HERE IS THE PPT ON PNB SCAM
NIRAV MODI
WE MADE IT BASED ON EARLIER FACED FRAUD BY PNB
FRAUDSTER NAME IS NIRAV MODI
I THINK IT WILL CLEAR ALL YOUR DOUBTS ABOUT SCAM
We are delighted to present our July newsletter, which covers developments in the products and services offered by the exchange, as well as news, interviews, and market data.
1) 11400 Crores Fraud
2) Nirav Modi, the billionaire jeweler who along with others scammed Punjab National Bank (PNB) of over 11400 crore’s has fled the country.
3) Apparently Nirav modi spotted in which placeWE DON’T KNOWBut What exactly is this scam?
4) The CBI has registered a case against Nirav Modi on January 29. Punjab National Bank registered a case against Nirav Modi, His Brother Neeshal & His Uncle Mehul Choksi on February 13.
5) The Bank initially reported a scam of rupees 280 crores. But it was later realized to be rupees 11400 crores. This is a lot of money. So how does one get away with a scam of such magnitude? Possibly it is one of the biggest in Indias’s banking history.
6) Nirav Modi is an importer of diamonds. Basically importers prefer to take loans in foreign currencies as interest rates on that are lower. In this case a loan that is taken from any overseas bank guaranteed by PNB. Then what Modi had to do was approach PNB & ask for buyers credit?In order to do this PNB had to issue a “letter Of Undertaking” to an overseas bank. Basically LoU guarantees an overseas bank that if it gives money for a specified period to identified by the home bank (in this case PNB) then the home bank will assure that the money will be returned to the overseas bank.
7) Most of these overseas banks are Indian Banks with foreign branches. So the overseas bank directly give to loan PNB not Nirav Modi. An account has to create by PNB called a NOSTRO account where the overseas bank gives the loan.
.
.
.
.
.
More.........
HERE IS THE PPT ON PNB SCAM
NIRAV MODI
WE MADE IT BASED ON EARLIER FACED FRAUD BY PNB
FRAUDSTER NAME IS NIRAV MODI
I THINK IT WILL CLEAR ALL YOUR DOUBTS ABOUT SCAM
We are delighted to present our July newsletter, which covers developments in the products and services offered by the exchange, as well as news, interviews, and market data.
1) 11400 Crores Fraud
2) Nirav Modi, the billionaire jeweler who along with others scammed Punjab National Bank (PNB) of over 11400 crore’s has fled the country.
3) Apparently Nirav modi spotted in which placeWE DON’T KNOWBut What exactly is this scam?
4) The CBI has registered a case against Nirav Modi on January 29. Punjab National Bank registered a case against Nirav Modi, His Brother Neeshal & His Uncle Mehul Choksi on February 13.
5) The Bank initially reported a scam of rupees 280 crores. But it was later realized to be rupees 11400 crores. This is a lot of money. So how does one get away with a scam of such magnitude? Possibly it is one of the biggest in Indias’s banking history.
6) Nirav Modi is an importer of diamonds. Basically importers prefer to take loans in foreign currencies as interest rates on that are lower. In this case a loan that is taken from any overseas bank guaranteed by PNB. Then what Modi had to do was approach PNB & ask for buyers credit?In order to do this PNB had to issue a “letter Of Undertaking” to an overseas bank. Basically LoU guarantees an overseas bank that if it gives money for a specified period to identified by the home bank (in this case PNB) then the home bank will assure that the money will be returned to the overseas bank.
7) Most of these overseas banks are Indian Banks with foreign branches. So the overseas bank directly give to loan PNB not Nirav Modi. An account has to create by PNB called a NOSTRO account where the overseas bank gives the loan.
.
.
.
.
.
More.........
Il documento "Dfs and rsb card issuance" dell'evento CARTE 2012. Conference&Expo su carte e pagamenti innovativi.
Roma, Palazzo dei Congressi
15 e 16 novembre 2012
Maggiori informazioni: http://www.abieventi.it/eventi/1633/carte-2012
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
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Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
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The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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2. Contents
3 Portrait of the Bank
7 Letter from the Chairman of the Management Board
9 Strategy
11 Key Events of 2009
12 The Russian Economy and Banking System in 2009
16 Business Overview
16 Analysis of financial results
20 Corporate business
28 Retail business
34 Bank card business
38 Operations on financial markets
41 Banking technologies
43 Shareholder Structure of Bank Vozrozhdenie
44 Corporate Governance
64 Risk Management
72 Social Policy
75 Financial Statements
82 Branches in Russia
83 Offices in Moscow Region
84 Offices of Vozrozhdenie Bank
88 Addresses and Contacts
3. Portrait of the Bank
1
General license of the Central Bank Bank Vozrozhdenie has a history Bank Vozrozhdenie is a Principal
of Russia No. 1439 (March 24, 2003). dating back to April 19911. It is one Member of the Visa and MasterCard
of the largest credit institutions international payment systems. By
in Russia today, and has been among the end of 2009 the bank had issued
the country’s top 30 banks for 18 years 1.35 million cards.
in a row.
The Bank stands out among peers by
Bank Vozrozhdenie serves around its geographic reach, large share of
56,000 corporate clients and 1.5 million revenues from fee and commission
retail clients, offering a varied range of income, and stable funding from
services that include deposits, business customer deposits. Our branch network
financing, mortgage and consumer consists of 168 offices (branches) and
lending, and bank cards. The Bank’s more than 670 ATMs in 20 Russian
most important asset is its clients, regions.
many of whom have been with the Bank
for over a decade. We use the latest banking technologies
to develop client products that are
Lending to the small and mid-sized among the most up-to-date on
enterprises (SME) sector, which the market.
represents the core segment of our
corporate client base, is an essential The Bank’s stability has been confirmed
part of our business. Bank Vozrozhdenie by international rating agencies
had an overall loan portfolio of Moody’s and Standard & Poor’s.
RUR 94.6 billion at the end of 2009
(before provisions for loan losses), Bank Vozrozhdenie has one of
making it one of the leading banks the longest and best established
in Russia and leader servicing SMEs. shareholder histories in the Russian
market. Current shareholders number
We are among the best in the Russian more than 7,000 individuals and legal
banking sector by quality of our loan entities, many of whom obtained their
portfolio and liquidity. shares more than a decade ago.
We have been providing services to Year after year, Bank Vozrozhdenie
retail clients over many years. The Bank has been acknowledged as one
is part of the national deposit insurance of the leading Russian financial
program and ranks 12th among large organizations in terms of corporate
Russian institutions by the amount of governance. It is a well established
individual deposits. leader in various ratings of information
3 ANNUAL REPORT / 09
4. transparency, investor relations and Market positions 2 2
Data from RBC Rating. Asset structure and trends, RUR million Liabilities structure and trends, RUR million
3
other aspects of corporate governance. 4th by loans to the SME sector Rating of the world’s 500 largest
banks by brand value, carried out
9th by bank cards issued by Brand Finance and The Banker 49,109 73,426 111,404 141,211 145,603 49,109 73,426 111,404 141,211 145,603
Bank Vozrozhdenie has 12th by individual deposits magazine.
4,368
published financials under 15th by size of the ATM network 4,713 8,866
Russian Accounting Standards 19th by liquid assets 11,401 11,068 21,360
and International Financial 20th by corporate loans
6,363
Reporting Standards since 24th by size of the loan portfolio
1991. Its external auditor 363rd among international banks by 54,476
4,845
is PricewaterhouseCoopers Audit. brand value3 5,440
7,346
40,200
7,236
36,350
Key business results 2009 2008 Change
Assets, RUR billion 145.6 141.2 +3.1% 85,205 14,088
94,575
4,768 11,637
Loan portfolio, RUR billion 94.6 99.3 –4.7% 4,395
13,446
5,732 28,575
Client funds, RUR billion 113.1 90.3 +25.2%
16,780 19,993
78,149 4,018
Profit, RUR billion 1.2 3.1 –61.2%
3,809 8,947
Capital adequacy 19.0% 16.4% +2.6 pps 3,078 19,234 9,210
4,087 22,869 21,719 24,572
52,426
ROE 7.8% 23.3% –15.5 pps 5,468
5,690
Number of retail clients, ‘000 1,503 1,400 +7.4% 30,774 4,131
4,408 4,578
34,101 17,421 4,464
28,490
Number of corporate clients, ‘000 56 54 +3.7% 10,780
15,065 16,286
13,233 11,890
8,478 6,105 5,509
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
Credit ratings
Moody’s Investors Service: Moody’s Interfax Rating Agency: Cash and equivalents Capital Corporate deposits
Loans to customers Subordinated deposits Bills of exchange,
• Foreign Currency Deposit Rating: • Long-Term National Scale Rating: Interbank credits Syndicated loans certificates
Bа3/NP Aa3.ru Securities Other Bonds
Other assets Corporate current Individual current
accounts accounts
• Local Currency Deposit Rating: • Outlook: Negative Individual deposits
Bа3/NP Due to other banks
• Rating of Financial Strength: D– Revenue by segment, % Assets by segment, % Liabilities by business segment, %
4
The change in outlook from “stable”
• Outlook: Negative4 to “negative” applied to all Russian
6 2 10
banks with private capital.
Standard & Poor’s:
36
18
27
16
• Long-Term Counterparty Credit
Rating: B+
51
• Short-Term Counterparty Credit
Rating: B
60
11
25
38
• Russia National Scale Rating: ruA+
• Outlook: Stable Corporate business Corporate business Corporate business
Retail business Retail business Retail business
Treasury operations Treasury operations Treasury operations
Bank cards Bank cards Bank cards
Source: IFRS accounts
4 BANK VOZROZHDENIE 5 ANNUAL REPORT / 09
5. Letter from the Chairman
of the Management Board
Dear Shareholders, Colleagues difficulties, and to strengthen
and Partners, the bank-client relationship.
The entire financial community had Our proactive stance allowed us to
a challenging year in 2009. Bank continue implementation of our long-
Vozrozhdenie remained true to its term development plans, although
conservative strategy, which once the crisis was inevitably reflected
again served us well in difficult in our results. Overall, we delivered
circumstances. The Bank retained a result that was significantly better
its business thanks to high levels of than the Russian banking sector
liquidity and good quality of its client average. We kept our assets at
base. We demonstrated the strength the level of 2008 despite a general
of our business to shareholders, decline of business activity and some
investors and partners, and we credit contraction in Russia. However,
reinforced our reputation as a reliable the share of overdue loans in our
bank that can be trusted whatever portfolio increased as the financial
the climate. situation of our clients worsened,
reaching 9.9% of total lending by
A bank’s most valuable asset is its the end of 2009. Adhering to our
relationship with people, and long- conservative policy of risk assessment,
term stability has always been more we set the objective of keeping loan
important to us than short-term loss provisions at a level no lower than
gains. We maintained an ongoing 100% of impaired loans. This required
dialog with our clients, partners, additional allocations to reserves
shareholders and employees in 2009. totaling RUR4.8 billion, which had an
We share common interests with our impact on our net profit.
clients and view mutual assistance
as the key principle of our work Bank Vozrozhdenie reported a profit
together. We therefore did all we could of RUR1.2 billion in 2009. The Bank
in the crisis environment to help them, kept capital adequacy at 19% (well
working even more closely with them in excess of the minimum level required
than before. We tried to take maximum by the Central Bank), despite 100%
account of their interests in the difficult provisioning of loan risk.
climate and to provide solutions that
addressed their needs. While avoiding Our conservative policy has always
any risk to the Bank’s stability, we did been to keep external borrowing to
our utmost to develop mechanisms a minimum.
to help our clients overcome their
7 ANNUAL REPORT / 09
6. Strategy
Development of the SME sector is crucial We thank you for supporting and trusting
for development of any economy, Bank Vozrozhdenie. We truly value our
is a priority for the government at relationship with you. That relationship
the federal and regional levels, and is the most important incentive for us to
is integral to our corporate business. advance confidently into the future.
We worked hard on fund management
in 2009. As a result, we increased
the inflow of client funds by 25% and
paid off most of the money that we
had borrowed from the Central Bank
at the end of 2008. This enabled us
to return to our traditional funding Yours sincerely,
structure, which relies mainly on Dmitry Orlov
the money of our customers.
In 2010, we plan to continue The strategy of Bank Vozrozhdenie is to We believe that the key to success
strengthening our client base and develop business segments that meet in this business segment lies in an
increasing our loan portfolio. As before, the needs of the fast-growing corporate integrated approach to client service
we will pursue a conservative strategy, and retail sectors of the Russian and improvement of service quality.
seeking annual growth of 10-15%. economy, and to ensure long-term In the medium term, the Bank
Our priorities are to maintain the high growth in value of the business for intends to increase its market
quality of our loan portfolio, while shareholders. share in the corporate segment and
attracting retail and corporate clients strengthen its position among the top
with innovative banking products and We are committed to providing 25 Russian banks in terms of lending
an unmatched level of client service. We comprehensive services to corporate to legal entities, particularly to
will offer our clients high-tech services and retail clients, while strengthening the strong and reliable SME sector.
and vigorously pursue our cross-sales the Bank’s competitive position by
program. Maintaining our integrity and developing its brand and improving • In the retail business the Bank
reliability as an institution remains our the quality of its customer service. plans a substantial increase
principal and unconditional goal, and we In offering clients a broad range of in loan operations, with a special
will continue to seek greater operational services, the Bank is able to develop focus on the mortgage segment.
efficiency and improve systems for cross sales and increase the proportion Bank Vozrozhdenie will also retain its
managing credit risk. of non-interest income in its revenue position among the top 15 Russian
structure. The Bank is harmonizing banks by retail deposits, which
We are pleased with the Bank’s investments in business expansion represent more than half of our
performance in 2009 and our ability with optimization of costs to improve liabilities. Cross sales are a key
to retain our status as Russia’s most efficiency and ensure a high return on component in developing our retail
transparent financial institution. Our operations. business, and our strategy is to
strong corporate governance institutions increase cross-selling of the most
remain central to our business and The Bank’s business is divided between popular banking products. The Bank
represent one of our most important three key segments: retail, corporate intends to develop client service
competitive advantages. and financial market operations. capacities by expanding the ATM
network in regions in which it is
• In the corporate business our main present, as well as achieving further
priority is developing long-term client development of remote banking
relationships. The Bank plans to services and increasing the client
increase sales of banking products base by providing user-friendly
to corporate clients, including loans Internet and mobile banking.
for business development, trade
financing, international operations, • Operations on financial markets
settlement and cash management will be developed through further
services, payment cards, salary diversification of our securities
schemes and fund management. portfolio to ensure sufficient liquidity,
8 BANK VOZROZHDENIE 9 ANNUAL REPORT / 09
7. Key Events of 2009
reduce risk and increase returns risk assessment and is developing
on assets. The Bank continues to a methodological base for risk analysis.
develop mechanisms for lowering
risks associated with main activities The Bank intends to achieve balanced
on financial markets: currency growth of its business in 2010 using
risk, interest-rate risk and stock its own resources. We are committed
market risk. to creating a capital structure that
is public, open and diversified in order
We are committed to creating the sales to raise the market capitalization and
and technology infrastructure liquidity of the Bank’s shares.
necessary to support the long-term
development of our three key business
areas. The Bank will concentrate
on elaborating an efficient sales
network based on branches and
ATMs to increase the quality of client
service. Special attention will be paid Business Developments • The Bank was nominated
to reducing costs in client service • Bank Vozrozhdenie generated profit in the Investor Relations Magazine
and banking operations. Further of RUR1,217 million in 2009 and Russia & CIS Annual Awards, for
development of the Bank’s sales maintained a high level of capital “Best Adaptation to the Needs of IR
network will be focused in European adequacy (19%) in the Downturn” and “Best IR Officer
Russia, in regions with high levels of (Small and Mid-Cap)”
economic potential. • The Bank’s loan portfolio (before
provisions) was RUR94.6 billion. Recognition by the Marketplace
The Bank views technology as one Loans to corporate clients and loans • Bank Vozrozhdenie was named ”Best
of the most important factors for to SMEs were, respectively, 85.1% and Public Company” by the magazine
maintaining competitive advantages 50.8% of the total loan portfolio Sekret Firmy out of Russia’s top 50
and raising the quality of client service. companies, based on its share price
In 2010, the Bank plans to complete • New loan loss provisions in 2009 were performance compared with leading
the transition of all its branches 5% of the total average loan portfolio indexes
to a new technology platform. The and totaled RUR4.8 billion. Coverage
Automated Banking System (ABS), of non-performing loans by provisions • Dmitry Orlov was among winners
which is being installed, will centralize was kept at a level in excess of 100% of a competition organized by
management of the Bank’s product the Russian Audit Chamber to find
range and service clients at any branch • The Bank’s deposit portfolio increased “Russia’s Best Banker” in 2009
office, regardless of where the account by 25% to RUR113 billion, and
was opened. individual deposits increased by 32.3% • Bank Vozrozhdenie received an
to RUR68.6 billion award for offering the widest range
The Bank’s strategy also envisions of services in the “Financial Pearl of
continuous improvements in the system • The Bank issued 225,000 new debit Russia” competition
of corporate governance in accordance cards and the total number of
with global best practice and cardholders (including holders of Strengthened Market Positions
shareholder interests, improving credit cards) rose to over 1.35 million. • After its 2008 debut in a rating by
internal control and corporate culture. A new ATM deposit was introduced, the independent consultancy Brand
which can be opened via any Bank Finance and The Banker magazine,
Commitment to the interests of Vozrozhdenie ATM Bank Vozrozhdenie jumped 134
shareholders and long-term growth of places in 2009 to rank 363rd among
shareholder value have fundamental Corporate Governance the world’s top financial brands. The
importance for Bank Vozrozhdenie, • Bank Vozrozhdenie placed Bank’s brand was valued at US$212
and the Bank maintains high standards 12th in a ranking of the most million
of transparency, ensuring detailed transparent Russian companies by
disclosure and full access to corporate Standard & Poor’s and the Center for • The Bank was named by Expert
information. The Bank is focusing Economic and Financial Research (part magazine as one of Russia’s top three
on improvements to its system for of the Russian School of Economics) banks in terms of SME lending
10 BANK VOZROZHDENIE 11 ANNUAL REPORT / 09
8. The Russian Economy
and Banking System
in 2009
in the form of unguaranteed loans had Banks worked with existing clients on
fallen to RUR190.4 billion. restructuring their loans and did not
actively seek to expand the client base.
The Central Bank and
Vnesheconombank used ten-year Last year, overall profitability
subordinated loans as a primary in the Russian banking sector fell
instrument to recapitalize the banking dramatically year-on-year. According to
sector. The overall capital of figures from the Central Bank, return
the Russian banking sector increased on banking sector assets (ROA) as of
by 46.7% from October 2008 to January 1, 2010 was 0.7%, compared
December 2009, and the sector’s with 1.8% a year earlier, and return
capital adequacy ratio by the end of on equity (ROE) was 4.9%, compared
the year stood at 20.9%, compared with with 13.3% in 2008. Some 938 credit
14.5% at the end of 2008 and 16.8% at organizations were profitable in 2009,
the end of the first half of 2009. and their combined profit was 36.3%
lower than in 2008. The number of
The Russian banking sector proved exports in leading world economies, A crucial achievement in 2009 was loss-making credit organizations and
its resilience in 2009, although a rise of international prices for raw restoring confidence in the banking the volume of their losses more than
the unfavorable macroeconomic materials, and stimulus measures system and restoring the flow of doubled.
situation had an impact on results. by the Central Bank and the Russian deposits into commercial banks.
Overall assets of Russian banks government, the impact of which Clearly, the deposit insurance program Wide spreads in 2009 made banking
increased by only 5% year-on-year began to be felt during the second half and banks’ efforts to promote savings operations more profitable and enabled
and their total credit portfolio shrank of the year. As a result, GDP declined products were effective. By mid-2009, many institutions to show positive
by 0.8%. However, banking sector by only 7.9% in 2009 (according to the liquidity issues had been resolved. margins. However, spreads had already
results relative to GDP were better than preliminary figures from the State begun to narrow by the end of the year
the previous year: the ratio of banking Statistics Committee), outperforming Over the year, funding from non- due to the inflow of liquidity.
capital to GDP rose from 9.1% to 11.8% official forecasts by the Ministry for financial organizations and individuals
and banking assets to GDP rose from Economic Development and Trade, grew from 38.7% to 44% of overall Increasing levels of bad debt, in both
67.3% to 75.4%. which had predicted 8.5% contraction. banking liabilities. The volume of retail retail and corporate segments,
deposits rose by 26.7% (versus 14.5% were a general problem throughout
Russia’s economic development in 2009 The banking sector played a key role in 2008), while the volume of corporate the banking sector last year. This forced
was influenced by the global economic last year in ensuring the stability deposits increased by only 10.5% (almost banks to increase provisions, which had
crisis and was uneven through the year. of the Russian economy and a quarter of the figure for 2008). The impact on results for the year. During
The first half was characterized by in overcoming the recession. From slower growth of corporate deposits was 2009, overall bad debt provisions soared
a sharp deterioration in external late 2008 and throughout the first half mainly due to the credit squeeze and by 120% to RUR1,547.1 billion, or 9.3% of
economic conditions, a drop in exports, of 2009, one of the toughest periods shortages of working capital. loans outstanding.
capital outflow and a reduction of bank for the economy, the government
lending, which led to a significant and the Central Bank implemented The rise in liabilities in 2009 was The small and mid-sized enterprise
decline of investment activity and a drop a program of anti-crisis measures. not accompanied by an increase (SME) sector also felt the effects
in industrial output. During the first half Deposit placements by the Ministry in the volume of operations due of the crisis in 2009. Overall risks
of the year, GDP growth rates fell by of Finance at the end of 2008 and to the absence of steady growth increased, and the specifics of the sector
10.4% year-on-year. subsequent refinancing operations by in the real economy and a fall (focus on local demand in the regions of
the Central Bank played a crucial role in demand for credit, reflecting their presence) made it more vulnerable
However, the recession in Russia in stabilizing the situation. Extension of the financial difficulties of companies to unfavorable market conditions.
began to slow down by the middle of the list of assets accepted as collateral and households. Also, higher levels Before the crisis, average annual
2009, and GDP showed a positive trend by the Central Bank and a program of of credit risk made banks tighten growth in lending to the SME sector
each month beginning from June. As unsecured loans increased liquidity their criteria for creditworthiness. was around 70%. During the first half
a result, the seasonally adjusted trend in the Russian banking sector. Many retail lending programs were of 2009, lending fell by 20% year-on-
in production was positive by the third As the situation stabilized, the Central reduced, particularly for long-term year. However, SME lending began to
quarter, and the fourth quarter saw Bank moved gradually to replace products such as mortgages and car increase as the real economy returned to
the beginning of growth. The key unsecured loans with less risky loans, and some banks halted such growth. According to preliminary figures
factors that ended the recession and instruments to strengthen the resource programs altogether. Retail loans fell for 2009, the largest 20 banks in Russia
led to the restoration of growth were an base of the banking sector. As a result, by 11% year-on-year, and the situation issued around 150,000 loans totaling
increase of demand for main Russian by the end of 2009 sector debt in the corporate segment was similar. RUR900 billion to the SME sector.
12 BANK VOZROZHDENIE 13 ANNUAL REPORT / 09
9. The improving economic situation improve and economic growth Expansion of loan portfolios will
brought ratings upgrades for Russia reappeared, state support was gradually be a key challenge for the banking
and Russian issuers, and many banks scaled back. Meanwhile, the stagnation sector in 2010, although dealing
and companies were regained their on credit markets began to give way to with problem loans and improving
ratings that had been withdrawn during growth and the volume of operations portfolio quality will remain high
the turbulence of 2008. This reflects picked up substantially. on the agenda. In contrast to 2009,
an improvement in the perception of banks will have to accept much
Russian borrowers on international Outlook for 2010 narrower spreads, which will affect
markets; by the end of 2009, credit The Central Bank has identified the profitability of banking operations.
limits for Russian banks had begun various risks that will be critical for In these conditions, financial
to return to previous levels and the development of the Russian banking organizations will strive to increase
international capital markets had system in 2010, even as the overall their non-interest revenue.
again become accessible for them. economy continues its recovery. These
The Central Bank lowered interest rates risks include:
for monetary and credit instruments;
the average Moscow Interbank Actual • Sharp decline in the sector’s
Credit Rate (MIACR) for one-day profitability in 2009
ruble interbank loans in December
was 5.12%, compared with 16.26% • Deficit of long-term resources for
in January. the sector
Towards the end of 2009, as the situation • Increased credit and currency risks
in the real sector began to visibly
Indicators for the Russian economy, % Bank loans in Russia, RUR billion Russian banking system indicators, RUR billion Corporate and retail deposits, RUR billion
3,766
4,017 3,109
3,574
7,485
13.3
11.9 2,971 5,907
2,672
8.8
8.1 5,159
5.6
12,542 28,022
29,430
12,510
20,125
2008
2009
2007
9,316
9,358
8,496
6,753
–7.9
2007
2008
2009
2007
2008
2009
2007
2008
2009
Real growth of Russian GDP Loans to legal entities Capital of the banking system Money in accounts of legal entities
Inflation Individual loans Assets of the banking system Money in personal accounts
Source: State Statistics Committee Source: Central Bank Source: Central Bank Source: Central Bank
14 BANK VOZROZHDENIE 15 ANNUAL REPORT / 09
10. Business Overview
Tatiana Gavrilkina: The
primary focus of our financial (shifting its focus from supporting
growth rates to supporting quality
strategy is to ensure stability of the Bank, so its of the loan portfolio). However, loan
main components are strict control over costs volumes began to grow in the fourth
quarter, enabling the Bank to expand
and high-quality risk management. High levels of efficiency its loan portfolio before provisions by
in the Bank: 2009 operations enabled us to combine 1.1% quarter-on-quarter. The main
source of growth was an increase
a conservative provisions policy with the maintenance in corporate loans. The traditional
of margins at target levels. jump in government spending at
the end of the year gave an extra
injection of liquidity to the economy
and enabled borrowers to repay loans
obtained from the Bank, causing
a modest slowdown in growth of
Analysis of Financial Results adequacy ratio remained at a comfortable the loan portfolio. As a result, loans
15.5%, and the tier-1 and tier-2 capital to corporate clients and to the SME
• Net profit was RUR1,217 million adequacy ratio reached 19%, which sector were 85.1% and 50.8% of
reflects the Bank’s strong capital the overall loan portfolio, respectively.
• The ratio of costs to revenues before position and is significantly higher than
provisions declined from 52.7% the mandatory level of 11%. The structure of the Bank’s corporate
to 48.7% loan portfolio remains diversified
Loan portfolio among economic sectors, with
• Assets rose by 3.1% to The loan portfolio before provisions the largest shares taken by trade and
RUR145.6 billion shrank by 4.7% year-on-year, reflecting production companies (21.3% and
a general decline of business activity 20.6% respectively). The structure
• Operating profit before provisions and change of the Bank’s credit policy of the retail loan portfolio remained
rose by 5.9% year-on-year to largely unchanged in the fourth
RUR6.7 billion Loan portfolio, RUR million quarter, with mortgage loans
representing 56.1% of total borrowings
• Return on equity was 7.8% 30,774 52,426 78,149 94,575 85,205 from the Bank by individuals.
Assets Overdue loans were 9.9% of the overall
Despite the major deterioration loan portfolio at the end of 2009
in the economic environment in 2009, and amounted to RUR9.36 billion.
Bank Vozrozhdenie successfully met its They were fully covered by loan-loss
financial targets for the year, increasing provisions, which were increased
its assets by 3.1% year-on-year to to 10% of the portfolio (RUR9.44
RUR145.6 billion. The growth was mainly billion). Non-performing loans, on
due to increase in the share of liquid assets, which a partial loss of principal
which represented 35.4% of the balance is expected, represented 9% of total
sheet as of December 31, 2009. As a result, loans outstanding. Allocations to
the Bank substantially reduced its liquidity provisions during the year amounted
risk and the ratio of loans to deposits to 5% of the average loan portfolio or
contracted to 83.7%. Customer deposits RUR4.8 billion, reflecting the Bank’s
remain the principal source of funding, and reasonable and responsible risk
a large inflow of resources from customers management policy, which is to keep
enabled the Bank to repay most of its loans the coverage ratio of provisions to
from the Central Bank, replacing borrowed overdue loans no lower than 100%.
money with funds on accounts of individual
and corporate customers. Net interest income
Net interest income decreased by 2%
Equity year-on-year to RUR8.3 billion, mainly
Bank Vozrozhdenie’s equity increased by due to the lower inflation and Central
2005
2006
2007
2008
2009
8.1% to RUR16.3 billion. The tier-1 capital
16 BANK VOZROZHDENIE
11. Bank refinancing rate, as well as tougher Operating costs Cost-to-income, %
competition in the banking sector. Despite a seasonal increase
The second half of the year saw a fall in payroll costs in the fourth quarter 76.1 72.3 62.7 52.7 48.7
in rates on both loans and deposits, due to bonus payments for 2009,
which together had negative impact overall payroll costs were reduced
on the Bank’s net interest margin. The by RUR713 million (172%) in 2009.
net interest margin on average Bank The ratio of costs to income before
assets was 6% for the year. The efforts at provisions declined to 48.7%, down
the end of the year focused on lowering from 52.7% in 2008, thanks to the cost
the cost of funding, as a result of which reduction program implemented by
the Bank succeeded in increasing management.
the interest spread to 9.6%.
Profit
Non-interest income Bank Vozrozhdenie reported an operating
Net income from fees and commissions profit of RUR1,919 million in 2009, down
grew steadily from the first quarter, but 53.2% year-on-year. The substantial
the abrupt decline of business activity negative impact on net profit from
in 2009 led to a fall of 9.7% year-on- provisions was partly compensated by
year, mainly reflecting a significant non-interest income: net profit for the year
reduction in client operations. was RUR1,217 million (down 61.2% year-
Nevertheless, the Bank was successful on-year). The effective tax rate continued
in maintaining net non-interest to be affected by changes in the estimated
income at one of the highest levels probability of reimbursement of a deferred
in the Russian banking sector: 35.9% of tax asset (referring to interest income on
operating income before provisions. non-performing loans) and was 36.6%.
2005
2006
2007
2008
2009
Operating costs, RUR million Net profit, RUR million Client funds, RUR million
3,037 4,243 5,732 7,029 6,325 544 801 1,904 3,137 1,217 40,112 60,674 81,612 90,336 113,129
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
18 BANK VOZROZHDENIE 19 ANNUAL REPORT / 09
12. Ludmila Goncharova: The
Bank’s conservative policy in previous current accounts. Despite substantial
outflow of client funds at the end of
years, client relationships based on loyalty and trust, our 2008, the dynamic of funds attracted
work with SMEs, and diversification of risk enabled us from corporate clients had returned
to pre-crisis levels by the end of 2009.
to adapt successfully to the difficult market conditions Total funds of corporate clients had
in 2009. An increase of credit risk made us focus on risen by 15.8% by the end of the year to
RUR44.6 billion.
high-quality management of our loan portfolio, more
careful assessment of loan applications, and increased There was a change in the sectoral
structure of corporate funds held on
monitoring of the financial situation of corporate account in 2009. The share of financial
borrowers. Our task during the year was to find joint organizations in total corporate
accounts declined from 33% to 27%,
solutions with clients to common problems. However, while the share of term deposits placed
the Bank also seized new development opportunities by companies in manufacturing, trade
and the construction sector increased.
in 2009. Several large organizations, including the Agency
for Housing Mortgage Lending, ROSNANO and Hyundai We expanded our range of deposits
for corporate clients in 2009, adding
Motor CIS became our clients in 2009, confirming the high a long-term product specifically
levels of confidence in Bank Vozrozhdenie and in our developed for pension funds willing
to place pension reserves and
strategy. contributions in deposit.
The Bank’s high ratings and
strong financial position enabled
it to attract fixed-term deposits
from major depositors including
the Housing Reform Assistance
Corporate Business the second half of the year, increasing Fund, the St Petersburg Finance
Overview the funding base to pre-crisis levels Committee, the Agency for Housing
Work with corporate clients is one of in the context of declining interest Mortgage Landing and the Russian
the key businesses of Bank Vozrozhdenie. rates Nanotechnology Corporation
We have built relationships of trust with (ROSNANO). Bank Vozrozhdenie also
our corporate clients over the years, • Expanding the loan portfolio (at pursued cooperation with insurance
learning to understand their needs and the end of 2009) companies in 2009. By the end of
provide the best solutions to meet those the year leading insurers had placed
needs. SMEs remain the priority segment • Focusing on distressed and more than RUR1.3 billion on accounts
for the Bank, but we have also increased restructured loans at the Bank.
our cooperation with regional and local
government. • Supporting clients and resolving Corporate Lending
crisis-related problems The Bank’s priority goals for corporate
The Bank’s priorities in the corporate in a constructive way lending in 2009 were to maintain our
segment in 2009 were: competitive position in the market
We were successful in retaining and as a Bank for SMEs, and to support
• Retaining clients increasing our client base in 2009: the quality of our loan portfolio. The
the number of our clients increased by volume of corporate loans by the end
• Monitoring the financial standing 4% over the year. of 2009 was almost unchanged from
of borrowers and quality of the loan the end of 2008 at RUR80.5 billion
portfolio Funding (RUR80 billion at the end of 2008). Non-
Last year, we not only maintained performing loans (defined by the Bank
• Retaining our funding base and keeping but increased the amount held by as the total sum of outstanding loans
interest rates acceptable; during corporate clients in payment and with principal or interest payments that
20 BANK VOZROZHDENIE
13. Funds held on account by corporate clients, RUR million Corporate funds in accounts
by sectors of the economy, % Maturity structure of corporate funding (2009), % Sector structure of the loan portfolio
of Bank Vozrozhdenie
15,188 22,889 31,816 38,499 44,565
0 6.3 14.
13. .2
7
16 23
.9 7.7
27
.3
7.6
13.0
24.2
22.8
9.9
.6
6
12
19.
.1
25
12.
1 9.7
12.1 17.5 4.7
Finance
Trade
Industry
More than 365 days Transport and communications
Construction
Up to 365 days Government and social organizations
Transport and communications
Up to 180 days Finance
Services
Up to 90 days Trade
Other
Up to 30 days Agriculture
Construction
Industry
Maturity structure of corporate funding (2008), %
Other
8.6
25
Corporate loan portfolio, RUR million Quality of the corporate loan portfolio
.8
2005
2006
2007
2008
2009
2
16.
45,398 64,186 80,153 80,534 1,951 2,470 4,154 8,420
10.5%
80 534
are overdue by one day or more) were
14.
1
10.2% of the total loan portfolio.
.3
35
In November 2009 Bank Vozrozhdenie
signed an agreement with the European More than 365 days
Bank for Reconstruction and Up to 365 days
Development (EBRD) on a US$51 Up to 180 days
million credit line for five years. The Up to 90 days
Up to 30 days
EBRD financing enables expansion of 5.2%
lending to SMEs, a priority segment for
corporate lending by Bank Vozrozhdenie. 4.3%
million to SMEs during 2009 through
Lending to SMEs was also carried out a program of loan guarantees for small 3.8%
via government programs at the federal businesses in Moscow.
and regional level, and via the programs
of specialized funds that provide support Loans to SMEs represented 59.7%
for small business development. of the corporate loan portfolio of
The Bank concluded agreements Bank Vozrozhdenie in 2009 and total
in 2009 with funds for support to SME lending to the sector was RUR48
lending in Mordovia, the Rostov Region billion. Bank Vozrozhdenie was among
and the Stavropol Region, enabling the top three bank lenders to SMEs
2006
2007
2008
2009
2006
2007
2008
2009
companies to use guarantees from these in the first half of the year, according
funds to supplement their loan security. to research by the rating agencies Provisions, RUR million
Bank Vozrozhdenie also lent RUR130 Expert RA and RBC. Ratio of provisions to the loan portfolio, %
22 BANK VOZROZHDENIE 23 ANNUAL REPORT / 09
14. The Bank worked hard to increase Yury Novikov: Russian
regions are the main business driver
lending to Russian federal regions,
regional administrations and local
for Bank Vozrozhdenie today. The Northwest Federal
governments in 2009, considering them District plays a particularly important role in the Bank’s
as particularly safe borrowers. Their
share in the Bank’s overall corporate
development, because of the high levels of economic
lending portfolio had risen to 14.7% activity and relatively low level of banking services
by the end of the year, up from 2.2%
a year earlier. In 2009 the Bank provided
currently available there. The Northwest has been
loans to housing and public utilities a center for investment in the real sector during recent
organizations in the Stavropol, Moscow
and Volgograd regions.
years, Bank Vozrozhdenie has a proactive position
in the region, offering corporate clients both basic and
There were no major changes
in the sectoral structure of the Bank’s
complex products together with an advanced approach
corporate loan portfolio in 2009. to service. Our business in the Northwest has grown
Bank Vozrozhdenie gave a high priority
quickly because we have been successful in identifying
to maintaining the quality of its loan clients with the greatest growth potential, primarily
portfolio in 2009 as the financial
situation of many corporate clients
industrial enterprises. Many of these companies are
worsened. The Bank evaluated all organized as holdings, producing various goods and
potentially risky corporate loans
and reduced the facilities of some
services that supplement one another. Such a flexible
borrowers as a result. All credit limits arrangement helps to ensure the stability of fund flows
were reviewed and a new approach
was adopted to loan security. Issuing
in the client-bank cycle.
new loans became dependent on
highly liquid property being provided as
collateral.
At the same time Bank Vozrozhdenie
offered support to its clients
in the difficult environment. Without
putting its own financial stability at risk,
the Bank restructured distressed loans its clients on the most beneficial As in the past, the greater part
totaling RUR4.5 billion (4.8% of the total terms, taking maximum account of the Bank’s financing of import
loan portfolio). This made it possible to of their interests. This activity contracts related to the real sector
preserve quality of the loan portfolio while retains its priority for developing of the economy and was aimed
strengthening relationships with clients. the corporate business, despite at modernizing production capacity
some decline in the amount of funds in industries such as metals, foods
The Bank created RUR4331 million of obtained by the Bank during 2009 for and textiles. The Bank also continues
additional provisions for impairment trade financing purposes. to implement a program to finance
of its corporate loan portfolio in 2009. the purchase of agricultural
The Bank constantly monitored In 2009, two contracts were equipment from US company
overdue debt, as well as monitoring signed with the EBRD for John Deere by authorized dealers
the adequacy of loan security and development of a trade financing in Russia.
the potential for sale. The quality program that uses a guaranteed
of the loan portfolio was kept at financing mechanism for foreign Green Corridor Customs Card
a comfortable level in 2009. trade deals and revolving credit For several years, we have worked
facilities. This has enabled successfully with customs agencies,
Trade Financing the Bank to provide its clients acting as a reliable guarantor for our
Bank Vozrozhdenie carries out with optimal prices for financing corporate clients engaged in foreign
trade financing operations for import contracts. trade. The Bank has been included
24 BANK VOZROZHDENIE 25 ANNUAL REPORT / 09
15. in the Register of Authorized Banks and factoring market. By becoming Priorities for corporate
is able to provide up to RUR1,700 million a member of the association the Bank business development
in simultaneous guarantees with a limit has demonstrated its sense of As the economy recovers, the future
of RUR345 million per one guarantee. In professional responsibility and growth of our corporate business will
2009 the Bank provided guarantees to commitment to positive steps for depend on retaining and expanding our
Customs Authorities worth more than optimization of the factoring market client base. This will be achieved by
RUR1.2 billion for customs payments in Russia. continually innovating in our business
due from its clients. processes, including sales and client
By participating in working relationship management, as well as
At the start of 2009 the Bank groups within the association, though the launch of new products
introduced a new product, the Green Bank Vozrozhdenie actively designed to meet clients’ needs.
Corridor customs card, which has contributes to preparing amendments
quickly become popular among to current civil, tax and currency The Bank’s priorities in 2010 include
clients engaged in foreign trade. legislation. The aim is to protect expansion of the loan portfolio and
Payments in excess of RUR20 the rights of its clients and factoring improvement of its quality, bringing
billion had been made to the state agents in such matters as repatriation more of our products to more of our
budget via the scheme by the end of of foreign-currency revenues, clients, development of cross sales, and
the year. The Green Corridor product VAT payment and offsets, and increasing of our fixed-term funding
encouraged numerous top Russian and payment of commission on factoring base.
international corporations to become transactions out of pre-tax profit.
our clients.
The Bank plans further development of
Such new clients include Hyundai its factoring business in 2010, viewing
Motors CIS, which represents it as a beneficial and convenient tool for
Hyundai in Russia, as well as financing of working capital at Russian
the leading Russian distributor enterprises, and an excellent way to
of pharmaceuticals, health and increase the Bank’s cash revenue and
beauty products, Protek. Other diversify credit risk.
companies that became clients of
Bank Vozrozhdenie through the Green Client Service
Corridor card project in 2009 include Bank Vozrozhdenie completed
Inter RAO Service, the customs broker the changeover to a new
for the largest exporter of Russian organizational structure of its branch
electricity, Inter RAO; Trading House network in 2009, giving each branch
MBG, one of Russia’s largest wine its own sub-section with responsibility
importers and distributors; and for client relations. The Bank carried
food producers Sady Pridonya and out its own internal research project,
Campina. “Secret Customer”, in 2009 to test
the skills and knowledge of employees
Factoring responsible for winning new
In October 2009 Bank Vozrozhdenie customers and providing services to
completed the process to become them. Appropriate internal standards
a member of the Association of will be designed in 2010 based on
Factoring Companies. The Bank has the results of the research, and
closely followed the emergence of further training and qualifications for
business financing services, such as employees will be introduced.
factoring, which it views as a promising
and rapidly developing niche The Bank paid much attention
in the business segment. in the reporting period to developing its
“Client-Bank” remote banking service.
Membership of the association The process of interaction with the Bank
is a natural move in view of was simplified and rendered more
the Bank’s support for development efficient. There were 16,000 Client-Bank
and improvement of the Russian service users by the end of the year.
26 BANK VOZROZHDENIE 27 ANNUAL REPORT / 09