Auditors Report on Limited Liability Company

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					LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”

Independent Auditors’ Report

Financial Statements
For the Year Ended 31 December 2005
LIMITED LIABILITY COMPANY “INVESTCAPITALBANK”

TABLE OF CONTENTS


                                                                                                                                                      Page

STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND
APPROVAL OF THE FINANCIAL STATEMENTS ................................................................................. 1

INDEPENDENT AUDITORS’ REPORT .................................................................................................... 2

FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005:

   Balance sheet ............................................................................................................................................ 3

   Income statement ..................................................................................................................................... 4

   Statement of cash flows ........................................................................................................................ 5-6

   Notes to the financial statements ........................................................................................................ 7-40
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”

STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION
AND APPROVAL OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005

The following statement, which should be read in conjunction with the independent auditors’ responsibilities
stated in the independent auditor’s report set out on page 2, is made with a view to distinguishing
the respective responsibilities of management and those of the independent auditors in relation to the
financial statements of Limited liability company “InvestCapitalBank” (hereinafter, the “Bank”).

Management is responsible for the preparation of the financial statements that present fairly in all material
respects the financial position of the Bank at 31 December 2005, the results of its operations and cash
flows for the year then ended in accordance with International Financial Reporting Standards
(hereinafter, “IFRS”).

In preparing the financial statements, management is responsible for:

●    selecting suitable accounting principles and applying them consistently;
●    making judgments and estimates that are reasonable and prudent;
●    stating whether IFRS have been followed, subject to any material departures disclosed and explained
     in the financial statements; and
●    preparing the financial statements on a going concern basis, unless it is inappropriate to presume that
     the Bank will continue in business for the foreseeable future.

Management is also responsible for:

●    the design, implementation and maintenance of an effective and sound system of internal controls,
     throughout the Bank;
●    maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial
     position of the Bank, and which enable them to ensure that the financial statements of the Bank
     comply with IFRS;
●    maintaining statutory accounting records in compliance with legislation and accounting standards of
     the Russian Federation;
●    taking such steps as are reasonably open to them to safeguard the assets of the Bank; and
●    detecting and preventing fraud and other irregularities.

The financial statements for the year ended 31 December 2005 were approved on
21 April 2006 by the Board of the Bank:

On behalf of the Board:


____________________________                                      _____________________________

Sh.K. Ibragimov                                                   G.R. Yunusova
Chairman of the Board                                             Chief Accountant




                                                      1
INDEPENDENT AUDITORS’ REPORT

To members and Board of Directors of Limited liability company “InvestCapitalBank”

We have audited the accompanying balance sheet of Limited liability company
“InvestCapitalBank” (hereinafter, the “Bank”) as at 31 December 2005 and the related
income statement and statement of cash flows for the year then ended (hereinafter, the
“financial statements”). These financial statements are the responsibility of the Bank’s
management. Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements of the Bank as at 31 December 2004 and for the year
then ended were audited by another auditor whose report dated 25 May 2005 expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing.
Those Standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of 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 statement
presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Bank as at 31 December 2005 and the results of its operations and its cash
flows for the year then ended in accordance with International Financial Reporting Standards.




21 April 2006
Moscow
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Balance Sheet
as at 31 December 2005
(in thousands of Russian rubles)

                                                                         Notes         2005           2004

Assets
Cash and cash equivalents                                                 4          375 731     159 661
Obligatory reserves with the Central Bank of the Russian Federation                   37 008      16 120
Assets at fair value through profit or loss                               5                -      78 782
Loans to customers, less allowance for impairment losses                 6,19      1 541 224     933 146
Securities available for sale, less allowance for impairment losses      7,19        203 003      19 080
Fixed assets, less accumulated depreciation                               8           99 110       4 373
Other assets                                                              9            3 144      14 412


Total assets                                                                       2 259 220   1 225 574


Liabilities
Customer accounts                                                        10,19     1 696 504     730 825
Debt securities issued                                                    11         285 746     301 868
Other liabilities                                                         12          21 467         332


                                                                                   2 003 717   1 033 025

Subordinated loans                                                       13,19        54 000      54 000


Net assets attributable to members of the Bank                            14         201 503     138 549


Authorized for issue by the Board of the Bank and signed on its behalf on 21 April 2006.


____________________________                                          _____________________________
Sh.K. Ibragimov                                                       G.R. Yunusova
Chairman of the Board                                                 Chief Accountant


The notes on pages 7 to 40 form an integral part of these financial statements. The Independent Auditors’
Report is on page 2.




                                                        3
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Income Statement
for the Year Ended 31 December 2005
(in thousands of Russian rubles)

                                                                            Notes       2005            2004

Interest income                                                             15,19         489 568        239 119
Interest expense                                                            15,19        (179 220)      (103 676)


Net interest income before provision for impairment losses on
 interest bearing assets                                                                  310 348        135 443

Provision for impairment on loans to customers                                6          (155 847)       (60 228)
Recovery of provision/(provision) for impairment on securities available
 for sale                                                                     7                389             (389)
Recovery of provision/(provision) for impairment on advances to banks         4                294             (294)


Net interest income after provision for impairment losses on interest
 bearing assets                                                                           155 184         74 532

Net gain on assets at fair value through profit or loss                                     1 462         12 598
Net gain on securities available for sale                                                   7 032          1 959
Net gain on foreign exchange operations                                                     8 605          2 262
Commission income                                                            16            26 944          6 719
Commission expense                                                           16              (945)            (6)
Provision for credit commitments                                             22            (6 051)          (332)
Other operating income                                                                      2 467          7 894


Operating income                                                                          194 698        105 626

Operating expenses                                                          17,19        (154 781)       (73 453)


Profit before income tax                                                                   39 917         32 173

Income tax expense                                                           18           (27 398)        (7 887)


Change in net assets attributable to members of the Bank                     14            12 519         24 286




____________________________                                            _____________________________
Sh.K. Ibragimov                                                              G.R. Yunusova
Chairman of the Board                                                        Chief Accountant


The notes on pages 7 to 40 form an integral part of these financial statements. The Independent Auditors’
Report is on page 2.




                                                           4
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Statement of Cash Flows
for the Year Ended 31 December 2005
(in thousands of Russian rubles)

                                                                         Notes   2005           2004

Cash flows generated from operating activities
Interest received                                                                 478 511        137 557
Interest paid                                                                    (168 811)       (93 231)
Commission income                                                                  27 014        100 943
Commission expense                                                                   (945)            (6)
Profit on assets recorded at fair value through profit or loss                     11 354         13 698
Net gain on foreign exchange operations                                             8 605          2 765
Other operating income                                                              2 396          7 894
Operating expense                                                                (144 436)       (73 453)
Income taxes paid                                                                 (20 870)       (15 054)


Cash flow from operating activities before changes in operating
 assets and liabilities                                                           192 818         81 113

Changes in operating assets and liabilities:
Net increase in minimum deposits with the Central Bank of the Russian
 Federation                                                                       (20 888)        (6 175)
Net decrease/(increase) in assets at fair value through profit or loss             77 678         (5 497)
Net increase in loans to customers                                               (757 640)      (669 865)
Net decrease in other assets                                                        5 786         20 700
Net decrease in advances from banks                                                     -        (15 010)
Net increase in customer accounts                                                 961 826        551 611
Net increase in debt securities issued                                            (22 678)       (32 493)
Net decrease in other liabilities                                                   2 482          3 511


Net cash inflow/(outflow) from operating activities                               439 384        (72 105)


Cash flows from investing activities
Purchase of securities available for sale                                        (645 770)      (105 227)
Disposal of securities available for sale                                         462 310        174 044
Purchase of fixed assets                                                          (89 501)        (3 238)


Net cash from (used in) investing activities                                     (272 961)        65 579


Cash flows from financing activities
Members’ contributions to net assets                                      14       50 000         25 000
Sale of treasury stock                                                                  -          2 314


Net cash from financing activities                                                 50 000         27 314


Effect of exchange rate changes on cash and cash equivalents                            (353)          503




                                                             5
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Statement of Cash Flows
for the Year Ended 31 December 2005 (continued)
(in thousands of Russian rubles)

                                                                     Notes       2005           2004

Net increase in cash and cash equivalents                                          216 070         21 291
Cash and cash equivalents at beginning of year                                     159 661        138 370


Cash and equivalents at the end of the year                           4            375 731        159 661




__________________________                                      _____________________________
Sh.K. Ibragimov                                                 G.R. Yunusova
Chairman of the Board                                           Chief Accountant

The notes on pages 6 to 39 form an integral part of these financial statements. The Independent Auditors’
Report is on page 2.




                                                    6
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


1. Operations and Organization

Limited liability company “InvestCapitalBank” (hereinafter, the “Bank”) has been operating in the
Russian Federation, Republic of Bashkortostan since 1993. The Bank is regulated by the Central Bank of
the Russian Federation (hereinafter, the “CBR”) and conducts its business under license number 2377.
The Bank’s primary business consists of commercial activities, trading with securities and foreign
currencies, originating loans and guarantees and other banking services.

The Bank has 10 additional offices and 8 operating offices. The Bank is registered at:
100/1 Dostoevskogo str., Ufa, Bashkortostan, 450077 Russia.

As of 31 December 2005 the following members of the Bank owned shares in excess of 5%:

 Member                                                                                           %

 LLC Avtofirma OZNA                                                                            47.93
 Rinat Khamzievich Gatiyatullin                                                                22.52
 Sergei Bayanovich Fakhretdinov                                                                22.52
 Other legal entities and individuals (under 5% each)                                           7.03



 Total                                                                                        100.00




As of 31 December 2005 the following members who are ultimate owners of the Bank owned shares in
excess of 5%:

 Member                                                                                           %

 Rinat Khamzievich Gatiyatullin                                                                22.52
 Sergei Bayanovich Fakhretdinov                                                                22.52
 Artur Valeryevich Khazigaleev                                                                 18.56
 Marat Marsovich Akhmetshin                                                                    14.59
 Marat Fanilyevich Fattakhov                                                                   14.59
 Other legal entities and individuals (under 5% each)                                           7.22



 Total                                                                                        100.00




These financial statements were approved by the Board of the Bank on 21 April 2006.




                                                        7
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


2. Basis of presentation

Basis of Preparation. These financial statements of the Bank have been prepared in accordance with
International Financial Reporting Standards (hereinafter, “IFRS”). These financial statements are
presented in thousands of Russian rubles, unless otherwise indicated. These financial statements are
prepared under the historical cost convention, except for revaluation of certain assets, and in accordance
with International Accounting Standard No. 29 “Financial Reporting in Hyperinflationary Economies”
(hereinafter, “IAS 29”).

The Bank maintains its accounting records in accordance with the Russian law. These financial statements
have been prepared from the accounting records in accordance with Russian accounting standards and
have been adjusted to conform with IFRS. Adjustments to these financial statements includes
reclassifications of certain assets and liabilities, income and expenses to reflect the economic substance of
underlying transactions.

The preparation of financial statements requires the management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and expense of the reporting period.
Although these estimates are based on management’s best knowledge of current events and actions, actual
results ultimately may differ from those estimates.

Functional currency. The functional currency of these financial statements is the Russian ruble.


3. Accounting Principles

Recognition and measurement of financial instruments. The Bank recognizes financial assets and
liabilities on its balance sheet when, and only when, it becomes a party to the contractual provisions of the
instrument. The Bank recognizes “regular way” purchases and sales of financial assets and liabilities using
settlement date accounting. Regular way purchases of financial instruments that will be subsequently
measured at fair value between trade date and settlement date are accounted for in the same way as for
acquired instruments.

Financial assets and liabilities are initially recognized at fair value plus, in the case of a financial asset and
financial liability not at fair value through profit or loss, transaction costs that are directly attributable to
acquisition or issue of the financial asset or liability. The accounting policies are disclosed in the
respective accounting policies set out below.

Cash and cash equivalents. Cash and cash equivalents are items that can be converted into cash within
one business day. Cash equivalents do not include amounts that are subject to any restrictions on their
availability. Cash and cash equivalents include cash, unrestricted balances with the CBR, advances to
banks in countries included in the Organization for Economic Co-operation and Development (hereinafter,
“OECD”) and in large Russian banks.

Minimum reserve deposit with the Central Bank of the Russian Federation. Minimum reserve deposits
with the CBR represent funds held with the CBR which are not intended to finance current operations of
the Bank. Consequently, they are not included in cash and cash equivalents in the statement of cash flows.




                                                        8
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Assets at fair value through profit or loss. Assets at fair value through profit or loss are assets purchased
principally for the purpose of selling them in the near term, or are a part of portfolio of identified financial
instruments that are managed together and for which there is evidence of a recent and actual pattern of
short-term profit-taking. Assets at fair value through profit or loss are initially recorded and subsequently
measured at fair value. The Bank uses quoted market prices to determine the fair value of assets at fair
value through profit or loss. Fair value adjustment on assets at fair value through profit or loss is
recognized in profit and loss for the period.

Originated loans. Loans originated by the Bank are financial assets that are created by the Bank by
providing money directly to a borrower or by participating in loan facility.

Loans with fixed maturities granted by the Bank are initially recognized in accordance with the policy
stated above. Loans to customers that do not have fixed maturity are accounted for under the effective
interest method based on expected maturity. Loans to customers are carried net of any allowance for
impairment losses.

Allowance for impairment losses. The Bank establishes an allowance for impairment losses of financial
assets when there is objective evidence that a financial asset or group of financial assets is impaired.
The allowance for impairment losses is measured as the difference between carrying amounts and the
present value of expected future cash flows, including amounts recoverable from guarantees and
collateral, discounted at the financial asset’s original effective interest rate, for financial assets which are
carried at amortized cost. If in a subsequent period the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed by adjusting an allowance account. For financial assets
carried at amortized cost the allowance for impairment losses is measured as the difference between the
carrying amount of the financial asset and the present value of estimated future cash flows discounted at
the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

The determination of the allowance for impairment losses is based on an analysis of the risk assets and
reflects the amount which, in the judgment of management, is adequate to provide for losses incurred.
Provisions are made as a result of an individual appraisal of risk assets for financial assets that are
individually significant, and an individual or collective assessment for financial assets that are not
individually significant.

The change in the allowance for impairment losses is charged to income statement. The total of the
allowance for impairment losses is deducted in arriving at assets as shown in balance sheet. Factors that
the Bank considers in determining whether it has objective evidence that an impairment loss has been
incurred include information about the debtors’ or issuers’ liquidity, solvency and business and financial
risk exposures, levels of and trends in delinquencies for similar financial assets, national and local
economic trends and conditions, and the fair value of collateral and guarantees. These and other factors
may, either individually or when taken together, provide sufficient objective evidence that an impairment
loss has been incurred in a financial asset or group of financial assets.

It should be understood that estimates of losses involve an exercise of judgment. While it is possible that
in particular periods the Bank may sustain losses, which are substantial relative to the allowance for
impairment losses, it is the judgment of management that the allowance for impairment losses is adequate
to absorb losses incurred on the risk assets.

Non-accrual loans. Once a financial asset or a group of similar financial assets has been written down
(partly written down) as a result of an impairment loss, interest income is thereafter recognized using the
interest rate to discount the future cash flows for the purpose of measuring the impairment loss.


                                                       9
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Promissory notes purchased. Purchased notes are included in assets at fair value through profit or loss,
securities available for sale, loans to banks or customers depending on their economic substance and are
subsequently measured and recorded in accordance with the accounting policy used for these asset
categories.

Securities available for sale. Securities available for sale represent debt and equity investments that are
intended to be held for an indefinite period of time. Such securities are initially recorded at fair value.
Subsequently the securities are measured at fair value, with such re-measurement recognized directly in equity,
plus accrued coupon income. The Bank uses quoted market prices to determine the fair value for the Bank’s
securities available for sale. If such quotes do not exist management estimation is used.

Non-marketable securities that do not have fixed maturity are stated at cost, less allowance for impairment
unless there are other appropriate and workable methods of reasonably estimating their fair value.
Allowance for impairment is recognized in income statement for the period.

When there is objective evidence that such securities have been impaired, the cumulative loss previously
recognized in equity is removed from equity and recognized in income statement for the period. Reversals
of such impairment losses on debt instruments, which are objectively related to events occurring after the
impairment, are recognized in income statement for the period. Reversals of such impairment losses on
equity instruments are not recognized in income statement.

Investments in corporate shares where the Bank owns more than 20% of share capital, but does not have
ability or intent to control or exercise significant influence over operating and financial policies,
or non-consolidation of such companies does not significantly affect the financial statements of the Bank
as a whole, or the Bank has an intention to resell such investments in the nearest future, as well as
investments in corporate shares where the Bank owns less than 20% of share capital, are accounted for at
fair value or at approximate fair value, or at historic cost where such fair value can not be reliably
determined. Management periodically assesses recoverability of the carrying values of these investments
and provides allowance for impairment losses if required.

Fixed assets. Fixed assets, acquired after 1 January 2003 are carried at historical cost less accumulated
depreciation. Fixed assets, acquired before 1 January 2003 are carried at historical cost restated for
inflation less accumulated depreciation. Depreciation on assets under construction and those not placed in
service commences from the date the assets are ready for their intended use.

Depreciation of fixed assets is designed to write off assets over their useful economic lives. It is calculated
on a straight line basis at the following annual prescribed rates:

                                                                                                  Depreciation
                                                                                                     rates, %

Buildings                                                                                                  2.5
Equipment and other fixed assets                                                                            25



The carrying amounts of fixed assets are reviewed at each balance sheet date to assess whether they are
recorded in excess of their replacement values. Where carrying values exceed this estimated replacement
value, assets are written down to their recoverable value. Impairment loss is recognized in the respective
period and is included in operating expenses. After the recognition of an impairment loss the depreciation
charge for fixed assets 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.

                                                      10
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Operating leases. Leases of assets under which the risks and rewards of ownership are effectively retained
with the lessor are classified as operating leases.

The Bank acting as lessee under operating lease contracts includes relevant lease payments in operating
expenses over the term of the lease contract.

Finance leases. Leases are classified as finance leases, whenever the terms of the lease transfer
substantially all the risks and rewards incident to ownership of an asset to the Bank. Title to the assets may
or may not eventually be transferred to the Bank. Whether a lease is a finance lease or an operating lease
depends on the substance of the transaction rather than the form of the contract. The lease is classified as
finance lease if:

(a)        the lease transfers ownership of the asset to the lessee by the end of the lease term;
(b)        the lessee has the option to purchase the asset at a price which is expected to be substantially
lower than the fair value at the date the option becomes exercisable such that, at the inception of the lease,
it is reasonably certain that the option will be exercised;
(c)        the lease term is for the major part of the economic life of the asset even if title is not transferred;
(d)        at the inception of the lease the present value of the minimum lease payments amounts to at least
substantially all of the fair value of the leased asset; and
(e)        the leased assets are of a specialized nature such that only the lessee can use them without major
modifications being made.

The Bank, which acts as lessee under finance lease contracts, recognizes finance leases as assets and
liabilities in the balance sheet at the inception of the lease at amounts equal to the fair value of the leased
property or, if lower, at the present value of the minimum lease payments. In calculating the present value
of the minimum lease payments the discount factor used is the interest rate implicit in the lease, when it is
practicable to determine; otherwise, the rate of interest on similar borrowings, which was effective at the
inception of the lease, is used. Initial direct costs related to leased assets are included in the cost of leased
assets. The lease payments under finance lease contracts are partially recognized as finance charge and
also decrease the finance lease liabilities.

Taxation. Income tax expense represents the sum of the current and deferred tax expense.

The current tax expense is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Bank’s
current tax expense is calculated using tax rates that have been enacted or substantively enacted by the
balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognized for all taxable temporary differences and deferred tax assets are recognized to the
extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises
from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognized in respect of all taxable temporary differences relating to
investments in subsidiaries, joint ventures and associates, unless the Bank is able to control the timing of
the reversal of the temporary difference and it is probable that the difference will not reverse in the
foreseeable future.
                                                    11
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset realized. Deferred tax is charged or credited to the income statement, except when it
relates to items charged or credited directly to net assets, in which case the deferred tax is also dealt with
in net assets.

Russian Federation also has various other taxes, which are assessed on the Bank’s activities. These taxes
are included as a component of operating expenses in the income statement.

Customer accounts. Customer accounts are initially recognized at cost, which amounts to the issue
proceeds less transaction costs incurred. Subsequently amounts due are stated at amortized cost and any
difference between net proceeds and the redemption value is recognized in the income statement over the
period of the borrowings using the effective interest method.

Debt securities issued. Debt securities issued include promissory notes issued by the Bank and are initially
recorded at their fair value which approximates the issue proceeds (fair value of acquired assets). Issued
securities are subsequently measured at amortized cost and any difference between net proceeds from the
initial sales of these securities and their redemption value is recognized in the income statement over the
period to maturity using the effective interest method.

If the Bank purchases issued securities they are not carried on the balance sheet and the difference
between the carrying value of the liability and the purchase price is recognized in income statement for the
period.

Financial guarantee contracts issued and letters of credit. Financial guarantee contracts and letters of
credit issued by the Bank are credit insurance liabilities that provide for guaranteed and specified
payments to be made to reimburse the beneficiary holder for a loss it incurs because a specified debtor
fails to make payment when due under the original or modified terms of a debt instrument. Such financial
guarantee contracts and letters of credit issued are initially recognized at fair value. Subsequently they are
measured at the higher of (a) the amount recognized as a provision and (b) the amount initially recognized
less, where appropriate, cumulative amortization of initial premium revenue received over the financial
guarantee contracts or letter of credit issued.

Retirement and other benefit obligations. The existing pension system provides for calculation of current
payments by the employer as a percentage of current total disbursements to staff. Such expense is charged
in the period when the related salaries are earned. Upon retirement all retirement benefit payments are
made by pension funds selected by employees. The Bank does not have any pension arrangements
separate from the State pension system of the Russian Federation. In addition, the Bank has no post-
retirement benefits or significant other compensated benefits requiring accrual.

Recognition of income and expense. Interest income and expense are included in income statement for all
interest-bearing instruments on an accrual basis using the effective interest method which is based on the
actual purchase price. Interest income includes coupon yield on securities with fixed interest rate, accrued
discount on promissory notes and other discount instruments. If there exist doubts that the issued loans
will be repaid on maturity, they are written down to their recoverable amount and the interest income is
thereafter recognized using the effective interest method to discount the future cash flows for the purpose
of measuring the recoverable amount.



                                                       12
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Commission income and expense are recognized as they arise over the period when the service is
provided. Loan origination fees are recognized as interest income on the respective loan and are included
in calculation of the effective interest rate.

Foreign currency translation. Transactions denominated in foreign currency are recorded at the exchange
rate prevailing at the transaction date. Exchange differences resulting from the settlement of transactions
denominated in foreign currency are included in the income statement using the exchange rate prevailing
on that date.

Monetary assets and liabilities denominated in foreign currency are translated into Russian rubles at the
CBR rate as at the balance sheet date. Exchange differences on transactions with debt securities and other
financial assets at fair value are recognized in profit and loss for the period.

As of 31 December 2005 and 2004 the principal rate of exchange used for translation foreign currency balances
was:

                                                                                      2005               2004

RUR/USD                                                                             28.7825            27.7487
RUR/EUR                                                                             34.1850            37.8104




Adoption of new and revised standards. The corresponding amounts as of 31 December 2004 and for the
year then ended have been restated to comply with the changes in IAS 1 “Presentation of Financial
Statements”, IAS 24 “Related Party Disclosures”, IAS 32 “Financial Instruments: Disclosure and
Presentation”, IAS 39 “Financial Instruments: Recognition and Measurement” (hereinafter, IAS 39) and
IFRS 4 “Insurance Contracts” effective for accounting periods beginning on or after 1 January 2005.
Changes in the above standards have not caused recalculation of the opening balances.

In accordance with the revised IAS 24 “Related Party Disclosures” assets, liabilities, income and expenses
should be disclosed for each category of related parties. Additional disclosures have been proved as at
31 December 2005 and for the year then ended.

In accordance with IAS 32 “Financial Instruments: Disclosure and Presentation” owners equity of
RUR 138,549 thousand was reclassified into liabilities as of 31 December 2004.

Reclassifications. Certain reclassifications have been made to the financial statements as at
31 December 2004 and for the year then ended to conform to the presentation as at 31 December 2005 and
for the year then ended as current year presentation provides better view of the financial statements.

                                                                                  Balance        Balance
                                                                             sheet/income   sheet/income
                                                                         statement line as statement line
                                                                               previously as per current
Nature of reclassification                                    Amount             reported          report

                                                                       Commissions for        Interest income
Reclassification of commission for maintenance of loan
                                                                94 224    settlement            on loans to
 accounts as interest income
                                                                         operations             individuals
Reclassification of fixed assets into a separate item            4 373   Other assets          Fixed assets




                                                         13
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Effect of new and revised standards. The Bank estimated the effect of adoption of new standards and
amendments to the existing standards, which had been issued but not yet become effective as of
31 December 2005.

In accordance with the revised version of IAS 39 for the financial statements for the period starting from
1 January 2006 financial guarantees will be accounted for in accordance with IAS 39. Also, securities
which do not have quoted market prices will be accounted only as securities available for sale. According
to the Bank’s estimation, these changes in IAS 39 will not have a significant effect on the financial
statement.

In accordance with the provisions of IFRS 7 “Financial Instruments: disclosure” effective from
1 January 2007 it is required that additional information on financial instruments is disclosed. The Bank
estimated the effect of this standard on its financial statements and will develop an action plan to modify
its accounting and reporting systems, which would provide a reliable disclosure of the required
information.


4. Cash and cash equivalents

                                                                                     2005            2004

Cash on hand                                                                       103 294          52 612
Balances with the CBR (except for obligatory reserves)                             241 164          92 661
Advances to banks of the Russian Federation                                         31 273          14 682
Less allowance for impairment losses                                                     -            (294)


Total cash and cash equivalents                                                    375 731         159 661



Movement in the allowance for impairment losses on advances to banks were as follows:

                                                                                     2005            2004

As of 1 January                                                                       294               -
(Recovery of provision)/ provision for impairment losses                             (294)            294


As of 31 December                                                                        -            294




                                                           14
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


5. Assets at fair value through profit or loss

                                                                               2005           2004

Promissory notes                                                                  -         46 086
Municipal bonds                                                                   -         15 972
Corporate bonds                                                                   -         15 620

Accrued interest income                                                           -          1 104


Total assets at fair value through profit or loss                                 -         78 782



6. Loans to customers

                                                                               2005           2004

Originated loans                                                           1 764 552      1 006 912
Accrued interest income                                                       12 519          6 234


Total loans to customers                                                   1 777 071      1 013 146

Less allowance for impairment                                              (235 847)       (80 000)


Total loans to customers, net                                              1 541 224       933 146



Movements in the allowance for impairment losses are as follows:

                                                                               2005           2004

As at 1 January                                                              80 000         19 772
Provision for impairment losses                                             155 847         60 228


As at 31 December                                                           235 847         80 000



As at 31 December 2005 the Bank originated 5 loans to customers totaling RUR 172 373 thousand,
which individually exceeded 10% of the Bank’s net assets attributable to members.
As at 31 December 2004 the Bank originated loans to 10 customers totaling RUR 253 327 thousand,
which individually exceeded 10% of the Bank net assets attributable to members.

As at 31 December 2005 and 2004 the maximum credit risk exposure of loans and advances to customers
amounted to RUR 1 777 071 thousand and RUR 1 013 146 thousand, respectively.




                                                    15
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


As at 31 December 2005 the loans originated to customers within the Republic of Bashkortostan
accounted for 100% of the loan portfolio As at 31 December 2004 the loans originated to customers
within the Republic of Bashkortostan accounted for RUR 975 946 thousand or 96% of the total loan
portfolio).

The bank loan portfolio is collateralized as follows:

                                                                                      2005       2004

Loans collateralized by the cars financed by the loan                              551 488      41 029
Loans collateralized by goods in turnover                                          275 888     173 236
Loans collateralized by property                                                   117 420      32 457
Loans collateralized by real estate                                                101 499      15 977
Loans collateralized by securities                                                  92 043       1 941
Loans collateralized by guarantees                                                  62 889       7 704
Unsecured loans                                                                    563 325     734 568

Accrued interest income                                                              12 519      6 234

Less allowance for impairment losses                                               (235 847)   (80 000)


Total loans to customers, net                                                     1 541 224    933 146



The structure of the Bank’s loan portfolio by industry sector is as follows:

                                                                                   2005          2004

Individuals                                                                    1 169 497       620 439
Trading                                                                          346 825       216 242
Manufacturing                                                                    106 803        11 437
Finance                                                                           43 782        89 567
Agriculture                                                                       37 954             -
Construction                                                                      17 662             -
Other                                                                             42 029        69 227

Accrued interest income                                                          12 519          6 234

Less allowance for impairment losses                                           (235 847)       (80 000)


Total loans to customers, net                                                  1 541 224       933 146




                                                        16
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


7. Securities available for sale

                                                                                    2005           2004

Corporate bonds                                                                  111 222               -
Promissory notes                                                                  60 590          17 000
Municipal bonds                                                                   31 181               -
Investments in unit trusts                                                             -           2 369
Investments in equity                                                                 10             100

Less allowance for impairment losses                                                   -            (389)


Total securities available for sale                                              203 003          19 080



Movements in the allowance for impairment losses were as follows:

                                                                                    2005           2004

As of 1 January                                                                      389              -
(Recovery of provision)/provision for impairment losses                             (389)           389


As of 31 December                                                                      -            389



As of 31 December 2005 corporate bonds comprised interest-bearing securities denominated in rubles and
issued by Russian companies: OJSC Uralsvyazinform, OJSC Inprom, OJSC Yuzhnaya
Telecommunicatsionnaya Companiya, OJSC Pervaya Ipotechnaya Companiya, LLC PIT Investments, and
OJSC IMPEXBANK, which are marketable in the Russian Federation. Corporate bonds in the Bank’s
portfolio as of 31 December 2005 mature between January 2006 to July 2007 with coupon rates of 8% to
14% and effective yield to maturity of 7% to 12% depending on the issue.

As of 31 December 2005 municipal bonds comprise the bonds issued by the Ufa City Authority maturing
in July 2006 and bearing coupon yield of 8%.

As of 31 Desember 2005 promissory notes include the notes of the following banks: CJSC Absolut Bank
and CJSC Rus-Bank. The notes have maturity dates before December 2006 and their effective maturity
yield is 10% to 13%.

As of 31 December 2004 promissory notes include promissory notes of Russian companies. They mature
before February 2005 and have an effective maturity yield of 10% to 30%.

As of 31 December 2005 the Bank owned 100% of the share capital of LLC InvestCapitalLeasing
amounting to RUR 10 thousand. The Company is not involved in active operations and its financial
statements were not consolidated into these financial statements of the Bank because of immateriality.

As of 31 December 2004 the Bank owned 100% of the share capital of LLC UK Investment Capital
amounting to 100 thousand. The Company is not involved in active operations, and its financial statements
were not consolidated into these financial statements of the Bank because of immateriality.

                                                          17
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


As of 31 December 2005 securities available for sale with fair value of RUR 132 387 thousand comprising
promissory notes of the bank OJSC Absolut, municipal bonds of Ufa and corporate bonds of OJSC
Uralsvyazinform, OJSC Yuzhnaya Telecommunicatsionnaya Companiya, and OJSC INPEXBANK were
pledged as security for interbank loans from OJSC URALSIB, СJSC Absolut Bank and СJSC NOMOS-
BANK (Note 22).




                                                  18
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


8. Fixed assets

                                                                Equipment
                                                    Office and acquired on
                                                     computer      finance
                                        Buildings   equipment         lease   Vehicles     Total

Net book value as at 31 December 2003        286         1 309            -          -     1 595


Cost
Balance at the beginning of the year         341         3 823            -         76     4 240
Additions                                      -         2 161            -      1 077     3 238
Disposals                                      -          (837)           -          -      (837)


Balance at end of the year                   341         5 147            -      1 153     6 641


Accumulated depreciation
Balance at beginning of the year               55        2 514            -         76     2 645
Depreciation charges (Note 17)                  7          436            -          2       445
Disposals                                       -         (822)           -          -      (822)


Balance at end of the year                     62        2 128            -         78     2 268


Net book value as at 31 December 2004        279         3 019            -     1 075      4 373


Cost
Balance at the beginning of the year         341         5 147           -      1 153      6 641
Additions                                 77 437        11 818       8 925        246     98 426
Disposals                                   (341)         (142)          -        (76)      (559)


Balance at end of the period              77 437        16 823       8 925      1 323    104 508


Accumulated depreciation
Balance at beginning of the year              62         2 128           -         78      2 268
Depreciation charges (Note 17)               527         2 241         244        272      3 284
Disposals                                    (62)          (16)          -        (76)      (154)


Balance at end of the year                   527         4 353         244        274      5 398


Net book value as at 31 December 2005     76 910        12 470       8 681      1 049     99 110




                                              19
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


9. Other assets

                                                  2005      2004

Receivables and advances paid                    2 398      7 599
Current income tax asset                           359        767
Receivables on current operations                  346          -
Prepaid taxes except income tax                     41          -
Deferred income tax assets                           -      5 074
Receivables on plastic card operations               -        972


Total other assets                               3 144    14 412



10. Customer accounts

                                                  2005      2004

Individuals                                   1 263 206   564 119
- Time deposits                               1 178 626   523 784
- Current/demand accounts                        84 580    40 335

Legal entities                                 403 395    163 058
- Time deposits                                235 416     75 725
- Current/settlement accounts                  167 979     87 333

State and public organizations                  22 675       273
- Current/settlement accounts                   22 675       273

Accrued interest expenses                        7 228      3 375


Total customer accounts                       1 696 504   730 825




                                         20
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


The distribution of customer accounts by industry sectors is as follows:

                                                                                   2005            2004

Individuals                                                                   1 263 206         564 119
Trading                                                                         212 596          42 047
Manufacturing                                                                    81 984          52 058
Finance                                                                          38 989          32 854
Construction                                                                     10 886           2 006
Other                                                                            81 615          34 366

Accrued interest expense                                                          7 228           3 375


Total customer accounts                                                       1 696 504         730 825



As at 31 December 2005 and 2004 the Bank had advances from 2 and 3 customers totaling
RUR 138 129 thousand and RUR 48 264 thousand, respectively, which individually exceeded 10% of the
net assets attributable to members of the Bank.


11. Debt securities issued

                                                                                   2005           2004

Promissory notes                                                                272 120        294 798

Accrued interest expense                                                         13 626           7 070


Total debt securities issued                                                    285 746        301 868



12. Other liabilities

                                                                                   2005            2004

Finance lease liability                                                           8 925               -
Provision for credit commitments                                                  6 383             332
Deposit insurance charge liability                                                1 768               -
Audit fees payable                                                                1 682               -
Current income tax liability                                                      1 663               -
Tax settlements, except income tax                                                1 046


Total other liabilities                                                          21 467             332



As of 31 December 2005 the provisions for credit commitments comprised provisions for guarantees
issued and the Bank’s commitments in respect of providing credit services in the form of an overdraft on
limited plastic cards. As of 31 December 2004 provisions were made for the guarantees issued (Note 22).
                                                    21
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Finance lease liability as of 31 December 2005 and 2004 consisted of the following:

                                                                                       2005     2004

Total amount of minimum lease payments                                                11 700       -
Less unamortized discount                                                             (2 775)      -


Net finance lease liability                                                            8 925       -



The analysis of the present value of future minimum lease payments due under finance lease at
31 December 2005 and 2004 is as follows:

                                                                                       2005     2004

Up to 1 year                                                                           3 727       -
1 year to 5 years                                                                      5 198       -


Net finance lease liability                                                            8 925       -



The analysis of the future minimum lease payments due under finance lease at 31 December 2005 and
2004 is as follows:

                                                                                       2005     2004

Up to 1 year                                                                           5 520       -
1 year to 5 years                                                                      6 180       -


Minimum lease payments                                                                11 700       -



The net book value of assets received under the financial lease comprised RUR 8 681 thousand at the
close of business on 31 December 2005 (Note 8).




                                                   22
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


13. Subordinated loans


                                                   Maturity    Interest rate,
                                   Currency       date, year              %         2005             2004

 LLC MC Investment Capital         RUR              2011            16            45 000           45 000
 CJSC Obyedinennyi Capital         RUR              2012            13             4 500            4 500
 CJSC IC Neftegazinvest            RUR              2012            13             4 500            4 500


Total subordinated loans                                                          54 000          54 000



In 2005 and 2004 subordinated loans expenses comprised RUR 8 593 thousand and RUR 5 215 thousand,
respectively. In the event of bankruptcy or liquidation of the Bank, repayment of this debt is subordinate
to the repayments of the Bank’s liabilities to all other creditors.


14. Net assets attributable to members of the Bank

                                                                                     2005            2004

As of 1 January                                                                   138 549           87 094

Additional contribution from members                                                50 000          25 000
Sale of repurchased earlier                                                              -           2 016
Fare value adjustment of securities available for sale                                 435             153
Changes in net assets attributable to members of the Bank                           12 519          24 286


As of 31 December                                                                 201 503          138 549




Members of the Bank have a right to sell their shares of stock to the Bank upon notification. The Bank
must reimburse stockholders the cost of their shares of stock in the Bank within six months starting from
the end of the year of the notification.

Pursuant to the Russian banking legislation the Bank transfers profits to reserves (fund accounts) based on
the financial statements prepared in accordance with the Russian Accounting Standards. The Bank’s
reserves in accordance with the Russian Accounting Standards total to RUR 31 573 (unaudited) thousand
and RUR 14 952 (unaudited) thousand as of 31 December 2005 and 2004, respectively.




                                                        23
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


15. Interest income and expense

                                                                           2005      2004

Interest income
Interest on loans to customers – individuals                             370 836   184 659
Interest on loans to customers – legal entities                          103 250    39 516
Assets at fair value through profit or loss                                7 709    10 933
Securities available for sale                                              5 569         -
Interest on loans and advances to banks                                    1 802     1 526
Interest on the banks’ correspondent accounts                                402     2 485


Total interest income                                                    489 568   239 119


Interest expense
Time deposits of individuals                                             113 944    47 391
Debt securities issued                                                    40 572    44 073
Time deposits of legal entities and subordinated loans                    22 361    10 430
Current/settlement accounts                                                2 222       683
Time deposits of banks                                                       121     1 099


Total interest expense                                                   179 220   103 676


Net interest income before provision for impairment losses on interest
 bearing assets                                                          310 348   135 443




                                                         24
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


16. Fees and commissions income and expenses

                                                      2005     2004

Commission income

Commissions for cash operations                      12 645    2 958
Commissions for settlements operations               11 694    3 639
Commissions for issued guarantees                     1 911       45
Other                                                   694       77


Total commission income                              26 944    6 719


Commission expense

Commissions for cash collection                        587        -
Commissions for settlement operations                   24        -
Commissions for cash operations                         11        3
Other                                                  323        3


Total commission expense                               945        6



17. Operating expenses

                                                      2005     2004

Staff costs                                          70 702   22 353
Maintenance and repairs                              15 944    2 380
Operating lease expenses                             15 225    8 470
Administrative expenses                              12 716    3 255
Advertising and marketing                            11 742    7 455
Deposit insurance charge expense                      5 782        -
Communication                                         3 702      575
Depreciation charges                                  3 284      445
Taxes, other than income tax                          2 809    4 113
Property insurance expenses                           2 492        -
Professional services                                 1 787   18 279
Other                                                 8 596    6 128



Total operating expenses                            154 781   73 453




                                               25
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


18. Income tax

The Bank provides for taxes based on the statutory tax accounts maintained and prepared in accordance
with the Russian statutory tax regulation which may differ from IFRS.

The Bank is subject to certain permanent tax differences due to non-tax deductibility of certain expenses
and tax-free regime under local tax regulation.

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for tax purposes. Temporary
differences as of 31 December 2005 and 2004 relate mostly to different methods of income and expense
recognition as well as to recorded values of certain assets

                                                                                     2005             2004

Current income tax expense                                                          22 324          15 054
Provision for deferred tax assets                                                        -          (7 167)
Reversal of deferred tax assets                                                      5 074               -


Income tax expense for the year                                                     27 398           7 887



For years ended 31 December 2005 and 2004 the income tax rate applicable to the majority of the Bank’s
income is 24%. Reconciliation between the expected and the actual taxation charge is provided below.

                                                                                      2005            2004

Profit before income tax                                                            39 917          32 173


Theoretical tax charge at the applicable statutory rate                              9 580           7 722
Tax effect of permanent differences                                                  3 529             165
Change in valuation allowance                                                       14 289               -


Income tax expense for the year                                                     27 398           7 887



Differences between IFRS and Russian statutory taxation regulation give rise to certain temporary
differences between the carrying amount of certain assets and liabilities for financial reporting purposes
and for profits tax purposes. The tax effect of these temporary differences is recorded at the rate of 24%,
except for income on government securities that is taxed at 15%.




                                                          26
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Temporary differences as of 31 December 2005 and 2004 comprise:

                                                                                      2005            2004

Deferred assets

Loans to customers                                                                  28 340           14 961
Other assets                                                                         5 753            9 742
Accrued expenses                                                                     2 630                -
Provision for credit commitments                                                     2 213                -


Total deferred assets                                                               38 936           24 703


Deferred liabilities

Assets at fair value through profit or loss                                           (538)          (2 860)
Fixed assets                                                                            (1)            (702)


Total deferred liabilities                                                            (539)          (3 562)


Total net deferred assets                                                           38 397           21 141

Deferred assets

Net deferred tax assets at the statutory tax rates                                    9 215           5 074
Deferred tax assets not recognized                                                   (9 215)              -


Net deferred tax assets                                                                   -           5 074



19. Related party transactions

Related parties, as defined by IAS 24 “Related Party Disclosures”, are those that represent:

(a) enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled
by, or are under common control with, the Bank; (This includes holding companies, subsidiaries and
fellow subsidiaries);
(b) associates are companies in which the Bank has significant influence and which is neither a
subsidiary nor a joint venture of the investor;
(c) individuals owning, directly or indirectly, an interest in the voting power of the Bank that gives them
significant influence over the Bank;
(d) key management personnel, that is, those persons having authority and responsibility for planning,
directing and controlling the activities of the Bank, including directors and officers of the Bank and close
members of the families of such individuals;
(e) companies in which a substantial interest in the voting power is owned, directly or indirectly, by any
person described in (c) or (d) or over which such a person is able to exercise significant influence;
This includes companies owned by directors or major members of the Bank and companies that have a
member of key management in common with the Bank.
(f) legal entities and/or individuals under common control with the Bank;
                                                      27
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


(g) joint ventures in which the Bank is a venture; and
(h) non-government pension insurance for the Bank’s staff and any other related parties of the Bank.

In considering each possible related party relationship, attention is directed to the substance of the
relationship, and not merely the legal form. The Bank had the following transactions outstanding with
related parties as of 31 December 2005 and 2004:

                                                                           2005                      2004
                                                                               Total                     Total
                                                                        category as               category as
                                                               Related per financial     Related per financial
                                                                 party statements          party statements
                                                           transactions      caption transactions      caption

Loans to customers                                              37 699    1 777 071       27 576    1 013 146
Members                                                         11 397                       104
Non-consolidated subsidiaries                                    8 230                    24 793
Key management personnel                                           222                       509
Other related party                                             17 850                     2 170
Allowance for impairment losses on loans to customers           (8 616)    (235 847)        (233)     (80 000)
Members                                                         (2 970)                       (1)
Non-consolidated subsidiaries                                   (1 646)                     (210)
Key management personnel                                             -                        (1)
Other related party                                             (4 000)                      (21)
Securities available for sale                                       10     203 003           100       19 469
Non-consolidated subsidiaries                                       10                       100
Allowance for impairments losses on securities available
 for sale                                                            -            -           (2)        (389)
Non-consolidated subsidiaries                                        -                        (2)
Customer accounts                                               84 075    1 696 504       24 309     730 825
Members                                                         78 731                    11 647
Non-consolidated subsidiaries                                        -                       892
Key management personnel                                            71                        16
Other related party                                              5 273                    11 754
Subordinated loans                                              54 000       54 000       54 000       54 000
Members                                                              -                    54 000
Other related party                                             54 000                         -




                                                     28
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)



                                                                             2005                     2004
                                                                                 Total                     Total
                                                                          category as               category as
                                                                 Related per financial     Related per financial
                                                                   party statements          party statements
                                                             transactions      caption transactions      caption

Interest income                                                    2 805       489 568        1 194       239 119
Members                                                            1 224                        128
Non-consolidated subsidiaries                                      1 300                        794
Key management personnel                                               -                         78
Other related party                                                  281                        194
Interest expense                                                 (13 177)     (179 220)      (6 558)     (103 676)
Subordinated loans (members/other related party )                 (8 593)                    (5 215)
Members                                                           (2 437)                         -
Key management personnel                                             (14)                         -
Other related party                                               (2 133)                    (1 343)
Operating expenses                                                (7 810)     (154 781)      (1 378)       (73 453)
Key management personnel                                          (7 810)                     1 378



Transactions with related parties entered by the Bank during the years ended 31 December 2005 and 2004
were made in the normal course of business and under arm-length conditions with third parties.


20. Fair value of financial instruments

Estimated fair value disclosures of financial instruments is made in accordance with the requirements of
IAS 32 “Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments:
Recognition and Measurement”. Fair value is defined as the amount at which the instrument could be
exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction,
other than in forced or liquidation sale. As no readily available published price quotations in an active
market exists for a large part of the Bank’s financial instruments, judgment is necessary in arriving at fair
value using a valuation technique, based on current economic conditions and specific risks attributable to
the instrument. The estimates presented herein are not necessarily indicative of the amounts the Bank
could realize in a market exchange from the sale of its full holdings of a particular instrument.

The fair value of financial assets and liabilities compared with the corresponding carrying amount in the
balance sheet of the Bank is presented below:

                                                                            2005                         2004
                                                             Current                      Current
                                                               value   Fair value           value      Fair value

 Cash and cash equivalents                                 375 731        375 731         159 661        159 661
 Assets recorded at fair value through profit or loss            -              -          78 782         78 782
 Customer accounts                                       1 696 504      1 696 504         730 825        730 825
 Debt securities issued                                    285 746        285 746         301 868        301 868
 Subordinated loans                                         54 000         54 000          54 000         54 000




                                                        29
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Loans to customers – The Bank’s loans to customers as at 31 December 2005 and 2004 less allowance for
impairment losses of RUR 1 541 224 thousand and RUR 933 146 thousand, respectively, were recognized
at their carrying value less allowance for impairment losses. The fair value of loans to customers can not
be measured reliably as it is not practicable to obtain market information or apply any other valuation
techniques on such instruments. Management of the Bank believes, that the allowance for impairment
losses is a reasonable estimate of the adjustment required to reflect the impact of credit risk.

Securities available for sale – As at 31 December 2005 and 2004 securities available for sale
of RUR 203 003 thousand and RUR 19 080 thousand, respectively, include RUR 10 thousand and RUR
100 thousand, respectively, were recognized at cost, the fair value of these investments can not be
measured reliably as it is not practicable to obtain market information or apply any other valuation
techniques on such instruments. As at 31 December 2005 and 2004 securities totaling RUR 202 993
thousand and RUR 18 980 thousand, respectively, were accounted for at fair value.

Subordinated loans – As at 31 December 2005 and 2004 the fair value of subordinated loans is calculated
based on interest rate of long term deposits of customers and periods to the maturity dates stated in the
contracts at reporting date.


21. Financial risk management

Management of the Bank’s financial risks is performed using various criteria for credit, market,
operational, general banking and liquidity risks. The primary task of financial risk management is to
ensure timely identification of all risks that are significant for the Bank, assessment of their possible
negative impact on the Bank’s operations and risk minimization while achieving tactical and strategic
financial goals. The management process includes development and implementation of control and
management activities, including setting limits, performing hedging and insurance activities. Management
of operational and legal risks should provide for reliable operation of internal policies and procedures with
a view to minimize operational and legal risks. Limitations are imposed on powers of officials. The risk
management functions are performed by the Assets and Liabilities Committee, Credit Committee, and the
Board.

Financial risks arise in the process of the Bank’s primary business.

Liquidity risk refers to the Bank’s inability to finance its positions on own and customer transactions, i.e.
discharge its financial liabilities before customers and counterparties timely and in full without
deterioration of the Bank’s solvency.

Interest rate risk is the risk of losses caused by unfavorable changes in the market interest rates.

Price risk is the risk of losses caused by changes in the price quotations of financial instruments.

Currency risk is the risk of losses due to negative effect of movements in the rate of exchange, as
considered based on the changes in foreign currency exchange rates to each other and the ruble.

Credit risk is the risk of losses due to troubled financial position of the debtor, counterparty for a
transaction, or securities issuer, resulting in failure to discharge its obligations to the Bank.

The methodology of financial risk identification and assessment includes criteria, models and methods of
assessment of certain risk types which are established in regulations and guidelines adopted by the Bank.


                                                      30
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


In order to assess and manage the major types of risks, the Bank developed detailed regulations and
guidelines by types of risks to supplement the regulation on Risk Assessment and Management System,
containing specific procedures for identification, assessment and control by types of risk, including
description of actions, powers and responsibilities of staff and interaction of departments involved in the
process.

The Bank’s major techniques for managing specific types of risk include:

    monitoring;
    consolidation of risks;
    distribution of risk;
    limitation;
    hedging;
    diversification; and
    scenario analysis.

Monitoring as a risk management technique includes valuation of the risk exposure, study of its dynamics
over time and reasons for changes. Monitoring precedes the application of other risk management
techniques and allows the Bank to adjust interaction of the Bank’s departments, calibrate the techniques of
information collection, exposure calculation and exposure dynamics analysis and develop standard
reports. Monitoring is performed on a regular basis.

Consolidation of risks is a method aimed at decreasing the risk exposure through transforming accidental
losses into relatively low fixed costs.

Distribution of risk is the method under which the possible risk exposure is shared by the participants so
that the possible losses of each were relatively low. This method is applied by the Bank for project
financing.

Limitation of transactions includes setting limits on risk exposures and subsequent control over the
compliance with these limits. The limit amount reflects the Bank’s readiness to accept a certain risk while
not exceeding the needs of the business department. Limitation includes development of detailed strategic
documentation (production plans, instructions and regulations) which should establish the maximum level
of risk acceptable for each type of the Bank’s activity and clearly allocate functions and responsibilities
between the Bank’s staff members. The established limits are reviewed on a regular basis and in specific
cases. The limits for loan portfolio, financial instruments and counterparties are mandatory.

Diversification is a method of controlling risk by investing in assets, returns on which are uncorrelated.

Scenario analysis or modeling is used by the Bank for forecasting possible development of the current
situation. During the scenario analysis activities the Bank develops responses for unfavorable changes of
environment. Particularly unfavorable scenarios are analyzed making use of stress testing which is
performed on a regular basis to identify the Bank’s weaknesses and action plans for emergency situations.

The major departments in charge of assessment and analysis of risk are the Risk Management Service,
Department for Budgeting and Financial Planning and the Bank’s Internal Control Service.

Credit risk. The Credit Committee takes part in the decision-making process on credit transactions in order
to ensure adequate assessment of credit risk exposure and authorize credit transactions in accordance with
the acceptable level of credit exposure as established by the Bank’s management.


                                                     31
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


The primary functions of the Credit Committee are the complex assessment of credit risks on customer
transactions, participation in authorization of transactions resulting in credit risk exposure including by
means of setting limits on credit transactions with customers, monitoring the quality of the portfolio of
loans which are exposed to credit risk.

The Credit Committee also defines major principles for performing credit transactions with customers
(including banks retail business), approaches to credit risk assessment, requirements to customers and loan
collaterals, and performing credit transactions with smaller customers (individuals, minor enterprises).

Currency risk. The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency
exchange rates on its financial position and cash flows. The risk management service sets limits in respect of
the assumed risk by currencies and monitors the compliance on a daily basis. When establishing the limits, the
Bank keeps to conservative risk management policies. The Bank’s currency risk analysis as of
31 December 2005 is presented in the table below. The Bank’s assets and liabilities are presented in the table at
their carrying value by major currencies.

                                                                Rubles      US dollars     Euros      Total

Assets
Cash and cash equivalents                                        326 905        32 357       16 469     375 731
Obligatory reserves with the Central Bank of the Russian
 Federation                                                        34 550        2 458           -       37 008
Loans to customers, less allowance for impairment losses        1 502 663       38 389         172    1 541 224
Securities available for sale                                     203 003            -           -      203 003
Fixed assets, less accumulated depreciation                        99 110            -           -       99 110
Other assets                                                        3 144            -           -        3 144


Total assets                                                    2 169 375       73 204       16 641   2 259 220


Liabilities
Customer accounts                                               1 605 589       77 419       13 496   1 696 504
Debt securities issued                                            285 746            -            -     285 746
Other liabilities                                                  21 467            -            -      21 467
Subordinated loans                                                 54 000            -            -      54 000
Net assets attributable to members of the Bank                    201 503            -            -     201 503


Total liabilities                                               2 168 305       77 419       13 496   2 259 220


Net position                                                       1 070         (4 215)      3 145




                                                           32
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


As of 31 December 2004 the Bank’s position by currencies was as follows:

                                                                Rubles       US dollars       Euros       Total

Assets
Cash and cash equivalents                                        127 616         27 670          4 375     159 661
Obligatory reserves with the Central Bank of the Russian
 Federation                                                       15 312            808               -     16 120
Assets at fair value through profit or loss                       78 782              -               -     78 782
Loans to customers, less allowance for impairment losses         909 625         23 521               -    933 146
Securities available for sale, less allowance for
 impairment losses                                                19 080                  -           -     19 080
Fixed assets, less accumulated depreciation                        4 373                  -           -      4 373
Other assets                                                      14 412                  -           -     14 412


Total assets                                                    1 169 200        51 999          4 375    1 225 574


Liabilities
Customer accounts                                                679 062         46 633          5 130     730 825
Debt securities issued                                           301 868              -              -     301 868
Other liabilities                                                    332              -              -         332
Subordinated loans                                                54 000              -              -      54 000
Net assets attributable to members of the Bank                   138 549              -              -     138 549


Total liabilities                                               1 173 811        46 633          5 130    1 225 574


Net position                                                       (4 611)         5 366          (755)



The Bank originated loans to customers denominated in foreign currency. Depending on the currency of
the cash flows obtained by the customer, the appreciation of foreign currencies to the Russian ruble may
have negative impact on the customer’s ability to repay the loans, which in turn, increases the probability
of losses associated with loans. Foreign currency denominated loans take up 2.5% of the Bank’s loan
portfolio.

Liquidity risk. The liquidity risk is managed by the Assets and Liabilities Committee of the Bank. In order
to manage day-to-day liquidity, the Liquidity Department performs monitoring of expected future cash
flows from customer, banking transactions and regulation of Banks’ nostro position.
The table below indicates asset and liability distribution as of 31 December 2005 by remaining maturity
unless there is an indication that the respective assets are impaired and will be settled after their
contractual maturities in which case the expected settlement date is used. Certain asset transactions,
however, may have longer than original maturity; e.g. short-term loans may have a longer maturity period
due to frequent prolongations.




                                                           33
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


The Bank’s liquidity position as of 31 December 2005 was as follows:

                                 Up to 1 month to 3 month to                    Over    No fixed
                              1 month 3 months 12 months         1-5 years    5 years   maturity       Total

Interest bearing assets
Loans to customers, less
 allowance for
 impairment losses            287 990    277 174     599 623     376 437           -          -    1 541 224
Securities available for
 sale                               -           -    181 014      21 979           -          -     202 993

Total interest bearing
 assets                       287 990    277 174     780 637     398 416           -          -    1 744 217
Cash and cash equivalents     375 731          -           -           -           -          -      375 731
Obligatory reserves with
 the Central Bank of the
 Russian Federation                 -           -           -           -          -     37 008      37 008
Securities available for
 sale                               -           -           -           -          -         10          10
Fixed assets, less
 accumulated
 depreciation                       -          -           -           -           -     99 110       99 110
Other assets                      747      2 375          22           -           -          -        3 144
Total assets                  664 468    279 549     780 659     398 416           -    136 128    2 259 220


Interest bearing
 liabilities
Customer accounts             228 846    470 330     576 572     145 431          -           -    1 421 179
Debt securities issued         76 080     40 149      66 096     103 421          -           -      285 746
Subordinated loans                  -          -           -           -     54 000           -       54 000

Total interest bearing
 liabilities                  304 926    510 479     642 668     248 852     54 000           -    1 760 925
Customer accounts             275 325          -           -           -          -           -      275 325
Other liabilities               2 228      2 924       8 957       7 358          -           -       21 467
Net assets attributable to
 members of the Bank                -          -     201 503           -          -           -      201 503
Total liabilities             582 479    513 403     853 128     256 210     54 000           -    2 259 220


Liquidity gap                  81 989    (233 854)   (72 469)    142 206     (54 000)   136 128           -
Interest sensitivity gap      (16 936)   (233 305)   137 969     149 564     (54 000)         -     (16 708)
Cumulative interest
 sensitivity gap              (16 936)   (250 241)   (112 272)    37 292     (16 708)   (16 708)
Cumulative interest
 sensitivity gap as a
 percentage of total assets   (0.75%)    (11.06%)     (4.96%)      1.65%     (0.74%)    (0.74%)




                                                      34
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)



The Bank’s liquidity position as of 31 December 2004 was as follows:

                                           1 month 3 month
                                     Up to      to    to 12                 Over          No fixed
                                  1 month 3 months months 1-5 years       5 years Overdue maturity       Total

Interest bearing assets
Assets at fair value through
 profit or loss                     6 976    19 472    35 679    16 655         -         -        -    78 782
Loans to customers, less
 allowance for impairment
 losses                           238 386   113 477   510 649    50 593         -    20 041        -   933 146
Securities available for sale,
 less allowance for impairment
 losses                                 -    16 758         -     2 222         -         -        -    18 980

Total interest bearing assets     245 362   149 707   546 328    69 470         -    20 041        - 1 030 908
Cash and cash equivalents         159 661         -         -         -         -         -        - 159 661
Obligatory reserves with the
 Central Bank of the Russian
 Federation                             -         -         -         -         -         -   16 120    16 120
Securities available for sale,
 less allowance for impairment
 losses                                 -         -         -         -         -         -     100       100
Fixed assets, less accumulated
 depreciation                           -         -         -         -         -         -    4 373     4 373
Other assets                        8 276     1 062         -         -         -         -    5 074    14 412
Total assets                      413 299   150 769   546 328    69 470         -    20 041   25 667 1 225 574


Interest bearing liabilities
Customer accounts                     420   105 819   476 185    19 624        -          -        -   602 048
Debt securities issued            154 326    26 795   120 580       167        -          -        -   301 868
Subordinated loans                      -         -         -         -   54 000          -        -    54 000

Total interest bearing
 liabilities                      154 746   132 614   596 765    19 791   54 000          -        -   957 916
Customer accounts                 128 777         -         -         -        -          -        -   128 777
Other liabilities                       -       332         -         -        -          -        -       332
Net assets attributable to
 members of the Bank                    -         -   138 549         -        -          -        - 138 549
Total liabilities                 283 523   132 946   735 314    19 791   54 000          -        - 1 225 574


Liquidity gap                     129 776    17 823 (188 986)    49 679   (54 000)   20 041   25 667         -
Interest sensitivity gap           90 616    17 093 (50 437)     49 679   (54 000)   20 041        -    72 992
Cumulative interest sensitivity
 gap                               90 616   107 709    57 272   106 951   52 951     72 992   72 992
Cumulative interest sensitivity
 gap as a percentage of total
 assets                            7.39%     8.79%     4.67%     8.73%     4.32%     5.96%    5.96%




                                                       35
    LIMITED LIABILITY COMPANY
    “INVESTCAPITALBANK”
    Notes to the financial statements
     for the year ended 31 December 2005
    (in thousands of Russian rubles)


    The Bank keeps to a conservative policy to manage liquidity. The expected maturity gap is subject to
    limitation. The Assets and Liabilities Committee sets quarterly limits on liquidity gap by maturity.
    Risk management service performs monitoring of conformity of breaks of liquidity to the established
    limits (on the basis of GAP-the analysis).

    Interest rate risk. The Bank is exposed to the effects of fluctuations in the prevailing levels of market
    interest rates on its financial position and cash flows. Such fluctuations may result in an increase of the
    interest margin, but in the event of an unexpected change, the interest margin may also narrow or lead to
    losses.

    The Bank has interest rate risk primarily as a result of its activities of granting loans and advances to
    customers and other banks at fixed interest rates in the amount and for the term, which differ from the
    amounts and terms of deposits and other borrowed funds with fixed interest rates. In practice, interest rates
    are normally set for a short period. Also, the interest rates fixed in the contractual terms and conditions
    with regard to assets and liabilities are often revised based on mutual agreement between the parties in
    accordance with the effective market situation.

    Assets and Liabilities Committee sets limits on the acceptable level of interest rate gap while the Risk
    Management Service monitors the compliance with the limits on a regular basis. In the absence of hedges,
    the Bank usually seeks to have no gap between interest rates.

    The table below contains an analysis of the average effective interest rates by major currencies of principal
    monetary financial instruments. The analysis is based on the average effective interest rates prevailing as
    of the end of the period and applicable to various financial instruments.

                                                      2005                                   2004
                                      Rubles      US dollars     Euros         Rubles    US dollars       Euros

    Assets
    Assets at fair value through
     profit or loss                           -           -          -             8%             -            -
    Loans to customers                     37%         19%        18%             39%          19%             -
    Securities available for sale          10%            -          -            23%             -            -

    Liabilities
    Customer accounts                    10%            8%         6%                -            -            -
    - Current/settlement accounts       0.5%              -          -             1%             -            -
1   - Time deposits                      12%            8%         6%             16%          11%           7%
    Debt securities issued               14%              -          -            15%             -            -
    Subordinated loans                   13%              -          -            16%             -            -




                                                           36
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Geographic risk. The geographical concentration of assets and liabilities as of 31 December 2005 is set
out below:

                                                                Russia       OECD           Non-OECD       Total
                                                                            countries        countries

Assets
Cash and cash equivalents                                        375 731                -             -     375 731
Obligatory reserves with the Central Bank of the Russian
 Federation                                                        37 008               -             -       37 008
Loans to customers, less allowance for impairment losses        1 541 224               -             -    1 541 224
Securities available for sale                                     203 003               -             -      203 003
Fixed assets, less accumulated depreciation                        99 110               -             -       99 110
Other assets                                                        3 144               -             -        3 144


Total assets                                                    2 259 220                                  2 259 220


Liabilities
Customer accounts                                               1693 296            20           3 188     1 696 504
Debt securities issued                                           285 746             -               -       285 746
Other liabilities                                                 21 467             -               -        21 467
Subordinated loans                                                54 000             -               -        54 000
Net assets attributable to members of the Bank                   201 503             -               -       201 503


Total liabilities                                               2 256 012           20           3 188     2 259 220


Net position                                                       3 208           (20)          (3 188)




                                                           37
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


The geographical concentration of assets and liabilities as of 31 December 2004 is set out below:

                                                                Russia       OECD           Non-OECD      Total
                                                                            countries        countries

Assets
Cash and cash equivalents                                        159 661                -            -     159 661
Obligatory reserves with the Central Bank of the Russian
 Federation                                                       16 120                -            -      16 120
Assets at fair value through profit or loss                       78 782                -            -      78 782
Loans to customers, less allowance for impairment losses         933 146                -            -     933 146
Securities available for sale, less allowance for
 impairment losses                                                19 080                -            -      19 080
Fixed assets, less accumulated depreciation                        4 373                -            -       4 373
Other assets                                                      14 412                -            -      14 412


Total assets                                                    1 225 574               -            -    1 225 574


Liabilities
Customer accounts                                                730 547           275               3     730 825
Debt securities issued                                           301 868             -               -     301 868
Other liabilities                                                    332             -               -         332
Subordinated loans                                                54 000             -               -      54 000
Net assets attributable to members of the Bank                   138 549             -               -     138 549


Total liabilities                                               1 225 296          275               3    1 225 574


Net position                                                         278          (275)             (3)



22. Financial commitments and contingencies

Legal proceedings. As of 31 December 2005 the Bank was not involved in any significant legal
proceedings. The Bank’s management believes that the existing legal proceedings will not result in any
material losses for the Bank and, consequently, no provision was made in these financial statements.

Operating environment. The Bank’s principal business activities are within the Russian Federation. Laws
and regulations affecting business environment in the Russian Federation are subject to rapid changes and
the Bank's assets and operations could be at risk due to negative changes in the political and business
environment.

Tax legislation. Due to the presence in Russian commercial legislation, and tax legislation in particular,
of provisions allowing more than one interpretation, and also due to the practice developed in a generally
unstable environment by the tax authorities of making arbitrary judgment of business activities, including
arbitrary judgment in respect of the kind of activities of the Bank in the absence of statutory criteria for
such judgment, the interpretation of tax legislation by the tax authorities as applied to the transactions and
activities of the Bank may not coincide with that of management.




                                                           38
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Changes in the tax legislation with regard to transfer pricing came into effect on 1 January 1999 which
provided tax authorities with the right to perform adjustments in respect of transfer pricing and assess
additional taxes on all transactions under control if the difference between the transaction price and the
market price is over 20%. Transactions under control include operations with related parties and
operations with non-related parties, when the difference between the prices of two similar market
transactions with two different non-related parties exceeds 20%. There is no formal guidance as to how
these rules should be applied in practice.

Tax implications of transactions in Russia are commonly dependent on how the transactions are executed
and whether the required accounting rules for these transactions are in accordance with the Russian.
If a transaction is challenged by the tax authorities, the Bank may be assessed additional taxes as well as
possible significant penalties and interest. Tax years remain open to review by the tax authorities for three
years.

Credit-related commitments. In the normal course of business the Bank is a party to financial instruments
with off-balance sheet risk in order to meet the needs of its customers. These instruments, involving
varying degrees of credit risk, are not reflected in the balance sheet.

As of 31 December 2005 and 2004 the nominal or contract amounts and the risk weighted credit
equivalents were:

                                                                       2005                        2004
                                                                       Risk-                       Risk-
                                                          Nominal     weighted     Nominal        weighted
                                                           amount     amount        amount        amount

Contingent liabilities and credit commitments
Guarantees issued and similar commitments                    84 234       82 024        16 580       16 248
Commitments on loans and unused lines of credit              24 534            -           879            -


Total contingent liabilities and
 credit commitments                                         108 768       82 024        17 459       16 248



Movements in provisions for credit commitments were as follows:

                                                                                      2005            2004

As of 1 January                                                                         332               -
Provision for credit commitments                                                      6 051             332


As of 31 December                                                                     6 383             332




                                                     39
LIMITED LIABILITY COMPANY
“INVESTCAPITALBANK”
Notes to the financial statements
 for the year ended 31 December 2005
(in thousands of Russian rubles)


Operating leases. The Bank’s future minimum rent payments under non-cancelled operating leases
contracts (operating lease of ATM) as of 31 December 2005 and 2004 were as follows:

Operating lease                                                                     2005               2004

Up to 1 year                                                                      21 439             15 225



Pension and retirement plans. Employees receive pension benefits in accordance with the laws and
regulations of the Russian Federation. As at 31 December 2005 and 2004, the Bank was not liable for any
supplementary pensions, post-retirement health care, insurance benefits, or retirement indemnities to its
current or former employees.

Pledged assets. As of 31 December 2005 the Bank has the following assets pledged as collateral.
The collateral agreement was made in order to obtain an interbank loan with the limits established by the
bank pledge. As of 31 December 2005 the Bank didn’t involved means from other banks on the security of
assets mentioned below.

                                                                         Pledged assets    Established limit

Securities available for sale                                                  132 387              110 173


Total                                                                          132 387              110 173



23. Events after the balance sheet date

In April 2006 the General meeting of the Bank’s members made a decision to reorganize
Limited liability company “InvestCapital Bank” by reorganization into an open joint-stock company.
The reorganization procedures are to be completed before 2007.




                                                   40

				
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