Bank Vozrozhdenie raises Subordinated Loan of USD 50 million

31 July 2008

Bank Vozrozhdenie has raised a US$ 50 million Subordinated Loan from two European development institutions; German DEG — DEUTSCHE INVESTITIONS — UND ENTWICKLUNGSGESELLSCHAFT MBH (“DEG”) and Dutch NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V. (“FMO”). The loan, in the form of a “10 non-call 5” is for a period of 10 years but the Bank has an option to prepay after five years. The term facility agreement was signed on May 21, 2008. This loan will provide significant long-term financing for continued expansion of Vozrozhdenie’s lending to its diversified client base. It also counts as Tier Two capital under Central Bank rules and Basle standards and therefore supports Vozrozhdenie’s capital base allowing further increase of our borrowing and lending ability. Prior to this loan, the Bank’s Tier 1 & 2 ratio was at 15.8%, well above the minimum standard of 10%.

"We consider this loan important, especially at this time of turbulent market conditions. FMO and DEG are known for making commitments to companies who make an effective contribution to development, meet environmental standards and comply with good governance and social principles. We are pleased to be recognized as creditworthy and conscientious by them.’’ said Neil Withers, Advisor to the Chairman of Bank Vozrozhdenie.

“We are proud to be the first international lender to support Vozrozhdenie Bank with subordinated capital. As one of the bank’s activities focuses is on financing of small and medium-sized enterprises, the project makes a contribution to securing jobs in this field. We support the development of such growth-intensive commercial banks for the sake of financial-sector diversification and improvement of access to financial services” said Dr Andreas Zeisler, Head of Financial Institutions division of DEG.

FMO and DEG are development finance institutions providing financing solutions for companies in developing and emerging market countries.

DEG, member of KfW Bankengruppe (KfW banking group), is one of the largest European development finance institutions. For more than 45 years, DEG has been financing and structuring the investments of private companies in developing and emerging market countries. DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy, from agribusiness to infrastructure and manufacturing to services. Another focus is investments in the financial sector in order to facilitate reliable access to capital locally. At the end of the year 2007, DEG’s portfolio of ongoing financing commitments increased by more than 17 per cent to EUR 3.6 billion.

The Netherlands Development Finance Company (FMO) is the international development bank of the Netherlands. FMO invests risk capital in companies and financial institutions in developing countries. FMO’s investment portfolio is EUR 3.4 billion and FMO is one of the largest bilateral development banks worldwide. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not — or not yet — prepared to take. FMO’s mission: to create flourishing enterprises, which can serve as engines of sustainable growth in their countries.

Vozrozhdenie Bank, a community bank for companies and individuals, was founded in 1991. (General License from the Central Bank of the Russian Federation # 1439, March 24, 2003.) Among the Top 30 Russian Banks in the Central Bank’s rating, its network includes 172 offices and over 600ATMs in 20 regions of Russia. The Bank provides more than 1,150,000 individual and 49,000 corporate clients with a range of services, from savings accounts, payment handling, payroll management, to mortgages, bank cards and business and consumer loans.

Bank Vozrozhdenie half-year net profit is to exceed RUB 1.7 bln on Russian Accounting Basis
Standard & Poor’s Ratings Services assigned its “BB-/B” counterparty credit and “ruAA-” Russia national scale ratings to Bank Vozrozhdenie