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Presented by: VTB Bank, Custody

December 14, 2017 Issue No. 2017/48

Company News

AIZhK board approves capital increase by RUB 3.6 bln On December 7, 2017 the supervisory board of Russia’s Agency for Housing Mortgage Lending (AIZhK) approved raising the agency’s charter capital by RUB 3.633 bln through an additional share offering. The agency said earlier it would privately offer 1.45 mln common shares to the Federal State Property Management Agency, its sole shareholder, for integration of bank Rossiisky Capital into its structure. In early November, the government decided to contribute 100% shares in bank Rossiisky Capital into AIZhK.

Otkritie FC Bank not to hold urgent meetings of shareholders On December 8, 2017 it was reported that Otkritie Financial Corporation (FC) Bank would not hold any new urgent shareholder meetings as it had been bailed out since summer. Russia’s central bank said earlier that it had approved adjustments to its bail out plan for Otkritie Financial Corporation (FC) Bank, which envisages a RUB 456.2 bln capital injection. The regulator said in August it would bail out troubled Otkritie Financial Corporation (FC) Bank and become its investor using funds of the Banking Sector Consolidation Fund, a newly created mechanism.

Gazprom’s directors to discuss deal with Bank Rossiya on December 18, 2017 On December 8, 2017 it was announced that the board of directors of Russian gas giant planned to discuss an interested party deal with Bank Rossiya at a meeting on December 18. The meeting’s agenda also includes issues of acquiring stakes in affiliates Gazprom Energoholding and Gazprom Investproekt, of a capital injection into Gazprom EP International B.V., and of sales of shares in subsidiary Central Oil Equipment Design Bureau.

B&N Bank buys back RUB 8.7 bln bonds under offer On December 11, 2017 it was stated that Russia’s B&N Bank bought back RUB 8.67 bln of exchange bonds of the fifth series, or 78.8% of the total issue, under an offer. The bank also paid RUB 10.66 mln of an accumulated coupon income to the owners of the bonds. B&N Bank sold RUB 11 bln of 6-year exchange bonds of the fifth series in December 2014. The next buyback offer is scheduled for December 10, 2018. The rates of the seventh and eighth coupon periods were set at 9% annually. The rates of the further coupon periods will be defined in line with the issue documents. Major shareholder may sell Cherkizovo Group On December 13, 2017 it was reported that the family of Igor Babayev, which owns 89.5% in Russian meat producer Cherkizovo Group, was considering selling its business. The talks had been held with Thailand’s CP Foods for several months already, while a month ago CEO Sergei Mikhailov met with Vadim Moshkovich, the majority shareholder of agricultural group Rusagro, on this issue. One of the sources said that owners appraised Cherkizovo Group at USD 2 bln. A representative of Cherkizovo denied plans to sell the business.

Enisey Capital acquires 24.5% stake in TransContainer On December 13, 2017 it was stated that Russian venture and private equity investments fund Enisey Capital acquired a 24.5051% stake in railway container operator TransContainer. Enisey Capital now owns

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3.405 mln shares in TransContainer. John Mann, a spokesman for Millhouse Capital of Russian tycoon Roman Abramovich, stated that Enisey Capital was affiliated with Abramovich and Alexander Abramov, the main shareholders of U.K.-based mining giant Evraz, which operates mainly in Russia. He did not name the seller. A representative of the Federal Antimonopoly Service (FAS) said that the deal would not need special approval of the service. A source close to the management company of private pension fund Blagosostoyanie stated that the 24.5051% stake in TransContainer was sold by Blagosostoyanie. A spokesperson for multi-industry holding Summa Group said the group did not sell its shares in TransContainer. Before the deal, United Transport and Logistics Company (UTLC) of Russia, Belarus, and Kazakhstan owned 50% plus two shares in TransContainer. Russian Railways planned to withdraw this stake from UTLC and sell it at an auction. Far Eastern Shipping Company (FESCO), a unit of Summa, held 25.07%, and Blagosostoyanie had over 24.5%. Several companies, including Summa Group, Freight One, and Delo, earlier expressed interest in TransContainer.

Dividends/coupons Unipro holders approve paying RUB 7 bln in January-September 2017 dividends On December 7, 2017 shareholders of Russian power producer Unipro approved paying RUB 0.111 per share, or a total of RUB 7 bln, in dividends for January-September. Unipro paid a total of RUB 13.2 bln in dividends for January-September 2016 and in final dividends for the year. The company also paid RUB 1.093 bln in dividends for January-March of this year. Russia Holding GmbH, a 100%-subsidiary of Germany’s Uniper, holds 83.7% in Unipro. The company operates the Berezovskaya GRES, Surgutskaya GRES-2, Yaivinskaya GRES, Shaturskaya GRES, and Smolenskaya GRES power plants with a combined capacity of 11.2 gigawatts.

Metalloinvest holders approve paying RUB 8 bln in January-September 2017 dividends On December 8, 2017 shareholders of Russian metals holding Metalloinvest approved paying 10.68 kopecks per share, or a total of RUB 8 bln, in dividends for January-September. The company paid 18.94 kopecks per share in dividends for 2016 and 26.69 kopecks per share in dividends for January-June. Metalloinvest is owned by USM Holdings, where businessman Alisher Usmanov has a 49% stake.

Mostotrest shareholders approve January-September 2017 dividends at RUB 8.45 per share On December 11, 2017 shareholders of construction company Mostotrest approved dividends for January- September at RUB 8.45 per share. The record date is December 19. In 2016 and in 2016, the company paid RUB 10.64 per share in dividends.

MMK holders approve RUB 1.111 per share in January-September 2017 dividends On December 12, 2017 shareholders of Russia’s Magnitogorsk Iron and Steel Works approved paying RUB 1.111 rubles per share, or a total of about USD 209 mln, in dividends for January-September. The dividend payment accounts for 59% of the company’s free cash flow in July-September, as calculated under International Financial Reporting Standards (IFRS). Under its dividend policy, MMK earmarks at least 50% of its IFRS free cash flow for dividends if its net debt/EBITDA ratio is below 1. Previously, the company paid RUB 0.72 per share or RUB 8.046 bln in dividends for January-June 2016, RUB 1.242 per share or RUB 13.879 bln in final dividends for 2016, and RUB 0.869 per share in dividends for January-June 2017. Viktor Rashnikov, chairman of the board of directors, is a beneficial owner of 84.3% in the company.

Sberbank raises dividends to 50% of net profit from 2020 On December 13, 2017 it was reported that Sberbank approved an increase of dividends to 50% of the net profit starting from 2020 from the current 25% under government pressure. CEO German Gref said on December 12 that the supervisory board of the bank had approved a new dividend policy and a strategy until 2020 without elaborating. One of the sources said that the amount of dividends for 2017 would be defined in April and payment of 50% of the net profit would start in 2020 from the 2019 net profit. Sberbank did not undertake to raise dividends to this level before but did not rule out this scenario.

Tatneft to pay RUB 27.78 per share in dividends for January-September 2017 On December 14, 2017 shareholders of Russian oil company approved paying RUB 27.78 per share in dividends for January-September. The company’s net profit rose 18% on the year to RUB 88.796 bln in January-September, as calculated under Russian Accounting Standards (RAS). The record date for the

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dividends is December 23. The government of the republic of Tatarstan holds 30.44% in Tatneft via holding Svyazinvestneftekhim and a golden share.

Eurobonds / DRs

VTB to sell EUR 460 mln of Sberbank’s 2014 Eurobonds On December 14, 2017 a banking source said that Russia’s second largest bank VTB put up for sale EUR 460 mln worth of Eurobonds of the country’s top bank Sberbank issued in 2014. The yield guidance is about 1.43%. The bank plans to close the deal on December 15. VTB’s goal is to reduce reserves of the banking group’s treasury. The bank will view the placement as success if it sells at least 75% of the offered securities. Sberbank issued EUR 500 mln of Eurobonds in March 2014 at 3.08%, before the introduction of Western sanctions. The Eurobonds mature in March 2019.

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

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