Annual Report 2005 ENG


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Annual Report 2005 ENG

  1. 1. Annual Report 2005 WWW.VBANK.RU
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  3. 3. Address of the president Dear shareholders, friends and colleagues! In many ways, our bank was extremely successful throughout We want our banking products and services to be understood 2005. First of all, I want to point out that the bank’s financial by our clients, to meet their needs, and to be useful in their results for the year were outstanding. According to Russian daily lives and work. My colleagues and I have a true interest Accounting Standards, our assets grew by 60%, to RUR 49 in our clients’ well being. We work with our longstanding, billion, our profits increased by 180% to RUR 891 million, and loyal clients to reach even greater business success. With new our capital increased by 27% to RUR 4,165 million. clients, we strive for a real understanding of their businesses and banking needs. We have a common interest in our clients’ These financial results reflect our effective management of the success! capital that shareholders have entrusted to the bank. However, the bank’s success is measured by more than just financial Unfortunately, we cannot tell you about all of our over 850,000 results. Our real achievement is the development of our retail clients and over 40,000 corporate clients. But I am proud personal relationships with clients and their trust in us. Our to present in this annual report a portrait gallery of some of the strategy is aimed at providing service to our clients, promoting clients of Vozrozhdenie Bank and their impressions of working the development of their business and helping them change with us. their lives for the better, and above all, supporting them in both good times and bad. The bank is expanding rapidly. This has been especially true in the retail area where products we introduced only two years On 12 April 2006 we celebrated the 15th anniversary of our ago have been exceptionally popular. Consumer loans, car bank. The bank has been through some difficult years, but they loans and debit and credit cards help individuals improve their were years that were both dynamic and interesting. Working lives. I am especially pleased that Vozrozhdenie was one of the closely with our clients, we have lived through the numerous 10 largest issuers of new mortgages last year. Buying a new changes that Russia and its banking system have undergone apartment is a major financial decision for people and we are in recent years. And we have never broken our banker’s word pleased to help in this important step. of honour to our clients. We have ensured that our bank has operated smoothly in times of crisis and, above all, we have Belief in our professionalism led to a dramatic increase, 66%, preserved and increased the size of financial resources our in the financial resources entrusted to the bank by corporate clients have entrusted to us. and retail clients in 2005. Thanks to rapid expansion into regions of Russia that are strategically important for our Our relationships with clients are our bank’s most precious business, the bank’s credit portfolio has become even more asset. This is the key factor in our approach to the banking diversified. The past year has seen the bank’s network expand business. So it was natural that the idea of building client to 138 branches. We have added 20 new branches to service relations on the principles of responsiveness, humanity and retail and corporate clients. Another important priority is to dependability became central to the bank’s rebranding project, increase the number of the bank’s ATMs and upgrade the which is now being implemented. We should like to stress that existing ones. By the end of last year we added 87 ATMs to our Vozrozhdenie Bank is «a bank that is always with you» in both network, which now has 401 ATMs. good times and bad. If it hadn’t been for the well coordinated and highly professional work of our more than 5,000 employees, none of these achievements would have been possible. I thank them from the bottom of my heart! Relations within our team are based on true partnership, trust, and respect. That’s the only way we can promote our relations with clients on the basis of responsiveness, humanity and dependability. Yours sincerely, Dmitry Orlov President, Vozrozhdenie Bank
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  5. 5. Contents Address of the president 3 Our bank 7 Key financial highlights 11 15 years of partnership 17 • Corporate business 17 • Retail business 20 Transactions on financial markets 24 Banking technologies 24 Human resource management 25 The bank’s social mission 25 Prospects for the bank’s development in 2006 27 Corporate governance 29 Capital and dividends 35 Financial statements 41 • Independent auditors report 41 • Financial statement under International Financial Reporting Standards (IFRS) 42 • Management Commentary on IFRS Financial Results 46 • Financial statement under Russian Accounting Standards (RAS) 48 Risk management 53 Background information 59 • Bank’s branches and offices 60
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  7. 7. Our bank Vozrozhdenie Bank provides personal banking and business In April 2006 Vozrozhdenie Bank launched a rebranding services to clients throughout the Russian Federation. Our campaign. This rebranding has affected not only the «look» nationwide network includes 138 locations and over 400 ATMs. of the bank but also our positioning strategy on the Russian We provide 900,000 clients with a range of services, from banking services market and the roles of marketing and savings accounts, payment handling and payroll management communications within our structure. The bank’s management to mortgages, bank cards and business and consumer loans. is confident that the rebranding exercise will help give brand a distinctive «feel», improve its recognisability, increase loyalty Vozrozhdenie Bank has been a part of Russian life and culture among existing clients, and boost the process of acquiring for many years. Today the bank combines the best of the new clients. stability and banking traditions of the past with the most up-to-date banking products, services and systems. We are Vozrozhdenie Bank is one of the largest financial institutions celebrating our 15 year anniversary in 2006. in Russia. Our reputation, quality of service and scope of activities are helping us to retain a leading position on the market. However, in the face of ever increasing competition from Russian and foreign banks, the bank’s technology based Our values competitive advantages are not sufficient in themselves to secure its further dynamic growth. It has been necessary to We believe that close relationships with our clients are our strengthen our corporate positioning, and to select and shape most valuable assets. We work in true partnership with our a unique «value based offer» that would clearly place the bank clients. We are responsive, human and dependable, the bank in a more favourable position vis-a-vis its competitors and that our clients rely on in good and bad times. This closeness to our could be used to build up effective communications with clients sets us apart, today and in the future our clients. Nikita Mikhalkov National artist of Russia General manager of OOO Studio TRITE Our friendly relationship with sense of the word. The supreme Vozrozhdenie Bank began professionalism of the bank’s more than ten years ago. The specialists goes hand in hand reputation of our Studio, TRITE, with sensitivity, cordiality, is built on such fundamental and reliability. I hope that our concepts as creativity, fellowship professional relationships and and hard work. Vozrozhdenie good friendship will last for Bank has more than once many years to come. displayed an attitude to joint projects that proves that it shares this approach to work and partnership, in the broad
  8. 8. Our bank The creation of a «value based offer» was launched in the The results of this study have shown that the unique spring of 2005. The rebranding exercise was managed asset of Vozrozhdenie Bank brand is our trust based by the international consultancy firm Quadric, which has relationship with our clients. This relationship therefore successfully carried out similar assignments for many became the cornerstone of the bank’s «value based global industry leaders. The bank and Quadric have offer»: responsiveness, humanity and dependability — all jointly conducted a large scale study for the purposes of the features of the bank that now set us apart from our positioning Vozrozhdenie Bank. competitors. The bank’s unique positioning on the market is based on the high quality of our relationships with clients. Stages of development 1991 1993 1995 1997 Foundation of Further Joins VISA Vozrozhdenie’s Vozrozhdenie development International shares trade in Bank. of the branch as associate international network. member. markets as ADRs. Central Bank registered One of the Begins Vozrozhdenie Bank largest in cooperation with with 34 branches Russia cash CIBС. in Moscow Oblast collection and Moscow City. and delivery service established. 1992 1994 1996 1998 Vozrozhdenie receives Vozrozhdenie joins Recognized as a Bank creates foreign exchange S.W.I.F.T. socially valuable ATM network and license from the credit organization establishes own Central Bank, joins Correspondent and joins World processing center. Moscow Interbank banking network Bank development Currency Exchange. established with programs. western banks. Shares listed on RTS. 8 4
  9. 9. We decided to revamp our logo in order to get in step with the latest trends in the sphere of visual communications, making it look more dynamic and comprehensive. A series of visuals has been developed, which are now being used in the bank’s marketing. The theme is nature, a symbol of honest personal relationships, productivity, stability and beauty. 1999 2001 2003 2005 Central Bank 10 years! Vozrozhdenie Bank a top evaluates has third largest 3 participant Vozrozhdenie Vozrozhdenie branch network in Government as a stable bank. among 20 largest and is among 200 Housing Finance banks in terms of largest Russian program, 9th corporate credit companies. largest issuer of portfolio. retail mortgages. 17th equity issue raises $33 million. Rated by Standard & Poor’s as most transparent bank in Russia. 2000 2002 2004 14th equity issue ATM network Vozrozhdenie, 2006 triples capital. largest in 10th largest 15 years! Moscow bank in terms CIBC becomes Oblast, of individual Network of a shareholder. 100,000th VISA deposits, 138 offices, card issued. accepted over 400 ATMs Europay into Deposit serves more International Insurance than 900,000 certifies Program. clients. processing center.
  10. 10. Our bank Strong positions • Present in 19 regions • 138 locations • Over 400 ATMs • Over 850,000 retail clients • Over 40,000 corporate clients Leading rankings The Central Bank of the Russian Federation has consistently ranked Vozrozhdenie Bank among the leading banks of Russia: Category Rank Number of branches 4 Business with plastic cards 6 Mortgage volume 9 Individual deposits 10 Corporate accounts 18 Corporate loans 24 Total assets 25 (sources: Interfax, RusBusinessConsulting and magazines «Profile», «CredCard», «Expert», «Kommersant Dengi».) Solid ratings • The bank has always been included among the most trustworthy Moscow banks by the independent agency «Rating». • NAUFOR, the National Association of Securities Dealers, ranks Vozrozhdenie Bank among the ‘A’ group of most reliable counterparties. The bank has commissioned creditworthiness ratings from Moody’s Investors Service and their Russian affiliate, Moody’s Interfax Rating Agency: • Moody’s Investors Service - foreign currency deposit rating B1/NP, Financial Strength Rating E+. • Moody’s Interfax Rating Agency – long-term national scale credit rating As the bank’s international obligations are primarily trade finance related and the bank does not borrow internationally, or issue long term bonds or debt obligations in foreign currencies, we have not commissioned ratings from other agencies. 10
  11. 11. Key financial highlights Development of branches network number of employees (thousand) number of corporate clients (thousand) number of retail clients (hundreds of thousand) number of offices (RHS) Funds and loans funds of corporate clients loans to corporate clients funds of retail clients loans to retail clients profit before taxes (RHS) Assets and loans loans assets loans/ assets, % (RHS)
  12. 12. Industry breakdown of the loan portfolio 2005 12
  13. 13. Key operational highlights (as at the end of the year) 2005 2004 2003 Clients Number of legal entities 40,199 37,219 34,240 Number of retail clients 856,000 780,300 608,476 Remote access system Number of clients using Client-Bank system 5,588 4,300 3,072 Bank cards Bank cards issued, thousands 700 537 442 Number of acquiring clients 1,531 869 620 Number of employees 5,083 4,506 4,195 Network of branches Number of offices, including branches, sub-branches, representative offices and cash outlets 138 121 112 ATM network Number of ATM’s 401 303 250 Key financial highlights (IFRS) 2005 2004 2003 $/Russian rubles exchange rate 28.7900 27.7487 29.4545 Financial performance, IFRS Net loans, million rubles 30,774 22,055 16,753 Total assets, million rubles 49,109 30,627 26,775 Equity, million rubles 3,273 2,604 2,160 Net profit, million rubles 544 461 89 Return ROE, % 19% 19% 6% ROA, % 1.36% 1.61% 0.41% Shares Earnings per common share, rubles 28 22 6 Dividends per common share, rubles 0.5 0.5 0.3 Market capitalization, $ million 650 126 62
  14. 14. Geographic breakdown of the loan portfolio other regions Moscow region Moscow Loan portfolio and interest income loans to retail clients loans to corporate clients interest income (RHS) Profit and equity operating profit average equity 14
  15. 15. Customers’ funds and interest expenses funds of corporate clients funds of retail clients interest expenses (RHS) Return on assets and equity ROAA ROAE Non-interest income other non-interest revenue securities gains FX gains other fees & commissions fees & commisions from cash operations fees & commisions from operations with bank cards fees & commisions from settlement operations
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  17. 17. 15 years of partnership Vozrozhdenie Bank – your partner in development. Corporate business Throughout the past 15 years Vozrozhdenie Bank has been Management of funds providing financial services to corporate clients at the highest The bank offers its clients reliable and efficient services for professional level. These years have seen the development of management of their funds: collection services, the opening a wide range of banking products and services by the bank, and management of current accounts, savings accounts which has always striven to be sensitive to the needs of its and deposit accounts, the issuing of certificates of deposit clients. and promissory notes, securities transactions, brokerage, and trust management. As at the start of 2006, the volume Our relationships with our clients are based on trust, of funds placed by clients in current accounts and savings communication, and mutual respect. Our longstanding accounts, in the form of certificates of deposit and promissory unblemished reputation, financial capacity and individual notes, had grown by 1.7 times to RUR 19.3 billion. approach to every client enable us to establish firm and long lasting partnership relations with entities and businesses. The number of our clients has increased every year. In 2005 this number grew by around 3,000 to 40,199. Industry breakdown of customers’ funds* administrations industry trade construction finance agriculture other * excluding certificates of deposit and promissory notes Anatoliy Falin General Director of JSC Gofron Kashira, Moscow region Enduring friendship lies at the credit facility under the joint very heart of our relationship investment project arranged with Vozrozhdenie Bank. This by Vozrozhdenie Bank and the year we are celebrating our World Bank, we were able to 15th anniversary, and so is purchase Japanese equipment Vozrozhdenie Bank. In the and meet our performance course of these fifteen years targets. We have complete our enterprise has undergone trust in the reliability of our massive restructuring, partnership with Vozrozhdenie which was essential for the Bank. successful development of our business. Thanks to the
  18. 18. 15 years of partnership Lending to businesses The bank has been providing loans to businesses for 15 years, Regional cooperation and this remains our primary activity. Our lending services help Throughout the past 15 years the bank has cooperated with the to create new opportunities for the development of our clients’ administrations of Russian cities and regions. The bank has business. The wide variety of credit facilities on offer, ranging entered into long term agreements with many of them. In 2005, from overdrafts to investment loans, means that our clients the bank issued loans to the administrations of Russian cities can choose the facility that is right for them. In 2005 the bank and regions amounting to over RUR 4.4 billion. started providing factoring services, and continued developing its financial leasing services. The bank’s specialists strive to put Despite the nationwide scale and plans for the bank’s together lending packages that are tailored to each individual development, Moscow Region accounts for about half of our client. business, which attests to the great importance of Moscow Region in our strategy. There are 95 branches and 235 ATMs in During 2005, the corporate credit portfolio increased by 28%, to Moscow Region, and over 30,000 corporate clients. RUR 28.9 billion. The number of enterprises that received loans from Vozrozhdenie Bank has grown by 20% over the past year, In 2005 Vozrozhdenie Bank entered into a cooperation and as of 1 January 2006 exceeded 2,000. agreement with the Government of Moscow Region, effective until 2010. Various sectors of the regional economy have In 2005, the bank increased the total guarantee limit of its received RUR 67.9 billion in credit facilities extended, including clients’ obligations to the customs authorities from €24 million over RUR 300 million allocated for the development of housing to €40 million. Guarantees issued in the course of that year and utilities infrastructure. amount to RUR 2.3 billion. Since 1997 Vozrozhdenie Bank has been an authorised In 2005 Vozrozhdenie Bank and the Federal State Strategic bank of the Government of Moscow City. The bank has been Reserve Agency signed a cooperation agreement. Within the successfully cooperating with the Moscow City Department of framework of joint programmes, the bank has issued guarantees Food Supplies in implementing various programmes initiated for RUR 405 million for the repayment of advanced sums and the by the Government of Moscow City. In 2005, guarantees issued performance of contracts by clients involved in delivering public to the enterprises involved in such programmes exceeded RUR contracts. 355 million. The bank is also active in extending subsidised loans, whereby the borrower receives a partial refund from the federal and Payment processing regional budgets of the loan interest paid. In 2005, such loans Individual service, accuracy, and efficiency of settlements are amounted to around RUR 600 million. the factors underlying the choice of more than 40,000 corporate Payments through «Client-Bank» system number of payments electronic payment proportion (RHS) 18
  19. 19. clients who use our settlement and collection services, The payroll services offered by Vozrozhdenie Bank have a corporate bank cards, services for the sale and purchase of number of advantages that are beneficial to businesses and major global currencies in exchange for Russian roubles, and their employees: reducing the expenses and labour costs services for the conversion of non-cash foreign currency as- related to the organisation and payment of salaries, reducing sets. The bank has introduced special systems that speed up wasted working hours, and increasing the safety of funds held. the processing of payment documents and help our clients The flexible scheme of tariff plans offered by the bank enables manage their accounts and control fund transfers from their our clients to choose the most convenient program. Thanks to own offices. the advanced, easily accessible network of ATMs, employees can receive their salaries at a convenient location of their The bank’s correspondent network helps us process clients’ choosing. They also enjoy favourable terms for issuing of settlements with any country of the world, and covers 63 Rus- credit cards. sian and 97 foreign banks. The increasing number of credit cards issued to the bank’s In 2005 the number of clients’ payments increased by 40% to clients promotes development of acquiring services. By the over 32 million transactions, and the number of documentary start of 2006, the bank had signed contracts for acquiring transactions effected by the bank on behalf of its clients grew services with 1,531 trade outlets to accept card transactions. by 1.6 times. Services for holding and multi-branch companies Trade finance and international transactions Thanks to the bank’s specific advantages, such as branches When the international agency Moody’s Investors Service in- throughout the country and solid business links in various sec- creased the rating of Vozrozhdenie Bank in 2005, the bank saw tors of the economy, we can offer the branches of holding and new opportunities for raising funds on foreign markets. As at multi-branch companies a set of special services, including the start of 2006, the limits provided by foreign banks in respect credit facilities, settlements effected through the Client-Bank of documentary transactions had increased by 1.7 times to USD system, collection services, payroll schemes, and tailored so- 35 million. In 2005, the bank raised internationally twice the cial programmes. volume of funds to finance its clients’ export and import trans- actions as it did in 2004. One good example is our cooperation with Mostransavto from Moscow Region. The bank’s offices service 49 branches of this In 2005, the bank signed an agreement with the Swedish bank company. The bank’s ATMs are installed at major bus terminals ForeningsSparbanken AB (Swedbank) providing for an export and stations in Moscow Region. Over the past year this com- credit facility to be guaranteed by the Swedish export agency pany has received RUR 2.5 billion in loans for the reconstruc- EKN. This helped bank’s clients finance the purchase of Scania tion of its facilities and the enlargement of its fleet of vehicles, commercial vehicles. The bank can finance imports of equip- and its local branches have leased rolling stock through the ment originating from virtually any OECD country, through the bank. The motor transport enterprises of Mostransavto use our long term credit facilities that are extended by foreign banks. payroll services. A joint special purpose programme has been The export insurance agencies of Austria, Germany, Poland, launched that provides for the extension of mortgage loans to Czech Republic, Hungary, Italy, Luxemburg, Sweden, the USA its employees. To date, 65 mortgage loans have been extended, and Taiwan have confirmed their readiness to insure the credit amounting to over RUR 50 million. risks of foreign banks vis-a-vis Vozrozhdenie Bank. In 2005, the volume of export and import transactions accomplished by the The bank also services 24 branches of Mosobldorremstroy bank’s clients amounted to RUR 48 billion. OJSC. One of the most actively developed areas of cooperation is lending. Payroll services The agreement entered into with Russian Post has helped con- Over 700,000 employees of 2,500 Russian enterprises received siderably to enhance cooperation in Moscow Region in 2005: their salaries in 2005 using cards issued by Vozrozhdenie the bank’s branches provide settlement and collection services Bank. In Moscow Region, 1,500 entities and businesses use our to 18 post offices via the Client-Bank system providing remote payroll services. account management and collection procedures.
  20. 20. 15 years of partnership Vozrozhdenie Bank with you. Retail business Vozrozhdenie Bank was among the first commercial banks Loans to start providing services to retail clients, and has long been In 2005 Vozrozhdenie was a leading bank in terms of the growth among top ten financial institutions in retail banking. rate of retail loan products such as mortgages, car loans, consumer loans and credit cards. The size of its retail credit The services we provide are driven by our strategy based portfolio grew by 4 times in 2005, reaching RUR 3.5 billion by on long term relationships with retail clients supported the start of 2006. by a continuous improvement in the quality of services, enhancement of availability, and a high level of personal Mortgage programmes are one of the priority lines of service. To achieve this, we use the latest information and development for the bank’s retail business. In 2005, banking technologies. A new system for servicing private the bank became one of the leading operators of a state individuals is being introduced in the bank’s branches. Every sponsored programme launched by the Housing Mortgage year the bank opens over 20 new branches. The business Lending Agency. The volume of mortgage loans extended hours of our offices servicing private individuals are being as of 1 January 2006 reached RUR 1.3 billion. In 2005 the increased, and the number of employees directly servicing such bank helped more than 2,000 families improve their housing customers is rising. The bank now operates a call centre, which conditions. The growth dynamics of mortgage loans are provides customers with information and advice on banking striking: at the start of 2005 the bank was extending 50 loans products and services (telephone 8-800-200-9-888). Calls to per month, by the end of 2005 the bank was extending over this number are free for customers throughout Russia. 250 loans per month. The monthly number of loans continues to increase. Deposits The bank and its borrowers become long term partners The bank offers a wide variety of special deposits so than — sometimes for up to 30 years. Through discussions with the clients can choose the deposit that best suits their needs. bank’s relationship managers, borrowers can help ensure that In 2005, the volume of funds held by retail clients in their loan terms are suitable for them. In 2005 the bank opened a accounts with the bank increased by 1.7 times, to over RUR special retail office in Moscow where retail clients can receive 24.9 billion. Over 165,000 retail clients keep their savings with professional advice and obtain mortgage loans, car loans, and our bank. consumer loans. The bank is doing its best to make mortgage loans available for all. In 2005 depositors preferred long term deposits extending to 1 year. Deposits such as Zolotoi Larets, Zolotoi Zapas and In 2005 the bank cut its loan interest rates, reduced the down Multivalutny (multi-currency) were in greatest demand. In payment minimum, raised the age limit for borrowers, and recent years, the growth rate of the volume of deposits held increased the terms of loans. The new mortgage conditions with Vozrozhdenie Bank has been above average over the have put mortgages within the reach of many more prospective Russian banking sector. borrowers, from young families to pensioners. Retail customers’ funds deposits card balances current accounts 20
  21. 21. The bank and developers operate joint programmes that enable increasing its car loan portfolio by 3.8 times. The unique «3+3» private individuals to buy flats at the construction stage. loan programme was in great demand among customers, as it All the bank’s branches issue mortgage loans to private provides for the extension of car loans on terms of a minimum individuals; Moscow Region, Altai Territory, Volgograd Region monthly repayment. In 2005 the bank started cooperating and Stavropol Territory have seen the fastest growth so far but with a number of major car dealers, including FK Motors, we plan rapid growth in branches in other regions. Nezavisimost, Autotrade AG, and Bavaria-Auto. Within the framework of its car loans programmes, the bank issued loans in 2005 amounting to RUR 510 million, thus Retail loan portfolio mortgages credit cards car loans consumer other Elman Azizov Financial Director of JSC Russian American poultry factory «Elinar-Broiler», Moscow region We chose Vozrozhdenie Bank deposit, crediting. Now we are among the many other banks about to launch our payroll because of its unblemished project. We have witnessed the reputation, and in all the years professionalism of the bank’s of working with it we have employees, their outstanding never had cause to regret efficiency and honesty. These this decision. The bank is our are just some of the factors principal supplier of banking that have led us to regard services: the handling of Vozrozhdenie Bank not just as settlement accounts, the a bank that is «always with placing of freely available you», but also as a bank that cash funds in certificates of is always ready to support you.
  22. 22. 15 years of partnership Debit and credit cards one of biggest issuers of bank cards in Russia. The turnover on Vozrozhdenie Bank issues international bank cards supported clients’ cards increased by 1.5 times in 2005, amounting to RUR by payment systems such as Visa International and MasterCard 42.5 billion. International. All current cards are chip-and-pin, in accordance with the requirements of those payment systems. Vozrozhdenie Bank operates an advanced ATM network that as of 1 January 2006 comprised over 400 24-hour ATMs, including Vozrozhdenie Bank started aggressively developing its bank 76 cash-in ATMs. In 2005 the bank significantly enhanced its card business in October 1998, and is now one of the leading ATM network, installing 87 new ATMs. financial institutions in terms of activity and promotion of services in the sphere of payment cards. The bank has been continuously improving its ATM service, enabling its customers to use its ATMs to carry out an ever By the start of 2006, over 700,000 customers were using our greater variety of operations. In 2005 the total number of bank cards. This is clear evidence that Vozrozhdenie Bank is transactions via ATMs exceeded 20 million, of which utility- Efficiency of bank cards operations cards turnover fees & commissions on card operations Development of bank cards business card balances number of cards (RHS) 22
  23. 23. ATM network development number of cash-in ATMs number of ATMs bill payments, mobile phone payments and loan repayments Money transfers and payments accounted for 5.5 million. Since Vozrozhdenie Bank is a technology competent bank with a nationwide network of branches in 19 Russian regions, it can Vozrozhdenie Bank issues credit cards to employees of effect bank transfers and arrange payments swiftly and safely. enterprises participating in payroll services. In 2005 over 23,000 employees of such enterprises were provided with credit In 2005 the volume of payments made by retail clients cards on favourable loan terms. increased by 33%, to RUR 8.9 billion, and the volume of transfers via the Western Union system grew by 2.5 times. In Vozrozhdenie Bank was one of the first Russian banks to offer 2005 the bank, striving to meet the needs of customers who its customers remote banking services. The bank’s employees are concerned about the cost of services, started the phased have been continuously updating the information service, connection of its offices to the Contact money transfer system. adding new features that allow our clients to obtain information on the status of their accounts via Internet, mobile or landline Our range of banking products also includes such traditional phones, and to block or unblock their cards. services as safe deposit boxes for valuables, the sale of commemorative and collectable coins, and currency exchange.
  24. 24. Transactions on financial markets Transactions on the interbank market To secure additional income and mitigate the risk of credit In 2005 Vozrozhdenie Bank continued to be an active player transactions, the bank has used instruments such as direct on the inter-bank lending market but primarily for liquidity REPO operations (the purchase of securities subject to management. The volume of interbank loans extended in subsequent resale). The turnover of REPO transactions rubles that year increased by 1.6 times compared to 2004, involving government stocks amounted to RUR 10.5 billion, reaching RUR 289 billion. The bank has been investing funds while that on REPO transactions involving subfederal and for terms ranging from 1 day to 1 month. To maintain the bank’s municipal bonds on the MICEX stock exchange reached RUR liquidity, the bank has been placing significant amounts of freely 14.2 billion. available cash funds in deposits with the Bank of Russia. The bank actively uses Bank of Russia bonds as liquidity and yield instrument. Transactions on the securities market In 2005 the bank’s volume of securities market trading increased by RUR 6 billion to RUR 49.6 billion. Over the Exchange transactions past year the bank has been focused on transactions with In 2005 the volume of exchange transactions increased by 1.8 government securities, which account for 80% of the total times to USD 23.8 billion. Transactions on MICEX accounted for volume of securities trading, with the yield on such securities over 70%. being well balanced between the reliability and liquidity of investments. The bank expanded its operations in the regional bonds market, For further information on our bank and its services, please accomplishing transactions involving bonds of Moscow City, visit our website: Moscow Region, Leningrad Region, Yaroslavl Region, Voronezh Region, Nizhny Novgorod Region, and other regional issuers. Banking technologies In 2005 the bank installed a new automated banking system The bank has been introducing a software system for at the head office that is capable of handling the full range of automating transactions of retail clients. This will enable functions required to effect banking transactions, and started clients to be serviced at any branch, irrespective of which implementing the same system throughout its branch network. branch the account is held in. This will lead to the optimisation of business processes and a reduction in the costs of supplying banking services. Working In 2005 the bank also began implementing a credit decision in this new automated environment will help to create a system TransactSM, which processes retail loan applications. uniform information space, speed up the banking process, and It was developed with Experian Scorex, a global leader in the improve the quality of service to our clients. area of scoring systems. Within the framework of this project, the bank conducted an audit of its techniques for making loan In 2005 the bank started implementing a CRM system at its decisions strengthen control over credit risk levels. branches. With the launch of this new system, the quality of service to our clients and the efficiency of managers’ work will improve. 24
  25. 25. A team of professionals working for your success Over the past 15 years the bank has forged a team of attention paid to the training of young professionals who have professionals that now exceeds 5,000 people. Professionalism, just graduated from leading educational institutions. Over 3,000 integrity, and the ability to work as a unified team, mutual employees of the bank were involved in training events during support — these are qualities that are shared by all members 2005. of the bank’s team. The bank’s employees are also able to upgrade their skills by The principles of responsiveness, humanity and dependability participating in workshops, conferences and training events underpin the business values of Vozrozhdenie Bank and set it organised by external training centres in Moscow and other apart from other banks. These values of Vozrozhdenie Bank Russian cities. Our employees have undergone training in are the driving force behind all the bank’s activities and are spheres such as economics, finance, law, accounting, new practised by all employees in their daily work. To this end, banking technologies, and banking security. the bank runs special training programmes aimed at shaping a corporate culture that is based on the bank’s values. A Our own corporate training workshops and conferences have brochure describing the bank’s values is provided to all also been held for employees. The lecturers and instructors employees. have included specialists and managers from the bank, external advisers and experts, and senior officials of the Bank In 2005 training programmes for Vozrozhdenie Bank employees of Russia and Moscow City Tax Inspectorate. covered all major areas of the banking business, with special The bank’s social mission The guiding principle of Vozrozhdenie Bank is to understand contribution of Moscow Region residents to our great Victory in the needs of our clients and foster relationships that are based World War II. on responsiveness, humanity and dependability. The bank’s participation in municipal and district events has already The bank pays particular attention to issues relating to the become something of a tradition, such as the Day of the City, education and training of young people, supports secondary youth events, forums for businessmen, and charity campaigns. schools, sponsors scholarship programmes for students, and This helps local residents get more closely acquainted with arranges internship programmes at the bank’s branches. The our bank and experience our warm, human approach to our bank maintains close links with the Finance Academy under customers. the Government of Russia, and the President of Vozrozhdenie Bank heads the Finance Academy’s Board of Trustees. The bank takes care of war veterans, and does its best to ensure that the truth about the heroic deeds of our people finds The bank also promotes the development of our culture, and its way into the hearts and minds of our youngsters. In 2005 assists in the renovation of historic monuments. In 2005, in our bank sponsored and organised a 39-part military history particular, the bank assigned funds to the renovation of the television series broadcast by Channel Three, entitled «We Did Cathedral of Christ the Saviour. our Best to Bring this Day Nearer», which was devoted to the
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  27. 27. Prospects for the bank’s development in 2006 Our strategy is to develop the bank in a number of key 3. Governance and organization directions while we are focusing on meeting the needs of the We will continue to improve our corporate governance and rapidly expanding corporate and retail sectors of the Russian internal control systems. In 2006 a centralized marketing and economy. To do this, we must effectively focus our resources communications function will be implemented helping to focus on the most promising potential areas for growth and profit. the bank’s brand and maintain a strong corporate culture as Our primary goal is to offer even greater levels of individual the bank expands. We will also develop programmes to further service, provide security for our clients’ funds and help with improvement of our employees’ professional skills. development of their business. 4. Technology strategy 1. Relations with corporate and retail clients During next two years the bank will completely replace its core Developing our business based on long term relations with our technology platform. Our expanding business demands sound clients is fundamental to the bank’s strategy. We put significant operational systems and an effective way of managing our effort into informing and educating our clients so that they client relationships. We are implementing a completely new appreciate the usefulness and value of the bank’s services. core technology platform that will create a uniform information Through these efforts and effective sales and marketing we base, allowing client service at any location, independent plan to increase the value of our corporate client relationships of the branch where the account is held. A relationship by selling existing clients additional products and services management system for retail accounts will allow significant such as alternative financing, transaction and cash services, increases in sales efficiency. Furthermore, technology related and payroll services. Our retail activities are still accelerating enhancements to our risk management practices should in an underserved market. During the next two years we will maintain our low credit loss record. continue to improve our position among the top 10 banks in retail deposits and mortgages. We will also continue to develop financial products based on bank cards. The bank is one of 5. Sales and network strategy the leading Russian banks in terms of the volume and quality As at 1 January 2006, our branch network included 138 of card related services and the number of cards issued will branches and more than 400 ATMs. We plan to expand our exceed 1,000,000 in the next year. The bank services the payroll sales infrastructure so as to make it more convenient for our needs of over 2,500 commercial clients using debit cards and customers to access our services. Every year the bank opens plans to increase this number to at least 3,000 over the next approximately 20 new branches or sub-branches and about 50 two years. new ATMs each year. The focus will continue to be on regions and cities with high potential and growth of independent small and medium sized businesses. In the next two years, we plan 2. Capital strategy to increase the number of ATMs to over 500, expanding the We intend to increase the bank’s capitalisation and liquidity functionality of our ATM-based payment services and equipping of our shares traded on exchanges. We do not envisage any all the bank’s branches with cash-in ATMs. invitation to strategic investors who might change the bank’s independent strategy or well-established brand. The bank has already had 18 issues of new equity and we plan in the near future to issue additional equity to a broad range of professional and individual investors. We want to continue the public, open and diversified structure of our ownership. Management maintains a significant position in the bank’s capital and it is pursuing a development strategy that is aimed at increasing the price of Vozrozhdenie Bank shares and boosting the efficiency of its activities in the interests of all shareholders. We plan continuing increases in efficiency that will reduce our cost/income ratio to 60-65% and increase our profitability to above 20-25%. A good record of earnings, we believe, will also allow us to access new capital from both Russia’s developing domestic capital market and from abroad.
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  29. 29. Corporate governance Vozrozhdenie Bank is one of the leading financial institutions principles set out in the Code, the bank has issued a number in the sphere of corporate governance. of internal documents regulating the division of authorities, the competences and accountability of management bodies, The bank maintains high standards of corporate governance the internal control and risk management systems, and is guided by the following principles: respect for and and disclosure rules and procedures. protection of shareholders’ rights, control over assets and economic activities, information transparency, and Since 1991 the bank has been preparing audited financial accountability of management. statements in accordance with both Russian and international standards. In 2005 the international rating agency Standard We have a productive relationship with the International & Poor’s assigned us its highest ranking among top Russian Finance Corporation (IFC), which a few years ago made banks, based on the bank’s information transparency and a positive assessment of the bank’s corporate governance openness. system. The bank was one of the first banks in Russia to adopt a Corporate Governance Code, which contains the fundamental For further information on our corporate governance principles and objectives for improving the effectiveness principles, internal documents, and shareholder and investor of corporate governance — one of the most crucial factors relations, see «Investor relations» on our website: for the stability of the bank’s operations. On the basis of the Yuriy Shcherbakov First Vice-president of OOO Holding company Parnas, Saint Petersburg Mutual understanding is prepared to do us a favour. With crucial both in relationships Vozrozhdenie Bank, we speak between people and in the same language. Virtually business. We have established all the bank’s employees great communication and are communicative, friendly, mutual understanding with and always keen to meet Vozrozhdenie Bank. I’ve had your wishes. This is what dealings with other banks, makes Vozrozhdenie Bank so and they have all given the distinctive. impression that our company should count itself blessed and fortunate that they were
  30. 30. Corporate governance The governing bodies of the bank The highest governing body of the bank is the General Meeting The Supervisory Council of Shareholders. The General Meeting of Shareholders elects The Supervisory Council of the Bank is responsible for the the Supervisory Council, which is empowered with the general general management of the bank’s activities, except the authority to manage bank’s activities. questions reserved to the exclusive competence of the General Meeting of Shareholders. Management of bank’s operations is executed by a single executive – the Chairman of the Bank’s Management Board The Supervisory Council is empowered to determine the (the President) elected by the General Meeting of Shareholders. strategic policy of the bank, to control its financial and For operational management the Supervisory Council elects economic activities, establish and maintain an effective system a corporate executive body – the Bank’s Management Board. of internal control, secure shareholders’ rights and supervise the activity of the executive bodies. The Bank’s Management Board is responsible for most important decisions regarding operational management of the The Supervisory Council includes 12 members elected by bank’s activities that require joint approval. cumulative voting during the annual General Meeting of Shareholders for a period till the next scheduled annual General Meeting of Shareholders or a special General The General Meeting of Shareholders Meeting of Shareholders with election of new members of the The General Meeting of Shareholders is the highest governing Supervisory Council on its agenda. body of the bank. On June 24, 2005, the General Meeting of Shareholders elected The bank ensures equal participation of all shareholders in the the Supervisory Council of the Bank consisting of 12 members. meeting, their timely notification of the calling of a meeting and also provides them with information and materials necessary As per the requirements of the Bank’s Corporate Governance for making decision on the items on the agenda. Code, the Supervisory Council should include at least three independent members in order to secure objective decision Notification of and basic information about the General Meeting making and to maintain a balance between interests of of Shareholders, including time, place and form of the meeting different groups of shareholders. Criteria of the Supervisory and its agenda are published in the newspaper «Ezhednevnye Council members’ independence are based on the Regulations Novosti: Podmoskovie» and at the bank’s Internet website at on Organization of Trading Activity on the Securities Market least 30 calendar days prior to the scheduled day of the meeting. adopted by The Federal Financial Market Service. 30
  31. 31. Members of the Supervisory Council Name, year of birth Positions at the bank and other organizations The portion of the Education bank’s shares owned Yury M. Marinichev Chairman of the Supervisory Council of the Bank; 0.28 Higher, 1937 Chairman of the Moscow Regional Union of the Consumers’ Cooperation Moscow Transport Institute, Moscow S. Ordzhonikidze Institute of Economics Dmitry L. Orlov Chairman of the Bank’s Management Board; 38.36 Higher, 1943 Deputy Chairman of the Supervisory Council of the Bank Moscow Finance Institute Lyudmila A. Goncharova Deputy Chairman of the Bank ‘s Management Board 1.76 Ternopol Institute of Finance 1958 and Economics Alexander V. Dolgopolov Deputy Chairman of the Bank ‘s Management Board 0.56 Higher, 1961 Moscow G. V. Plekhanov Institute of National Economy Boris F. Borin The General Director of Elektrostal Metallurgical Plant, OJSC 0.000002 Higher, 1939 Moscow Institute of Metallurgy, The Academy of National Economy under the USSR Council of Ministers Sergey A. Vybornov General Director of the Investment Group ALROSA, OJSC 0.00 Higher, 1958 Moscow State Institute of International Relations (MGIMO) Alexander I. Goyev General Director of Krasnogorsk S. A. 0.002 Higher, 1947 Zverev Mechanic Industries, OJSC Mogilev Engineering Institute, Academy of National Economy under the USSR Council of Ministers Nikolai Y. Demin General Director of AVK Exima, NPJSC; 0.00 Higher, 1936 General Director of Mikoyan Meat Processing Plant, NPJSC Moscow K. A. Timiryazev Academy of Agriculture Nikolai S. Zatsepin General Director of Mozhaisk Wholesale and Retail Trade Company, NPJSC; 0.20 Higher, 1951 General Director of LLC Edelweiss Moscow Institute of Civil Aviation Engineers Valentina M. Kabanova Retired 0.01 Higher, 1937 The All-Union Financial and Economic Institute Otari L. Margania Senior Vice-President of Vneshtorgbank, OJSC 0.00 Higher, 1959 Leningrad State University Rustem M. Usmanov General Director of Almazyuvelirexport, 0.00 Higher, 1949 state owned foreign trade company Moscow State Institute of International Relations (MGIMO)
  32. 32. Corporate governance Members of the Management Board Name, year of birth Positions at the bank The portion of the Education bank’s shares owned Dmitry L. Orlov Chairman of the Bank’s Management Board 38.36 Higher, 1943 Moscow Finance Institute Lyudmila A. Goncharova Deputy Chairman of the Bank’s Management Board 1.76 Higher, 1958 Ternopol Institute of Finance and Economics Alexander V. Dolgopolov Deputy Chairman of the Bank’s Management Board 0.56 Moscow G. V. Plekhanov Institute 1961 of National Economy Mark M. Nakhmanovitch Deputy Chairman of the Bank’s Management Board 0.56 Higher, 1957 Moscow K. A. Timiryazev Academy of Agriculture Yury I. Novikov Deputy Chairman of the Bank’s Management Board; 0.00 Leningrad State University 1962 Head of the Bank’s North-Western Inter-Regional Centre (representative office of the Bank in the North-Western federal district and economic area) Nikolay D. Orlov Deputy Chairman of the Bank’s Management Board 2.44 Higher, 1971 Finance Academy under the Government of Russia Dmitry A. Strashok Deputy Chairman of the Bank’s Management Board 0.30 Higher, 1951 All-Union Institute of Agriculture Tatyana F. Gavrilkina Deputy Chairman of the Bank’s Management Board 0.28 Higher, 1959 Head of Finance Department Moscow Finance Institute Alexander A. Bolvinov Head of HR Department 0.00 Higher, 1962 Moscow State Institute of International Relations (MGIMO) Tamara I. Luzhina Deputy Head of Finance Department 0.29 Higher, 1950 All-Union Institute of Finance and Economics Oleg V. Kharlamov Head of Administrative Department 0.01 Higher, 1938 All-Union Polytechnic Institute Remuneration for members of the bank’s governing bodies Audit Commission There was no compensation fixed for members of the The Audit Commission consists of four members and was Supervisory Council, and no payment was made. elected by the General Meeting of Shareholders on June 24, 2005. The remuneration for members of the executive bodies (salary and bonus) for the year 2005 totaled 112,497 thousand rubles. 32
  33. 33. Members of the Internal Audit Commission Name, year of birth Positions at the bank and other organizations The portion of the Education bank’s shares owned Viktor A. Afonin Chairman of the Audit Commission, 0.00 Higher, 1956 Deputy General Director of Almazyuvelirexport (GUPVO) Moscow Finance Institute Tamara N. Lapinskaya Deputy Head of Business Planning and Analysis Division of the Finance 0.005 Higher, 1954 Department, Vozrozhdenie Bank (OJSC) Moscow Finance Institute Svetlana A. Markina Head of Internal Operations Recording Division of the Accounting and 0.001 Specialized Secondary, 1952 Financial Reporting Department, Vozrozhdenie Bank (OJSC) All-Union School of Accounting and Credit Natalya A. Romanenko Head of Monitoring Division of the Corporate Department, Vozrozhdenie 0.00 Higher, 1963 Bank (OJSC) Moscow G. V. Plekhanov Institute of National Economy Auditor of the bank • RUR 70,000,000 in clients’ funds placed as deposits; An independent auditor has audited the bank’s activities since • RUR 7,950,000 in bank guarantees issued; its foundation in the year 1991. The Audit carried out under • RUR 396,970,000 and USD 8,170,000 in contracts for the sale both Russian Accounting Standards (RAS) and International and purchase of certificates of deposit and promissory notes; Financial Reporting Standards (IFRS). • RUR 592,682,000 in contracts for the sale and purchase of precious metals. The official Auditor of the bank is ZAO PricewaterhouseCoopers Audit. The bank entered into such transactions in the course of its normal business operations and on its standard terms. The prices for such interested party transactions were determined Disclosure of interested party transactions in accordance with the Guidelines of Fundamental Principles In 2005 the bank entered into a number of transactions for Management of Resources of Bank Vozrozhdenie (OJSC) involving members of the bank’s executive bodies and that are denominated in Russian Roubles and Foreign the Supervisory Council that are deemed interested party Currencies. transactions under the applicable laws of the Russian Federation. The total volume of interested party transactions The amounts involved in each transaction accomplished by entered into by the bank in 2005 amounted to RUR the bank with a related party did not exceed the upper limit 9,769,153,000 and USD 35,766,000, including: established by resolutions of annual general meetings of the • RUR 6,993,281,000 and USD 25,310,000 in loans extended bank’s shareholders, which is 5% of the balance sheet value to legal entities of assets appearing in the bank’s financial statements as at the • RUR 150,000 and USD 286,000 in loans extended relevant reporting date (Minutes № 1 of 25/06/2004 and Minutes to individuals; № 1 of 24/06/2005). • RUR 1,708,120,000 and USD 2,000,000 in credit facility agreements;
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  35. 35. Capital and dividends Structure of the Authorized Capital As at January 01, 2006 the authorized capital of the bank amounted to 200,431,990 Rubles. Shares issued Class of Shares Government registration Face Value Number of shares issued number (Rubles) Common non-documentary registered shares 10101439В 10 18,748,694 Preferred non-documentary registered shares with 20201439В 10 1,294,505 fixed dividends The equity issue under state registration number 20101439В state registration number 10101439В with a face value of RUR was cancelled, due to the terms for converting preferred non- 10 each. (1,999,941 shares under state registration number documentary registered shares with a face value of RUR 10 20101439В were cancelled on the basis of the letter each into common non-documentary registered shares bearing № 33-1-5/3318, issued by the Bank of Russia on 11/05/05.) Alexander Domashenko Deputy General Director of OJSC Rokadovskie Mineralnye Vody (Rokadov Mineral Water), Rostov-on-Don We have met like-minded will have a positive effect on people at Vozrozhdenie Bank. their health. We are grateful Our partnership is aimed at to Vozrozhdenie Bank for their upgrading our production mutual understanding and facilities, increasing our sensitivity, and we believe that capacities, creating new jobs. our cooperation will contribute Thanks to the re-equipment to the development of the of our production facilities, economy and the preservation we have managed to increase of the nation’s health. output considerably. Our high quality water is now available to many more people, and it
  36. 36. Capital and dividends Trading floors Name Class of Securities Date of Listing Non-commercial Partnership Common non-documentary registered shares (VZRZ) May 1997 «Stock Exchange «Russian Trade System» (NP RTS) Non-public Joint-Stock Company Common non-documentary registered shares (VZRZ) February 1998 «Moscow Interbank Foreign Preferred non-documentary registered shares with fixed February 1998 Currency Exchange» (MICEX) dividends (VZRZP) Berlin Stock Exchange ADR of first level for common registered shares July 1997 (VZYy.Be, U.S.ISIN US0654531021) Frankfurt Stock Exchange ADR of first level for common registered shares August 1997 (VZYy.F, U.S.ISIN US0654531021) Stuttgart Stock Exchange ADR of first level for common registered shares November 2000 (VZYy.Sg, U.S.ISIN US0654531021) The volume of trade on German stock exchanges during the In total on Russian stock exchanges trades of 366 thousand year 2005 was equal to $ 7,390 thousand. shares were concluded for the amount of 182 million rubles. Active trading in common shares of Vozrozhdenie Bank started The volume of trade on MICEX during the year 2005 totaled in August 2005. At the beginning of 2006 shares were included 92 million rubles and on RTS – $ 3.2 million. into the «B» listing of MICEX. 36
  37. 37. Price for Vozrozhdenie Bank’s ADRs on German stock exchanges in 2005 volumes of trade ADR price Price for common shares of Vozrozhdenie Bank on MICEX in 2005 volume price Price for common shares of Vozrozhdenie Bank on NP RTS in 2005 volume price
  38. 38. Capital and dividends Shareholders structure On January 01, 2006 8,030 shareholders were registered in the register of Vozrozhdenie Bank shareholders, including 918 legal entities and 7,112 individuals. Shareholders structure as at January 01, 2006 Share in the Authorized Capital (%) Individuals 50.78 Non-residents 12.01 including holders of ADRs 2.74 Other legal entities 36.93 Total legal entities 48.94 Russian Government Agencies 0.28 List of shareholders owning more than 5 percent of bank’s authorized capital as at January 01, 2006 Shareholder Share in the Authorized Capital (%) Dmitry L. Orlov 38.36 Non-public joint-stock company «Depository Clearing Company»* 24.27 Burlington Trading Co Limited 5.25 * Nominee Capital of the bank 01.01.2006 Capital of the bank (Thousands Rubles) 3,273 Number of shares (common & preferred) 20,043,199 Book value per share* 163.3 P/BV** 5.1х * Without subordinated deposits . ** Market price of the shares at MICEX on December 31, 2005 was equal to 840.57 rubles. 38
  39. 39. Dividends Dividends on common non-documentary registered shares Dividends on preferred non-documentary registered shares have been paid at a rate of 5% of the share’s face value since with fixed dividends have been paid at a rate of 20% of the the year 2002. share’s face value regularly. Dividends on preferred non-documentary convertible registered shares were paid at the same rate until their conversion into common shares in the year 2005. Report on declared dividend payments on bank’s shares thousand rubles Year Common non-documentary Preferred non-documentary Preferred non-documentary Total registered shares convertible registered shares* registered shares with fixed dividends 2002 5,624.38 999.97 2,589 9,213.35 2003 8,374.38 999.97 2,589 11,963.35 2004 9,374.35 - 2,589 11,963.35 * The equity issue under state registration number 20101439В was cancelled, due to the terms for converting preference non-documentary registered shares with a par value of RUR 10 each into common non-documentary registered shares bearing state registration number 10101439В with a par value of RUR 10 each. According to the resolution of the General Meeting of Registrar of Open joint-stock company Bank Vozrozhdenie: Shareholders (Protocol No. 1 dated 24 June 2005) annual dividends for the year 2004 were declared on shares of all Joint-Stock Company Specialized Registrar AVISTA. classes in the amount of 11,963.35 thousand Rubles. License No. 10-000-1-00271 issued by the Federal Securities Commission on 24 December 2002. Dividends were paid from August 16, 2005 by transferring the relevant amounts to current accounts of corporate shareholders Mailing address: and to personal accounts of individual shareholders according to Luchnikov Pereulok, 7/4, Building 1, 101999 Moscow, the data of the Shareholders Register. In case if banking details Open joint-stock company Bank Vozrozhdenie of individual shareholders were not available dividends were paid (for Moscow branch of JSC AVISTA) in cash at the bank’s offices. Phone: (495) 620-1861. American Depository Receipts (ADR) of first level for common shares of Bank Vozrozhdenie (OJSC) Depository (Issuer of ADR) Custodian Bank The Bank of New York ING Bank (Eurasia) ZAO. Address: The Bank of New York, Address: Krasnaya Presnya Street, 31, Moscow, 123022 Russia. American Depositary Receipt Division Phone: (495) 755-5400 101 Barclay Street, New York, NY, 10286. Fax: (495) 755-5499 Phone: + 1 (212) 815-4493 Fax: + 1 (212) 571-3050 Process Agent Representative Office in Moscow C.T. Corporation System. Address: Posledny Pereulok, 17, Address: 111, Eighth Avenue New York, NY 10011. Office 4, 103045 Moscow. Phone: + 1 (212) 894-8600 Phone: (495) 967-3110 Fax: + 1 (212) 894-8690
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  41. 41. Financial statements Auditors’ report on the summarised consolidated Financial statements (IFRS) To the Supervisory Council of Vozrozhdenie Bank: In our opinion, the accompanying consolidated summarised financial statements are consistent, in all material respects, We have audited the consolidated financial statements of with the consolidated financial statements from which these Vozrozhdenie Bank and its associate as at 31 December summarised consolidated financial statements have been 2005, from which these summarised consolidated financial derived. statements were derived, in accordance with International Standards of Auditing. For a better understanding of the Group’s financial position and the results of its operations for the year, and of the scope of In our report dated 31 March 2006 we expressed an opinion our audit, these summarised consolidated financial statements that the consolidated financial statements of the Group (not should be read in conjunction with the consolidated financial attached herewith), from which these summarised consolidated statements, from which these summarised consolidated financial statements have been derived, present fairly, in all financial statements have been derived, and our audit report material respects, the financial position of the Group as at thereon. 31 December 2005 and the results of its operations for the year then ended in accordance with International Financial Moscow, Russian Federation Reporting Standards. 31 March 2006 Zinaida Lukicheva Yaroslavl When I decided to buy my first into the driver’s seat of my car I compared the car loan own car. Now, whenever I take offers of seven different banks. my son for a drive around the The offer of Vozrozhdenie Bank city, I remind myself that this was the most attractive. The has all been made possible by bank’s employees were very Vozrozhdenie Bank. helpful to me. I received clear answers to all my questions, and the documents were processed without delay. In late December 2005 I ceased to be a pedestrian and became a motorist, getting