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					      Closed Joint-Stock Company
      «Joint Stock Commercial Bank
            «ALEF-BANK»

Independent Auditor’s Report and Financial Statements
for the Year ended 31 December 2009




                Moscow, 2010
                                                 Limited Liability Company

                          VNESHAUDIT CONSULTING
                                                     Russi a, Moscow
                                                    www.v-consult.ru
                                      Tel.: +7 (499) 766-9277, 766-9792, 766-9304




Contents

INDEPENDENT AUDITOR'S REPORT                                                        3

FINANCIAL STATEMENTS AND NOTES:

STATEMENT OF FINANCIAL POSITION                                                     4

STATEMENT OF COMPREHENSIVE INCOME                                                   5

STATEMENT OF CASH FLOWS                                                             6

STATAMENT OF CHANGES IN EQUITY                                                      7

NOTES                                                                               8




Notes on pages 8 - 64 form an integral part of these financial statements.              2
                                                 Limited Liability Company

                          VNESHAUDIT CONSULTING
                                                     Russi a, Moscow
                                                    www.v-consult.ru
                                      Tel.: +7 (499) 766-9277, 766-9792, 766-9304




18 June 2010

To the Management and Shareholders
of CJSC JSCB “Alef-Bank”

Russian Federation, 117218, Moscow, Krjijanovskogo str. 21/33 bld.1



INDEPENDENT AUDITOR'S REPORT


1. We have audited the accompanying financial statements of CJSC JSCB «Alef-
   Bank» (hereinafter – «the Bank»), that includes statement of financial position as of
   31.12.2009, statement of comprehensive income, statement of cash flows and
   statement of changes in equity for the year ended 31 December 2009. Responsibility
   for preparation of these financial statements is carried by the Management of the
   Bank. Our responsibility is to express the opinion on these financial statements
   based on our audit.

2. We have conducted our audit in accordance with following standards: International
   Standards on Auditing, International Financial Reporting Standards (IFRS), and the
   Bank’s standards. Those Standards require that we plan and perform the audit to
   obtain reasonable assurance about whether the financial statements are free from
   material misstatement. An audit includes examining, on a test basis, evidence
   supporting the amounts and disclosures in the financial statements. An audit also
   includes assessing the accounting principles used and significant estimates made by
   Management, as well as evaluating the overall financial statements presentation. We
   believe that our audit provides a reasonable basis for our opinion.

3. In our opinion, the accompanying financial statements present fairly, in all material
   respects, the financial position of the Bank for the period from 01 January to 31
   December 2009 including, in accordance with International Financial Reporting
   Standards.




General Director
LLC «Vneshaudit consulting»                                                         O.V. Trokhova




Notes on pages 8 - 64 form an integral part of these financial statements.                      3
                                                CJSC JSCB «Alef-Bank»

                                 STATEMENT OF FINANCIAL POSITION
                                                as of 31 December 2009
                                           (in thousands of Russian Rubles,
                                             inclusive of purchasing power
                                       of Russian Ruble as of 31 December 2009)

                                                                       Notes             2009        2008
 Assets
 Cash and cash equivalents                                                   5          2 067 300   3 069 919
 Mandatory cash balances with the Central Bank of
 the Russian Federation                                                                    13 697       3 761
 Financial assets at fair value through profit or loss                   6                235 038     163 094
 Due from other banks                                                    7                525 278   1 217 160
 Loans and receivables                                                   8              2 234 041   1 319 409
 Financial assets available for sale                                     9                253 718          66
 Financial assets held to maturity                                       10                     0       5 046
 Property, plant and equipment                                           11                15 899      14 176
 Other assets                                                            12                37 716      15 106
 - including available for sale                                                            11 579           0
 Total Assets:                                                                          5 382 687   5 807 737
 Liabilities
 Due to other banks                                                      13                36 025      35 402
 Customers accounts                                                      14             2 609 072   3 168 396
 Debt securities issued                                                  15                 3 362       4 139
 Other debts                                                             16               514 151     499 467
 Other liabilities                                                       17               101 626      60 832
 - including deferred tax payments                                                         55 563      36 886
 Total liabilities:                                                                     3 264 236   3 768 236
 Equity
 Share capital                                                           18             1 616 887   1 616 887
 Share premium                                                           18               450 133     450 133
 Retained earnings of reporting period                                   19                78 950      84 954
 Retained earnings of prior years                                                        (27 519)   (112 473)
 Total equity:                                                                          2 118 451   2 039 501
 Total liabilities and equity:                                                          5 382 687   5 807 737


Chairman of the Board, V.V.Doroshko                                                                 _________
                                                                                                     (signature)
                                                                                 seal
Chief Accountant, T.A.Larina
                                                                                                    _________
                                                                                                     (signature)




Notes on pages 8 - 64 form an integral part of these financial statements.                                         4
                                                CJSC JSCB «Alef-Bank»
                               STATEMENT OF COMPREHENSIVE INCOME
                                  for the year ended 31 December 2009
                                           (in thousands of Russian Rubles,
                                             inclusive of purchasing power
                                       of Russian Ruble as of 31 December 2009)

                                                                             Notes    2009            2008
 Interest income                                                              20       500 303        403 873
 Interest expense                                                             20     (376 204)       (60 988)
 Net interest income                                                                   124 099        342 885
 Changes in provision for loan impairment                                     8         13 653      (504 260)
 Net interest income after provision for loan
 impairmenr                                                                           137 752       (163 375)
 Gains less losses from operations with financial assets at
 fair value through profit or loss                                                       6 920         (5 793)
 Gains less losses from trading in foreign currencies                                 (56 679)          34 244
 Gains less losses from foreign currencies revaluation                                 130 138        284 486
 Fee and commission income                                                    21       129 382        148 479
 Fee and commission expense                                                   21      (12 502)       (13 250)
 Changes in other provision                                                           (18 147)           3 829
 Other operating income                                                       22        37 518           4 088
 Net income (expense)                                                                  354 382        294 708
 Operating expense                                                            23     (256 755)      (184 875)
 Operating income / (expense)                                                           97 627        109 833
 Profit / (loss) before tax                                                             97 627        119 833
 Income tax expense (reimbursement)                                           24      (18 677)       (24 879)
 Net profit / (loss)                                                                    78 950          84 954
 Other items of comprehensive income
 Income from Property, plant and equipment revaluation                                       -                  -
 Income less expense from foreign currencies revaluation                                     -                  -
 Income tax referred to other items of comprehensive
 income                                                                                     -               -
 Other items of comprehensive income less income tax                                        -               -
 Comprehensive income for the year                                                     78 950          84 954

Chairman of the Board, V.V.Doroshko                                                              _________
                                                                                                  (signature)
                                                                              seal
Chief Accountant, T.A.Larina
                                                                                                 _________
                                                                                                 (signature)




Notes on pages 8 - 64 form an integral part of these financial statements.                                          5
                                                CJSC JSCB «Alef-Bank»

                                        STATEMENT OF CASH FLOWS
                                     for the year ended 31 December 2009
                                            (in thousands of Russian Rubles,
                                              inclusive of purchasing power
                                       of Russian Ruble as of 31 December 2009)

                                                                             Notes         2009             2008
 Cash from operating activity
 Interest received                                                                          501 406             410 704
 Interest paid                                                                            (367 372)            (61 039)
 Gains less losses from financial assets at fair value
 through profit and loss available for sale                                                   7 474              (3 493)
 Gains less losses from trading in foreign currencies                                      (56 679)               34 244
 Fee and commission received                                                                129 338             148 479
 Fee and commission paid                                                                   (12 502)            (13 250)
 Other operating income received                                                             37 518                4 088
 Operating expense paid                                                                   (250 397)           (176 185)
 Tax paid                                                                                     6 755            (33 098)
 Cash flows from/(used in) operating activities before
 changes in operating assets and liabilities                                                 (4 459)            310 450
 Increase/decrease in operating income and liabilities
 Net (increase)/decrease in mandatory reserves with the
 Central Bank of the Russian Federation                                                      (9 936)             72 549
 Net (increase)/decrease in financial assets at fair value
 through profit and loss                                                                   (72 498)           (110 867)
 Net (increase)/decrease in due from other banks
                                                                                            754 477             379 290
 Net (increase)/decrease in loans and receivables                                         (958 266)             662 131
 Net (increase)/decrease in other assets                                                   (36 670)              27 970
 Net (increase)/decrease) in due to other banks                                                  942           (96 135)
 Net (increase)/decrease in customers accounts                                            (517 844)         (1 638 926)
 Net (increase)/decrease in other borrowings                                                       0                  0
 Net (increase)/decrease in other liabilities                                                (4 828)           (11 666)
 Net cash flows from/(used in) operating activities                                       (849 082)           (405 203)
 Cash flows from investing activity
 Changes in financial assets available for sale                                           (253 649)                    -
 Changes in financial assets held to maturity                                                 5 046             226 754
 Changes in investments in associates                                                                                  -
 Changes in Property, plant and equipment                                                   (6 073)              (7 634)
 Dividends received                                                                               -                    -
 Net cash flows from/(used in) investing activity                                         (254 676)             219 120
 Cash flows from financing activities
 Ordinaries issued                                                                                 -                   -
 Preferred shares issued                                                                           -                   -
 Other contribution from shareholders to share capital                                             -                   -
 Changes in value of debt securities                                                         (9 609)             (3 394)
 Changes in value of borrowings                                                                1 258                   1
 Net cash flows from/(used in) financing activities                                          (8 351)             (3 933)
 Effect of changes in exchange rate on cash and cash
 equivalents                                                                                 109 490           349 889
 Net increase in cash and cash equivalents                                               (1 002 619)           159 873
 Cash and cash equivalents at the beginning of the year                       5            3 069 919         2 910 046
 Cash and cash equivalents at the end of the year                             5            2 067 300         3 069 919

Chairman of the Board, V.V.Doroshko                                                                    _________
                                                                                                        (signature)
                                                                                  seal
Chief Accountant, T.A.Larina
                                                                                                       _________
                                                                                                       (signature)

Notes on pages 8 - 64 form an integral part of these financial statements.                                                 6
                                                CJSC JSCB «Alef-Bank»

                                  STATEMENT OF CHANGES IN EQUITY
                                     for the year ended 31 December 2009
                                            (in thousands of Russian Rubles,
                                              inclusive of purchasing power
                                       of Russian Ruble as of 31 December 2009)

                                            Share          Share premium           Retained earnings         Total equity
                                            capital                              (accumulated deficit)         (deficit)
 Balance of 1 January 2009                  1 616 887                450 133                  (27 519)             2 039 501
 Net profit (loss) for the year                     -                      -                    78 950                78 950
 Balance of 1 January 2010                  1 616 887                450 133                    51 431             2 118 451



Chairman of the Board, V.V.Doroshko                                                                  _________
                                                                                                         (signature)
                                                                               seal
Chief Accountant, T.A.Larina
                                                                                                     _________
                                                                                                         (signature)




Notes on pages 8 - 64 form an integral part of these financial statements.                                                     7
                                         NOTES

The order of the information disclosure in the Notes to financial statements of the Bank
is presented below. While disclosing the information its necessary to take into
consideration the specific character of the Bank’s activity.

                            1. Principal activity of the Bank
These financial statements include financial statements of CJSC JSCB “Alef-Bank”
(hereinafter – the Bank).

Bank was established in the Russian Federation as a joint-stock commercial bank
without a limitation of activity term and was granted its general banking license (number
2119) by the Bank of the Russian Federation (hereinafter - “the CBR”) in 1992. The
principal activities of the Bank are commercial and retail banking operations in Russia.

As of 31 December 2009, the Bank carried out its main activities in Moscow. The Bank
has four branches in Russian Federation: Kurgan, Lebedyan’, Lys’va and Krasnodar.

The Bank’s registered address is:

Russian Federation, 117218, Moscow, Krjijanovskogo str. 21/33 bld.1

The number of the Bank’s employees as of 31 December 2009 was 119 (2008 - 187
empl.).

As of 31 December 2009 the 100% shareholder of the Bank is Eastlink Lanker Plc.,
United Kingdom, part of Eastlink Lanker Group. Principal activities of the shareholder
are metallurgy, production of oil extraction equipment, trading of metals on the Westen
markets, banking services and corporate consultancy.

The Bank is a participant of State Deposit Insurance System that guarantees a
reimbursement of up to RUR 700 000 to every single individual in case the CBR calls
back the license or applies moratorium on payments.

The notes on pages 8-64 form an integral part of the financial statements.




                                                                                           8
                       2. Operating environment of the Bank
Overall characteristics
The Russian Federation displays certain characteristics of an emerging market, including
relatively high inflation. Despite strong economic growth in recent years, the financial
situation in the Russian market significantly deteriorated during 2009, particularly in the
fourth quarter. As a result of global volatility in financial and commodity markets, among
other factors, there has been a significant decline in the Russian stock market since mid-
2009. Since September 2009, there has been increased volatility in currency markets
and the Russian Ruble has depreciated significantly against some major currencies

Inflation
Russian economy is characterized with hight inflation temps. In table below are
presented inflationindexes for the past five years:



              Year ended          Inflation for the period
            31 December 2009                          8,8%
            31 December 2008                         13,3%
            31 December 2007                         11,9%
            31 December 2006                          9,0%
            31 December 2005                         10,9%


Financial markets operations
The ongoing global financial and economic crisis that emerged out of the severe
reduction in global liquidity which commenced in the middle of 2007 (often referred to as
the “Credit Crunch”), has resulted in, among other things, a lower level of capital market
funding, lower liquidity levels across the banking sector and wider economy, and, at
times, higher interbank lending rates and very high volatility in local and international
stock and currency markets. The uncertainties in the global financial markets have also
led to failures of banks and other corporates, and to bank rescues in the United States
of America, Western Europe, Russia and elsewhere. Since September 2009 several
medium size Russian banks have been acquired by state-controlled banks and
companies due to their liquidity problems. The full extent of the impact of the ongoing
crisis is currently not possible to predict.

The volume of wholesale financing has significantly reduced since August 2009. Such
circumstances may affect the ability of the Bank to obtain new borrowings or deposits


                                                                                         9
and re-finance its existing borrowings or deposits at terms and conditions similar to
those applied to earlier transactions.

The Management is unable to reliably determine the effects on the Bank's future
financial position of any further deterioration in the liquidity of the financial markets and
the increased volatility in the currency and equity markets. The Management believes it
is taking all the necessary measures to support the sustainability and development of
the Bank’s business in the current circumstances.

The tax, currency and customs legislation within the Russian Federation is subject to
varying interpretations and frequent changes. Furthermore, the need for further
developments in the bankruptcy laws, the absence of formalised procedures for the
registration and enforcement of collateral, and other legal and fiscal impediments
contribute to the challenges faced by banks currently operating in the Russian
Federation. The future economic direction of the Russian Federation is largely
dependent upon the effectiveness of economic, financial and monetary measures
undertaken by the Government, together with tax, legal, regulatory, and political
developments.

                               3. Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) under the historical cost convention, as modified
by the initial recognition of financial instruments based on fair value, and by the
revaluation of premises, investment property, available-for-sale financial assets,
financial instruments categorised as at fair value through profit or loss and all derivative
contracts. The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.

The Bank maintains its accounting records in accordance with Russian banking
regulations. Other subsidiaries maintain their accounting records in accordance with
accounting regulations or applicable companies’ law in their respective jurisdictions.
These financial statements have been prepared from those accounting records and
adjusted as necessary in order to be in accordance with IFRS.

Accounting policies applied in this year corresponds to the policy of last financial year
except adoption of new standards taking effect after 1 January 2008.

Some new IFRS standards became obligatory to the Bank since 1 January 2008.
Further all newly adopted standards and interpretations are presented as well as their

                                                                                          10
influence on the Bank’s accounting policy. All changes in accounting policy were applied
retrospectively with adjustment to retained earnings as at the 1 January 2006.

The preparation of these financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reported period.

In Notes 4 there are presented items needed to be estimated thoroughly and being
most important for these financial statements.

Key measurement terms
Depending on their classification financial instruments are carried at fair value or
amortised cost or historical as described below.

Fair value is the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. Fair value is the
current bid price for financial assets and current asking price for financial liabilities which
are quoted in an active market. For assets and liabilities with offsetting market risks, the
Bank may use mid-market prices as a basis for establishing fair values for the offsetting
risk positions and apply the bid or asking price to the net open position as appropriate.
A financial instrument is regarded as quoted in an active market if quoted prices are
readily and regularly available from an exchange or other institution (e.g. financial
analytical systems such as “Bloomberg” or “Reuters”) and those prices represent actual
and regularly occurring market transactions on an arm’s length basis.

If there is no spot bid quotes on active market, for determination of fair value can be
used:

- last bid/ask quote price from an independent source (if there were no serious changes
in economic environment before the reporting date);

- actual transaction cost (if there were no serious changes in economic environment
before the reporting date).

Valuation techniques such as discounted cash flows models or models based on recent
arms length transactions or consideration of financial data of the investees are used to
fair value certain financial instruments for which external market pricing information is
not available. Valuation techniques may require assumptions not supported by
observable market data. Disclosures are made in these financial statements if changing



                                                                                            11
any such assumptions to a reasonably possible alternative would result in significantly
different profit, income, total assets or total liabilities.

The applied valuation technique can be chosen for each specific case of fair value
determination. At that, if another is not stated, valuation technique, based on stock
market and bid/ask quoted prices, is applied.

Amortised cost is the amount at which the financial instrument was recognised at initial
recognition less any principal repayments, plus accrued interest, and for financial assets
less any write-down for incurred impairment losses. Accrued interest includes
amortisation of transaction costs deferred at initial recognition and of any premium or
discount to maturity amount using the effective interest method. Accrued interest
income and accrued interest expense, including both accrued coupon and amortised
discount or premium (including fees deferred at origination, if any), are not presented
separately and are included in the carrying values of related balance sheet items.

The effective interest method is a method of allocating interest income or interest
expense over the relevant period so as to achieve a constant periodic rate of interest
(effective interest rate) on the carrying amount.

The effective interest rate is the rate that exactly discounts estimated future cash
payments or receipts (excluding future credit losses) through the expected life of the
financial instrument or a shorter period, if appropriate, to the net carrying amount of the
financial instrument. The effective interest rate discounts cash flows of variable interest
instruments to the next interest repricing date except for the premium or discount which
reflects the credit spread over the floating rate specified in the instrument, or other
variables that are not reset to market rates. Such premiums or discounts are amortised
over the whole expected life of the instrument. The present value calculation includes all
fees paid or received between parties to the contract that are an integral part of the
effective interest rate.

Historical cost is the amount of cash or cash equivalents paid and the fair value of the
other consideration given to acquire an asset at the time of its acquisition including
transaction costs. Transaction costs are incremental costs that are directly attributable
to the acquisition, issue or disposal of a financial instrument. An incremental cost is one
that would not have been incurred if the deal didn’t take place. Transaction costs imply
fees and commissions paid to agents (including employees acting as trade agents),


                                                                                        12
consulters, brokers and dealers; collections paid to regulating bodies and stock
exchanges, and also taxed from surrender of property.

                       4.     Significant accounting policies
Principles of accounting policy are stated in the accounting policy of CJSC JSCB “Alef-
Bank” for the purposes of preparing of the financial statements according to IFRS.


Materiality and aggregation
Each material item is represented in the financial statements separately. The non-
material sums are united with the sums of similar items and are not represented
separately.
The financial statements are consequence from processing a plenty of operations which
are structurally united in groups according to their character and function. The final
stage of process of association and classification consists in representation of the
compressed and classified data which form items in the financial statements or in notes.


If item is not material itself, it is united with other items in the financial statements or in
notes. Non-material item can be, enough essential to be represented separately in
notes.
Materiality depends on the size and character of items. Character and the size of each
item are assessing together. Depending on circumstances, both character, and the size
of item can be the major factor. Nevertheless, the large items are represented
separately if they are differing on character.


The information is material if its miss or distortion could affect the economic decision of
users accepted on the basis of the financial reporting. Materiality depends on the size of
object or the mistake. Thus, materiality shows a threshold or a reference point, more
likely, and is not the basic qualitative characteristic of information.
Materiality assumes that requirements of IFRS should not be carried out, if as a result
the information received is not material.

Initial recognition of financial instruments
At initial recognition of financial asset/liability the Bank valuates it at fair value plus, in
case it could not be valuated at fair value through profit or loss, plus transaction costs. A
gain or loss on initial recognition is only recorded if there is a difference between fair
value and transaction price which can be evidenced by other observable current market


                                                                                            13
transactions in the same instrument or by a valuation technique whose inputs include
only data from observable markets.

If any standard terms of payments are used, purchasing or selling of a financial asset is
recorded at the date of contract conclusion (date of settlement or date of provision of
financial asset). The chosen technique is applied in sequence to all purchases/sales of
financial assets of one category.

Record, made on the date of contract conclusion, implies:

- recognition of a financial asset on the day of contract conclusion;

- derecognition of an asset being item for sale, derecognition of profit from it and
recognition of account receivable at the day of contract conclusion.

Record, made on the date of settlement, implies:

- recognition of an asset on the day of its delivery to the Bank;

- derecognition of an asset and recognition of any profit or loss from its removal on the
day the Bank delivers it.

Record made on the date of settlement implies consideration of any change in fair value
of a financial asset to be deliverer between the date of contract conclusion and the date
of settlement and is recognized as a part of equity). Record, made on the date of
contract conclusion, classify such operations as “operations with derivative financial
instruments”.

Financial assets depreciation
The Bank creates reserves on impairment of all categories of financial assets, excluding
for those valuated through profit or loss.

Financial asset/liability depreciates in case there are objective features of depreciation
as result for one or several events after the recognition of asset and if this event affects
future cash flows on this asset.

Main factor determining the depreciation of asset is a fact of past-due loan and an ability
to sell the pledge (if available).

Below are other criteria used as objective evidence of depreciation:

- any fee was overdue (not because of bugs in payment system);

- borrower or issuer has serious financial problems (as stated in its financial
statements);

- borrower or issuer is considering a possibility to go bankrupt;
                                                                                         14
- unfavorable changes in borrower’s or issuer’s solvency were detected as a result of
crisis in national or regional economy;

- pledged equity has decreased in value due to unfavorable market conditions;

- creditor has provided to borrower some privileges due to some economic or legal
circumstances;

- disappearance of active market for this current financial asset as result for financial
trubles of the issuer;

- information of possible breach from borrower or issuer.

Derecognition of financial assets
Bank derecognises financial assets when

- the assets are redeemed or the rights to cash flows from the assets otherwise expired
or

- Bank has transferred substantially all the risks and rewards of ownership of the assets
or

- Bank has neither transferred nor retained substantially all risks and rewards of
ownership but has not retained control. Control is retained if the counterparty does not
have the practical ability to sell the asset in its entirety to an unrelated third party without
needing to impose additional restrictions on the sale.

Any rights or obligations created or retained in the transfer are recognized separately as
assets or liabilities. A financial liability is derecognized whet it is extinguished.

Cash and cash equivalents
The Bank considers cash and cash equivalents as cash on hand and money in
accounts with the Bank, and also cash equivalents presenting short-term highly-liquid
investments easily convertible into a certain amount of cash and exposed to minor risk
of their price change. All short-term interbank deposits, excluding “overnight”, are
recognized in “Due from other banks”.

Sums that have any limitations on their use are excluded from “Cash and cash
equivalents”. Cash and cash equivalents are recognized at fair value.

Mandatory cash balances with the CBR
Mandatory cash balances with the CBR are carried at amortised cost and represent
non-interest bearing mandatory reserve deposits which are not available to finance the
Bank’s day to day operations and hence are not considered as part of cash and cash
equivalents for the purposes of the cash flow statement.
                                                                                             15
Financial assets at fair value through profit or loss
The financial asset is classified in this category if it is purchased for sale in short-term
prospect.

The derivative financial instruments with positive fair value are also defined as the
financial assets appraised in fair value via profit or losses only if they are not the
derivative instrument certain as the effective instrument of hedging.

Financial assets appraised in fair value via profit or losses are initially recorded and
subsequently remeasured at fair value based on their market value or after the
application of various valuation methodologies, including assumptions as to the future
realisability of these securities.

Different methods can be used to assess financial assets depending on market
circumstances. Quoted market prices are the best base to assess fair value. If there are
no quoted market prices the Bank should use the information on last market
transactions between well informed wishing to make such transactions independent
parties, and results of the analysis of the discounted cash flows and models of definition
of the options price.

If there is widely used methodology for definition of the price and have proved reliability
of results such technique is used.

The Bank classifies quoted and not quoted securities (under the legislation of the
Russian Federation) in this category of financial assets if there are intentions to sell
them within 6 months (180 calendar days) from the moment of purchase.

The Bank classifies debt and share quoted securities (under the legislation of the
Russian Federation) in the given category of financial assets except for debt securities
in relation to which there are intentions about held to maturity (such securities are a
subject to classification in a category "financial assets available for sale "or" financial
assets held to maturity").

The Bank classifies the financial instruments appraised in fair value via profit or losses
at the time of their purchase. The financial assets classified in this category are not a
subject of reclassification.

All related realised and unrealised gains and losses are recorded within gains less
losses arising from financial instruments appraised in fair value via profit or losses in the
statement of income in the period in which the change occurs. Interest earned on
financial instruments appraised in fair value via profit or losses is reflected in the
statement of income as interest income on financial instruments appraised in fair value
                                                                                     16
via profit or losses. Dividends received are included in dividend income within other
operating income.

All purchases and sales of financial instruments appraised in fair value via profit or
losses that require delivery within the time frame established by regulation or market
convention (“regular way” purchases and sales) are recorded at trade date, which is the
date that the Bank commits to purchase or sell the asset. Otherwise such transactions
are treated as derivative instruments until settlement occurs.

Due from other banks
Amounts due from other banks are recorded when the Bank advances money to
counterparty banks with no intention of trading the resulting unquoted non-derivative
receivable due on fixed or determinable dates. Amounts due from other banks are
carried at amortised cost.

Loans and receivables
This classification includes non-quotable financial instruments with fixed or uncertain
payments, excluding following cases

- there is an intention to sale item immediately or in the near future and the item should
be classified as available for sale, initial recognised as financial assets appraised in fair
value via profit or losses;

- subsequently items are recognize as available for sale;

- owner cannot cover all material sum of the initial investment for the reasons which are
distinct from decrease of credit status and which should be classified as available for
sale.

Initially, loans and recievables are recorded at cost, which is the fair value of the
consideration given, and subsequently are carried at amortised cost less provision for
loan impairment. Amortised cost is based on the fair value of cash consideration given
to originate those loans determinable by reference to market prices at origination date.
Third party expenses, such as legal fees incurred in securing a loan are treated as part
of the cost of the transaction.

Loans originated at interest rates different from market rates are remeasured at
origination to their fair value, being future interest payments and principal repayment(s)
discounted at market interest rates for similar loans. The difference between the fair
value and the nominal value at origination is credited or charged to the statement of
income as gains on origination of assets at rates above market or losses on origination
of assets at rates below market. Subsequently, the carrying amount of such loans is
                                                                                          17
adjusted for amortisation of the gains/losses on origination and the related income is
recorded as interest income within the statement of income using the effective interest
method.

A credit risk provision for loan impairment is established if there is objective evidence
that the Bank will not be able to collect the amounts due according to original
contractual terms. The amount of the provision is the difference between the carrying
amount and estimated recoverable amount, calculated as the present value of expected
cash flows, including amounts recoverable from guarantees and collateral, discounted
at the instrument’s original effective interest rate.

The provision for loan impairment also covers losses where there is objective evidence
that probable losses are present in components of the loan portfolio at the balance
sheet date. These have been estimated based upon historical patterns of losses in each
component, the credit ratings assigned to the borrowers and reflect the current
economic environment in which the borrowers operate.

When a loan is uncollectable, it is written off against the related provision for loan
impairment. Such loans are written off after all the necessary procedures have been
completed and the amount of the loss has been determined.

Subsequent recoveries of amounts previously written off are credited to the provision for
loan impairment in the statement of income.

If the amount of the provision for loan impairment subsequently decreases due to an
event occurring after the writedown, the release of the provision is credited to the
provision for loan impairment in the statement of income.

Under the consumer loans on system "autocrediting", by the rights got by Bank under
contracts on funds placement, under "overdraft" to individuals fair value is defined as a
whole on a portfolio of homogeneous loans. The assessment of such loans is made
proceeding from calculation of net cost of the principal sum. The assessment of net cost
of loan is a difference between balance cost of the loan and provision for loan
impairment.

Acquired bills of exchange

Acquired bills of exchange are classified depending on the purposes of their purchase in
a category of financial actives: financial assets appraised in fair value via profit or
losses, the financial instruments held to maturity, loans and receivables, the financial
assets available for sale, and are considered according to the accounting policy
presented in the given note for these categories of assets.
                                                                                      18
Acquired bills of exchange are included in the financial assets appraised in fair value via
profit or losses, if the drawer (under the promissory note) or the payer (under the
transfer note) is the credit organization - the resident of the Russian Federation or the
resident of the country - member OECD.

In all other cases acquired bills of exchange are included in “Due from other banks” or in
“Loans and receivables” depending on their economic context and subsequently are
revaluated in according to the principles described above.

Financial assets available for sale

This classification includes financial instruments which are intended as available for sale
or are not classified as credits and receivables, investments held to maturity financial
assets appraised in fair value via profit or losses. The Bank classifies financial
instruments available for sale at the time of purchase.

Financial instruments available for sale are initially recorded at cost (which includes
transaction costs) and subsequently remeasured to fair value based on quoted bid
prices. Depending on circumstances various methods of assessment can be applied.
Investments into share instruments on which there are no quoted market prices, are
estimated under the cost price

Unrealised gains and losses arising from changes in the fair value of financial
instruments available for sale are included in the statement of changes in equity.
Disposals of financial instruments available for sale are included in the statement of
income as “Gains less losses from financial assets available for sale”. Impairment and
reversal of impairment loss of financial instruments available for sale are included in the
statement of income.

Cost of the financial instruments available for sale decreases if their balance cost
exceeds estimated recoverable cost. The recoverable cost is defined as current cost of
the expected cash flows discounted under current market interest rates for similar
financial assets.

Interest earned on financial instruments available for sale is reflected in the statement of
income as interest income on financial instruments available for sale. Dividends
received are included in other operating income within the statement of income.

All regular way purchases and sales of financial instruments available for sale are
recorded at trade date, which is the date that the Bank commits to purchase or sell the
asset. All other purchases and sales are recorded as derivative forward transactions
until settlement.
                                                                                         19
Financial assets held to maturity

This classification includes financial instruments with fixed maturity date and the Bank
has intention and an opportunity to hold them to maturity. The Bank classifies financial
instruments held to maturity at the time of purchase. The bank monitor the intention and
ability to hold financial instruments to maturity as of each reporting period.

Financial instruments held to maturity are initially recorded at cost (which includes
transaction costs) and subsequently remeasured to amortized cost on effective interest
rate method less provision for impairment. Provision for impairment is calculated as a
difference between balance cost and current cost of the expected future cash flows
discounted with use of the initial effective interest rate.

The Bank does not classify any financial asset held to maturity if within current year or
within two last financial years the volume of financial assets held to maturity which the
Bank has sold or reclassified before date of maturity is expressed more than non-
material sum compare to all financial assets held to maturity (if only they do not get
under the exceptions stipulated IAS 39). In that case the kept financial asset held to
maturity should be reclassified as the financial assets available for sale. After the
specified term the financial instrument can be included in the given category). Interest
incomes on the financial asset held to maturity are recognized in the statement of
income.

All regular way purchases and sales of financial instruments available for sale are
recorded at trade date, which is the date that the Bank commits to purchase or sell the
asset. All other purchases and sales are recorded as derivative forward transactions
until settlement

Property, plant and equipment

Premises and equipment are stated at cost, restated to the equivalent purchasing power
of the Russian Ruble at 31 December 2002 for assets acquired prior to 1 January 2003,
or revalued amounts, as described below, less accumulated depreciation and provision
for impairment, where required.

Premises of the Bank are subject to revaluation on a regular basis. The frequency of
revaluation depends upon the movements in the fair values of the premises being
revalued. The revaluation reserve for premises included in equity is transferred directly
to retained earnings when the surplus is realised, i.e. either on the retirement or
disposal of the asset, or as the asset is used by the Bank; in the latter case, the amount


                                                                                       20
of the surplus realised is the difference between depreciation based on the revalued
carrying amount of the asset and depreciation based on the asset’s original cost.

Costs of minor repairs and maintenance are expensed when incurred. Cost of replacing
major parts or components of premises and equipment items are capitalised and the
replaced part is retired.

If impaired, premises and equipment are written down to the higher of their value in use
and fair value less costs to sell. The decrease in carrying amount is charged to profit or
loss to the extent it exceeds the previous revaluation surplus in equity. An impairment
loss recognised for an asset in prior years is reversed if there has been a change in the
estimates used to determine the asset’s value in use or fair value less costs to sell.

Gains and losses on disposals determined by comparing proceeds with carrying amount
are recognised in profit or loss.

Depreciation

Depreciation on other items of premises and equipment is calculated using the straight-
line method to allocate their cost or revalued amounts to their residual values over their
estimated useful lives at the following annual rates:

 Premises and investments in lease                                 -    2.5%
 Equipment                                                         -    25%
 Carriages                                                         -    10 -20%
 Passenger cars                                                    -    20-30%
 Computers                                                         -    35-50%
 Other equipment                                                   -    5-25%
 Improvement of leased equipment                                   -    10-25%


The carrying amounts of property, equipment and intangible assets are reviewed at
each balance sheet date to assess whether they are recorded in excess of their
recoverable amounts, and where carrying values exceed this estimated recoverable
amount, assets are written down to their recoverable amount. An impairment is
recognized in the respective period and is included in operating expenses. After the
recognition of an impairment loss the depreciation charge for property and equipment is
adjusted in future periods to allocate the assets’ revised carrying value, less its residual
value (if any), on a systematic basis over its remaining useful life.

The residual value of an asset is the estimated amount that the Bank would currently
obtain from disposal of the asset less the estimated costs of disposal, if the asset were
already of the age and in the condition expected at the end of its useful life. The residual

                                                                                         21
value of an asset is nil if the Bank expects to use the asset until the end of its physical
life. The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.

Land doesn’t depreciate.

Operating leases

Where the Bank is a lessee in a lease which does not transfer substantially all the risks
and rewards incidental to ownership from the lessor to the Bank, the total lease
payments, including those on expected termination, are charged to profit or loss on a
straight-line basis over the period of the lease.

Finance leases

Where the Bank is a lessee in a lease which transferred substantially all the risks and
rewards incidental to ownership to the Bank, the assets leased are capitalised in
premises and equipment at the commencement of the lease at the lower of the fair
value of the leased asset and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to
achieve a constant rate on the finance balance outstanding. The corresponding rental
obligations, net of future finance charges, are included in the Finance lease obligations.
The interest cost is charged to the income statement over the lease period using the
effective interest method. The assets acquired under finance leases are depreciated
over their useful life or the shorter lease term if the Bank is not reasonably certain that it
will obtain ownership by the end of the lease term.

Borrowings

Borrowings includes due to customers, other banks other liabilities.

Borrowings are recorded initially at cost, being their issue proceeds (fair value of
consideration received) net of transaction costs incurred. Subsequently, borrowings are
stated at amortised cost and any difference between net proceeds and the redemption
value is recorded in the statement of income over the period of the borrowings using the
effective interest method.

Borrowings originated at interest rates different from market rates are remeasured at
origination to their fair value, being future interest payments and principal repayment(s)
discounted at market interest rates for similar borrowings. The difference between the
fair value and the nominal value at origination is credited or charged to the statement of


                                                                                           22
income as gains on origination of liabilities at rates below market or losses on
origination of liabilities at rates above market.

Subsequently, the carrying amount of such borrowings is adjusted for amortisation of
the gains/losses on origination and the related expense is recorded as interest expense
within the statement of income using the effective interest method.

Financial liabilities at fair value through profit or loss

The Bank classifies to such category financial liabilities at fair value through profit or
loss, available for sale, or other financial liabilities at fair value through profit or loss at
initial recognition.

The financial liability is classified in this category if it is purchased for sale in short-term
prospect and presents a part of profit-bringing portfolio. The derivative financial
instruments with negative fair value are also defined as the financial liabilities appraised
in fair value via profit or losses only if they are not the derivative instrument certain as
the effective instrument of hedging.

Financial liabilities appraised in fair value via profit or losses are initially recorded and
subsequently remeasured at fair value based on their market value or after the
application of various valuation methodologies, including assumptions as to the future
realisability of these securities.

Debt securities issued

Debt securities issued include promissory notes and certificates of deposit issued by the
Bank. Debt securities are stated at amortised cost. If the Bank purchases its own debt
securities in issue, they are removed from the consolidated balance sheet and the
difference between the carrying amount of the liability and the consideration paid is
included in gains or losses arising from retirement of debt.

Payments to counterparties and other accounts payable

Accounts payable is recognized by the Bank after the counterparty has fulfilled its
obligations and recorded at amortized cost.

Provisions for liabilities

Provisions for liabilities are non-financial liabilities of uncertain timing or amount. They
are accrued when the Bank has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and a reliable estimate of the amount of the
obligation can be made.
                                                                                             23
Share capital and share premium

Share capital is recorded at initial cost, adjusted to the purchasing power of RUR as st
21 December 2002, for subscriptions made before 31 December 2003. Expenses on
issues are recorded as depreciation in shareholders’ equity less income tax. Share
premium is an increase in subscription to share capital over the nominal share price.

Owned shares purchased from shareholders

In case the Bank or its daughter enterprises redeems shares of the Bank, owned equity
decreases in on the sum paid for the shares plus transaction costs less taxes, until
these shares are sold or the owned equity decreases on the nominal value of these
shares.

Income and expense recognition

Interest income and expense are recorded in the income statement for all debt
instruments on an accrual basis using the effective interest method. This method defers,
as part of interest income or expense, all fees paid or received between the parties to
the contract that are an integral part of the effective interest rate, transaction costs and
all other premiums or discounts.

Fees integral to the effective interest rate include origination fees received or paid by
the entity relating to the creation or acquisition of a financial asset or issuance of a
financial liability, for example commitment fees and fees for opening and maintaining
loan accounts. Commitment fees received by the Bank to originate loans at market
interest rates are integral to the effective interest rate if it is probable that the Bank will
enter into a specific lending arrangement and does not expect to sell the resulting loan
shortly after origination. The Bank does not designate loan commitments as financial
liabilities at fair value through profit or loss.

When loans and other debt instruments become doubtful of collection, they are written
down to present value of expected cash inflows and interest income is thereafter
recorded for the unwinding of the present value discount based on the asset’s effective
interest rate which was used to measure the impairment loss.

All other fees, commissions and other income and expense items are generally
recorded on an accrual basis by reference to completion of the specific transaction
assessed on the basis of the actual service provided as a proportion of the total
services to be provided



                                                                                            24
Commissions and fees arising from negotiating, or participating in the negotiation of a
transaction for a third party, such as the acquisition of loans, shares or other securities
or the purchase or sale of businesses, which are earned on execution of the underlying
transaction are recorded on its completion. Portfolio and other management advisory
and service fees are recognised based on the applicable service contracts, usually on a
time-proportion basis. The same principle is applied to custody services that are
continuously provided over an extended period of time.

Income tax

Income taxes have been provided for in the financial statements in accordance with
Russian legislation enacted or substantively enacted by the balance sheet date. The
income tax charge comprises current tax and deferred tax and is recognised in the
income statement except if it is recognised directly in equity because it relates to
transactions that are also recognised, in the same or a different period, directly in
equity.

Current tax is the amount expected to be paid to or recovered from the taxation
authorities in respect of taxable profits or losses for the current and prior periods.
Taxable profits or losses are based on estimates if financial statements are authorised
prior to filing relevant tax returns. Taxes, other than on income, are recorded within
administrative and other operating expenses.

Deferred income tax is provided using the balance sheet liability method for tax loss
carry forwards and temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. In accordance with
the initial recognition exemption, deferred taxes are not recorded for temporary
differences on initial recognition of an asset or a liability in a transaction other than a
business combination if the transaction, when initially recorded, affects neither
accounting nor taxable profit. Deferred tax balances are measured at tax rates enacted
or substantively enacted at the balance sheet date which are expected to apply to the
period when the temporary differences will reverse or the tax loss carry forwards will be
utilised.

Foreign currency translation

The Bank’s functional currency and the Bank’s presentation currency is the national
currency of the Russian Federation, Russian Rubles (“RUR”). Monetary assets and
liabilities are translated into the functional currency of the Bank at the official exchange
rate of the CBR ruling on the transaction date. Foreign exchange gains and losses

                                                                                         25
resulting from the settlement of the transactions and from the translation of monetary
assets and liabilities into the functional currency of the Bank at official exchange rates of
the CBR are recognised in profit or loss. Translation differences on non-monetary items
such as equity securities are recorded as part of the fair value gain or loss.

Exchange restrictions and controls exist relating to converting Russian Rubles into other
currencies. At present, the Russian Ruble is not a freely convertible currency in most
countries outside of the Russian Federation.

Foreign currency balances were translated using the principal rate of exchange:

       31 December 2009                 31 December 2008
30,2442 RUR for 1 USD            29,3804 RUR for 1 USD
43,3883 RUR for 1 EUR            41,4411 RUR for 1 EUR


Derivative financial instruments

Derivative financial instruments, including forward agreements and foreign exchange
contracts, foreign exchange and interest options, interest futures etc are carried at their
fair value. Fair value are calculated on the basis of quoted market prices, models of
cash flows discounting, models of an establishment of the price on an option or spot
rates on the end of year depending on type of the transaction.

All derivative instruments are carried as assets when fair value is positive and as
liabilities when fair value is negative. Derivative financial instruments are included in
balance sheet as “Financial assets appraised in fair value via profit or losses” if fair
value is positive. Derivative financial instruments are included in balance sheet as
“Financial liabilities appraised in fair value via profit or losses” if fair value is negative.

Changes in the fair value of derivative instruments are included in profit or loss as gains
less losses arising from trading in foreign currency, gains less losses arising from
dealing in precious metals and other operating income depending on the related
contracts.

Accounting for the effects of hyperinflation

The Russian Federation has previously experienced relatively high levels of inflation
and was considered to be hyperinflationary as defined by IAS 29 “Financial Reporting in
Hyperinflationary Economies” (“IAS 29”). IAS 29 requires that the financial statements
prepared in the currency of a hyperinflationary economy be stated in terms of the
measuring unit current at the balance sheet date. It states that reporting operating
results and financial position in the local currency without restatement is not useful

                                                                                                  26
because money loses purchasing power at such a rate that the comparison of amounts
from transactions and other events that have occurred at different times, even within the
same accounting period, is misleading.

The characteristics of the economic environment of the Russian Federation indicated
that hyperinflation had ceased effective from 1 January 2003. Restatement procedures
of IAS 29 are therefore only applied to assets acquired or revalued and liabilities
incurred or assumed prior to that date. For these balances, the amounts expressed in
the measuring unit current at as 31 December 2002 are the basis for the carrying
amounts in these financial statements. The restatement was calculated using the
conversion factors derived from the Russian Federation Consumer Price Index (“CPI”),
published by the Russian Statistics Agency, and from indices obtained from other
sources for years prior to 1992.

         Yea r      Co nv er sio n co effi cie nt         Yea r   Co nv er sio n co effi cie nt
         1991                          1 0 1 9 2 ,9 4 5   1997                            4 ,1 4 0
         1992                             3 8 5 ,8 1 6    1998                            2 ,2 4 4
         1993                               4 0 ,7 3 4    1999                            1 ,6 4 3
         1994                               1 2 ,9 9 0    2000                            1 ,3 6 8
         1995                                 5 ,5 9 9    2001                            1 ,1 5 1
         1996                                 4 ,5 9 5    2002                            1 ,0 0 0



Estimative liabilities

Estimative liability is a non-financial liability not determined by value or term of its
fulfillment.

Estimative liabilities are recorded in obligations before the reporting date. At that there is
a certain possibility that the Bank has to flow-out financial resources and the sum of
obligations can be effectively determined.

Staff costs and related contributions

Wages, salaries, contributions to the Russian Federation state pension and social
insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits
are accrued in the year in which the associated services are rendered by the employees
of the Bank.

Segment reporting

A segment is a distinguishable component of the Bank that is engaged either in
providing products or services (business segment) or in providing products or services

                                                                                                     27
within a particular economic environment (geographical segment), which is subject to
risks and rewards that are different from those of other segments. Segments with a
majority of revenue earned from sales to external customers and whose revenue, result
or assets are ten percent or more of all the segments are reported separately.
Geographical segments of the Bank have been reported separately within these
consolidated financial statements based on the ultimate domicile of the counterparty,
e.g. based on economic risk rather than legal risk of the counterparty.

Operations with affiliates

Bank performs operations with affiliates. Affiliates are parties available to control each
other or under overall control, under mutual control of a counterparty or third party or
may seriously affect admission of financial and operational decisions.

While considering the relations between affiliates the Bank takes into consideration the
economical value of such relation and not only their legal form.

Critical Accounting Estimates, and Judgments in Applying Accounting Policies

The Bank makes estimates and assumptions that affect the reported amounts of assets
and liabilities within the next financial year. Estimates and judgments are continually
evaluated and are based on Management’s experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. Management also makes certain judgments, apart from those involving
estimations, in the process of applying the accounting policies. Judgments that have the
most significant effect on the amounts recognized in the financial statements and
estimates that can cause a significant adjustment to the carrying amount of assets and
liabilities within the next financial year include:

Impairment losses on loans and advances. The Bank regularly reviews its loan
portfolios to assess impairment. In determining whether an impairment loss should be
recorded in the consolidated income statement, the Group makes judgements as to
whether there is any observable data indicating that there is a measurable decrease in
the estimated future cash flows from a portfolio of loans before the decrease can be
identified with an individual loan in that portfolio. This evidence may include observable
data indicating that there has been an adverse change in the payment status of
borrowers in a group, or national or local economic conditions that correlate with
defaults on assets in the group. Management uses estimates based on historical loss
experience for assets with credit risk characteristics and objective evidence of
impairment similar to those in the portfolio when scheduling its future cash flows. The

                                                                                       28
methodology and assumptions used for estimating both the amount and timing of future
cash flows are reviewed regularly to reduce any differences between loss estimates and
actual loss experience.

Tax legislation. Tax, currency and customs legislation of the Russian Federation
assume possibility of different interpretations.

Fair value of financial instruments. Fair value is the amount at which a financial
instrument could be exchanged in a current transaction between willing parties, other
than in a forced sale or liquidation. The best evidence of fair value is price quotations in
an active market. The estimated fair values of financial instruments have been
determined by the Bank using available market information, where it exists, and
appropriate valuation methodologies. However, judgement is necessarily required to
interpret market data to determine the estimated fair value. The Russian Federation
continues to display some characteristics of an emerging market and economic
conditions continue to limit the volume of activity in the financial markets. Market
quotations may be outdated or reflect distress sale transactions         and therefore not
represent fair   values of financial instruments. Management has used all available
market information in estimating the fair value of financial instruments. Financial
instruments carried at fair value: Trading securities, other securities at fair value through
profit or loss are carried in the consolidated balance sheet at their fair value. Cash and
cash equivalents are carried at amortised cost which approximates current fair value.

Capital adequacy. Capital adequacy is valuated in accordance with the demands of
International convergency of capital valuation and standards applied to capital (adopted
July 1988, revised November 2005) (or “Basel agreements”). These demands assume
different interpretations while valuating the capital.

Adoption of New or Revised Standards and Interpretations

Certain new IFRSs became effective for the Bank during 2009, financial statements for
year 2009 differs from statements published for the year 2009. Listed below are those
new or amended standards or interpretations which are relevant to the Bank’s
operations and the nature of their impact on the Bank’s accounting policies.

IFRS 2 (revised 2008) “Share-based Payment – vesting conditions and cancellations”
(effective for annual periods beginning on or after 1 January 2009).
The objective of this IFRS is to specify the financial reporting by an entity when it
undertakes a share-based payment transaction.



                                                                                          29
The amendment deals with two matters. It clarifies that vesting conditions are service
conditions and performance conditions only. Other features of a share-based payment
are not vesting conditions. It also specifies that all cancellations, whether by the entity or
by other parties, should receive the same accounting treatment.



IFRS 8 (issued November 2006) “Operating Segments” (effective for annual periods
beginning on or after 1 January 2009). Companies not applying IFRS 8 before the
effective date, should apply IAS 14 “Segment reporting”.

IAS 23 (Revised in April 2007) “Borrowing Costs” (effective for annual periods
beginning on or after 1 January 2009).

The main change from the previous version is the removal of the option of immediately
recognising as an expense borrowing costs that relate to assets that take a substantial
period of time to get ready for use or sale. An entity is, therefore, required to capitalise
borrowing costs as part of the cost of such assets.


The revised IAS 23 does not require the capitalisation of borrowing costs relating to
assets measured at fair value, and inventories that are manufactured or produced in
large quantities on a repetitive basis, even if they take a substantial period of time to get
ready for use or sale.


IAS 32 (revised January 2008)             “Financial instruments: disclosure” The new
requirements will come into force on July 1, 2009.


IAS 32 “Financial instruments: Disclosure” and IAS 1 “Presentation of Financial
Statements — Puttable Financial Instruments and Obligations Arising on Liquidation”.

Amendments to IAS 32 and IAS 1 were published February 2008 and effective for
annual periods beginning on or after 1 January 2009 The amendments classify the
following types of financial instruments as equity, provided they have particular features
and meet specific conditions:

      puttable financial instruments (for example, some shares issued by co-operative
       entities);

      instruments, or components of instruments, that impose on the entity an
       obligation to deliver to another party a pro rata share of the net assets of the

                                                                                           30
       entity only on liquidation (for example, some partnership interests and some
       shares issued by limited life entities).

IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial
instruments: disclosure”.

Amendments to IAS 39 and IFRS 7 were published October 2008 and under limited
circumstances, permit the reclassification of certain financial assets previously classified
as 'held for trading' or 'available for sale' to another category of financial assets.

IFRIC 11 “IFRS 2 – Group and Treasury Share Transactions”
Effective Date of IFRIC 11: Annual periods beginning on or after 1 March 2007. Earlier
application permitted.
A subsidiary grants rights to equity instruments of its parent to its employees. The
subsidiary accounts for the transaction as a cash-settled share-based payment
transaction.

Therefore, in the subsidiary's individual financial statements, the accounting treatment
of transactions in which a subsidiary's employees are granted rights to equity
instruments of its parent would differ, depending on whether the parent or the subsidiary
granted those rights to the subsidiary's employees. This is because the IFRIC
concluded that, in the former situation, the subsidiary has not incurred a liability to
transfer cash or other assets of the entity to its employees, whereas it has incurred such
a liability in the latter situation (being a liability to transfer equity instruments of its
parent).

IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction”

Effective Date of IFRIC 14: Annual periods beginning on or after 1 January 2008. Earlier
application permitted.

Defines measurement of the defined benefit asset to the “present value of economic
benefits available in the form of refunds from the plan or reductions in future
contributions to the plan”. IFRIC 14 addresses the interaction between a minimum
funding requirement and the limit placed by paragraph 58 of IAS 19 on the
measurement of the defined benefit asset or liability.

Reclassification of Financial Assets – Amendments to IAS 39 Financial Instruments:
Recognition and Measurement and further Amendment Reclassification of Financial
Assets – Effective date and transition In October 2008 the IASB issued “Reclassification
of Financial Assets” (Amendments to IAS 39 “Financial Instruments: Recognition and
                                                                                31
Measurement” and IFRS 7 “Financial Instruments: Disclosures”). The amendment to
IAS 39 permits an entity to reclassify non-derivative financial assets, other than those
designated at fair value through profit or loss upon initial recognition, out of the fair
value through profit or loss (i.e., trading) category if they are no longer held for the
purpose of being sold or repurchased in the near term, would have met the definition of
loans and receivables at initial recognition, and the entity has the intention and ability to
hold the financial asset for the foreseeable future or until maturity. If the financial asset
would not have met the definition of loans and receivables, then it may be reclassified
out of the trading category only in ‘rare circumstances’. The amendment also permits an
entity to transfer a non-derivative financial asset from the available-for-sale category to
the loans and receivables category provided the non-derivative financial asset would
have met the definition of loans and receivables and the entity has the intention and
ability to hold that financial asset for the foreseeable future or until maturity. The
amendment to IFRS 7 introduces additional disclosure requirements if an entity has
reclassified financial assets in accordance with the amendment to IAS 39. The
amendments are effective retrospectively from 1 July 2008. Pursuant to these
amendments, the Bank reclassified certain non-derivative financial assets out of trading
assets and into loans to customers, due from banks and investment securities held-to-
maturity. Management decided not to apply this adoption for current financial
statements of the Bank.


IAS 1, Presentation of Financial Statements (revised September 2007; effective for
annual periods beginning on or after 1 January 2009). The main change in IAS 1 is the
replacement of the income statement by a statement of comprehensive income which
will also include all non-owner changes in equity, such as the revaluation of available-
for-sale financial assets. Alternatively, entities will be allowed to present two statements:
a separate income statement and a statement of comprehensive income. The revised
IAS 1 also introduces a requirement to present a statement of financial position
(balance sheet) at the beginning of the earliest comparative period whenever the entity
restates comparatives due to reclassifications, changes in accounting policies, or
corrections of errors. The Bank expects the revised IAS 1 to affect the presentation of
its consolidated financial statements but to have no impact on the recognition or
measurement of specific transactions and balances.


IAS 27, Consolidated and Separate Financial Statements (revised January 2008;
effective for annual periods beginning on or after 1 July 2009). The revised IAS 27 will
                                                                                          32
require an entity to attribute total comprehensive income to the owners of the parent
and to the non-controlling interests (previously “minority interests”) even if this results in
the non-controlling interests having a deficit balance (the current standard requires the
excess losses to be allocated to the owners of the parent in most cases). The revised
standard specifies that changes in a parent’s ownership interest in a subsidiary that do
not result in the loss of control must be accounted for as equity transactions. It also
specifies how an entity should measure any gain or loss arising on the loss of control of
a subsidiary. At the date when control is lost, any investment retained in the former
subsidiary will have to be measured at its fair value. The management does not expect
IAS 27 to significantly affect the Bank’s financial statements.

Other new standards or interpretations.

The Bank has not early adopted the following other new standards

or interpretations:

- IFRIC 13, Customer Loyalty Programmes (effective for annual periods beginning on or
after1 July 2008).

- IFRIC 15, Agreements for the Construction of Real Estate (effective for annual periods
beginning on or after 1 January 2009).

- IFRIC 16, Hedges of a Net Investment in a Foreign Operation (effective for annual
periodsbeginning on or after 1 October 2008).

- IFRIC 17, Distribution of Non-Cash Assets to Owners (effective for annual periods
beginning on or after 1 July 2009, with earlier application permitted).

- Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate - IFRS
1 and IAS 27Amendment (revised May 2008; effective for annual periods beginning on
or after 1 January2009).

Unless otherwise described above, the new standards and interpretations are not
expected to significantly affect the Bank’s financial statements.

Unless otherwise described above, the new standards and interpretations are not
expected to significantly affect the Bank’s financial statements.



                              5.      Cash andcash equivalents
                                                                                      (RUR ‘000)
                                                                          2009            2008
 Cash on hand                                                           143 772         186 002
 Cash balances with the CBRF (other than mandatory reserve deposits)    652 095         312 686

                                                                                           33
 Correspondent accounts and overnight placements with other banks in
 Russia                                                                       85 446        88 024
 Correspondent accounts and overnight placements with other banks abroad   1 105 295     2 315 203
 Settlements balances with ORCB                                               62 636       156 697
 Settlements balances with NCO                                                18 056        11 307
 Total cash and cash equivalents                                           2 067 300     3 069 919

Cash and cash equivalents are highly liquid assets which are not having any restrictions
on use.


As of 31 December 2009 the Bank had balances with two banks (31 December 2008:
two) whose balance exceeded 10% of the total cash and cash equivalents. The gross
value of this exposure as of 31 December 2009 was 2 019 847 RUR’000 (31 December
2008: was 2 019 847 RUR’000).


As of 31 December 2009 there were no overdues on cash and cash equivalents or their
devaluation.


Geographical, currency and interest rate analyses of cash and cash equivalents are
disclosed in Note 25. Related parties information is disclosed in Note 29.



           6.        Financial assets at fair value through profit or loss
                                                                                       (RUR ‘000)
                                                                               2009          2008

 Debt securities of sub-federal units                                        54 743             -
 Corporate debt securities                                                  180 295       163 094
 Promissory notes of banks                                                        -             -
 Corporate shares                                                                 -             -

 Total financial assets at fair value through profit or loss                235 038       163 094

Financial assets at fair value through profit or loss as of 31.12.2009 are presented as
trading securities:


- debt securities of the Moscow Government (bonds issues RU31054MOS0 and
RU25061MOS0), debt obligations of the Moscow Oblast’ Government (bonds issue
RU34005MOO0) and debt obligations of the Yaroslavskaya Oblast’ Government (bonds
issue RU34007YRS0).




                                                                                              34
-     debt securities of Russian banks – bonds of OJSC “NOMOS-Bank”, OJSC “AK
BARS”, Bank “Zenith”, OJSC Bank “Petrokommerz”, OJSC “TransKreditBank”, OJSC
“Promsviaz’bank”, OJSC “MDM-Bank”.


-      debt securities of Russian companies – bonds of                            OJSC “RZD”, OJSC AFK
“Systema”, OJSC “MTS”, OJSC “Mosenergo”, OJSC “Severstal”.


These bonds are a part of the Bank’s trading portfolio and they are revaluated in
accordance with MICEX data monthly.


Trading securities are recorded at far value which includes possible devaluation
determined by the credit risk.


Below is an analysis of debt securities by the credit quality as of 31 December 2009:
                                                                                                             (RUR ‘000)
                                                Investing rating       Speculating          No rating       Total
                                                                       rating
    Governmental debt securities of RF                             -              54 743                -       54 743
    Corporate bonds                                                -             180 295                -      180 295
    Promissory notes of banks                                      -                   -                -            -
    Total debt securities at 31 December
    2009                                                           -            235 038                 -      235 038


Below is an analysis of debt securities by the credit quality as of 31 December 2008:
                                                                                                            (RUR ‘000)
                                                Инвестиционный         Спекулятивный           Нет           Итого
                                                    рейтинг               рейтинг            рейтинга

    Corporate bonds                                                -            163 094                 -      163 094
    Promissory notes of banks                                      -                  -                 -            -
    Total debt securities at 31 December
    2008                                                           -            163 094                 -      163 094


Geographical, currency and interest rate analyses are disclosed in Note 26.

                                       7.       Due from other banks
                                                                                                            (RUR ‘000)
                                                                                             2009               2008
    Current loans and deposits                                                             352 635             858 995
    Demands for letters of credit in foreign currencies                                    173 212             393 562
    Less provision for loan impairment                                                       (569)            (35 397)
    Total due from other banks                                                             525 278           1 217 160

As of 31 December 2009 the Bank had four balances with two banks (31 December
2008: two) whose balance exceeded 10% of the total cash and cash equivalents. The

                                                                                                                    35
gross value of this exposure as of 31 December 2009 was 405 563 RUR’000 (31
December 2008: was 741 888 RUR’000).


Geographical, currency, maturity and interest rate analyses of due from other banks are
disclosed in Note 26.

                                 8.       Loans and receivables
                                                                                             (RUR ‘000)
                                                                                    2009         2008
 Current loans                                                                 2 905 111     1 634 968
  - corporate loans                                                            2 798 771     1 487 294
    Including overdue loans                                                        6 341         7 000
  - consumer loans                                                                89 544       124 814
    Including overdue loans                                                        5 813        15 229
  - mortgages to individuals                                                      16 796        22 860
     Including overdue loans                                                           -             -
 Less provision for impairment of loans and advances                           (712 929)     (570 505)
 Total loans to individuals and legal entities                                 2 192 182     1 064 463
 Factoring                                                                        79 163       370 532
 Less provision for impairment                                                  (37 304)     (115 586)
 Total factoring                                                                  41 858       254 946
 Total loans and receivables                                                   2 234 041     1 319 409

Commercial credits present loans to legal entities for current needs. Loans are granted
up to 3 years. Commercial credits include overdraft loans, crediting of export and
import. Loans are repaid by borrowers’ current cash flows.

Consumer loans are credits to individuals for consumer and current needs (urgent
needs, auto credits, overdrafts), except investments in intangibles.

Mortgage present long-term loans to individuals for acquisition, building or
reconstruction of intangibles.

The total value of Current loans as of 31 December 2009 included sums in accordance
with loan agreements in amount of 2 905 111 RUR’ 000 (31 December 2008: 1 634 968
RUR’ 000).

Credit portfolio quality. Below is presented the analysis of credit portfolio quality as of
31 December 2009:

                                                                                             (RUR ‘000)
                                                          Consumer loans    Mortgage loans
                                Loans to legal entities    to individuals   to individuals   Total
 Current loans (impairment is
 valuated collectively)
 - 1 group                                      46,859             14,360              948      62,167
 - 2 group                                   1,475,146             25,630            8,285   1,509,061
 - 3 group                                     801,882             37,926            7,563     847,371
 - 4 group                                     302,634              5,815                -     308,449

                                                                                                     36
 - 5 group                                     165,910                   -                -      165,910
 Total current loans                         2,792,431              83,731           16,796    2,892,958
 Individually impaired loans                     6,341               5,813                -       12,154
 Total loans before
 provision for impairment                    2,798,772              89,544           16,796    2,905,112
 Less provision for
 impairment
 - provision for individually
 impaired loans                                 (6,341)             (5,813)               -      (12,154)
 - provision for collectively
 evaluated loans                              (685,913)            (12,860)          (2,002)    (700,775)
 Total loans less provision
 for impairment                              2,106,518               70,871          14,794    2,192,183
 Assignment agreement                           35,412               34,887               -       70,299
 - provision for impairment                   (25,288)             (11,308)               -     (36,596)
 Factoring                                       8,864                    -               -        8,864
 - provision for impairment                      (709)                    -               -        (709)
 Total factoring rights less
 provision for impairment                        18,279             23,579                 -      41,858
 Total loans and
 receivables less provision
 for loan impairment                         2,148,376              70,871           14,794    2,234,041


Credit portfolio quality. Below is presented the analysis of credit portfolio quality as of
31 December 2008:

                                                                                               (RUR ‘000)
                                                           Consumer loans     Mortgage loans
                                Loans to legal entities     to individuals    to individuals   Total
 Current loans (impairment is
 valuated collectively)
 - 1 group                                      62 316              52 066           13 075      127 457
 - 2 group                                     249 627               9 469                -      259 096
 - 3 group                                     683 481              39 236            9 785      732 502
 - 4 group                                     484 870               8 814                -      493 684
 Total current loans                         1 480 294             109 585           22 860    1 612 739
 Individually impaired loans                     7 000              15 229                -       22 229
 Total loans before
 provision for impairment                    1 487 294            124 814            22 860    1 634 968
 Less provision for
 impairment
 - provision for individually
 impaired loans                                 (7 000)            (15 229)                -     (22 229)
 - provision for collectively
 evaluated loans                              (528 976)            (16 689)          (2 611)    (548 276)
 Total loans less provision
 for impairment                                 951 318              92 896          20 249    1 064 463
 Assignment agreement                           316 222              44 162               -      360 384
 - provision for impairment                   (106 232)             (7 324)               -    (113 556)
 Factoring                                        10 148                  -               -        10 148
 - provision for impairment                      (2 030)                  -               -       (2 030)
 Total factoring rights less
 provision for impairment                      218 108              36 838                0      254 946
 Total loans and
 receivables less provision
 for loan impairment                         1 169 426             129 734           20 249    1 319 409


The Bank applied provision forming methods stated in IAS 39 “Financial instruments:
recognition and measurement”. Bank’s policy is to classify each loan as “Not overdue or

                                                                                                       37
individually impaired” unless there are objective reasons for its recognition as impaired.
This is why provision for loan impairment may exceed the sum of individually impaired
loans.

In order to analyze and manage its credit portfolio, the Bank performs regular loans
classification depending on valuation their quality. The basis of evaluation is analysis of
borrower’s financial position, shareholder’s equity structure, credit history and goodwill.
Also the position of the borrower in the field or the region of its activity is also
considered. As the result for such analysis, borrowers are divided into three groups
(presented in tables above), where first group has the best characteristics.

The first group of legal entities includes entities with high liquidity level and high level of
capital adequacy. The possibility of agreement transgression is low. The second group
includes entities with moderate liquidity and profitability and capital adequacy level. The
possibility of agreement transgression is moderate. The second group includes entities
with satisfactory liquidity and profitability and capital adequacy level. The possibility of
agreement transgression is higher that medium.

Loans to individuals are combined into portfolios of similar demands and similar risk
groups. Credit service and loan purpose are also considered. Each portfolio is analyzed
by its repayment history. Loans to individuals are divided into three groups. First group
includes loans with good level service and perfect financial position of the borrower. The
second group includes loans with good/medium level service and perfect/moderate
financial position of the borrower. The third group includes loans with medium level
service and moderate financial position of the borrower.

Loans with overdue repayments less repayment of the entire sum as of 31.12.2009 total
12 154 thousands of Russian Rubles (2008: 295).

Banks separates individually impaired loans to a special group. The reason for
classification of loans to legal entities in such group is bad financial position of the
borrower or unsatisfactory service of the loan. The reason for classification of loans to
individuals in such group is repayment overdue for more than 90 days.

As of 31.12.2009 and 31.12.2008 all individually impaired loans presented in the table
above were classified this way due to repayment overdue for more than 90 days.

Below is the information about current loans, valued collectively, with revised credit
conditions, as of 31.12.2009 and 31.12.2008

                                                                                     (RUR ‘000)


                                                                                            38
                                                              Consumer loans         Mortgage loans to
                                Loans to legal entities        to individuals          individuals              Total

  Loans with revised terms,
  balance as of 31.12.2009                     599 641                  7 835                        5 910     613 386

  Loans with revised terms,
  balance as of 31.12.2008                     459 375                103 251                        9 785     572 412

Revision of terms implies any change in credit agreement made because of the Bank or
a Client.


Some loans presented in the table below could have been overdue unless revised.


Provision for impairment of credit portfolio. The analysis of change in provision for
impairment of portfolio during the year 2009 from the angle of credit class:
                                                                                                             (RUR ‘000)
                                                              Consumer loans        Mortgage loans
                                Loans to legal entities        to individuals       to individuals           Total
 Provision for impairment of
 credit portfolio as of
 01.01.2009                                   (644 238)               (39 242)             (2 611)            (686 091)
 Provision for impairment of
 credit portfolio formed
 during the year 2009                           (74 013)                 9 261                609              (64 143)
 Written off bed debts during
 the year 2009                                            -                     -                -                      -
 Provision for impairment of
 credit portfolio as of
 01.01.2008                                   (718 251)               (29 981)             (2 002)            (750 234)

The analysis of change in provision for impairment of portfolio during the year 2008 from
the angle of credit class:
                                                                                                             (RUR ‘000)
                                                              Consumer loans        Mortgage loans
                                Loans to legal entities        to individuals       to individuals           Total
 Provision for impairment of
 credit portfolio as of
 01.01.2008                                   (197 093)               (18 459)             (1 677)            (217 229)
 Provision for impairment of
 credit portfolio formed
 during the year 2008                         (447 145)               (20 783)               (934)            (468 862)
 Written off bed debts during
 the year 2008                                            -                     -                -                      -
 Provision for impairment of
 credit portfolio as of
 01.01.2007                                   (644 238)               (39 242)             (2 611)            (686 091)

Loan guarantee. The Bank usually demands to obtain a guarantee or pledge for a loan.
Usually a guarantee is securities, intangibles, machinery, transport, provisions, rights,
etc. Also a loan could be guaranteed by the Bank’s major shareholder (or any other
controlling body). Such guarantor is also analyzed for risk level. The value of

                                                                                                                     39
guarantee/pledge must amount to the sum of credit plus interests on it. Some loans are
granted without any pledge/guarantee. Such loans are granted to financially stable
borrowers or major borrowers or borrowers with perfect credit history for the past three
years.

Mortgage, auto credits and other loans to individuals are usually guaranteed by
intangibles, automobiles, government bonds, precious metals and other liquid assets

Some credits to individuals could be granted without any pledge/guarantee. Such loans
are: consumer loans less than 3 044,7 000’RUR under term of 24 months; consumer
loans with good credit history less that 429 000 USD000’RUR under term of 24 months;
overdrafts on banking cards.

Fair value of guarantees and pledge for loans valued collectively, loans to legal entities,
individually classified as impaired or as of 31.12.2009 is presented below:

                                                                                                             (RUR ‘000)
                                                                                   Consumer loans        Mortgage loans
                                                       Loans to legal entities      to individuals       to individuals
 Value of guarantees and pledge for loans valued collectively
 Securities                                                                    -                 -                   -
 Intangibles                                                          683 669                8 066              16 789
 Machinery / Transport                                                 75 208                4 502                   -
 Goods in circulation                                                  96 609                    -                   -
 Guarantees and banking guarantees                                    155 097               31 980
 Other assets                                                          66 466                6 058                       -
 Value of pledge for loans, individually classified as impaired
 Securities                                                                  -                       -               -
 Intangibles                                                                   -                     -                   -
 Machinery / Transport                                                         -                     -                   -
 Goods in circulation                                                          -                     -                   -
 Guarantees and banking guarantees                                             -                     -                   -
 Other assets                                                                  -                     -                   -



Fair value of guarantees and pledge for loans valued collectively, loans to legal entities,
individually classified as impaired or as of 31.12.2008 is presented below:

                                                                                                             (RUR ‘000)
                                                                                   Consumer loans        Mortgage loans
                                                       Loans to legal entities      to individuals       to individuals
 Value of guarantees and pledge for loans valued collectively
 Securities                                                                    -       -                              -
 Intangibles                                                           40 643    24 650                         17 303
 Machinery / Transport                                                253 455    15 079                              -
 Goods in circulation                                                 133 305         -                              -
 Guarantees and banking guarantees                                    232 462     7 090                              -
 Other assets                                                                  -       -                             -
 Value of pledge for loans, individually classified as impaired
 Стоимость обеспечения по кредитам, в индивидуальном порядке определенным как обесцененные
 Securities                                                                    -      -                                  -
                                                                                                                    40
 Intangibles                                                             -            8 225                -
 Machinery / Transport                                                   -                -                -
 Goods in circulation                                                    -                -                -
 Guarantees and banking guarantees                                       -                -                -
 Other assets                                                            -                -                -

Credit portfolio concertration. Below is presented the structure of the credit portfolio by
sectors of the economy as of 31.12.2009. and 31.12.2008:
                                                                                           (RUR ‘000)
                                                    2009                           2008
                                                Sum                             Sum
                                             (RUR ‘000)          stake       (RUR ‘000)         stake
 Ferrous metallurgy                                   558 203   18,7%                 58,761      3%
 Machinery                                            644 135   21,6%                107,695      5%
 Mining                                                14 931     0,5%               266,509     13%
 Trading                                              716 981   24,0%                779,248     39%
 Intangibles                                           66 466     2,2%                66,366      3%
 Food industries                                            -     0,0%                  1,500     0%
 Chemical industry                                    167 000     5,6%               179,000      9%
 Finance                                              107 990     3,6%                            0%
 Construction                                          35 000     1,2%               176,782      9%
 Other                                                567 812   19,0%                177,803      9%
 Individuals                                          105 757     3,5%               191,836     10%
 Total:                                             2 984 275                      2 005 500

Geographical analysis, loans, advances to customers divided by currencies and by
terms are disclosed in Note 26.

                         9.       Financial assets available for sale
                                                                                                  (RUR ‘000)
                                                                                      2009              2008
 Banks’ bills of exchange                                                          253 649                 -
 Unquoted shares                                                                        69                66
 Total financial assets available for sale                                         253 718                66


Financial assets available to sale includebills of exchange of OJSC “Promsvyaz’bank”
and OJSC “Uralsib” and shares of S.W.I.F.T. Last have no fixed date of maturity, but
Bank’s management does not bind to sale the shares. Shares are denominated in EUR.
Balance value (at the rate of the CBR as of 31.12.2009) exceed par value but less than
current market value, which calculated as result of General meeting of the Members of
Company.

Geographical analysis, financial assets available for sale analysis by currencies and by
terms are disclosed in Note 26.

                            10.    Financial assets held to maturity
                                                                                                  (RUR ‘000)
                                                                                        2009            2008
 Banks’ bonds                                                                                 -         5 046
 Banks’ bills of exchange                                                                     -             -

                                                                                                         41
 Total financial assets held to maturity                                                    -             5 046


As of 31.12.2009 the Bank has no financial assets held to maturity.



                             11.    Property, plant and equipment
                                                                                                   (RUR ‘000)
 PPE for the year 2009
                                                                                                 Invest
                                                                                                 ments
                                                                                                   and    Total inc.
                                             Comp          Office                               finance   investme
                                    Cars     uters       equipment     Other     Total            lease      nts

 Historical cost including
 inflation
 31.12.2008                          3 821     7 642          20 873    11 472     44 249            -       44 249
 Acquisition                         1 523       611           5 997        64      9 135          152        9 287
 Disposals                           (310)   (1 503)         (2 855)   (9 120)   (13 788)            -     (13 788)
 31.12.2009                          5 034     6 750          24 015     2 416     39 596          152       39 747
 Depreciation including
 inflation
 31.12.2008                          2 102     6 818          13 317     7 813     30 073            -       30 073
 Depreciation charge                   819       594           3 244       819      5 613            -        5 613
 Depreciation of disposals           (196)   (1 452)         (2 692)   (7 496)   (11 838)            -     (11 838)
 31.12.2009                          2 724     5 960          13 869     1 135     23 848            -       23 848
 Balance                             2 310       790          10 146     1 281     15 748          152       15 899

 PPE for the year 2008
                                                                                                 Invest
                                                                                                 ments
                                                                                                   and    Total inc.
                                             Comp          Office                               finance   investme
                                    Cars     uters       equipment     Other     Total            lease      nts

 Historical cost including
 inflation
 31.12.2007                          3 093       7 642        15 258   10 301     36 294            423      36 717
 Acquisition                           984           -         6 055    1 171      8 210              -       8 210
 Disposals                           (255)           -             -        -      (255)          (423)       (678)
 31.12.2008                          3 822       7 642        21 313   11 472     44 249              -      44 249
 Depreciation including
 inflation
 31.12.2007                          1 411       6 171        11 624    6 184     25 389              -      25 389
 Depreciation charge                   746         648         1 716    1 629      4 739              -       4 739
 Depreciation of disposals            (55)           -             -        -       (55)              -        (55)
 31.12.2008                          2 102       6 819        13 339    7 813     30 073              -      30 073
 Balance                             1 721         823         7 556    3 659     14 176              -      14 176



                                           12.     Other assets
                                                                                                   (RUR ‘000)
                                                                                         2009            2008
 Other financial assets
 Settlements                                                                             4 474               36
 Other                                                                                     145              102
 Other non-financial assets
 Receivables and advances                                                              4 020              4 536
 Taxes                                                                                12 584              3 729
                                                                                                           42
 Available for sale                                                     11 579             -
 Total other assets                                                      4 914         6 703
 Other financial assets                                                 37 716        15 106

Item “Available for sale” includes carrying amount of a flat having been a guaranty to a
loan and now being the Bank’s assessment due to non-payment of the loan. It’s being
currently on sale at the market price.

Geographical analysis, other assets analysis by currencies and by terms are disclosed
in Note 26.

                                   13.   Due to other banks
                                                                                 (RUR ‘000)
                                                                          2009         2008
 Correspondent accounts of other banks                                  18 021        35 401
 Loans from other banks                                                 18 004             -
 Term deposits                                                               -             1
 Total                                                                  36 025        35 402

As of 31 December 2009 there were two exposures (2008: two), which individually
comprised 95,27% of deposits and balances from banks and other financial institutions.
The gross value of these accounts as of 31 December 2009 was 34 322 RUR’000 (31
December 2008: 33 242 RUR’000).

Carrying amount of each item in the table above is close to fair value as of 31
December 2009 and 31 December 2008. As of 31 December 2009 the estimated fair
value of due to other banks totaled 36 025 RUR’000 (as of 31 December 2008:
35 402 RUR’000).

Geographical analysis, due to banks analysis by currencies and by terms is disclosed in
Note 26.

                                   14.   Customer accounts
                                                                                 (RUR ‘000)
                                                                        2009          2008
 Legal entities
 — Current/settlement accounts                                      2 176 734     1 846 002
 — Term deposits                                                      285 474     1 185 541
 Individuals
 — Current/settlement accounts                                        143 407       105 103
 — Term deposits                                                        3 457        31 750
 Total customer accounts                                            2 609 072     3 168 396

As of 31 December 2009 there was four counterparties, which individually comprised
more than 10% of current accounts and deposits from customers (31 December 2008:



                                                                                        43
one). Total value of these balances as of 31 December 2009 was 1 492 402 RUR’000
(31 December 2008 was 535 681 RUR’000).


Bank’s liabilities to clients as of 31 December 2009 are not secured by anything except
for the overall guaranty of mandatory reserves with CBR.


Carrying amount of each item in the table above is close to fair value as of 31
December 2009 and 31 December 2008. As of 31 December 2009 the estimated fair
value of customer accounts totaled 2 609 072 RUR’000 (as of 31 December 2008:
2 609 072 RUR’000).


Geographical analysis, customer accounts’ analysis by currencies and by terms is
disclosed in Note 26.

                            15.   Debt securities issued
                                                                             (RUR ‘000)
                                                                     2009           2008
 Bills of exchange                                                  3 362          4 139
 Total debt securities issued                                       3 362          4 139

Debt securities issued consist of promissory notes denominated in RR. All of them are
discounted and from 30 days to 3 years maturity.


Geographical analysis, debt securities issued analysis by currencies and by terms are
disclosed in Note 26.

                                  16. Other debts
                                                                               (RUR ‘000)
                                                                      2009         2008

 Subordinated loans
                                                                   514 151       499 467
 Total other debts                                                 514 151       499 467

In 2001 the Bank received a subordinated loan from its shareholder in the amount of
USD 6 million. The nominal interest rate of the loan was 2% per annum and maturity in
February 2011.

In February 2006 the loan was prolonged up to February 2017. The subordinated loan
is recognized as new one because of terms was changed.



                                                                                      44
In 2004 the Bank received another subordinated loan from its shareholder in the amount
of USD 11 million. The nominal interest rate of the loan was 3% per annum and maturity
in September 2014.

Since 10 October 2008 in accordance with additional agreements, the annual interest
rate became 10%.

Subordinated loans is stated at amortised cost discounted at effective rate (in RUR at
the rate of the CBR).

Geographical analysis, other debts analysis by currencies and by terms is disclosed in
Note 26.

                                     17.      Other liabilities
                                                                                                 (RUR ‘000)
                                                                                         2009          2008
 Other financial liabilities
 Payables                                                                                2 835              74
 Tax liabilities                                                                        12 797           1 127
 Accounts payable for vacations                                                          4 195           6 093
 Other                                                                                   5 650           3 044
 Other non-financial liabilities
 Accounts payable                                                                        2 490         1 737
 Provisions                                                                             30 018        11 871
 Deferred tax payments                                                                  43 641        36 886
 Total                                                                                 101 626        60 832


Carrying amount of each item in the table above is close to fair value as of 31
December 2009 and 31 December 2008. As of 31 December 2009 the estimated fair
value of other liabilities totaled 101 626 RUR’000 (as of 31 December 2008: 60 832
RUR’000).

Geographical analysis, other liabilities analysis by currencies and by terms is disclosed
in Note 26.

                                           18. Share capital
Share capital of the Bank consists of 112 581 720 ordinary shares with nominal value of
10 RUR per share each.

                                                                                                 (RUR ‘000)
                                                                 2009
                               Number of         Nominal        Inflation correction             Total
                               shares            value

Ordinaries                          68 481 720             10
Additional issue                    44 100 000             10
Total                                               1 125 817                     491 070         1 616 887
Share premium                                         420 125                      30 008           450 133

                                                                                                          45
Total share capital                                        1 545 942   521 078       2 067 020

The holders of ordinary shares has the right to receive dividends and one vote per
share at annual shareholder’s meetings. Dividends payables are restricted to the
maximum retained earnings of the Bank, which are determined according to legislation
of the Russian Federation. In accordance with the legislation of the Russian Federation,
as of 31 December 2009, retained earnings available for distribution amounted to RUR
96 218 000 (31.12.2008 - 41 693 000 RUR).


The Bank has the right to issue additionally 455 900 000 ordinary shares with nominal
value of 10 RUR each.



                      19. Accumulated Deficit /(Retained Earnings)

In accordance with Russian legislation, the Bank distributes profits as dividends or
transfers them to reserves (fund accounts) on the basis of financial statements prepared
in accordance with Russian Accounting Rules. The Bank’s reserves under Russian
Accounting Rules at 31.12.2009 307 108 thousands of Russian Rubles (31.12.2008:
265 075thousands of Russian Rubles).

                                20. Interest Income and Expense
                                                                                    (RUR ‘000)
                                                                           2009        2008
 Interest income
 "Overnight" and due from other banks                                    23 938       69 644
 Financial assets at fair value through profit or losses
                                                                         48 184       27 526
 Financial assets available for sale                                          -            -
 Financial assets held to maturity                                            -            -
 Loans and advances to customers                                        428 181      306 703
 Other                                                                        -            -
 Total interest income                                                  500 303      403 873
 Interest expense
 Due to other banks                                                      (11267)      (3 398)
 Customer accounts                                                     (121 785)    (52 190)
 Debt securities issued                                                   (8 832)       (250)
 Subordinated loans                                                             -           -
 Other                                                                 (234 320)      (5 150)
 Total interest expense                                                (376 204)    (60 988)
 Net interest income                                                     124 099     342 885



                    21. Fee and Commission Income and Expense
                                                                                    (RUR ‘000)
                                                                           2009         2008
Fee and commission income

                                                                                           46
Settlement transactions                                             29 057       49 253
Bank cards and cheques                                                   -            -
Cash transactions                                                   45 250          676
Banking guarantees                                                  54 895       83 680
Other                                                                  180       14 870
Total fee and commission income                                    129 382      148 479
Fee and commission expense
Settlement transactions                                              (3 224)      (2 955)
Cash transactions                                                    (4 951)      (5 181)
Collection                                                                 -            -
Currency                                                             (2 059)      (3 103)
Banking guarantees                                                      (70)         (59)
Other                                                                (2 198)      (1 952)
Total fee and commission expense                                   (12 502)     (13 250)
Net fee and commission income                                       116 880      135 229

                                    22. Other Operating Income
                                                                               (RUR ‘000)
                                                                      2009         2008
 Fine and penalty received                                                 -         790
 Derivative financial instruments
                                                                           -            -
 Rights for demand
                                                                    30 189         1 230
 Other                                                               7 329         2 068
 Total operationg income                                            37 518         4 088



                                      23. Operating Expense
                                                                               (RUR ‘000)
                                                                      2009          2008
 Staff costs                                                      (118 985)     (112 737)
 Other costs related to amortization of premises and equipment      (9 226)       (4 739)
 Professional services                                             (13 737)     (15 590)
 Lease                                                             (36 767)     (27 169)
 Funds contributions                                                      -            -
 Taxes other than income tax                                       (12 590)     (11 350)
 Other operating expense                                           (65 450)     (13 290)
 Total operating expense                                          (256 755)    (184 875)

Staff costs include salaries and wages, statutory social security and pension
contributions, professional training, compensative payments.

                                     24. Income tax expense
Income tax expense comprises the following:

                                                                               (RUR ‘000)
                                                                      2009         2008
 Current income tax expense                                         11 922        26 050
 Deferred tax asset                                                  6 755       (1 171)
 Total income tax expense during the year                           18 677        24 879


The income tax rate applicable to the majority of Bank’s income is 20%. Reconciliation
between the expected and the actual taxation charge is provided below:


                                                                                       47
                                                                                                    (RUR ‘000)
                                                                                      2009                2008

Profit before tax                                                                   97 627             109 833

Theoretical income tax expense (2009 – 20%, 2008 – 24%)                             19 525              21 967

Revaluation for income and expense doesn’t affecting tax
base
- Expense doesn’t affecting tax base                                                      -              2 519
- Governmental bonds taxed at statutory 15%                                               -               (80)
- Other permanent differences                                                         (848)                473

Income tax expense for the period                                                   18 677              24 879

Differences between IFRS and Russian statutory taxation regulations give rise to
temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and their tax bases.

Tax effect from the temporary difference on 31 December 2009 is the following:

                                                                                              (RUR ‘000)
                       Temporary     Gross deferred tax liability    Gross deferred tax asset        Total net
    IFRS item
                       differences   Temporary     Deferred tax      Temporary     Deferred tax    deferred tax
                                     differences   at 20%            differences   at 20%              asset
Assets
Financial assets at
fair value                    (31)              0               0              31              6
Due from other
banks                       38 023         38 023           7 605               0              0
Loans and
receivables                167 301        167 301         33 460                0              0
Property, plant
and equipment              (1 236)              0               0           1 236             247
Other assets                21 653         21 653           4 331               0               0
Liabilities
Due to other
banks                            4              0               0               4              1
Customer
accounts                     (444)            444             89                0              0
Other liabilities                               0              0            7 943          1 589
TOTAL                           Х         227 421         45 484            9 214          1 843           43 641


Tax effect from the temporary difference on 31 December 2008 is the following:


                                                                                          (RUR ‘000)
                                        Gross deferred tax            Gross deferred tax asset
                         Temporary                                                                   Total net
     IFRS item                          liability
                         differences                                                                deferred tax
                                        Temporary Deferred tax        Temporary     Deferred tax
                                                                                                        asset
                                        differences at 20%            differences   at 20%
Assets
Financial assets at
fair value                        523           523            105              0              0
Due from other banks            1 103         1 103            221              0              0
Loans and
receivables                  144 757       144 757          28 951              0              0
                                                                                                            48
 Property, plant and
 equipment                    (4 003)          0        0       4 003       801
 Other assets                (10 722)          0        0      10 722     2 144
 Liabilities
 Other liabilities           (52 774)      52 774   10 555          0         0
 TOTAL                             Х      199 157   39 832     14 725     2 945         36 886

The tax effect of the movements in these temporary differences is detailed above and is
recorded at the rate of 20%. The amount is 43 631 thousands of Russian Rubles
(31.12.2008: 36 886 thousands of Russian Rubles)

The net deferred tax asset represents income taxes recoverable through future
revenues and is recorded as a deferred tax asset on the consolidated balance sheet.
Deferred income tax assets are recorded for tax loss carry forwards only to the extent
that realization of the related tax benefit is probable.

Comparison of tax expenses and accounting profit for the year ended 31 December
2009 is following:

                                                                                   (RUR ‘000)
                                                                           2009            2008

 Profit before tax                                                        97 626        109 833
 Tax (2009-20%/2008-24%)                                                  19 525         21 967
 Tax effect of permanent differences                                       (848)          2 912
 Tax to be paid                                                           18 677         24 879

 Current tax expenses                                                     11 922          26 050
 Changes in deferred tax                                                   6 755         (1 171)
 Total tax expenses for the year                                          18 677          24 879

                                        25. Segment Analysis
The Bank should not use IAS 14 «Segment Analysis» because Bank’s debts do not
circulate in open market.

                               26. Financial Risk Management
The risk management function within the Bank is carried out in respect of financial risks
(credit, market, geographical, currency, liquidity and interest rate), operational risks and
legal risks. The primary objectives of the financial risk management function are to
establish risk limits, and then ensure that exposure to risks stays within these limits. The
operational and legal risk management functions are intended to ensure proper
functioning of internal policies and procedures to minimise operational and legal risks.


Credit risk


The Bank takes on exposure to credit risk which is the risk that a counterparty will be
unable to pay all amounts in full when due. The Bank structures the levels of credit risk
                                                                                       49
it undertakes by placing limits on the amount of risk accepted in relation to one
borrower, or groups of borrowers, and to geographical and industry segments. Such
risks are monitored on a revolving basis and subject to an annual or more frequent
review. Limits on the level of credit risk by product, borrower and industry sector are
approved quarterly by the Credit Committee.


The exposure to any one borrower including banks and brokers is further restricted by
sub-limits covering on and off-balance sheet exposures and daily delivery risk limits in
relation to trading items such as forward foreign exchange contracts. Actual exposures
against limits are monitored daily.


Exposure to credit risk is managed through regular analysis of the ability of borrowers
and potential borrowers to meet interest and principal repayment obligations and by
changing these lending limits where appropriate. Exposure to credit risk is also
managed, in part, by obtaining collateral and corporate and personal guarantees.


The Bank’s maximum exposure to credit risk is primarily reflected in the carrying
amounts of financial assets on the consolidated balance sheet. The impact of possible
netting of assets and liabilities to reduce potential credit exposure is not significant.


Credit risk for off-balance sheet financial instruments is defined as the possibility of
sustaining a loss as a result of another party to a financial instrument failing to perform
in accordance with the terms of the contract. The Bank uses the same credit policies in
making conditional obligations as it does for on balance sheet financial instruments
through established credit approvals, risk control limits and monitoring procedures.


Market risk

The Bank takes on exposure to market risks. Market risks arise from open positions in
interest rate, currency and equity products, all of which are exposed to general and
specific market movements. The Credit Committee set limits on the value of risk that
may be accepted, which is monitored on a daily basis. However, the use of this
approach does not prevent losses outside of these limits in the event of more significant
market movements.

Interest rate risk. The Bank takes on exposure to the effects of fluctuations in the
prevailing levels of market interest rates on its financial position and cash flows. Interest

                                                                                            50
margins may increase as a result of such changes but may reduce or create losses in
the event that unexpected movements arise.

The Bank is exposed to fair value interest rate risk as a result of long term assets and
short term liabilities at fixed interest rates. In practice, interest rates are determined in
the short-term. Moreover, interest rates that are contractually fixed on both assets and
liabilities are usually renegotiated to reflect current market conditions.

Below is presented the influence of interest rates fluctuation on net profit as of
31.12.2009:

 Analysis of sensibility to interest rate fluctuations
                                                                         Influence
                                                                       on profit/loss
                                                          Total        RUR           USD

 Increase in interest rate by 100 basis points                 7,79       288,82           -281,03
 Decrease in interest rate by 100 basis points                -7,79      -288,82            281,03

Below is presented the influence of interest rates fluctuation on net profit as of
31.12.2009:

 Analysis of sensibility to interest rate fluctuations
                                                                         Influence
                                                                       on profit/loss
                                                          Total        Total         Total

 Increase in interest rate by 100 basis points               504 68     1 051 70           -547 02
 Decrease in interest rate by 100 basis points              -504 68    -1 051 70            547 02

The Bank monitors the level of mismatch of interest rate repricing that may be
undertaken on a daily basis. The Bank had not any available hedging instruments and
therefore policy of hedging risks is not set.

The table below displays the Bank’s interest bearing assets and liabilities and their
corresponding average effective interest rates as at that date. These interest rates are
an approximation of the yields to maturity of these assets and liabilities.

                                                                                                     (RUR ‘000)
                                                         31 December 2009              31 December 2008
                                                            Carrying     Average          Carrying     Average
                                                            amount      Effective         amount       Effective
                                                                          Interest                      Interest
                                                                            Rate                          Rate

Interest Bearing Assets
Cash and cash equivalents
- Rubles                                                     789 853          -               363 787       -
- USD                                                        997 445       0,15%             2 065 426   0,02%
- EUR                                                        227 416          -               636 178    0,01%

- Other currency                                              52 586          -               4 528        -
                                                                                                               51
Reserve deposit with the Bank of Russia
- Rubles                                                      13 697                    3 761

Deposits with banks and other
financial institutions

- Rubles                                                     311 687     0,40%            -
- USD                                                        186 906     3,0%           894 111       2,8%
- EUR                                                         26 685        -           323 049       0,9%


Financial assets at fair value
through profit or loss

- Rubles                                                    235 038      10,6%        163 094         4,3%
- USD                                                        -                           -
- EUR                                                        -                           -


Loans to customers

- Rubles                                                     435 446     17,0%          909 102       11,00%
- USD                                                      1 304 354     10,0%          409 035       12,00%
- EUR                                                        494 241     13,0%           1 272        12,00%


Financial instruments held to maturity

- Rubles                                                        -                       5 046
Interest Bearing Liabilities

Deposits and balances from banks and
other financial institutions                                  34 397     8,5%           15 196        2,50%
- Rubles                                                         735     3,0%           18 436        3,00%
- USD                                                            893                     1 685        0,05%
- EUR                                                            -         -              85


Deposits from customers

- Rubles                                                   1 656 279     8,9%         1 351 470
- USD                                                        748 116     4,1%         1 566 305
- EUR                                                        204 269     1,4%          250 391

- Other currency                                                 408                     230


Promissory notes

- Rubles                                                       3 362           2,5%        4 139        4,80%

Subordinated loans
- USD                                                        514 151      10,00%         499 467       10,00%

Below is presented the Bank’s sensitivity analysis of influence of interest rates
fluctuation during the year, as of 31.12.2009, based on gap-analysis method:
                                                                                                   (RUR ‘000)
 Analysis of sensibility to interest rate fluctuations

                                                         Demand less 1    Demand 1 to      Demand 6          Total
                                                            month          6 months          to 12
                                                                                                             52
                                                                                            months
 Assets sensitive to %% fluctuation                              420,577        370,030       677,483    Х
 Liabilities, sensitive to %% fluctuation                    (2,346,690)       (12,783)      (56,437)    Х
 Spread (total liquidity spread)                             (1,926,113)        357,247       621,046    Х
 Net balance on financial instruments,
 sensitive to %% fluctuation                                 (1,926,113)     (1,568,866)    (947,820)    Х
 Spread coefficient                                              17,92%          33,51%       60,77%     Х
 Time coefficient                                                  0,959           0,712        0,252    Х
 Change in %% rate (basis points)                                    100             100          100    Х
 Change in net %% income while %% rates change                 (184,696)          25,448       15,654        (143,594)
 Change in %% rate (basis points)                                  (100)           (100)        (100)    Х
 Change in net interest income while %% rate
 decrease                                                       184,696        (25,448)       (15,654)        143,594

Below is presented the Bank’s sensitivity analysis of influence of interest rates
fluctuation during the year, as of 31.12.2008, based on gap-analysis method:
                                                                                                  (RUR ‘000)
 Analysis of sensibility to interest rate fluctuations

                                                         Demand less 1     Demand 1 to     Demand 6          Total
                                                            month           6 months          to 12
                                                                                            months
 Assets sensitive to %% fluctuation                              624 494        831 283        163 459   Х
 Liabilities, sensitive to %% fluctuation                    (2 027 842)         (8 809)   (1 161 532)   Х
 Spread (total liquidity spread)                             (1 403 348)        822 474      (998 073)   Х
 Net balance on financial instruments,
 sensitive to %% fluctuation                                 (1 403 348)      (580 874)    (1 578 947)   Х
 Spread coefficient                                              30,80%         71,48%         50,63%    Х
 Time coefficient                                                  0,959          0,712          0,252   Х
 Change in %% rate (basis points)                                    100            100            100   Х
 Change in net %% income while %% rates change                 (134 568)         58 587       (25 157)       (101,137)
 Change in %% rate (basis points)                                  (100)          (100)          (100)   Х
 Change in net interest income while %% rate
 decrease                                                       134 568        (58 587)        25 157         101,137



Stock market risk. Bank undertakes stock market risk that arises from change in fair
value of shares owned by the Bank. In order to limit the stock market risk, the Bank
limits the list of issuers which shares could be referred to as “available for trading
investment”. This list includes only “blue chips”..

Currency risk.

The Bank takes on exposure to effects of fluctuations in the prevailing foreign currency
exchange rates on its financial position and cash flows. The Finance Committee set
limits on the level of exposure by currency and in total for both overnight and intra-day
positions, which are monitored daily. The table below summarises the Bank’s exposure to
foreign currency exchange rate risk at 31 December 2009:

The following table summarizes the Bank’s exposure to currency risks at 31 December
2009 by showing assets and liabilities in categories based on main currencies.

Currency risk for off-balance sheet financial instruments is defined as difference between
contract amount and fair value of currency derivative financial instruments. As a rule,
                                                                                    53
currency derivative financial instruments are used to minimize the Bank’s exposure to
effects of fluctuations in foreign currency exchange rates.

The currency balance of the Bank at 31 December 2009 is set out below.:

                                                                                                         (RUR ‘000)
                                                     RUR             USD            EUR          Other       Total
 ASSETS
 Cash and cash equivalents                             776 789      1 028 579        256 936        4 996     2 067 300
 Mandatory cash balances with the Central Bank of
 the Russian Federation                                  13 697               -             -            -       13 697
 Financial assets at fair value through profit or
 losses                                                 235 038             -              -             -      235 038
 Due from other banks                                   164 479       261 007         99 792             -      525 278
 Loans and receivables                                  494 165     1 245 634        494 242             -    2 234 041
 Financial assets available for sale                    253 650             -             68             -      253 718
 Financial assets held to maturity                            -             -              -             -            -
 Property, plant and equipment                           15 899             -              -             -       15 899
 Other assets                                            37 522           194                                    37 716
 TOTAL ASSETS:                                        1 991 239     2 535 414        851 038        4 996     5 382 687
 LIABILITIES
 Due to other banks                                    (34 398)           (734)         (893)           -       (36 025)
 Customer accounts                                  (1 672 453)      (735 531)      (200 680)       (408)    (2 609 072)
 Debt securities issued                                  (3 362)              -             -           -         (3 362)
 Other debts                                                   -     (514 151)              -           -      (514 151)
 Other liabilities                                     (43 229)         (2 834)             -           -       (46 063)
 Deferred tax liabilities                              (55 563)               -             -           -       (55 563)
 TOTAL LIABILITIES:                                 (1 809 005)    (1 253 250)      (201 573)       (408)      3 264 236
 Net balance sheet position                             182 234      1 282 164        649 465       4 588      2 118 451
 Credit related commitments                           1 168 783                                                1 168 783


The currency balance of the Bank at 31 December 2008 is set out below.:

                                                                                                         (RUR ‘000)
                                                     RUR             USD           EUR           Other          Total
 ASSETS
 Cash and cash equivalents                           3 069 919               -              -            -     3 069 919
 Mandatory cash balances with the Central Bank
 of the Russian Federation                               3 761               -              -            -          3 761
 Financial assets at fair value through profit or
 losses                                                163 094              -              -           -         163 094
 Due from other banks                                  483 238        552 352              -     181 570       1 217 160
 Loans and receivables                                 141 256        278 931        163 459     735 763       1 319 409
 Financial assets available for sale                        66              -              -           -               66
 Financial assets held to maturity                       5 046              -              -           -            5 046
 Property, plant and equipment                          14 176              -              -           -           14 176
 Other assets                                           15 106              -              -           -          15 106
 TOTAL ASSETS:                                       3 895 662        831 283        163 459     917 333       5 807 737
 LIABILITIES
 Due to other banks                                    (35 402)              -              -            -       (35 402)
 Customer accounts                                  (1 992 440)        (7 287)    (1 158 915)      (9 754)    (3 168 396)
 Debt securities issued                                       -        (1 522)        (2 617)            -         (4 139)
 Other debts                                                  -              -              -   (499 467)       (499 467)
 Other liabilities                                     (23 946)              -              -            -       (23 946)
 Deferred tax liabilities                              (36 886)              -              -            -       (36 886)
 TOTAL LIABILITIES:                                 (2 088 674)        (8 809)    (1 161 532)   (509 221)     (3 768 236)
 Net balance sheet position                           1 806 988       822 474       (998 073)     408 112       2 039 501
 Credit related commitments                                                                                     1 981 072




                                                                                                                   54
The Bank grants loans and advances to customers in foreign currencies. Fluctuations of
foreign exchange rates may influence negatively on borrowers’ ability to repay their
loans, thus creating a possibility for the Bank to have loss from debts.

Below is presented the analysis of the Bank’s sensitivity to foreign exchange rate
fluctuations as of 31 December 2009:

                                                                 (RUR ‘000)
 Analysis of sensitivity to foreign exchange rate fluctuations

                                                Influence on     Influence on
                                                 profit/loss        capital
 Fortification of USD by 5%                            64 108           64 108
 Weakening of USD by 5%                              (64 108)         (64 108)
 Fortification of EUR by 5%                            32 473           32 473
 Weakening of EUR by 5%                              (32 473)         (32 473)
 Fortification of other currencies by 5%                   229              229
 Weakening of other currencies by 5%                     (229)           (229)


Below is presented the analysis of the Bank’s sensitivity to foreign exchange rate
fluctuations as of 31 December 2008:

                                                                 (RUR ‘000)
 Analysis of sensitivity to foreign exchange rate fluctuations

                                                Influence on     Influence on
                                                 profit/loss        capital
 Fortification of USD by 5%                            49 513           49 513
 Weakening of USD by 5%                              (49 513)         (49 513)
 Fortification of EUR by 5%                            26 918           26 918
 Weakening of EUR by 5%                              (26 918)         (26 918)
 Fortification of other currencies by 5%                   160              160
 Weakening of other currencies by 5%                     (160)           (160)



Liquidity risk.

Liquidity risk is defined as the risk when the maturity of assets and liabilities does not
match. The Bank is exposed to daily calls on its available cash resources from overnight
deposits, current accounts, maturing deposits, loan draw downs, guarantees and from
margin and other calls on cash settled derivative instruments. The Bank does not
maintain cash resources to meet all of these needs as experience shows that a
minimum level of reinvestment of maturing funds can be predicted with a high level of
certainty. Liquidity risk is managed by the Finance Committee of the Bank.



The table below shows assets and liabilities at 31 December 2007 by their remaining
contractual maturity, unless there is evidence that any of the assets are impaired and
will be settled after their contractual maturity dates, in which case the expected date of
settlement of the assets is used. Some of the assets and liabilities, however, may be of
                                                                                      55
a longer term nature; for example, loans are frequently renewed and accordingly short
term loans can have a longer term duration.



The liquidity position of the Bank at 31 December 2009 is set out below.

                                                                                                               (RUR ‘000)
                                       Demand
                                                                                                   No
                                          less       From 1 to    From 6 to         Over
                                                                                                 stated
                                         than        6 months     12 months       12 months                       Total
                                                                                                maturity
                                       1 month
                                            `
 ASSETS
 Cash and cash equivalents              2 067 300             -               -             -              -     2 067 300
 Mandatory cash balances with the
 Central Bank
 of the Russian Federation                       -            -               -             -      13 697           13 697
 Financial assets at fair value
 through profit or losses                 235 038            -               -              -            -         235 038
 Due from other banks                     337 690            -               -       187 588             -         525 278
 Loans and receivables                     82 887      370 030        677 483      1 103 641             -       2 234 041
 Financial assets available for sale            -            -               -              -     253 718          253 718
 Financial assets held to maturity              -            -               -              -            -               -
 Premises and equipment                         -            -               -              -      15 899           15 899
 Other assets                              37 716            -              -              -            -           37 716
 TOTAL ASSETS:                          2 760 631      370 030        677 483      1 291 229      283 314        5 382 687
 LIABILITIES
 Due to other banks                       (18 025)            -      (18 000)              -            -          (36 025)
 Customer accounts                     (2 328 029)     (10 057)      (38 437)      (232 549)            -       (2 609 072)
 Debt securities issued                      (636)      (2 726)             -              -            -            (3 362)
 Other debts                                     -            -             -      (514 151)            -         (514 151)
 Other liabilities                        (46 063)            -             -              -            -          (46 063)
 Deferred tax liabilities                 (55 563)            -             -              -            -          (55 563)
 TOTAL LIABILITIES:                    (2 448 316)     (12 783)      (56 437)      (746 700)            -       (3 264 236)
 Net balance sheet position                312 315     357 247       621 046         544 529      283 314         2 118 451
 Accumulated balance sheet
 position                                 312 315      669 562      1 290 608      1 835 137     2 118 451
 Credit related commitments                                                                      1 168 783       1 168 783


The liquidity position of the Bank at 31 December 2008 is set out below.

                                                                                                           (RUR ‘000)
                                       Demand
                                                                                                   No
                                          less       From 1 to    From 6 to         Over
                                                                                                 stated
                                         than        6 months     12 months       12 months                       Total
                                                                                                maturity
                                       1 month
                                            `
 ASSETS
 Cash and cash equivalents              3 069 919             -               -             -              -     3 069 919
 Mandatory cash balances with the
 Central Bank
 of the Russian Federation                       -            -               -             -       3 761             3 761
 Financial assets at fair value
 through profit or losses                 163 094            -               -              -           -          163 094
 Due from other banks                     483 238      552 352               -       181 570            -        1 217 160
 Loans and receivables                    141 256      278 931        163 459        735 763            -        1 319 409
 Financial assets available for sale            -            -               -              -          66               66
 Financial assets held to maturity              -            -               -              -       5 046            5 046
 Premises and equipment                         -            -               -              -      14 176           14 176
 Other assets                              15 106            -              -              -            -           15 106
 TOTAL ASSETS:                          3 872 613      831 283        163 459        917 333       23 049        5 807 737
 LIABILITIES
 Due to other banks                       (35 402)            -              -             -               -       (35 402)
 Customer accounts                     (1 992 440)      (7 287)    (1 158 915)       (9 754)               -    (3 168 396)
                                                                                                                        56
 Debt securities issued                          -     (1 522)       (2 617)           -              -         (4 139)
 Other debts                                     -           -             -   (499 467)              -      (499 467)
 Other liabilities                        (23 946)           -             -           -              -       (23 946)
 Deferred tax liabilities                 (36 886)           -             -           -              -       (36 886)
 TOTAL LIABILITIES:                    (2 088 674)     (8 809)   (1 161 532)   (509 221)              -    (3 768 236)
 Net balance sheet position              1 783 939    822 474      (998 073)     408 112         23 049      2 039 501
 Accumulated balance sheet
 position                               1 783 939    2 606 413     1 608 340   2 016 452       2 039 501
 Credit related commitments                                                                                 1 981 072


The main item is customers accounts which provide a long-term and stable source of
funding for the Bank.

The matching and/or controlled mismatching of the maturities and interest rates of
assets and liabilities is fundamental to the management of the Bank. It is unusual for
banks ever to be completely matched since business transacted is often of an uncertain
term and of different types. An unmatched position potentially enhances profitability, but
can also increase the risk of losses. The maturities of assets and liabilities and the
ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are
important factors in assessing the liquidity of the Bank and its exposure to changes in
interest and exchange rates.

Geographical risk


Data of geographical analysis allow to make conclusion on asset concentration by
country characteristics.


The geographical concentration of the Bank’s assets and liabilities at 31 December
2009 is set out below:
                                                                                                 (RUR ‘000)
                                                                                 Other
                                                                  Russia       countries           Total
 ASSETS
 Cash and cash equivalents                                          962 005     1 105 295           2 067 300
 Mandatory cash balances with the Central Bank
 of the Russian Federation                                           13 697                -           13 697

 Financial assets at fair value through profit or losses            235 038             -             235 038
 Due from other banks                                               351 388       173 890             525 278
 Loans and receivables                                            2 234 041             -           2 234 041

 Financial assets available for sale                                253 650            68             253 718
 Financial assets held to maturity                                        -             -                   -
 Premises and equipment                                              15 899             -              15 899
 Other assets                                                        37 716             -              37 716
 TOTAL ASSETS:                                                    4 103 434     1 279 253           5 382 687
 LIABILITIES
 Due to other banks                                                 (34 328)      (1 697)            (36 025)
 Customer accounts                                               (2 608 774)        (298)         (2 609 072)
 Debt securities issued                                              (3 362)            -             (3 362)
 Other debts                                                               -    (514 151)           (514 151)

                                                                                                                   57
 Other liabilities                                            (46 063)             -         (46 063)
 Deferred tax liabilities                                     (55 563)             -         (55 563)
 TOTAL LIABILITIES:                                        (2 748 090)     (516 146)      (3 264 236)
 Net balance sheet position                                  1 355 344       763 107        2 118 451
 Credit related commitments                                  1 168 783                      1 168 783

The geographical concentration of the Bank’s assets and liabilities at 31 December
2008 is set out below:
                                                                                          (RUR ‘000)
                                                                            Other
                                                            Russia        countries        Total
 ASSETS
 Cash and cash equivalents                                  3 067 604          2 315       3 069 919
 Mandatory cash balances with the Central Bank
 of the Russian Federation                                       3 761                -         3 761

 Financial assets at fair value through profit or losses      163 094              -         163 094
 Due from other banks                                         447 982        769 178       1 217 160
 Loans and receivables                                      1 319 409                      1 319 409

 Financial assets available for sale                                -             66              66
 Financial assets held to maturity                              5 046               -          5 046
 Premises and equipment                                        14 176               -         14 176
 Other assets                                                  15 106              -          15 106
 TOTAL ASSETS:                                              5 036 178        771 559       5 807 737
 LIABILITIES
 Due to other banks                                           (35 127)          (275)        (35 402)
 Customer accounts                                         (1 621 850)    (1 546 546)     (3 168 396)
 Debt securities issued                                         (4 139)             -          (4 139)
 Other debts                                                          -     (499 467)       (499 467)
 Other liabilities                                            (23 946)              -        (23 946)
 Deferred tax liabilities                                     (36 886)              -        (36 886)
 TOTAL LIABILITIES:                                        (1 721 948)    (2 046 288)     (3 768 236)
 Net balance sheet position                                  3 314 230    (1 274 729)       2 039 501
 Credit related commitments                                  1 981 072              -       1 981 072

Assets and liabilities of the Bank were classified in accordance with the country in which
the counterparty was situated. Cash, premises and equipment wesr classified according
to the country where they were really situated.

                            27. Contingencies and Commitments

Legal proceedings


From time to time and in the normal course of business, claims against the Bank are
received. On the basis of its own estimates and both internal professional advice the
Management is of the opinion that no material losses will be incurred in respect of
claims and accordingly no provision has been made in these financial statements.


Tax legislation



                                                                                                         58
Russian transfer pricing legislation introduced 1 January 1999 provides the possibility
for tax authorities to make transfer pricing adjustments and impose additional tax
liabilities in respect of all controllable transactions, provided that the transaction price
differs from the market price by more than 20%. Controllable transactions include
transactions with interdependent parties, as determined under the Russian Tax Code,
all cross-border transactions (irrespective whether performed between related or
unrelated parties), transactions where the price applied by a taxpayer differs by more
than 20% from the price applied in similar transactions by the same taxpayer within a
short period of time, and barter transactions. There is no formal guidance as to how
these rules should be applied in practice.


Credit related commitments

The primary purpose of these instruments is to ensure that funds are available to a
customer as required. Guarantees and standby letters of credit, which represent
irrevocable assurances that the Bank will make payments in the event that a customer
cannot meet its obligations to third parties, carry the same credit risk as loans.
Documentary and commercial letters of credit, which are written undertakings by the
Bank on behalf of a customer authorising a third party to draw drafts on the Bank up to
a stipulated amount under specific terms and conditions, are collateralised by the
underlying shipments of goods to which they relate or cash deposits and therefore carry
less risk than a direct borrowing.


The Bank monitors the term to maturity of credit related commitments because longer-
term commitments generally have a greater degree of credit risk than shorter-term
commitments. Outstanding credit related commitments are as follows:
                                                                               (RUR ‘000)
                                                                       2009         2008
Guarantees issued                                                  1 034 515    1 931 401
Letters of credit                                                          -            -
Undrawn overdraft limits                                              25 954       26 882
Undrawn loan commitments                                             138 332       34 660
Less provision for losses on credit related commitments             (30 018)     (11 871)
 Total credit related commitments                                  1 168 783    1 981 072


Commitments to extend credit represent unused portions of authorizations to extend
credit in the form of loans, guarantees or letters of credit. With respect to credit risk on
commitments to extend credit, the Bank is potentially exposed to loss in an amount
equal to the total unused commitments. However, the likely amount of loss is less than


                                                                                            59
the total unused commitments since most commitments to extend credit are contingent
upon customers maintaining specific credit standards.
The Bank monitors the term to maturity of credit related commitments because longer-
term commitments generally have a greater degree of credit risk than shorter-term
commitments.
The total outstanding contractual amount of indrawn credit lines, letters of credit, and
guarantees does not necessarily represent future cash requirements, as these financial
instruments may expire or terminate without being funded.


Derivative Financial Instruments


he contract value of derivative financial instrument is a basis of comparable to financial
instruments but may not reflect cash flows or fair values of financial instruments and
therefore not represent credit and market risks.


Derivatives have potentially favourable (assets) or unfavourable (liabilities) conditions
as a result of fluctuations in market interest rates, foreign exchange rates or other
variables relative to their terms. The contract values or notional amount of derivative
financial assets and liabilities, potentially favourable or unfavourable conditions and
therefore aggregate fair values can fluctuate significantly from time to time.

Fair value is the amount at which a financial instrument could be exchanged in a current
transaction between willing parties, other than in a forced sale or liquidation, and is best
evidenced by an active quoted market price.


The estimated fair values of financial instruments have been determined by the Bank
using available market information, where it exists, and appropriate valuation
methodologies. However, judgement is necessarily required to interpret market data to
determine the estimated fair value. Management has used all available market
information in estimating the fair value of financial instruments. Market quotations may
be outdated or reflect distress sale transactions and therefore not represent fair values
of financial instruments.

As of 31.12.2009 balances of derivative financial instrument equal zero.

                     28. Fair Value of Financial Instruments
Fair value is the amount at which a financial instrument could be exchanged in a current

                                                                                            60
transaction between willing parties, other than in a forced sale or liquidation, and is best
evidenced by an active quoted market price.

The estimated fair values of financial instruments have been determined by the Bank
using available market information, where it exists, and appropriate valuation
methodologies. However, judgement is necessarily required to interpret market data to
determine the estimated fair value. The Russian Federation continues to display some
characteristics of an emerging market and economic conditions continue to limit the
volume of activity in the financial markets. Market quotations may be outdated or reflect
distress sale transactions and therefore not represent fair values of financial
instruments. Management has used all available market information in estimating the
fair value of financial instruments.

Financial instruments carried at fair value. Trading securities and investment securities
available for sale are carried on the balance sheet at their fair value. Fair values were
determined based on quoted market prices. Cash and cash equivalents are carried at
amortised cost which approximates current fair value.

Loans and receivables carried at amortised cost. The fair value of floating rate
instruments is normally their carrying amount. The estimated fair value of fixed interest
rate instruments is based on estimated future cash flows expected to be received
discounted at current interest rates for new instruments with similar credit risk and
remaining maturity. Refer to Notes 10 and 11 for the estimated fair values of due from
other banks and loans and advances to customers, respectively.

Liabilities carried at amortised cost. The estimated fair value of fixed interest rate instruments
with stated maturity was estimated based on expected cash flows discounted at current interest
rates for new instruments with similar credit risk and remaining maturity. The fair value of
liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as
the amount payable on demand, discounted from the first date that the amount could be
required to be paid.

Investment securities held to maturity. The estimated fair value of investment
securities held to maturity based on market prices (See Note 12).

Derivative financial instruments. All derivative financial instruments are carried at fair
value as assets when the fair value is positive and as liabilities when the fair value is
negative Their fair values are based on observable market prices.

Fair value of financial instruments is set out below:
                                                                                                61
                                                                                   (RUR ‘000)
                         Fair value of financial instruments               2009          2008
Financial assets recorded at amortized cost
Cash and cash equivalents:
Cash on hand                                                            143 772       186 002
Cash balances with the CBR (other than mandatory reserve deposits)      652 095       312 686
Correspondent accounts with other banks in Russia                        85 446        88 024
Correspondent accounts with other banks abroad                        1 105 295     2 315 203
Settlements balances with ORCB                                           62 636       156 697
Settlements balances with NKO                                            18 056        11 298
Mandatory reserve deposits with the CBT                                  13 697         3 761
Current credits and deposits in other banks                             525 278     1 217 160
Loans to legal entities
Consumer loans to individuals                                         2 148 376     1 169 426
Mortgages to individuals                                                 70 871       129 734
Financial assets held to maturity                                        14 794        20 249
Loans to legal entities
Bank’s bonds                                                                   -        5 046
Banks’ promissory notes                                                                     -
Other financial assets recorded at amortized cost
Cash in settlements                                                       4 474            36
Other                                                                       145           102
Financial assets recorded at fair value
Corporate bonds                                                         235 038       163 094
Corporate shares
Unquated corporate securities
Total financial assets                                                5 079 973     5 778 518

Financial liabilities recorded at amortized cost
Due to other banks                                                      (36 025)      (35 402)
Customers’ accounts                                                  (2 462 208)   (3 031 543)
 - current                                                           (2 176 734)   (1 846 002)
 - term                                                                (285 474)   (1 185 541)
Individuals’ account                                                   (146 864)             -
 - current                                                             (143 407)     (105 103)
 - term                                                                  (3 457)      (31 750)
Debt securities issued                                                   (3 362)       (4 139)
Subordinated loans                                                     (514 151)     (499 467)
Other financial liabilities recorded at amortized cost
Payables                                                                (2 835)           (74)
Tax liabilities                                                        (12 797)        (1 127)
Accounts payable for vacations                                          (4 195)        (6 093)
Other                                                                   (5 650)        (3 044)
Financial liabilities recorded at fair value                                  -              -

Total financial liabilities                                          (5 797 159)   (3 717 742)



                                29. Related Party Transactions
For the purposes of these financial statements, parties are considered to be related if
one party has the ability to control the other party, is under common control, or can
exercise significant influence over the other party in making financial or operational
decisions (as defined by IAS 24 “Related Party Disclosures”). In considering each
possible related party relationship, attention is directed to the substance of the
relationship, not merely the legal form.




                                                                                           62
Operations with management and directors.


At 31 December 2009 and 31 December 2008, the outstanding balances with
management and directors were as follows:
                                                                                                       (RUR ‘000)
                                                  31 December      Average        31 December         Average
                                                      2009         effective          2008            effective
                                                                   interest                           interest
                                                                     rate                               rate

 Assets
 Loans to directors and management                      12 942           10%               17 035           10%

 Liabilities
 Current accounts and deposits of directors and
 management                                             19 971                            31 418,9

 Contingent credit liabilities

 Guarantees issued                                           -                              1 503
 Unused credit lines                                    12 574                             13 736

Sums from operations with directors and management, included into income statement,
are as follows:
                                                                                               (RUR ‘000)
                                                                               2009             2008
 Payments                                                                          622               2,8
 Interests acquired                                                              1292.9           1357.1


Operations with shareholders.
At 31 December 2009 100% shareholder of the Bank is Eastlink Lanker Plc., United
Kingdom. Eastlink Lanker Plc. is owned by Lanker Entereprises Ltd., British Virgin
Islands (99,96%). Two individual shareholders of the latter company are the ultimate
beneficial owners of the Bank, each of them owns 50 % of the Bank’s capital.

The outstanding balances with shareholders and average interest rates are as follows:

                                                                                                       (RUR ‘000)
                                                  31 December      Average        31 December          Average
                                                      2009         effective          2008             effective
                                                                 interest rate                       interest rate
Liabilities
Current accounts ant deposits                          10 038                              18 056
Borrowings                                            514 151             10%             499 467            10%

Amounts included in the income statement in relation to transactions with shareholders
are as follows:
                                                                                               (RUR ‘000)
                                                                             2009               2008
 Interest expense                                                           53 373.,00         11 872.00
 Interest income                                                                     0                 0



                                                                                                               63
              30. Capital management and capital adequacy rate

The Bank’s main objectives when managing capital are: (i) to comply with the capital
requirements set by the respective central banks, (ii) to safeguard the Group’s ability to
continue as a going concern, and (iii) to maintain a sufficient capital base to achieve a
capital adequacy ratio based on Basel I (International Convergence of Capital
Management and Capital Standards dated July 1988 (as subsequently amended and
updated)) of at least 8%. Capital adequacy ratio is monitored daily for compliance with
the requirements set by the CBR and monthly for other objectives of capital
management.


The Bank 's policy of capital management is designated to maintain the capital base
sufficient to keep the confidence of investors, creditors, other market participants and to
secure the future development of the Bank. The CBR establishes and monitors capital
adequacy limits for CJSC JSCB “Alef-Bank”.

                                                                           (RUR ‘000)
 Capital in accordance with RAS (Statute 215-S)                2009              2008
 Fixed capital                                             1 840 661         1 798 965
 Additional capital                                          624 769           574 556
 Sums subtracted from capital                                      -                 -
 Total norm capital                                        2 465 430         2 373 521

                                                                           (RUR ‘000)
    Capital in accordance with Basel agreement of 1988         2009              2008
 1-st level capital                                        2 118 451         2 039 501
  - Share capital                                          2 067 020         2 067 020
  - Fund of accrued rate differences                               0                 0
  - Retained earnings                                         51 431          (27 519)
 2-nd level capital                                          514 151           499 467
  - Revaluation fund                                               0                 0
  - Subordinated deposit                                     514 151           499 467
 Total norm capital                                        2 632 602         2 538 968
 Assets valued with risk                                                     4 109 235
 Capital adequacy ratio                                                          62%

During the year 2009 and 2008 the Bank has kept all external demands to the level of
capital.

                                   31. Subsequent Events
Subsequent Events had not exercised a significant influence on these financial
statements.




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