Moody’s Interfax Rating Agency upgrades Bank Vozrozhdenie (Russia) from A3.RU to A2.RU

20 July 2005

Moscow, July 20, 2005 — Moody’s Interfax Rating Agency has upgraded to from the Vozrozhdeniye Bank’s long-term credit rating.

Moscow, July 20, 2005 — Moody’s Interfax Rating Agency has upgraded to from the Vozrozhdeniye Bank’s long-term credit rating.

The upgrade reflects growing franchise of the bank and material improvement of the bank’s financial fundamentals after the bank has finally solved in 2004 — 2005 its largest non-performing loan problem. The improvements include decreased single-party and industry concentration, increased returns and lower risks on the loan portfolio, growing profitability and capitalization. The bank’s participation in the recently introduced Deposit Insurance System, in Moody’s Interfax opinion, is likely to alleviate the bank’s sensitivity to the depositor runs and increase stability of the bank’s liabilities comprised to a large extent of household deposits.

The Bank’s rating takes into account both the bank’s relative size — one of the top 30 in terms of assets and top 10 in terms of household deposits in Russia — and its well developed and growing business franchise.

The bank has strong market positions in the Moscow region, a region surrounding the city of Moscow, one of the most promising banking markets in Russia. The bank’s positions are defended by it’s the largest among private banks branch network in the region and first mover advantage.

The bank’s tight capitalization remains the most important deterrent to the bank’s ratings. Shareholders of the bank have limited resources to increase the bank’s capital regularly and the bank plans to generate most of the required capital internally and continue to grow at a fast rate. Moody’s Interfax draws attention to the fact, that although the bank’s plans are feasible, any mismanagement of growth, inability to raise capital when needed, or failure to meet the bank’s profitability targets may jeopardize the bank’s capital adequacy and have negative rating implications.

The ratings reflect Vozrozhdeniye Bank’s credit standing on a stand alone basis without imputing support, either from the government or from the owners. In 1998 Vozrozhdeniye was one of few banks who managed to negotiate support from the Central Bank. State support for the bank in the future could not be ruled out, though the bank does not meet fully too-important-to-fail criteria.

Vozrozhdeniye Bank is headquartered in Moscow, Russian Federation, and reported total assets under IFRS of $1,091 million as of end—2004 (2003: $909 million).

Moody’s Interfax Rating Agency upgraded the long-term credit rating for Bank Vozrozhdeniye (OAO) to
Moody’s upgraded the long-term rating on foreign currency deposits of Bank Vozrozhdeniye from level B2 to level B1.