Annual Report Zenit Banking Group 2011

ANNUAL REPORT ZENIT BANKING GROUP 2011

TEAMWORK

RUGBY IS A TEAM SPORT THAT IS KNOWN FOR ITS PASSION AND FAST PACE. THE AIM OF THE GAME IS TO TOUCH DOWN AN OVAL BALL OVER THE TRY LINE OR KICK THE BALL IN THE H-SHAPED GOAL POSTS OF THE OPPOSING TEAM WHICH BRINGS SCORES TO THE TEAM. THE BALL IS PASSED FROM PLAYER TO PLAYER BY HAND (BUT ONLY IN A BACKWARDS DIRECTION) OR BY KICKING IT (IN ANY DIRECTION) ALONG THE PITCH. THE TEAM THAT SCORES THE MOST GOALS IS THE WINNER.

THE RULES OF RUGBY ALLOW FOR A FIERCELY CONTESTED CONTACT SPORT. IT IS RENOWNED AS AN HONEST SPORT THAT IS PLAYED ACCORDING TO GENTLEMAN’S RULES; A SPECTACULAR AND UNCOMPROMISING GAME THAT DEMANDS INTENSE STRENGTH, TECHNICAL AND SPEED TRAINING FROM ITS PLAYERS, AS WELL AS STAMINA, MOBILITY, WRESTLING SKILLS AND AN UNSHAKEABLE BELIEF IN VICTORY.

IT IS WORTH MENTIONING THE CURIOUS WAY IN WHICH RUGBY FIRST APPEARED. IN 1823, A PUPIL OF RUGBY SCHOOL IN ENGLAND, WILLIAM WEBB ELLIS, COMMITTED A FOUL IN A GAME OF FOOTBALL BY PICKING UP THE BALL AND RUNNING WITH IT. THUS, A NEW SPORT WAS INVENTED, RUGBY.

THE FIRST TIME RUGBY WAS OFFICIALLY PLAYED IN THE SOVIET UNION WAS IN 1923 IN MOSCOW BETWEEN THE “SOCIETY FOR THE PHYSICAL EDUCATION OF WORKERS” AND THE “MOSCOW YACHT CLUB”. THE FIRST NATIONAL RUGBY CHAMPIONSHIP IN THE USSR TOOK PLACE IN 1936. HOWEVER, IT WAS ONLY AFTER THE 1957 WORLD FESTIVAL OF YOUTH AND STUDENTS IN MOSCOW THAT THE SPORT GAINED A WIDER FOLLOWING ACROSS THE SOVIET UNION.

IN 1986, IN AUSTRALIA THE CONGRESS OF THE INTERNATIONAL RUGBY FOOTBALL FEDERATIONS TOOK A DECISION TO HOLD A WORLD CUP TOURNAMENT AMONG NATIONAL TEAMS. EVER SINCE, THE RUGBY WORLD CUP HAS BEEN HELD EVERY FOUR YEARS. IT IS ONE OF THE LARGEST SPORTING EVENTS IN THE WORLD, BEING IN THE SAME LEAGUE AS THE FOOTBALL WORLD CUP AND THE SUMMER OLYMPIC GAMES.

RUGBY IS A CONTINUALLY GROWING SPORT THAT IS ATTRACTING NEW FANS AND PLAYERS YEAR ON YEAR, AS CONFIRMED BY STATISTICS ON THE INCREASE IN VIEWER FIGURES AND THE SPORT’S FINANCIAL SHOWING. RUGBY SEVENS HAS ALSO BEEN ADDED TO THE LIST OF OLYMPIC SPORTS FOR THE 2016 AND 2020 GAMES. FOOTBALL REMAINS THE MOST POPULAR SPORT IN THE WORLD, BUT MANY SPORTS PUBLICATIONS PUT RUGBY IN SECOND PLACE.

RUGBY IS NOW PLAYED IN MORE THAN 120 COUNTRIES OF THE WORLD. THE NUMBER OF PLAYERS OF THE SPORT RUNS INTO THE MILLIONS, WHILE FANS CAN BE NUMBERED IN THEIR BILLIONS.

ONCE YOU HAVE WATCHED A LIVE RUGBY MATCH, YOU BECOME A FAN INSTANTLY AND FOREVER!

ZENIT BANKING GROUP IS WORKING ACTIVELY TO DEVELOP AND PROMOTE THE SPORT OF RUGBY IN RUSSIA THROUGH A LONG-RUNNING PROGRAMME THAT SUPPORTS AND FINANCES CHILDREN’S AND YOUTH RUGBY IN VARIOUS REGIONS OF THE COUNTRY. BANK ZENIT MAINTAINS A PARTNERSHIP WITH THE RUSSIAN RUGBY UNION, BEING THE UNION’S OFFICIAL SPONSOR. THE BANK IS ALSO THE GENERAL SPONSOR OF THE RUSSIAN NATIONAL RUGBY TEAM. ANNUAL REPORT 2011

CONTENTS

3 ZENIT BANKING GROUP THE RUSSIAN NATIONAL is General Sponsor of the RUGBY TEAM Russian National Rugby Team.

In May 1975, the USSR Rugby Federation became member of the Fe’de’ration Internationale de Rugby Amateur (FIRA), and in 1976, the USSR national team successfully qualified for Group B of the European Championship. From 1979 onwards, the Soviet team became a fixture in Group A, the first division of the European Championship, taking third place in the competition in 1978, 1981 and 1983, and second place in 1985-1987, 1989 and 1990. The national team’s players were merited with the title “Master of Sport, International Class” according to the Soviet Union’s ranking system for athletes. Having suffered only two defeats over the course of 10 matches in the European Nations Cup in 2009-2010, the Russian team for the first time in its history qualified for the main world rugby forum. Thus, in 2011, the Russian National Rugby Team made its de’but at the Rugby World Cup in New Zealand. STATEMENT FROM THE CHAIRMAN OF THE BOARD ANNUAL REPORT 2011 1 OF DIRECTORS OF OJSC BANK ZENIT

crucial points. Firstly, despite the difficult market The Group also supports charitable sports initiatives. STATEMENT FROM THE CHAIRMAN conditions in 2011, ZENIT Banking Group made Bank ZENIT has a long tradition of promoting OF THE BOARD OF DIRECTORS a net profit of RUR 2.5 billion. Total assets of the rugby in the Russian Federation. The Bank has Group increased by almost RUR 50 billion (up by been a general sponsor of the Russian National OF OJSC BANK ZENIT 23.5%). Capital, as calculated in accordance with Rugby Team for many years, and last year we were the Basel Accord, also continued to grow, totalling proud to celebrate a landmark achievement of our RUR 33.7 billion at the year end, with Total equity sportsmen – the debut of the Russian national team reaching RUR 23.9 billion. in the Rugby World Cup in New Zealand. DEAR SHAREHOLDERS, One of our main goals in 2011 was to increase our Looking forward to 2012, there is every indication PARTNERS AND COLLEAGUES, loan portfolio, and, as you will see in this report, the that the macroeconomic climate will remain strained. emphasis was very much on stimulating growth of For this reason, our main priorities in 2012 will be The year that has just ended was relatively difficult lending to individual customers. As priority areas to maintain financial stability, improve operational for the Russian and international financial sectors: for development, products such as mortgage and efficiency and deliver business growth. We will the pace of recovery of the world’s largest economies car loans yielded impressive results. The Group continue to modernize our banking network and did not bear out the optimistic expectations of also continued to strengthen its risk management infrastructure, develop sales and customer service investors. While the Russian economy performed policies, aiming to maintain a reasonable balance technologies and integrate state of the art solutions relatively well in comparison to many other between the growth of the loan portfolio and into our IT systems. countries, it also remained subject to various risks. preserving its high quality. Another important goal was to develop the customer service infrastructure But, above all, our core mission is to ensure Nevertheless, when viewed in the light of previous through the opening of new branches and expansion that ZENIT Banking Group’s activities satisfy the years, 2011 was a fairly successful one for the of joint projects with partners and clients. needs of our clients and meet the interests of our Russian banking sector. Many banks demonstrated shareholders to the fullest extent. Mutual trust is the growth of their loan portfolios which was essentially As in previous years, in 2011 ZENIT Banking foundation on which banking business has always “frozen” following a period at the very height of the Group continued to take an active part in the been built. On behalf of the Group, I would like to crisis; new products and services were offered and implementation of socially important projects in the thank you all for many years of fruitful cooperation plans for business development and consolidation Russian Federation. This was made, on the one hand, and assure you that we will continue to do our best to were implemented. in the form of extending commercial loans, such as reward your trust in us. mortgage loans and financing of small and medium- The banking sector did, however, remain under sized businesses, under specialized governmental pressure from a tense liquidity situation and programmes that are targeted at resolving core instability on the capital markets. social issues. On the other hand, we continued our With best regards, charitable activities in the fields of art and culture, A.A. Sokolov, It is against this background that we should evaluate youth programmes and sports development. Out of Chairman of the Board of Directors the performance of ZENIT Banking Group in 2011. all our numerous charitable initiatives, two projects A.A. Sokolov Over the reporting period, we achieved notable particularly stand out, both in terms of scale and Chairman of the successes, not only growing our business in the long-term commitment. Board of Directors traditional sectors, such as corporate and Private Banking services, but also managing to invigorate Since 2005, we have supported the Russian regional our activities at the mass retail market. charity Operation Smile, which works to improve the lives of children with maxillo-facial defects. Last year, The performance of any business, and certainly we particularly concentrated our efforts on helping of a bank, must be judged above all by its little patients in the Novosibirsk Region. With the financial results. Full information on the Group’s support of ZENIT Banking Group, qualified medical 2011 results can be found further in this report, treatment was provided to almost 800 Russian but for the moment I would like to highlight some youngsters in the past few years.

6 7 PROP A FIRM BASIS

Props are players that take most of the strain FOR SUCCESS in a scrum and help their team to withstand pushing from the opposition. Their role is to When you stand firmly on your feet, ensure that the ball travels well through the scrum and to support the hooker in hooking you can move forward faster the ball. They take the lead in hitting rucks and mauls. ANNUAL REPORT 2011

ZENIT BANKING ZENIT BANKING GROUP – 2 GROUP TODAY KEY FACTS

ZENIT BANKING GROUP (FURTHER, THE Building a universal bank with a pan-federal reach is “BANKING GROUP” OR THE “GROUP”) WAS the strategic priority in ensuring the Banking Group’s long-term competitiveness and in consolidating its 2.1 ZENIT Banking Group – key facts | 11 ESTABLISHED IN 2005, AND NOW IT IS position on the market. ONE OF THE LARGEST PRIVATELY-OWNED 2.2 History of ZENIT Banking Group | 15 BANKING GROUPS IN THE RUSSIAN ZENIT Banking Group actively provides and promotes FEDERATION, PROVIDING A FULL RANGE all types of financial services that are in demand on the Russian market. The Group has traditionally OF BANKING SERVICES THROUGH ITS focused on developing corporate business, but it also DEVELOPED REGIONAL NETWORK. offers investment banking, private banking and retail services. Services for small and medium businesses ZENIT Banking Group comprises OJSC Bank ZENIT are also under active development. (further, the “Bank” or “ZENIT”), which is the parent bank of the Group, and its banking subsidiaries: Despite the increased competition from the state- JSB Devon-Credit (OJSC), OJSC Lipetskkombank, owned banks and local subsidiaries of international CJSC Bank ZENIT Sochi and OJSC Spiritbank. The financial institutions on the Russian market for subsidiaries hold leading positions in their respective banking services over the past year, ZENIT Banking regions – Tatarstan, the Lipetsk Region, Krasnodar Group holds strong positions among the top Kray and Tula Region. Altogether, the regional 30 Russian lending institutions in the majority of network covers 261 federal political units of the key banking activities. In particular, in terms of key Russian Federation in 6 federal districts. The Group business indicators the Group was ranked as follows: has branches in the majority of Russian cities with a population of more than one million people. The Indicator As at January 1, 2012 most significant presence of the Banking Group is st in the Volga Federal District and, particularly, in the Assets 21 place th Republic of Tatarstan. Capital 20 place

Source: “Profile”, RAS data as at January 1, 2012

1 As at January 1, 2012, ZENIT Banking Group had a presence in 26 sub- federal political units of the Russian Federation. The branch in Veliky Novgorod was closed down in accordance with a resolution of the Board of Directors dated February 3, 2012.

10 11 ZENIT BANKING GROUP TODAY ZENIT BANKING GROUP – 2.1 ANNUAL REPORT 2011 2 KEY FACTS

The chart below shows the Group’s key positions A conservative approach to maintaining necessary In 2011, services for small and medium businesses in the corporate and retail segments. Since Bank liquidity levels and mitigating credit risks helped to were also under active development. This segment ZENIT’s investment banking business accounts for preserve credit ratings which were assigned earlier. is a priority business line for the Group, given the the main part in the entire investment block of the In June 2011, Moody’s Investors Service confirmed potential size of this market and its high profit Banking Group, its rankings may also be assigned a long-term foreign currency deposit rating at “Ba3/ margins. to the Group as a whole. Not Prime”, a long-term global local currency deposit rating at “Ba3” and a financial stability rating at “D-”. ZENIT Banking Group offers its clients a full In August 2011, Fitch Ratings confirmed the long- range of investment banking services that are term foreign and local currency issuer default ratings available on the Russian financial market, icluding (IDRs) at “B+”, a National long-term rating at “A-” brokerage on the stock and bond markets, asset RETAIL BUSINESS INVESTMENT BUSINESS CORPORATE BUSINESS AND PRIVATE BANKING and a viability rating at “b+”. All ratings came with management, raising debt financing on the public “Stable” outlook. markets, analytical support, foreign exchange operations, trade in derivatives and operations st th Among the TOP BANKS on the money markets, as well as cooperation 1 PLACE 16 PLACE THE INCLUSION OF BANK ZENIT’S in Private Banking in Russia ROUBLE BONDS IN THE LOMBARD LIST with financial institutions, including international in terms of net AUM in Bank in terms of corporate loans*** (Bank ZENIT) Managed Mutual Funds OF THE BANK OF RUSSIA IS A FURTHER banks. (BMMFs)* CONFIRMATION OF ITS HIGH LEVEL OF The development of retail business is based on RELIABILITY AS AN ISSUER. optimization of the banking network, active cross- th st th selling, improving sales technologies and integrated 12 PLACE 21 PLACE 26 PLACE According to the annual rating of the TOP 500 largest among arrangers of corporate in terms of corporate deposits*** in terms of funds raised from services for promising groups of clients. In order bond issues** individuals*** global banking brands prepared by “Brand Finance” to develop this business, in 2011 a new system of consulting company in cooperation with “The partnership agreements was set up. The Group Banker” magazine, Bank ZENIT has strengthened its also actively participates in the governmental th rating, which was increased by 13 notches to reach PLACE programmes for accessible mortgages and 10 439th place1. among arrangers of bond issues construction of affordable housing. in the municipal sector** The Banking Group’s priority is provision of AT PRESENT, THE GROUP HOLDS comprehensive services to corporate clients using THE FULL SPECTRUM OF VISA AND the most advanced banking technologies. In pursuing Sources: * – Investfunds.ru; ** – Cbonds.ru; *** – “Profile” this goal, the Group focuses on establishing and MASTERCARD INTERNATIONAL maintaining long-term relations with corporate PAYMENT SYSTEMS LICENSES, WHICH clients. SIGNIFICANTLY ENHANCES ITS POTENTIAL FOR GROWTH ON THE Most of the Group’s corporate clients work in the RETAIL MARKET. following sectors: mining, oil and gas processing, manufacturing (including machine building and ZENIT BANKING GROUP HAS LONG defence), construction, wholesale and retail trade, BEEN A LEADING RUSSIAN PROVIDER finance, food production and agriculture. Pension funds and regional/municipal government bodies OF SERVICES FOR PRIVATE BANKING are also among the Group’s clients. Corporate CLIENTS. THE GROUP CONSIDERS business services are primarily aimed at Russian THIS ACTIVITY AS A STRATEGICALLY clients. VITAL AREA.

1 The Banker, February 2012

12 13 ZENIT BANKING GROUP TODAY HISTORY OF ZENIT 2.2 ANNUAL REPORT 2011 2 BANKING GROUP

Active participation in the life of the professional community is of strategic importance for ZENIT HISTORY OF ZENIT Banking Group. Long-lasting constructive BANKING GROUP cooperation with the Association of Russian Banks and the Association of Regional Banks of Russia (Association “Russia”) gives the Group the opportunity to come up with suggestions and initiatives on issues affecting the development of the banking sector. ESTABLISHING THE BRAND Social responsibility of business is a key priority of ZENIT Banking Group’s corporate culture. The Group 1994 • Bank ZENIT founded. carries out long-term targeted charitable projects to support sports, including children’s sports, healthcare, culture, provide aid to vulnerable groups • Bank ZENIT obtained licenses from the Central Bank of the Russian Federation for 1995 banking operations in Russian rubles and foreign currencies. of population.

• Official adviser to the Ministry of Finance, Republic of Tatarstan. 1998 • First branch launched in Almetyevsk.

• Financial adviser to OJSC “Tatneft” in negotiations with foreign creditors on the debt 2000 restructuring agreement totaling USD 1 bn.

STRENGTHENING POSITIONS

• First Russian bank to raise a syndicated loan after the financial crisis of 1998. 2001 • Private Banking launched. • Launched operations with bank cards of VISA and MasterCard international payment systems.

• Total number of regional branches reached 7. 2003 • Initial placement of Eurobonds amounting to USD 125 m.

• Initial issue of bonds amounting to RUR 1 bn. 2004 • Participation in the State Deposit Insurance System.

14 15 ZENIT BANKING GROUP TODAY HISTORY OF ZENIT 2.2 ANNUAL REPORT 2011 2 BANKING GROUP

DYNAMIC GROWTH RECOVERY GROWTH

• Joint Stock Bank Devon-Credit (OJSC), one of the leading financial and credit institutions • In 2010 Bank ZENIT celebrated a 15-year anniversary of successful operations in the Republic of Tatarstan, acquired. as a reliable business partner and responsible member of the banking community 2005 contributing to the development of clients and financial markets. • The Banking Group comprising OJSC Bank ZENIT and JSB Devon-Credit (OJSC) established. • International rating agencies Fitch and Moody’s confirmed the assigned ratings: “B+” and “Ba3”, respectively, the ratings outlook increased to “Stable”

• The Group’s capital made up USD 0.5 bn. • Debut issue of exchange-traded BO-01 bonds of OJSC “Tatneft” totaling RUR 5 bn arranged. Bank ZENIT acted as a financial adviser and transaction passport bank in • Initial issue of foreign securities for a client (CLN totaling USD 100 m). 2006 2010 OJSC “Tatneft” USD 2 bn syndicated loan. • First among Russian companies and banks to issue CDO based on the portfolio of • Correspondent NOSTRO accounts in Chinese Renminbi opened. Clients got additional Russian debt instruments in the amount of USD 250 m. opportunities for making settlements under their contracts in China and developing their business. • Lipetskkombank, a leading bank in the Lipetsk region, acquired (assets ~ USD 600 m / capital~ USD 49 m). • Works on the Banking Group’s operational integration and development as a nationwide banking group continued. Banking center TATARSTAN was established, LLC Bank ZENIT • Sochigazprombank acquired (assets ~ USD 29 m / capital ~ USD 2 m). Sochi was reorganized into CJSC Bank ZENIT Sochi. The bank is located in the Krasnodar Kray, one of the most dynamically developing Russian regions to host 2014 Olympic Games. At present, the bank operates under • According to the annual rating of the TOP 500 largest global banking brands made by 2007 the Bank ZENIT Sochi brand. Brand Finance in cooperation with The Banker magazine, Bank ZENIT strengthened its th • Capital increased by RUR 1,545 m through an additional issue. position, with a 13-notch rating increase, and was ranked in 439 place.

• ZENIT Banking Group is present in 21 of 83 sub-federal political units of the Russian • The Bank joined the Unified Payment System which has over 8,000 ATMs and Federation. The total number of the Banking Group’s points of sale reached 150. 1,000 offices of partner banks in 81 sub-federal political units of the Russian Federation. • The range of bank cards was considerably expanded. The Bank issued a “Metro Card” STABILITY IN CRISIS TIMES (which allows customers to pay for journeys on the Moscow Metro) and co-branding cards “Give Kids a Smile” and “Rugby for the Children of Russia”. • The Banking Group was joined by OJSC Spiritbank, one of the leading banks in the Tula 2011 • In 2011 Bank ZENIT participated in the arrangement of 10 bond issues with a total par region; the number of the Banking Group members increased to five. value of RUR 32.5 billion for 9 issuers. • A pilot project launched to establish a Banking Centre on the basis of Bank ZENIT • Twice (in May and in November), the Bank successfully placed its exchange-traded branches located in the Republic of Tatarstan. 2008 bonds totaling RUR 8 bn. • An impeccable credit history and international credit ratings were the key factors which • A second subordinated loan was raised from the Black Sea Trade and Development allowed Bank ZENIT to get access to the resources of the Bank of Russia and obtain Bank, amounting to USD 20.5 m and maturing in over 10 years. support from the state budget during the financial crisis. • ZENIT Banking Group’s regional network reached 180 points of sales in 26 sub-federal • Subordinated loans from shareholders, as well as from Vnesheconombank and Black political units of the Russian Federation. Sea Trade and Development Bank raised.

• General acquiring license of VISA obtained enabling members of ZENIT Banking Group 2009 and partner banks to provide a full range of services to VISA cardholders across Russia. • In April 2009, in the context of crisis in the Russian economy, Fitch Ratings retained the Long-term issuer default rating at “B+”, and the National long-term rating at “A-(rus)”, with the outlook changed to “Negative”. In March and November 2009, the Long-term foreign and global local currency deposit ratings also confirmed at Ba3 by Moody’s.

16 17 HOOKER

A key player in the scrum who must take possession of the ball quickly and neatly at the start of play in order to give his team maximum advantage. Being able to pass the ball down the corridor of players with a high degree of accuracy, they are often team captains.

CHOOSING THE TRUE DIRECTION The advantage is with those who act ANNUAL REPORT 2011

CORPORATE SHAREHOLDERS 3 GOVERNANCE OF OJSC BANK ZENIТ

THE TABLE BELOW SHOWS THE SHARE CAPITAL STRUCTURE AS AT DECEMBER 31, 2011.

3.1 Shareholders of OJSC Bank ZENIТ | 21 (4.22%) 5 6 (3.00%) (7.25%) 4 7 (1.76%) 3.2 Group Structure | 22 (14.42%) 3 3.3 Corporate Governance Structure | 23 8 (19.92%)

3.4 Board of Directors of OJSC Bank ZENIT | 25 (19.77%) 2 9 (5.10%) 3.5 Management Board of OJSC Bank ZENIT | 27

1 (24.56%)

SHAREHOLDERS OF OJSC BANK ZENIT CONTROLLED BY: % OF VOTING RIGHTS

1 Tatneft Oil AG OJSC “Tatneft” 24.56%

А.А. Sokolov, Nabertherm Limited, А.V. Sokolov, 2 19.77% Rosemead Enterprises Limited A.G. Nyrkov, T.P. Shishkina

3 Silener Management Limited V.S. Lisin 14.42%

4 Viewcom Finance Limited А.I. Proshechkin 7.25%

5 Gatehill Limited Т.P. Shishkina 4.22%

6 A.A. Sokolov 3.00%

7 Meliboea Trading Limited I.G. Avanesyan 1.76%

RUVC Limited, LLP Sintez Group, Members of the Board of Directors 8 19.92% Janisaco Enterprises Limited, and the Management Board Jackfield Trading Limited

9 Other 5.10%

100.00%

20 21 CORPORATE 3.2 GROUP STRUCTURE ANNUAL REPORT 2011 3 GOVERNANCE 3.3 CORPORATE GOVERNANCE STRUCTURE

GROUP STRUCTURE CORPORATE GOVERNANCE STRUCTURE

ZENIT BANKING GROUP WAS ESTABLISHED IN 2005 FOLLOWING THE ACQUISITION RECOGNISING THE CRUCIAL ROLE THAT The Banking Group is fully compliant with the OF A CONTROLLING STAKE IN JSB DEVON-CREDIT (OJSC) BY BANK ZENIT. IN 2007, CORPORATE GOVERNANCE PLAYS IN Corporate Governance Code. Corporate governance OJSC LIPETSKKOMBANK AND LLC CB SOCHIGAZPROMBANK (LATER RENAMED BANK THE ECONOMIC PERFORMANCE AND priorities include taking measures that ensure: ZENIT SOCHI) JOINED THE BANKING GROUP. OJSC SPIRITBANK (TULA) BECAME SUSTAINABLE DEVELOPMENT OF ZENIT • Efficient protection of shareholders’ rights and interests. A MEMBER OF THE BANKING GROUP IN 2008. BANKING GROUP, THE GROUP’S BANKS PAY CLOSE ATTENTION TO THIS ISSUE. • Transparency in decision-making processes. The chart below shows ZENIT BANKING GROUP’S STRUCTURE AS AT DECEMBER 31, 2011. • Observance of professional and ethical responsibility by the members of the Board of Directors, members of the executive bodies, senior managers, and other employees and shareholders.

• Informational transparency.

OJSC BANK ZENIT • Opportunities for shareholders to exercise their rights to participate in governance through participation in General Shareholders Meetings, rights to receive dividends, and obtain exhaustive and reliable JSB DEVON-CREDIT (OJSC) 97.3% 100% ZENIT INVESTMENT SERVICES INC. information on the operations of ZENIT Banking Group. acquired in December 2005 securities transactions The current corporate governance structure of OJSC Bank ZENIT as the parent bank of the Group OJSC LIPETSKKOMBANK 99.4% 100% ZPIF «4TH NATSIONALNY» is presented below. acquired in June 2007 real estate

CJSC BANK ZENIT SOCHI 99.5% 100% ZPIF «6TH NATSIONALNY»

acquired in January 2007 real estate

OJSC SPIRITBANK 100% 100% ZPIF «LIBRA CAPITAL PROPERTY»

acquired in December 2008 real estate

100% LLC REGIONAL DEVELOPMENT

real estate

99.7% OJSC PUSHNOI DOM

real estate

22 23 CORPORATE 3.3 CORPORATE GOVERNANCE STRUCTURE ANNUAL REPORT 2011 3 GOVERNANCE 3.4 BOARD OF DIRECTORS OF OJSC BANK ZENIT

CORPORATE GOVERNANCE STRUCTURE BOARD OF DIRECTORS OF OJSC BANK ZENIT REGISTRAR INSPECTION COMMITTEE GENERAL SHAREHOLDERS MEETING JSC RIR AGENCY (3 MEMBERS)

BOARD OF DIRECTORS CORPORATE SECRETARY (12 DIRECTORS INCL. (SECRETARY OF THE BOARD INTERNAL AUDIT UNIT 4 INDEPENDENT AND 3 MEMBERS OF DIRECTORS) The Board of Directors of OJSC Bank ZENIT exercises The Chairman of the Board of Directors of OJSC Bank OF THE MANAGEMENT BOARD) overall management of the Bank’s operations, except ZENIT is Alexey Arkadievich Sokolov. for the issues within the competence of the General The Board of Directors of OJSC Bank ZENIT includes Shareholders Meeting. The Board of Directors’ scope 4 independent directors (according to the FFMS CHAIRMAN OF THE MANAGEMENT STRATEGIC PLANNING of responsibilities includes issues enumerated in the BOARD COMMITTEE (5 MEMBERS) criteria): Alexander Yevgenyevich Makhotin, Jonathan Federal Law “On Joint-Stock Companies” and the Tubb, Igor Gennadievich Zabelkin and Alexey Bank’s Charter. Sergeevich Vorobiev.

MANAGEMENT BOARD AUDIT COMMITTEE (13 MEMBERS) (5 MEMBERS) BOARD OF DIRECTORS AS AT DECEMBER 31, 2011: COMMITTEES Born in 1979. NOMINATIONS AND ASSETS AND LIABILITIES Alexey Sergeevich Graduated from the State University of Management in 2001. PRIVATE BANKING COMMITTEE REMUNERATION COMMITTEE MANAGEMENT COMMITTEE (4 MEMBERS) Vorobiev Deputy Head of Department – Head of Division for Russian financial institutions of the Department for financial institutions of Vnesheconobank.

Born in 1960. Graduated from the Kazan Institute of Finance and Economics in 1981. CREDIT COMMITTEE SME PROGRAMS COMMITTEE Iskandar Gatinovich Garifullin Member of the Management Board, Chief Accountant – Head of the Accounting and Financial Reporting Department of OJSC “Tatneft” named after V.D. Shashin.

Born in 1968. INVESTOR RELATIONS Graduated from the Moscow State Aviation Institute named after S. Ordzhonikidze RETAIL LENDING COMMITTEE COMMITTEE Igor Gennadievich in 1991. Graduated from the All-Russian State Distance Learning Institute of Finance and Zabelkin Economics in 1994. CEO of CJSC Management Company “Libra-Capital”.

PERSONNEL LENDING COMMITTEE TECHNOLOGY COMMITTEE Born in 1958. Graduated from the Moscow Institute of Petrochemical and Gas Industry named Nayil Ulfatovich after I.M. Gubkin in 1983. Maganov Member of the Board of Directors, Member of the Management Board, First Deputy CEO – Head of Department of Oil and Oil Products Sales, OJSC “Tatneft” named after V.D. Shashin. BUDGET COMMITTEE MARKET RISKS COMMITTEE

Born in 1953. Alexander Yevgenievich Graduated from the Moscow Finance Institute in 1977. Makhotin Financial adviser to the President of SAFIN Handelsges.m.b.H.

ANALYTICAL COMMITTEE CORPORATE STYLE COMMITTEE

24 25 CORPORATE 3.4 BOARD OF DIRECTORS OF OJSC BANK ZENIT ANNUAL REPORT 2011 3 GOVERNANCE 3.5 MANAGEMENT BOARD OF OJSC BANK ZENIT

Born in 1956. MANAGEMENT BOARD Alexey Arkadievich Graduated from the Order of Lenin Moscow Aviation Institute named after Sokolov S. Ordzhonikidze in 1979, and from the Moscow Finance Institute in 1990. Chairman of the Board of Directors of OJSC Bank ZENIT. OF OJSC BANK ZENIT

Born in 1964. Member of the Association of Financial Accountants in England and Wales (AFA) During 1995-2009 – Chief Financial Officer and Senior Partner at Ernst & Young Jonathan Tubb and Deloitte. At present – Director of British Business Club (Moscow), Member of the Advisory Board of BayRu, Director of Lanka Ocean Partnership and Member of the Board MANAGEMENT BOARD AS AT DECEMBER 31, 2011 of Directors of OJSC Bank ZENIT.

NO. FULL NAME POSITION Born in 1946. Graduated from the Moscow Institute of Petrochemical and Gas Industry named Shafagat Fakhrazovich after I.M. Gubkin in 1971. Doctor of Science in Economics. 1 Kirill Olegovich Shpigun Chairman of the Management Board Takhautdinov Member of the Board of Directors, Chairman of the Management Board and CEO of OJSC “Tatneft” named after V.D. Shashin. 2 Tatiana Petrovna Shishkina First Deputy Chairman of the Management Board

Born in 1960. 3 Rodion Vladimirovich Gorovoy First Deputy Chairman of the Management Board Yevgeny Alexandrovich Graduated from the Moscow Institute of Administration in 1982. Tikhturov Member of the Management Board, Head of Department of Finance, OJSC “Tatneft” 4 Elena Vladimirovna Gornaya Deputy Chairman of the Management Board named after V.D. Shashin. 5 Alexey Davidovich Gribkov Deputy Chairman of the Management Board Born in 1966. Graduated from the Moscow Institute of Chemical Engineering in 1990, from 6 Yevgeny Lvovich Grishin Deputy Chairman of the Management Board the Institute of World Economy and Informatisation in 1996, from the Institute of Business and Business Administration of the Academy of National Economy Vyacheslav Petrovich under the Government of the Russian Federation in 2002. In 2003 defended a PhD 7 Victor Anatolievich Isakov Deputy Chairman of the Management Board Fyodorov thesis at the Institute of Economy of the Russian Academy of Sciences and was awarded a PhD in Economics. 8 Alexander Alexandrovich Mnatsakanov Deputy Chairman of the Management Board President of the Non-governmental pension fund “Social development”. Deputy Chairman of the Management Board of OJSC Bank ZENIT. 9 Alexey Victorovich Rozorenov Deputy Chairman of the Management Board

Graduated from the Moscow State Pedagogical Institute of Foreign Languages 10 Vladimir Valentinovich Padanin Deputy Chairman of the Management Board Tatiana Petrovna named after Maurice Thorez. Shishkina First Deputy Chairman of the Management Board of OJSC Bank ZENIT. 11 Stanislav Sergeevich Pashchenko Deputy Chairman of the Management Board

Born in 1970. 12 Vyacheslav Petrovich Fyodorov Deputy Chairman of the Management Board Graduated from the Moscow State University named after M.V. Lomonosov in 1992 Kirill Olegovich and from the Institute of Re-training and Professional Skills Extension in Finance and Economics of the Finance Academy under the Government of the Russian 13 Olga Yevgenyevna Scherbakova Deputy Chairman of the Management Board Shpigun Federation (in Banking) in 1997. Chairman of the Management Board of OJSC Bank ZENIT.

26 27 LOCK

In a scrum the locks bind together the front row players, either holding back the opposition or providing power to help manoeuvre the scrum in order to hook the ball. They hook the ball as it is passed along the corridor of players.

THE SUPREMACY OF STRONG RESULTS The higher the goal, the more tangible the victory ANNUAL REPORT 2011

OPERATIONS OF ZENIT STRATEGY OF ZENIT 4 BANKING GROUP BANKING GROUP

ZENIT BANKING GROUP IS A UNIVERSAL ZENIT Banking Group’s Development Strategy sets BANKING GROUP OF FEDERAL SCALE, the following priorities: 4.1 Strategy of ZENIT Banking Group | 31 A RELIABLE BUSINESS PARTNER AND • Strengthening the Group’s positions A RESPONSIBLE MEMBER OF THE in the key segments (corporate, investment Review of the Russian Economy and Performance and Private Banking). 4.2 of the Banking Sector in 2011 | 33 FINANCIAL COMMUNITY CONTRIBUTING

Summary of ZENIT Banking Group TO THE DEVELOPMENT OF ITS CLIENTS • Active promotion of retail banking products and their 4.3 | 42 Development in 2011 AND FINANCIAL MARKETS. standardization across the subsidiaries of the Group with the goal of creating a unified product line. 4.4 Overview of business of ZENIT Banking Group | 47 In 2011, the top priorities for ZENIT Banking Group’s • Development of SME business. strategic development were to increase corporate 4.5 ZENIT Banking Group’s Regional Network Development | 48 • Increasing the regional business share through and retail lending, and to expand the branch network organic growth. and client infrastructure in order to further improve 4.6 Corporate Banking | 54 the Group’s hi-tech competitive banking complex • Focusing on cross-selling between divisions, secured which meets actual clients’ demands and serve the loan products and products based on bank cards with 4.7 Small and Medium Businesses (SMB) 64 different applications. | interests of shareholders. • Investments in operational efficiency and risk Investment Banking Taking into consideration the macroeconomic 4.8 | 66 management. outlook for 2012 and stricter regulations, which 4.9 Retail Banking | 74 constrain the growth rates in the banking sector, • Optimization of the branch network and client the Group’s strategic goal for 2012 is to retain its infrastructure based on the integration of regional divisions into banking centres. 4.10 Private Banking | 78 market positions in the Russian banking sector by key indicators of assets and liabilities and maintain • Operational integration of the business models of 4.11 Risk Management | 79 profitability at 2011 levels. ZENIT Banking Group’s banks.

4.12 Charity and Sponsorship Programmes | 84

30 31 OPERATIONS OF ZENIT REVIEW OF THE RUSSIAN ECONOMY AND 4.2 ANNUAL REPORT 2011 4 BANKING GROUP PERFORMANCE OF THE BANKING SECTOR IN 2011

In its Development Strategy, ZENIT Banking Group positions itself as a market player renowned for: REVIEW OF THE RUSSIAN ECONOMY AND 1 • A strong position among leading Russian credit PERFORMANCE OF THE BANKING SECTOR IN 2011 institutions in terms of key performance indicators.

• A scope of business sufficient for comprehensive servicing of the largest national companies.

• Transparency on the market and for potential investors, applying the best international practices of The macroeconomic environment in 2011 exception with a lower unemployment rate in the corporate governance. remained unstable and curbed the potential for environment of moderate economic growth. In spite • A wide range of corporate, investment, Private robust growth. These difficulties were largely of a slowdown on the global markets, oil prices Banking and retail banking services. engendered by the overall global economic climate. remained high, fuelled by political tensions in North • High-quality services based on efficiency, The sovereign debt crisis in the peripheral EU Africa and the Middle East, as well as by rising knowledge of its clients’ businesses and an integrated economies shaped negative expectations and demand in several countries, and soft monetary customized service that ensures long-term restrained investment flows. policies in the developed economies. partnerships. In H1 2011, business activity on the international Highlights of the external economic environment • Strict adherence to balanced approach in risk-taking. markets intensified on the back of the US in 2011: • An optimal branch network that ensures efficient quantitative easing policy. Oil and gold prices surged • Stagnating economic growth on the back of weak servicing of diverse client groups in most federal to their post-crisis highs. Lending and investment lending activity and a policy of reducing budgetary districts and the largest cities of the Russian activities in developed economies remained low. Federation. expenditures in developed economies coupled with An aggravation of the debt crisis in Greece and long-term tightening of economic policies in the • Active participation in the professional community a downgrade of the US rating triggered a financial emerging markets. activities and a commitment to advising the federal downturn in the Eurozone and instability on the • Pursuance of “soft” monetary policy by the authorities on improving banking legislation. global markets. Full-scale programmes for public leading central banks (the European Central Bank, costs reduction in the Eurozone together with • A corporate culture based on teamwork, trust, Bank of England, the Federal Reserve and Bank of recognition of personal contribution made by each a slowdown in business activity on the global Japan) led to relatively high liquidity levels. and every employee, dedication, professionalism markets led to a recession in this region in late 2011. and loyalty. By the end of the year, in order to respond to the • A localized financial crisis in Europe which mounting crisis, the European Central Bank took adversely affected the stability of the global financial markets, and high oil prices against the background steps towards a softer monetary policy: the ECB of political tensions in a number of North African and reduced the refinancing rate and launched a large- Middle Eastern countries, as well as a “soft” policy scale programme to expand money supply through pursued by the leading central banks. High volatility long-term refinancing of banks which, eventually, on the foreign exchange markets and the led to stabilization on the global financial markets. persisting threat of “currency wars”. In the second half of the year, the growth rates in • A downgrade of the US rating coupled with the emerging economies slowed down in response debt problems in Europe nearly closed access to to a continued tightening of monetary and lending the debt capital market to the issuers from emerging policies. By the end of 2011, the USA was the only economies.

1 This Section “Review of the Russian economy and performance of the banking sector in 2011” presents data under RAS.

32 33 OPERATIONS OF ZENIT REVIEW OF THE RUSSIAN ECONOMY AND 4.2 ANNUAL REPORT 2011 4 BANKING GROUP PERFORMANCE OF THE BANKING SECTOR IN 2011

Growth of the global economy in the first half of GROWTH OF INVESTMENT ACTIVITY RESUMED IN EXTERNAL MACROECONOMIC ENVIRONMENT 2011 and sustainably high oil prices throughout 2011 Q2 2011. BANKING SYSTEM INCREASED ITS ROLE formed a fairly favourable external environment for AS A CONTRIBUTOR TO THE GROWTH IN CAPITAL 6 1.6 the domestic economy. Despite a decline in imports, INVESTMENTS, WHICH ROSE BY 6%. ACCORDINGLY, 5 the current account surplus reached its pre-crisis THE SHARE OF BANK LOANS IN THE TOTAL 4 1.5 maximum (USD 101 billion). At the same time, global AMOUNT OF CAPITAL INVESTMENTS GREW FROM 3 financial and macroeconomic destabilization in the 7.7% IN 2010 TO 9% IN 2011. 2 1.4 second half of the year and some political tensions 1 However, the quality of economic growth was in Russia in the light of upcoming parliamentary inflation, % 0 1.3 EUR/USD relatively low. The significant effect of accrual and presidential elections set the scene for further -1 of inventories on the growth of GDP persists outflows of private capital which were quite high -2 1.2 as a substantial risk factor which can lead to (USD 84 billion) although did not reach the crisis Q1 08 Q2 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 a slowdown in economic growth rates. In 2011, Q3 08 levels. In addition to this capital flight, restricted growth of inventories directly accounted for 3% EUR/USD exchange rate, % p.a access to international capital markets, as a result of 4.3% of the GDP growth. Inflation in the USA, % p.a of the debt crisis in the Eurozone in the second Inflation in the Eurozone, % p.a half of 2011, and the downgrade of the US rating A decline in net exports was another factor which adversely affected the economic environment due to aggravated the situation. Hence, the trend for ruble BALANCE OF PAYMENTS AND RUBLE EXCHANGE RATE appreciation reversed in mid 2011. a higher than expected increase in real imports.

THE MACROECONOMIC ENVIRONMENT HAD USD-denominated GDP reached its historical 60 40.0 maximum by the year end. The role of the banking A POSITIVE IMPACT ON DOMESTIC DEMAND. 40 38.0 HOUSEHOLD CONSUMPTION, DEFERRED sector in the national economy was also gaining 20 36.0 DURING THE CRISIS, BEGAN TO RECOVER. THE importance. UNEMPLOYMENT RATE CONTINUED TO DECLINE USD bn 0 34.0 rate exchange ruble THUS CONTRIBUTING TO HIGHER CONSUMPTION. -20 32.0

-40 30.0 -130 -60 28.0 Q1 08 Q2 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q3 08

Ruble exchange rate to the dual currency basket, quarterly average Current account, USD bn Balance of private sector capital movements, USD bn

SAVINGS: 2008 - 14% 2010 - 20% FINANCIAL POSITION OF HOUSEHOLDS 2009 - 19.9% 2011 - 15.8%

6 5 4 3 2 1

Real growth, % Real growth, 0 -1 -2 Q1 08 Q2 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q3 08

Real disposable income, YoY quarterly, % Real growth of final household consumption, YoY quarterly, %

34 35 OPERATIONS OF ZENIT REVIEW OF THE RUSSIAN ECONOMY AND 4.2 ANNUAL REPORT 2011 4 BANKING GROUP PERFORMANCE OF THE BANKING SECTOR IN 2011

Robust demand on the international and domestic On the back of high oil prices and invigoration DYNAMICS OF GDP AND ASSETS OF THE RF BANKING SYSTEM markets provoked real growth in most sectors business activity in Russia, the inflow of tax and non-

of the Russian economy. The agricultural sector tax revenues to the state budget was much higher 2,000 30

demonstrated double-digit growth of added value than planned targets. Accordingly, the public budget +11.5% 1,850 1,800 (16.1%) against the low base of 2010, which was surplus was 0.8% of GDP instead of the planned 25 1,659 the result of a poor crop. THE INDUSTRIES WITH deficit. During 2011, Russian authorities reported 1,600 1,479 A POTENTIAL FOR RECOVERY AFTER A DRAMATIC higher than expected budget revenues and increased 20 1,400

FALL DURING THE CRISIS ALSO DEMONSTRATED the plan for public expenditures. 1,221 1,235 15 HIGHER THAN EXPECTED GROWTH RATES: 1,200

The surplus budget, the Bank of Russia’s policy 1,301 1,012 THE MANUFACTURING INDUSTRY (6.1%), 1,000 992 10 +8.5 940

on transition to inflation targeting, higher lending 895 CONSTRUCTION (4.8%) AND HOSPITALITY AND activity on the domestic market and a worsening 800 763 +8.2 +5.2 5 RESTAURANTS (4.8%). GROWTH RATES ALSO 667 +4.3 +4.3 economic climate on the global financial markets +6.4 ACCELERATED IN TRADE (5%) AND THE FISHERY 600 since the middle of 2011 all contributed to an 0 AND FISH-FARMING (13.2%) SECTORS. 436 aggravation of the liquidity situation in the 400 297 Growth in various industries allowed banks to actively national financial system. The financial authorities 200 -5 diversify their loan portfolios. coordinated a number of measures to ameliorate -7.8

USD bn 0 the situation. The Ministry of Finance of Russia, -10 (%) Overall, the financial standing of manufacturing state-owned funds and corporations significantly industries and service providers remained 2005 2006 2007 2008 2009 2010 2011 increased their temporarily surplus funds held in stable. THE TOTAL NET FINANCIAL RESULT OF Real GDP growth, % bank deposits. The Bank of Russia, in turn, increased ENTERPRISES GREW BY 14.5% AND REACHED Nominal GDP, USD bn volumes and simplified procedures of refinancing of A NEW HISTORICAL MAXIMUM. THE SHARE OF Annual average assets of the RF banking system, USD bn commercial banks. PROFITABLE ENTERPRISES INCREASED BY 1.8% TO 71.9%. In spite of a slight rise in overdue The liquidity situation somewhat improved by the LIQUIDITY OF THE BANKING SYSTEM payments of enterprises in real terms, the share of year end, coinciding with a seasonal increase in NPLs in banks’ corporate loan portfolios dropped by the money supply entailed by active spending of 0.5% to 4.79%. budgetary funds. Despite this, the overall year-end 1,400 results showed that a structural liquidity deficit had developed. 900

400

RUR bn -100

-600

-1,100 01.01.2010 19.02.2010 06.04.2010 20.05.2010 02.07.2010 13.08.2010 24.09.2010 09.11.2010 20.12.2010 07.02.2011 23.03.2011 05.05.2011 20.06.2011 01.08.2011 12.09.2011 24.10.2011 06.12.2011

Deposits of commercial banks held in the CBR accounts, RUR bn Net liquidity position of the RF banking system, RUR bn

36 37 OPERATIONS OF ZENIT REVIEW OF THE RUSSIAN ECONOMY AND 4.2 ANNUAL REPORT 2011 4 BANKING GROUP PERFORMANCE OF THE BANKING SECTOR IN 2011

Transition of the Bank of Russia to inflation targeting especially in lending. The interest margin across the MONETARY POLICY AND INTEREST RATES led to unprecedentedly slow widening of the banking sector was under pressure from increased monetary base of the national economy amidst real competition. A lower banking margin and persistent 19 GDP growth. As a result, an expanded money supply instability on the global and domestic financial

to the national economy (M2) was mainly driven by markets weakened investors’ interest in the banking 17 higher corporate savings related to, among other sector in the second half of the year. things, interest rates and business and lending 15 Active lending adversely affected banks’ capital activities. These factors led to a money supply on the adequacy ratios. At the end of 2011, the capital of 13 back of record-high levels of the money multiplier. Russia’s banking system grew by only 10.8%. By the Stable development of the real sector of the national end of 2011, several major credit institutions needed 11

economy in the first half of 2011 allowed the banking additional capital. HOWEVER, CAPITAL ADEQUACY 9 system to increase total assets by 23.1% based on RATIO IN THE BANKING SYSTEM AS A WHOLE WAS the year-end results. As in 2010, the banking sector MAINTAINED AT A RELATIVELY SATISFACTORY 7 growth was in line with the nominal GDP growth. This LEVEL (N1 RATIO – 14.7% AGAINST 18.1% IN EARLY

monetary aggregates, % aggregates, monetary 5 resulted in a slightly higher (a rise by 1.4% to 76.6%) 2011). HIGH PERFORMANCE INDICATORS OF STATE- share of banking assets in the GDP structure at the OWNED BANKS WERE LARGELY RESPONSIBLE FOR Jul 09 Jul 10 Jul 11 Oct 09 Oct 10 Oct 11 Jan 09 Jan 10 Jan 11 Apr 09 Apr 10 Apr 11 Feb 09 Feb Feb 10 Feb Feb 11 Feb Jun 09 Jun 10 Jun 11 Sep 09 Sep 10 Sep 11 Dec 09 Dec 10 Dec 11 Nov 09 Nov Nov 10 Nov Nov 11 Nov Aug 09 Aug 10 Aug 11 Mar 09 Mar 10 Mar 11 May 09 May 10 year-end. THIS TREND. May 11 In 2011, the banking sector demonstrated growth on the back of fiercer competition and strengthening Rate of ruble deposits (except for demand deposits), up to 1 year positions of state-owned banks, which were able Rate of ruble loans to non-financial corporations, up to 1 year to offer more advantageous terms to their clients, Consumer price index, YoY, % CBR refinancing rate, as at the end of the month, %

CAPITAL ADEQUACY RATIO OF RUSSIA’S BANKING SYSTEM KEY TRENDS IN THE RUSSIAN BANKING SECTOR IN 2011:

22 FURTHER AGGRAVATION OF COMPETITION IN THE SECTOR 20.3 20.9 20.5 20 18.9 TIGHTER REGULATORY FRAMEWORK 18.5 18.4 18.1 18 17.2 SHARP DECLINE IN CAPITAL ADEQUACY 16.9 16.7 16 15.2 14.7 RECORD-HIGH RETAIL LENDING SINCE 2007 14 OPERATING AMID STRUCTURAL LIQUIDITY DEFICIT Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 LOWER INTEREST MARGIN Capital adequacy ratio N1, %

38 39 OPERATIONS OF ZENIT REVIEW OF THE RUSSIAN ECONOMY AND 4.2 ANNUAL REPORT 2011 4 BANKING GROUP PERFORMANCE OF THE BANKING SECTOR IN 2011

Non-performing loans continued to hobble the access to the global capital markets and liquidity KEY PARAMETERS OF THE RF BANKING SYSTEM (%) banking system exerting additional pressure on the deficit in the second half of the year. (YOY INCREASE) banks’ capital. Accordingly, following the aggravation STARTING FROM THE SECOND QUARTER OF of the global financial environment in the second 2011, AN INCREASE IN BANKS’ LIABILITIES WAS half of 2011, the amount of overdue payments on ALLOWANCES COUPLED WITH AN ACTIVE EXPANSION OF LOAN loans extended to non-financial organizations and PORTFOLIOS. HIGH LENDING ACTIVITIES WERE 100 individuals increased to 10.7% and 3.1% respectively, DRIVEN BY REDUCED INTEREST RATES, THE 80 as at the year end. However, the rapid growth of the PROFIT DEPOSITS OF RECOVERY GROWTH OF THE NATIONAL ECONOMY 60 loan portfolio led to a lower ratio of overdue loans in INDIVIDUALS AND INCREASED COMPETITION IN THE BANKING the portfolio’s structure and amounted to 4.64% for 40 SECTOR IN THE CONTEXT OF A LOWER BANKING loans to non-financial organizations and 5.24% for 20 MARGIN. 47.9% 4.4% retail loans. 0 IN SPITE OF DECREASED CORPORATE LENDING IN 20.9% In 2011, adapted policies of the monetary authorities -20 Q4 2011, THE ANNUAL GROWTH OF LENDING TO had a significant impact on the Russian banking NON-FINANCIAL ORGANIZATIONS ACCOUNTED FOR -40 system. The Bank of Russia’s transition to inflation 26%. -60 targeting led to changes in the structure of money LOANS TO CAPITAL INDIVIDUALS 35.9% 10.8% supply. In this context, the role of banks’ lending and RETAIL LENDING WAS GROWING AT FASTER RATES deposit activities was increasing significantly, being ON THE BACK OF HIGHER DEMAND DEFERRED DURING THE CRISIS. AT THE YEAR END, GROWTH reflected in the rise of the monetary multiplier. In 26% 25.8% addition, the Bank of Russia designed and began to OF RETAIL LOANS REACHED ITS HIGHEST LEVEL implement a series of measures aimed at tightening SINCE 2007 AND AMOUNTED TO 35.9%. 23.1% the regulatory framework in the banking sector and The banks refrained from further expansion of improving the effectiveness of banking monitoring. operations on the capital markets in the context of LOANS TO CUSTOMER The growth of the banks’ funding base with monies instability on the global financial markets, which LEGAL ENTITIES ACCOUNTS raised from individuals slowed down (20.9% against resumed in H2 2011. As a result, by the year end the 31.2% in 2010), due to a lower propensity to save in banks’ securities portfolio grew only by 6.6%. many households and higher consumption. ASSETS CORPORATE CUSTOMER ACCOUNTS GREW BY 25.8%. This increase was driven by higher economic 2011 activity, re-evaluation of bank accounts opened in 2010 foreign currencies (amidst ruble depreciation in Q3 2011), as well as by placement of temporarily surplus state funds on bank deposits (to smooth the liquidity deficit which emerged in the second half of the year). The replenishment of the banks’ funding base on the capital markets was limited by the nearly closed

40 41 OPERATIONS OF ZENIT SUMMARY OF ZENIT BANKING GROUP 4.3 ANNUAL REPORT 2011 4 BANKING GROUP DEVELOPMENT IN 2011

SUMMARY OF ZENIT BANKING GROUP DEVELOPMENT IN 20111

2011 was a year of stable development for ZENIT Group managed to maintain the pace of growth of LOANS TO CUSTOMERS BEFORE LOAN QUALITY, %. Banking Group. In the reporting period, the Group its loan portfolio at 2010 levels. Moreover, in priority IMPAIRMENT, RUR MN held its competitive position among the Russian segments the performance results exceeded those of credit institutions based on the key performance the previous year. 2007 104,025 1% indicators. The financial results and the Group’s 2.9% In 2011, ZENIT Banking Group focused its efforts business growth dynamics demonstrate the Group’s on preserving and expanding its client base, on the 3.6% ability to develop even in a difficult macroeconomic 2008 113,999 one hand, and on improving provisioning of its loan 4.2% environment. portfolio and reinforcing control of its credit risks, on 7.4% 2009 109,358 Despite aggravating competition among banks for the other. 7.5% good-quality borrowers, in 2011 ZENIT Banking 5.3% 2010 136,794 7.2% IN 2011, THE TOTAL ASSETS OF THE THE NET PROFIT OF THE GROUP FOR 2011 GROUP INCREASED BY 23.5% TO REACH AMOUNTED TO RUR 2.5 BILLION 4.1% 2011 174,842 RUR 246.7 BILLION. 6.0%

0 50,000 100,000 150,000 200,000 01234567810 9 ASSETS, RUR MN NET PROFIT, RUR MN Share of loans with payments overdue for more than 90 days Loan loss provision rate 2007 163,098 2,390

In order to maintain the high quality of its loan The pace of growth of allowance for loan impairment 2008 187,317 1,177 portfolio, the Group constantly fine-tunes its in 2011 (+8%) was lower than in 2010 (+19%). approaches to borrower risk and collateral quality Significant growth of the loan portfolio was the main assessment. The total amount of problem loans (the factor behind the increase in provisioning. By the 2009 186,041 2,090 total amount of loans in respect of which the clients end of 2011, the total amount of allowance for loan have at least one payment overdue for more than impairment stood at RUR 10.5 billion, while loan loss 2010 199,796 3,662 90 days) fell by RUR 0.2 billion to reach RUR 7.1 billion provision rate made up 6%. (4.1% of loans to customers before impairment). The ratio of such loans to allowances was 148% 2011 246,727 2,520 as at December 31, 2011, which is in line with the

0 50,000 100,000 150,000 200,000 250,000 0 1,000 2,000 3,000 4,000 conservative lending policy of ZENIT Banking Group.

OVERALL, THE STRATEGIC GOAL HAS BEEN ACHIEVED: LOAN PORTFOLIO 1 Sections 4.3–4.4, 4.6, 4.8–4.9 present data in accordance with the BEFORE IMPAIRMENT GREW BY 27.8% consolidated financial statements of ZENIT Banking Group under IFRS for the year ended December 31, 2011. IN 2011 AND AMOUNTED TO RUR 174.8 BILLION BY THE YEAR END.

42 43 OPERATIONS OF ZENIT SUMMARY OF ZENIT BANKING GROUP 4.3 ANNUAL REPORT 2011 4 BANKING GROUP DEVELOPMENT IN 2011

ZENIT Banking Group’s stable financial position and In 2011, the Group managed to maintain its net The Group’s profitability and capital ratios were also This was the result of setting new strategic goals for balanced tariff policy facilitated a significant inflow of interest margin (NIM) at 3.6%. Against a background put under pressure by the above-mentioned negative the development of retail and SMB businesses. These funds from individual and corporate clients. of intensifying competition in the banking sector, trends. segments are potentially more profit-generating, lower credit rates coupled with an active growth but at initial stages need more investments in terms ACCORDING TO 2011 RESULTS, CUSTOMER In 2011, the Group oversaw a controlled increase in of the loan portfolio in the first six months of of both adapting sales points to meet the needs of ACCOUNTS HELD BY THE GROUP GREW BY its operating expenses related to the growth of its 2011 led to a decline in the interest margin. In the these client groups and investments in hiring and activities and an intensive expansion of its banking RUR 26.1 BILLION (OR 22.5%) TO REACH reporting period, the worsening climate on the training of staff, advertising, and other operating network (over the course of the year, 23 new sales RUR 142.2 BILLION, INCLUDING A 9.7% financial markets in the second half of 2011 and expenses related to these business areas. points of various types were opened). INCREASE IN FUNDS HELD IN INDIVIDUAL the consequent increase in the cost of funding also CLIENT ACCOUNTS (TO RUR 57.9 BILLION), affected the Group’s interest margin. AND AN INCREASE OF MORE THAN 33% OPERATING EXPENSES ROSE BY 18.2% IN CORPORATE ACCOUNTS (TO RUR TO RUR 6.8 BILLION, WHILE THE COST–TO- 84.3 BILLION). INCOME RATIO INCREASED FROM 44.3% IN 2010 TO 56.1% AS AT THE END OF 2011.

CUSTOMER ACCOUNTS, RUR MN NET INTEREST MARGIN, %

2007 92,413 10 PROFITABILITY RATIOS, %. COST-TO-INCOME RATIO, %.

2008 96,343 8 65 20 17.5% 59.1% 6 5.8% 60 2009 56.1% 104,659 15 14.9% 55 4 5.3% 3.9% 4.6% 10 50 2010 116,154 11.5% 52.8% 3.6% 10.9% 2 5 6.8% 45 1.8% 1.9% 1.1% 1.1% 40 2011 142,244 0.7% 44.3% 0 0 41.6% 35 0 50,000 100,000 150,000 20072008 2009 2010 2011 20072008 2009 2010 2011 20072008 2009 2010 2011 Return of average equity (ROAE) Return of average assets (ROAA)

44 45 OPERATIONS OF ZENIT OVERVIEW OF BUSINESS 4.4 ANNUAL REPORT 2011 4 BANKING GROUP OF ZENIT BANKING GROUP

IN 2011, ZENIT BANKING GROUP’S TOTAL Subordinated deposits are of great importance OVERVIEW OF BUSINESS EQUITY GREW BY 7.9% AMOUNTING TO for improving the Group’s capital and maintaining RUR 23.9 BILLION AS AT DECEMBER 31, the level of long-term liabilities. In 2011, OF ZENIT BANKING GROUP a supplementary agreement was signed with OJSC 2011. “Tatneft” on reducing the rate on a RUR 2.140 billion subordinated deposit to 9.35%. In addition, As at the end of 2011, the Total capital ratio of ZENIT subordinated deposits totalling RUR 3.607 billion Banking Group, as calculated in accordance with the and USD 49.2 million raised from OJSC “Tatneft” requirements of the Basel Accord, declined from and Tatneft Finance Cyprus Limited were extended 16.3% to 13.9%, while the Tier 1 capital ratio moved CUSTOMER ACCOUNTS LOAN PORTFOLIO for 5 years. down from 11.9% to 9.2%, which was mainly a result of a significant increase in the gross loan portfolio. IN 2011, BANK ZENIT ALSO RAISED (59%) 1 (92%) 1 A SECOND SUBORDINATED LOAN FROM THE BLACK SEA TRADE AND DEVELOPMENT BANK FOR USD 20.5 MILLION MATURING IN OVER CAPITAL 10 YEARS. 2 (41%) 16.3% 2 (8%) 15% 13.9% 60

11.9% 50 1 Corporate clients (59%) 1 Corporate clients (92%) 10% 9.2% 40 2 Individuals (41%) 2 Individuals (8%) 30 33.7 5% 28.4 20 20.7 22.3 MAIN BUSINESS AREAS OF ZENIT BANKING GROUP 10 AND KEY PRODUCT LINES 0% 0

2010 2011

Total capital, RUR bn (RHS) Tier 1 capital (RHS) ZENIT BANKING GROUP Total capital ratio, % (LHS) Tier 1 capital ratio, % (LHS) CORPORATE INVESTMENT RETAIL BANKING AND SMB BANKING BANKING PRIVATE BANKING

Commercial loans Debt financing Lending: Lending: Project finance Securities trading • Car loans, • Working capital loans Trade finance Brokerage • Mortgage loans, • Commercial Cash/Settlement Asset management • Consumer loans mortgages Services and FX Derivative instruments Bank cards • Car loans Depository operations Financial consulting Cash/Settlement • Equipment loans and M&A Services and FX • Overdrafts Money transfers and cheques Cash/Settlement Services and FX “Family Office” Payroll programmes Alternative investments Acquiring

46 47 OPERATIONS OF ZENIT ZENIT BANKING GROUP’S REGIONAL 4.5 ANNUAL REPORT 2011 4 BANKING GROUP NETWORK DEVELOPMENT

ZENIT BANKING GROUP’S REGIONAL NETWORK DEVELOPMENT

IN 2011, ZENIT BANKING GROUP Other members of ZENIT Banking Group also opened The expansion of ZENIT Banking Group’s network In addition to the opening of new sub-divisions of the SIGNIFICANTLY INCREASED ITS SALES these new types of offices in the regions where they was largely driven by the opening of new sub- Group, the points-of-sale network was rationalized NETWORK IN MOSCOW, THE MOSCOW have a presence: OJSC Lipetskkombank opened two divisions in the regions where the Group is present. with the closure of unprofitable units. A subsidiary new subsidiary offices in the city of Lipetsk and OJSC As a result, the number of covered regions increased office in the city of Armavir and 3 mini-offices in REGION AND IN OTHER REGIONS ACROSS Bank ZENIT Sochi opened an operations office in the to 261 up from 23. This increase was achieved Moscow, Tatarstan and Bashkortostan were closed RUSSIA. THE OVERALL NUMBER OF city of Krasnodar. through the opening of operations offices of the down. OFFICES GREW BY 23 TO 180. Kursky and Novosibirsky branches in the cities of In 2011, the priority for the Moscow banking network Voronezh and Omsk respectively. was to open subsidiary offices specializing in Until recently, when opening new offices, ZENIT rendering services to individual clients. As part of Banking Group focused primarily on meeting this initiative, 5 new subsidiary offices were opened: the needs of its corporate customers. However, at Sheremetyevo Airport, at the “Our Hypermarket” POS NETWORK the Group has launched new initiatives aimed at shopping centre on Borovskoe Highway and three providing services to retail and SMB clients. This, in offices at the branches of RESO-Garantiya Insurance 2007 turn, has led to changes in the format of new offices. 94 29 21 6 150 Company. These initiatives foresee increasing the number of both traditional full-scale offices offering the full In addition, six new mini-offices were opened in 2008 9335 23 6 7 164 range of banking services to all client groups, and 2011 at car sales and service centres that are clients small easily accessible points of sale targeting retail of the Bank. Two branches were opened at trade and 2009 clients. service centres of the “U Service+” company, and 8434 22 5 7 152 one branch at the showroom of car dealers Avtomir, Bank ZENIT has opened such new points of sale in Kuntsevo Trade Centre, AvtoGERMES and STS-S. the Nizhny Novgorod and Rostov Regions, and in 2010 8733 22 8 7 157 the cities of Sarov, Dzerzhinsk and Taganrog. The regional network was further extended in the cities 2011 11031 24 8 7 180 of Kazan, Samara, Kursk, and St. Petersburg. 0 20 40 60 80 100 120 140 160 180

Bank ZENIT Devon-Credit Lipetskkombank Bank ZENIT Sochi Spiritbank

1 As at January 1, 2012, ZENIT Banking Group had a presence in 26 subjects of the Russian Federation. A representative office in Veliky Novgorod was closed in accordance with a resolution of the Board of Directors dated February 3, 2012.

48 49 OPERATIONS OF ZENIT ZENIT BANKING GROUP’S REGIONAL 4.5 ANNUAL REPORT 2011 4 BANKING GROUP NETWORK DEVELOPMENT

REGIONS OF PRESENCE OF SUBDIVISIONS OF THE GROUP WERE REGIONS OF PRESENCE LOCATED IN 26 OUT OF 83 RUSSIAN MOSCOW ZENIT BANKING GROUP REGIONS AND IN 10 OUT OF 12 CITIES MOSCOW REGION WITH POPULATION EXCEEDING 1 MILLION TATARSTAN KEMEROVO REGION KURSK REGION N.NOVGOROD REGION REPUBLIC OF ALTAY ROSTOV REGION SAMARA REGION SAINT PETERSBURG SVERDLOVSK REGION VORONEZH REGION OMSK REGION NOVGOROD REGION KALININGRAD CHELYABINSK REGION BASHKORTOSTAN CHUVASHIYA ST.PETERSBURG KALININGRAD REGION NOVOSIBIRSK REGION VELIKY NOVGOROD PERM KRAY SARATOV REGION BELGOROD REGION KHMAO-YUGRA KRASNODAR KRAY LIPETSK REGION TULA REGION MOSCOW TULA DONSKOY NOVOMOSKOVSK KURSK DZERZHINSK DANKOV NIZHNY NOVGOROD YELETS LEBEDIAN LIPETSK GRYAZI ARZAMAS NOVOCHEBOKSARSK BELGOROD SAROV NUMBER OF REGIONAL VORONEZH STARIY OSKOL CHEBOKSARY PERM CHISTOPOL POINTS OF SALE AT THE KAZAN NABEREZHNYE CHELNY TAGANROG YELABUGA NIZHNEKAMSK END OF 2011 NURLAT ALMETYEVSK ROSTOV-ON-DON AZNAKAEVO ANAPA ZAINSK TOLYATTI BUGULMA SURGUT KRASNODAR LENINOGORSK SARATOV HEAD OFFICES TUAPSE BAVLY YEKATERINBURG 5 SAMARA TUYMAZY SOCHI OKTYABRSKY UFA BRANCHES 31 CHELYABINSK SUBSIDIARY/OPERATIONS OFFICES 71 MINI-OFFICES 72 OMSK REPRESENTATIVE OFFICE 1

KEMEROVO TOTAL 180 NOVOSIBIRSK

NOVOKUZNETSK

GORNO-ALTAYSK

Current regions of the Group’s presence

50 51 FULLBACK A STRATEGY

Fullbacks have good attacking speed, FOR VICTORY provide strong defensive cover and display sharp tactical abilities. Aside from tackling Every movement contributes the opposition’s tries, they must have a strong kicking game to weaken the to the final result opposition’s push. OPERATIONS OF ZENIT CORPORATE 4.6 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

CORPORATE BANKING

CORPORATE CLIENTS, NEW MAJOR CLIENTS OF ZENIT CONSTRUCTION: AGRICULTURE AND FOOD: THOUSAND BANKING GROUP IN 2011: LLC “DOMOSTROITEL-DEVELOPMENT” is a company OJSC “KAZANSKY MEZ” undertakes agricultural 2007 5.2 26.0 31.2 within the Domostroitel Group of companies, an projects that cover the full cycle of growing, investment and construction group of full-cycle processing and sale of oil seeds and rape seeds. This MACHINE BUILDING: companies. The Group owns three of nine integrated is one of the largest seed processing company in the 2008 6.0 32.6 38.6 OJSC “LIANOZOVO ELECTRO-MECHANICAL PLANT house-building industrial complexes in the Moscow Volga River basin and remains the biggest rape seed RESEARCH AND PRODUCTION CORPORATION” Region: the Shchelkovsky, Elektrostalsky and processing company to date. Orekhovo-Zuyevsky plants. According to a research 2009 6.2 31.8 37.97 (LEMZ R&P CORP.) specializes in development and “BELSTAR-AGRO” GROUP OF COMPANIES conducted by Market Capital Solutions Company, production of radar equipment and control systems specializes in processing and storage of agricultural Domostroitel Group is ranked fourth in terms of for a variety of uses. It is the oldest military and products, food production and retail. 2010 6.4 34.8 41.24 housing market share and third in terms of brand industrial enterprise in the Russian Federation: awareness. it was founded in 1935. In 2002, LEMZ R&P Corp. OJSC “AKTANYSHSKOYE GRAIN COLLECTING 2011 COMPANY” is involved in purchasing, storage and 7.0 36.9 43.9 was integrated with the Almaz-Antey Air Defence LLC “TRANSGRUZ” is one of the largest construction processing of grain. Industrial Concern. companies in the city of Samara and is engaged in 0 5 10 15 20 25 30 35 40 45 50 LLC “CHTZ-URALTRAC” (THE CHELYABINSK residential and commercial housing projects. Moscow Regions TRACTOR PLANT) is one of the companies of the LLC “ZAPSIBINTERSTROY” is a company involved in FINANCE AND LEASING: OJSC Uralvagonzavod Scientific and Production the construction of multi-storey houses, suburban Corporation. LLC “ChTZ-URALTRAC” manufactures cottage settlements, shopping centres and office LLC “KARKADE” is a leasing company with 100% CLIENT BASE and markets a wide range of wheeled and full- centres. It also undertakes project management. foreign capital that launched its operations in Russia track road construction machinery (bulldozers, in 1996. It is owned by GETIN Holding European OJSC ”TATNEFTEPROVODSTROY” conducts pipe-layers, front loaders, mini-tractors), their financial group. LLC “Karkade” is one of the largest ACCORDING TO THE YEAR-END RESULTS, civil engineering, construction of cross-country components and other high-tech engineering leasing companies in Russia with a focus on motor THE CORPORATE CLIENT BASE GREW BY pipelines and oil and gas pipelines and engineering equipment. vehicles leasing for SMB. The company offers leasing 6.4%. infrastructure projects. programmes for the purchase of new passenger OJSC “KLIMOV” (THE KLIMOV COMPANY) is OJSC “MOSTOSTROY NO.6” cars, light motor vehicles for commercial purposes, Overall, by the end of 2011, the Group had 43,869 a leading Russian developer of gas turbine engines focuses on construction trucks, special vehicles and used cars. corporate clients from the machinery, construction, that has an international reputation. The company of nuclear and thermal power plants, hydraulic metallurgy, agricultural, consumer and food is involved in the design, batch manufacturing engineering installations, industrial and civil industries, and the wholesale and retail trade, supervision and maintenance of engines for construction. transportation, petrochemical and financial sectors. helicopters produced under the “Mil” and “Kamov” trademarks, as well as jet engines for combat aviation.

54 55 OPERATIONS OF ZENIT CORPORATE 4.6 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

LLC “IR-LEASING” is a multi-purpose leasing LLC “AVTOEXPERT” GROUP OF COMPANIES started TRANSPORTATION: SERVICES: company focusing on equipment and machinery operations on the automobile tyres and wheels leasing to Russian companies operating in industries market in 2006. The core business of the group is OJSC “NORTH-WEST SHIPPING LINE” is an affiliate REMSTROYKOMPLEKS GROUP OF COMPANIES is including energy, oil and gas production, mining, wholesale and retail trade of automobile tyres for of the UCLH-Holding group of companies that offers a general contractor that undertakes construction food industry, telecommunications, metallurgy, trucks and passenger cars, cast and steel wheels and cargo and passenger water transportation and modernization projects for the transportation, transportation and communications. The company accessories. The company also offers a car repair extraction and processing of natural gas, as well LLC “VOLGA-FLOT-TANKER” is an inland waterways joined the Russian Association for Leasing service, including tyre fitting and tyre storage. as oil and natural liquid gas. Since its foundation in carrier of petrochemicals. The company currently Companies in 1997. 2003, the Group has serviced the oil and gas industry, operates over 40 ships. LLC “RUANT” supplies petro-chemicals and chemical Russia’s key industry, where its activities cover civil LLC “LEASING TRADE” is one of the leading leasing products to the domestic market. OJSC “AK BARS AERO” is a regional airline that now engineering, cross-country pipeline construction, companies in Russia (it is on the TOP-100 list of the LLC “BELL” has been a player on the household operates at the federal level. The core business of installation of engineering equipment and pipelines. largest leasing companies in Russia and on the TOP- appliances and electronics market since 1992. The the company is air carriage including commercial The company is involved in all stages of construction, 10 list of the largest leasing companies operating in company conducts wholesale and retail trade in the air carriage. The company runs an airline, helicopter from front-end engineering design to management of the Volga Federal District). city of Moscow and across the regions of the Russian services and an airport located in the city of Bugulma. all kinds of facilities. Federation. LLC “TEK NIZHEGORODSKY EXPRESS” performs OJSC “OPTIMA” was launched in 1990. The TRADE: LLC “AKRON PLUS” is an affiliate of the LLC Akron cargo carriage and cargo logistics by rail. company is one of the biggest systems integrators Plus group of companies and is one of the largest in the power sector. It develops IT infrastructure CJSC “PROFITMED” is the management company of independent scrap collecting companies in the Volga projects and is ranked highly by leading global the ProfitMed group of companies, which is involved Region. LLC Akron Plus is based in the Samara Region CHEMICAL INDUSTRY: hardware manufacturers and software vendors. The in the distribution of pharmaceutical products. It acts and specializes in the collection, processing and sale company has extensive experience in implementing as a principal for agency agreements to purchase of ferrous and non-ferrous metal scrap. OJSC “NEFIS COSMETICS” is a diversified enterprise, governmental projects and projects for more than and sell medicines, medical devices and dietary one of the largest in Russia’s chemical industry. The 1,500 leading enterprises in Russia and the CIS, as supplements. The company currently has more than LLC “SISTEMA CHIBIS” is a company involved in retail company produces household cleaning products well as international projects in Angola, Argentina, 400 employees. trade of food, alcohol and other related products in the and products for technical application. The core Vietnam, Cuba and Peru. The quality of services Kemerovo Region (121 points of sale). The company business of the company is production of household rendered by the company is demonstrated by its LLC “INDUKERN-RUS” is an affiliate of the “Indukern has been operating since 1992. cleaning products: synthetic detergents (mainly, unique set of licenses and certifications, which include Group” (Spain/Switzerland). The company started licenses for national security projects and the ISO LLC “PF “TRANSTEKHSERVICE-2” is an affiliate of powder detergents), liquid detergents (including dish its operations in Russia in 1999, and today is one of 9001-2000 Quality Management Certificate. Overall, “TransTekhService” Group of companies engaged washing and glass cleaning detergents, shampoos, the biggest importers of raw materials and additive the company holds approximately 40 licenses and in wholesale and retail trade of motor vehicles. gels, bleaches and conditioners), beauty soaps and agents on the Russian market. The key business of certifications. Over 2,500 professionals are employed The company also offers automobile repair and household soaps. The company owns famous brands the company is wholesale trade of pharmaceutical by OJSC Optima. The company operates across Russia maintenance services. “TransTekhService” Group is and trademarks such as “AOS”, “BiMax”, “Sorti”, substances and finished pharmaceutical products. and has affiliates in more than 60 cities of the country. one of the leading regional automobile retailers in “Biolan”, “Love”, “Lesnaya polyanka” and “Tselebnye travy”. More than 300 production items are produced GEMA GROUP OF COMPANIES is Russia’s largest and Russia today. VAGON-SERVICE GROUP OF COMPANIES has been by the company. fastest-growing motor vehicles holding company. a market player since 2006. The company renders According to Forbes magazine, Gema is ranked 73rd OJSC “SINTEZ-KAUCHUK” is the flagship company services to OJSC Federal Passenger Carriage in the TOP-200 list of the largest Russian private of Sterlitamak Petrochemical Works. This enterprise Company, including technical and exterior repairs of companies. is one of the biggest Russian producers of isoprene wagons (cleaning, washing, painting and repairing). rubber for general and specialized manufacturing LLC “RTL AUTO” is an international logistics provider of tyres and various industrial rubber products used which focuses on all stages of warehouse logistics, in the production of food and medical equipment. dispatching cars to dealers and customs clearance of This is the only enterprise in Russia that produces passenger cars. neodymium polyisoprene SKI-5 and SKI-5PM rubbers.

56 57 OPERATIONS OF ZENIT CORPORATE 4.6 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

OJSC “LENMORNIIPROYEKT” is involved in project OJSC “ZAVOD ESKON” produces construction CORPORATE The Group’s financial stability and a balanced tariff design of ports and transportation systems at all equipment for the energy industry, such as mounting CUSTOMER policy allowed for an inflow of funds from legal stages of an investment project – from concept bases for electricity transmission lines, columns for entities: in 2011, corporate customer accounts design to project designer supervision. The company overhead wiring on railways and other equipment for ACCOUNTS increased by 33%, reaching RUR 84.3 billion. Term conducts engineering surveys of all types, including energy technology companies in Russia. deposits of legal entities in the reporting period rose In 2011, ZENIT Banking Group continued to build a comprehensive engineering inspections and by 46.5%, amounting to RUR 50.5 billion overall. LLC “BRIS-BOSFOR” is one of the largest shoe stable corporate accounts base as a main source of inspections of hydraulic engineering installations. The manufacturers in the Russian Federation. Today, the financing long-term investment programmes of its company can also act as a general designer. THE SHARE OF CORPORATE CUSTOMER factory produces over 500 low-priced shoe styles: clients. In the environment of deteriorating liquidity including casual, trekking, indoor and beach shoes for in the banking system, these efforts took on special ACCOUNTS IN TOTAL CUSTOMER all age groups. significance. The priority was set on both increasing ACCOUNTS AMOUNTED TO 59.3%. OTHER MANUFACTURING: the amount of funds raised while reducing the cost OJSC “TAGANROGSKY TANNERY” specializes in of funding, and diversification aimed at reducing “ANGSTREM” GROUP OF COMPANIES is one of the animal skin tanning and treatment, and produces client concentration. leaders in the Russian micro-electronics industry. The some 40 types of leather items to be sold on the company is a leading developer and one of the biggest domestic market. manufacturers of integrated circuits in Russia, the CIS and Eastern Europe. “Angstrem” owns facilities OJSC “JEWELLERS OF THE URALS” produces a wide in the city of Zelenograd for the design, development range of jewellery decorated with precious and semi- and production of high-tech electronics, carrying out precious stones, as well souvenirs using ornamental CORPORATE CUSTOMER CORPORATE CUSTOMER ACCOUNTS stones. research and development, experimental designs ACCOUNTS, RUR BN BY INDUSTRY and providing training to academics working in the LLC “MDM-PRINT” is one of the leading printing fields of micro-electronics and nanotechnology. 9 (1.7%) companies in Russia. Printing is the core business 2007 63.7 (2.0%) 8 Among other enterprises owned by the Group, OJSC (4.0%) 7 10 (12.6%) of this company with a focus on magazines and Angstrem, OJSC Angstrem-T and NPO Angstrem are (4.5%) 6 catalogues of various publication frequencies. The (4.8%) 5 the core companies of the scientific and industrial 2008 65.7 (7.6%) 4 company also publishes a wide range of promotional group. and information items. (9.0%) 3 1 (27.5%) LLC “WORLD OF SOFT TOYS”, which is part of the 2009 65.0 Grand Toys group of companies, is one of the largest suppliers and manufacturers of children’s toys in the 2010 63.3 Russian Federation. The Group owns 54 hypermarkets 2 (26.2%) in 47 regions across Russia, and exports toys abroad. Grand Toys was one of two companies that were 2011 84.3 granted a license by the Sochi-2014 Olympic Games 1 Oil and Gas (27.5%) 0 20406080 100 Organizing Committee to manufacture souvenirs and 2 Finance (26.2%) toys bearing the Sochi-2014 brand. 3 Trade (9.0%) 4 Manufacturing (7.6%) LLC “KES-TRADING” is engaged in centralized 5 Construction (4.8%) purchasing of natural gas and heating oil from the 6 Services (4.5%) largest fuel and oil companies for supply to the power 7 Energy (4.0%) generating companies of the KES-Trading Group 8 Transport (2.0%) 9 Local authorities (1.7%) (TGK-5, TGK-6, TGK-7 and TGK-9). 10 Other (12.6%)

58 59 OPERATIONS OF ZENIT CORPORATE 4.6 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

CORPORATE LOANS The Group prioritized lending to companies in Most corporate clients of the Group operate in the CORPORATE LOAN PORTFOLIO the real sector, to strategically and systemically following sectors: BY LOAN TYPE In 2011, ZENIT Banking Group credit policy was important subjects of the Russian economy, • manufacturing (including machine building and targeted at dynamic portfolio growth. Stable priority and socially important industries , such as defence), development of the Russian economy and high level machine building, agro-industrial complex, defence • construction, of liquidity in the first half of 2011 contributed to technologies, food production, services, including (2%) 3 attainment of this goal. engineering, and trade. • wholesale and retail trade,

As part of its efforts to support federal programmes • finance, BASED ON THE 2011 RESULTS, that were launched during the recent financial • food industry, CORPORATE LOAN PORTFOLIO crisis, the Group has continued to provide credit (34%) 2 1 (64%) (BEFORE IMPAIRMENT) GREW BY 26.5% to companies included in the list of systemically • agriculture, important enterprises as approved by the State (RUR 33.7 BILLION), BRINGING THE TOTAL • oil and gas. TO RUR 160.9 BILLION. Committee on Sustainable Development of the Russian Economy. THE GROUP’S LENDING POLICY IMPLIES The corporate loan portfolio structure categorized by CONSTANT EFFORTS ON THE LOAN CORPORATE LOAN PORTFOLIO loan type demonstrates that ZENIT Banking Group 1 Commercial loans (64%) BEFORE IMPAIRMENT, RUR BN has pursued a balanced lending policy towards PORTFOLIO DIVERSIFICATION BY 2 Project finance (34%) providing credit for current business operations INDUSTRY. 3 Reverse sale and repurchase agreements (2%) 2007 93.2 of its clients and helping them to develop their businesses through project financing.

2008 100.1

CORPORATE LOAN PORTFOLIO BY INDUSTRY 2009 98.7

(1%) 8 1 Manufacturing (24%) 9 (5%) 2010 127.2 (3%) 7 Incl. (5%) 6 Manufacturing (other) (11%) (11%) 5 Machine building (9%) Metallurgy (2%) 2011 160.9 Chemical industry (2%) (14%) 4 1 (24%) 0 306090120150 180 2 Trade (23%) Incl. Food trade (7%) (15%) 3 Trade (other) (6%) 2 (23%) Car trade (3%) Oil trade (3%) Liquors and tobacco trade (2%) Home appliances trade (1%) Metal trade (1%)

3 Construction and development (15%) Construction (residential) (11%) Construction (non-residential) (4%)

4 Services (14%) 5 Finance (11%) 6 Food (5%) 7 Agriculture (3%) 8 Oil and gas (1%) 9 Other (5%)

60 61 OPERATIONS OF ZENIT CORPORATE 4.6 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

TRADE FINANCE AND The total amount of import letters of credit issued INTERNATIONAL PROJECTS AND IN ORDER TO PROVIDE ITS CUSTOMERS DOCUMENTARY OPERATIONS in 2011 exceeded USD 510 million. Most of them TRANSACTIONS WITH CLEARING WITH THE WIDEST SPECTRUM OF were opened on an unsecured basis within the risk FINANCIAL SERVICES, BANK ZENIT NOT limits set up by foreign counterparties. Among other AND NATIONAL CURRENCIES Bank ZENIT provides trade finance services and ONLY MAINTAINS BUSINESS RELATIONS things, import letters of credit were used to finance documentary operations for the Group’s clients For many years, Bank ZENIT has been one of importing of foods, hi-tech equipment, computer WITH BANKS IN WESTERN EUROPE AND and partners that are involved in import/export the leading operators on the clearing currencies components, vehicles and consumer goods to the THE USA, BUT HAS ALSO ADDED THE operations. The Group offers a wide range of services market. The Bank has at its disposal the necessary Russian Federation. In 2011, the total amount of LARGEST BANKS OF CHINA, INDIA, THE to assist in import/export activities. infrastructure and expertise to offer a full range of export letters of credit reached USD 413 million. MIDDLE EAST AND SOUTH-EAST ASIA TO services to those clients who seek to use clearing In 2011, the Group continued cooperation with its These instruments were issued to ensure payments currencies in settlements under foreign trade ITS LIST OF PARTNER BANKS. long-standing partner banks in trade finance and for the exports of raw materials and equipment by documentary operations alongside the opening of contracts and for selling their export revenues, Bank ZENIT’s clients. Bank ZENIT has established strong permanent new credit lines. Documentary operations with ВСР, including opening and running accounts in clearing contacts with the Russian sections of inter- Bank of China and the Industrial and Commercial currencies and conducting documentary operations. THE GROUP SUCCESSFULLY DEVELOPED governmental commissions for trade and economic Bank of China were stepped up, while new credit ITS GUARANTEE BUSINESS: IN In 2011, following the trend towards the use of local cooperation with China, India, Vietnam and lines were opened with CITIBANK and the Standard currencies in settlements between Russia and a number of other countries. ZENIT Banking Group’s Chartered Bank. The total amount of transactions 2011 THE AMOUNT OF ALL TYPES its largest trade partners, ZENIT Banking Group representatives are closely involved in the activities of under foreign banks’ credit lines almost doubled OF ISSUED GUARANTEES EXCEEDED provided its clients with the opportunity to make working groups and sub-commissions for interbank compared to the 2010 results and exceeded USD 710 MILLION. settlements with their counter-parties in China and financial cooperation with these countries. USD 400 million. (including Hong Kong and Macao), India and South The Group also participates in the activities of the ZENIT Banking Group has extensive experience Korea in the national currencies of these countries Committee for International Cooperation of the in currency regulation and currency control. The BANK ZENIT’S PORTFOLIO OF (in Renminbi, Rupees and Wons). Association of Russian Banks, Russian-Chinese Group cooperates with the Bank of Russia, the DOCUMENTARY SERVICES SURGED and Russian-Singaporean Business Councils, Hong Federal Customs Service and the Federal Service for DURING 2011 FROM USD 514 MILLION Kong Trade Development Council, Russia-Hong Kong Financial and Budgetary Supervision, as well as with IN EARLY 2011 TO USD 1 BILLION AS AT Business Association and the Russia-Singapore major Russian banks within the framework of the Business Forum. JANUARY 1, 2012, AND COMPRISED THE Association of Russian Banks. FOLLOWING:

• An increase in the portfolio of letters of credit (direct and confirmed within the limits set by foreign banks) of 104.7% to USD 315.4 million as at January 1, 2012.

• A growth in the portfolio of counter guarantees and guarantees by 93% to USD 670 million over the course of the year.

• The portfolio of project finance loans raised from foreign banks for funding international trade operations of Bank ZENIT’s clients grew 2.7 times to reach USD 37 million by the end of the year.

By January 1, 2012, the client base for Bank ZENIT’s trade finance and documentary operations stood at 155 enterprises (82 served at the head office and 73 at the branches), including 70 new clients enlisted over the course of 2011. Since the beginning of 2011, the client base for documentary operations grew by 38%.

62 63 OPERATIONS OF ZENIT SMALL AND MEDIUM 4.7 ANNUAL REPORT 2011 4 BANKING GROUP BUSINESSES (SMB)

SMALL AND MEDIUM BUSINESSES (SMB)

Given the increased competition in the banking In order to strengthen the Group’s position in the THE YEAR-END RESULTS SHOWED IN DEVELOPING THIS BUSINESS LINE sector for high quality corporate borrowers and the SMB segment, a series of in-house initiatives were THAT BANK ZENIT’S SMB LOAN IN 2011, THE GROUP PLACED SPECIAL resulting drop in interest margin in 2011, the Group adopted: PORTFOLIO UNDERWENT AN EIGHT-FOLD EMPHASIS ON ATTRACTING CLIENTS intensified efforts to develop its highly profitable • From 1 April 2011, a dedicated division was set up INCREASE, FROM RUR 162 MILLION TO BY OFFERING THEM COMPREHENSIVE lending for small and medium businesses in all with the task to develop service lines for small and 1 regions where it has a presence, including through medium businesses and build a portfolio of loans in this RUR 1,316 MILLION . SERVICES AS PART OF CROSS-SELLING: its subsidiary banks. category. The scope of responsibilities of this business AS A RESULT, THE CUSTOMER BASE OF unit includes rendering services to customers in the As part of ZENIT Banking Group’s drive to develop CORPORATE AND RETAIL BUSINESSES SMB category with an annual sales turnover below RUR BANK ZENIT, THE PARENT BANK OF THE its cooperation with governmental bodies that offer INCREASED BY OVER 150 SMB COMPANIES. 400 million, which can be allowed a credit limit of up to support to small and medium businesses, the Group BANKING GROUP, PLAYED A KEY ROLE RUR 50 million. signed 6 partnership agreements with regional Given the potential for growth of the credit market for IN IMPLEMENTATION OF CUTTING-EDGE • 18 innovative solutions were applied to the Bank’s guarantee funds which provide loans to SMBs. The small and medium businesses, as well as the high BANKING TECHNOLOGIES FOR THIS credit review process, making the credit cycle two Bank also continued its successful partnership with profits that can be generated, this business area will BUSINESS LINE. times shorter. the Fund of Credit Assistance to Small and Medium- be considered of strategic importance in the future. sized Enterprises in the city of Moscow. From the fourth quarter of 2011, credit products for The Group’s current plans foresee small and medium businesses were available in all In order to ensure a high-quality credit portfolio, regions where Bank ZENIT has a presence. Also, the Bank adopted a conservative approach to risk • a growth of the credit portfolio that will outstrip that of the market as a whole, while sticking to a from the fourth quarter, the SMB product line was assessment of SMB projects. The share of SMB loans conservative risk management policy; expanded, including the launch of a micro-credit secured by property which value is discounted in line programme. with the Bank’s internal guidelines, made up 51% of • developing of IT infrastructure for SMB lending,

this portfolio. • optimization of technologies and efficiency of operations,

• expanding the product line and growing the client base.

1 In the consolidated financial statements of ZENIT Banking Group prepared under IFRS for 2011, data on SMB are included in corporate loan portfolio and corporate customer accounts, respectively.

64 65 № 8 THE ADVANTAGE

These players bind the locks at the back OF TEAM WORK of the scrum. They must provide a clean ball from the back of the scrum, either Individuality shines most picking the ball up themselves or making opportunities for other players. They set up brightly in a team attacks or instantly tackle opposition players holding the ball. OPERATIONS OF ZENIT INVESTMENT 4.8 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

INVESTMENT BANKING

The Group’s investment banking business is based DEBT FINANCING ARRANGEMENT The Bank’s active presence on the debt finance IN APRIL 2011, BANK ZENIT on the provision of a full range of investment banking market was reflected in its rankings. In 2011, SUCCESSFULLY EXECUTED AN OFFER ON services to corporate, retail and Private Banking Bank ZENIT is one of the leading arrangers of bond the Cbonds.ru agency awarded Bank ZENIT the THE BO-01 EXCHANGE-TRADED BONDS. clients. issues for corporate clients on the Russian market, following rankings: THE COUPON RATE WAS FIXED AT 7.1% and holds strong positions in arranging issues of TH The greater part of ZENIT Banking Group’s • 13 among arrangers of bond issues; WITH A ONE-YEAR PERIOD TO THE NEXT investment banking activities is currently sub-federal and municipal bonds. Over the course of • 14TH among underwriters of bond issues; OFFER. concentrated in Bank ZENIT. The Group has set the the year, the Bank arranged bond issues to the par TH goal to expand sales of investment banking services value of RUR 32.5 billion. In particular, in 2011, the • 12 among arrangers of bonds in the corporate Despite a very restricted access to the capital through its points of sale in the regions of presence, Bank arranged bond issues for such companies as sector; SB Bank, Credit Bank of Moscow, Krayinvestbank, markets in the second half of 2011, Bank ZENIT including the POS network of the subsidiary banks. TH • 9 among arrangers of bonds for banking and managed to attract a USD 110 million syndicated RAZGULAY Group, KEDR Bank, KOMOS Group, as financial institutions; In 2011, debt financing, securities trading , well as bonds for the Nizhny Novgorod Region and loan maturing in 1 year. The participants in this club TH operations on the foreign exchange and interbank the city of Kazan. • 10 among arrangers of bonds in the municipal deal were the following leading European financial markets, asset management, brokerage, research sector. institutions: Citi, Commerzbank, Aktiengesellschaft, and market analysis were the most demanded JPMorgan, Raiffeisen Bank International AG, VTB The increased activity on the financial markets investment banking services on the Russian market. Bank (Deutschland) AG, OJSC “ROSBANK” and in the first half of 2011 and the Bank’s financial In this environment, Bank ZENIT boosted its Eurasian Development Bank. stability and reputation, enhanced by the necessary activities on the debt market, and the focus remained BOND ISSUES ARRANGEMENT ratings from international and Russian rating on the arrangement and initial placement of bond agencies, enabled the Bank to successfully place its issues. BY INDUSTRY BROKERAGE SERVICES (% OF THE TOTAL PAR VALUE) own bond issues on the public markets: • In May 2011, the Bank placed an issue of its BO- Over the course of 2011, 88 new clients used Bank 06 exchange-traded bonds in the amount of RUR ZENIT’s brokerage services, and the brokerage client (14%) 3 5 billion maturing in 3 years. The coupon rate was fixed base grew by 7%. at 7.25% per annum. The offer date is November 28, 2012. In the reporting period, the QUIK software for on-line trading was implemented, which enabled the Bank • In November 2011, the Bank placed an issue of to expand the range of its brokerage services and its BO-03 exchange-traded bonds in the amount of (31%) 2 products available to clients. 1 (55%) RUR 3 billion maturing in 3 years. The coupon rate was fixed at 8.75% per annum. The offer date is November The Group continued to develop its services in 19, 2012. trading in financial instruments on the international financial markets.

1 Banks (55%) 2 Sub-federal and municipal authorities (31%) 3 Agroindustrial sector and agriculture (14%)

68 69 OPERATIONS OF ZENIT INVESTMENT 4.8 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

ASSET MANAGEMENT THROUGH PROPRIETARY TRADING STRUCTURE OF THE PROPRIETARY CORRESPONDENT BANKING BANK-MANAGED MUTUAL FUNDS SECURITIES PORTFOLIO RELATIONSHIPS (BBMFs) IN 2011, THE PROPRIETARY SECURITIES 5 (5.2%) (7.7%) 4 Aiming to meet the increased demand among PORTFOLIO REMAINED ALMOST (1.5%) 3 6 (0.9%) clients for high quality interbank services, Bank In 2011, in the difficult environment on the financial UNCHANGED AND AMOUNTED TO markets tight risk management control was the key ZENIT successfully continued the expansion of its RUR 23.6 BILLION. (17.8%) 2 in the activities of asset managers. correspondent network. As at January 1, 2012, direct correspondent relationships were established 1 (66.9%) The Association of Investors Information Rights Corporate bonds denominated in Russian rubles with more than 100 of the world’s leading financial assigned leading positions to three of Bank ZENIT’s accounted for 66.9% of the securities portfolio institutions in more than 30 countries in Europe, BBMFs in the high risk funds category. This rating structure. The greater part of the securities portfolio America and Asia. is based on the assessment of funds performance is comprised of bonds of high-quality issuers that are At the beginning of 2011, in order to offer its clients over a three year period, and identifies the market included in the Lombard List of the Bank of Russia. a broader range of banking services, Bank ZENIT leaders capable of sustainably outperforming the The remaining 6.7% are investments in federal loan opened NOSTRO accounts in Korean won with the benchmark, both in periods of market growth bonds (OFZ) and municipal bonds. 1 Corporate RUR-denominated bonds (66.9%) Korea Exchange Bank, and accounts in Renminbi and market decline. The first place was assigned 2 Corporate Eurobonds (17.8%) Most notable among the factors that affected the with the Bank of China (Hong Kong) Limited to BBMF “Dokhodny II” (“Profitable II”), which 3 OFZ (1.5%) Banking Group’s activities in the reporting year outperformed the benchmark by 46.8%. BBMF 4 Equities (7.7%) and the Bank of Communications. As a result, were the deteriorating conditions on the financial “Perspectivny” (“Promising”) and BBMF “Dokhodny” 5 Municipal bonds (5.2%) clients of ZENIT Banking Group gained additional markets in the second half of 2011 caused by (“Profitable”), which came in second and third place, 6 Other (0.9%) opportunities for conducting external trade a mounting debt crisis in the Eurozone and the USA’s outperformed the benchmark by 41.5% and 31.3%, transactions and developing their businesses. economic difficulties. In the third quarter of the year, respectively. BBMF “Osnova Kapitala” (“Capital widespread fears of devaluation emerged on the Base”) showed similar strong results, but it did not back of increased volatility provoked by instability on appear in the ratings this time because it had only the world financial markets and a massive outflow been incepted in April 2009. of capital from the Russian market. In response to These results facilitated further strengthening of the these trends, the Group took measures to reduce Bank’s leading positions in 2011 by net AUM on the both investments in securities and the duration of BBMF market. its RUR-denominated and foreign currency bond portfolios.

70 71 SCRUM HALF SWIFTLY TAKING

The scrum-half’s role is to ensure that the THE INITIATIVE full-backs link with the forwards in delivering the ball in the scrum and in corridors. This In the contest for supremacy, player has to make a swift decision whether to pass it back to the defenders or keep it the active player always has moving forward. the advantage OPERATIONS OF ZENIT RETAIL 4.9 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

RETAIL BANKING

Retail banking is one of ZENIT Banking Group’s key IN 2011, DEPOSITS OF INDIVIDUALS WITH ACCORDING TO 2011 RESULTS, THE RETAIL Retail loan portfolio grew in 2011 largely due to an business lines, providing a full range of services to ZENIT BANKING GROUP INCREASED LOAN PORTFOLIO BEFORE IMPAIRMENT increase in mortgage loans (+80%) and car loans individual banking customers. BY 10%, FROM RUR 52.8 BILLION TO INCREASED BY 45.5% AND AMOUNTED (+278%), a trend that gained momentum in the second half of 2011. The development of this business line is based on RUR 57.9 BILLION. TO RUR 13.9 BILLION. RETAIL LOANS the expansion of the Group’s branch network, active CURRENTLY ACCOUNT FOR 8% OF THE cross-selling, improvement of sales techniques, and This was the result of an active drive to optimize the BANKING GROUP’S TOTAL LOAN BOOK. provision of comprehensive services to promising range of deposit accounts available to retail banking customer groups. In order to develop this business customers. The Group strives to standardize the area, in 2011, the Group launched a system of retail product range across the banking subsidiaries LOANS TO INDIVIDUALS BEFORE STRUCTURE OF THE RETAIL LOAN partnership and cooperation agreements. in order to offer the most up-to-date retail product IMPAIRMENT, RUR BN PORTFOLIO BY TYPE OF LOAN line and to issue retail products under a unified

BY THE END OF 2011 ZENIT BANKING brand. The Group’s deposit accounts not only 2007 4 (1%) 10.8 5 (1%) GROUP HAD 1.22 MILLION RETAIL afford customers attractive interest rates, but also (8%) 3 CLIENTS. offer highly advantageous terms: for example, the option of automatic extension upon termination, 2008 13.9 (41%) 2 monthly interest payments, and the options to make additional contributions or partially withdraw funds. 2009 10.7 1 (49%) DEPOSITS OF INDIVIDUALS, Individuals deposits currently make up 41% of the RUR BN Banking Group’s overall customer accounts. 2010 9.5

2007 28.7 2011 13.9

2008 1 Consumer loans (49%) 30.7 0 5 10 15 2 Mortgage loans (41%) 3 Car loans (8%) 2009 39.6 4 Overdrafts on plastic cards (1%) 5 Reverse sale and repurchase agreements (1%)

2010 52.8

2011 57.9

0 1020304050 60

74 75 OPERATIONS OF ZENIT RETAIL 4.9 ANNUAL REPORT 2011 4 BANKING GROUP BANKING

To maintain the high quality of the retail loan In 2011, while actively developing a variety of retail THE NUMBER OF TRADE AND SERVICE • Development of contingency loan programmes; portfolio, lending programmes have been business lines, ZENIT Banking Group focused on OUTLETS EQUIPPED WITH POS TERMINALS • Further expansion of the range of retail banking overhauled in order to meet the challenges of the increasing sales of bank cards. As at January 1, 2012, ROSE BY 61.8% TO 4,853 LAST YEAR. services based on development of remote customer current macroeconomic environment with proper 815 thousand bank cards had been issued. 2011 ALSO SAW A SIZEABLE INCREASE service channels: internet banking and mobile banking; consideration of the lessons learned during the Bank ZENIT sponsors ZENIT Banking Group’s • Expansion of the integrated ATM network; financial crisis. IN THE TURNOVER OF ZENIT BANKING subsidiary banks in international payment GROUP’S TRADE ACQUIRING, RISING TO In order to strengthen its positions and expand its systems (CJSC Bank ZENIT Sochi – MasterCard • Improving the functionality of ATMs and raising their RUR 11.9 BILLION. financial effectiveness; business, in 2011 the Group actively participated in and VISA; OJSC Spiritbank – MasterCard and VISA, the implementation of the following governmental JSB Devon-Credit (OJSC) – MasterCard, OJSC • Increasing the number of banks that cooperate In order to strengthen the Group’s position on the programmes: Lipetskkombank – VISA (currently undergoing with ZENIT Banking Group through sponsorship and retail banking market and improve its customer a change of sponsorship)). Under its sponsorship and partnership programmes in the retail sector; • Bank ZENIT was accredited as a participant in the services, in 2011 a complex of new products and programmes run by Vnesheconombank and the Agency partnership programmes, Bank ZENIT cooperates • Expansion of the network of companies that use the services based on bank cards and POS terminals was for Housing Mortgage Lending which aim to foster with 15 banks. Group’s trade acquiring services. investments in the construction of affordable housing put under development and implementation. Last year, sponsored by Bank ZENIT, OJSC and mortgages in the period 2010-2013. The Bank ZENIT Banking Group has identified the following has a limit of RUR 4.5 billion in the Vnesheconombank Lipetskkombank joined the VISA international priority areas for strategic development of its retail programme. payment system for trade acquiring. In the first business: quarter of 2012, Bank ZENIT plans to sponsor • A “Military Mortgage” Programme has been • Unification of retail services in all banks of the Group developed in partnership with the Federal Directorate OJSC Lipetskkombank’s membership in the VISA in order to create a unified product line; of the Deposit and Mortgage Housing System for international payment system (ATMs and issuance). Military Servicemen, which will provide mortgages Also, in 2012 Bank ZENIT plans to become a sponsor • Development of credit products based on bank cards, to military personnel. The Bank was also the first of OJSC Lipetskkombank’s membership in including the issuance of a common credit card for all financial institution to implement a sub-component of MasterCard international payment system. the banks of the Group under a single brand; the Military Mortgage Programme on providing military servicemen with loans for buying new dwellings. In 2011, the unified ATM network of ZENIT • Issuance of debit cards with a variety of applications; Banking Group and its partner banks numbered • Development of prepaid cards; DYNAMICS OF ATM NETWORK* 1,406 automated teller machines. The functionality AND ISSUED CARDS of the ATMs allows cardholders not only to withdraw • Development of loyalty programmes for cardholders; cash, replenish card accounts and make transfers, 770 • Development of mortgage lending, including 2007 but also to make payments for utility, cable TV and 614 within the framework of the programmes led by Internet services and to top up their mobile phone Vnesheconombank, the Agency for Housing Mortgage accounts. Lending and the “Military Mortgage” Programme; 2008 997 700

2009 1,036 735

2010 1,174 760

2011 1,406 815

0 200 400 600 8001,000 1,200 1,400

ATMs, units Issued bank cards, thousands

* - including ATMs of partner banks

76 77 OPERATIONS OF ZENIT 4.10 PRIVATE BANKING ANNUAL REPORT 2011 4 BANKING GROUP 4.11 RISK MANAGEMENT

PRIVATE BANKING RISK MANAGEMENT

In 2011 ZENIT Banking Group particularly focused on 2011 saw significant progress in improving the RISK MANAGEMENT OF THE GROUP CREDIT RISK development of Private Banking services1. quality of the client base, as reflected in the fact that IS AIMED AT MONITORING AND the growth of key performance indicators exceeded Bank ZENIT, the parent bank of the Group, has MANAGING MAJOR RISKS ADHERENT To manage credit risk ZENIT Banking Group sticks the increase in the number of clients who received to conservative approaches, applies methods and traditionally occupied a leading position in the Private TO ITS ACTIVITIES. BANK ZENIT IS THE services. In 2011, the average annual balances on Banking sector due to impeccable customer service procedures required by the regulatory authorities. term deposit accounts per Private Banking client COORDINATING, METHODOLOGICAL AND and the high level of its services. Despite the difficult The concentration of Bank ZENIT’s activities as the were 30.5% higher than in 2010. RISK-CONTROLLING CENTRE OF THE market environment, significant investment risks Group’s parent bank in corporate banking defines the GROUP. THE GROUP’S SUBSIDIARIES and strong competition in this sector, 2011 witnessed In 2011, ZENIT Banking Group continued regional corporate clients credit risk as one of the key risks the strengthening and growth of the Bank’s key development of its Private Banking services. In INDEPENDENTLY PERFORM ONGOING for the Group. Considering the requirements of the indicators in the Private Banking segment. particular, OJSC Lipetskkombak strengthened its MANAGEMENT OF THEIR OWN RISKS Basel Committee on Banking Supervision, this risk position as a provider of Private Banking services. BASED ON A UNIFIED METHODOLOGY OF should be managed by underwriting, establishing BASED ON THE YEAR-END RESULTS These services for high-net-worth clients are based RISK MANAGEMENT ACROSS THE GROUP. limits on loans to borrowers (issues, counter-parties) THE AVERAGE ANNUAL ACCOUNTS OF on the technological solutions developed by OJSC and subsequent compliance control, creation of THE BANK’S PRIVATE BANKING CLIENTS Bank ZENIT that have proven efficient on the Moscow The third version of the Risk Management Concept adequate allowances for possible loan impairment, market for over a decade. regular monitoring of the borrower’s transactions and INCREASED BY 24.1%, INCLUDING approved in 2009 defines the key principles and approaches to the composition and application of financial standing for as long as the deal is in effect, THE GROWTH OF BALANCES ON TERM Overall, in 2011 ZENIT Banking Group successfully risk management systems across the Group at the as well as through application of credit risk mitigation DEPOSITS FROM PRIVATE BANKING competed with the strongest players on the domestic Private Banking market and held on to its position current stage of its development. instruments (collaterals, guarantees, sureties). CLIENTS BY 23.4%. among the market leaders. The Group’s consolidated risk management In order to optimize the credit risk level, a system of covers assessment of economic capital, control of internal ratings for corporate clients and counter- In order to maintain competitiveness in this concentration on related parties and business lines, parties (IRB approach to credit risk assessment) has difficult market environment, Bank ZENIT launched implementation of unified standards for analysis of been developed and implemented. a new investment service “Private Consultant on borrowers, issuers and counter-parties. In addition, the Russian Financial Market”, which extended In 2007, the Group implemented a technology for the Group implements common policies on currency, opportunities for clients on structuring and operational monitoring of borrowers’ financial price, interest and liquidity risks, as well as capital maintaining effective broker positions. standing and business type by risk factors. This adequacy ratio monitoring, unified approaches monitoring system is used to identify any potential and methodologies to control business processes problems arising with standard loans in a timely and policies on operational risks, and works on manner. In 2008, this technology was supplemented introducing a unified risk assessment software. by a monitoring system for investment projects financed by the Group. In 2010, the business plans of investment projects monitored by the Group went through a process of reviewing and re-approval on the back of the new post-crisis economic conditions.

1 In the Consolidated Financial Statements of ZENIT Banking Group for the The methodologies and tools for managing year ended 31 December 2011 Private Banking services are recognized in non-performing loans under the retail lending retail lending portfolios and individual customer accounts, respectively. programmes are being constantly updated.

78 79 OPERATIONS OF ZENIT 4.11 RISK MANAGEMENT ANNUAL REPORT 2011 4 BANKING GROUP

Close attention is paid to improving the quality of COUNTRY RISK LIQUIDITY RISK At present, pursuant to the policies of balance retail loan portfolios. Most loan-related decisions are structure risk assessment and management across made by the relevant collegiate bodies. To minimize In order to mitigate country risks associated with Close attention is paid to liquidity risk management. the Group, a software solution of Bank ZENIT based operating costs and expedite the decision-making loans extended to customers from other countries, The Group performs daily monitoring of the current on the assessment and analysis of liquidity and process, the Group restrictedly uses a scoring-based the Bank establishes specific country limits – and forecast status of short-term liquidity on the interest risks is being implemented in the banking technology for decision making, which is constantly restrictions on total exposure to clients, residents basis of a payment schedule and forecast of funds subsidiaries. The completion of this project will adapted to changes on the retail lending market. In of a particular country. required in the short term. Monitoring of the long- allow the Group to assess and analyze these risks line with the improvement of forecasting capacities term liquidity position is performed by drawing up on a consolidated basis and improve the decision- of this system, the number of the decisions made on current and forecast reports on a mismatch between making on optimal distribution of funds among the its basis will be growing. The system also has in-built MARKET (PRICE) RISK OF the maturities of assets and liabilities. Based on Group members. checks for identifying fraud in the process of loan SECURITIES PORTFOLIOS 2008 crisis data, in 2010, the Group updated the extension and employs behavioural scoring methods algorithms used for stress test analysis of long-term when managing consumer loans. The Group’s credit As with credit risk, market risk management liquidity. The above reports serve as the basis for policy primarily focuses on development of lending comprises procedures for independent risk decision-making in the Group’s long-term liquidity programmes for employees of the Group’s corporate assessment of transactions (investments in management. clients, thus significantly mitigating credit risks. financial instruments) initiated by the IB unit. The Group complies with all mandatory CBR liquidity Risks are assessed on the basis of a detailed analysis control ratios. of an issuer as well as of the transaction structure. The share of liquid assets is maintained at a level The Group applies VaR methodologies allowing to sufficient for meeting the Group’s obligations to its assess maximum possible losses for a given portfolio customers and counter-parties. To maintain instant with a set reliability within a given time horizon. liquidity, the Group has established limits with In 2009, taking into account the crisis environment many Russian and international banks. A significant on the securities market during 2008, the Bank amount of bonds from the CBR’s Lombard List is improved its approach to setting stop-loss and take- maintained as an additional liquidity instrument. profit limits. Upon approval of a limit application Liquidity risk is also mitigated by the Group’s liquidity submitted by a unit by the respective collegiate management policy and technologies, envisaging body, the limits are being monitored on a daily basis. stress approaches to assessing future cash flows. On a monthly basis ALCO (Assets and Liabilities The Group also exercises weekly monitoring of actual Committee) gets a report on the utilization of the interest margin. approved limits on investments in securities. In 2009, the Market Risks Committee was established ZENIT Banking Group responded to instability and started its work. Its main aim is controlling and on the financial markets in the second half of prompt decision-making on the approved stop-loss 2011 by pursuing a consistent policy of maintaining and take-profit limits. a sufficient share of cash in assets structure should a negative economic climate persist. Within the framework of integration of risk assessment and risk management policies within the Group banks, OJSC Lipetskkombank started to implement the transactional limits system applied by Bank ZENIT.

80 81 OPERATIONS OF ZENIT 4.11 RISK MANAGEMENT ANNUAL REPORT 2011 4 BANKING GROUP

INTEREST RATE RISK CURRENCY RISK OPERATIONAL RISK LEGAL RISK

Interest rate risk is managed by optimizing the Currency risk is managed by funding material The Group’s operational risk and its material Risk of loss due to noncompliance with the current structure of assets and liabilities by maturity investments from the resources denominated exposure to operational losses are monitored on RF regulatory framework, and/or due to legal and interest rates and is based on the analysis of in the same currency and, if possible, with the a regular basis by type of operational risk and area of mistakes committed during banking activities, and instruments sensitivity to changes in interest rates, same maturity. This approach corresponds with activity. due to imperfections of the Russian legal system is analysis of gaps between the interest sensitive the Group’s currency policy which provides for included in the Group’s legal risk category. Data on operational risk and loss are being collected; components of assets and liabilities, and scenario avoiding funding of term assets in one currency and internal and external operational loss databases The Bank takes, among other things, the following analysis of changes in the Bank’s interest margin. by selling another. The currency policy only have been created. steps to mitigate this risk: An expert assessment of excessive concentrations of permits short-term RUR / USD transactions interest risk is continuously performed. generating speculative income to be carried out Multi-step controls of transactions and deals at all • Standardization of banking operations and other transactions (regulations, procedures, technologies for within the scope of the regulator’s requirements. stages allow for significant mitigation of risk. The Group uses a system of interest rate dynamics conducting transactions, closing deals and executing This approach ensures that investments and monitoring by products and interest margin The risk management system focuses particularly contracts); funding match in terms of currency, precludes on technology risk and risk associated with control. Regular stress calculations are made of • Establishing an internal review and approval uncontrollable open currency positions, and implementation of new technologies. Design possible losses due to the occurring mismatch of procedure stipulating endorsement by the Legal eliminates significant currency risks. interest-bearing assets and liabilities. In 2010 a set solutions and their quality are studied and Department of contracts executed by the Bank and of software tools for the assessment of a possible The Group also analyses the volumes of different assessed for this purpose, as are the organization non-standardized banking operations and other reduction of interest margin based on the Monte types of assets, liabilities and transactions in of technological processes, information flows transactions; and management processes, and resistance to Carlo method was implemented. If potential losses domestic and foreign currencies, forecasts foreign • Regular monitoring of changes to the legislation of are significant, a decision can be taken to eliminate exchange rates and adjusts the transactions technological and technical risks. the Russian Federation. the relevant gaps or compensate for the losses by depending on the potential losses from unfavorable Implementation is now complete of the automated increasing the spread between the borrowing and changes in foreign exchange rates. In the event of limit control system (developed by Thompson lending rates. potential unfavorable currency risk dynamics, the Reuters and Systematica), which consists not REPUTATIONAL RISK Group plans the changes in the currency structure of only of methodologies tested and verified by ZENIT Banking Group dedicates significant efforts to assets and liabilities in order to mitigate these risks. international banks, but also of those for risk the developing of a positive image with its customers Management of currency risk is carried out by assessment and limits control applied by the Group, and on the market in general through improved setting limits on the open currency position (OCP). including concentration limits for all counter-party informational transparency. Management of OCP limits are determined for each currency commitments. reputational risk is an important element of the risk individually and for aggregate positions in all management system, and the Group’s management currencies. In order to limit the currency risk is directly involved in this. pursuant to the CBR’s regulations and its own internal requirements, the Group controls OCP on a daily basis. STRATEGY RISK

This risk is mitigated by thorough management decision-making based on preliminary analysis of the current situation in the banking sector and the prospects for its future development, of actions of the Bank’s counterparties and competitors as well as customers’ needs, and of the availability of human, financial and technical resources required for the planned change.

82 83 OPERATIONS OF ZENIT CHARITY AND SPONSORSHIP 4.12 ANNUAL REPORT 2011 4 BANKING GROUP PROGRAMMES

CHARITY AND SPONSORSHIP PROGRAMMES

ZENIT Banking Group takes an active part in the of its presence. The main partner in this major A highlight of 2011 was the presentation of the LONG-TERM PROGRAMMES CONDUCTED social and cultural life of the regions of its presence. programme is the National Charitable Foundation for “Give Kids a Smile” bank card during the final of BY ZENIT BANKING GROUP ARE AIMED TO Activities include providing support to vulnerable the Development of Children’s Rugby. The foundation the Nechkebil Beauty, Motherhood and Family ASSIST THE MOST VULNERABLE SOCIETY segments of the population, implementing cultural provides grants for children’s trainers, equipment Competition in the Republic of Tatarstan. This was GROUPS – CHILDREN AND THE ELDERLY. and arts projects and developing the talents of young and uniforms for players and pays expenses during the first time ZENIT Banking Group has sponsored people and sports. competitions. The Junior Rugby Tournament - the this event which takes place annually in Kazan with IN 2011, THE GROUP UNDERTOOK Bank ZENIT Cup took place for the tenth time in the support of the Government of the Republic of OBLIGATIONS OF PROVIDING CONSTANT A MAJOR LANDMARK OF 2011 WAS 2011 and has been officially included in the national Tatarstan. FINANCIAL SUPPORT TO CHILDREN WHO events calendar of the Russian Union of Rugby THE PARTICIPATION OF THE RUSSIAN Also, in the Republic of Tatarstan, ZENIT Banking WERE ORPHANED BY THE “BULGARIA” Players. NATIONAL RUGBY TEAM IN THE Group supports the restoration of historical and CRUISE SHIP DISASTER. TWENTY-ONE RUGBY WORLD CUP WITH TITLE ZENIT Banking Group channels funds to promote cultural monuments – the ancient city of Bulgar and CHILDREN WILL RECEIVE PERSONAL SPONSORSHIP FROM BANK ZENIT. THE regular sport practices among children. In particular, the island-town Sviyazhsk. In 2011, the restoration PENSIONS THROUGH TO ADULTHOOD. DEBUT OF THE RUSSIAN TEAM AT THE a unique banking product was developed – a charity of the Small Minaret in Bulgar was completed, card “Rugby for Russian Children! Healthy Citizens while restoration work was also carried out on the WORLD CUP IN NEW ZEALAND WAS The Group provides supplementary pensions to for Russia!” In 2011, Bank ZENIT presented its Sergiev Church in Sviyazhsk. The restoration of the retired professors of the Moscow Aviation Institute AN IMPORTANT ACHIEVEMENT FOR charity programme for holders of VISA/MasterCard Annunciation Cathedral of the Kazan Kremlin has and to the honorary pensioners of Kazan. The list of RUSSIA. THE TEAM GAVE A STRONG with the aim of popularizing children’s rugby and been underway since 1996: the cell of St. Guriya and pensioners was expanded in 2011 and the pensions PERFORMANCE AND WHIPPED UP A LOT building wider public support for the sport. Therefore the All Saints Lower Church have been restored and were raised in line with inflation. Every year ZENIT OF ENTHUSIASM AMONG THE RUGBY a contemporary and convenient financial tool for the work on the Church of the Saints Boris and Gleb Banking Group provides financial support for Victory SUPPORTERS, INCLUDING BANK ZENIT making target charitable donations was introduced. was completed. In 2011, the building of a mosque in Day celebrations and sends its congratulations Nizhnekamsk was supported. Charitable donations REPRESENTATIVES. INDEED, THE BANK’S Another similar scheme is being implemented to veterans in its regions of presence. It also were channelled to the Russian Orthodox Church DELEGATION GAVE THE MOST FERVENT by ZENIT Banking Group in partnership with the traditionally participates in the “Help to Get Ready for of the Intercession of the Holy Mother of God in the Russian Public Charity organization “Operation School” initiative, which provides financial assistance ENCOURAGEMENT TO ITS COMPATRIOTS village Afanasovo in the Nizhnekamsk district. Smile”. Holders of charity donation cards “Give to first-year pupils from low-income families in the COMPETING IN NEW ZEALAND, AND THE Kids a Smile” help to improve the lives of children ZENIT Banking Group has donated towards the Republic of Tatarstan at the beginning of the school TEAM FELT THIS SUPPORT, GROWING IN who have maxillo-facial defects. With the support restoration of the Raifa Monastery in the Republic of year. In 2011, donations were made to the Nurlatsky SKILL FROM MATCH TO MATCH. of ZENIT Banking Group children living across the Tatarstan since 2001. In 2011, the Church Over-the- Children’s Home in Tatarstan, Dzerzhinsky Children’s Russian Federation benefit from free corrective gates of Archangel Michael was fully restored. The Home No. 1 in the Nizhny Novgorod Region, and the While we celebrate the achievements of the national surgeries. In 2011, the Group financed a medical Group also makes regular annual donations to the Special Needs Children’s Home No.12 and Municipal rugby team, we are also looking to training up the campaign of the Russian Public Charity organization Raifa Monastery’s Children’s Orphanage. Children’s Clinic No.7 in Moscow. The Group also worthy generation of young sportsmen. With the “Operation Smile” in Novosibirsk. donated to the anniversary celebrations of the Kazan longstanding support of ZENIT Banking Group, Suvorov Military School. more than 1,800 young Russian rugby players have been given the opportunity to play their favourite sport. Bank ZENIT has set up and actively develops a network of children’s rugby schools in the regions

84 85 OPERATIONS OF ZENIT CHARITY AND SPONSORSHIP 4.12 ANNUAL REPORT 2011 4 BANKING GROUP PROGRAMMES

It has become traditional for the Group to finance In 2011, ZENIT Banking Group acted as a sponsor of AMONG NOTEWORTHY PROJECTS OF THE charity New Year celebrations with gifts for children a charitable golf tournament – the President of the YEAR 2011 THE GROUP’S SPONSORSHIP from low-income families in the Republic of Republic of Tatarstan Cup. All money raised during OF THE THIRD FESTIVAL OF THE RUSSIAN Tatarstan. In 2011, Bank ZENIT in cooperation with the event was donated to the development of the NATIONAL ORCHESTRA THAT TOOK PLACE JSB Devon-Credit (OJSC) organized an ice-show paralympic movement. In particular, the Tatarstan “Snow Queen” in the “Tatneft Arena” Ice Palace of Disabled Basketball Team received donations from IN MOSCOW CAN BE MARKED OUT, AS Sports. New Year charity gifts were also presented to the organizers and participants of the tournament. WELL AS THE “THIRD ROME” FESTIVAL. orphaned children in the Kaliningrad Region. Bank ZENIT is a title sponsor of the Russian Shooting In 2011, financial support was provided to the Galina For many years ZENIT Banking Group patronizes the Union, supporting competitions and publication of Vishnevskaya’s School of Opera, the World Opera Kazan Zoological and Botanical Garden where special methodical literature. Competition “Operalia” held in Moscow and the housing is provided for tigress Romashka at the In 2011, financial support was also provided to annual Festival “Svyatoslav Richter’s December expense of the Group. the “Slavyanka” Women’s Basketball Team of Evenings”, which takes place in the State Pushkin The Master Class Creativity School is one of ZENIT Chelyabinsk and sports teams of the “Yunost” Youth Museum. Banking Group’s consistent long-term charitable Club of Almetyevsk. The Group supported the rugby projects in the cultural field. In 2011, the Master tournament in memory of B.P. Gavrilov held by the ZENIT BANKING GROUP’S CHARITABLE Class School established a unique organization charitable foundation for retired rugby players. The ACTIVITIES ARE HIGHLY APPRECIATED IN – Non-Commercial Partnership “Inter-Regional Group continues its tradition of supporting the “Altay- THE REPUBLIC OF TATARSTAN. IN THE Association of Bayan Players and Accordionists”. The Raft” Foundation, which promotes the development Group’s financial support opens up new opportunities of boat racing and rafting. For many years the Group REPUBLIC’S “CHARITOR OF THE YEAR” for talented young musicians and artists to develop has sponsored the Russian Hockey Federation CONTEST, THE GROUP WON IN THE their skills and unlock their potential. The school has and is currently providing active assistance to the CATEGORY FOR “LARGE AND MEDIUM also started to work with gifted disabled children Continental Hockey League. BUSINESS”. since 2011. ZENIT Banking Group has a strong interest in The Group supports the foundation “Illustrated maintenance and development of national sports, When designing its charity programmes, the Group Books for Blind Children”. In 2011, the Almetyevsk traditions and cultures. The annual Sabantuy national devotes significant efforts to developing modern Nursery for Children with Special Needs received festival takes place in the Republic of Tatarstan, Saint public fundraising tools that allow monitoring and specially adapted Braille books as a gift. In both Petersburg and Moscow, funds are provided for the controlling of the targeted use of donated funds. Almetyevsk and Kazan the Group regularly provides public sports events that promote Kuresh wrestling The financial tools developed by ZENIT Banking support to disabled and blind people. Donations were and Greco-Roman wrestling. Group have been taken up by the Group’s charity made to the local Togliatti organization “All-Russian In 2011, the monument to the Tatar poet Gabdulla partners. Providing a high level of transparency Society for the Disabled”. Tukay was put up in Moscow. The monument was and efficiency according to the best international presented to the capital by the Government of the standards, these tools are clear and appealing to Republic of Tatarstan. ZENIT Banking Group provided a wide range of donors. financial assistance to this initiative.

86 87 ANNUAL REPORT 2011

THE CORNERSTONES OF ZENIT BANKING 3. Improving the Banking Group’s information DEVELOPMENT GROUP’S STRATEGIC DEVELOPMENT technologies: ARE IMPROVEMENT OF INFORMATION • Centralization of banking applications and their OF INFORMATION functional upgrade; TECHNOLOGIES OF SALES AND CUSTOMER TECHNOLOGIES SERVICES, INTEGRATION OF THE IT • Implementation of projects aimed at modernization of 5 local computer networks; SYSTEMS WITHIN ZENIT BANKING GROUP AND UPDATING THE IT INFRASTRUCTURE • Ensuring the security of IT systems in accordance TO THE STATE OF THE ART STANDARDS, with legislative requirements and industry standards; AS WELL AS MODERNIZATION OF THE IT • Expansion of an integrated monitoring system for IT SUPPORT SOLUTIONS OF MANAGERIAL infrastructure objects across the Banking Group; DECISION-MAKING. • Improvement of electronic document processing in the subsidiary banks;

In 2011, the Group conducted the following work in • Expansion of a video-conferencing system across order to meet its technological objectives: the Bank ZENIT head office, its regional offices and 1. Improving customer service technologies: subsidiary banks – members of ZENIT Banking Group. These technologies can be used not just to expedite • Development and implementation of contemporary managerial decision-making but also to conduct job systems for remote customer services, including interviews, distant trainings and topical meetings. technologies for front-office work with clients; • Development of an IT services management system • Development and implementation of comprehensive based on the best international practices. solutions for customized services (Customer Relations Management). Integration of the state of the art comprehensive IT solutions is aimed to strengthen the technological 2. Improving technologies for financial and risk advantages of the Banking Group and assure management: a competitive power in the long-term perspective. • Launch of a new system for controlling limits on trade transactions;

• Launch of a new automation system for processes of compiling managerial and financial reports in compliance with the IFRS standards applied in the Banking Group;

• Modernization and implementation of an integrated system for employee motivation.

88 89 CENTER ACTION

The centres are crucial to both defence WITH CONTROL and attack. They need to be solid tacklers who can also display speed, power Any victory begins with and creativity in breaking through the opposition lines and making tries. control over situation ANNUAL REPORT 2011

The most important goal of the Banking Group’s HR The Banking Group’s HR policy aims to engage ORGANIZATIONAL policy in 2011 was to provide its structural units with the talents of every single employee based on his highly-qualified banking specialists. individual strengths. Motivation approaches based DEVELOPMENT AND HUMAN on comprehensive incentive methods, including THE OVERALL NUMBER OF EMPLOYEES monetary and non-monetary incentives, are used for 6 RESOURCES MANAGEMENT OF THE BANKING GROUP ROSE BY that purpose. 8.94%, AND BY THE END OF DECEMBER In 2011, Bank ZENIT developed a concept, defined 2011 ARRIVED AT ALMOST 4,500 PEOPLE. the mechanisms and tools required for a staff THE DEVELOPMENT OF THE BANKING rewarding system based on key performance GROUP’S PRIORITY BUSINESS AREAS: indicators (KPIs). The aim was to raise employees’ responsibility for the results of their work and to RETAIL BANKING, SMALL AND MEDIUM- provide an objective incentive for them to contribute SIZED BUSINESS AND THE EXPANSION to the strategic development of the Bank. In 2012, the OF THE GROUP’S REGIONAL NETWORK performance of employees and units will be assessed WAS THE MAIN FACTOR BEHIND THIS using a new staff rewarding system based on KPIs. INCREASE. In order to improve inter-corporate relations and inform employees about current events, The Group’s significant efforts were directed a “ZENIT Bulletin” is issued on a regular basis. towards the further professional development of This newsletter focuses on coverage of corporate the personnel. 13% of employees received training events, business issues in different areas, strategy at different vocational training centres, including and plans, achievements and successes of staff seminars and professional counselling sessions. members, important developments and updates on Employees working in the retail and cashier units key projects. Moreover, an Intranet portal is up and of the Bank (16% of the overall number) received running and regular opinion polls take place. regular trainings on new technologies, products and Efforts devoted to organizational development, HR services. Managers from regional offices attended policies and innovations, corporate governance and training programmes in Moscow. a system of corporate communications are ultimately Over the course of 2011, OJSC Bank ZENIT regularly aimed at creating the Banking Group’s corporate organized trainings and seminars for employees of culture, which is a key factor of successful business. the Group’s subsidiary banks. These sessions were devoted to developing unified approaches to lending to investment projects and project financing, anti- laundering procedures and measures to counteract financing of terrorism, collateral management, operational risk management, and various HR activities. Online training, including online courses, tests and video seminars in accordance with the objectives of professional development of staff members, was intensively developed.

92 93 WING THE REWARDS OF

The fastest and most dynamic players in TARGETED ACTION the team, they generally score the most tries in a match. Taking possession of the ball on The most impressive results the sideline launching high-speed tackles or interacting with partners, the wings break go to the most dynamic player through the opposition’s defensive line to touch down the ball. ANNUAL REPORT 2011

CONSOLIDATED STATEMENT OF INCOME FINANCIAL (Thousands of Russian roubles, except for Earnings per share) STATEMENTS

7 YEAR ENDED 31 DECEMBER 2011 2010

Interest income 17,866,514 17,771,464

Interest expense (10,436,556) (10,783,316)

NET INTEREST INCOME BEFORE PROVISION FOR LOAN IMPAIRMENT 7,429,958 6,988,148 Consolidated Statement of Income | 97 Provision for loan impairment (1,371,641) (1,856,253)

Consolidated Statement of Comprehensive Income | 98 NET INTEREST INCOME 6,058,317 5,131,895 Net gain/(loss) on financial assets at fair value through profit or loss 74,091 (52,925)

Consolidated Statement of Financial Position | 99 Net realised gain from available-for-sale financial assets 25,866 1,772,123

Recovery/impairment of available-for-sale financial assets 83,356 (5,824) Consolidated Statement of Changes in Equity | 100 Net gains arising from dealing in foreign currencies 286,875 649,629 Consolidated Statement of Cash Flows | 102 Net gain/(loss) arising on foreign exchange translation 92,646 (285,645) Fee and commission income 4,272,964 3,664,208

Fee and commission expense (535,905) (383,764)

(Charge) /recovery of provision for losses on credit related commitments (68,137) 6,006

Recovery of impairment of property, plant and equipment 58,263 96,761

Impairment of assets for development and sale (335,434) -

Fair value movement of investment property 14,575 10,992

Impairment of non-current assets held for sale (59,549) (277,360)

Net loss on disposal of non-current assets held for sale (77,893) -

Other operating income 442,395 595,713

NET REVENUES 10,332,430 10,921,809

Operating expenses (6,786,128) (5,738,854)

PROFIT BEFORE INCOME TAX EXPENSE 3,546,302 5,182,955

Income tax expense (1,026,718) (1,521,027)

NET PROFIT 2,519,584 3,661,928

ATTRIBUTABLE TO:

EQUITY HOLDERS OF THE PARENT 2,506,867 3,655,776

NON-CONTROLLING INTEREST 12,717 6,152

EARNINGS PER SHARE, BASIC AND DILUTED (RUSSIAN ROUBLES) 0.222 0.324

96 97 7 FINANCIAL STATEMENTS ANNUAL REPORT 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Thousands of Russian roubles) (Thousands of Russian roubles)

YEAR ENDED 31 DECEMBER 31 DECEMBER

2011 2010 2011 2010

NET PROFIT 2,519,584 3,661,928 ASSETS Cash and cash equivalents 34,413,258 30,936,454 OTHER COMPREHENSIVE INCOME Mandatory reserve deposits with the Central Bank of the Russian Federation (CBRF) 2,335,160 1,087,250 Due from banks 10,097,501 8,618,382 Exchange differences on translation of foreign operations (3,216) (451) Financial assets at fair value through profit or loss 6,933,434 12,122,902 Available-for-sale financial assets 16,641,962 11,414,482 Net result from changes in fair value of available-for-sale financial assets reclassified to profit or loss upon disposal (net of deferred income tax of RUR 5,173 thousand for the year Investments in associates 1,213,914 1,162,726 (20,693) (1,417,698) ended 31 December 2011 and net of deferred income tax of RUR 354,425 thousand for the Loans to customers 164,304,510 126,995,907 year ended 31 December 2010) Property, plant and equipment 4,017,664 3,730,088 Assets for development and sale 2,691,584 - Net result from changes in fair value of available-for-sale financial assets reclassified to Investment property 392,768 212,771 profit or loss upon impairment (net of deferred income tax of RUR 16,671 thousand for the (66,685) 4,659 year ended 31 December 2011 and net of deferred income tax of RUR 1,165 thousand for Goodwill 156,248 156,248 the year ended 31 December 2010) Other assets 760,258 540,467 Current income tax asset 8,017 101,727 Fair value adjustment on available-for-sale financial assets (net of deferred income tax of Deferred income tax asset 575,779 387,953 RUR 125,601 thousand for the year ended 31 December 2011 and net of deferred income (502,405) 1,211,880 Non-current assets held for sale 2,185,310 2,328,547 tax of RUR 302,970 thousand for the year ended 31 December 2010) TOTAL ASSETS 246,727,367 199,795,904 LIABILITIES Revaluation of property, plant and equipment (net of deferred income tax of RUR 16,520 Due to banks and CBRF 23,432,163 16,247,210 thousand for the year ended 31 December 2011 and net of deferred income tax of RUR 66,076 90,414 22,604 thousand for the year ended 31 December 2010) Customer accounts 142,244,146 116,153,700 Debt securities issued 19,689,309 15,832,779 RUR-denominated bonds issued 23,885,464 17,384,398 Other comprehensive income from investments in associates (net of deferred income tax 11,678 - of RUR 2,920) Other liabilities 1,024,705 815,122 Current income tax liability 12,545 4,002 OTHER COMPREHENSIVE LOSS, NET OF TAX (515,245) (111,196) Deferred income tax liability 85,286 101,759 TOTAL COMPREHENSIVE INCOME 2,004,339 3,550,732 Subordinated debt 12,440,987 11,087,699 TOTAL LIABILITIES 222,814,605 177,626,669 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: EQUITY EQUITY HOLDERS OF THE PARENT 1,991,622 3,544,580 Share capital 12,698,104 12,698,104 NON-CONTROLLING INTEREST 12,717 6,152 Treasury shares (699,900) (699,900) Share premium 1,545,000 1,545,000 Cumulative translation reserve (3,321) (105) Revaluation reserve for available-for-sale financial assets (568,992) 20,791 Property, plant and equipment revaluation reserve 203,778 137,702 Other comprehensive income from investments in associates 11,678 - Retained earnings 10,654,603 8,400,755 EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE BANK 23,840,950 22,102,347 Non-controlling interest 71,812 66,888 TOTAL EQUITY 23,912,762 22,169,235 TOTAL LIABILITIES AND EQUITY 246,727,367 199,795,904

98 99 7 FINANCIAL STATEMENTS ANNUAL REPORT 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Thousands of Russian roubles)

REVALUATION OTHER RESERVE FOR PROPERTY COMPREHENSIVE EQUITY CUMULATIVE AVAILABLE-FOR- AND EQUIPMENT INCOME FROM ATTRIBUTABLE TO NON- SHARE TREASURY SHARE TRANSLATION SALE FINANCIAL REVALUATION INVESTMENT IN RETAINED SHAREHOLDERS CONTROLLING TOTAL CAPITAL SHARES PREMIUM RESERVE ASSETS RESERVE ASSOCIATES EARNINGS OF THE BANK INTEREST EQUITY

31 DECEMBER 2009 12,698,104 (699,900) 1,545,000 346 221,950 47,288 - 5,833,089 19,645,877 77,463 19,723,340 Net profit ------3,655,776 3,655,776 6,152 3,661,928 Dividends for the year 2009 ------(1,088,110) (1,088,110) (5,227) (1,093,337) Translation movement - - - (451) ----(451) - (451)

Net result from changes in fair value of available-for-sale financial assets reclassified to profit or loss upon disposal ---- (1,417,698) - - - (1,417,698) - (1,417,698) (net of deferred income tax of RUR 354,425 thousand)

Net result from changes in fair value of available-for-sale financial assets reclassified to profit or loss upon impairment ---- 4,659 - - - 4,659 - 4,659 (net of deferred income tax of RUR 1,165 thousand)

Fair value adjustment on available-for-sale financial assets ---- 1,211,880 - - - 1,211,880 - 1,211,880 (net of deferred income tax of RUR 302,970 thousand)

Revaluation of property, plant and equipment (net of deferred ---- - 90,414 - - 90,414 - 90,414 income tax of RUR 22,604 thousand)

Acquisition of additional shares in subsidiary ------(11,500) (11,500)

31 DECEMBER 2010 12,698,104 (699,900) 1,545,000 (105) 20,791 137,702 - 8,400,755 22,102,347 66,888 22,169,235 Net profit ------2,506,867 2,506,867 12,717 2,519,584 Dividends for the year 2010 ------(253,019) (253,019) (7,793) (260,812) Translation movement - - - (3,216) ----(3,216) - (3,216)

Net result from changes in fair value of available-for-sale financial assets reclassified to profit or loss upon disposal ---- (20,693) - - - (20,693) - (20,693) (net of deferred income tax of RUR 5,173 thousand)

Net result from changes in fair value of available-for-sale financial assets reclassified to profit or loss upon ---- (66,685) - - - (66,685) - (66,685) impairment or disposal (net of deferred income tax of RUR 16,671 thousand)

Fair value adjustment on available-for-sale financial assets ---- (502,405) - - - (502,405) - (502,405) (net of deferred income tax of RUR 125,601 thousand)

Revaluation of property, plant and equipment (net of deferred ---- - 66,076 - - 66,076 - 66,076 income tax of RUR 16,520 thousand)

Other comprehensive income from investments in associates ------11,678 - 11,678 - 11,678 (net of deferred income tax of RUR 2,920)

31 DECEMBER 2011 12,698,104 (699,900) 1,545,000 (3,321) (568,992) 203,778 11,678 10,654,603 23,840,950 71,812 23,912,762

100 101 7 FINANCIAL STATEMENTS ANNUAL REPORT 2011

CONSOLIDATED STATEMENT OF CASH FLOWS (Thousands of Russian roubles)

2011 2010 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 16,971,620 15,141,068 Acquisition of associate - (1,171,997)

Interest paid (9,778,136) (11,050,524) Subsequent acquisition of shares in subsidiary - (10,769)

Cash received on dealing in foreign currencies 263,378 635,947 Purchase of property, plant and equipment (435,278) (242,726)

Cash paid on dealing in financial assets at fair value through profit or loss (50,607) (322,713) Purchase of available-for-sale financial assets (24,940,114) (29,436,634)

Fees and commissions received 4,233,721 3,634,261 Proceeds from sales of available-for-sale financial assets 18,410,867 31,435,760

Fees and commissions paid (520,156) (377,834) Proceeds from sale of equipment 66,339 184,442

Other operating income received 467,172 269,980 Proceeds from sale of non-current assets held for sale 1,022,422 206,338

Operating expenses paid (6,835,272) (5,610,874) Purchase of assets for development and sale (3,027,018) -

Income tax paid (1,000,758) (1,004,451) Purchase of investment property (165,422) -

OPERATING ACTIVITIES BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES 3,750,962 1,314,860 NET CASH USED IN/(FROM) INVESTING ACTIVITIES (9,068,204) 964,414

NET CASH INCREASE/(DECREASE) FROM OPERATING ASSETS AND LIABILITIES CASH FLOWS FROM FINANCING ACTIVITIES

Mandatory reserve deposits with the Central Bank of the Russian Federation (1,247,910) (138,034) Issuance of shares by subsidiary - 32

Due from banks (1,482,153) 21,261,965 Re-issuance/issuance of RUR-denominated bonds 8,000,000 10,000,000

Financial assets at fair value through profit or loss 5,391,286 (7,924,427) Redemption of RUR-denominated bonds (667,268) (2,253,912)

Loans to customers (36,898,326) (26,875,307) Dividends paid (260,812) (1,093,337)

Other assets (351,868) (527,911) Subordinated debt, received 1,047,630 -

Due to banks 6,359,443 (8,611,763) Subordinated debt, paid (55,000) (48,069)

Customer accounts 24,892,072 12,909,855 NET CASH FROM FINANCING ACTIVITIES 8,064,550 6,604,714

Debt securities issued 3,286,858 1,488,527 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 349,114 (632,053)

Other liabilities 430,598 115,438 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,476,422 (49,722)

NET CASH FROM/(USED IN) OPERATING ACTIVITIES 4,130,962 (6,986,797) Cash and cash equivalents, beginning 30,935,847 30,985,569

CASH AND CASH EQUIVALENTS, ENDING 34,412,269 30,935,847

102 103 ANNUAL REPORT 2011

104 105 8 REFERENCE INFORMATION ANNUAL REPORT 2011

LIST OF LICENSES AND MEMBERSHIP IN ASSOCIATIONS, MEMBERSHIP OF OSJC BANK ZENIT IN ASSOCIATIONS, PARTNERSHIPS AND ORGANISATIONS: PARTNERSHIPS AND ORGANISATIONS • State Deposit Insurance System • Participants of the Information Exchange Partnership (non-profit partnership) • Association of Russian Banks (ARB) • Odintsovo Chamber of Commerce and Industry • Chamber of Commerce and Industry of the Republic of Tatarstan • Association of Russian Banks/Members of Visa (non-profit organization) • Moscow Banking Union (non-profit partnership) OJSC BANK ZENIT • Visa International Service Association • Association of Banks of Central Russia LIST OF LICENSES OF OJSC BANK ZENIT: • MasterCard Europe S.A. • Bankers Association of Tatarstan • Association of Russian Europay Members • General license of the Bank of Russia dated 02.10.2002 • License of the Federal Financial Markets Service of • Association of Banks of North-West Russia (non-governmental non-profit organization) No. 3255 for banking operations in Russian roubles and Russia dated 11.08.2009 No. 1417 to act as an Exchange foreign exchange intermediary to deal in commodities futures and options • Club for Directors of Bank PR and Advertising (regional • SWIFT non-governmental organization) • License of the Bank of Russia dated 02.10.2002 No. 3255 • License of the Centre for Licensing, Certification and • Western Union money transfer system, Zolotaya Korona for banking operations in deposits and placement of Protection of State Secrets of the Federal Security Service of • National Securities Market Association (self-governing money transfer system, GOROD Federal System of payment precious metals Russia dated 25.11.2010 No.3918 for operations that involve non-profit organization) collection and processing, Unified Payment System, a non- classified information profit organization • License of the Federal Securities Commission of Russia • National Association of Securities Market Participants dated 04.12.2000 No. 177-03434-000100 for depositary • License of the Centre for Licensing, Certification and (self-governing non-profit organization) operations Protection of State Secrets of the Federal Security Service of Russia dated 13.07.2010 No.9126X for technical • Association of Bill of Exchange Market Participants • License of the Federal Securities Commission of Russia maintenance of the encryption (cryptographic) equipment (non-profit organization) dated 27.11.2000 No. 177-02954-100000 for brokerage operations • License of the Centre for Licensing, Certification and • Inter-Regional Oil Partnership (non-profit partnership) Protection of State Secrets of the Federal Security Service • License of the Federal Securities Commission of Russia of Russia dated 13.07.2010 No. 9127P for distribution of • Union of Russian Gold Producers dated 27.11.2000 No. 177-03058-010000 for dealing encryption (cryptographic) equipment operations • Russian National Committee of the International Chamber • License of the Centre for Licensing, Certification and of Commerce – the World Business Organization – ICC • License of the Federal Securities Commission of Russia Protection of State Secrets of the Federal Security Service Russia (non-profit partnership) dated 27.11.2000 No. 177-03132-001000 for securities of Russia dated 13.07.2010 No.9128У for provision of management information encryption services

• License of the Federal Securities Commission of Russia dated 07.12.2000 No. 22-000-0-00018 to act as a specialized depositary of investment funds, mutual funds, and non- governmental pension funds

106 107 8 REFERENCE INFORMATION ANNUAL REPORT 2011

AUTHORIZED STATUSES OF OJSC BANK ZENIT: JSB DEVON-CREDIT (OJSC)

LIST OF LICENSES MEMBERSHIP OF JSB DEVON-CREDIT (OJSC) • Authorized bank of the Government of the City of Moscow, • Authorized bank of the governmental Fund for Promotion IN ASSOCIATIONS, PARTNERSHIPS AND member of the Public Advisory Board on Coordination and of Entrepreneurship in the Kemerovo Region ORGANISATIONS: Relations with Credit Institutions, established by Order No.942-РП issued by the Government of the City of Moscow • Authorized bank of the Fund for Promotion of on 6 December 2011 Entrepreneurship, a governmental autonomous institution in the Kaliningrad Region • License of the Bank of Russia dated 30.05.2003 No.1972 • State Deposit Insurance System • Authorized bank of the Committee of Finance of the City of for banking operations in Russian roubles and foreign St. Petersburg for placement of the city’s budget funds on • Authorized bank of the Guarantee Fund for Promotion of exchange with legal entities • The Bankers Association of Tatarstan bank deposits Entrepreneurship in the Samara Region, a governmental enterprise • License of the Bank of Russia dated 30.05.2003 No.1972 • Association of Regional Banks of Russia • Participant of the 2010-2013 Vnesheconombank for banking operations in Russian roubles and foreign • Association of Lending Agencies of the Republic of Programme for Affordable Housing Construction and • Authorized bank of the Treasury Committee of the Kursk exchange with individuals Bashkortostan Mortgage Lending Region for placement of funds of the regional budget on bank deposits • License of the Federal Securities Commission of Russia, • SWIFT • Partner of the Federal Savings and Mortgage Programme dated 07.12.2000, No.016-03516-100000 for brokerage for Servicemen (Rosvoenipoteka) • Partner bank of OJSC Mortgage Agency of the Republic of operations • Visa International Service Association Altai • Authorised bank of the Fund for Assistance in Reformation • License of the Federal Securities Commission of Russia, • MasterCard Int. of Housing and Communal Services for placement of the • Authorized bank of OJSC Mortgage Agency of Yugra dated 07.12.2000, No.016-03617-010000 for dealing Fund’s resources on bank deposits • WesternUnion and Migom money transfer systems • Participant of the Targeted Programme to Improve • License of the Federal Securities Commission of Russia, • Authorized bank of the Fund for Promotion of Lending to Housing for the People of the Khanty-Mansi Autonomous dated 20.12.2000, No.016-04202-000100 for depositary Small Businesses in Moscow Area – Yugra (between 2011 and 2013 and for the period up operations to 2015) • Authorized bank of the Fund for Promotion of Lending to • License of the Federal Securities Commission of Russia, Small Businesses in St. Petersburg for placement of the • Included in the register of banks and other credit dated 07.12.2000 No.016-03702-001000 for securities Fund’s resources on bank deposits organisations that have the right to issue bank guarantees management for payment of customs duties • Authorized bank of the Fund for Development of SME in • License of the Federal Financial Markets Service of the Novosibirsk Region Russia, dated 01.07.2008, No.1211 to act as an exchange intermediary to deal in commodities futures and options • Authorized bank of the Sverdlovsk Regional Fund for Support of Small Businesses • License of the Federal Security Service Directorate of Russia for the Republic of Tatarstan, dated 23.05.2008, • Authorized bank of OJSC Guarantee Fund for Small ЛЗ No.0013006 Reg. No. 90У for data encryption services Businesses in the Saratov Region • License of the Federal Security Service Directorate of Russia for the Republic of Tatarstan, dated 23.05.2008, ЛЗ No.0013002, Reg. No. 89Р for distribution of encryption (cryptographic) equipment

• License of the Federal Security Service Directorate of Russia for the Republic of Tatarstan, dated 23.05.2008, ЛЗ No.0013007, Reg. No. 91X for technical maintenance of the encryption (cryptographic) equipment

108 109 8 REFERENCE INFORMATION ANNUAL REPORT 2011

OJSC LIPETSKKOMBANK OJSC SPIRITBANK CJSC BANK ZENIT SOCHI

LIST OF LICENSES MEMBERSHIP OF OJSC LIPETSKKOMBANK LIST OF LICENSES: LIST OF LICENSES: IN ASSOCIATIONS, PARTNERSHIPS AND ORGANISATIONS:

• General license of the Bank of Russia dated 21.02.2003 • State Deposit Insurance System • License of the Bank of Russia, dated 15.08.2002, No.2053 • License of the Bank of Russia for banking operations in No. 1242 for banking operations in Russian roubles and for banking operations in Russian roubles and foreign Russian roubles and foreign exchange (no right to raise foreign exchange • Association of Russian Banks exchange with individuals deposits from individuals) No. 232 dated 20.07.2010

• License of the professional securities market participant • Lipetsk Chamber of Commerce and Industry • License of the Bank of Russia, dated 21.10.2002, No.2053 • License of the Bank of Russia for raising funds of for brokerage issued by the Federal Securities Commission for banking operations in Russian roubles and foreign individuals in Russian roubles and foreign exchange to bank of Russia dated 13.12.2000 No.048-03793-100000 • SWIFT exchange with legal entities deposits No.232 dated 20.07.2010

• License of the professional securities market participant • Visa International Service Association • License of MasterCard Int. member dated 25.10.2007 • License of the Federal Security Service Directorate for dealing issued by the Federal Securities Commission of of Russia for the Krasnodar Kray, dated 15.02.2011, Russia, dated 13.12.2000, No.048-03854-010000 • Member of MasterCard Int. payment system • License of the Federal Security Service Directorate of Reg. No.966/T for technical maintenance of the encryption Russia for the Tula Region, dated 09.11.2010, No.788P for (cryptographic) equipment • License of the professional securities market participant • Regional Union of Employers “The Union of Industrialists distribution of encryption (cryptographic) equipment for securities management issued by the Federal Securities and Entrepreneurs of the Lipetsk Region” • License of the Federal Security Service Directorate Commission of Russia, dated 13.12.2000, No.048-03902- • License of the Federal Security Service Directorate of of Russia for the Krasnodar Kray, dated 15.02.2011, 001000 • Social Development, a non-governmental pension fund Russia for the Tula Region, dated 09.11.2010, No.789X for Reg. No. 966/У for data encryption services technical maintenance of the encryption (cryptographic) • License of the professional securities market participant equipment • License of the Federal Security Service Directorate for depository operations issued by the Federal Securities of Russia for the Krasnodar Kray, dated 15.02.2011, Commission of Russia, dated 20.12.2000, No.048-04172- • License of the Federal Security Service Directorate of Reg. No.966/Р for distribution of encryption (cryptographic) 000100 Russia for the Tula Region, dated 09.11.2010, No.790Y for equipment data encryption services • License of the Federal Security Service Directorate of Russia for the Lipetsk Region, dated 04.12.2008, ЛЗ No.0006513 for data encryption services

• License of the Federal Security Service Directorate MEMBERSHIP OF OJSC SPIRITBANK IN MEMBERSHIP OF CJSC BANK ZENIT SOCHI of Russia for the Lipetsk Region, dated 04.12.2008, ASSOCIATIONS, PARTNERSHIPS AND IN ASSOCIATIONS, PARTNERSHIPS AND ЛЗ No.0006515 for distribution of encryption (cryptographic) ORGANISATIONS: ORGANISATIONS: equipment

• License of the Federal Security Service Directorate • State Deposit Insurance System • State Deposit Insurance System of Russia for the Lipetsk Region, dated 04.12.2008, ЛЗ No.0006510 for technical maintenance of the encryption • Association of Russian Banks • Visa International Service Association (cryptographic) equipment • Tula Chamber of Commerce and Industry • MasterCard Int.

• MasterCard Int.

• Member of Contact, WesternUnion, Anelik payment systems

110 111 ANNUAL REPORT 2011

Head Office: LIST OF SUBDIVISIONS OJSC BANK ZENIT 9, Banny pereulok, Moscow, 129110 OF ZENIT BANKING GROUP Tel.: +7 (495) 937 07 37 9 +7 (495) 777 57 07

MOSCOW AND THE MOSCOW REGION

OJSC Bank ZENIT | 113 CITY SUBDIVISION MAILING ADDRESS, TELEPHONE 14, Gorbunova street, Moscow, 121596, Subsidiary office No. 1 “Kuntsevo”, 1 Moscow Russian Federation List of subdivisions of JSB Devon-Credit (OJSC) | 117 OJSC Bank ZENIT Tel.: +7 (495) 642-93-58

List of subdivisions of OJSC Lipetskкombank 28, Ostozhenka street, Moscow, 119034, | 119 Subsidiary office No. 3 “Ostozhenka”, 2 Moscow Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 933-29-57 List of subdivisions of CJSC Bank ZENIT Sochi | 121 8, block 1, Akademika Anokhina street, Subsidiary office No. 4 “Yugo-Zapadnyi”, 3 Moscow Moscow, 117602, Russian Federation List of subdivisions of OJSC Spiritbank OJSC Bank ZENIT | 122 Tel.: +7 (495) 937-07-37 (ext. 28-24)

2, Kievsky railway station square, Evropeisky Trade and Subsidiary office No. 5 “Evropeisky”, 4 Moscow Entertainment Center, 1st Floor, OJSC Bank ZENIT Moscow, 121059, Russian Federation Tel.: +7 (495) 229-19-70 (ext. 101)

40-42, bldg. 1, Shcherbakovskaya street, Subsidiary office No. 6 “Semyonovsky”, 5 Moscow Moscow, 105187, Russian Federation OJSC Bank ZENIT Tel.: +7 (499) 166-71-74

16, bldg.3, Presnensky Val, Moscow, Subsidiary office No. 8 “Presnensky”, 6 Moscow 123557, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 937-36-64

Subsidiary office No. 9 69, Sadovnicheskaya street, 7 Moscow “Client Center “Sadovaya sloboda”, Moscow, 115035, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 980-75-78

10, block 2, Kurina Gerasima street, Subsidiary office No. 10 “Filyovsky”, 8 Moscow Moscow, 121108, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 937-68-36

27, Leningradsky prospekt, Subsidiary office No. 11 “Leningradsky”, 9 Moscow Moscow, 125284, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 981-15-04

7, Olimpiisky prospekt, Subsidiary office No. 13 “Olimpiisky”, 10 Moscow Moscow, 129110, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 937-07-37 (ext. 39-90)

9, block 2, Veshnyakovskaya street, Subsidiary office No. 15 “Veshnyaki”, 11 Moscow Moscow, 111539, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 937-07-37 (ext.42-15)

50, Rublyovskoye highway, Subsidiary office No.17 “Krylatskoye”, 12 Moscow Moscow, 121609, Russian Federation OJSC Bank ZENIT Tel.: +7 (495) 937-07-37 (ext. 42-17)

112 113 9 LIST OF SUBDIVISIONS OF ZENIT BANKING GROUP ANNUAL REPORT 2011

6, bldg.2, Aviamotornaya street, Operations office “Gorno-Altaisky”, 53/1, Choros-Gurkina street, Subsidiary office No. 18 “Lefortovo”, 13 Moscow Moscow, 111116, Russian Federation 6 Gorno-Altaisk Novosibirsky branch, Gorno-Altaisk, 649000, OJSC Bank ZENIT Tel.: +7 (495) 937-07-37 (ext. 42-18) OJSC Bank ZENIT Altai Republic, Russian Federation

2nd Floor, “Tri Kita” Shopping Mall, Subsidiary office “Dzerzhinsky”, 41, Griboyedova street, Dzerzhinsk, 1, Lugovaya street, 7 Dzerzhinsk Nizhegorodsky branch, Nizhny Novgorod region, 606008, Odintsovsky district, Subsidiary office No. 2 “Odintsovo”, townsite of Novoivanovskoye, OJSC Bank ZENIT Russian Federation 14 Moscow region OJSC Bank ZENIT Odintsovsky district, Moscow region, 143026, Russian Federation 28, Kirova street / 43, Toledova street, Tel.: +7 (495) 723-82-82 (ext. 22-61) Yekaterinburg, 620219, Sverdlovsk region, Russian Federation 4, Butakovo, 2nd Floor, Grand-2 Yekaterinburgsky branch №3255/16, Tel.: +7 (343) 263-29-85 8 Yekaterinburg Multifunctional Shopping Mall, OJSC Bank ZENIT 33a, Popova street, Yekaterinburg, Khimki, Moscow Subsidiary office No. 7 “Khimki-2”, 15 Khimki, Moscow region, 141400, 620014, Sverdlovsk region, region OJSC Bank ZENIT Russian Federation Russian Federation Tel.: +7 (495) 723-80-01 (ext.12-30) Tel.: +7 (343) 310-32-70

24/5, Mira street, Mytishchi, 21-1, Telmana street, Kazan, 420111, Mytishchi, Moscow Subsidiary office No. 12 “Mytishchi”, Moscow region, 141008, Branch Banking Center TATARSTAN Republic of Tatarstan, 16 9 Kazan region OJSC Bank ZENIT Russian Federation No.3255/9, OJSC Bank ZENIT Russian Federation Tel.: +7 (499) 940-91-14 Tel.: +7 (843) 230-40-05

1st Floor, “Nash Gipermarket” Shopping 18, Volgogradskaya street, Kazan, Subsidiary office “Na Volgogradskoy”, Mall, bldg.20, 47th km MKAD, village 420080, Republic of Tatarstan, Subsidiary office No.14 10 Kazan Branch Banking Center TATARSTAN, Leninsky district, Govorovo, Leninsky municipal district. Russian Federation 17 “Na Borovskom”, OJSC Bank ZENIT Moscow region Moscow region, 142784, Tel.: (843) 523-77-74, 523-77-75 OJSC Bank ZENIT Russian Federation 97, H.Yamasheva prospekt, Kazan, Tel.: +7 (495) 937-07-37 (ext. 42-14) Subsidiary office “Savinovo”, 420133, Republic of Tatarstan, 11 Kazan Branch Banking Center TATARSTAN, 3rd Floor, Aeroexpress Concourse, Russian Federation OJSC Bank ZENIT Sheremetyevo Airport, Khimki, Tel.: (843) 519-29-60 Khimki, Moscow Subsidiary office No.16 “Sheremetyevo”, 18 Moscow region, 141400, region OJSC Bank ZENIT 38, Chistopolskaya street, Kazan, Russian Federation Subsidiary office “Magellan”, 420124, Republic of Tatarstan, Tel.: +7 (495) 937-07-37 (ext. 42-16) 12 Kazan Branch Banking Center TATARSTAN, Russian Federation OJSC Bank ZENIT Tel.: +7 (843) 514-10-31

REGIONS OF RUSSIA Operations office “Kaliningradsky”, 155a, Leninsky prospekt, Kaliningrad, 13 Kaliningrad Peterburgsky Branch, 236040, Russian Federation CITY SUBDIVISION MAILING ADDRESS, TELEPHONE OJSC Bank ZENIT Tel.: +7 (4012) 92-00-01

26a, Beloglazova street, Almetyevsk, 74/1, prospekt Sovetsky, Kemerovo, Subsidiary office “Na Beloglazova” 423450, Republic of Tatarstan, Kemerovsky branch No.3255/4, 650099, Kemerovo region, 1 Almetyevsk in Almetyevsk, Branch Banking Center 14 Kemerovo Russian Federation OJSC Bank ZENIT Russian Federation TATARSTAN, OJSC Bank ZENIT Tel.: +7 (8553) 37-65-90 Tel.: +7 (3842) 58-21-99

100, Lenina street, Almetyevsk, 9, Kati Zelenko street, Kursk, 305004, Subsidiary office “Panorama” in Almetyevsk, Kursky branch No.3255/5, 423450, Republic of Tatarstan, 15 Kursk Russian Federation 2 Almetyevsk Branch Banking Center TATARSTAN, OJSC Bank ZENIT Russian Federation Tel.: +7 (4712) 51-26-56 OJSC Bank ZENIT Tel.: +7 (8553) 30-39-60 Subsidiary office “Na Lenina», 31, Lenina street, Kursk, 305004, 94, office 1, Gertsena street, Almetyevsk, 16 Kursk Kursky branch, Russian Federation Subsidiary office “Na Gertsena” 423450, Republic of Tatarstan, OJSC Bank ZENIT Tel.: +7 (4712) 39-90-44 3 Almetyevsk in Almetyevsk, Branch Banking Center Russian Federation TATARSTAN, OJSC Bank ZENIT 148, Maksima Gorkogo street, Nizhny Tel.: +7 (8553) 37-55-30 Nizhegorodsky branch No.3255/6, 17 Nizhny Novgorod Novgorod, 603000,Russian Federation OJSC Bank ZENIT 26, Kulikova street, Arzamas, Tel.: +7 (8312) 278-97-77 Subsidiary office “Arzamassky”, Nizhny Novgorod region, 607226, 4 Arzamas Nizhegorodsky branch, 53a, Shinnikov street, Nizhnekamsk, Russian Federation Subsidiary office “Nizhnekamsky”, OJSC Bank ZENIT 423570, Republic of Tatarstan, Tel.: +7 (83147) 2-37-57 18 Nizhnekamsk Branch Banking Center TATARSTAN, Russian Federation OJSC Bank ZENIT Operations office “Voronezhsky”, 74, Fridrikha Engelsa street, Voronezh, Tel.: +7 (8555) 42-03-51 5 Voronezh Kursky branch, 394018, Russian Federation OJSC Bank ZENIT Tel.: +7 (4732) 76-58-68

114 115 9 LIST OF SUBDIVISIONS OF ZENIT BANKING GROUP ANNUAL REPORT 2011

48, prospekt Metallurgov, Central Head office: Subsidiary office “Novokuznetsky”, district, Novokuznetsk, 654005, LIST OF SUBDIVISIONS 77, Lenina street, Almetyevsk, 19 Novokuznetsk Kemerovsky branch, Russian Federation OJSC Bank ZENIT 423450, Republic of Tatarstan, Tel.: +7 (3843) 46-60-11 OF JSB DEVON-CREDIT (OJSC) Russian Federation 13, Chelyuskintsev street, Tel./fax: +7 (8553) 456 777, Zheleznodorozhny district, Novosibirsk, Novosibirsky branch No.3255/15, 20 Novosibirsk 630132, Novosibirsk region, +7 (8553) 317 513 OJSC Bank ZENIT Russian Federation Tel.: +7 (383) 298-94-30 49/46, corner of Frunze street and Operations office “Omsky”, Ordzhonikidze street, Omsk, 644007, CITY SUBDIVISION MAILING ADDRESS, TELEPHONE 21 Omsk Novosibirsky branch, Russian Federation OJSC Bank ZENIT Tel.: +7 (3812) 35-64-40 11, Shaikhutdinova street, Aznakaevo, 423331, Aznakaevsky branch No.1972/5, +7 (3812) 35-64-41 1 Aznakaevo Republic of Tatarstan, Russian Federation JSB Devon-Credit (OJSC) 27, prospekt Komsomolsky, Leninsky Tel.: +7 (85592) 7-32-27 Permsky branch No.3255/14, district, Perm, 614072, Perm Krai, 22 Perm 96, Gertsena street, Almetyevsk, 423450, OJSC Bank ZENIT Russian Federation Subsidiary office, 2 Almetyevsk Republic of Tatarstan, Russian Federation Tel.: +7 (342) 211-12-20 JSB Devon-Credit (OJSC) Tel.: +7 (8553) 30-28-01 144a, Pushkinskaya street, Rostov-on- Rostovsky branch No.3255/7, 63, F. Engelsa street, Bavly, 423930, 23 Rostov-on-Don Don, 344006, Russian Federation Bavlinsky branch No.1972/6, OJSC Bank ZENIT 3 Bavly Republic of Tatarstan, Russian Federation Tel.: +7 (863) 250-11-56 JSB Devon-Credit (OJSC) Tel.: +7 (85569) 5-51-25 Premises P2, building 20, prospekt Subsidiary office “Sarovsky”, Lenina, Sarov, Nizhny Novgorod region, 24 Sarov Nizhegorodsky branch, Subsidiary office, 39, Gafiatullina street, Bugulma, 423236, 607190, Russian Federation OJSC Bank ZENIT 4 Bugulma Bugulminsky branch, Republic of Tatarstan, Russian Federation Tel.: +7 (83130) 6-99-77 JSB Devon-Credit (OJSC) Tel.: +7 (85594) 4-14-05 139/3, A. Tolstogo street/L. Tolstogo street, Samarsky branch No.3255/10, 32, Dzhalilya street, Bugulma, 423230, 25 Samara Samara, 443099, Russian Federation Bugulminsky branch No.1972/4, OJSC Bank ZENIT 5 Bugulma Republic of Tatarstan, Russian Federation Tel.: +7 (846) 310-28-60 JSB Devon-Credit (OJSC) Tel.: +7 (85594) 4-40-50 Subsidiary office “Oktyabrsky”, 26, Sklyarenko street, Samara, 443086, 26 Samara Samarsky branch, Russian Federation 24/1, Akhmadieva street, townsite of Dzhalil, OJSC Bank ZENIT Tel.: +7 (846) 200-11-00 Dzhalilsky branch No.1972/8, 423368, Sarmanovsky district, 6 Townsite of Dzhalil JSB Devon-Credit (OJSC) Republic of Tatarstan, Russian Federation 20 letter Ya, Yablochkova street, Saint Peterburgsky branch No.3255/2, 27 Saint Petersburg Petersburg, 197198, Russian Federation Tel.: +7 (85573) 6-00-99 OJSC Bank ZENIT Tel.: +7 (812) 448-22-48 41, prospekt Neftyanikov, Yelabuga, 423603, Yelabuzhsky branch No.1972/3, Subsidiary office “Suvorovsky”, 32, Suvorovsky prospekt, Saint 7 Yelabuga Republic of Tatarstan, Russian Federation JSB Devon-Credit (OJSC) 28 Saint Petersburgh Peterburgsky branch, Petersburg, 191015, Russian Federation Tel.: +7 (85557) 3-56-16 OJSC Bank ZENIT Tel.: +7 (812) 324-69-24 1/13, prospekt Pobedy, Zainsk, 423520, Zainsky branch No.1972/12, Operations office “Saratovsky”, 66, Moskovskaya street, Saratov, 8 Zainsk Republic of Tatarstan, Russian Federation JSB Devon-Credit (OJSC) 29 Saratov Samarsky branch, 410012, Russian Federation Tel.: +7 (85558) 3-41-11 OJSC Bank ZENIT Tel.: +7 (8452) 48-97-17 58, K. Marksa street, Kazan, 420015, 30/1, Profsoyuzov street, Surgut, 628415, Kazansky branch No.1972/9, Tyumen region, Khanty-Mansiisky 9 Kazan Republic of Tatarstan, Russian Federation Surgutsky branch No.3255/12, JSB Devon-Credit (OJSC) 30 Surgut Autonomous District – Yugra, Tel.: +7 (843) 264-51-82 OJSC Bank ZENIT Russian Federation 54, Shashina street, Leninogorsk, 423250, Tel.: +7 (3462) 22-81-50 Leninogorsky branch No.1972/1, 10 Leninogorsk Republic of Tatarstan, Russian Federation JSB Devon-Credit (OJSC) Subsidiary office “Tolyattinsky”, 15 A, boulevard Lenina, Tolyatti, Tel.: +7 (85595) 9-01-02 31 Tolyatti Samarsky branch, 445021, Russian Federation 26, prospekt Syuyumbike, Naberezhnye Chelny, OJSC Bank ZENIT Tel.: +7 (8482) 31-99-50 Naberezhno-Chelninsky branch 423823, Republic of Tatarstan, 7-1a, Sotsialisticheskaya street, 11 Naberezhnye Chelny No.1972/7, Subsidiary office “Taganrogsky”, Russian Federation Taganrog, Rostov region, 347905, JSB Devon-Credit (OJSC) 32 Taganrog Rostovsky branch, Tel.: +7 (8552) 39-60-75 Russian Federation OJSC Bank ZENIT Tel.: +7 (8634) 61-11-57 21, Sovetskaya street, Chelyabinsk, Chelyabinsky branch No.3255/8, 33 Chelyabinsk 454091, Russian Federation OJSC Bank ZENIT Tel.: +7 (351) 247-91-95

116 117 9 LIST OF SUBDIVISIONS OF ZENIT BANKING GROUP ANNUAL REPORT 2011

Head office: 21, Gidrostroiteley street, Naberezhnye Chelny, Subsidiary office, LIST OF SUBDIVISIONS 423807, Republic of Tatarstan, 8, Internatsionalnaya street, 12 Naberezhnye Chelny Naberezhno-Chelninsky branch, Russian Federation Lipetsk, 398600. JSB Devon-Credit (OJSC) OF OJSC LIPETSKКOMBANK Tel.: +7 (8552) 77-66-32 Tel.: +7 (4742) 32-92-00 38, prospekt Khimikov, Nizhnekamsk, 423550, Nizhnekamsky branch No.1972/11, 13 Nizhnekamsk Republic of Tatarstan, Russian Federation JSB Devon-Credit (OJSC) Tel.: +7 (8555) 47-66-00

Subsidiary office, Cheboksarsky 44, Sovetskaya street, Novocheboksarsk, 14 Novocheboksarsk branch, JSB Devon-Credit (OJSC) 429950, Chuvash Republic, Russian Federation in Novocheboksarsk Tel.: +7 (8352) 73-77-73 CITY SUBDIVISION MAILING ADDRESS, TELEPHONE

3, Kooperativnaya street, Nurlat, 423042, 102, prospekt Pobedy, Nurlatsky branch No.1972/2, Subsidiary office 15 Nurlat Republic of Tatarstan, Russian Federation Lipetsk, 398024, Russian Federation JSB Devon-Credit (OJSC) 1 Lipetsk “LKB PLUS Pobedy branch”, Tel.: +7 (84345) 2-95-18 Tel.: +7 (4742) 47-75-70, OJSC Lipetskkombank 13, Khalturina street, Oktyabrsky, 452612, +7 (4742) 47-78-77 Oktyabrsky operations office, 16 Oktyabrsky Republic of Bashkortostan, Russian Federation 2, Vermisheva street, JSB Devon-Credit (OJSC) Subsidiary office Tel.: +7 (34767) 3-14-00 Lipetsk, 398036, Russian Federation 2 Lipetsk “LKB PLUS Vermisheva branch”, 7, Ostrovskogo street, Tuimazy, 452755, Tel.: +7 (4742) 32-24-98, Tuimazinsky operations office, OJSC Lipetskkombank 17 Tuimazy Republic of Bashkortostan, Russian Federation +7 (4742) 32-24-99 JSB Devon-Credit (OJSC) Tel.: +7 (34782) 7-67-35 13, Semashko street, Lipetsk, 398002, Subsidiary office 98, prospekt Mira, Cheboksary, 428024, Russian Federation Cheboksarsky branch No.1972/10, 3 Lipetsk “LKB PLUS Semashko branch”, 18 Cheboksary Chuvash Republic, Russian Federation Tel.: +7 (4742) 47-61-80, JSB Devon-Credit (OJSC) OJSC Lipetskkombank Tel.: +7 (8352) 63-74-43 +7 (4742) 47-61-11 8, 15th mikrorayon, Lipetsk, 398058, 2B, Lenina street, Chistopol, 422980, Subsidiary office Chistopolsky branch No.1972/13, Russian Federation 19 Chistopol Republic of Tatarstan, Russian Federation 4 Lipetsk “LKB PLUS Stroiteley branch”, JSB Devon-Credit (OJSC) Tel.: +7 (4742) 46-79-80, Tel.: +7 (84342) 5-48-19 OJSC Lipetskkombank +7 (4742) 46-79-81

44, Katukova street, Lipetsk, 398036, Subsidiary office Russian Federation 5 Lipetsk “LKB PLUS Katukova branch”, Tel.: +7 (4742) 47-34-43, OJSC Lipetskkombank +7 (4742) 47-34-45

2, V.P. Gazina street, Lipetsk, 398007, Subsidiary office Russian Federation 6 Lipetsk “LKB PLUS Gazina branch”, Tel.: +7 (4742) 36-50-06, OJSC Lipetskkombank +7 (4742) 36-50-07

10, Titova street, Lipetsk, 398043, Subsidiary office Russian Federation 7 Lipetsk “LKB PLUS Titova branch”, Tel.: +7 (4742) 36-61-56 OJSC Lipetskkombank +7 (4742) 36-61-57

2a, M. Raskovoy street, Subsidiary office Lipetsk, 398005, Russian Federation 8 Lipetsk “LKB PLUS Raskovoy branch”, Tel.: +7 (4742) 43-12-93, OJSC Lipetskkombank +7 (4742) 43-18-70

97, Gagarina street, Lipetsk, 398002, Subsidiary office Russian Federation 9 Lipetsk “LKB PLUS Gagarina branch”, Tel.: +7 (4742) 34-82-23, OJSC Lipetskkombank +7 (4742) 34-82-24

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Head office: 2, Krasnozavodskaya street, Subsidiary office LIST OF SUBDIVISIONS Lipetsk, 398006, Russian Federation 14, Navaginskaya street, Sochi, 10 Lipetsk “LKB PLUS Traktorozavodskoye branch”, Tel.: +7 (4742) 79-47-70, 354000, Krasnodar Kray. OJSC Lipetskkombank OF CJSC BANK ZENIT SOCHI +7 (4742) 79-47-80 Tel.: +7 (8622) 64-00-90 2a, prospekt Imeni 60-letiya USSR, Subsidiary office Lipetsk, 398046, Russian Federation 11 Lipetsk “LKB PLUS Oktyabrskoye branch», Tel. +7 (4742) 42-26-30, OJSC Lipetskkombank +7 (4742) 42-26-31

Subsidiary office 3, Slavyanova street, Lipetsk, 12 Lipetsk “LKB PLUS Universitetskoye branch», 398055, Russian Federation CITY SUBDIVISION MAILING ADDRESS, TELEPHONE OJSC Lipetskkombank Tel.: +7 (4742) 25-60-88 26, Lenina street, Anapa, 353440, 2-2a, Mira Square, Lipetsk, 398005, Anapa branch No.232/1, Subsidiary office “Novolipetskoye branch”, 1 Anapa Krasnodar Kray, Russian Federation 13 Lipetsk Russian Federation CJSC Bank ZENIT Sochi OJSC Lipetskkombank Tel.: +7 (86133) 5-65-45 Tel.: +7 (4742) 43-02-21 5/1, Shosse Neftyanikov, Krasnodar, 66, Pervomaiskaya street, Subsidiary office “Sovetskoye branch”, Subsidiary office “Krasnodar”, 350000, Krasnodar Kray, 14 Lipetsk Lipetsk, 398001, Russian Federation 2 Krasnodar OJSC Lipetskkombank CJSC Bank ZENIT Sochi Russian Federation Tel.: +7 (4742) 77-37-85 Tel.: +7 (861) 215-28-43 Subsidiary office “Ploshchad Pobedy”, 21, prospekt Pobedy, Lipetsk, 398024, 15 Lipetsk 70, Sverdlova street, Adler district, Sochi, OJSC Lipetskkombank Tel.: +7 (4742) 23-32-38 Subsidiary office No.1, 354340, Krasnodar Kray, 3 Sochi 32a, Krasnaya Ploshchad, Gryazi, 399058, CJSC Bank ZENIT Sochi Russian Federation Subsidiary office “Gryazinskoye branch”, 16 Gryazi Lipetsk region, Russian Federation Tel.: +7 (8622) 40-17-82 OJSC Lipetskkombank Tel.: +7 (47461) 2-10-42 4, Sormovskaya street, Karasunsky area, 11, Mira street, Dankov, 399850, Operations office “Karasunsky” Krasnodar, 350018, Krasnodar Kray, Subsidiary office “Dankovskoye branch”, 4 Krasnodar 17 Dankov Lipetsk region, Russian Federation CJSC Bank ZENIT Sochi Russian Federation OJSC Lipetskkombank Tel.: +7 (47465) 6-07-41 Tel.: +7 (861) 219-30-55

5, Pobedy street, Lebedyan, 398610, Subsidiary office “Lebedyanskoye branch”, 18 Lebedyan Lipetsk region, Russian Federation OJSC Lipetskkombank Tel.: +7 (47466) 5-20-15

79, Lenina street, Yelets, 399770, Yeletsky branch No.1242/2, 19 Yelets Lipetsk region, Russian Federation OJSC Lipetskkombank Tel.: +7 (47467) 2-00-75

2/21, Lobanova street, Moscow branch No.1242/11, 20 Moscow Moscow, 115432, Russian Federation OJSC Lipetskkombank Tel.: +7 (495) 545-42-84

8a, Stepnoy mikrorayon, Stary Oskol, 309503, Starooskolsky branch No.1242/12, 21 Stary Oskol Belgorod region, Russian Federation OJSC Lipetskkombank Tel.: +7 (4725) 40-60-70 +7 (4725) 40-60-71

2, Morskoy boulevard, Tuapse, 352800, Tuapsinsky branch No.1242/13, Krasnodar Kray, Russian Federation 22 Tuapse OJSC Lipetskkombank Tel.: +7 (86167) 7-02-40, +7 (86167) 2-47-79

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Head office: LIST OF SUBDIVISIONS 85-a Lenina prospekt, Tula, OF OJSC SPIRITBANK 300012, Russian Federation. Tel.: +7 (4872) 33-15-76, Fax: +7 (4872) 33-28-74

CITY SUBDIVISION MAILING ADDRESS, TELEPHONE

17, Zavodskaya street, Donskoy, Donskoy branch, 301770, Tula region, Russian Federation 1 Donskoy OJSC Spiritbank Tel.: +7 (48746) 5-80-23, +7 (48746) 5-79-48

28a, Komsomolskaya street, Novomoskovsk, 301650, Tula region, Subsidiary office No.1, 2 Novomoskovsk Russian Federation Donskoy branch, OJSC Spiritbank Tel.: +7 (48762) 3-04-00, +7 (48762) 6-34-18

1-d, Galkina street, Tula, Subsidiary office No.2, 300000, Russian Federation, 3 Tula OJSC Spiritbank Tel.: +7 (4872) 34-63-99, +7 (4872) 34-33-94

290, Oktyabrskaya street, Tula, Subsidiary office No.3, 4 Tula 300000, Russian Federation, OJSC Spiritbank Tel.: +7 (4872) 75-06-87

17, Novomoskovskoe shosse, Tula, Subsidiary office No.4, 5 Tula 300045, Russian Federation OJSC Spiritbank Tel.: +7 (4872) 50-20-07

122 123 NOTES wDog o el l