statements, bank Slovensko a.s. It has a separate decision-taking proposals to distribute the profit or cover the loss, and power. Recommendations of the Committee are aimed to report its findings to the General Meeting. The com- to be the basis of Board’s decisions on issues within the position of the Supervisory Board of Sberbank Slovensko, Committee’s competence. The Committee has four reg- a.s. as at 31st December 2012 constitutes part of the An- ular members. Its sessions are held once in three months nual Report herein. The Supervisory Board shall consist and an extraordinary session is convened in case of a of at least three members. The number of the Supervi- required identification of a situation, which is subject to sory Board members shall be determined by the Gen- the Committee´s competence. The Committee may cre- eral meeting; the number of members, however, must ate ad hoc work groups for the purpose of investigation be divisible by three. Two-thirds of the membership of of cases of criminal activity and operational risk or in case the Supervisory Board is elected and recalled by the Gen- of performance of other assignments, which belong to eral Meeting. Candidates for members of the Supervisory the Committee’s competence. Board elected by the General Meeting and their recall may be proposed by any shareholder as well as by any member of the Board of Directors. A separate voting procedure should be held for every candidate. A candidate is deemed to be elected as a member of the Supervisory Board if the decision on his/her election is adopted by a

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 91 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 simple majority of the votes of those present. As soon as The Supervisory Board is deemed to have quorum if a the requisite number of members to be elected by the simple majority of the members of the Supervisory Board General Meeting has been reached, voting on the re- are present. Decisions by the Supervisory Board are maining candidates does not take place. One-third of the deemed to be adopted by a simple majority of votes of Supervisory Board membership is elected and recalled by those present; in the event of an even division of votes, the staff members employed by the Company. The vot- the Chairman of the Supervisory Board has the casting ing procedure for the election and recall of members of vote. Members of the Supervisory Board, who take part the Supervisory Board and amendments thereto is pre- in a session through video –teleconference equipment. pared by the Board of Directors in collaboration with the eligible voters. The term of office of the Supervisory In urgent, pressing matters, the Supervisory Board may Board is five years, i.e. it ends in the year with a numerical adopt decisions in writing, by e-mail, or fax. A simple expression higher by five than the numerical expression majority of votes of all the members of the Supervisory of the year in which the term of office commenced, and Board is necessary for the adoption of such a decision. it expires on a date with a designation identical to the date of commencement of the term of office. All the meetings and decisions of the Supervisory Board are to be recorded and minutes taken; the minutes are The term of office of members of the Supervisory Board to be signed by the Chairman of the Supervisory Board. elected by the General Meeting commences on the date Upon request, any opinion of any member differing from as determined by the General Meeting. The term of of- the decision of the Supervisory Board is also to be re- fice of members of the Supervisory Board elected by corded in the minutes; differing opinions of the members the staff members commences on the date as defined of the Supervisory Board elected by staff members of in those elections. If a member of the Supervisory Board the Company are always to be recorded in the minutes. steps down from his/her position, is recalled, dies or his/ her tenure of office is terminated in any other manner, the General Meeting and/or staff members are to elect a new member of the Supervisory Board within the period as defined by the valid legislation of the Slovak Repub- Part II lic. The member of the Supervisory Board elected in the above manner is deemed to be elected for a maximum Information on the structure of share capital, period up to the end of the current term of office of the including data concerning securities which were Supervisory Board. A repeat election of members of the not accepted for trading on the regulated mar- Supervisory Board is permitted. kets in any EU member state or state of the Eu- ropean Economic Area, indicating the type of The meetings of the Supervisory Board are summoned shares, description of rights and duties related by its Chairman. In reasonable cases, a meeting of the thereto for each type of shares, and their partici- Supervisory Board may be summoned by any of its mem- pation, in percentage, in the total share capital. bers. Meetings are to be convened when necessary, but at least two times per calendar year. The Supervisory SHARES Board elects its Chairman, who manages its activities, or two Vice-Chairmen, who stand in for the Chairman dur- Type, manner and form of securities: A book-entered ing his/her absence. security – a registered ordinary share The shares are not accepted on the regulated stock exchange market

ISIN number: 1st issue: SK1110000660 series 01 1st issue: SK1110003524 series 01 2nd issue: SK1110016799 series 01

92 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Number : Number : 1st issue: 60, 000 pcs 1st issue: 22, 400 pcs 2nd issue: 29, 550 pcs 2nd issue: 10, 400 pcs 3rd issue: 105, 337 pcs 3rd issue: 34, 000 pcs 4th issue: 32, 904 pcs Face value: 1st issue: 186 EUR Description of rights: 2nd issue: 186 EUR 1st issue: 166,- EUR 3rd issue: 186 EUR 2nd issue: 166,- EUR 3rd issue: 166,- EUR Description of rights: The right to participate in the 4th issue: 166,- EUR Bank’s management, profit, liquidation balance and voting rights. Description of rights: The right to participate in the Bank’s management, profit, liquidation balance and voting Percentage stake in total registered capital: rights.

SK1110000660 Percentage stake in total registered capital: Sberbank Europe AG 98.48% Other legal entities 0.03% Individuals 1.49% SK1110000678 Sberbank Europe AG 98,97 % SK1110003524 Other legal entities 0,01 % Sberbank Europe AG 99.84% ndividuals 1,02 % Individuals 0.16% SK1110003516 SK1110016799 Sberbank Europe AG 99,74 % Sberbank Europe AG 99,93 % ndividuals 0,26 % Individuals 0,07 %

3rd issue was paid up as at 31.12.2012. However, the book- entry was made in the Central Securities Depository only on 2nd January 2013.

Type, manner and form of securities: A book-entered security – a registered preference share The shares are not accepted on the regulated stock exchange market

ISIN number: 1st issue: SK1110000678 series 01 2nd issue : SK1110000678 series 02 3rd issue : SK1110000678 series 03 4th issue : SK1110003516 series 01

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 93 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 MORTGAGE BONDS

Type, manner and form of securities: a book-entered security – a bearer mortgage bond

ISIN number: Date of mortgage bond issuance commencement : 4th issue: SK4120005364 4th issue 28. 03. 2007 5th issue: SK4120005489 5th issue 20. 07. 2007 8th issue: SK4120006446 8th issue 26. 11. 2008 10th issue: SK4120007634 10. issue 26. 11. 2010 11th issue: SK4120007873 11th issue 11. 05. 2011 12th issue: SK4120007915 12th issue 27. 05. 2011 13th issue: SK4120007998 13th issue 01. 12. 2011 14th issue: SK4120008459 14th issue 28. 03. 2012 15th issue: SK4120008681 15th issue 08. 08. 2012 16th issue: SK4120008889 16th issue 26. 11. 2012 17th issue: SK4120008921 17th issue 28.12.2012

Number: Date of mortgage bond face value pay-up : 4th issue: 4,600 pcs 4th issue 28. 03. 2012 5th issue: 3,800 pcs 5th issue 20. 07. 2012 8th issue: 2,000 pcs 8th issue 15. 10. 2013 10th issue: 9, 038 pcs 10th issue 26. 11. 2012 11th issue: 10, 000 pcs 11th issue was untimely paid on 28.12.2012 12th issue: 10, 000 pcs 12th issue was untimely paid on 20.12.2012 13th issue: 10, 000 pcs 13th issue 01. 12. 2021 14th issue: 15,000 pcs 14th issue 28. 03. 2018 15th issue: 20, 000 pcs 15th issue 08. 08. 2015 16th issue: 22, 000 pcs 16th issue 26.11. 2015 17th issue: 40, 000 pcs 17th issue 28.12. 2017

Face value : 4th issue: 3,319.39 EUR 5th issue: 3,319.39 EUR 8th issue: 3,319.39 EUR 10th issue: 3,319.39 EUR 11th issue: 3,000 EUR 12th issue: 2, 000 EUR 13th issue: 1, 000 EUR 14th issue: 1,000 EUR 15th issue: 1,000 EUR 16th issue: 1,000 EUR 17th issue: 1, 000 EUR

94 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Method of determining the yield of the mortgage 4 % p.a., calculated on the 30/360 basis bond issue: Issue 15: The yield is determined by a floating rate Issue 4: The yield is determined by a floating interest rate 3M EURIBOR + 2% p.a. The basis for calculation is of 6M BRIBOR, calculated on the act/360 basis determined at act/360.

Issue 5: The yield is determined by a floating interest rate Issue 16: The yield is determined by a floating rate of 6M BRIBOR + 0.07%, calculated on the 30/360 3M EURIBOR + 1.50 % p.a.. The basis for calculation is determined at act/360 Issue 8: The yields are determined as follows: For the first interest period, the bond is determined by the fixed Issue 17: The yield is determined by a floating rate 3M interest rate of 5.76% p.a. Bond will be due as at 15/10/ EURIBOR + 0.90 % p.a.. The basis for calculation is 2009. Bond for the 2nd to 5th interest periods is deter- determined at act/360 mined by a floating interest rate of 12M BRIBOR + 0.60% p.a. Payment for the 2nd to 5th interest periods will be Coupon Dates: fixed on the second workday before the beginning of the Issue 4: semi-annually, as at 28/03 and 28/09 of the interest period. If 12M BRIBOR should not be fixed for 2 current year workdays before the beginning of the interest period, the Issue 5: semi-annually, as at 20/01 and 20/07 of the cur- previous fixed 12M BRIBOR will be used. For the purpose rent year of the issue conditions herein, the interest period is un- Issue 8:annually, as at 15/10 of the current year derstood as the period between the respective coupon Issue 10: quarterly, as at 26/02, 26/05, 26/08 and 26/11 payment dates. of a current month, beginning at 26/02 2011 Issue 11: quarterly, as at k 11/08, 11/11, 11/02 and 11/05 of a Issue 10: The yield is determined by the floating rate3M current year, beginning at 11/08 2011 eurIBOR + 1% p.a.. The basis for calculation is determined Issue 12: quarterly, as at 27/08, 27/11, 27/02 and 27/05 of at act/360. a current year, beginning at 27/08 2011 Issue 13: one-time at 1/12 2021 Issue 11: The yield is determined by floating interest rate Issue 14: annually, as at 28/03 of the current year, begin- of 3M eurIBOR + 1% p.a.. The basis for calculation is de- ning from 28.03.2013 termined at act/360. Issue 15: quarterly, as at 08/11, 08/02, 08/05 and 08/08 of the current year, beginning from 08.11.2012 Issue 12: The yield is determined by floating interest rate Issue 16: quarterly, as at 26/02, 26/05, 26/08 and 26/11 of 3M eurIBOR + 1% p.a. The basis for calculation is deter- of the current year, beginning from 26.02.2013 mined at act/360. Issue 17: quarterly, as at 28/03, 28/06, 28/09 and 28/12 of the current year, beginning from 28.03.2013 Issue 13:The yield bonds will not be determined by any interest rate. The bond yield represents a difference be- Description of rights: The right for payment of receiv- tween the bond issue rate and the bond due amount. able and the agreed interest after the maturity date. For any calculations related to bonds (including calculations related to bond trading) the „Act/360“ convention Guarantee of validity: The payment of notional value or to determine a day fraction will be applied, which means pay-out of bonds is not guaranteed by any legal or natu- that for the purpose of calculation it will be based on the ral person. assumption that there are 360 (three hundred and sixty) days in a year, although the real number of elapsed days Information on restrictions on transferability of over the respective period of time is considered. shares

Issue 14: The yield is determined by a fixed interest rate of The shares of Sberbank Slovensko are to be registered

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. 95 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 (inscribed) and issued as booked and publicly marketable, pursuant to the relevant valid legislation in the Slo- vak Republic. The shares are registered with the Central Securities Depository of the Slovak Republic, a.s. The shares are indivisible. The transfer of ownership of the shares is not restricted.

Information on restrictions on transferability of bonds

The bonds of Sberbank Slovensko are transferable without restriction to the new owner, are not associated with any pre-emptive right (including pre-emptive right to subscription), or exchange right.

Information on qualified participation in the share capital pursuant to a separate regulation

Majority shareholder with a higher than a 10% stake in the Bank’s registered capital (status as at 31st December 2012):

Trade name Stake in registe- Participation in vo- Registered red capital ting rights Office (%) (%) Sberbank Europe AG 99,0791 98,9324 Renngasse 10, Vienna, Austria

96 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | DECLARATION ON CORPORATE GOVERNANCE OF SBERBANK SLOVENSKO, A.S. WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Information on the securities-holders with sep- between shareholders, which could lead to restrictions arate rights of control with description of the of the transferability of shares, and/or restrictions of vot- rights indicated herein. ing rights

Participation of the majority shareholder in the regis- Information on regulations governing tered capital of Sberbank Slovensko, a.s., determines the amendments to the Articles of Association character of its control and exercising its influence over the Bank. Sberbank Slovensko, a.s., is not aware of any An amendment to the Articles of Association falls within acts on the part of the majority shareholder as might thepowers of the General Meeting; its approval requires lead to an abuse of its controlling position. The major- a two thirds majority of the shareholders present and it ity shareholder does not have and does not exercise any must be recorded in the notarial minutes. separate rights over Sberbank Slovensko, a.s.. Information on the right to decide on the issue or Information on the manner of control of the repurchase of shares employeeshares system, provided that the rights related to the shares are not directly The decision on the issue of shares and increase in the exercised by the employees registered capital is vested in the General Meeting. Ac- cording to the available information, Sberbank Sloven- Sberbank Slovensko, a.s., issued no employee shares. sko, a.s., is not aware of the existence of any agreements or situations, as anticipated under Article 20 of Act No. Information on the limitation of voting rights 431/2002., Coll. on Accounting.

The registered capital of Sberbank Slovensko, a.s., represents € 52,799,846 and is divided as follows: € 36,248,982 which represents 194,887 ordinary regis- teredshares with the face value of € 186

-€ 16, 550,864, which represents 99,704 registered preference shares with the face value of € 166. Each ordinary share with the face value of € 186 represents one vote.

Preference shareholders have priority claims in relation to dividends but are not entitled to vote at the General Meeting of shareholders unless no preference dividends are declared or the dividends are overdue. These voting rights commence from either the day following the Gen- eral Meeting or from when the dividends are overdue until such time as the preference dividends are declared or paid. When entitled, the preference shareholders may vote on the declaration of the preference dividend

Information on agreements between securities-hold- ersit is aware of and which could lead to restrictions of the transferability of securities and restrictions of voting rights

Sberbank Slovensko, a.s., is not aware of any agreements

SBERBANK SLOvensko | ANNUAL REPORT 2012 | Declaration on Corporate Governance of Sberbank Slovensko, a.s. 97 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Our network

Region Banská Bystrica Tel Fax Banská Bystrica Dolná 27, 974 01 Banská Bystrica 048/471 2121 048/471 2130 Lučenec Nám. Artézskych prameňov 4, P. O. BOX 125, 984 01 Lučenec 047/4316 111 047/4330 566 Zvolen Nám. SNP 19, 960 01 Zvolen 045/524 9071 045/524 9075 Region Bratislava Tel Fax Bratislava – AUPARK Einsteinova 18, P. O. BOX 81, 810 00 Bratislava 02/6720 2071 02/6720 2075 Bratislava – Dulovo námestie Dulovo nám. 1, P. O. BOX 81, 810 00 Bratislava 02/5596 8511 02/5596 8522 Bratislava – Haanova Haanova 12, P. O. BOX 81, 810 00 Bratislava 02/6720 2091-4 02/6720 2095 Bratislava – Jesenského Jesenského 2, P. O. BOX 81, 810 00 Bratislava 02/5930 8251-4 02/5930 8255 Bratislava – Kazanská Kazanská 23, 821 06 Bratislava 02/4020 3041 02/4020 3045 Bratislava – Miletičova Miletičova 44, P. O. BOX 81, 810 00 Bratislava 02/5020 3057 02/5020 3055 Bratislava – Mlynské nivy Mlynské nivy 3, P. O. BOX 81, 810 00 Bratislava 02/5720 1061 02/5720 1064 Bratislava – M. Sch. Trnavského M. Sch. Trnavského 14, P. O. BOX 81, 810 00 Bratislava 02/6920 2030 02/6920 2035 Bratislava – Námestie SNP Námestie SNP 15, P. O. BOX 81, 810 00 Bratislava 02/5921 1111 02/5296 3794 Bratislava – Námestie sv. Františka Námestie sv. Františka č. 8A, P. O. BOX 81, 810 00 Bratislava 02/6020 2082 02/6020 2085 Bratislava – Polus City Center Vajnorská ulica, Polus City Center, P. O. BOX 81, 810 00 Bratislava 02/4464 5191 02/4464 5193 Bratislava – Seberíniho Seberíniho 2/B, P. O. BOX 81, 810 00 Bratislava 02/4820 9080 02/4820 9085 Bratislava – Trnavská Trnavská ul. 50/A, P. O. BOX 81, 810 00 Bratislava 02/4910 3010 02/4910 3017

98 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | OUR NETWORK WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Bratislava – Vazovova Vazovova 22, P. O. BOX 81, 810 00 Bratislava 02/5020 3028 02/5020 3025 Bratislava – Vysoká Vysoká 9, P. O. BOX 81, 810 00 Bratislava 02/5965 1111 02/5441 2453 Region Košice Tel Fax Košice – Hlavná Hlavná 108, 043 73 Košice 055/720 6511 055/720 6515 Košice – Mlynská Mlynská 29, 043 73 Košice 055/7204 211 055/7204 240 Michalovce Hollého 7, 071 01 Michalovce 056/6871 010 056/6871 015 Region Nitra Tel Fax Komárno Župná ulica 18, P. O. BOX 178, 945 01 Komárno 035/7900 010 035/7900 015 Levice Námestie hrdinov 7-8, 934 01 Levice 036/6350 381 036/6350 385 Nitra – F. Mojtu P. O. BOX 26/B, 949 01 Nitra 037/6926 312 037/6550 369 Nitra – ZOC Max Chrenovská 1661/30, 949 01 Nitra 037/ 693 03 51 037/ 693 03 55 Nové Zámky M. R. Štefánika 45, P. O. BOX 159, 940 01 Nové Zámky 035/6911 330 035/6911 335 Šaľa Hlavná 6/53, P. O. BOX 64, 927 00 Šaľa 031/7883816 031/7707 180 Region Prešov Tel Fax Poprad Ul. 1. mája 220/19, P. O. BOX 20, 058 01 Poprad 052/772 2425 052/772 3215 Prešov Hlavná 45, P. O. BOX 70, 080 01 Prešov 051/7580 555 051/7580 530 Region Trenčín Tel Fax Nové Mesto nad Váhom Weisseho 16, 915 01 Nové Mesto nad Váhom 032/748 4401 032/748 4405 Prievidza Námestie slobody 38, 971 01 Prievidza 046 / 5198 550 - 4 046 / 5198 555

SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | OUR NETWORK 99 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Region Trenčín Tel Fax Trenčín Nám. Ľ. Štúra 16, P. O. BOX 90, 911 50 Trenčín 032/7480 100 032/7441 935 Region Trnava Tel Fax Dunajská Streda Poštová 2, P. O. BOX 85, 929 01 Dunajská Streda 031/5902 700 031/5902 705 Galanta Hlavná 977/14, 924 00 Galanta 031/7802 174 031/7802 355 Hlohovec Nám. sv. Michala 1, 920 01 Hlohovec 033/735 1033 033/735 1035 Piešťany Nám. slobody 13, P. O. BOX D-27, 921 01 Piešťany 033/7970 000 033/7970 005 Trnava Paulínska 2, 917 01 Trnava 033/5903 826 033/5903 850 Region Žilina Tel Fax Martin Francisciho 6, 036 01 Martin 043/4213900 043/4213905 Ružomberok Mostová 16, P. O. BOX 96, 034 01 Ružomberok 044/4314 111 044/4314 130 Žilina Národná 28, 010 01 Žilina 041/5059 511-13 041/5059 525

100 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | OUR NETWORK WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | OUR NETWORK 101 WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Organisation structure SUPERVISORY BOARD

BOARD RESORT I. BOARD RESORT II. BOARD RESORT IV. Chairman of the Management Board Member of the Management Board Member of the Management Board

1130 2100 2080 1940 2940 2040 1090 1930 INTERNAL CONTROL COMPLIANCE OFFICER RISK MANAGEMENT ALTERNATIVE DISTRIBUTION INTEGRATED RISK MANAGEMENT FINANCE DIVISION RETAIL SALES NETWORK RETAIL PRODUCT DEVELOPMENT AND INTERNAL AUDIT AND ANTIMONEY LAUNDERING (UNDERWRITING) CHANNELS AND SALES SUPPORT Depatment Division Division Department Staff Unit Staff Unit Division Department

1140 2941 1030 PORTFOLIO ANALYSIS 2821 2410 1091 MARKETING AND CORPORATE BANKING Team SME AND CORPORATE UNDERWRITING ACCOUNTING RETAIL CENTER CAPITAL CITY COMMUNICATION STAFF UNIT Department Department Division Retail Center Staff Unit 2942 METHODOLOGY AND PROCESS Team 2411 2822 ACCOUNTING, METHODOLOGY, TAXES 1060 3310 MICRO UNDERWRITING Team 1910 1917 1925 SME BRATISLAVA PRIVATE BANKING MLYNSKÉ NIVY VAZOVOVA HUMAN RESOURCES Department Team Branch II Branch II Corporate Center 2950 Staff Unit 2412 CORPORATE CREDIT RISK REPORTING Department Team 1911 1918 1926 3311 2810 VYSOKÁ MILETIČOVA AUPARK 1610 SME BRATISLAVA – I RETAIL UNDERWRITING Branch I Branch II Branch I BUSINESS PARTNERSHIP AND CAREER DEVELOPM. Team Department 2420 Team 2951 PORTFOLIO ANALYSIS AND LIMITS FINANCIAL CONTROLLING 1912 1920 1927 DULOVO NÁM. NÁM. SNP PANÓNSKA CESTA 3312 Team Department SME BRATISLAVA – II 2020 Branch I Branch I Branch II 2170 Team WORK-OUT, RESTRUCTURING LEGAL SERVICES 2952 METHODOLOGY AND RESERVES AND COLLECTION 4020 1913 1921 1928 Staff Unit Team Division INFORMATION TECHNOLOGIES HAANOVA JESENSKÉHO KAZANSKÁ 3320 Branch I Branch I Branch II SME TRENČÍN AND ORGANIZATION Corporate Center 2953 Division RISK TECHNOLOGIES (CORPORATES) 2210 1915 1922 1931 1020 Team WORK-OUT AND RESTRUCTURING POLUS CITY CENTER TRNAVSKÁ KARLOVA VES Branch I Branch II Branch II BUSINESS & PRODUCT SUPPORT Department 4210 Department 3330 SME NITRA IT OPERATIONS 2960 Department 1916 1923 Corporate Center RETAIL CREDIT RISK SEBERÍNIHO SCH. TRNAVSKÉHO 2220 Branch II Branch II 1021 Department COLLECTION CREDIT ANALYSIS Department 4211 Team 3340 IT ADMINISTRATION SME BANSKÁ BYSTRICA Team 1092 2961 RETAIL CENTER WEST 1022 Corporate Center PORTFOLIO ANALYSIS AND MODELING PRODUCT DEVELOPMENT Retail Center Team 2030 4212 Team CENTRAL BACK OFFICE APPLICATION SUPPORT Team 1023 3350 2962 Division MIS SME KOŠICE METHODOLOGY 1941 1945 1947 Team Corporate Center Team 4213 GALANTA TRENČÍN HLOHOVEC SERVICE MANAGEMENT Branch I Branch I Branch II Team 1024 2963 4030 MIDDLE OFFICE/BUSINESS SUPPORT RISK TECHNOLOGIES (RETAIL) PAYMENT SERVICE CENTER 3390 Team Department 1942 1944 1961 Team 4240 PIEŠŤANY NOVÉ MESTO n/VÁHOM ŠAĽA SME ŽILINA IT DEVELOPMENT Branch II Branch II Branch I Corporate Center 4310 Department 1070 2920 PAYMENTS 1943 1946 1971 TRANSACTION SERVICES MARKET RISK MANAGEMENT Team TRNAVA DUNAJSKÁ STREDA ŽILINA Division 3370 Staff Unit 4241 Branch I Branch II Branch I CORPORATE PROGRAMMING 4313 Team Corporate Center PAYMENTS -INVESTIGATIONS Team 1094 1071 2930 4242 RETAIL CENTER MIDDLE TRADE/EXPORT FINANCE TESTING Retail Center 3360 OPERATION RISK MANAGEMENT 4314 Team Department LARGE CORPORATE THIRD PARTY EXECUTION Staff Unit Team Corporate Center 4250 1711 1952 PROJECT MANAGEMENT OFFICE 1951 1964 1974 MIDDLE OFFICE 3110 CARDS, POS AND ATM Department PRIEVIDZA NITRA ZVOLEN Team 1050 ASSET AND LIABILITY Team Branch II Branch I Branch II GLOBAL MARKETS MANAGEMENT 1954 Department Department 4251 1962 1965 1975 1072 CARDS-CLEARING AND INVESTIGATION PROJECT MANAG. AND DELIVERY SERVICE KOMÁRNO NOVÉ ZÁMKY BANSKÁ BYSTRICA CASH MANAGEMENT Team Team Branch II Branch II Branch I Department 1511 1040 2350 MARKET EXECUTION/FIN. INSTITUTIONS FACILITY MANAGEMENT 4252 1963 1966 1976 Team ACTIVIVE PRODUCTS BUSINESS ANALYSIS LEVICE NITRA-MAX LUČENEC 1073 AND SUPPORT SETTLEMENT CENTER Team Branch II Branch II Branch I Department SYNDICATIONS Division Department 1620 1410 2320 ORGANIZATION 1095 LENDING SETTLEMENT AND PROCESS MANAGEMENT RETAIL CENTER EAST PROPERTY MANAGEMENT Team Department Retail Center AND CONSTRUCTIONS Department 4320 TREASURY BACK OFFICE 2970 Team SECURITY 1972 1992 1995 1420 RUŽOMBEROK KOŠICE-MLYNSKÁ KOŠICE-HLAVNÁ Member of the Department / Corporate CENTRAL CASH DESK Staff Unit Branch I Branch I Branch II Department 4330 Management Board Center / Retail Center SECURITIES Team 1973 1994 1996 2971 MARTIN PREŠOV MICHALOVCE PHYSICAL AND PERSONAL SECURITY Branch II Branch I Branch II 1430 Team DOCUMENTATION AND SERVICES 2310 BUSINESS DOCUMENT CENTER Division / Staff Unit / Department Department 1991 2972 POPRAD INFORMATION SECURITY Department reporting Team / Branch Branch I 1440 Team to BoD Member PROCUREMENT 2840 Team COLLATERAL APPRAISAL Department

102 SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | ORGANISATION STRUCTURE SBERBANK SLOVENSKO | ANNUAL REPORT 2012 | ORGANISATION STRUCTURE 103WorldReginfo - fab5d859-8db0-4d93-a1b8-6756145aa787 Sberbank Slovensko, a.s.

Vysoká 9, P. O. BOX 81 810 00 Bratislava, Slovenská republika Tel.: +421 2 5965 1111, Fax: +421 2 5965 1112 [email protected], www.sberbank.sk

Sberbank Europe AG

Renngasse 10 1010 Vienna, Austria Tel.: +43 1 22732 0 [email protected], www.sberbank.at