1 WHO WE ARE OTKRITIE Financial Corporation is one of Russia’s leading financial institutions, focused on investment banking, commercial banking, brokerage services, and asset management. The key constituents of Otkritie Financial Corporation are Otkritie Capital, Otkritie Bank, Otkritie Brokerage, Otkritie Asset Management, Otkritie Securities Limited and Otkritie Finance (Cyprus) Limited. At present, the companies that comprise the Otkritie Financial Corporation provide a wide range of services to institutional, retail, and corporate clients and on both the domestic and global stock markets. Clients are also offered a traditional set of banking products. Established in 1995, OTKRITIE has become a trusted partner for many Russian and international individual and institutional clients. Accredited by most European exchanges where Russian instruments are traded, OTKRITIE offers global market connectivity and order-routing from its offices in London, Frankfurt, Moscow, New York, Bermuda, Limassol and over 50 major cities across Russia.
2 HISTORY • TOP-10 in terms of trading volumes and number of clients in Russia – since 1999; • TOP-10 player in terms of trading volumes in depository receipts at LSE – since 2009. Source: RTS, MICEX, LSE, Company data
3 GEOGRAPHY • Offices of the companies, banks and brokerage house of OTKRITIE Group are located in over 50 cities* of Russia (in 30 regions), as well as in Great Britain, Germany, the Republic of Cyprus and Ukraine. • Regional network of the group in Russia includes more than 30 branches and around 220 points of sales * Including offices in Dolgoprudniy, Reutov, Zhukovskiy and Khimki
4 MAIN LEGAL ENTITIES OF OTKRITIE FINANCIAL CORPORATION OTKRITIE Brokerage house JSC OTKRITIE Bank (JSC) OTKRITIE Brokerage house JSC (Ukraine) OTKITITIE Financial OTKRITIE Securities OTKITITIE CAPITAL Corporation JSC Limited (UK) OTKRITIE Asset Management Ltd. OTKRITIE Finance Limited (Cyprus) BENEFICIARIES Mr. Vadim Belyaev 39,24% • Commercial Banking, Global Markets & Investment Banking Mr. Boris Mints 39,24% VTB Bank 19,90% • Asset Management Others 1,62% • Brokerage
5 BOARD OF DIRECTORS OTKRITIE FINANCIAL CORPORATION Board of Directors of OTKRITIE FC JSC Boris I. MINTS Vadim S. BELYAEV Chairman of the Board President, Board Member Mikhail V. BELYAEV Vladimir A. MAU CEO, Board Member Independent Director, Board Member Sergei K. DUBININ Oleg V. KISELEV Board Member Independent Director, Board Member
6 LINES OF BUSINESS OTKRITIE FINANCIAL CORPORATION • OTKRITIE Asset Management • Management of collective investments • Trust management OTKRITIE Financial Corporation (OTKRITIE) • OTKRITIE Commercial Banking • OTKRITIE Capital Global Markets • Corporate Banking and Investment Banking • Retail Banking • Fixed Income Trading • Electronic Trading • SME Lending • Money Market • Retail brokerage • Private Banking • Debt Capital Markets • Depository service • Equity Capital Markets • Sales and Trading • Mergers & Acquisitions • Research • Prime Brokerage
7 KEY FIGURES AND FACTS OTKRITIE FINANCIAL CORPORATION OTKRITIE Financial Corporation JSC Assets ($ mln.) Revenue ($ mln.) Trading turnover Source: financial reports and management forecasts MICEX and FORTS ($ mln.) • TOP-10 M&A adviser in Russia and Eastern Europe as of 2008, according to Dealogic International Research Agency • Leading positions on the Russian stock market in terms of trading volumes • Widely represented in Russia (more than 50 major cities of the country) • Well established on the European market with offices in London, Kiev Frankfurt and Limassol • More than 5200 employees as at the end of 2010 - USD equals 31 RUR - 1H 2010 according to unaudited management report under IFRS - 2007-2009 according to audited financial results under IFRS - Trading turnover according to the data from www.micex.ru and www.rts.ru and off the market
8 IFC – NEW SHAREHOLDER OF OTKRITIE BANK OTKRITIE Bank: target capital structure 67% 16% 17% 67% 16% OTKRITIE Financial Corporation International Finance Corporation (Word BankGroup) 17% Deposit Insurance Agency Sale of up to 17% shares of OTKRITIE Bank (JSC) to IFC in amount of $100 mln.* is in progress. It is going to be the most significant investment of IFC in the Russian market after 2008. * The project is approved by BoD of IFC, deal closure is expected in 1Q 2011
9 AWARDS & RECOGNITIONS: OTKRITIE FINANCIAL COMPANY MICEX members Most active derivative firms’ equity trading broker on FORTS with Second place 1st place on RTS Standard MICEX members volumes & the most active the market share of more according to bonds arrangers’ exchange market in terms of firms’ fixed income trading broker for institutional clients than 18% & most active rating: subfederal/municipal trade volume volumes on MICEX broker on FORTS, options sectors, as of end of 2010* (data from (data from www.rts.ru) (data from www.micex.ru) section (data from (data from www. cbonds.ru) www.micex.ru) www.rts.ru) TOP 1 TOP 1 TOP 3 TOP 3 TOP 2 London Stock Ranking among Russian Ranking among Russian Summary rating Exchange-traded bonds Exchange asset management Bank in terms of of commercial paper program arrangers’ rating, Most active brokers, companies according assets and shareholders arrangers, as of end of 2010 as of end of 2010 (data from www. cbonds.ru) IOB section (www. to the National Rating Agency (data from www. cbonds.ru) equity (data from Bank of Russia, as londonstockexchange.com) (data from www.nra.ru) of end of 2010) TOP 5 TOP 5 TOP 5 TOP 10 TOP 30 • Successfully completed IPOs for two Russian companies on MICEX, with a market capitalisation of RXbn / US$Xbn • The licensed company in foreign jurisdiction (UK) provides access to 30 leading exchanges of the world through * Excluding Moscow Financial Agency (Mosfinagentstvo)
10 OTKRITIE CAPITAL: An Emerged Force in Emerging Markets Otkritie Capital is the investment banking, securities, capital markets and corporate finance business of Otkritie Financial Corporation. Since it’s establishment, the business has grown to be among the strongest and most successful firms in Russian in it’s target markets. Working with clients across the institutional, corporate, government, regional and HNWI sectors, Otkritie has developed a business of size, scale, scope and profitability, developing a leading-edge electronic execution platform as well as hiring and developing some of the most experienced professionals in its key markets The business has extended its geographic footprint beyond its strong base of Russia, with operations in the UK, Germany and Cyprus. Further expansion is planned for Hong Kong and New York in the near future, with a substantial opportunity to enhance its client offering, its physical presence and its profitability amid market consolidation and a flight to quality among clients. Brokerage services for retail clients in the Russian securities market. Key targets For 2011 Continue to build out the universal investment banking business model through expanded product range, strategic hiring and geographic operations. Support the ongoing process preparing Otkritie FC for IPO in 2013.
11 BUSINESS SEGMENTS OTKRITIE CAPITAL Direct Market Access Equity Sales & Trading Corporate Finance Fixed Income Sales & Trading Debt Capital Market Money Markets Research • Client execution • Client execution • Buy/sell-side • Client execution & • Bond issuance • Money market • Macro & settlement via & settlement advisory settlement (interest) operations electronic platform • Commercial • Equity • Custody of equity • Valuation • Custody of paper issuance • FX spot and • Custody of DMA clients FixedIncome clients derivatives • Fixed Income clients • Restructuring • CLN/LPN issuance transactions • Prop trading • Prop trading • Brokerage • Mergers and • Securitization • REPO desk • Derivative execution acquisitions • Derivative execution & settlement for & settlement for • Syndicated clients, prop, or clients, prop, or loans issuance hedging hedging • Secondary • REPO with CBR placement of bonds • Underwriting • Bridge financing • Market Making • Restructuring debt • Financial advisory • Agent services and debt management
12 SENIOR MANAGEMENT TEAM: OTKRITIE CAPITAL Roman LOKHOV Head of Global Markets and Investment Banking Member of the Board, Otkritie Financial Corporation CEO, Otkritie Securities Ltd. Igor VAYN Managing Director Deputy Head of Capital Market Operations and Investment Banking Services Head of Capital Market Trends and Corporate Finance Dmitry POPKOV Managing Director Deputy Head of Capital Market Operations and Investment Banking Services
13 GLOBAL MARKET TRENDS Equity Sales & Trading Otkritie Capital has quickly established a reputation in the institutional investment sector as a trusted market participant across a broad range of investors, offering them access to principal equity trading platforms, providing a stable pricing and execution environment, while helping to develop and implement diverse strategies on stock markets globally. We are now a leading domestic prime broker for emerging markets, with a strategic focus on Russia. Our clients include Russian and international institutional investors, large corporations and private entrepreneurs. Our business is growing at a fast pace as we continue to stay ahead of the latest market trends. Otkritie Capital acts as a Moscow-based market maker, providing trading capabilities from Moscow through Cyprus, Frankfurt, London, and soon New York. Derivatives Otkritie Capital is one of the biggest operators on FORTS in terms of futures and options trading volumes, as recently as January 2011 handling over 35% of the overall turnover on the exchange. We offer our clients a wide range of derivative instruments, including Russian index futures, index options, futures and options on local shares and shares of Russian entities traded on other stock exchanges (in London, Frankfurt and New York). Beyond providing liquidity in derivatives on more than 30 underlying securities, we also help our clients design and implement individual strategies using both listed and OTC instruments. Otkritie Capital is steadily expanding its range of products and number of underlying securities, which allows us to retain a leading position on the Russian Derivatives market.
14 FIXED INCOME SALES & TRADING Otkritie Capital is one of the leading market participants in the Russian debt markets and ranks among the top three domestic companies in terms of turnover on the secondary bond market on MICEX. We have a highly skilled team which specializes in fixed-income instruments and we offer our clients a full array of fixed-income services both in Russia and internationally through our London operation, including Russian bonds denominated in rubles and foreign currency, as well as bonds issued in CIS countries. Otkritie Capital is also an increasingly active player in the promissory notes market, working with a broad range of instruments issued by Russian companies. Across all fixed income products, we offer corporates and Russian regions one of the most high-quality and competitive services on the market for raising capital and placing funds through the fixed-income market. On the secondary market we offer investors highly efficient terms for executing orders, while issuers have access to market maker services aimed to support the liquidity of their securities. We also provide financing for institutional investors, using securities as collateral, including standard pledge and repo operations. Our clients have access to full support from a team of top-notch analysts in our Research division. Our research products and analysis provide insight into key market trends on daily and weekly basis, followed by strategic forecasts on the mid-term outlook, overviews of primary placements, recommendations and trade ideas.
15 FIXED INCOME SALES & TRADING OTKRITIE’s turnover on the secondary bond market on the MICEX, mln.RUR OTKRITIE’s Market Share in 2010 • Negotiated deals mode • Main trading mode OTKRITIE’s Market Share • OTKRITIE; 8,01% Source: www.micex.ru
16 DIRECT MARKET ACCESS Access to more than 30 equity and derivatives markets with strong focus on Russia and Emerging Markets Compatibility with all major international trading systems and global networks Comprehensive global electronic trading solutions based on advanced order-routing, market data and connectivity technologies: Direct Market Access (DMA) – directly to a number of Russian and international exchanges including MICEX, RTS/FORTS, LSE, XETRA, NYSE/NASDAQ Execution Desk Access (EDA) – routing orders to our trading desk for execution in care with real-time status updates on the client’s side OTKRITIE Capital is an active player on global securities lending and borrowing market Low Latency & Algo Trading • Dedicated infrastructure enables algo-traders with faster-than-the-market electronic trading tool • Exchange collocation solutions for trading at MICEX, RTS/FORTS, LSE and other global markets • The minimum of intermediate hubs and systems involved ensures efficiency and speed of data processing and transmission • OTKRITIE uses industry-standard technology ensures reliable connectivity, smooth and low-latency handling of orders with effective support for active trading style
17 DIRECT MARKET ACCESS • OSL is a UK registered, FSA authorised broker • OSL is a member of The London Stock Exchange, EDX London, Deutsche Bourse & Chi-x and offers access to global markets • OSL acts as an agent for its clients and trades on MICEX, RTS/FORTS via OTKRITIE broker in Moscow. OSL takes full responsibility for its affiliated entities MICEX • OSL clients have no direct exposure to Russian regulatory or tax regimes FORTS X LSE ED LOND ON CLIENT IE OTKRIT Moscow OSL London RTS XETRA & Equity Global De rivative ges Exchan r e via partn bro kers
18 DEBT CAPITAL MARKETS (DCM) Core services provided to our Clients: Competitive advantages / Additional services Origination and placement of bond issues • Rendering listing agent services • Structuring bond issues, drafting the prospectus and related documents, support in bond offerings • Offering agent services to help companies restructure public liabilities • Underwriting and distribution of primary issues • Assist issuers in directly managing their own debt pursuant Support on the secondary market to the effective RF legislation • Market making – raising liquidity on the fixed income market • Provide domestic ruble bond issuers with bridge financing to • Advising on enhancing corporate transparency supplement their working capital until the proceeds are raised from a bond placement, bond buyback obligations are fulfilled on the • IR and PR assistance secondary market, coupon yield is paid or until bond issue costs are redeemed (amortized) Placement of treasury bonds/ secondary debt offerings • Selling bonds not floated in the course of the primary offering or bought back from investors due to various binding terms NOTABLE IMPLEMENTED PROJECTS 2010 Assistance in the execution of call and put options • Optimizing the number of bonds repurchased under call and put options Second place according to bonds Summary rating of commercial arrangers’ rating: subfederal / paper program arrangers, municipal sectors, as of end of as of end of 2010 2010* TOP 3 TOP 5 Seventh place in bonds arrangers’ Exchange-traded bonds rating according to number arrangers’ rating, as of of deals, as of end of 2010 end of 2010 TOP 10 TOP 10 * Excluding Moscow Financial Agency (Mosfinagentstvo) Source: CBONDS Information Agency
19 DEBT CAPITAL MARKETS (DCM) 1H10 – launching a DCM business line within Otkritie Group’s Investment block 2010 highlights: Our clients represent the following sectors of the economy: • Building a full-fledged team of Debt Capital Market professionals • Financial services • Completing 21 public and 17 non-public DCM transactions • Agricultural sector • Otkritie Bank has organized bond and promissory • Food industry note issues for 17 issuers • Metals & Mining • Otkritie Bank has raised capital in excess of RUB 56 bn • Machinery-construction • Otkritie Bank has now joined the ranks of the Top 10 of investment banks involved in issuing bonds* • Development • Infrastructure and life support system • Sub-federal/ municipal sector Otkritie market share Otkritie market share Otkritie market share of the municipal sector of the corporate sector of the entire market • Overal • Overal mun sector • Overal corporate sector • Otkritie • Otkritie • Otkritie 14,09% 4,21% 5,50%* in different ratings prepared by Cbonds information agency
20 STRUCTURED PRODUCTS Otkritie Capital helps its clients protect their businesses against unfavorable price changes, exchange rate fluctuations and shifts in base commodity prices. We offer a number of methods and financial instruments designed to provide an effective and efficient hedging strategy – a comprehensive approach to protect corporates and investors against risks associated with price swings in commodities or fluctuations in currency exchange rates in order to mitigate their impact on your profit. The most widespread instruments are futures, swaps and options. Alongside this, we offer our clients ready-made hedging strategies packaged as the following structured products: • Capped/Floored Average • Improved Capped/Floored Average • Cap/Floor • Min/Max Our experts hold vast expertise in and help our clients to choose the right instrument or strategy to meet their individual needs. Structured products enable investors not inclined to a high degree of risk-taking to enter such complex markets as electric power utilities or base metals. Moreover, they are the ones to select the desired level of risk tolerance, ranging from 100% (risk-free investments) to 0%. Otkritie Capital offers its clients not only custom-made structured products, but also products developed by leading global issuers.
21 CORPORATE FINANCE Team members of the investment division have extensive experience in working with utilities: • Developing OGK-3’s acquisition plan, strategy, management reshuffle • Acquiring and managing a 3.5% stake in RAO UES, swapping the stake for OGK-3’s shares and other assets • Managing portfolio investments in utility stocks (aggregate amount of about $1 bn) • Developing and implementing OGK-4’s strategy, including the management strategy for several power plants • Taking part in developing the capacity market model in the Russian Federation • Resolving issues related to fuel supplies to power generation companies • Restructuring and managing TGK-1’s stake • Consolidating distribution grid assets in the course of reorganization of RAO UES of Russia – establishing inter- regional distribution grid companies (MRSKs), merging Moscow City Electric Grid Company (MGEsK) OJSC with Moscow United Electric Grid Company (MOESK) OJSC.
22 RESEARCH Otkritie produces ongoing research on 95 stocks (as at 31st December 2010), which accounts for X% of the market in terms of market capitalisation and y% of number of companies. This has increased from 5 stocks covered in early 2009 and we have a target of covering up to 110 stocks by the end of 2011 Russian research headcount – in line with competition We have increased our research focus on the less covered names, broadening our CIS exposure, and reviewing the small cap 35 companies 30 We have a coherent and comprehensive product line including: • Daily, Strategy, Macro, Sector reports, flashnotes, 20 and trading ideas • Value-adding sector reports 10 Our marketing efforts for companies includes analyst marketing in Moscow , Continental Europe, London and the US and Non Deal Roadshows in Moscow and Continental Europe OTKRITIE VTB RenCap Troika • Equity • Fixed Income Source: Source: OTKRITIE Research