AN INVESTMENT IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 14 BEFORE INVESTING.

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1 U.S.$ 2,500,000,000 Programme for the Issuance of Loan Participation Notes to be issued by, but with limited recourse to, Russian Standard Finance S.A. for the sole purpose of financing loans to Joint Stock Company "Russian Standard Bank" Under the Programme for the Issuance of Loan Participation Notes (the "Programme") described in this base prospectus (the "Base Prospectus"), Russian Standard Finance S.A., a public limited liability company (société anonyme) established under the laws of the Grand Duchy of Luxembourg whose registered office is at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, registered with the Register of Commerce and Companies of Luxembourg under number B (the "Issuer"), subject to compliance with all relevant laws, regulations and directives, may from time to time issue loan participation notes (the "Notes") on the terms and conditions set out herein, as such terms and conditions are supplemented by a final terms (each a "Final Terms") for each issue or in a separate prospectus specific to such issue (the "Drawdown Prospectus") as described under "Supplemental Base Prospectus and Drawdown Prospectus" below. In the case of Notes which are the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise. The aggregate principal amount of Notes outstanding under the Programme will not at any time exceed U.S.$ 2,500,000,000 (or the equivalent in other currencies). This Base Prospectus supersedes any previous Base Prospectus relating to the Programme and any supplements thereto. Any Notes issued under the Programme on or after the date of this Base Prospectus shall be issued pursuant to this Base Prospectus. This Base Prospectus does not affect any Notes issued under the Programme prior to the date hereof. Notes will be issued in Series (as defined in "Overview of the Programme") and the sole purpose of issuing each Series will be to finance either a senior loan (a "Senior Loan") or a subordinated loan (a "Subordinated Loan" and, together with a Senior Loan, the "Loans" and each a "Loan") to Joint Stock Company "Russian Standard Bank" ("RSB" or the "Borrower") as borrower, on the terms of either: (i) in relation to a Senior Loan, an amended and restated facility agreement between the Issuer and RSB dated 26 September 2012 (the "Facility Agreement"), as amended and supplemented by a loan supplement to be entered into in respect of each Loan on or before each issue date ("Issue Date") of the relevant Series (each a "Loan Supplement" and, together with the Facility Agreement, the "Senior Loan Agreement" which expression shall include any other or further loan agreement entered into between the Issuer and RSB in connection with the issue of any Series under the Programme and set out in a supplement to this Base Prospectus or in a Drawdown Prospectus) or (ii) in relation to a Subordinated Loan, a subordinated loan agreement between the Issuer and RSB, to be entered into on or before the Issue Date of the relevant Series (the "Subordinated Loan Agreement"). In this Base Prospectus, "Loan Agreement" shall mean either (i) a Senior Loan Agreement (in respect of a Senior Loan) or (ii) a Subordinated Loan Agreement (in respect of a Subordinated Loan), as applicable. The relevant Final Terms in respect of the issue of any Series of Notes will specify whether a Loan being financed by such Series of Notes is a Senior Loan (such Series of Notes being a "Senior Series") or a Subordinated Loan (such Series of Notes being a "Subordinated Series"). Subject as provided in an amended and restated principal trust deed dated 26 September 2012, as supplemented by a supplemental trust deed in respect of each Series of Notes ("Trust Deed"), the Issuer will charge, in favour of Deutsche Trustee Company Limited (the "Trustee") as trustee, by way of a first fixed charge as security for its payment obligations in respect of each Series of Notes and under the Trust Deed, certain of its rights and interests under the relevant Loan Agreement and the relevant Account (as defined in "Description of the Transaction"). In addition, the Issuer will assign certain of its administrative rights under the relevant Loan Agreement to the Trustee. In each case where amounts of principal, interest and additional amounts (if any) are stated to be payable in respect of a Series of Notes, the obligation of the Issuer to make any such payment shall constitute an obligation only to account to the noteholders of such Series of Notes (the "Noteholders"), on each date upon which such amounts of principal, interest and additional amounts (if any) are due in respect of such Series of Notes, for an amount equivalent to all principal, interest and additional amounts (if any) actually received from RSB by or for the account of the Issuer pursuant to the relevant Loan Agreement excluding, however, any amounts paid in respect of Reserved Rights (as defined in the "Terms and Conditions of the Notes"). The Issuer will have no other financial obligation under the Notes. Noteholders will be deemed to have accepted and agreed that they will be relying solely and exclusively on the credit and financial standing of RSB in respect of the payment obligations of the Issuer under the Notes. Other than as described in this Base Prospectus and the Trust Deed, the Noteholders have no proprietary or other direct interest in the Issuer's rights under or in respect of the relevant Loan Agreement or the relevant Loan. Subject to the terms of the Trust Deed, no Noteholder will have any rights to enforce any of the provisions in the relevant Loan Agreement or have direct recourse to RSB except through action by the Trustee. AN INVESTMENT IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 14 BEFORE INVESTING. THE NOTES AND LOANS (TOGETHER, THE "SECURITIES") HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ("REGULATION S")). THE NOTES OF EACH SERIES MAY BE OFFERED AND SOLD (I) WITHIN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS ("QIBs"), AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), THAT ARE ALSO QUALIFIED PURCHASERS ("QPs"), AS DEFINED IN SECTION 2(A)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940 (THE "INVESTMENT COMPANY ACT") IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144A (THE "RULE 144A NOTES") AND (II) TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON - 1 -

2 REGULATION S (THE "REGULATION S NOTES"). THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT. PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT SELLERS OF THE NOTES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. FOR A DESCRIPTION OF THESE AND CERTAIN FURTHER RESTRICTIONS, SEE "SUBSCRIPTION AND SALE" AND "TRANSFER RESTRICTIONS". The Base Prospectus has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/EC (as amended, inter alia, by Directive 2010/73/EU) (the "Prospectus Directive"). The Central Bank of Ireland only approves this Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application will be made to the Irish Stock Exchange (the "Irish Stock Exchange") for Notes issued under the Programme within 12 months of the Base Prospectus to be admitted to the Official List (the "Official List") and trading on its regulated market (the "Main Securities Market"). The Main Securities Market is a regulated market for the purposes of Directive 2004/39/EC. Such approval relates only to the Notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the European Economic Area. The Central Bank of Ireland has been requested by the Issuer to provide the United Kingdom Financial Services Authority with a certificate of approval attesting that the Base Prospectus has been drawn up in accordance with the Prospectus Directive so that the Notes issued under the Programme may be listed on the regulated market of the London Stock Exchange. Application may be made for Notes issued under the Programme to be admitted to trading on the regulated market of the London Stock Exchange. Unlisted Notes may also be issued pursuant to the Programme. The relevant Final Terms in respect of the issue of any Notes will specify whether or not such Notes will be listed on the Irish Stock Exchange (or any other stock exchange) and admitted to trading on the Main Securities Market (or any other market). Reference in this Base Prospectus to Notes being "listed" (and all related references) shall mean that such Notes have been admitted to trading on the regulated market of the Irish Stock Exchange. Regulation S Notes of each Series will initially be represented by interests in a permanent global note in fully registered form (each a "Regulation S Global Note") without interest coupons, which will be deposited with a common depositary for, and registered in the name of a nominee of, Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"), on its Issue Date. Beneficial interests in a Regulation S Global Note will be shown on, and transfers thereof will be effected only through records maintained by, Euroclear or Clearstream, Luxembourg and their respective participants. Rule 144A Notes of each Series will initially be represented by interests in a permanent global note in fully registered form (each a "Rule 144A Global Note" and, together with any Regulation S Global Note for the relevant Series of Notes, the "Global Notes") without interest coupons, which will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company ("DTC") on its Issue Date. Beneficial interests in a Rule 144A Global Note will be shown on, and transfers thereof will be effected only through records maintained by, DTC and its participants. See "Summary of the Provisions Relating to the Notes in Global Form". Individual definitive Notes in registered form will only be available in certain limited circumstances as described herein. The Notes will be in denominations in aggregate principal amount, for Rule 144A Notes, of at least U.S.$200,000 (or the equivalent in other currencies) and integral multiples of U.S.$1,000 (or the equivalent in other currencies) in excess thereof, and for Regulation S Notes, of at least EUR100,000 (or the equivalent in other currencies) and integral multiples of EUR1,000 (or the equivalent in other currencies) in excess thereof, save that unless otherwise permitted by then current laws and regulations, Notes which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise would constitute a contravention of section 19 of the Financial Services and Markets Act 2000 (the "FSMA") will have a minimum denomination of GBP100,000 (or its equivalent in other currencies). Arrangers and Permanent Dealers Citigroup Goldman Sachs International J.P. Morgan UBS Investment Bank VTB Capital The date of this Base Prospectus is 26 September

3 This Base Prospectus (including the financial statements attached thereto) comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC (the "Prospectus Directive") and for the purpose of giving information with respect to RSB and its consolidated subsidiaries taken as a whole (the "Group"), the Issuer, the Loan Agreements and the Notes. In addition, RSB, having made all reasonable enquiries, confirms that (i) this Base Prospectus contains all information with respect to RSB, the Group, the Issuer, the Loan Agreements and the Notes that is material in the context of the issue and offering of the Notes; (ii) the statements contained in the Base Prospectus are in every respect true and accurate and not misleading; (iii) the opinions, expectations and intentions expressed in this Base Prospectus are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions; (iv) there are no other facts with respect to RSB, the Group, the Issuer, the Loan Agreements or the Notes the omission of which would, in the context of the issue and offering of the Notes, make any statement in this Base Prospectus misleading in any respect; and (v) all reasonable enquiries have been made by RSB to ascertain such facts and to verify the accuracy of all such information and statements. RSB accepts responsibility accordingly. Each of RSB and the Issuer accepts responsibility for all information in this Base Prospectus. To the best of the knowledge and belief of RSB and the Issuer (which have taken all reasonable care to ensure that such is the case), the information contained in this Base Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. This Base Prospectus has been filed with and approved by the Central Bank of Ireland as required by the Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations"). The credit ratings in this Base Prospectus have been issued by Fitch Ratings CIS Limited ("Fitch"), Moody's Investors Service Limited ("Moody's") and Standard & Poor's Credit Market Services Europe Limited ("Standard & Poor's") (together, the "Rating Agencies"). As of the date of this Base Prospectus, Fitch, Moody's and Standard & Poor's are established in the European Union and registered under Regulation (EU) No 1060/2009, as amended (the "CRA Regulation"). Series of Notes issued under the Programme may be rated or unrated. Where a Series of Notes is rated, such rating will not necessarily be the same as the rating described above or the rating(s) assigned to Notes already issued. Where a Series of Notes is rated, the applicable rating(s) will be specified in the relevant Final Terms. Whether or not each credit rating applied for in relation to a relevant Series of Notes will be (1) issued by a credit rating agency established in the European Union and registered (or which has applied for registration and not been refused) under the CRA Regulation, or (2) issued by a credit rating agency which is not established in the European Union but will be endorsed by a credit rating agency which is established in the European Union and registered under the CRA Regulation or (3) issued by a credit rating agency which is not established in the European Union but which is certified under the CRA Regulation will be disclosed in the Final Terms. NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY CITIGROUP GLOBAL MARKETS LIMITED, GOLDMAN SACHS INTERNATIONAL, J.P. MORGAN SECURITIES PLC, UBS LIMITED OR VTB CAPITAL PLC (THE "ARRANGERS"), ANY DEALER (AS DEFINED HEREIN), THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES OR ANY PERSON ACTING ON THEIR BEHALF AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS BASE PROSPECTUS. NOTHING CONTAINED IN THIS BASE PROSPECTUS IS, OR SHALL BE RELIED UPON AS, A PROMISE OR REPRESENTATION, WHETHER AS TO THE PAST OR THE FUTURE. EACH PERSON CONTEMPLATING MAKING AN INVESTMENT IN THE NOTES MUST MAKE ITS OWN INVESTIGATION AND ANALYSIS OF THE CREDITWORTHINESS OF RSB AND THE ISSUER AND ITS OWN DETERMINATION OF THE SUITABILITY OF ANY SUCH INVESTMENT, WITH PARTICULAR REFERENCE TO ITS OWN INVESTMENT OBJECTIVES AND EXPERIENCE, AND ANY OTHER FACTORS WHICH MAY BE RELEVANT TO IT IN CONNECTION WITH SUCH INVESTMENT

4 Certain information and data (which may include estimates and approximations) contained in the sections titled "Business" and "Overview of the Banking Sector and Banking Regulation in Russia" of this Base Prospectus were derived from publicly available information, including press releases and filings under various regulatory and securities laws. In particular, certain information and data contained in this Base Prospectus were derived from the web sites of RosBusinessConsulting, European Card Acquiring Forum and the Agency for Deposit Insurance (the "Deposit Insurance Agency"). Each of RSB and the Issuer accepts responsibility that such publicly available information and data have been accurately reproduced and, as far as RSB and the Issuer are aware and are able to ascertain from information published by such third parties, no facts have been omitted which would render such information inaccurate or misleading. However, RSB and the Issuer have relied on the accuracy of such publicly available information and data without carrying out an independent verification. Certain information and data (which may include estimates and approximations) contained in the sections titled "Presentation of the Financial Information", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Overview of the Banking Sector and Banking Regulation in Russia" of this Base Prospectus were derived from official data published by Russian government agencies. In particular, certain information and data contained in this Base Prospectus were derived from the web sites of the Central Bank of Russia ("CBR"), the Ministry for Economic Development of Russia and the Federal State Statistics Service of Russia. Each of RSB and the Issuer accepts responsibility that such official data have been accurately reproduced and, as far as RSB and the Issuer are aware and able to ascertain from information published by such Russian government agencies, no facts have been omitted which would render such information inaccurate or misleading. However, the official data published by Russian federal, regional and local governments is substantially less complete or researched than data published by governmental agencies of Western countries. Official statistics may also be compiled on different bases than those used in Western countries. Any discussion of matters relating to Russia in this Base Prospectus may, therefore, be subject to uncertainty due to concerns about the completeness or reliability of available official and public information. The veracity of some official data released by the Russian government may be questionable. See "Risk Factors- Risks Related to Russia Neither the Issuer nor RSB has independently verified official data from Russian government agencies, nor have they independently verified information regarding the banking sector". The language of this Base Prospectus is English. Certain technical terms and legislative references have been cited in their original language so that the correct technical meaning may be ascribed to them. This Base Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, RSB, the Arrangers or the Dealers to subscribe for or purchase any Series of Notes. The distribution of this Base Prospectus and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus comes are required by the Issuer, RSB, the Arrangers and the Dealers to inform themselves about and to observe any such restrictions. In particular, the Notes have not been and will not be registered under the Securities Act. Subject to certain exceptions, the Notes may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons. For a description of certain further restrictions on offers and sales of the Notes and distribution of this Base Prospectus, see "Subscription and Sale". Neither the Issuer nor RSB intends to provide any post-issuance transaction information regarding the Notes or the performance of any Loan. No person is authorised to provide any information or to make any representation not contained in this Base Prospectus, and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer, RSB, the Trustee, the Arrangers or the Dealers. The delivery of this document at any time does not imply that the information contained in it is correct as at any time subsequent to its date. Without limitation to the generality of the foregoing, the contents of RSB's website or any other website referred to in this Base Prospectus as at the date hereof or as at any other date do not form any part of this Base Prospectus (and, in particular, are not incorporated by reference herein). IN CONNECTION WITH THE ISSUE OF ANY SERIES OF NOTES, THE DEALER OR - 4 -

5 DEALERS (IF ANY) NAMED AS THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) IN THE APPLICABLE FINAL TERMS MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF A STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE RELEVANT SERIES OF NOTES AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE RELEVANT SERIES OF NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE RELEVANT SERIES OF NOTES. ANY STABILISATION ACTION OR OVERALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF A STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES

6 FORWARD-LOOKING STATEMENTS Some statements in this Base Prospectus, as well as written and oral statements that RSB and its officers make from time to time in reports, filings, news releases, conferences, teleconferences, web postings or otherwise, may be deemed to be "forward-looking statements". Forward-looking statements include statements concerning RSB's plans, objectives, goals, strategies and future operations and performance and the assumptions underlying these forward-looking statements. RSB uses the words "anticipates", "estimates", "expects", "believes", "intends", "plans", "may", "will", "should" and other similar expressions to identify forward-looking statements. These forward-looking statements are contained in "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business" and other sections of this Base Prospectus. RSB has based these forward-looking statements on the current views of its management with respect to future events and financial performance. These views reflect the best judgment of the management of RSB but involve uncertainties and are subject to certain risks, the occurrence of which could cause actual results to differ materially from those RSB predicts in its forward-looking statements and from its past results, performance or achievements. Although RSB believes that the estimates and the projections reflected in its forward-looking statements are reasonable, if one or more risks or uncertainties were to materialise or occur, including those which RSB has identified in this Base Prospectus, or if any underlying assumptions prove to be incomplete or inaccurate, its results of operations may vary from those it expected, estimated or projected. Forward-looking statements that may be made by RSB from time to time (but that are not included in this document) may also include projections or expectations of interest income, net interest income, operating income (or loss), net profit (or loss) (including on a per share basis), dividends, capital structure or other financial items or ratios. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. You should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include: the health of the global and Russian economies, including the Russian banking sector; inflation, interest rate fluctuations and exchange rate fluctuations in Russia; the ability of RSB to refinance its indebtedness on reasonable terms or at all; RSB's ability to maintain its collection rate on overdue loans; prices for securities issued by Russian entities; RSB's ability to maintain its liquidity levels; the effects of, and changes in, the policy of the federal government of Russia (the "Russian Government") and regulations promulgated by the CBR; the effects of competition in the geographic and business areas in which RSB conducts its operations; the effects of changes in laws, regulations and taxation or accounting standards or practices in the jurisdictions where RSB conducts its operations; RSB's ability to maintain or increase market share for its products and services and control expenses; - 6 -

7 acquisitions or divestitures; technological changes; and RSB's success at managing the risks associated with the aforementioned factors. This list of important factors is not exhaustive. When reviewing forward-looking statements, the investors should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which RSB operates. Such forward-looking statements speak only as at the date on which they are made, and are not subject to any continuing obligations under the listing guidelines of the Irish Stock Exchange. Accordingly RSB is not obliged to, and does not intend to, update or revise any forward-looking statements made in this Base Prospectus whether as a result of new information, future events or otherwise. All subsequent written or oral forward-looking statements attributable to RSB, or persons acting on RSB's behalf, are expressly qualified in their entirety by the cautionary statements contained throughout this Base Prospectus. As a result of these risks, uncertainties and assumptions, a prospective purchaser of the Notes should not place reliance on these forward-looking statements

8 ENFORCEABILITY OF JUDGMENTS RSB is a joint stock company organised under the laws of Russia. The majority of RSB's directors and executive officers reside in Russia. Substantially all the assets of RSB are located in Russia. As far as RSB is aware, part of the assets of RSB's directors and executive officers are located in Russia. As a result, the Trustee, acting on behalf of the Noteholders, may not be able to effect service of process, or enforce any court judgement obtained, in the United Kingdom or the United States on or against RSB or any of RSB's directors or executive officers named in this Base Prospectus. However, RSB will appoint a process agent for the service of legal process in England and Wales. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce any provisions of the relevant Loan Agreement, or have direct recourse to RSB, except through action by the Trustee. Neither the Issuer nor the Trustee will be required to enter into proceedings to enforce payment from RSB under the relevant Loan Agreement, unless it has been indemnified and/or secured by the Noteholders to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses, which it may incur in connection therewith. Similarly, it may not be possible to obtain or enforce English or United States court judgments in Russia against RSB or its directors or executive officers. Courts in Russia will only recognise judgments rendered by a court in any jurisdiction outside Russia if an international treaty providing for the recognition and enforcement of judgments in civil cases exists between Russia and the country where the judgment is rendered. No such treaty for the reciprocal enforcement of foreign court judgments in civil and commercial matters exists between Russia and most Western jurisdictions (including the United Kingdom, Luxembourg and the United States), which may require new proceedings to be brought in Russia in respect of a judgment already obtained in any such jurisdiction against RSB or its directors or executive officers. In addition, Russian courts have limited experience in the enforcement of foreign court judgments. The limitations described above, including the general procedural grounds set out in Russian legislation for the refusal to recognise and enforce foreign court judgments in Russia, may significantly delay the enforcement of any such judgment, or deprive the Noteholders or the Trustee of effective legal recourse for claims under the Notes relating to the relevant Loan. Each Loan Agreement will be governed by English law and will provide that if any dispute or proceeding arises from or in connection with such Loan Agreement, such dispute or proceedings will be settled by arbitration in accordance with the Rules of the LCIA (formerly the London Court of International Arbitration) (the "LCIA Rules"). The place of such arbitration shall be London, England. Russia and the United Kingdom are parties to the United Nations (New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention"). Consequently, Russian courts should generally recognise and enforce in Russia an arbitral award from an arbitral tribunal in the United Kingdom, on the basis of the rules of the New York Convention (subject to qualifications provided for in the New York Convention and compliance with Russian procedural regulations and other procedures and requirements established by Russian legislation). The Arbitrazh Procedural Code of Russia dated 24 July 2002 (the "Arbitrazh Procedural Code") sets out the procedure for the recognition and enforcement of foreign arbitral awards by Russian courts. The Arbitrazh Procedural Code also contains an exhaustive list of grounds for the refusal of recognition and enforcement of foreign arbitral awards by Russian courts, which grounds are broadly similar to those provided by the New York Convention. The Arbitrazh Procedural Code and other Russian procedural legislation could change, and other grounds for Russian courts to refuse the recognition and enforcement of foreign courts' judgments and foreign arbitral awards could arise in the future. In practice, reliance upon international treaties may meet resistance or a lack of understanding on the part of a Russian court or other officials, thereby introducing delay and unpredictability into the process of enforcing any foreign judgment or any foreign arbitral award in Russia

9 Furthermore, any arbitral award pursuant to arbitration proceedings in accordance with the LCIA Rules and the application of English law to each Loan Agreement may be limited by the mandatory provisions of Russian laws relating to the exclusive jurisdiction of Russian courts and the application of Russian laws with respect to bankruptcy, winding up or liquidation of Russian companies and credit organisations in particular. Each Loan Agreement will provide for the Issuer to elect for disputes to be settled in the courts of England and Wales as an alternative to arbitration

10 PRESENTATION OF FINANCIAL AND OTHER INFORMATION Presentation of Financial Information The financial information of the Group set forth herein (i) as of and for the six months ended 30 June 2012 and 2011 has, unless otherwise indicated, been derived from the Group's unaudited interim condensed consolidated financial information as of and for the six months ended 30 June 2012 and the related notes thereto (the "Interim Financial Statements"), and (ii) as of and for the years ended 31 December 2011, 2010 and 2009 has, unless otherwise indicated, been derived from the Group's audited consolidated financial statements as of and for the years ended 31 December 2011 and 2010 and the related notes thereto (the "Annual Financial Statements" and, together with the Interim Financial Statements, the "Financial Statements"). The Annual Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as promulgated by the International Accounting Standards Board. The Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 ("IAS 34") "Interim Financial Reporting". The Issuer's audited financial statements as of and for the years ended 31 December 2011, 2010 and 2009 have been prepared in accordance with generally accepted accounting principles in Luxembourg. The Issuer's audited financial statements as of and for the years ended 31 December 2011, 2010 and 2009 have been filed with the Central Bank of Ireland and are incorporated by reference herein. Currency In this Base Prospectus, the following currency terms are used: "EUR", "Euro" or " " means the currency introduced at the start of the third stage of European economic and monetary union and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended; "GBP" means the lawful currency of the United Kingdom; "RUB", "Russian rouble", "Rouble" or "rouble" means the lawful currency of Russia; "UAH" means the lawful currency of the Ukraine; and "U.S. Dollar", "USD" or "US$" means the lawful currency of the United States. Exchange Rates The table below sets forth, for the periods indicated, certain information regarding the exchange rate between the Rouble and the U.S. Dollar, based on the official exchange rate quoted by the CBR. Fluctuations in the exchange rate between the Rouble and the U.S. Dollar in the past are not necessarily indicative of fluctuations that may occur in the future. The Group's Financial Statements are presented in Russian roubles, the Group's functional currency. Solely for the convenience of the reader, certain financial information has been translated into U.S. Dollars at the conversion rate quoted by the CBR as of the indicated date. RSB does not make any representation that the Rouble amounts referred to in this Base Prospectus could have been or could be converted into U.S. Dollars at the below exchange rates, at any other rate or at all. High Low Average (1) Period end (2) Rouble/U.S. Dollar Year ended 31 December

11 High Low Average (1) Period end (2) Rouble/U.S. Dollar Month ended January February March April May June July August September 2012 (3) (1) The average of the exchange rates on the last business day of each full month during the relevant period. (2) The period end rates are quoted for the last business day of the relevant period. (3) Data as of 25 September Source: CBR Rounding Some numerical figures included in this Base Prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them. Market Share Information In this Base Prospectus, RSB and the Issuer refer to information regarding RSB's business and the market in which RSB operates. RSB and the Issuer obtained this information in part from various third party sources and in part from RSB's own internal estimates. RSB and the Issuer have obtained market and industry data relating to RSB's business from providers of industry and market data, primarily the CBR. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Each of RSB and the Issuer has relied on the accuracy of the information from industry publications, surveys and forecasts without carrying out an independent verification thereof and cannot guarantee their accuracy or completeness. Each of RSB and the Issuer confirms that such third party information has been accurately reproduced and, as far as each of RSB and the Issuer is aware and is able to ascertain from information published by such third parties, no facts have been omitted from the information in this Base Prospectus that would render it inaccurate or misleading. In addition, RSB has made statements in this Base Prospectus regarding the Russian banking industry and its position in this industry based on RSB's own experience and investigation of market conditions. RSB cannot provide assurances that any of its assumptions regarding the banking industry are accurate or correctly reflect the position of other banks in the industry, and its statements have not been verified by any independent sources

12 ADDITIONAL INFORMATION Neither the Issuer nor RSB is required to file periodic reports under Section 13 or 15 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). For so long as either the Issuer or RSB is not a reporting company under Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the Issuer or RSB will, upon request, furnish to each holder or beneficial owner of Notes that are "restricted securities" (within the meaning of Rule 144(a)(3) under the Securities Act) and to each prospective purchaser thereof designated by such holder or beneficial owner upon request of such holder, beneficial owner or prospective purchaser, in connection with a transfer or proposed transfer of any such Notes pursuant to Rule 144A under the Securities Act or otherwise, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act

13 CONTENTS FORWARD-LOOKING STATEMENTS... 6 ENFORCEABILITY OF JUDGMENTS... 8 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ADDITIONAL INFORMATION RISK FACTORS DOCUMENTS INCORPORATED BY REFERENCE SUPPLEMENTAL BASE PROSPECTUS AND DRAWDOWN PROSPECTUS OVERVIEW OF THE PROGRAMME DESCRIPTION OF THE TRANSACTIONS USE OF PROCEEDS CAPITALISATION SELECTED CONSOLIDATED FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS ASSET, LIABILITY AND RISK MANAGEMENT MANAGEMENT SHAREHOLDING RELATED PARTY TRANSACTIONS THE ISSUER THE FACILITY AGREEMENT TERMS AND CONDITIONS OF THE NOTES FORM OF FINAL TERMS SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM TAXATION CERTAIN ERISA CONSIDERATIONS SUBSCRIPTION AND SALE TRANSFER RESTRICTIONS GENERAL INFORMATION OVERVIEW OF THE BANKING SECTOR AND BANKING REGULATION IN RUSSIA INDEX TO FINANCIAL STATEMENTS

14 RISK FACTORS An investment in the Notes involves a high degree of risk. Prospective investors should consider carefully, among other things, the risks set forth below and the other information contained in this Base Prospectus prior to making any investment decision with respect to the Notes. The risks highlighted below could have a material adverse effect on the Group's business, financial condition, results of operations or prospects which, in turn, could have a material adverse effect on RSB's ability to service its payment obligations under the relevant Loan Agreement and, as a result, the ability of the Issuer to make payments under the Notes. In addition, the value of the Notes could decline due to any of these risks, and prospective investors may lose some or all of their investment. Prospective investors should note that the risks described below are not the only risks RSB and the Issuer face. These are the risks RSB considers material. There may be additional risks that RSB currently considers immaterial or of which it is currently unaware, and any of these risks could have similar effects to those set forth above. Risks Related to the Issuer The Issuer is a special purpose vehicle and as such its ability to make payments will rely on RSB's ability to service its payment obligations under the relevant Loan Agreement. This will rely on RSB's business, financial condition, results of operations and prospects which may be adversely affected by the risks highlighted below. Risks Related to RSB's Business and the Banking Sector The instability of the global economy and financial markets could have a material adverse effect on RSB's business, financial conditions, results of operations and prospects and on the value of the Notes Beginning in the second half of 2008 and continuing into 2009, the global economy experienced a significant downturn, the effects of which continue to some degree until present. In response to the financial crisis affecting the global banking sector and financial markets and the threats to the ability of investment banks and other financial institutions to continue as going concerns, governments in the United States, Europe and elsewhere implemented and continue to implement significant rescue packages, which include, among other things, the recapitalisation of banks through state purchases of common and preferred equity securities, the state guarantees of certain forms of bank debt, the purchase of distressed assets from banks and other financial institutions by the state and the provision of guarantees of distressed assets held by banks and other financial institutions by various governments. Despite these actions, the volatility and market disruption in the global banking sector has continued to a degree unprecedented in recent history. In 2010, concerns about sovereign debt, in particular sovereign debt of certain member states of the EU, further disrupted the global credit markets. In May 2010, Greece received a 110 billion bailout from the International Monetary Fund (the "IMF") and the EU. This resulted in widening credit spreads, reduced liquidity and reduced access to funding in the global financial markets. A risk of contagious effects of the Greek sovereign debt crisis on other countries, in particular Spain, Portugal and Ireland, has intensified these adverse effects on the global financial markets. In November 2010, Ireland agreed a 85 billion bailout, and in May 2011, Portugal agreed a 78 billion bailout with the EU and the IMF. In March 2012, a second Greek bailout was agreed in the amount of 130 billion. In June 2012, Spain requested and was granted a bailout package in the amount of 100 billion. The funds were made available directly to the Spanish banks. In June 2012, Cyprus also requested a bailout. Due to high sovereign debt levels, ongoing or anticipated economic recessions, high unemployment, falling housing prices and budget deficits across most Southern-European countries, challenging economic conditions and volatility of financial markets may continue in the short term or beyond. Doubts have also been raised about the fiscal stability of the United Kingdom, Japan and the United States. On 5 August 2011, the rating agency Standard & Poor s Rating Services, a division of The McGraw Hill Companies, Inc. ("S&P"), downgraded the United States' credit rating from "AAA"

15 to "AA+" with a "negative" outlook amid uncertainties regarding the country's fiscal policy and budget deficit reduction plan, which marks the first time a rating agency has downgraded the United States' credit rating. As a result of risk aversion by investors following these developments, demand for, and values of, securities of emerging markets issuers have decreased and may continue to further decrease in the future. Disruption in the global credit markets has had a negative impact on investor confidence and has negatively affected the interbank markets and debt issuance in terms of volume, maturity and credit spreads. Among the sectors of the global credit markets experiencing particular difficulty due to the impact of the global financial and economic crisis are those associated with sub-prime mortgagebacked securities, asset-backed securities, collateralised debt obligations, leveraged finance and complex structured securities. Continued or intensified turmoil in global credit markets may adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB is subject to risks associated with the credit quality and recovery of loans to customers and market counterparties. Changes in the creditworthiness of RSB s borrowers and counterparties, or in their behaviour, or arising from systemic risks in the Russian or global financial systems, could significantly reduce the value of RSB s assets and increase RSB s write-downs and provisions for impairment losses. As is the case with nearly all other Russian banks, the global financial and economic crisis had an adverse impact on RSB s loan portfolio and certain other types of assets, giving rise to significantly increased impairment charges, write-offs and allowance for loan impairment. A decrease in the employment rate and/or disposable income in Russia, a decrease in corporate liquidity, an increase in the number of corporate and/or personal insolvencies, decreases in RSB's net interest income due to the contraction of its loan portfolio and increased funding costs, decrease in fee and commission income due to the suspension of certain of RSB's consumer finance operations, decreases in RSB's ability to generate growth in its portfolio of credit products as a result of customers' reduced creditworthiness arising out of uncertainties about their future income and ability to absorb higher interest rates, and other factors have reduced in the past and may reduce in the future the ability of RSB's customers to repay loans, which could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and on the value of the Notes. In addition, demand for RSB's consumer finance products is dependent on sales of consumer goods. Unfavourable changes in economic conditions in Russia may result in a decrease in consumer spending and disposable income, and hence a decline in consumer finance lending. Prior to the onset of the global financial and economic crisis in the second half of 2008, RSB's loan portfolio expanded significantly and in line with the general expansion of the Russian economy. However, the crisis resulted in the contraction of the Russian and global economies, dislocation of credit and financial markets and decreases in exports and prices of Russian commodities, which adversely affected the growth of the Russian economy. RSB's loan portfolio was also significantly impacted. RSB's net loan portfolio decreased by 35.7 per cent. from RUB 144,671 million as of 31 December 2008 to RUB 92,985 million as of 31 December 2009 (mainly due to a significant decrease in the amount of new loans issued), further decreasing by 11.9 per cent. to RUB 81,930 million as of 31 December The crisis also had an adverse effect on RSB's non-performing loans (loans that are more than 90 days overdue). Non-performing loans increased from 3.2 per cent. of RSB's gross consumer loan portfolio as of 31 December 2008 to 5.4 per cent. as of 31 December 2009 and then further increased to 5.9 per cent. as of 31 December Reflecting these developments, RSB's allowance for loan impairment increased by 9.8 per cent. from RUB 8,628 million as of 31 December 2008 to RUB 9,476 million as of 31 December RSB's allowance for loan impairment increased from 5.6 per cent. of its gross loan portfolio as of 31 December 2008 to 9.2 per cent. as of 31 December Furthermore, as of 31 December 2011, RSB had loans that had been restructured due to borrowers' financial difficulties in the aggregate amount of RUB 604 million, or 0.5 per cent. of RSB's gross consumer loan portfolio, as compared to RUB 1,032 million, or 1.2 per cent. of RSB's gross consumer loan portfolio, as of 31 December 2010 and RUB 1,810 million, or 1.8 per cent. of RSB's gross consumer loan portfolio, as of 31 December RSB's interest income was also

16 significantly adversely affected by the crisis, decreasing by 33.9 per cent. from RUB 51,311 million for the year ended 31 December 2008 to RUB 33,937 million for the year ended 31 December As a result, RSB's net interest income decreased by 44.8 per cent. from RUB 37,454 million in 2008 to RUB 20,690 million in RSB's interest income and net interest income decreased further by 16.2 per cent. and 5.7 per cent., respectively, in 2010 as compared to The ongoing uncertainty over the euro-zone debt crisis, concerns about the health of the global economy and particularly the economies of the European Union, United States and China, and the resulting volatility in the global financial markets continue to pose risks to the global economic environment. No assurance can be given that a further economic downturn or financial crisis will not occur, or that the measures taken or that will be taken in the future to support the banking system and to overcome the crisis, will be sufficient to restore stability in the global banking sector and financial markets in the short term or beyond. If the state of the Russian and/or the global economy deteriorates again, this may lead to weakening consumer spending, falling corporate profitability and increased insolvencies. Although RSB does not have direct exposure to Eurozone sovereign debt, continuing uncertainty in the international financial markets, or the default or a significant decline in the credit rating of one or more sovereigns or financial institutions, could adversely impact RSB's business and operating results as a result of: impact on the Russian economy and/or financial markets; decreases in the business activity and disposable income of the Russian population and reduced demand for RSB's loan products, which may result in a decrease in the size of RSB's loan portfolio, leading to a decline in RSB's interest income and fee and commission income; deterioration of creditworthiness of customers, resulting in impairments on assets and/or collateral as well as increased levels of non-performing loans and amounts of loan impairment charges; and increases in funding costs (leading to an increase in interest expense) and reduced, or complete lack of, access to capital markets due to unfavourable market conditions and increased competition for deposits. If any of the above events were to occur, this could have a material adverse effect on RSB's business, results of operations, financial conditions and prospects. Turmoil in financial markets has already adversely affected, and may continue to adversely affect, the Russian economy, the Russian banking industry in general and RSB in particular In December 2008, due in large part to the impact of the global financial and economic crisis that began in the second half of 2008, S&P downgraded Russia's foreign currency sovereign credit rating from BBB+/A-2 to BBB/A-3. Moody's Investor Services, Inc. ("Moody's") changed its outlook to "stable" from "positive" on Russia's key ratings in December In February 2009, Fitch downgraded its long-term sovereign rating for the Russian Federation from "BBB+/A-2" to "BBB/A- 3", with "negative" outlook, stating that the lower ratings reflected risks associated with the sharp reversal in external portfolio and other investment flows, which increased the cost and difficulty of meeting the country's external financing needs. In January 2010, Fitch changed its outlook from "negative" to "stable". In October 2011, Moody's adjusted its outlook for the Russian banking system from "stable" to "negative". The change reflected concerns that market volatility was weakening Russia's operating environment, which could negatively affect Russian banks through a system-wide liquidity contraction, slower credit growth and pressures on asset quality over the next 12 to 18 months. In January 2012, the World Bank cut its 2012 global economy growth forecast to 2.5 per cent. from 3.6 per cent., and the Russian economy growth forecast to 3.5 per cent. from 4.0 per cent., though the IMF raised the Russian economy growth forecast back to 4.0 per cent. in April In January 2012, Fitch revised the outlook on the Russian Federation's long-term foreign and local currency Issuer Default Ratings (each, individually, an "IDR") to "stable" from "positive" and

17 affirmed the IDRs at "BBB". The agency has also affirmed Russia's short-term IDR at "F3" and country ceiling at "BBB+". Fitch's revised outlook is based on perceived increased political uncertainty and global economic outlook. In March 2012, Fitch announced it may further lower the Russian sovereign credit rating if the Government does not restrict its budget policy and fails to limit expenditure. There can be no assurance that a future economic crisis will not have a negative effect on investors' confidence in the Russian Federation's markets or economy or the ability of Russian entities to raise capital in the international capital markets, any of which, in turn, could have a material adverse effect on the Russian Federation's economy and/or RSB's business, results of operations, financial condition and prospects. According to the Russian Federal State Statistics Service's latest estimates, Russia's gross domestic product ("GDP") decreased by 7.8 per cent. in This was the first year of negative GDP growth since Russia has also experienced a relatively high level of inflation and a large decrease in equity prices from the levels recorded in May 2008, although equity prices have increased from the low levels reached in the beginning of While Russia's GDP experienced positive growth of 4.0 per cent. in 2010, 4.3 per cent. in 2011 and an estimated 4.4 per cent. in the first half of 2012, there can be no assurance that GDP growth will continue. Furthermore, during the global financial and economic crisis, there were periodic suspensions of Russian stock market trading, extreme volatility in the Russian equity markets and sharp declines in the share prices of Russian financial institutions. The disruptions in the global markets have had a severe impact on liquidity of Russian banks and other financial institutions, as well as the availability of credit and the terms and cost of funding in Russia. Russian banks, including RSB, have experienced a reduction in available financing both in the interbank and short-term funding market, as well as in the longer-term capital markets and through bank finance instruments. The Russian securitisation market has also been largely inaccessible as a result of the crisis. Since October 2008, the Russian Government and the CBR have implemented measures intended to support the liquidity and solvency of Russian banks and to significantly increase the availability of credit to businesses, which have been seen as critical for restoring investor confidence and supporting the medium-term economic growth of the Russian economy. RSB, for example, had unsecured loans from the CBR in the amount of RUB 13,238 million as of 31 December The unsecured lending facility from the CBR was repaid by RSB in In addition, in October 2009, RSB received a subordinated loan from VEB for RUB 4,959 million with a fixed interest rate of 8 per cent. per annum (reduced to 6.5 per cent. per annum from August 2010) maturing in December There can be no assurance, however, that any similar measures, if taken by the Russian Government or the CBR in the future, will be successful in materially improving the liquidity position and financial condition of Russian banks, including RSB, in a time of a financial crisis. RSB could be adversely affected by the deterioration of the commercial soundness and/or the perceived soundness of other financial institutions, which could result in significant systemic liquidity problems, losses or defaults by other financial institutions and counterparties During the global financial and economic crisis, the international and Russian inter-bank lending markets experienced a lack of liquidity and high cost of funds unprecedented in recent history. As a result, RSB has become increasingly subject to the risk of deterioration of the actual or perceived commercial soundness of other financial institutions within and outside Russia. Financial institutions that transact with each other are interrelated as a result of trading, investment, clearing, counterparty and other relationships. This risk is sometimes referred to as "systemic risk" and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges with which RSB interacts on a daily basis, all of which could have an adverse effect on RSB. RSB routinely executes a high volume of transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other financial institutions. As a result, RSB is exposed to a significant counterparty risk, and this counterparty risk is

18 heightened due to recent financial institutions failures and nationalisations. A default by, or concerns about the stability of, one or more financial institutions could lead to further significant systemic liquidity problems, or losses or defaults by other financial institutions, which could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB's ability to grow its business is dependent on having sufficient funding as well as access to various funding sources, and RSB's inability to access such funding at favourable rates, or at all, could adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes RSB funds its businesses through a range of sources including customer accounts, issuance of debt securities and bank borrowings. Over the years, RSB has sought to increase the level of retail deposits and the proportion of such deposits in its total liabilities in order to diversify its funding base. As of 30 June 2012 and 31 December 2011, customer accounts represented 68.0 per cent. of RSB's total liabilities, as compared to 57.1 per cent. and 24.3 per cent. as of 31 December 2010 and 2009, respectively. The ongoing availability of retail deposit funding is dependent on a variety of factors outside RSB's control, such as general economic conditions, market volatility, consumer confidence levels in the general economy and the financial services industry, the availability and extent of deposit guarantees and other current laws and regulations affecting deposits (for example, Russia currently entitles depositors who are individuals to withdraw deposits, including term deposits, at any time). In addition, the growth in RSB's deposits is, in part, attributable to the fact that RSB has been offering competitive interest rates on its deposits and has been placing a significant emphasis on customer service. RSB may decide that its strategy of offering higher interest rates is not sustainable in the long-term and it may decide to focus on alternative methods of attracting retail deposits. These and other factors could lead to a reduction in RSB's ability to attract retail deposit funding on appropriate terms in the future. Similar to other deposit-taking institutions, if RSB is unable to attract retail deposits, RSB could be forced to find alternative sources of funding. Such alternative funding may not be available or, if available, may be more expensive, which may adversely impact RSB's ability to achieve its strategic goals to expand its network of branches and grow its loan portfolio. In addition, loss of consumer confidence in RSB's business could lead to retail deposit withdrawals in a short period of time and, if such a risk materialised, it would have an adverse effect on RSB's ability to fund its loan portfolio and its business operations, which in turn would adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. The remainder of RSB's funding is raised in the domestic and international capital markets and interbank markets as well as from syndicated loans and corporate deposits. The current market conditions have significantly reduced RSB's access to funding from private, capital and inter-bank markets at commercially attractive costs. RSB's ability to raise funding from domestic and international markets in amounts sufficient to meet its liquidity needs could be further adversely affected by a number of factors, including any deterioration in Russian and international economic conditions and the state of the Russian and global financial and credit markets. In particular, the tightening of the global credit markets that began in the second half of 2007 as a result of concerns over the U.S. sub-prime mortgage crisis and the valuation and liquidity of asset-backed securities resulted in, among other things, significantly higher inter-bank lending rates, which made financing for banks and financial institutions more difficult to obtain. Any future uncertainty in the Russian or international financial markets or any tightening of credit conditions could restrict RSB's access to funding in the domestic and international credit markets or significantly increase its borrowing costs. If these sources of funding are not available on commercially acceptable terms or at all, RSB's business, financial condition, results of operations, prospects and liquidity position, as well as the value of the Notes, could be materially adversely affected. RSB's ability to continue to access the fixed income capital markets and bank lenders to the extent sufficient to meet its funding needs, including the refinancing of outstanding debt falling due, could be adversely affected by a number of factors, including the current instability in the Russian and international financial markets, the state of the Russian financial and banking system, and changing

19 Russian and international economic conditions generally. The recent global financial and economic crisis was characterised by, among other things, extremely limited opportunities for funding in the capital markets, as well as significantly higher interbank lending rates, making financing more difficult and costly to obtain. In addition, as happened during the crisis, an economic downturn is likely to result in substantial withdrawals of retail deposits (existing Russian legislation allows individuals to withdraw deposits, including term deposits, at any time), which may make funding even more scarce and/or expensive. If RSB is forced to use more expensive funding sources or if other sources of its existing short and long-term funding are not available, RSB's business, financial condition, results of operations, prospects and liquidity position could be materially adversely affected. Any deterioration in the credit rating of RSB could have a material adverse impact on RSB's cost of, and access to, funding As of the date of this Base Prospectus, RSB had a "Ba3" long term rating with a "stable" outlook from Moody's. RSB also had long term and short term ratings of "B+" and "B", respectively, with a "stable" outlook from S&P and a long term rating of "B+" with a "stable" outlook from Fitch. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. There is no assurance that RSB's credit ratings will not be subject to negative rating action at any time by the relevant assigning rating organisation, as was previously the case in 2008 and 2009 as a result of the impact of the global financial and economic crisis on the Russian banking sector in general and on RSB in particular. Such negative rating action could be caused by any of a number of factors, either alone or in combination. Examples of such factors include, without limitation, a downgrade in the sovereign rating of the Russian Federation; a significant deterioration in the operating environment, or in RSB's financial or operational performance or the quality of its assets; liquidity pressures; or a reduction in RSB's capitalisation levels through payment of dividends or otherwise. Any deterioration in RSB's credit ratings could undermine confidence in RSB, limit its access to capital markets and/or increase RSB's cost of funding, which could require RSB to seek alternative and possibly more expensive sources of funding in order to maintain market share or grow RSB's business, thereby affecting RSB's competitiveness and financial condition. Margins on RSB's products may decline in the future, which would have an adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes Intense competition which has developed in Russia for credit card loans, personal loans and point-ofsale ("POS") loans, as well as excess liquidity levels prior to the onset of the global financial and economic crisis, resulted in a considerable downward pressure on RSB's effective and average interest rates on these products, particularly in In addition, as a result of increased volatility in the international and domestic markets, as well as changes in the Russian regulatory environment including the new regulations introduced by the CBR on the disclosure of the effective interest rate charged on consumer lending products and certain calculation procedures, in August 2007 RSB changed the pricing policy of its consumer lending products, including the removal of monthly fees and commissions charged on both new and existing products. Furthermore, in 2007 RSB's retail partners introduced commissions for selling RSB's products through their retail chains. As a result of these developments, in effective interest rates and interest margins on RSB's credit card loans, personal loans, POS loans and other products declined. Although RSB's average interest rate on loans and advances to individuals and net interest margin stabilized at 33.8 per cent. and 18.6 per cent. in 2010, 34.0 per cent. and 18.9 per cent. in 2011, and 34.2 per cent. and 18.7 per cent. in the first half of 2012, respectively, in the medium term RSB believes that margins in its POS loan and likely in its personal loan businesses may contract to levels at which such businesses will be principally used as vehicles for acquiring credit card customers. RSB also expects that interest margins and spreads in its credit card business may decline as a result of increased competition in the credit card market, in particular from state-owned banks. See " Competition in the Russian banking industry and specifically in consumer lending may continue to adversely affect RSB's financial condition and prospects." Although RSB's cost of funding declined in 2010 and 2011, with the average rate on

20 interest-bearing liabilities decreasing from 9.6 per cent. in 2009 to 8.7 per cent. in 2010 and 8.2 per cent. in 2011, it has increased to 8.8 per cent. in the first half of If RSB's cost of funding continues to increase, as a result of ongoing instability in the global financial markets or otherwise, RSB's margins may be adversely affected. Declining margins and/or spreads are likely to adversely affect RSB profitability, which could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB's financial condition and results of operations depend on consumers' consumption and income levels as well as consumer understanding of credit products, which are outside RSB's control RSB's business focuses on lending to individuals. As of 30 June 2012, 93.5 per cent. of RSB's gross loan portfolio comprised loans to individuals. Sustainable development of the consumer finance market and the credit card market in Russia is highly dependent on economic stability and growth, increases in consumers' average disposable income and levels of consumer spending. The global financial and economic crisis has impacted and may continue to impact the demand for consumer goods and credit card products. A deterioration in the performance of the Russian economy in the future or stagnation or reduction in levels of personal income, individual purchasing power or consumer confidence (either generally or specifically in respect of the banking sector) may cause the demand for consumer goods and credit products to decrease, resulting in a corresponding decrease in demand for RSB's credit cards and other consumer finance products. The development of the consumer finance market and credit card market in Russia and the growth of RSB's loan portfolio are also dependent on increasing consumer understanding and acceptance of credit products, particularly in smaller population centres outside of Moscow. As a substantial portion of RSB's customer base consists of individuals in a demographic group with relatively little experience or understanding of credit products, there can be no assurance that RSB will be able to maintain and increase consumer acceptance of credit products. RSB's financial condition and results of operations depend on correctly assessing the creditworthiness of its customers and counterparties, and this is not always possible RSB is exposed to credit risk related to its borrowers and counterparties. RSB s business, financial condition, results of operations and prospects depend on an accurate assessment of the creditworthiness of its clients and counterparties, the adequacy of its provisioning levels and the continued management and monitoring of the risks of its loan portfolio. The financial condition, and particularly the level of disposable income, of retail customers in Russia is generally more variable and their credit risk is, on average, less predictable than in more mature markets and economies, which makes assessment more difficult. Therefore, notwithstanding RSB s credit risk evaluation procedures, RSB may be unable to accurately assess the current financial condition of existing or potential borrowers or counterparties and to accurately determine the ability of such borrowers or counterparties to meet their financial obligations to RSB. In addition, the retail lending market in Russia is relatively undeveloped and limited resources are available to Russian banks to ascertain the credit history of individual borrowers. The institution of centralised credit databases in Russia is relatively new, with the first centralised credit bureau established in Russia in June In addition, the quality of information provided by Russian credit bureaus is generally lower than in the U.S. and in many Western countries. As credit bureaus are not widely developed in the Russian Federation, it is particularly difficult to accurately assess the credit risk of individuals. Although RSB uses information from several credit bureaus complemented by data from its internal proprietary database of individuals (including both RSB clients and applicants who are not RSB clients) consisting of over 30 million records as of 30 June 2012, RSB has to rely mostly on information provided by borrowers in making its credit decisions. As a result, the financial condition of private individuals transacting with RSB is difficult to assess and predict with a high degree of certainty. Furthermore, the limited availability of recent and reliable credit information on

21 retail borrowers constrains RSB's ability to detect and prevent fraudulent activities by potential borrowers, including the use of false information in order to obtain credit, which could result in decreased loan recovery by RSB. Limited availability of recent and reliable credit information on retail borrowers may result in RSB's inability to assess and create necessary provisions for credit risk and, as a result, provisions for loan impairment may be insufficient to cover actual losses. Loans and advances to customers net of provision for loan impairment accounted for 63.2 per cent. of RSB's total assets as of 30 June RSB's provision for loan impairment was RUB 11,427 million, or 7.5 per cent. of total loans, as of 30 June As of 30 June 2012, RSB's restructured loans amounted to RUB 574 million and total written-off loans during the six months ended 30 June 2012 amounted to RUB 2,921 million. Material additions to the provision for loan impairment could materially decrease RSB's net income. The actual amount of future provisions for loan losses cannot be determined in advance and may vary from the amounts of past provisions. Any increase in the provision for loan impairment might have a material adverse effect on RSB's financial condition and results of operations. Although RSB has invested substantial time and effort in its risk management strategies when building its existing loan portfolio and has sought to enhance those strategies in light of the current economic conditions, there can be no guarantee that such risk management strategies will protect RSB from increased levels of non-performing loans, particularly when confronted with risks that RSB did not identify or anticipate from its existing portfolio. RSB's non-performing loans were 5.2 per cent. of RSB's gross loans and advances to customers as of 30 June There can be no assurance that RSB's current level of loan recovery will be maintained in the future and failure to accurately assess the credit risk of potential borrowers or acceptance of a higher degree of credit risk in the course of lending operations may result in a deterioration of RSB s loan portfolio and a corresponding increase in loan impairments, which would have a material adverse effect on RSB s business, financial conditions, results of operations and prospects and on the value of the Notes. RSB's risk management policies and procedures may be ineffective RSB's policies and procedures for managing credit risk, market risk, liquidity risk and operational risk may prove ineffective. Some of RSB's methods for managing risk are based upon observations of historical market behaviour and RSB applies statistical techniques to these observations to arrive at quantifications of its potential risk exposures. However, these methods may not accurately quantify RSB's risk exposures, especially in situations that cannot be identified based on its historical data. In particular, if RSB enters new lines of business, historical data may be incomplete. It is also possible that the global financial and economic crisis might have impaired RSB's ability to assess credit exposure and asset values accurately if its models and techniques have become less predictive of future conditions, behaviours and valuations. As additional information becomes available, RSB may need to make additional provisions if default rates are higher than expected. If circumstances arise whereby RSB did not identify, anticipate or correctly evaluate certain risks in developing its statistical models, losses could be greater than the maximum losses envisaged under its risk management system. In addition, certain risks may not be accurately quantified by RSB's risk management systems. If a material deficiency in RSB's risk management or other internal control policies or procedures arises, this may expose it to significant credit, liquidity, market or operational risk, which may in turn have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. Material deficiencies in RSB's risk management policies or procedures may expose it to significant credit, liquidity, market or operational risk. Deficiencies in respect of credit risk management may lead to RSB not being able to assess accurately default risk on loans provided to its clients. RSB may, therefore, need to make additional provisions if default rates are higher than expected. See " RSB's financial condition and results of operations depend on correctly assessing the creditworthiness of its customers and counterparties, and this is not always possible". Deficiencies in respect of liquidity risk management may result in the inability of RSB to meet its obligations in full when they become

22 due without borrowing funds at higher than market rates or at all. For instance, unanticipated decreases in client deposits and/ or unexpected withdrawals of deposits may result in liquidity gaps that RSB may not be able to cover through borrowing in domestic and international capital, syndicated loan and inter-bank markets. Deficiencies in respect of interest rate risk management may have a negative impact on RSB's funding costs, net interest income and net interest margin and may result in a gap between its interest rate-sensitive assets and liabilities. Currency risk management deficiencies may adversely affect the value of RSB s assets and liabilities denominated in foreign currencies and its income from operations in currency spot market and currency futures and over-the-counter forwards market. Deficiencies in respect of securities price risk management may adversely affect the value of RSB's securities portfolio. Operational risk management deficiencies may result in significant unanticipated losses resulting from, among other things, fraud by employees or outsiders, mismanagement, unauthorised transactions by employees and operational errors. Therefore, material deficiencies in RSB's risk management policies or procedures could have a material adverse effect on its business, financial condition, results of operations and prospects and the value of the Notes. RSB relies on its relationships with third party distribution channels, but there is no guarantee that these relationships will continue in their current form or at all RSB uses various distribution channels to offer its products to customers, such as retail chains, points of sale and post offices, and its ability to successfully conduct its business and originate loans is highly dependent on its relationships and the contracts it has with these third parties. The top ten partners of RSB, who are among the largest Russian retail chains, have generated 40.0 per cent. of RSB's POS loans for the six months ended 30 June 2012, as compared to 46 per cent. and 51 per cent. for the years ended 31 December 2011 and 2010, respectively. However, as RSB's relationship with these retail chains is not exclusive, retailers may either seek alternatives or renegotiate their relationship with RSB to be more consistent with recent market developments. In particular, retailers have previously increased, and may continue to increase, commissions paid by RSB for selling its products through their retail chains. There can be no guarantee that retail chains or other retail stores that permit RSB POS lending operations will not choose to transfer some or all of their business to other banks, seek to provide their own consumer finance services directly, or seek to negotiate more favourable terms for cooperation with RSB, which could adversely affect the income earned from such relationships and could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. Competition in the Russian banking industry and specifically in consumer lending may continue to adversely affect RSB's financial condition and prospects The Russian market for consumer finance and banking services is highly competitive, and RSB is subject to significant competition from both domestic and foreign providers of financial services. According to the CBR, as of 1 August 2012, 965 banks and non-banking credit institutions were operating in Russia, with most of the large Russian banks' operations being based in Moscow. Some of these competitors are larger and have access to greater resources than RSB. If these competitors and other providers of financial services were to focus more of their resources on the consumer finance market, it could have a negative impact on RSB's business, results of operations, financial condition and prospects. RSB is a retail bank focusing on consumer lending. As other banks, especially the state-owned ones (such as Sberbank and Closed Joint Stock Company "Bank VTB 24" ("VTB 24")), launch consumer finance programmes or joint ventures in Russia and as existing competitors' programmes develop further, RSB's share in these markets may decline. As economic conditions started to improve in the beginning of 2010, RSB has faced more intense price and other competition from its principal competitors, who are: in the credit card loan market: Sberbank, VTB 24, Closed Joint Stock Company Bank "Tinkoff Credit Systems" ("TCS Bank"), Open Joint Stock Company "OTP Bank" ("OTP

23 Bank"), Closed Joint Stock Company "Svyaznoy Bank" ("Svyaznoy Bank"), Limited Liability Company "Home Credit & Finance Bank" ("Home Credit & Finance Bank"), Open Joint Stock Company "Orient Express Bank" ("Orient Express Bank") and Open Joint Stock Company "Alfa Bank" ("Alfa Bank"); in the personal loan market: Sberbank, VTB 24, Russian Agricultural Bank, Orient Express Bank and Home Credit & Finance Bank; in the POS loan market: Home Credit & Finance Bank, OTP Bank, Alfa Bank, Limited Liability Company "Rusfinance Bank" ("Rusfinance Bank"), Limited Liability Company "Credit Europe Bank" ("Credit Europe Bank") and Closed Joint Stock Company "BNP PARIBAS Bank" ("Cetelem"); and in the retail deposit market: Sberbank and VTB 24. Russian state-owned banks, such as Sberbank and VTB 24, have recently increased their focus on retail banking, including the provision of credit card loans, personal loans and POS loans, and are gradually becoming some of RSB's key competitors. RSB's share in the credit card market has declined in recent years, and may continue to decline, especially due to increased activity of Sberbank and VTB 24 in this market. In addition, in December 2011, Sberbank (which is the largest bank in Russia) and Cetelem (part of the BNP Paribas group) signed an agreement to establish a new bank to focus primarily on the Russian POS loan market, which is expected to become operational in the second half of On 5 September 2012, Sberbank and BNP Paribas announced the establishment of the joint Russian POS finance bank. Following the closing of the transaction on 31 August 2012, the joint bank, BNP Paribas Vostok LLC, will operate under the Cetelem brand. Sberbank has a 70 per cent. stake in the bank with the remaining 30 per cent. being owned by BNP Paribas Personal Finance France, which owns the Cetelem brand. Furthermore, following the global financial and economic crisis, banks that are directly or indirectly owned by or affiliated with the Russian Government have received large amounts of funding from the Russian Government on commercially favourable terms in connection with the measures to support the Russian banking sector, which has further enabled these banks to enhance their dominance of the Russian banking sector, including the consumer finance operations. If these banks were to focus on high-margin loans to the low-income demographic segment, there is no assurance that RSB would be able to compete successfully in this market segment. In addition, the moderate size of RSB's business compared to Russian state-owned banks and other Russian and international banks might impede RSB's ability to compete successfully with such larger rivals now or in the future, which may adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB's position in the consumer finance market may also be impacted by potential consolidation in the retail sector or the launch of consumer finance projects by retailers and/or partnerships between retailers and other consumer finance providers or banks. Consolidation in the retail sectors in which RSB operates could adversely affect the terms on which RSB cooperates with its retail partners. Should retailers launch their own consumer finance programmes or partner with RSB's competitors, independent providers of consumer finance such as RSB could face significant barriers to offering financial services to such retailers' customers. The potential consolidation of the retail sector in Russia, the possibility that large retailers may establish their own in-house consumer finance operations or RSB's inability to partner with key retailers could adversely affect RSB's market position, especially in the POS loan market, and potentially lead to a decrease in its market share, volumes of business operations, interest income and profitability. The expansion of RSB's business is subject to a number of risks RSB may not be able to achieve its desired customer growth if, among other things, it is not successful in acquiring customers and adapting its product range to evolving customer needs and preferences. To

24 achieve and sustain growth, RSB will need to monitor the economic cycles and the characteristics of its customer base and offer products which are tailored to meet customer demand. The ability of RSB to expand its business will depend on, among other things, effective adherence to its credit policies and provisioning procedures. If RSB accepts a higher degree of credit risk to achieve growth, this may have an adverse effect on its underwriting standards and increase the level of non-performing loans in its loan portfolio, which could have a material adverse effect on its financial performance and results of operations. A key element of RSB's strategy is to increase volumes of credit card loans and retail deposits. To achieve this strategic goal, RSB intends to expand its network of banking offices throughout Russia from 197 banking offices as of 30 June 2012 to over 250 banking offices as of 31 December As it expands its network of banking offices, RSB may fail to accurately assess the market potential of targeted new regions in Russia. Additionally, these new regions may generate smaller profits than anticipated and, if RSB subsequently withdraws from a region, RSB will incur costs of withdrawal. In addition, RSB's expansion activities may be subject to cost overruns. Furthermore, RSB may not be able to support its expected growth successfully if it cannot recruit qualified employees. RSB may also face other unanticipated challenges in connection with its proposed expansion activities. The failure to manage any risks associated with its expansion and growth could result in a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. The Group's expansion into Ukraine may expose it to increased credit risk which the Group may be unable to manage successfully Although the Group has been present in Ukraine since 2006, the volume of its Ukrainian operations is relatively small. As a result, it may not be able to successfully compete with its larger rivals in the Ukrainian market, which may adversely affect the Group's business and financial condition. As of 30 June 2012, the Group had a head office in Kyiv and 18 banking offices in Kyiv, Donetsk, Kharkov, Dnepropetrovsk and Odessa. The Group intends to further expand its network of banking offices in Ukraine. The Group's continued expansion in Ukraine will involve increased staff costs and administrative expenses. Additionally, the new regions in Ukraine which the Group intends to expand into may fall short of the Group's expectations in terms of profit generation and, if the Group decides to withdraw from certain regions or scale down its operations, the Group's withdrawal or curtailment of operations will entail additional costs. In addition, the Group's policies and procedures for managing credit risk in Ukraine may not be sufficiently robust, which may expose the Group to increased credit risks it may be unable to manage effectively. Therefore, the anticipated benefits of the Group's expansion into Ukraine may not be realised in the short term or at all, which may adversely affect the Group as a whole. RSB's financial condition and results of operations could be adversely affected by inaccurate estimates of future payments by its insurance companies Through its holdings in Russian Standard Insurance ("RSI") and Bankassuranse Company ("BAC"), RSB engages in the provision of insurance products. RSI's and BAC's results of operations and financial condition depend upon its ability to assess accurately the potential losses associated with the risks that it insures. RSI and BAC establish reserves for unpaid losses and loss adjustment expense ("LAE") liabilities, which are estimates of future payments of reported and unreported claims for losses and related expenses with respect to insured events that have occurred. The process of establishing reserves can be complex and is subject to considerable variability as it requires the use of informed estimates and judgments. Actuarial estimates of unpaid loss and LAE liabilities are subject to potential errors of estimation, which could be significant, due to the fact that the ultimate disposition of claims incurred prior to the date of such estimation, whether reported or not, is subject to the outcome of events that have not yet occurred. Examples of these events include the accuracy of the factual information on which the estimates were based, especially as this develops, jury decisions, court interpretations, legislative changes, changes in the medical condition of claimants, public attitudes, and economic conditions such as inflation. Any estimate of future costs is subject to the

25 inherent limitation on the ability to predict the aggregate cost of future events. It should therefore be expected that the actual emergence of loss and LAE liabilities will vary, possibly materially, from any estimate. In addition, neither RSI nor BAC is insured by a re-insurer. If the amount of insurance payments is greater than the Group's estimate, this would affect the Group's profit, and in turn adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB is exposed to interest rate risk and currency risk RSB is exposed to risks resulting from mismatches between the interest rates on its interest-bearing liabilities and interest-earning assets. For example, should interest rates decline, RSB would generally earn less interest income on its relatively short-term loan portfolio, while interest expense on its interest-bearing liabilities, a large portion of which is fixed-interest rate long-term debt securities, may not decrease to the same extent. Conversely, if interest rates on RSB's funding sources were to increase, RSB may not be able to pass on any such increases to its customers due to competitive environment or other factors. Interest rates are highly sensitive to a number of factors beyond RSB's control, including the CBR's reserve policy and discount rate, and domestic and international economic and political conditions. RSB does not hedge its interest rate risk exposure. Although RSB monitors interest rates with respect to its assets and liabilities, and generally seeks to manage effectively the interest rate positions on its interest-earning assets and interest-bearing liabilities, there can be no assurance that RSB's interest rate risk management strategies will protect it from the negative effect of future changes in interest rates. Therefore, interest rate movements may materially and adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB is also exposed to currency risks. RSB's consumer loan portfolio is denominated in roubles, and a substantial portion of its liabilities is typically denominated in U.S. Dollars. Depreciation of the rouble against the U.S. Dollar will increase the actual cost to RSB of financing its U.S. Dollar-based liabilities. RSB seeks to manage its currency risk by using derivative financial instruments, in particular foreign exchange forwards, but these measures may not be effective in protecting RSB from exposure to currency risks. See "Asset, Liability and Risk Management Market Risks Currency Risk" for more detail on RSB's currency risk hedging. Accordingly, depreciation of the rouble against the U.S. Dollar may have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. Moreover, depreciation of the rouble and a resulting decrease in the purchasing power of Russian consumers may lead to a decrease in demand for RSB's consumer finance products, which may adversely affect RSB's results of operations. Any failure of RSB to comply with capital adequacy or other ratios may result in the revocation of RSB's bank licence and breach of loan covenants According to CBR regulations, which apply a methodology using unconsolidated financial data based on Russian Accounting Standards ("RAS"), RSB's shareholders' equity as a percentage of riskweighted assets, or its capital adequacy ratio, must be at least 10 per cent. RSB's capital adequacy ratio in accordance with the CBR regulations was 14.4 per cent. as of 30 June 2012 and thus in compliance with CBR requirements. If, however, RSB's capital adequacy ratio were to fall below the 10 per cent. threshold, RSB would be in violation of the CBR mandatory ratio, and the CBR could impose various administrative fines or, in the event of repeated violations, revoke RSB's banking licence. As of 30 June 2012, RSB had a total capital ratio of 17.4 per cent. and a Tier 1 capital ratio of 11.6 per cent. calculated in accordance with the requirements of the Basel Accord as defined in the International Convergence of Capital Measurement and Capital Standard (updated April 1998) and Amendment to the Capital Accord to incorporate market risks (updated November 2005), commonly known as Basel I ("Basel"). In addition, the CBR may amend the capital adequacy requirement and increase the capital adequacy ratio at any point and, in such circumstances, RSB would be forced to seek additional capital or alternative sources of financing to comply with these requirements, which may not be available or may

26 only be available on commercially unacceptable terms. In particular, new regulatory capital requirements are expected to come into effect between 2013 (with a capital adequacy ratio as early as October 2013) and 2015, and be followed by a new Basel III-based leverage ratio requirement from 1 January It should also be noted that the CBR has published for consultation a draft of new regulations in connection with the implementation of provisions of Basel III in Russia, with the indication from the CBR that they are considering such implementation over a period of time commencing during the course of While such proposed regulations are at a preliminary stage of consultation and it is not clear whether they will be implemented in the form proposed or within such timeframe, it is possible that such an implementation of Basel III principles in Russia could have a materially adverse effect on RSB capital ratios, including as a consequence of the potential accelerated amortisation of the capital treatment of subordinated debt and the potential deduction from its capital of equity stakes that RSB holds on its balance sheet, which may result from such implementation. Additionally, new liquidity and funding requirements are expected to be gradually implemented between 2012 and Following the adoption of the Banking Sector Development Strategy, the CBR pursued its intention to increase the banks capital cushion for certain types of risky operations. As such, it increased risk weighting for a number of asset categories, which became effective from 1 July 2012, and will impact the regulatory capital adequacy No. 1 ratio requirements for Russian banks. See "Overview of the Banking Sector and Banking Regulation in Russia Russian Banking Regulation Basel Implementation in Russia". Certain of RSB's loan agreements contain covenants that require RSB to maintain its capital adequacy ratio in accordance with the CBR regulations and total adequacy ratio in accordance with Basel at certain levels. If RSB were to fall below the required thresholds for its capital adequacy ratio and total capital ratio, it would breach its covenants and be in default under the terms of these agreements, as well as the terms of other loan agreements to which it is a party which have cross-default provisions. Any such default and/or cross-default would permit acceleration of amounts due under the loans, which could have a material adverse effect on RSB's financial condition and business. The interests of RSB's controlling shareholder may conflict with those of the Noteholders As of the date of this Base Prospectus, per cent. of RSB's total outstanding share capital was controlled by The Closed Joint Stock Company "Russian Standard" Corporation" ("RSC"), Limited Liability Company "Russian Standard Invest" ("RSInv") and The Closed Joint Stock Company with 100 per cent. foreign investments "ROUST INCORPORATED" ("ROUST"), which are in turn indirectly owned and controlled by Mr. Roustam Tariko, a Russian entrepreneur, through his holding vehicle, Roust Trading Limited ("Roust Trading"). As such, Mr. Tariko is the beneficial owner of almost all of RSB's outstanding share capital. Mr. Tariko, through Roust Trading, RSC, RSInv and ROUST, is able to elect all of the RSB Board of Directors and determine the outcome of all matters submitted to the shareholders of RSB without recourse to the minority shareholders, save where such matters fall within the rules governing interested party transactions under Russian civil legislation. For example, Mr. Tariko, through Roust Trading, RSC, RSInv and ROUST could cause RSB to pursue acquisitions and other transactions or provide a loan or make large dividend payments or other distributions or payments to shareholders that are designed to benefit Mr. Tariko, RSC, RSInv and ROUST, even though such transactions may involve increased risk for the Noteholders. The total amount of dividends and other profit distributions for the year ended 31 December 2011 was RUB 5,000 million. As of 30 June 2012 and 31 December 2011, loans granted by RSB to RSC and other entities controlled by Mr. Tariko amounted to RUB 1,759 million and RUB 2,023 million, respectively. Furthermore, on 9 July 2012 the Board of Directors of Central European Distribution Corporation ("CEDC"), one of the world's largest producers of vodka and Central and Eastern Europe's largest integrated spirit beverage company, appointed Roustam Tariko to its Board of Directors as a member and a non-executive Chairman. Roust Trading also obtained the right to acquire up to 42.9 per cent. of CEDC shares (including 16 per cent. of CEDC shares already owned by Russian Standard group) upon fulfillment of certain conditions. On 13 September 2012, the Board of Directors of CEDC approved a

27 framework for the corporate governance of CEDC, which, among other things, provides for the appointment of Mr. Tariko as the Interim President of CEDC, who would supervise CEDC's operations other than in Poland and exercise certain rights with respect to CEDC s export and import businesses in Poland. Mr. Tariko is expected to retain his position as a non-executive Chairman of the CEDC Board of Directors after permanent President is appointed. As of 30 June 2012 and 31 December 2011, RSB had investments in bonds issued by CEDC in the amounts of RUB 4,863 million and RUB 2,340 million, respectively, in its available for sale securities portfolio recorded at current market value. RSB believes that under Russian banking regulations CEDC is currently not a party related to other borrowers of RSB. If in the future CEDC is determined to be a related party for the purposes of calculating a statutory ratio of maximum risk exposure to a borrower or a group of related borrowers (ratio N6), RSB would have to undertake action in order to avoid violation of this ratio. There can be no assurance that any such action would not have a material adverse effect on RSB's financial condition or results of operations. In addition, RSB owns 14.5 per cent. of the share capital of JSC Company Russian Standard, the immediate parent of RSB, purchased from its parent, Roust Trading Limited, in 2010 for RUB 6,473 million. Accordingly, the interests of the controlling shareholder may conflict with the interests of the Noteholders and the controlling shareholder may require RSB to take actions that may adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB engages in transactions with related parties, which may present conflicts of interest RSB routinely engages in transactions with related parties. These related party transactions have included financing provided or received by RSB through loans and advances, term deposits and promissory notes, as well as guarantees issued and received by the Group. See "Related Party Transactions" for more detailed information on related party transactions concluded by RSB. Such related party transactions may present conflicts of interest, and may be on terms less favourable to RSB than could be obtained in arm's-length transactions, which could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes and on the value of the Notes. In addition, some of RSB's agreements with third parties, including the Facility Agreement, limit and/or place conditions on RSB's ability to enter into transactions with affiliates and related parties. In the event that RSB's transactions with affiliates or related parties were to be determined to be in breach of such limitations or conditions, any resulting award of damages or acceleration of indebtedness under, or termination of, the relevant third party agreements could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes, the ability of RSB to meet its obligations under the Loan Agreement, and the Issuer's ability to meet its obligations under the Notes, and furthermore could result in a default or cross-default under the Notes. Failure by RSB to comply with the applicable privacy and data protection laws and regulation may have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes RSB relies on the collection and use of information from customers to conduct its business. RSB may be subject to investigative or enforcement actions by data protection authorities, legal claims or reputational damage if it acts or is perceived to be acting inconsistently with the terms of privacy policies or applicable law. Concerns about RSB's collection, use and/or sharing of personal information or other privacy related matters, even if unfounded, could deter customers from using RSB's services and require RSB to alter its business practices resulting in a possible loss of revenue. Data protection legislation and regulation may change in the future and impose new burdensome requirements. Compliance with any such requirements may increase RSB's costs or require it to change the way it conducts business, as well as lead to a possible loss of revenue

28 RSB operates in a highly regulated environment, and its business depends on the maintenance of its licences RSB's operations are subject to legislation, regulations, rules, guidance, codes of conduct and government policies in relation to the products it markets and sells. Regulatory authorities have broad jurisdiction over many aspects of RSB's business, including capital adequacy requirements, marketing and selling practices, advertising and terms of business. These requirements, the interpretation of which is often unclear, are typically designed to protect retail customers. Consequently, these regulations may limit RSB's activities, including its lending activities, and may increase its costs of doing business or affect the profitability of RSB's products. All banking and various related operations in Russia require the grant of licences from the CBR, as well as licences from the FSFM for professional activities on the Russian securities market. RSB has obtained licences from the CBR in connection with its banking and related operations, and licences from the Federal Service of Financial Markets ("FSFM") for operations involving foreign currencies and broker, dealer, custodian and securities management. Although RSB has been successful in obtaining licences, there can be no assurance that it will be able to obtain, maintain or renew such licences in the future. In the event that RSB loses its CBR licences, applying for new CBR licences would be costly and time consuming. The CBR may, in its discretion, impose additional requirements on the existing licenses or deny any request by RSB for licences, which could materially adversely affect its business, financial condition, results of operations and prospects and the value of the Notes. In addition, in 2004 RSB was admitted to the Russian mandatory retail bank deposits insurance system. A loss of a CBR licence or a breach of its terms by RSB, any delay or failure to obtain or renew any CBR licence in the future, the discontinuation of RSB's membership in the retail bank deposits insurance system, or other penalties for non-compliance with other applicable rules and regulations could result in the temporary or permanent suspension of some or all of RSB's banking activities. In particular, discontinuation of RSB's membership in the retail bank deposits insurance system would result in RSB being unable to conduct its deposit taking activities, which could have a material adverse effect on RSB's liquidity position, as deposits account for a substantial part of RSB's funding base. RSB may be subject to litigation or regulatory proceedings or investigations for alleged non-compliance with the applicable legislation, which may result in penalties or fines and be costly and time-consuming for RSB's management. The CBR may also impose penalties on RSB for breaches of the terms of its licences. Any such developments could, in turn, affect RSB's ability to fulfil its payment obligations, either generally or under the Loan Agreement, and could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. In addition, in the absence of specific consumer lending laws, Russian courts have extended the scope of the Federal Law No "On Consumer Protection" dated 7 February 1992, as amended ("Consumer Protection Law"), which provides general protection for consumers, to consumer loans. As of the date of this Base Prospectus, the draft law on consumer lending has been drafted by the Russian Government but not yet been submitted to the Russian parliament. If specific consumer protection laws, such as the Consumer Protection Law, are adopted, such laws may provide for the right of regulatory agencies to regulate the consumer loan market and introduce mandatory rules on consumer finance activities. RSB would have to respond to any such material changes in applicable legislation or regulation by adopting its products and/or its business practices, the effects of which may have a material impact on the success of RSB's operations and its overall profitability. Additionally, there can be no assurance that RSB would be able to respond effectively to any such changes, and its failure to do so could affect RSB's operations and the conduct and success of its business. Although RSB believes that it operates its business in compliance with all applicable laws and regulations, there can be no assurance that applicable laws will not change or that a regulator will not change its interpretation of the laws and take action against market participants offering such products

29 Acquisitions that RSB may make in the future may involve a number of inherent risks, any of which could cause RSB not to realise the anticipated benefits RSB may seek to expand its operations through selective acquisitions. However, there is no assurance that RSB will be able to identify attractive targets in the future or that RSB will be able to acquire them on acceptable terms. Moreover, acquisitions pose significant risks to RSB's existing operations, placing additional demands on RSB's senior management who are also responsible for managing existing operations. RSB may also be unable to integrate the operations of any future acquired businesses or to achieve the particular operating and financial synergies anticipated to result from the acquisitions. In addition, acquisitions may result in a significant increase in indebtedness. RSB's focus on unsecured loan products exposes it to additional credit risk and may result in increased non-performing loans RSB's credit cards, POS and personal loans, which collectively accounted for 94.6 per cent. of RSB's net customer loan portfolio as of 30 June 2012, are unsecured loans. While such loans generally earn higher interest rates than secured loans, they normally involve a higher credit risk. The fact that most of RSB's loans are unsecured may result in decreased loan recovery in the event of a default by its borrowers as compared to secured loans, which could materially adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB may be unable to retain key management personnel or recruit experienced and/or qualified personnel, either of which may adversely affect RSB's results of operations and prospects RSB is dependent on its senior management for the implementation of its strategy and the operation of its day-to-day activities. In addition, retailer and other business relationships of members of senior management are important to the conduct of RSB's business. RSB's business prospects depend, in part, on its ability to continue to attract, retain and motivate qualified and experienced banking and management personnel. There can be no assurance that measures taken by RSB will ensure that key members of senior management will remain at RSB or that such business relationships will endure. Competition in the Russian banking industry for personnel with relevant expertise is intense due to the relatively small number of available qualified individuals. RSB's failure to recruit and retain necessary personnel or manage its personnel successfully could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. Damage to RSB's brand or reputation, including as a result of adverse use of the "Russian Standard" brand, could have a material adverse effect on RSB RSB's success is dependent, in part, upon the strength of the Group's "Russian Standard" brand and the reputation of its business. The Group licenses the "Russian Standard" trademark. There could be significant brand confusion in areas where the Group uses the same trademark for businesses other than its banking business. Such brand confusion or adverse publicity and damage to the "Russian Standard" brand could harm RSB's reputation or reduce the value of the brand. If RSB's brand recognition decreases or experiences adverse publicity, it may lose customers, due to decreased customer willingness to use RSB's products or to deposit funds with RSB. Adverse publicity and damage to the "Russian Standard" brand could also adversely affect RSB's ability to enter into or maintain existing partnerships with retailers and other key relationships with third parties on which RSB depends. Any of these events, if they were to occur, could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB's business is highly dependent on its information technology ("IT") system, the disruption or failure of which could result in loss of business and reputational damage to RSB As with other consumer finance groups, RSB's business depends on its ability to process a large number of transactions efficiently and accurately. RSB's ability to maintain financial and operating controls, to monitor and manage its risk exposure across RSB, to keep accurate records, to provide high quality customer service, and to develop and sell products and services depends, in part, on the

30 uninterrupted and efficient operation of its information and communications systems, including its IT and other systems which protect business continuity. RSB's ability to expand its business also depends on the ability of its IT and other systems to handle increases in transaction volumes and any requirements that may result from new product features and functionalities. RSB's IT systems may be vulnerable to a number of problems, such as software or hardware malfunctions, malicious hacking, physical damage to vital IT centres, and computer viruses. In addition, RSB's IT systems need regular upgrading to meet changing business and regulatory requirements and to maintain the efficiency of its network's operations. To the extent that RSB's activities or the activities of customers involve the storage and transmission of confidential information, security breaches and viruses could expose RSB to claims, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in RSB's systems and could adversely affect RSB's reputation and its ability to generate deposits. Moreover, as RSB considers expanding its Internet and mobile banking services, it may be exposed to greater security risks and additional risks of disruption to its systems. There can be no assurance that a disruption (even short-term) to the functionality of RSB's information technology systems, delays, or other problems of increasing capacity of the IT systems, or increased costs associated with such systems, will not have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. RSB's assets and business are not fully insured and may be subject to loss Currently, RSB does not maintain comprehensive insurance over its assets or for business interruption. Although the buildings and premises in which RSB's offices are located are generally insured by the owners thereof, and although RSB maintains insurance over cash held in offices and directors' and officers' insurance and also has a disaster recovery plan for information systems failure, any event which would normally be covered as an insurable risk such as fire, theft, systems disruptions or other operational risk would expose RSB to loss, which could, if significant, materially adversely affect its business, financial condition, results of operations and prospects and the value of the Notes. Additionally, existing insurance cover may not or may not fully cover all insured losses. RSB's participation in the development of a postal bank in Russia may adversely affect RSB's results of operations and prospects RSB is one of the two remaining participants in the tender held by VEB for the development of a postal bank in Russia. If RSB wins the tender, cooperation with the Russian Post and VEB is expected to allow RSB to increase its penetration in the Russian retail banking market by selling products through Russian post offices. However, the terms of external investors' participation in this project have not been determined and could require considerable investments from the external participants. In addition to funding the establishment of the postal bank, if appointed, RSB may incur additional burdens in the form of management time and other resources that it would have to commit to the project. As at the date of this Base Prospectus, RSB does not have any binding legal commitments as a result, or in respect, of this tender. RSB is subject to accounting system and internal control risks RSB does not have accounting systems that directly support the preparation of IFRS financial statements. Currently, the financial statements prepared under RAS by RSB are transformed manually into IFRS to prepare its IFRS-based financial statements. Financial statements prepared by RSB under RAS require significant processing to present financial data in accordance with IFRS because RAS differ significantly from IFRS. If RSB is unable to maintain an effective accounting and internal control system, this may have a material adverse effect on RSB's business, financial conditions, results of operations and prospects and the value of the Notes

31 Risks Related to Russia The Group is a Russian banking group and substantially all of its net interest income is derived from Russia. There are certain risks associated with an investment in Russia. Investors in emerging markets, such as Russia, are subject to greater risks than more developed markets Investors in emerging markets such as Russia should be aware that these markets are subject to greater risk than investors in more developed markets, including, in some cases, significant legal, economic, financial and political risks. Investors should also note that emerging economies such as the economy of Russia are subject to rapid change and the information included herein may become outdated relatively quickly. Russia's economy, like other emerging economies, is vulnerable to market downturns and economic slowdowns elsewhere in the world. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in Russia or other emerging economies could dampen foreign investment in these markets and adversely affect their economies. These developments could in particular limit RSB's access to capital. Moreover, any financial turmoil can result in declines in the creditworthiness of many borrowers and an overall decrease in demand for loans as well as severe liquidity constraints for companies that operate in emerging markets, which, in turn, could have an adverse effect on Russian banks, including RSB. Investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, their investment is appropriate. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved and investors are urged to consult with their own legal, financial and tax advisers before making an investment in the Notes. Political instability in Russia may have a material adverse effect on RSB's business, financial condition, results of operations or prospects There was considerable political uncertainty in Russia in the 1990s, characterised by frequent conflicts between the executive, legislative and judicial authorities, which had a consequent adverse impact on the business and investment climate in Russia. Over the past two decades, the progress of political and other reforms has been erratic and unpredictable and the composition of the Russian Government has at times been unstable. The Russian political system continues to be vulnerable to popular dissatisfaction, including dissatisfaction with the results of the privatisations of the 1990s, as well as to demands for autonomy from certain ethnic and regional groups. Shifts in governmental policy and regulation in Russia are less predictable than in many Western democracies and could disrupt or reverse political, economic and regulatory reforms. Any significant change in the Russian Government's programme of reform could lead to a deterioration in Russia's investment climate which might limit the ability of RSB to obtain financing in the international capital markets, could require RSB to seek alternate sources of funding resulting in higher borrowing costs and could have a material adverse effect on its business, results of operations, financial condition and prospects. Political instability in Russia increased preceding and during the State Duma and presidential elections, which took place in December 2011 and March 2012, respectively. Protesting the results of these elections, many residents of Moscow and other Russian cities took part in political rallies. While the Russian political system and the relationship between the President, the Russian Government and the Russian parliament currently appear to be stable, the potential for political instability resulting from the uncertain political climate and an increase in political activity in Russia should not be disregarded. As a result of this political instability, investment in Russian companies may decrease and the stability of the Russian economy may be significantly affected. This may have a material adverse effect on RSB's business, results of operations, financial condition and prospects

32 Domestic and regional political conflicts, acts of terrorism and natural disasters could create an uncertain operating environment that could have a material adverse effect on RSB's business, financial conditions, results of operations and prospects and hinder its long-term planning ability Russia is a federation of 83 political units, which include republics, territories, regions, cities of federal significance, an autonomous region and autonomous districts. The delineation of authority and jurisdiction among the constituents of Russia and the Russian Government is, in many instances, unclear and sometimes remains contested. In the past, lack of consensus between the federal government and regional or local authorities resulted in the enactment of conflicting legislation at various levels and led to political instability. In particular, in the past, conflicting laws were enacted in the areas of privatisation, securities, corporate legislation, regulation of land use and licensing. Some of these laws and the governmental and administrative decisions implementing them, as well as certain transactions consummated pursuant to them, have, in the past, been challenged in Russian courts and such challenges may occur in the future. This lack of consensus creates uncertainties in the operating environment in Russia, which could hinder RSB's long-term planning efforts and may prevent RSB from effectively and efficiently carrying out its business strategy. In addition, ethnic, religious, historical and other divisions have, on occasion, given rise to tensions and, in some cases, military conflicts and terrorist attacks. For example, Russian military and paramilitary forces have been engaged in the Chechen Republic in the recent past and continue to maintain a presence there. The conflict in the late 1990s and into the 2000s brought normal economic activity within Chechnya to a halt for a period of time and adversely affected the economic and political situation in neighbouring regions. In addition, a military conflict in August 2008 between Russia and Georgia involving South Ossetia and Abkhazia resulted in significant overall price declines on the Russian stock exchanges. The emergence of any new or escalation of existing tensions in the region may negatively affect the economy of Russia and other countries that are involved and lead to a deterioration of the investment environment. Such tensions or conflicts may lead to reduced liquidity, greater trading volatility and significant reductions in the price of listed Russian securities, with a resulting negative effect on the liquidity and trading prices of the Notes and on RSB's ability to raise capital in the international capital markets. Furthermore, various acts of terrorism have been committed within Russia. Most recently, on 24 January 2011, suicide bombings were carried out at the Moscow Domodedovo airport, which, as reported, resulted in the death of more than 37 people and injuries to many more. Any future military conflicts or acts of terrorism could have an adverse effect on Russia's political stability, as well as the international financial and commodities markets and the global economy. Historically, natural disasters have adversely affected the global and Russian economies and financial markets. For example, in July and August 2010, a series of fires broke out across Western Russia and around Moscow, covering at one stage over 193,000 hectares. The fires, combined with a summer drought and record high temperatures, resulted in a decline in the Russian harvest, and accordingly an increase in demand for imported grain, resulting in Russia's highest reported import volumes of grain in over ten years. The costs associated with controlling and reducing the fires, addressing environmental concerns and repairing the damage caused by the fires may have had an adverse effect on the Russian economy. The risks associated with these or similar events could materially and adversely affect the investment environment and overall consumer confidence in Russia, which, in turn, could have a material adverse effect on RSB's business, results of operations, financial condition and prospects

33 Economic instability in Russia could have a material adverse effect on the business of RSB Since the dissolution of the Soviet Union in the early 1990's, Russia's society and economy have been undergoing a rapid transformation from a one party state with a centrally planned economy to a pluralist democracy with a market-oriented economy. This transformation has been marked by periods of significant instability. The Russian economy has, at various times, experienced and/or is currently experiencing: significant declines in national GDP; high levels of inflation; an unstable currency; high levels of state or corporate debt, relative to GDP; crises in banking sector limiting the ability of banks to provide liquidity to Russian corporate and individual borrowers; a large number of loss-making enterprises that continue to operate due to the lack of effective bankruptcy procedures; widespread tax evasion; growth of the "black" and "grey" market economies; pervasive capital flight; high levels of corruption and organised crime; political and social instability, including acts of terrorism; dependence of the economy on exports of commodities; significant declines and volatility in the stock market; significant increases in unemployment and underemployment; the impoverishment of a large portion of the Russian population; and outdated and deteriorating physical infrastructure. The Russian economy has been subject to abrupt downturns. For example, in August 1998, in the face of a rapidly deteriorating economic situation, the Russian Government defaulted on its rouble denominated securities, the CBR stopped its support of the rouble and a temporary moratorium was imposed on certain hard currency payments. These actions resulted in an immediate and severe devaluation of the rouble and a sharp increase in the rate of inflation, a dramatic decline in the prices of Russian debt and equity securities and an inability of Russian issuers to raise funds in the international capital markets. These problems were aggravated by the near collapse of the Russian banking sector in connection with the same events. This further impaired the ability of the banking sector to act as a reliable source of liquidity to Russian companies and resulted in a widespread loss of bank deposits. From 2000 through the first half of 2008, Russia experienced rapid growth in its GDP, higher tax collections and increased stability of the rouble, providing a certain degree of economic soundness. However, the Russian economy was adversely affected by the recent global financial and economic crisis that commenced in the second half of 2008, which manifested itself through extreme volatility in debt and equity markets, reductions in foreign investment and decreases in GDP around the world

34 According to the data published by the CBR, real growth of Russia s GDP decreased from 8.1 per cent. in 2007 to 5.2 per cent. in In 2009, the Russian GDP contracted by 7.8 per cent. in real terms; however, in 2010 and 2011 Russian GDP grew by 4.0 per cent. and 4.3 per cent., respectively. As the price of oil and other commodities collapsed in 2008, with the price of West Texas Intermediate (WTI) oil falling from over U.S.$146 per barrel in July 2008 to less than U.S.$37 per barrel in December 2008, the Russian economy, whose performance depends closely on export revenues from oil and other commodities, fell into a recession, while tightening global credit and capital markets left many highly leveraged Russian financial institutions and corporations unable to borrow or raise equity in the capital markets. While market prices of most commodities, including oil, have recovered since March 2009 (although not to the same levels as prior to the crisis), there can be no assurance that current market prices will persist. In addition, during the global economic downturn, Russia experienced declines in debt and equity prices, capital markets price volatility, occasional suspension in trading of public securities on local exchanges, and outflows of capital from the country, in particular in 2008 and early Although Russian equity markets have rebounded since then, there can be no assurance that such market volatility and downside risk will not persist in the future. Although economic conditions in Russia have been generally improving in 2010, 2011 and the first half of 2012, there is a lack of consensus as to the desired scope, content and pace of economic and political reform. There can be no assurance that reform policies will continue to be implemented or, if implemented, will be successful, that Russia will remain receptive to foreign investment, or that the economy of Russia will continue to improve. Any failure or reversal of the current policies of economic reform and stabilisation could have a material adverse effect on RSB's business, results of operations, financial condition and prospects. Crime and corruption could disrupt RSB's ability to conduct its business and adversely affect the value of the Notes Levels of organised criminal activity continue to be significant in Russia. The Russian and international press have reported high levels of corruption in Russia, including the bribing of officials for the purpose of initiating investigations by government agencies and facilitating payments. Additionally, published reports indicate that a significant number of the Russian media regularly publishes biased articles in exchange for payment. RSB's business, results of operations, financial condition and prospects, as well as the value of the Notes, could be materially adversely affected by illegal activities or corruption or by claims alleging that RSB is involved in illegal activities. Exchange rate fluctuations and inflation may result in decreased demand for RSB's products and services During the financial crisis of August 1998 as well as the recent global financial and economic crisis and the resulting collapse of global commodity market prices in the second half of 2008 and first quarter of 2009, the value of the rouble against the US dollar, the Euro and currencies of some of Russia s other major trading partners dropped. The rouble depreciated against the U.S. dollar from under RUB23.50 per U.S. dollar in July 2008 to over RUB36.00 per U.S. dollar in January-February 2009, thereby raising the cost of funding for financial institutions and corporations that borrowed internationally in foreign currencies. The rouble recovered somewhat and the exchange rate was RUB30.48 per U.S. dollar at the end of 2010; however, it has since weakened to the exchange rate of RUB32.19 per U.S. dollar as of 31 July There is no guarantee that the rouble will not continue to decline in value in the future in response to economic conditions, market sentiment or other factors. The value of the rouble as well as the domestic inflation rate remain particularly vulnerable to any downside relapse in global commodity prices. The ability of the Russian Government and the CBR to limit any further volatility of the rouble will depend on many political and economic factors, including the Russian Government's ability to control inflation and the availability of foreign currency reserves. In addition, persistent elevated price inflation, in the absence of corresponding income or wage

35 growth, decreases consumer purchasing power (in roubles), including that of RSB s customers. A decrease in consumer purchasing power is likely to adversely affect discretionary spending in general, and purchases of consumer goods in particular, resulting in lower demand for consumer loans. It is also likely to adversely affect the ability of customers to repay loans, thereby degrading loan quality. Moreover, the volatility in inflation rates over the last several years, and particularly its propensity for acceleration during the boom years leading up to the financial crisis, make it more difficult for Russian banks such as RSB to lend profitably in real terms, since borrowers repay their loans in roubles that have lost purchasing power, and the effect of inflation may not be fully captured in the interest rate borne by the loan at the time it was originated. Russia has in the past experienced relatively high levels of inflation. According to Rosstat, the consumer price inflation rate in Russia was 11.9 per cent. in 2007, 13.3 per cent. in 2008, 8.8 per cent. in 2009, 8.8 per cent. in 2010, 6.1 per cent. in 2011 and 3.2 per cent. in the first half of Any return to high and sustained inflation could lead to a reduction in the value of the rouble relative to other currencies. The Russian currency control regime has been substantially developed and liberalised during the last decade. Notwithstanding that, the Federal Law No. 173-FZ "On Currency Regulation and Currency Control" of 10 December 2003, as amended (the "Currency Law") and current regulations contain a number of limitations. These include a general prohibition on foreign currency operations between Russian companies (except for the operations specifically listed in the Currency Law and the operations between the authorised banks specifically listed in the CBR regulations) and the requirement to repatriate, subject to certain exemptions, export related earnings in Russia. Restrictions on RSB s ability to conduct some of these transactions could increase its costs, prevent RSB from continuing necessary businesses, or from successfully implementing its business strategy, which could have a material adverse effect on RSB's business, results of operations, financial condition and prospects. In addition, because of the limited development of the foreign currency market in Russia, RSB may experience difficulty converting roubles into other currencies. Any delay or other difficulty in converting roubles into a foreign currency to make a payment or any practical difficulty in the transfer of foreign currency could limit RSB s ability to meet its payment and debt obligations, which could result in the acceleration of debt obligations and cross defaults. Furthermore, there is only a limited number of available rouble denominated instruments in which RSB may invest its excess cash. Any balances maintained in roubles will give rise to losses if the rouble devalues against major foreign currencies. Although most of the previously existing currency control restrictions are no longer in effect, any future change to the currently existing currency control regime may have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes. Disruptions or deterioration in Russia's physical infrastructure may increase the cost of doing business in Russia Russia's physical infrastructure is in a very poor condition and largely dates back to Soviet times. It has not been adequately funded and maintained over the past two decades and may cause disruptions in normal business activities, as was the case when recent electricity and heating shortages disrupted the local economics of several regions of Russia. Particularly affected are pipeline, rail and road networks, power generation and transmission systems, communication systems and building stock. The Russian Government is actively implementing programmes to reorganise the nation's rail, electricity and telephone systems. Such reorganisations are expected to result in increased charges and tariffs while failing to generate the anticipated capital investment needed to repair, maintain and improve these systems. Further deterioration of Russia's physical infrastructure may harm the national economy, disrupt the transportation of goods and supplies, add costs to doing business in Russia and interrupt business operations, any of which could have a material adverse effect on RSB's business, results of operations, financial condition and prospects

36 Weaknesses related to the Russian legal system and Russian legislation may result in a material adverse effect on RSB and on the rights of investors in the Notes The Russian Federation is still developing an adequate legal framework required for the proper functioning of a market economy. Several fundamental Russian laws have become effective only relatively recently. The recent nature of much of Russian legislation and the rapid evolution of the Russian legal system place the enforceability and underlying constitutionality of laws in doubt and can result in ambiguities, inconsistencies and anomalies in their application. The following aspects of Russia's legal system create uncertainty with respect to many of the legal and business decisions that RSB's management makes. Many of these risks do not exist in countries with more developed legal systems: since 1991, Soviet law has been largely, but not entirely, replaced by a new legal regime as established by the 1993 Russian Federal Constitution, the Civil Code and by other federal laws, and by decrees, orders and regulations issued by the President, the Russian Government and federal ministries which are, in turn, complemented by regional and local rules and regulations. There may be inconsistencies between such laws, presidential decrees, state resolutions and ministerial orders, and between local, regional and federal legislation and regulations; decrees, resolutions and regulations may be adopted by state authorities and agencies in the absence of a sufficiently clear constitutional or legislative basis and with a high degree of discretion. There is a risk that the state may arbitrarily nullify or terminate contracts, withdraw licences, conduct sudden and unexpected tax audits, initiate criminal prosecutions and civil actions and use common defects in accounting or share issues and registration as pretexts for court claims and other demands to liquidate companies or invalidate such issues and registrations and/or transactions; substantial gaps in the regulatory structure may be created by the delay or absence of regulations implementing certain legislation; there is a lack of judicial and administrative guidance on interpreting applicable rules and limited precedential value of judicial decisions; Russia has a judiciary with limited experience in interpreting and applying market-oriented legislation and is vulnerable to economic and political influence; and Russia has weak enforcement procedures for court judgments, and there is no guarantee that a foreign investor will obtain effective redress in a Russian court. As a result of the above factors, sudden unexpected changes in legal requirements in Russia may occur. Such unpredictability and lack of legal guidance may result in inadvertent violations by RSB of applicable rules and regulations. Moreover, the current status of the Russian legal system makes it uncertain whether RSB would be able to enforce its rights in disputes with any of its contractual counterparties. RSB's ability to protect and enforce such rights is dependent on the Russian courts, which are underdeveloped, inefficient and, in places, corrupt. The independence of the judicial system and its immunity from economic, political and social influences in Russia remains uncertain and the court system is generally understaffed and underfunded. The Russian Federation is a civil law jurisdiction and, as such, judicial decisions have a limited precedential value in subsequent decisions. Most court decisions are not published and enforcement of court orders can in practice be very difficult in Russia. All of these factors make judicial outcomes in Russia difficult to predict and effective redress uncertain. Further, court judgments are not always enforced or followed by law enforcement agencies. Furthermore, although Russia (as successor to the Soviet Union) is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and therefore arbitral

37 awards obtained in another signatory state should be recognised by a Russian court, in practice, reliance on international treaties may meet resistance or lack of understanding in courts of Russia. These factors introduce an element of delay and unpredictability into the process of enforcing any foreign arbitral award in Russia, which may hamper investors ability to enforce their rights with respect to the Notes. Russian regulation of banking and financial activity has been undergoing significant changes Like most of Russia's legislation on business activities, Russia's laws on banks and banking activity have only relatively recently been adopted. In addition to Federal Law No. 86-FZ "On the Central Bank of Russia (Bank of Russia)" dated 10 July 2002, as amended (the "Central Bank Law"), and Federal Law No. 395-I "On Banks and Banking Activity" dated 2 December 1990, as amended (the "Banking Law"), Russia has adopted and continues to develop new banking legislation. Federal Law No. 177-FZ "On Insurance of Deposits of Individuals in Banks of Russia" dated 23 December 2003, as amended (the "Deposit Insurance Law"), was adopted with a view to mandate the protection of retail bank deposits. The Deposit Insurance Law establishes a deposit insurance scheme in which all Russian banks must participate or lose their ability to accept retail deposits and open bank accounts for individuals. The adoption of the Deposit Insurance Law strengthens competition in the retail deposit market as all Russian banks that choose to participate in the deposit insurance scheme will have the ability to offer protected deposits. The majority of Russian banks that filed their requests were admitted to the deposit insurance scheme. The CBR has also been developing regulations on bank capital and bringing them in line with international standards. Currently, CBR regulations on bank regulatory capital are relatively new, which could lead to uncertainty in their application and interpretation, in particular in light of the adoption of new international standards on capital regulation. The changes in the Russian banking and financial regulation are aimed at bringing the regulatory regime more in line with that of more developed countries. However, due to the changes in the regulatory system, banks operate in a new and relatively unclear regulatory environment. It is difficult to forecast how the changes in the banking and financial regulation will affect the Russian banking system and no assurance can be given that the regulatory system will not change in a way that will impair RSB's ability to provide the range of banking services that it currently provides or to compete effectively, thus materially and adversely affecting RSB's business, financial condition, results of operations and prospects and the value of the Notes. Unlawful or arbitrary government actions may have a material adverse effect on RSB's business, financial condition, results of operations or prospects The Russian Government authorities have a high degree of discretion in Russia and at times exercise their discretion arbitrarily, without conducting a hearing or giving prior notice, sometimes in a manner that is contrary to law. Moreover, the Russian Government also has the power in certain circumstances, by regulation or act, to interfere with the performance of, nullify or terminate contracts. Unlawful or arbitrary actions of Russian authorities have included withdrawal of licences, sudden and unexpected tax audits, criminal prosecutions and civil actions. Federal and local government agencies have also used common defects in matters surrounding documentation of financing activities as pretexts for court claims and other demands to invalidate such activities and/or to void transactions, often for political purposes. Unlawful or arbitrary Russian Government actions, if directed at RSB, could have a material adverse effect on its business, financial condition, results of operations and prospects and the value of the Notes. Inspections of RSB's operations may result in determinations that RSB has violated laws, decrees or other regulations The application of Russian laws is not always clear or consistent, particularly where the pace of legislative drafting has not kept pace with the demands of the marketplace. Russian commercial

38 practices and legal and regulatory frameworks differ significantly from practices in other jurisdictions. As a result, it is often difficult to maintain compliance with changing regulatory requirements. Russian authorities have the right to, and do, conduct periodic inspections of RSB's operations throughout the year. Any such inspections may conclude that RSB has violated laws, decrees or regulations, and RSB may be unable to adequately address such conclusions. Such findings could result in the imposition of fines or penalties or more severe sanctions including the suspension or termination of RSB's licences, any of which could increase costs or materially adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. Legislation to protect against nationalisation and expropriation may not be enforced in the event of a nationalisation or expropriation of RSB's assets Although the Russian Government has enacted legislation to protect property against expropriation and nationalisation and to provide fair compensation to be paid if such events were to occur, there can be no certainty that such protections would be enforced. This uncertainty is the result of several factors, including the lack of state budgetary resources, an independent judicial system and sufficient mechanisms to enforce judgments. The concept of property rights is not well developed in Russia and there is not a great deal of experience in enforcing legislation enacted to protect private property against nationalisation and expropriation. As a result, RSB may not be able to obtain proper redress in the courts, and may not receive adequate compensation if in the future the Russian Government decides to nationalise or expropriate some or all of RSB's assets. The expropriation or nationalisation of any of RSB's assets without fair compensation may have a material adverse effect on RSB's business, results of operations, financial condition and prospects. Russian corporate governance, public reporting requirements and accounting regulations, to which RSB is subject, differ significantly from those applicable to comparable companies in other jurisdictions RSB's corporate affairs are governed by its charter, its internal regulations and the laws governing Russian banks and companies incorporated in Russia. The responsibilities of members of RSB's management and Board of Directors under Russian law are different from those applicable to, and may be subject to certain requirements not generally applicable to, companies organised in the United Kingdom, the United States or other developed countries. For instance, disclosure and reporting requirements, as well as anti-fraud and insider-trading legislation, have only recently been enacted in Russia. Most Russian companies and managers are not accustomed to restrictions on their activities arising from these requirements. The concept of fiduciary duties of management or directors to their companies and shareholders is also relatively new and is not well developed. Violations of disclosure and reporting requirements or breaches of fiduciary duties could materially adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes. Russian banking and securities market regulations contain certain disclosure requirements, including the requirement to file periodic financial statements prepared in accordance with RAS with the CBR. Much of this financial information is subsequently made available to the public. Material differences exist between financial information prepared under RAS and that prepared under IFRS. Therefore, prospective investors are cautioned not to place undue reliance on such information when evaluating the financial performance of RSB. In addition, despite recent initiatives to improve corporate transparency in Russia, there is less publicly available information about RSB than there is available for comparable banks and banking groups in, for example, the United Kingdom or the United States. Neither the Issuer nor RSB has independently verified official data from Russian government agencies, nor have they independently verified information regarding the banking sector Official statistics and other data published by the CBR, Russian federal, regional and local governments and federal agencies may be substantially less complete or researched and, consequently, less reliable than those published by comparable bodies in more developed countries, such as those in North America and Western Europe. Accordingly, neither the Issuer nor RSB can assure prospective

39 investors that the official sources from which the Issuer and RSB have drawn some of the information set out herein are reliable or complete. Russian state entities may produce official statistics on bases different from those used by comparable bodies in other jurisdictions. Any discussion of matters relating to Russia herein may, therefore, be subject to uncertainty due to concerns about the completeness or reliability of available official and public information. The Russian taxation system is relatively underdeveloped RSB is subject to a broad range of taxes and other compulsory payments imposed at the federal, regional and local levels, including, but not limited to, corporate income tax, value added tax, property tax and other taxes. Russian tax laws, regulations and court practice are subject to frequent change, varying interpretations and inconsistent and selective enforcement. Historically, the system of tax collection has been relatively ineffective, resulting in the imposition of new taxes in an attempt to increase government revenues. The existing Russian tax legislation, including the Tax Code of Russia (the "Tax Code"), has been in force for a short period relative to tax laws in more developed market economies. Interpretation of existing tax laws by the governmental authorities is often unclear, inconsistent or contradictory and may result in the imposition of conditions, requirements or restrictions not provided for by the existing legislation. Accordingly, few precedents with regard to the interpretation of these laws have been established. In addition, in some past instances, although it may be viewed as contradictory to Russian constitutional law, Russian tax authorities have applied certain tax laws retroactively, issued tax claims for periods for which the statute of limitations had expired and reviewed the same tax period multiple times. In practice, the Russian tax authorities may interpret the tax laws in ways that do not favour taxpayers, who often have to resort to court proceedings to defend their position against the tax authorities. Furthermore, court rulings on tax or other related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. In addition to the usual tax burden imposed on Russian taxpayers, these conditions complicate tax planning and related business decisions. For example, tax laws are unclear with respect to the deductibility of certain expenses. Despite RSB's best efforts to comply with applicable tax laws, these uncertainties could possibly expose RSB to significant fines and penalties and to potentially severe enforcement measures despite its best efforts at compliance, could result in a greater than expected tax burden and could have a material adverse effect on the Group's business, financial condition, results of operations or prospects. On 12 October 2006, the Plenum of the Supreme Arbitration Court of Russia (the "Supreme Arbitration Court") issued Resolution No. 53 (the "Resolution"), formulating the concept of "unjustified tax benefit", which is described in the Resolution by reference to circumstances such as absence of business purpose or transactions where the form does not match the substance, and which could lead to the disallowance of tax benefits resulting from the transaction or the re-characterisation of the transaction for tax purposes. There has been very little further guidance on the interpretation of this concept by the tax authorities or courts, but it is likely that the tax authorities will actively seek to apply this concept when challenging tax positions taken by taxpayers in Russian courts. Although the intention of this Resolution was to combat tax law abuses, in practice there can be no assurance that the tax authorities will not seek to apply this concept in a broader sense than may have been intended by the Supreme Arbitration Court. Russia's largely ineffective tax collection system and continuing budgetary funding requirements increase the likelihood that the Russian Government will impose arbitrary and/or onerous taxes and penalties in the future, which could have a material adverse effect on RSB's business, financial condition, results of operations or prospects. Additionally, tax has been utilised as a tool for significant state intervention in certain key industries. A large number of changes have been introduced to the Tax Code since its adoption. These

40 amendments may result in additional tax costs for RSB. The amendment was introduced to decrease deductibility limits applicable to taxpayers' interest expenses, which are calculated on the basis of the CBR's refinance rate (including for obligations denominated in foreign currency). The amendment decreasing deductibility limits was introduced as a temporary measure to be in effect for a time period specified in the law and, according to the current wording of the law, this period expires on 31 December The above conditions create tax risks in Russia that are more significant than the tax risks typically found in countries with more developed taxation, legislative and judicial systems. These tax risks may impose additional burdens and costs on RSB's operations, including management resources. Further, these risks and uncertainties complicate RSB's tax planning and related business decisions, potentially exposing RSB to significant fines, penalties and enforcement measures, which could have a material adverse effect on RSB's business, results of operations, financial condition and prospects. It is expected that Russian tax legislation will become more sophisticated, which may result in the introduction of additional revenue raising measures. Although it is unclear how any new measures would operate, the introduction of such measures may affect RSB's overall tax efficiency and may result in significant additional taxes becoming payable. RSB cannot offer prospective investors any assurance that additional tax exposures will not arise while the Notes are outstanding. Additional tax exposures could have a material adverse effect on RSB's business, financial condition, results of operations or prospects. Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments Generally, tax returns in Russia remain subject to inspection by the tax authorities for a period of three years immediately preceding the year in which the decision to conduct a tax audit is taken. The fact that a particular year has been reviewed by the tax authorities does not mean that any tax returns applicable to that year will not be subject to further review by a superior tax authority during the three year limitation period. The Tax Code provides for the extension of the three year statute of limitations if the actions of a taxpayer create insurmountable obstacles for a tax audit. Because the relevant term is not defined in Russian law, the tax authorities may have broad discretion to argue that a taxpayer has "obstructed" or "hindered" or "created insurmountable obstacles" in respect of an inspection and to ultimately seek review and possibly apply penalties beyond the three year term. Tax audits may result in additional costs to RSB if the relevant tax authorities conclude that RSB did not satisfy its tax obligations in any given year. Such audits may also impose additional burdens on RSB by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on RSB's business, financial condition, results of operations and prospects and the value of the Notes or the trading price of the Notes. Russian transfer pricing legislation is unclear Transfer pricing legislation became effective in Russia on 1 January This legislation allowed the tax authorities to make transfer-pricing adjustments and impose additional tax liabilities in respect of certain types of transactions ("controlled" transactions). There were also special transfer pricing rules for transactions with securities and derivatives. However, Russian transfer pricing rules were not well-developed and there was little guidance and court practice, which left a wide room for interpretation by the Russian tax authorities and courts. Following adoption of Federal Law No 227-FZ dated 18 July 2011, the new Russian transfer pricing rules became effective from 1 January The new rules are more technically elaborated, detailed and, to a certain extent, better aligned with the international transfer pricing principles developed by the Organisation for Economic Cooperation and Development. The amendments have toughened considerably the previous transfer pricing rules, by, among other

41 things, effectively shifting the burden of proving market prices from the tax authorities to the taxpayer and obliging the taxpayer to keep specific documentation. The introduction of the new transfer pricing rules may increase the risk of transfer pricing adjustments being made by the tax authorities and, therefore, may have a material impact on RSB 's business and results of operations. It also requires RSB to ensure compliance with the new transfer pricing documentation requirements proposed in such rules. Risks Related to the Notes and the Trading Market Payments under the corresponding Series of Notes are limited to the amount of certain payments received under the relevant Loan Agreement The Issuer is only obliged to make payments under a Series of Notes to the Noteholders in an amount equal to, and in the same currency as, sums of principal, interest and additional amounts (if any) actually received and retained (net of tax) by or for the account of the Issuer from RSB pursuant to the relevant Loan Agreement. Consequently, if RSB fails to meet its payment obligations under the relevant Loan Agreement in full, this will result in the Noteholders of a Series of Notes receiving less than the scheduled amount of principal, interest and additional amounts (if any) on the relevant due date. The Noteholders have no direct recourse to RSB Except as otherwise disclosed in the "Terms and Conditions of the Notes" and in the Trust Deed, no proprietary or other direct interest in the Issuer's rights under or in respect of any Loan exists for the benefit of the Noteholders. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce any of the provisions of the relevant Loan Agreement or have direct recourse to RSB, except through action by the Trustee under the Security Interests (as defined in "Terms and Conditions of the Notes"). Neither the Issuer nor the Trustee pursuant to the Security Interests shall be required to enter into proceedings to enforce payment under the relevant Loan Agreement, unless it has been indemnified and/or secured by the Noteholders to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith. Payment of principal and/or interest by RSB under the relevant Loan Agreement to, or to the order of, the Trustee or the Principal Paying Agent is expected to meet, and will discharge, the Issuer's obligations in respect of the Notes. Consequently, the Noteholders will have no further recourse against the Issuer or RSB after such payment is made. Any fluctuations in the credit ratings assigned to Russia, RSB, the Programme or the Notes may cause trading in the Notes to be volatile and/or adversely affect the trading price of the Notes As of 30 June 2012, the face value of all outstanding RSB's loan participation notes was USD 400 million, and RSB had a "Ba3" long term rating with a "stable" outlook from Moody's. RSB also had long term and short term ratings of "B+" and "B", respectively, with a "stable" outlook from S&P and a long term rating of "B+" with a "stable" outlook from Fitch. The Programme has been given a long term rating of "B+" by S&P, "Ba3" by Moody's and "B+" by Fitch. The Russian Federation has been assigned a "BBB/A-2" foreign currency long and short-term sovereign credit rating and a "BBB+/A-2" local currency long and short-term sovereign credit ratings with a "stable" outlook by Standard & Poor's. Fitch has assigned the Russian Federation a long-term foreign and local currency IDR of "BBB" "stable". RSB cannot be certain that a credit rating will remain for any given period of time or that a credit rating will not be downgraded or withdrawn entirely by the relevant rating agency if, in its judgment, circumstances in the future so warrant. RSB has no obligation to inform the Noteholders of any such revision, downgrade or withdrawal. A suspension, downgrade or withdrawal at any time of the credit rating assigned to Russia, RSB, the Programme or the Notes may cause trading in the Notes to be

42 volatile or adversely affect the trading price of the Notes. The credit ratings may not reflect the potential impact of the risks discussed above or of any other factors that may affect the value of the Notes. Credit ratings assigned to the Notes do not necessarily mean that they are a suitable investment. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Similar ratings on different types of securities do not necessarily mean the same thing. The ratings do not address the likelihood that the principal on the Notes will be prepaid, paid on an expected final payment date or paid on any particular date before the legal final maturity date of the Notes. The ratings do not address the marketability of the Notes or any market price. Any change in the credit ratings of the Notes or RSB could adversely affect the price that a subsequent purchaser will be willing to pay for the Notes. The significance of each rating should be analysed independently from any other rating. Newness of debt instruments denominated and settled in Roubles There are risks associated with the newness of debt instruments that are denominated and settled in Roubles and the inexperience of Euroclear and Clearstream, Luxembourg (both "Clearing Systems") and the Russian and international banking systems in dealing with them. Offerings of debt instruments that are denominated and may be settled in Roubles, as a Series of Notes may be, are a relatively new product in the international capital markets. This, coupled with the relative inexperience of Clearing Systems and the Russian and international banking systems in dealing with Rouble payments and Rouble accounts, could lead to unforeseen difficulties, which may have an adverse effect on the liquidity, marketability or trading price of such Notes. In particular: Roubles became an eligible settlement currency of Clearstream, Luxembourg with effect from 15 January 2007 and of Euroclear from 12 February Due to the lack of experience of the Clearing Systems with settling, clearing and trading debt instruments that are both denominated and settled in Roubles, there can be no guarantee that such clearing, settlement and trading procedures will progress smoothly or in a way which is comparable to procedures carried out with respect to instruments denominated in more conventionally settled currencies, such as U.S. Dollars or Euros. Russian law previously prohibited or otherwise severely restricted the transfer and holding of Roubles offshore and required their repatriation onshore. Although these restrictions have now been lifted for non-residents (save for some restrictions which apply to the regime of residents' accounts held outside of Russia), there is still no specific tested framework under Russian law for transferring or holding Roubles in offshore Rouble accounts. As with much recent Russian legislation, there is extremely limited or non-existent regulatory or court practice in interpreting these regulations (see "Risks Related to Russia" "Risks related to the Russian legal system and legislative weaknesses"). If restrictions or prohibitions were placed on the transfer and holding of Roubles offshore or if such legislation was reinterpreted by the Russian regulators or courts to the effect that restrictions were still deemed to apply to the transfer and holding of Roubles offshore, this would severely hinder the Noteholders' ability to receive payments of principal or interest under the relevant Notes or proceeds from the sale of such Notes. Payments of principal and interest under the relevant Notes and proceeds from the sale of such Notes will be made in Roubles. All payments of Roubles to, from, or between Rouble accounts located outside Russia will be made via onshore correspondent accounts within the Russian banking system. The Russian banking system is less developed than many of its Western counterparts and at present has little experience in dealing with payments relating to Eurobonds or similar international debt instruments. Consequently there is a risk that

43 payments of both principal and interest under the relevant Loan and the relevant Notes and proceeds from the sale of such Notes, which need to pass through the Russian banking system, will be subject to delays and disruptions which may not exist in more mature banking markets. In order for the Noteholders to remove Roubles received from payments of principal and interest on the relevant Notes and proceeds from the sale of such Notes from the Clearing Systems, they will need to hold a bank account denominated in Roubles. The administrative difficulties associated with opening Rouble accounts outside Russia are significant. Nonresident Noteholders may also encounter considerable procedural difficulties with opening Rouble accounts onshore in Russia. There can therefore be no guarantee that the Noteholders will be able to successfully open up a Rouble bank account either offshore or in Russia or transfer Rouble payments made under the relevant Notes out of the Clearing Systems. Upon the occurrence of certain circumstances described in the relevant Loan Agreement, RSB may prepay the relevant Loan Under the terms of the relevant Loan Agreement, RSB may, subject to certain conditions, prepay the relevant Loan if RSB is required to increase its payments for tax reasons regardless of whether the increased payment obligation results from any change in the applicable tax laws or treaties, or from the change in application of existing tax laws or treaties, or from enforcement of the security provided for in connection with the Notes. RSB may also prepay the relevant Loan if RSB is required to indemnify the Issuer in respect of certain increased costs to the Issuer (as set out in the Loan Agreement). In the event that it becomes unlawful for the Issuer to allow the relevant Loan to remain outstanding under the relevant Loan Agreement, to allow the Notes to remain outstanding, to maintain or give effect to any of its obligations under the Loan Agreement and/or to charge or receive or to be paid interest at the rate then applicable to the relevant Loan, RSB may be required by the Issuer to repay the relevant Loan in full. In case of any prepayment, all outstanding Notes would be redeemable at par with accrued interest or as otherwise specified in the relevant Loan Agreement. There may be no market for the Notes when issued There may not be an existing market for the Notes at the time they are issued. Further there can be no guarantee that a Series of the Notes will be listed or traded on any exchange. Further, if a Series of the Notes is listed or traded on an exchange, there can be no assurance that a liquid market will develop for the Notes, that the holders of the Notes will be able to sell their Notes, or that such holders will be able to sell their Notes for a price that reflects their value. Even if a market for a Series of the Notes develops, the market price of the Notes could be subject to significant fluctuations in response to actual or anticipated variations in the operating results of RSB's competitors, adverse business developments, changes to the regulatory environment in which RSB operates, changes in financial estimates by securities analysts, the actual or anticipated sale of a large number of Notes and other factors, including those set forth in "Risk Factors". Noteholders' claims under a Subordinated Loan may be subordinated to those of other creditors under Russian insolvency law RSB's obligations in respect of the payment of principal and interest under any Subordinated Loans will be subordinated in right of payment to the claims of its unsubordinated creditors. As a result, in case of the insolvency, liquidation, dissolution, winding up or analogous events of RSB, RSB's assets will be available to satisfy obligations in respect of the Subordinated Loan only after the claims of all unsubordinated creditors have been satisfied in full. See "Overview of the Banking Sector and Banking Regulation in Russia". Such remaining assets may not be sufficient to satisfy RSB's obligations under the relevant Subordinated Loan Agreement. Any Subordinated Loan Agreement may not prohibit or limit the incurrence by RSB of unsubordinated indebtedness, other subordinated indebtedness that ranks equally with the indebtedness under Subordinated Loans or other liabilities by RSB. Incurrence of such additional indebtedness or other liabilities could adversely affect RSB 's

44 ability to make payments under any Subordinated Loans. RSB anticipates that, from time to time, it will incur additional indebtedness, including unsubordinated indebtedness. In addition, in order for a Subordinated Loan to be eligible for inclusion as own funds (capital) under the CBR regulations, the terms of each Subordinated Loan Agreement must provide for prior CBR approval of any early payment thereof. Moreover, following the occurrence of certain acceleration events (which will be defined in the relevant Subordinated Loan Agreement), amounts payable under each Subordinated Loan Agreement may be declared immediately due and payable. However, such actions may not result in the payment of principal, accrued interest and additional amounts, if any, due under any Subordinated Loan Agreement being paid in full, as such payments may be made only after all unsubordinated obligations are satisfied in full. Russian regulatory capital regulations are relatively new and subject to further review and development With respect to regulatory capital for banks and subordinated loans in particular, the concept of subordinated debt is relatively new in Russia, and the rules governing subordinated debt may be subject to further review, clarification and development. In particular, the regulatory capital regulations of the CBR are currently rudimentary as compared with regulatory capital legislation enacted in other jurisdictions, which could lead to uncertainty and a lack of clarity in the interpretation and application of such regulations. In this respect, RSB will be relying on letters issued by the CBR at RSB's requests to confirm, inter alia, that the CBR agrees with the structural aspects of the issue of the Notes. In addition, RSB will be relying on conversations with representatives of the CBR both before and after the receipt of these letters. Such letters issued by the CBR, as well as such conversations, are informal individual clarifications and do not have the effect of legislation, and as such they may, at any time, be revised, revoked and/or disapplied. Usually, following the CBR's preliminary approval and conclusion (zakluchenie) on the regulatory capital treatment of the Subordinated Loan and on the basis of the discussion in the paragraph above, the CBR delivers its final approval and conclusion (zakluchenie) on the eligibility of the Subordinated Loan for inclusion as own funds (capital) between 30 and 60 days after the issue date of the Notes. There can, however, be no guarantee that such approval and conclusion in respect of the Subordinated Loan will be granted. If the CBR does not initially grant such approval or conclusion in respect of the Subordinated Loan within 90 days after the date of the Subordinated Loan Agreement, RSB will have the right to prepay the Subordinated Loan pursuant to provisions of the relevant Subordinated Loan Agreement, in which circumstances the Notes will become redeemable on a pro rata basis corresponding to the amount received in respect of the Subordinated Loan Agreement. If such approval and conclusion are granted by the CBR, it is possible that the interpretation of such capital treatment changes or that the regulatory capital rules are subsequently amended or clarified. As a result, RSB could lose the eligibility for inclusion as own funds (capital) granted to each Subordinated Loan and, therefore, exercise the right (described below) to prepay the Subordinated Loan which would result in the early repayment of the Notes. Under the relevant Subordinated Loan Agreement, RSB will, inter alia, have the right, following the CBR's delivery of its final conclusion (zaklucheniye) as being eligible for inclusion as own funds (capital), to prepay the Subordinated Loan, in whole but not in part, at any time if, as a result of any amendment or clarification of, or change in (including a change in interpretation or application of), applicable requirements of the CBR, the Subordinated Loan would cease to be eligible for inclusion as own funds (capital). If the Subordinated Loan is prepaid pursuant to this provision, the Notes will become due and repayable at their principal amount plus interest accrued and all other amount payable by RSB, if any, on a pro rata basis corresponding to the amount received in respect of the Subordinated Loan or Subordinated Loans being so redeemed

45 RSB's payments under Loans may be subject to Russian withholding tax In general, interest payments on borrowed funds made by a Russian legal entity to non-resident persons are subject to Russian withholding tax at a rate of 20 per cent. in respect of legal entities or organisations and 30 per cent. in respect of individuals, unless such withholding is reduced or eliminated pursuant to the terms of an applicable double tax treaty. RSB believes that under the provisions of the Tax Code introduced by the Law No. 97-FZ it will be exempt from the obligation to withhold tax from the Issuer s interest income if the Issuer is a tax resident in Luxembourg and has submitted to RSB a special confirmation of its tax residency prior to the relevant settlement. This exemption should apply as long as the interest income payable by RSB to the Issuer relates to the Notes issued prior to 1 January Income under the Notes issued prior to 1 January 2014 but with a maturity going beyond that date should also be subject to this exemption. In the absence of the proper certificate submitted to RSB, Russian withholding income tax should apply on any interest payments. Interest payments related to the Notes issued after 1 January 2014 will not be covered by the Law No. 97-FZ and generally may be subject to withholding income tax in Russia. There can be no assurance as to whether any exemption will be available under any new legislation in the future. At the same time the double tax treaty between Luxembourg and the Russian Federation dated 23 June 1998 (the Treaty ) reduces the applicable Russian withholding income tax if on the date of the interest payment the Issuer is a tax resident in Luxembourg and a respective confirmation of such residency (i.e. a certificate of residency) has been submitted by the Issuer to RSB. The application of the Treaty benefits could potentially be affected by the changes in the position of the Russian tax authorities in relation to the nature of the transaction when assessing the applicability of the Treaty. In particular, based on the official position of the Ministry of Finance expressed in the Letter No /1 dated 30 December 2011 (the Letter ), special purpose vehicle companies ( SPVs ) used in Eurobond transactions may not be regarded as beneficial owners of interest income as required by the double taxation treaties, because they in fact act as intermediaries passing all the income to the Eurobond holders. Although that position refers to a deal structure which is not exactly the same as the transaction structure described in this Base Prospectus, there can be no assurance that the position expressed in the Letter would not potentially be applied by the Russian tax authorities to the payments of interest in respect of the Notes issued after 1 January In circumstances where payments under any Loan Agreement become payable to the Trustee as described herein, benefits of the Russia-Luxembourg Tax Convention will cease, and payments under such Loan Agreement to the Trustee should be made subject to Russian income tax withholding at a rate of 20 per cent. (or, potentially, 30 per cent. in respect of individual non-resident Noteholders) or such other rate as may be in force at the time of payment. It is not expected that the Trustee would, or would be able to, claim a withholding tax exemption under any double tax treaty under such circumstances. In addition, while some Noteholders might be eligible for an exemption from or reduction of Russian withholding tax under applicable double taxation treaties, there is no assurance that such exemption or reduction would be available in practice under such circumstances. If the interest payments under any Loan are subject to any withholding of Russian tax (as a result of which the Issuer would reduce payments under the corresponding Series of the Notes in the amount of such withholding tax), RSB will be obliged under the terms of the relevant Loan Agreement to increase interest payments (pay additional amounts) as may be necessary so that the net amount of payments received by the Issuer will not be less than the amounts it would have received in the absence of such withholding. It is currently unclear whether the provisions obligating RSB to grossup interest payments will be enforceable under Russian law. There is a risk that gross-up for withholding tax will not take place and that interest payments made by RSB under the relevant Loan Agreement will be reduced by any such Russian income tax withheld by RSB at a rate of 20 per cent. (or, potentially, 30 per cent. in respect of individual non-resident Noteholders), or such other rate as may be in force at the time of payment. See "Taxation - Russian Taxation - Taxation of Interest on the Loan". If RSB is obliged to increase payments or pay additional amounts, it may (without premium or

46 penalty), subject to certain conditions, prepay such Loan in full. In such case, all outstanding Notes of the corresponding Series would each be redeemable at par together with accrued and unpaid interest and additional amounts, if any, to the date of the redemption. See "Terms and Conditions of the Notes - 6. Redemption". On 21 November 2011, Luxembourg and the Russian Federation signed a protocol amending the Treaty (the Protocol ), which should become effective after its ratification by the parties. The Protocol introduces certain changes to the provisions of the Treaty, including: benefits provided by the Treaty to a resident of one contracting state may be limited if the main purpose or one of the main purposes of the establishment and existence of such resident is receipt of treaty benefits; and other income not dealt with in other articles of the Treaty may now be subject to withholding income tax in the source country (under the currently applicable version of Article 21 of the Treaty other income may only be taxed in the country of residence of the receiving party only). Implementation of the Protocol after its ratification may also have an impact on future payments made by RSB in respect of Notes issued after 1 January Particularly, there can be no assurance that interest payments of RSB would not become subject to withholding income tax in Russia. Tax might be withheld on disposal of the Notes in Russia, reducing their value If a non-resident Noteholder legal entity which holds and disposes of the Notes issued after 1 January 2014 other than through a permanent establishment in Russia, sells the Notes in Russia and/or receives proceeds from a source in Russia, there is a risk that the part of the payment that represents accrued interest may be subject to the applicable Russian withholding income tax. A non-resident Noteholder may be entitled to reduce such Russian withholding income tax pursuant to an exemption under an applicable double taxation treaty, but there could be no assurance that such exemption or reduction will be available. Where proceeds from a disposal of the Notes are received from a source within Russia by a nonresident individual Noteholder, there is a risk that personal withholding income tax at the rate of 30 per cent. would become payable on such disposal. The imposition or a possibility of the imposition of withholding income tax could adversely affect the value of the Notes. U.S. Foreign Account Tax Compliance Withholding The Issuer and other non-u.s. financial institutions to which payments on the Notes are made may be required to withhold U.S. tax at a rate of 30 per cent. on all, or a portion of, payments made after 31 December 2016 pursuant to the foreign account tax compliance provisions ("FATCA") of the Hiring Incentives to Restore Employment Act of This withholding tax may be triggered if (i) the Issuer is a foreign financial institution ("FFI") (as defined in FATCA) which enters into an agreement with the U.S. Internal Revenue Service ("IRS") to provide certain information on its account holders (making the Issuer a "Participating FFI"), (ii) the Issuer has a positive "passthru percentage" (as defined in FATCA), and (iii) (a) an investor does not provide information sufficient for the relevant Participating FFI to determine whether the investor is subject to withholding under FATCA, (b) an investor does not consent, where necessary, to have its information disclosed to the IRS, or (c) any FFI to or through which payment on such Notes is made is not a Participating FFI or otherwise exempt from FATCA withholding. The application of FATCA to interest, principal or other amounts paid with respect to the Notes is not clear. If an amount in respect of U.S. withholding tax were to be deducted or withheld from interest, principal or other payments on the Notes as a result of FATCA, none of the Issuer, any paying agent or any other person would, pursuant to the Terms and Conditions of the Notes be required to pay additional amounts as a result of the deduction or withholding of such tax. As a result, investors may, if FATCA is implemented as currently proposed by the IRS, receive less interest or principal than expected

47 Investors will not be entitled to receive additional amounts or otherwise be compensated by RSB with respect to taxes withheld pursuant to FATCA. The application of FATCA to Notes issued or materially modified on or after 1 January 2013 may be addressed in the relevant Final Terms or a supplement/supplementary prospectus to this Base Prospectus, as applicable. FATCA is particularly complex and its application to the Issuer, the Notes and the Holders of the Notes is uncertain at this time. Each Holder of Notes should consult its own tax adviser to obtain a more detailed explanation of FATCA and to learn how this legislation might affect each Holder in its particular circumstance. In the event of RSB's insolvency, Russian bankruptcy law could adversely affect the ability of the Lender, the Trustee or the Noteholders to recover sums owed under the relevant Loan Agreements Russian bankruptcy laws are subject to varying interpretations and constant amendments. As a result of limited court practice it is not possible to predict with certainty how claims of the Issuer and/or the Trustee or the Noteholders under the relevant Loan Agreement against RSB would be resolved in case of RSB's bankruptcy. Under the Federal Law No. 127-FZ "On Insolvency (Bankruptcy)" dated 26 October 2002, as amended (the "Law on Insolvency (Bankruptcy)") and the Federal Law No. 40-FZ "On Insolvency (Bankruptcy) of Credit Organisations" dated 25 February 1999 (the "Law on Insolvency (Bankruptcy) of Credit Organisations", together with the Law on Insolvency (Bankruptcy), "Russian Bankruptcy Law"), unsecured creditors' claims are generally subordinated to current liabilities (i.e. claims which arose after the initiation of bankruptcy proceedings and costs related to bankruptcy litigation) and the following claims ("Priority Claims"): (a) injury and moral damages obligations; (b) claims of individuals under cash deposits and balances on current accounts (except for individual entrepreneurs holding such deposits or accounts for business purposes); (c) claims of the state corporation Agency for Deposits Insurance ("Deposits Insurance Agency") transferred to it pursuant to the Federal Law No. 177-FZ "On Insurance of Retail Deposits in Russian Banks" dated 23 December 2003 ("Retail Deposit Insurance Law"); (d) recourse claims of the CBR if it paid compensation to the retail depositors of a bank which does not participate in the retail deposit insurance system; (e) claims arising in connection with severance payments and other employment related obligations and royalties. In accordance with the Law on Insolvency (Bankruptcy) of Credit Organisations, claims of creditors secured by a pledge are satisfied from the proceeds from the sale of pledged assets in priority to other creditors' claims, except for Priority Claims. Any obligations of creditors secured by a pledge remaining unsatisfied following the sale of the pledged assets would be ranked as claims of unsecured creditors. Generally, under the Law on Insolvency (Bankruptcy), taxes and other payment obligations owed to the Russian Government are satisfied pari passu with the claims of unsecured creditors. Application of these provisions, however, remains untested. In the event of the insolvency of RSB, Russian Bankruptcy Law could adversely affect the ability of the Issuer, the Trustee or the Noteholders to recover sums owed by RSB under the relevant Loan Agreement. Risks Related to Luxembourg Law Issuer's payments under the Notes may be subject to withholding tax Payments in respect of any Series of Notes will be made, except in certain limited circumstances, without a deduction or withholding for or on account of Luxembourg taxes, provided certain conditions are met. However, interest on the Notes paid to individuals resident or certain types of legal entities established in European Union member states and certain other countries may become subject to withholding tax (pursuant to the European Council Directive 2003/48/EC on the taxation of

48 savings income (the "Savings Directive")). For further information on the Savings Directive and the applicability of withholding tax to interest payments, see "Taxation - Luxembourg Taxation". If any payments in respect of the Notes become subject to deduction or withholding for or on account of Luxembourg taxes (other than pursuant to the Savings Directive), RSB will, subject to certain limitations, be obliged under the terms of the relevant Loan Agreement to increase interest payments (pay additional amounts) as may be necessary so that the net payments received by the Noteholders will not be less than the amounts they would have received in the absence of such withholding. For further information regarding the circumstances in which the payment of such additional amounts will be required and the limitations thereon, see "Terms and Conditions of the Note - 8. Taxation". Luxembourg insolvency laws may affect the ability of Noteholders to enforce their rights under the Notes Under Luxembourg insolvency laws, the ability of Noteholders to receive payment from the Issuer in respect of the Notes may be subject to significant limitations. Under Luxembourg law, the following types of proceedings (together referred to as insolvency proceedings) may be opened against an entity having its registered office or centre of main interest (as defined in the EC Regulation 1346/2000 of 29 May 2000 on insolvency proceedings (the "Regulation 1346/2000")) in Luxembourg: bankruptcy proceedings (faillite), the opening of which may be requested by the Issuer or by any of its creditors. The Issuer itself has the obligation to file for bankruptcy within one month of it being in a state of cessation of payments (cessation des paiements). Following such a request, the courts having jurisdiction may open bankruptcy proceedings if the Issuer (i) is in a state of cessation of payments (cessation des paiements) and (ii) has lost its commercial creditworthiness (ébranlement de credit). If a court finds that these conditions are satisfied, it may also open bankruptcy proceedings ex officio (absent a request made by the Issuer or a creditor). The main effect of such proceedings is the suspension of all measures of enforcement against the Issuer, except, subject to certain limited exceptions, for secured creditors, and the payment of the creditors in accordance with their rank upon realisation of the assets of the Issuer; controlled management proceedings (gestion contrôlée), the opening of which may only be requested by the Issuer and not by its creditors; and composition proceedings (concordat préventif de faillite), which may be requested only by the Issuer (subject to obtaining the required majority consent of its creditors) and not by its creditors themselves. In addition to the proceedings described above, the ability of Noteholders to receive payment on the Notes may be affected by a decision of a court to grant a stay on payments (sursis de paiements) or to put the Issuer into judicial liquidation (liquidation judiciaire). Judicial liquidation proceedings may be opened at the request of the public prosecutor against companies pursuing an activity violating criminal laws or that is in violation of the commercial code or of the laws governing commercial companies. The management of such liquidation proceedings will generally follow the rules of bankruptcy proceedings. The Issuer's liabilities in respect of the Notes will, in the event of the liquidation of the Issuer following bankruptcy or judicial liquidation proceedings, only rank after the cost of liquidation (including any debt incurred for the purpose of such liquidation) and those of the Issuer's debts entitled to priority under Luxembourg law. Preferential debts under Luxembourg law include, inter alia: money owed to the Luxembourg tax authorities; value added tax and other taxes and duties owed to the Luxembourg customs and excise; social security contributions; and

49 remuneration owed to employees. Assets over which a security interest has been granted and duly perfected will in principle not be available for distribution to unsecured creditors (except after enforcement, and only to the extent a surplus is realised), and subject to the application of the relevant priority rules and liens and privileges arising by mandatory laws. During such insolvency proceedings, all enforcement measures by unsecured creditors are suspended. The ability of secured creditors to enforce their security interest may also be limited, in particular in the event of controlled management proceedings automatically causing the rights of secured creditors to be frozen until a final decision has been taken by the court as to the petition for controlled management and may be affected thereafter by a reorganisation order given by the relevant Luxembourg court, subject to the exceptions under the Luxembourg law of 5 August 2005 on financial collateral arrangements, as amended. Furthermore, prospective investors should note that declarations of default and any subsequent acceleration (such as acceleration upon the occurrence of an event of default) might not be enforceable during controlled management proceedings. Luxembourg insolvency laws may affect transactions entered into or payments made by the Issuer during the period before any liquidation or administration. For example, if the liquidator or administrator can demonstrate (including, without limitation, in relation to the Issuer, any commissaire, juge-commissaire, liquidateur or curateur or similar official) that the Issuer has given "preference" to any person by defrauding the rights of creditors generally, regardless of when this occurred, a Luxembourg court has the power, among other things, to avoid the preferential transaction. If the liquidator or administrator can show that a payment was made during the so-called suspect period (which is a maximum of six months and ten days preceding the judgment declaring bankruptcy) and is disadvantageous to the general body of creditors and the party receiving such payment is shown to have known that the bankrupt party had generally stopped making payments when such payment occurred, a Luxembourg court has the power, among other things, to void the preferential transaction. Regardless of the suspect period, article 448 of the Luxembourg Code of commerce and article 1167 of the Luxembourg civil Code (action paulienne) give any creditors the rights to challenge any fraudulent payments and transactions made prior to the bankruptcy. Finally, international aspects of Luxembourg bankruptcy, controlled management or composition proceedings may be subject to the Regulation 1346/2000. The Luxembourg public prosecutor may request the dissolution or the liquidation of the Issuer Pursuant to the Luxembourg law dated 19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings, as amended, the Issuer is required to submit its annual financial statements to its shareholders for approval not later than six months after the end of each financial year. After approval by the shareholders, the Issuer's financial statements have to be filed with the Luxembourg Register of Commerce and Companies within a month. In approving and filing the annual financial statements for the years ended 31 December 2009 the Issuer did not comply with the terms given in the above mentioned provisions. Pursuant to the Luxembourg law on commercial companies dated 10 August 1915, as amended (the "Companies Law"), the Tribunal d'arrondissement, which is the authorised body for commercial matters, may, upon request of the public prosecutor (Procureur d'etat), pronounce the dissolution and order the liquidation of any company established and operating under the laws of Luxembourg if such company performs activities that are contrary to criminal laws or seriously contravenes the provisions of the Luxembourg commercial code or the Companies Law. Any decision of the public prosecutor to institute proceedings which might lead to dissolution or liquidation of the Issuer would be taken by the public prosecutor at its discretion on the basis of the

50 circumstances in the specific case while the ultimate decision as to ordering dissolution or liquidation would need to be made by the competent Luxembourg court. Although it is unlikely that late approval and filing of financial statements by the Issuer should constitute a serious breach of the applicable legislation from the public prosecutor's perspective, this cannot be excluded in which case the public prosecutor could bring before the competent Luxembourg courts claims for dissolution or liquidation of the Issuer, which would likely constitute a Relevant Event under the Terms and Conditions of the Notes which may in turn adversely affect the value of the Notes

51 DOCUMENTS INCORPORATED BY REFERENCE The following documents shall be deemed to be incorporated in, and to form part of, this Base Prospectus: (a) the Issuer's audited financial statements as of and for the years ended 31 December 2011, 2010 and 2009 (including the auditors' report thereon and notes thereto) which are available for viewing at and and (b) the Terms and Conditions of the Notes set out on pages 145 to 156 of the base prospectus dated 29 May 2012 of the Issuer which constitutes a base prospectus for the purposes of Article 5.4 of the Prospectus Directive and which is available for viewing at Copies of the documents incorporated by reference in this Base Prospectus may be inspected, free of charge, at the registered office of the Issuer at 2, Bd. Konrad Adenauer, L-1115 Luxembourg during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted). Any information contained in any of the documents specified above which is not incorporated by reference in this Base Prospectus is either not relevant to investors or is covered elsewhere in this Base Prospectus

52 SUPPLEMENTAL BASE PROSPECTUS AND DRAWDOWN PROSPECTUS The Issuer will, in connection with the listing of the Notes on the Irish Stock Exchange, in the event of any significant new factor, material mistake or inaccuracy relating to the information contained in this Base Prospectus, prepare a supplement to this Base Prospectus or publish a new Base Prospectus for use in connection with any subsequent issue of the Notes to be listed on the Irish Stock Exchange. The terms and conditions applicable to a Series of Notes which is the subject of a Drawdown Prospectus will be the Terms and Conditions as supplemented, amended and/or replaced to the extent described in the relevant Drawdown Prospectus. In the case of a Series of Notes which is the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise. The Issuer and RSB may agree with any Dealer that a Series of Notes may be issued in a form not contemplated by the Terms and Conditions, in which event a supplemental Base Prospectus or a Drawdown Prospectus, if appropriate, will be published which will describe the effect of the agreement reached in relation to such Notes. The Issuer and RSB may agree with any Dealer that the Loan to be financed by the issue of the relevant Series will be made on the terms different to those set out in the Facility Agreement, in which event a Drawdown Prospectus will be prepared in connection with such Series of Notes. The Issuer and RSB may agree with any Dealer the form of any future Subordinated Loan Agreement, in which event a Drawdown Prospectus will be published for use in connection with any subsequent issue of any Subordinated Series to be listed on the Irish Stock Exchange

53 OVERVIEW OF THE PROGRAMME Description Issuer Borrower Programme Size Arrangers and Permanent Dealers Permanent Dealers Trustee Principal Paying Agent Paying Agents Registrars Programme for the Issuance of Loan Participation Notes Russian Standard Finance S.A., a public limited liability company (société anonyme), established under the laws of the Grand Duchy of Luxembourg whose registered office is at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, registered with the Register of Commerce and Companies of Luxembourg under number B Joint Stock Company "Russian Standard Bank" Up to U.S.$2,500,000,000 (or its equivalent in other currencies at the date of issue) aggregate principal amount of Notes outstanding at any one time. RSB may increase the amount of the Programme in accordance with the Dealer Agreement (as defined herein). In this respect, for the purpose of calculating the aggregate principal amount of Notes outstanding, Notes issued at a premium shall be treated as having been issued at the amount of their net proceeds received by the Issuer. Citigroup Global Markets Limited, Goldman Sachs International, J.P. Morgan Securities plc, UBS Limited and VTB Capital plc Citigroup Global Markets Limited, Goldman Sachs International, J.P. Morgan Securities plc, UBS Limited and VTB Capital plc. Pursuant to the terms of the Dealer Agreement, the Issuer, on RSB's instructions, may from time to time terminate the appointment of any dealer under the Programme or appoint additional dealers either in respect of one or more Series of Notes or in respect of the whole Programme. References in this Base Prospectus to "Permanent Dealers" are to the persons listed above as Dealers and to such additional persons that are appointed as dealers in respect of the whole programme (and whose appointment has not been terminated). References in this Base Prospectus to "Dealers" are to all Permanent Dealers and all other persons who are appointed as dealers in respect of one or more Series of Notes. Deutsche Trustee Company Limited Deutsche Bank AG, London Branch Deutsche Bank AG, London Branch and Deutsche Bank Trust Company Americas Deutsche Bank Luxembourg S.A. in respect of Regulation S Notes and Deutsche Bank Trust Company Americas in respect of Rule 144A Notes. A register of the Notes shall be kept at the registered office of the Issuer in accordance with the Luxembourg Law of 10 th August 1915 on commercial companies, as amended. In case of inconsistency between the register of the Notes kept by either of the Registrars and the one kept by the Issuer at its registered office, the register kept by the Issuer at its registered office shall prevail

54 List Agent Luxembourg Paying Agent Transfer Agents Calculation Agent Issue Price Maturities Interest Periods and Rates Fixed Rate Notes Floating Rate Notes Arthur Cox Listing Securities Limited. Deutsche Bank Luxembourg S.A. Deutsche Bank AG, London Branch, Deutsche Bank Luxembourg S.A. and Deutsche Bank Trust Company Americas. Deutsche Bank AG, London Branch unless otherwise stated in the relevant Final Terms. Notes may be issued at their principal amount or at a discount or premium to their principal amount. Subject to compliance with all relevant laws, regulations and directives, any maturity as may be agreed between the Issuer, RSB and the relevant Dealer(s). The length of the interest periods for the Notes and the applicable interest rate may differ from time to time or be constant for any Series. Notes may be issued on a fixed rate or floating rate basis (as further described below) and may have a maximum interest rate, a minimum interest rate, or both. All such information will be set out in the relevant Final Terms. Each Fixed Rate Note will bear interest on the outstanding principal amount from (and including) the Interest Commencement Date set out in the relevant Final Terms at the rate(s) per annum (expressed as a percentage) equal to the Rate(s) of Interest specified on the Note, which shall be equal to the rate per annum at which interest under the Loan accrues, such interest being payable in arrear on each Interest Payment Date. Floating Rate Notes will bear interest determined separately for each Series and corresponding Loan as follows: (a) (b) on the same basis as the floating rate under a notional interest rate transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc.; or by reference to LIBOR, EURIBOR or MosPrime Rate (or such other benchmark as may be specified in the relevant Final terms) as adjusted for any applicable margin. Method of Issue The Notes will be issued on a syndicated or non-syndicated basis. The Notes will be issued in series (each, a "Series") having one or more issue dates and on terms otherwise identical (or identical other than in respect of the first payment of interest), the Notes of each Series being intended to be fungible with all other Notes of that Series. The specific terms of each Series will be set out in Final Terms to this Base Prospectus which shall supplement the Terms and Conditions of the Notes

55 Limited Recourse Security Form The Notes will constitute the obligation of the Issuer to apply the proceeds from the issue of the Notes solely for the purpose of financing the relevant Loan to RSB pursuant to the terms of the corresponding Loan Agreement. The Issuer will only account to the Noteholders for all amounts equivalent to those (if any) received from RSB under such Loan Agreement or held on deposit in the Account less amounts in respect of the Reserved Rights (as defined in the "Terms and Conditions of the Notes"), all as more fully described under "Terms and Conditions of the Notes" Each Series of Notes will be secured by a first fixed charge in favour of the Trustee for the benefit of the Noteholders of (i) certain of the Issuer's rights and interests as lender under the relevant Loan Agreement, and (ii) the Issuer's rights, title and interest in and all sums held on deposit in the Account (in each case, other than the Reserved Rights), all as more fully described under "Terms and Conditions of the Notes". In addition, the Issuer with full title guarantee will assign absolutely its administrative rights under the relevant Loan Agreement (save for the rights charged or excluded as described above) to the Trustee for the benefit of the Noteholders, as more fully described under "Terms and Conditions of the Notes". Each Series of Notes will be issued in registered form. The Notes will be in denominations in aggregate principal amount, for Rule 144A Notes, of at least U.S.$200,000 (or its equivalent in other currencies) and integral multiples of U.S.$1,000 (or its equivalent in other currencies) in excess thereof, and for Regulation S Notes, of at least EUR 100,000 (or its equivalent in other currencies), and integral multiples of EUR 1,000 (or its equivalent in other currencies) in excess thereof, save that unless otherwise permitted by then current laws and regulations, Notes which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise would constitute a contravention of section 19 of the FSMA will have a minimum denomination of GBP100,000 (or its equivalent in other currencies). Notes of each Series will be represented by interests in one or more Global Notes. The Global Notes will only be exchangeable for definitive certificates in the limited circumstances described under "Summary of Provisions Relating to the Notes in Global Form". Each series of Notes offered and sold outside the United States to non U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act will be represented by interests in a Regulation S Global Note. Each Series of Notes offered or resold in the United States to QIBs that are also QPs in reliance on Rule 144A will be represented by interests in one or more Rule 144A Global Notes

56 Each Series of Notes will be redeemed in whole, but not in part, at any time, upon notice having been given to the Noteholders, at their principal amount together with accrued and unpaid interest to the date of redemption and any additional amounts (if any) then due if RSB, pursuant to the provisions of the relevant Loan Agreement, elects to prepay the Loan for tax reasons or by reason of increased costs or, at the option of the Issuer, in the event that it becomes unlawful for the Issuer to fund the Loan or to allow it to remain outstanding under the relevant Loan Agreement, all as more fully described in the relevant Loan Agreement. See also Condition 6 (Redemption) of the "Terms and Conditions of the Notes". Certain Covenants Relevant Events As long as any of the Notes remains outstanding, the Issuer will not, without the prior written consent of the Trustee, agree to any amendment to or any modification or waiver of, or authorise any breach or proposed breach of, the terms of the relevant Loan Agreement, except as otherwise expressly provided in the Trust Deed or the relevant Loan Agreement. In the case of a Relevant Event, the Trustee may, subject to the provisions of the Trust Deed, enforce the security created in the Trust Deed in favour of the Noteholders, where: "Relevant Event" means the earlier of the failure by the Issuer to make any payment of principal or interest on the Notes when due or the Issuer becoming insolvent or bankrupt or unable to pay its debts, stopping or suspending payment of its debts, proposing or making a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any such debts or a moratorium is agreed or declared in respect of or affecting all or (in the opinion of the Trustee) a material part of the debts of the Issuer or an order is made or an effective resolution is passed for the winding up or dissolution of the Issuer or the Issuer becomes subject to any insolvency, bankruptcy, concordat préventif de faillite, moratorium, controlled management (gestion contrôlée), general settlement with creditors, liquidation, reorganisation and any other similar legal proceedings affecting the Issuer or a commissaire à la gestion controlée, a liquidateur, a commissaire, a curateur, an administrateur or any similar officer is appointed as a consequence of the financial difficulties affecting the Issuer. Further Issues Rating The Issuer may from time to time issue further Notes of any Series on the same terms as existing Notes and such further Notes shall be consolidated and form a single Series with such existing Notes of the same Series. In the event of such further issuance the Loan will be correspondingly increased. The Programme has been given a long term rating of "B+" by S&P, "Ba3" by Moody's and "B+" by Fitch. Series of Notes issued under this Programme may be rated or unrated. Where a Series of Notes is rated, such rating will not necessarily be the same as the rating assigned to the Programme

57 Credit ratings assigned to the Notes or the Programme do not necessarily mean that the Notes are a suitable investment. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Similar ratings on different types of notes do not necessarily mean the same thing. The ratings do not address the marketability of the Notes or any market price. Any change in the credit ratings of the Notes, the Programme or RSB could adversely affect the price that a subsequent purchaser would be willing to pay for the Notes. The significance of each rating should be analysed independently from any other rating. As of the date of this Base Prospectus, Fitch, Moody's and Standard & Poor's are established in the European Union and are registered under the CRA Regulation. Withholding Tax All payments in respect of the Notes will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of the Grand Duchy of Luxembourg save as required by law. If any such taxes, duties, assessments or governmental charges are payable, the Issuer shall (subject to certain exceptions and in particular to the application of the laws of 21 June 2005 implementing the EU Savings Directive 2003/48/EC (the "EU Savings Directive") as well as related agreements and the law of 23 December 2005, having introduced a 10 per cent. withholding tax on savings income for Luxembourg resident individuals) pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received had no such deduction or withholding been required. The sole obligation of the Issuer in this respect will be to account to the Noteholders for the sums equivalent to the sums received from RSB. See "Terms and Conditions of the Notes". In such circumstances, RSB will be required to increase the sum payable under the relevant Loan Agreement to the extent necessary to ensure that the Issuer receives a net sum sufficient to pay to the Noteholders such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received had no such deduction or withholding been made or required to be made. In addition, the Issuer shall not be obligated to pay additional amounts in connection with U.S. Internal Revenue Code sections 1471 through 1474 (commonly referred to as FATCA). The net proceeds of each Series of Notes will be used by the Issuer for the sole purpose of financing the corresponding Loan to RSB. In connection with the receipt of each Loan, RSB will pay an arrangement fee, as reflected in the relevant Final Terms. Listing Application will be made, where specified in the relevant Final Terms, to the Irish Stock Exchange for a Series of Notes to be admitted to the Official List and to trading on the Main Securities Market. Application may also be made for a Series of Notes to be admitted to trading on the regulated market of the London Stock Exchange or to be listed on such other stock exchange and traded on such other market as shall be specified in the relevant Final

58 Terms or the Series of Notes will remain unlisted. Selling Restrictions ERISA Considerations Governing Law Initial Delivery of Notes Currencies The Notes have not been, and will not be, registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Terms used in this paragraph have the meaning ascribed to them by Regulation S under the Securities Act. The Notes may be sold in other jurisdictions (including the United Kingdom and Russia) only in compliance with applicable laws and regulations. See "Subscription and Sale". A Series of Notes issued under the Programme may be regarded for ERISA purposes as equity interests in a separate entity whose sole asset is the Loan. Accordingly, the Notes should not be acquired by any "benefit plan investor," within the meaning of the Plan Assets Regulation (each as defined in "Certain ERISA Considerations"). Each purchaser and/or holder of Notes and each transferee therefore will be deemed to have made certain representations as to its status under ERISA. Potential purchasers should read the sections entitled "Certain ERISA Considerations" and "Transfer Restrictions". The Notes, the Trust Deed and all non-contractual obligations arising out of or in connection with them shall be governed by, and construed in accordance with, English law. The provisions of articles 86 to 94-8 of the Luxembourg law of 10 August 1915, as amended, on commercial companies are excluded. On or before the Issue Date for each Series, the Rule 144A Global Note will be deposited with a custodian for DTC, and the Regulation S Global Note will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. The Rule 144A Notes will be registered in the name of a nominee of DTC, and Regulation S Notes will be registered in the name of a nominee of the common depository for Euroclear and Clearstream, Luxembourg. Global Notes may also be deposited with any other clearing system or may be delivered outside any clearing system, provided that the method of such delivery has been agreed in advance by the Issuer, RSB, the Paying Agents, the Trustee and the relevant Dealer(s). Notes that are to be credited to one or more clearing systems on issue will be registered in the name of a nominee or nominees for such clearing systems. Subject to compliance with all relevant laws, regulations and directives, Notes may be issued in any currency agreed between the Issuer, RSB and the relevant Dealer(s) SENIOR LOAN CORRESPONDING TO EACH SERIES OF NOTES Lender Borrower The Issuer Joint Stock Company "Russian Standard Bank"

59 Security and Ranking Interest Basis Redemption at the Option of RSB Mandatory Repayments Redemption Following Exercise of Put Option Certain Restrictions and Covenants Events of Default Withholding Tax Governing Law No Loan will be secured by any collateral. Obligations under the Loan will rank at least pari passu with all other unsecured and unsubordinated financial indebtedness of RSB. Interest will be payable on a fixed or floating rate basis as specified in the relevant Loan Agreement. If so specified in the relevant Loan Agreement, the relevant Loan may be prepaid at RSB's option in whole, but not in part, on any Interest Payment Date in the case of Floating Rate Loans or, at any time, in the case of Fixed Rate Loans at the principal amount thereof, together with accrued and unpaid interest and additional amounts, if any, for certain tax reasons or by reason of certain increased costs. See "The Facility Agreement 5. Repayment and Prepayment". In the event that it becomes unlawful for the Issuer or RSB to fund any Loan or allow such Loan to remain outstanding under the relevant Loan Agreement or allow the corresponding Series of Notes to remain outstanding, RSB may be required to repay the corresponding Loan in full. See "The Facility Agreement 5. Repayment and Prepayment". If Put Option is specified in the applicable Loan Agreement as being applicable, the relevant Loan may be redeemed prior to its stated maturity, at the option of the Issuer following exercise by the Noteholders of the Put Option in relation to the Notes. See "The Facility Agreement 5. Repayment and Prepayment". The Notes will have the benefit of certain covenants made by RSB all as more fully described in the relevant Loan Agreement. If any of the events set out in Clause 11 of the Facility Agreement (each, an "Event of Default") shall occur, the Trustee may, subject as provided in the Trust Deed, cause the Lender to declare all amounts payable under the relevant Loan Agreement to be due and payable. All payments of principal and interest under each Loan will be made in full without set-off or counterclaim and (except to the extent required by law) free and clear of and without deduction for or on account of any Taxes (as defined in the Facility Agreement). If any such Taxes are payable in respect of the Loan, the sum payable by RSB under the corresponding Loan will (subject to certain conditions) be required to be increased to the extent necessary to ensure that the Issuer receives and retains the net sum which it would have received and retained free from any liability in respect of any such deduction or withholding had no such deduction or withholding been made or required to be made. Each Loan and any non-contractual obligations arising from or in connection with it will be governed by English law. The provisions of articles 86 to 94-8 of the Luxembourg law of 10 August 1915, as amended, on commercial companies, are herein excluded

60 SUBORDINATED LOAN CORRESPONDING TO A SERIES OF NOTES Lender Borrower Terms The Issuer Joint Stock Company "Russian Standard Bank" The terms of any Subordinated Loan will be as set out in the relevant Subordinated Loan Agreement and as agreed with the CBR. A supplemental Base Prospectus containing the form of the Subordinated Loan Agreement will, if required, be published for use in connection with any subsequent issue of any Subordinated Series to be listed on the Irish Stock Exchange

61 DESCRIPTION OF THE TRANSACTIONS The following summary description should be read in conjunction with, and is qualified in its entirety by, the information set out under "Terms and Conditions of the Notes" and "The Facility Agreement" appearing elsewhere in this Base Prospectus. Issuer Loan Principal and Interest RSB Proceeds of the Notes Principal and Interest on the Notes Noteholders Each transaction relating to a Series of Notes will be structured as a loan to RSB by the Issuer under the relevant Loan Agreement. The Issuer will issue a Series of Notes, which will be limited recourse loan participation notes issued for the sole purpose of funding the corresponding Loan to RSB. Each Loan will have characteristics that demonstrate capacity to produce funds to service any payments due and payable on the Notes. Each Series of Notes will be constituted by, subject to, and have the benefit of the Trust Deed entered into between the Issuer and the Trustee. The obligations of the Issuer to make payments under the Notes shall constitute an obligation only to account to the Noteholders for an amount equal to the sums of principal, interest and/or additional amounts (if any) the Issuer actually receives by or for its account from RSB pursuant to the relevant Loan Agreement or that are deposited in the Account, less any amounts in respect of the Reserved Rights. As provided in the Trust Deed, the Issuer will charge in favour of the Trustee for the benefit of the Noteholders as security for its payment obligations in respect of a Series of Notes (a) its rights to all principal, interest and additional amounts (if any) payable by RSB under the corresponding Loan Agreement, (b) its right to receive all sums which may be or become payable by RSB under any claim, award or judgment relating to the corresponding Loan Agreement and (c) its rights, title and interest in and to all sums of money now or in the future deposited in an account with the Principal Paying Agent with respect to such Series of Notes in the name of the Issuer, together with the debt represented thereby (the "Account") (collectively, the "Charged Property"), in each case other than the Reserved Rights and amounts relating thereto. The Issuer will assign absolutely certain administrative rights under the relevant Loan Agreement to the Trustee for the benefit of the Noteholders of the applicable Series. RSB will be obliged to make payments under the Loan to the Issuer in accordance with the terms of the relevant Loan Agreement to the Account. The Issuer has covenanted not to agree to any amendments to or any modification or waiver of, or authorise any breach or potential breach of, the terms of any Loan Agreement unless the Trustee has given its prior written consent (in each case except in relation to the Reserved Rights). The Issuer (save as expressly provided in the Trust Deed, the relevant Loan Agreement or with the consent of the Trustee) shall not pledge, charge or otherwise deal with the relevant Loan or the relevant Charged Property or any right or benefit either present or future arising under or in respect of the relevant Loan Agreement or the Account or any part thereof or any interest therein or purport to do so (in each case except in relation to the Reserved Rights). Any amendments, modifications, waivers or authorisations made with the Trustee's consent shall be notified to the Noteholders of the applicable Series in accordance with Condition 14 (Notices) of the "Terms and Conditions of the Notes" and will be binding on the Noteholders of such Series

62 Payments in respect of the Notes will be made without any deduction or withholding for, or on account of, taxes of the Grand Duchy of Luxembourg except as required by law. See "Taxation". In that event, the Issuer will only be required to pay an additional amount to the extent it receives corresponding amounts from RSB under the relevant Loan Agreement. In addition, payments under the relevant Loan Agreement will be made without any deduction or withholding for, or on account of, any taxes in Russia or any jurisdiction from, or through, which any payments are made, except as required by law, in which event RSB will be obliged to increase the amounts payable under the relevant Loan Agreement. See "Risk Factors Risks Related to the Notes and the Trading Market"

63 USE OF PROCEEDS The proceeds from the offering of each Series of Notes will be used by the Issuer for the sole purpose of financing the corresponding Loan to RSB. RSB will use the proceeds from the relevant Loan to fund its lending activities and for general banking purposes (unless otherwise specified in the relevant Final Terms). In connection with the receipt of such Loan, RSB will pay an arrangement fee, as reflected in the relevant Final Terms

64 CAPITALISATION The following table sets out the Group's consolidated liabilities and equity as of 30 June Prospective investors should read this information in conjunction with "Presentation of Financial and Other Information", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements included elsewhere in this Base Prospectus. As of 30 June 2012 (in millions of Roubles) Liabilities Due to other banks... 10,015 Customer accounts ,836 Debt securities in issue... 20,558 Other liabilities... 9,328 Subordinated debt... 22,998 Total liabilities ,735 Equity Share capital... 1,565 Share premium Additional paid-in capital Revaluation reserve for available for sale securities... (164) Translation reserve... (42) Retained earnings... 23,819 Total equity... 26,042 Total liabilities and equity ,777 Save as disclosed below, there has been no material change in the consolidated capitalisation, indebtedness, guarantees or contingent liabilities of the Group since 30 June The below information is not reflected in the table above. In July 2012, the Group issued USD 350 million 9.25 per cent. Eurobonds due July 2017 at nominal amount. The holders of these bonds have the right to redeem them at nominal value in July

65 SELECTED CONSOLIDATED FINANCIAL INFORMATION The following table presents the Group's selected consolidated financial information which has been extracted without material adjustment from, and should be read in conjunction with, the Financial Statements included elsewhere in this Base Prospectus, as well as "Presentation of Financial and Other Information", "Capitalisation" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". The Group's Statement of Comprehensive Income Data For the six months ended 30 June For the year ended 31 December (in millions of Roubles) Interest income... 22,782 14,586 32,776 28,432 33,937 Interest expense... (7,486) (4,719) (9,959) (8,923) (13,247) Net interest income... 15,296 9,867 22,817 19,509 20,690 Provision for impairment of loans to customers... (5,261) (1,689) (4,603) (6,345) (12,485) Net interest income after provision for loan impairment... 10,035 8,178 18,214 13,164 8,205 Fee and commission income... 2,216 1,211 3,088 1, Fee and commission expense... (1,582) (889) (2,230) (986) (597) (Losses)/gains from operations with securities... (30) 30 (244) (56) 197 Losses less gains from operations with foreign currencies... (244) (359) (496) (902) (5,920) Gains from early debt retirement ,696 Income from insurance operations ,415 2,488 2,612 Other operating income ,061 1, Administrative and other operating expenses... (10,113) (7,598) (17,206) (13,696) (13,195) Profit/(loss) before tax... 3,839 3,075 6,602 2,531 (5,570) Income tax (expense)/credit... (768) (615) (1,591) (686) 1,043 Profit/(loss) for the period... 3,071 2,460 5,011 1,845 (4,527) Other comprehensive income Exchange differences on translation to presentation currency (25) (34) Revaluation of securities available for sale... (542) Other comprehensive (loss)/income for the period... Total comprehensive income/(loss) for the period... (536) (31) 2,535 2,501 5,283 1,926 (4,558) The Group's Statement of Financial Position Data As of 30 June As of 31 December (in millions of Roubles) Assets Cash and cash equivalents... 15,325 18,266 11,392 12,555 Mandatory cash balances with the CBR... 1,895 1,380 1,222 1,263 Securities at fair value through profit or loss... 29,976 22,789 17,568 15,491 Due from other banks , Loans and advances to customers , ,753 81,930 92,985 Investment securities available for sale... 16,432 14,266 11, Current income tax prepayment Deferred income tax asset... 2,660 1,734 1,

66 As of 30 June As of 31 December (in millions of Roubles) Goodwill... 2,610 2,610 2,476 2,476 Premises and equipment and intangible assets... 6,967 6,768 5,926 6,649 Other assets... 4,788 4,659 2,697 6,065 Total assets , , , ,105 Liabilities Due to other banks... 10,015 5, ,673 Customer accounts , ,479 62,890 26,835 Debt securities in issue... 20,558 15,748 21,039 42,724 Other liabilities... 9,328 7,925 3,807 3,086 Subordinated debt... 22,998 22,562 21,870 22,245 Total liabilities , , , ,563 Equity Share capital... 1,565 1,565 1,565 1,739 Share premium Additional paid-in capital Revaluation reserve for available for sale securities... (164) Translation reserve... (42) (48) (51) (26) Retained earnings... 23,819 24,337 24,427 27,005 Net assets attributable to the Bank s equity holders 26,042 27,096 26,914 29,542 Non-controlling interest Total equity... 26,042 27,096 26,990 29,542 Total liabilities and equity , , , ,

67 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the consolidated financial condition and results of operations of RSB covers the six months ended 30 June 2012 and 2011 and the years ended 31 December 2011, 2010 and Unless otherwise indicated, the financial information presented in this discussion has been extracted or derived without material adjustments, subject to rounding, from the Financial Statements. Prospective investors should read the following discussion together with the whole of this Base Prospectus, including "Risk Factors" and the Financial Statements (including the related notes), and should not rely solely on the information set out in this section The following discussion includes certain forward-looking statements that, although based on assumptions that RSB s management considers to be reasonable, are subject to risks and uncertainties that could cause actual events or conditions to differ materially from those expressed or implied in this Base Prospectus. Among the important factors that could cause RSB s actual results, performance or achievements to differ materially from those expressed in such forward-looking statements are those factors that are discussed in "Forward Looking Statements" and "Risk Factors". All statements other than statements of historical fact, such as statements regarding RSB s future financial position, business plans and objectives for future operations, are forward-looking statements. Overview RSB's core business is issuing and extending loans and advances to customers, primarily to individuals, in the form of credit card loans, personal loans and POS loans. For the six months ended 30 June 2012 and 2011 and the years ended 31 December 2011, 2010 and 2009, interest income earned on loans to individuals accounted for 90.7 per cent., 91.3 per cent., 92.0 per cent., 91.2 per cent. and 91.2 per cent., respectively, of RSB's interest income. To complement its consumer finance products, RSB offers insurance products (such as life and permanent disability insurance, property insurance and unemployment insurance) to all of its customers through two wholly-owned subsidiaries of the Group, RSI and BAC. RSB's revenue is derived principally from interest income on retail loans, fees and commissions, and insurance income. RSB's primary sources of funds are customer accounts, subordinated debt and debt securities issued (including domestic bonds, loan participation notes and euro commercial paper). Most of RSB's operations are concentrated in Russia, although RSB offers some lending products in Ukraine as well, mostly POS loans and credit card loans. RSB began operations predominantly as a consumer loan bank focused primarily on lower income customers in Moscow and other large cities. It subsequently expanded its consumer finance business into smaller population centres outside of Moscow, developed its credit card business and additional consumer credit products such as personal loans, and broadened the demographic profile of its client base. To service the needs of this diversified client base, RSB continues to develop a wide range of financial products and services for the retail sector. As of 30 June 2012, RSB operated through its network of 197 banking offices throughout Russia. In 2009, RSB made attracting retail deposits a strategic priority in order to diversify its funding base and compensate for a decline in other liquidity sources due to the global financial and economic crisis. These initiative resulted in an increase in the customer accounts portfolio as a percentage of RSB's liabilities to 68.0 per cent. as of 30 June 2012 as compared to 68.0 per cent. as of 31 December 2011, 57.1 per cent. as of 31 December 2010 and 24.3 per cent. as of 31 December Significant Factors Affecting Financial Condition and Results of Operations RSB s results of operations and financial position have been influenced during the periods under review by the following key factors, which RSB s management believes will continue to affect RSB s results of operations in the future

68 General Market Conditions and Operating Environment in Russia Due to the concentration of RSB s assets and operations in Russia, RSB is substantially affected by Russian macroeconomic conditions. During the periods under review, economic conditions in Russia have significantly affected RSB's financial condition and results of operations, particularly the size and composition of RSB s loan portfolio (as discussed under " Changes in the Size and Composition of RSB s Loan Portfolio" below), the performance of loans in the portfolio, and the size and composition of RSB s funding base (as discussed under " Changes in the Size and Composition of RSB s Funding Base" below). The following table sets forth certain Russian economic indicators as of and for the six months ended 30 June 2012 and the years ended 31 December 2011, 2010 and Six months ended 30 June Year ended 31 December Nominal gross domestic product (GDP) (RUB billion)... 28,062 54,369 45,166 38,809 Real GDP growth / (decline) (in per cent.) (1) (7.8) Surplus / (deficit) of Russian Federal budget (RUB billion) (1,812.0) (2,322.3) International reserves (U.S.$ million) Inflation (in per cent., consumer price index) Nominal appreciation/depreciation of the RUB against the U.S.$ (in per cent.) (2)... (6.5) (21.7) Real appreciation/depreciation of the RUB against the U.S.$ (in per cent.) (3)... (5.1) (12.2) (1) Preliminary estimate. (2) Nominal appreciation/depreciation is calculated as the nominal exchange rate of Roubles to U.S. Dollars (average for the relevant year) divided by the nominal exchange rate of Roubles to U.S. Dollars (average for the previous year). (3) Real appreciation/depreciation is distinguished from nominal as it is adjusted for inflation in Russia and the United States, and takes into account certain other macroeconomic parameters which are calculated by the CBR. Source: CBR, Ministry for Economic Development of Russia, Federal State Statistics Service of Russia. Prior to the onset of the global financial and economic crisis in the second half of 2008, RSB s loan portfolio expanded in line with the general expansion of the Russian economy. However, the crisis resulted in the contraction of the Russian and global economies, dislocation of credit and financial markets and decreases in Russian commodities exports and prices of such commodities, which adversely affected the growth of the Russian economy. Since Russia s economy is to a significant degree dependent on exports of key commodities, such as oil, gas and other raw materials, the dramatic falls in the prices of these commodities on the world market in the second half of 2008 resulted in sharp decreases in revenues for the Russian government and private companies operating in these sectors, which also had a severely negative overall effect on the Russian economy. Russia s susceptibility to fluctuations in commodity prices inevitably has consequences for the Russian consumer finance market, including RSB. During downturns, unemployment typically rises and levels of disposable income fall, resulting in reduced creditworthiness of customers and potential customers, which in turn creates the risk of high non-performing loan rates among loan portfolios. In 2008 and 2009, RSB, like many other banks in Russia, experienced an increase in the number of non-performing loans in its portfolio. During 2009 it became apparent that some of RSB s customers were unable to pay amounts due in full or in a timely manner. Many of these customers demonstrated an intent to repay their loans, but were not in a position to discharge their debts in accordance with the original repayment schedule. RSB assessed the individual circumstances of each customer and, where appropriate, arranged for existing loans to be restructured, often by reducing the amount of monthly instalment required and extending the tenor of the loan

69 In the end of 2008 and in 2009, the Russian economy was adversely affected by the global financial and economic crisis resulting in a substantial deterioration of financial and corporate sectors. The volume of available wholesale financing domestically and, to a greater degree, from overseas significantly decreased. Falling incomes and rising unemployment reduced consumer demand for retail banking products in Russia and resulted in higher default rates on loans. RSB's core consumer finance business was adversely affected by the above factors. In particular, RSB's total assets, loans and advances to customers, and interest income decreased from RUB 224,815 million, RUB 144,671 million and RUB 51,311 million, respectively, as of and for the year ended 31 December 2008 to RUB 140,105 million, RUB 92,985 million and RUB 33,937 million, respectively, as of and for the year ended 31 December 2009, mainly due to a significant decrease in the volume of new loans issued. The crisis also had an adverse effect on RSB s non-performing loans (loans that are more than 90 days overdue). RSB's non-performing loans as a percentage of RSB's gross loans increased from 3.2 per cent. as of 31 December 2008 to 5.4 per cent. as of 31 December Reflecting these developments, RSB's provision for loan impairment increased from RUB 8,628 million as of 31 December 2008 to RUB 9,476 million as of 31 December Such increased impairment losses, coupled with the increased funding costs mentioned below, contributed substantially to RSB s swing from profit for the year of RUB 7,418 million in 2008 to a loss for the year of RUB 4,527 million in The state of the Russian economy improved considerably in 2010, 2011 and the first half of 2012, with 4.0 per cent., 4.3 per cent. and 4.5 per cent. (preliminary estimate) real GDP growth during these periods, respectively, as compared to a 7.8 per cent. decline in Such economic growth had a positive effect on the Russian retail banking sector. According to the CBR, total retail loans of Russian banks increased by 14.3 per cent. in 2010 from RUB 3,573 billion as of 1 January 2010 to RUB 4,084 billion as of 1 January 2011, increased further by 35.9 per cent. in 2011 to RUB 5,550 billion as of 1 January 2012 and then increased by 18.4 per cent. in the first half of 2012 to RUB 6,572 billion as of 1 July The improvement in the state of the Russian economy had a significant positive effect on the financial condition and results of operations of RSB in 2010, 2011 and the first six months of 2012, allowing it to resume growth of its business, while at the same time increasing profitability. As the Russian economy improved in 2010, 2011 and the first half of 2012 as compared to 2009, RSB increased its lending activity. This resulted in increases in the Group's loans and advances to customers to RUB 140,790 million as of 30 June 2012 from RUB 113,753 million as of 31 December 2011 and RUB 81,930 million as of 31 December RSB's non-performing loans as a percentage of RSB's gross loans increased from 5.4 per cent. as of 31 December 2009 to 5.9 per cent. as of 31 December 2010, then decreased to 4.5 per cent. as of 31 December 2011 and subsequently increased to 5.2 per cent. as of 30 June In addition, the improvement in the state of the Russian economy allowed RSB to launch certain new products, including personal instalment loans, which are loans to "Bank-in-Pocket" accounts, in This credit product amounted to 22.8 per cent. of RSB's total loan portfolio as of 30 June RSB also continued to follow its strategy of increasing the share of retail deposits in its total liabilities. As a result, the Group's customer accounts increased to RUB 133,836 million as of 30 June 2012 from RUB 109,479 million as of 31 December 2011 and RUB 62,890 million as of 31 December Reflecting these developments, RSB had a profit for the period of RUB 3,071 million and RUB 2,460 million in the six months ended 30 June 2012 and 2011, respectively, and RUB 5,011 million in 2011 and RUB 1,845 million in 2010, as compared to a loss for the year of RUB 4,527 million in However, the ongoing uncertainty over the euro-zone debt crisis, concerns about the health of the global economy and particularly the economies of the European Union, United States and China, and the resulting volatility in the global financial markets continue to pose risks to the global and Russian economies. A deterioration of the Russian macroeconomic environment may materially adversely affect RSB's future financial condition and results of operations. See "Risk Factors Risks Related to RSB's Business and the Banking Sector The instability of the global economy and financial markets could have a material adverse effect on RSB's business, financial conditions, results of operations and

70 prospects and on the value of the Notes" and "Risk Factors Risks Related to RSB's Business and the Banking Sector Turmoil in global financial markets has already adversely affected, and may continue to adversely affect, the Russian economy, the Russian banking industry in general and RSB in particular". Changes in the Size and Composition of RSB s Loan Portfolio RSB s loan portfolio principally comprises loans issued to retail consumers, which as of 30 June 2012 accounted for 93.5 per cent. of RSB s gross loan portfolio. Prior to the onset of the global financial and economic crisis in the second half of 2008, RSB s lending strategy focused on increasing its share of the Russian consumer finance market through high-volume growth of its loan portfolio. In the second half of 2008, it became clear to RSB that the capital markets and inter-bank financing on which it had previously relied to fund its operations would not be available on commercially acceptable terms, or at all, for an extended period of time. Further, RSB realised that the risks associated with lending had increased dramatically and, as a result, it became impossible to continue lending on the same scale as before the crisis. RSB therefore decided to cease most of loan origination and to focus on ensuring that its existing portfolio could fund its liquidity requirements until such time as economic conditions improved sufficiently to restart its lending operations. As a result, in late 2008 and 2009, RSB significantly reduced sales of its loan products, offering such products only to existing clients with favourable credit history. During the year ended 31 December 2009, most loan repayments and other available cash was used to pay down third party borrowings by RSB. As a result, by 31 December 2009, both RSB s assets and liabilities decreased markedly as compared to 31 December In response to the global financial and economic crisis, RSB reduced the scale of its operations by closing over 100 branches and over 6,000 points of sale. RSB also reduced its headcount by approximately 54 per cent. during the period from October 2008 to October In addition, RSB put in place certain business optimisation measures, including tightening its underwriting criteria (for a time, RSB cut back practically all loan origination for clients who did not have any credit history with RSB) and retaining credit products that had the best credit risk quality. See "Business History - Effect of the Financial Crisis". In line with and as a result of these measures, RSB reduced its credit card loan portfolio, to a large extent due to lower predictability of drawdowns and repayments under credit card loans. RSB also decreased origination of POS loans and personal loans, issuing such loans only to customers with reliable payment histories. Furthermore, by the end of 2008, RSB suspended origination of auto loans. As a result, the RSB's auto loans portfolio decreased from RUB 11,013 million as of 31 December 2009 to RUB 5,338 million as of 31 December 2010 and further decreased to RUB 1,484 million as of 31 December 2011 and RUB 611 million as of 30 June RSB has not resumed issuing auto loans in Russia. The resulting hiatus in RSB s lending activities during the first half of 2009 and the reduced creditworthiness of many potential borrowers, as well as a reduction in demand for consumer finance products due to falling incomes and rising unemployment and RSB s more conservative post-crisis lending criteria, resulted in a lower volume of loans being extended in 2009 as compared to the pre-crisis period and resulted in a decrease in the size of RSB's loan portfolio during Volumes of all major types of loans decreased as of 31 December 2009 as compared to 31 December This trend continued to a large extent in 2010, and volumes of all types of loans except for POS loans decreased as of 31 December 2010 as compared to 31 December Due to the fact that POS loans generally have shorter tenor than other types of loans, in 2009 RSB's POS loans portfolio was more rapidly affected by the measures described above than other loans. As a result, RSB's loan portfolio decreased significantly in Once the Russian economy began to recover in 2010, RSB started issuing more POS loans, which led to the increases in the share of POS loans in the RSB's loan portfolio from 11.4 per cent. as of 31 December 2009 to 18.5 per cent. as of 31 December 2010 and further to 20.6 per cent. as of 31 December As the state of the Russian economy continued to improve in 2011 and the first half of 2012, RSB increased its loan origination, and, as a result, volumes of all types of loans except for auto and restructured loans increased as of 30 June 2012 as compared to 31 December 2011, which in turn represented an increase from 31 December In

71 2011, the significant increase in RSB's personal loan origination was the result of RSB's focus on issuing personal instalment loans to "Bank-in-Pocket" accounts. This resulted in an increase in the share of personal loans in RSB's loan portfolio from 13.7 per cent. as of 31 December 2010 to 19.9 per cent. as of 31 December In the first six months of 2012, the composition of RSB's loan portfolio slightly changed, with the share of credit card loans increasing from 49.2 per cent. as of 31 December 2011 to 53.0 per cent. as of 30 June 2012 and the share of personal loans increasing from 19.9 per cent. as of 31 December 2011 to 24.1 per cent. as of 30 June 2012, while the share of POS loans decreased from 20.6 per cent. as of 31 December 2011 to 14.8 per cent. as of 30 June The increases in the shares of credit card loans and personal loans were generally in line with RSB's strategy to actively grow their credit card loan and personal loan portfolios. The decrease in the share of POS loans was principally due to a seasonal decrease in mid-year portfolio resulting from a seasonal decrease in demand for POS loans, reflecting the fact that more POS loans are issued in December ahead of the winter holidays. RSB's management believes that in the medium term profitability of the POS loan business may contract to levels at which such business will be principally used as a vehicle for acquiring credit card customers. Due to improvements of the state of the Russian economy in 2010, 2011 and the first six months of 2012, RSB's restructured loans decreased from RUB 1,810 million as of 31 December 2009 to RUB 1,032 million as of 31 December 2010 and further decreased to RUB 604 million as of 31 December 2011 and RUB 574 million as of 30 June The aforementioned changes had a material effect on the size and composition of RSB's loan portfolio. The following table sets forth the break-down, in rouble and in percentage terms, of RSB s gross loan portfolio as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June 2012 % of total 2011 % of total 2010 As of 31 December % of total 2009 (in millions of Roubles, except percentages) Loans to individuals Credit card loans... 80, , , , Personal loans... 36, , , , POS loans... 22, , , , Auto loans , , , Restructured loans , , Other... 1, , , Total loans to individuals , , , , Loans to legal entities... 9, , , , Gross loans and advances to customers , , , , % of total Changes in the Size and Composition of RSB s Funding Base Prior to the global financial and economic crisis, RSB funded its operations principally from capital markets operations and inter-bank loans. The global financial and economic crisis severely affected the functioning of the Russian and international capital markets and, as a result, corporate bond spreads and inter-bank lending rates increased significantly. During and immediately following the crisis, all of RSB s traditional funding sources either became entirely unavailable or available only on commercially unattractive terms. In response to the lack of funding during the global financial and economic crisis and in order to diversify its funding base and decrease its dependence on the wholesale market, RSB launched programmes for attracting retails deposits and retail customer accounts. These programs resulted in significant year-on-year increases in term deposits and current/demand accounts of individuals. As a result, the Group's customer accounts increased from RUB 26,835 million, or 24.3 per cent. of the Group's total liabilities, as of 31 December 2009 to RUB 62,890 million, or 57.1 per cent. of the

72 Group's total liabilities, and RUB 109,479 million, or 68.0 per cent. of the Group's total liabilities, as of 31 December 2010 and 2011, respectively. The Group's customer accounts further increased to RUB 133,836 million, or 68.0 per cent. of the Group's total liabilities, as of 30 June RSB intends to pursue this funding strategy and also believes that it will encourage new customers to use RSB for their borrowing needs. The Russian banking sector has historically suffered from a relatively limited retail depositor base. A lack of trust in the banking system, much of which stems from banking crises that occurred in the 1990s, limits the access of many Russian banks, in particular non-state owned banks, to what in many countries, including other emerging markets, can be a relatively cheap and stable funding source. However, there are signs that public trust in the banking sector, or at least in the state s ability to guarantee the liabilities of the banking sector, may be growing in Russia. For example, the deposit insurance scheme implemented by the Russian Government following the onset of the financial crisis was largely successful in preventing large retail deposit outflows from Russian banks. Unlike other countries, in Russia, retail deposits represent a comparatively expensive form of funding, as banks must pay relatively high interest rates in order to overcome the industry-wide stigma of past banking crises. Accordingly, whilst RSB believes that the stability and diversification obtained through the retail deposit base outweighs the higher costs of funding, this strategy may have the effect of increasing interest expense and reducing interest margins in the foreseeable future. In addition retail depositors have a right to withdraw deposits, including term deposits, at any time, which may have an adverse effect on RSB liquidity position. See "Risk Factors RSB's ability to grow its business is dependent on having sufficient funding as well as access to various funding sources, and RSB's inability to access such funding at favourable rates, or at all, could adversely affect RSB's business, financial condition, results of operations and prospects and the value of the Notes". In line with the increases in customer accounts and in order to decrease its dependence on the capital markets and reduce its interest expense, RSB sought to decrease its debt securities issued. RSB repurchased some of its outstanding debt securities in 2009 and 2010, while some of its other debt securities matured in As a result, RSB's debt securities in issue significantly decreased from RUB 42,724 million, or 38.6 per cent. of the Group's total liabilities, as of 31 December 2009 to RUB 21,039 million, or 19.1 per cent. of the Group's total liabilities, and RUB 15,748 million, or 9.8 per cent. of the Group's total liabilities, as of 31 December 2010 and 2011, respectively. As international and domestic capital markets improved in the first half of 2012, RSB made several issuances of debt securities during this period. As a result, RSB's debt securities in issue increased from RUB 15,748 million, or 9.8 per cent. of the Group's total liabilities, as of 31 December 2011 to RUB 20,558 million, or 10.4 per cent. of the Group's total liabilities as of 30 June As a result of the global financial and economic crisis, in 2009, similarly to other Russian banks, RSB was reliant to a considerable extent on CBR lending under a temporary liquidity program available to Russian banks to meet its funding needs. During 2010, RSB repaid all its loans to the CBR, which amounted to RUB 13,238 million as of 31 December 2009, and had no amounts due to the CBR as of 31 December 2010 and as of 31 December As a result, amounts due to other banks significantly decreased from 2009 to The CBR has since discontinued the temporary liquidity program it established during the crisis. In September 2011, RSB received a loan from the European Bank for Reconstruction and Development in the amount of RUB 4,000 million, bearing interest at a floating rate based on Mosprime rate, which resulted in an increase in due to other banks from 2010 to During the first six months of 2012, RSB obtained several loans from the CBR in the aggregate amount of RUB 5,007 million as of 30 June 2012, which was the principal reason for the increase in due to other banks from 31 December 2011 to 30 June CBR loans were made available to Russian banks in 2012 in response to the decrease in liquidity on international and domestic capital markets in the autumn of 2011 resulting from renewed concerns over the euro-zone sovereign debt crisis and the health of the global economy. CBR loans obtained by RSB bear interest at fixed interest rates that range from 7.0 per cent. to 8.0 per cent. per annum, representing a relatively low cost of funding for RSB, which was the main reason for RSB's decision to obtain this funding from the CBR

73 The following table sets forth the RSB s funding base as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June 2012 % of total 2011 % of total 2010 As of 31 December % of total 2009 (in millions of Roubles, except percentages) Customer accounts Term deposits of individuals... 96, , , , Current/demand accounts of individuals... 32, , , , Term deposits of state and municipal... 4, , Current/settlement accounts of legal entities Term deposits of legal entities Total customer accounts , , , , Subordinated debt... 22, , , , Debt securities in issue... 20, , , , Due to other banks... 10, , , Other liabilities... 9, , , , Total funding , , ,0 110, , % of total Interest Rate Environment Net interest income is the largest component of RSB s income statement. As such, changes in interest rates in the Russian banking markets have affected RSB s results of operations in the past and are likely to continue to affect RSB s results of operations in the future. During the periods under review, such changes affected RSB s interest income, interest expense, net interest spread and net interest margin. Upon resuming its origination activity in 2009, RSB was able to charge higher interest rates than it had prior to the crisis, mainly due to a general lack of availability of consumer credit and higher risk premium expectations by banks. As a result, RSB s average interest rate earned by RSB on loans to individuals increased from 30.8 per cent. in the year ended 31 December 2009 to 33.8 per cent. in the year ended 31 December In 2009 and 2010, the Russian banking system maintained a strong customer deposit growth rate that often substantially outpaced loan growth. This resulted in a substantial increase in liquidity in the market and the lowering of interest rates on both loans and deposits by major banks. In order to manage its additional liquidity, RSB decreased deposit interest rates in During the first half of 2010, real interest rates were stable. However, in the second half of 2010, the rise in inflation resulted in a decrease in real interest rates on loans, and interest rates on deposits became lower than the rate of inflation. This made bank loans more affordable, encouraging demand for loans and increasing activity on the lending market. The competition for borrowers with good credit standings has remained high throughout 2011 and the six months ended 30 June 2012, which has placed downward pressure on the interest rates that can be charged on consumer loans. Since the first half of 2009, borrowing conditions for Russian customers have been challenging as a consequence of the global financial and economic crisis. For example, according to the CBR, the average Rouble lending rate on the Russian interbank market increased by more than five times to 16.3 per cent. in January 2009 from 2.8 per cent. in January 2008, before decreasing to 5.8 per cent. in June 2012 (with significant fluctuations during that period). Increased competition for customer deposits due to a lack of other funding sources as a result of the global financial and economic crisis, as well as inflation, resulted in higher interest rates being payable on customer deposits by Russian banks, which was the principal reason for the increase in the average interest rate paid by RSB on customer accounts from 8.2 per cent. in the year ended 31 December 2009 to 10.3 per cent. in the year ended 31 December However, this higher cost of funding in 2010 as compared to 2009 was partially offset by the higher lending rates that RSB charged in 2010 in respect of the new loans

74 originated after it had restarted its lending operations in A general lack of liquidity in the international capital markets made it very difficult to access the international capital markets on commercially reasonable terms or at all or during Consequently, in the period starting from the onset of the global financial and economic crisis until mid-2010, RSB was largely dependent on funding by the CBR, which initially raised its interest rate in late 2008 to defend the Rouble, before lowering it gradually in the second half of 2009 and then more aggressively in the first two months of As a result, RSB s average interest rate payable on amounts due to other banks (which principally comprised the amounts due to the CBR) decreased from 11.7 per cent. in 2009 to 6.6 per cent. in Interest rates on interest-earning assets remained generally flat between 2011 and 2010, with the exception of debt securities portfolio, the interest rate on which decreased from 2010 to 2011, principally as a result of decreases in market interest rates between the two years. Interest rates on interest-bearing liabilities decreased from 2010 to 2011, principally due to a decrease in the rates on customer accounts, mainly due to the fact that as economic conditions in Russia improved in 2011 (particularly in the first half of the year), RSB and other consumer finance institutions in Russia were able to reduce the interest rates offered on its current and term deposit accounts, while still attracting new and existing customers. As the Russian economy continued to grow in the first half of 2012, RSB, similarly to other consumer finance banks in Russia, was able to increase the share of higher-interest earning products in its loan portfolio (credit cards and personal loans), resulting in the increase in the average interest rate on loans and advances to individuals. In addition, as a result of the increase in market interest rates in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011, interest rates on debt securities portfolio increased. Interest rates on interest-bearing liabilities increased between the six months ended 30 June 2011 and the same period in The increase was principally due to a slight increase in interest rates on customer accounts, partially offset by a decrease in the interest rate on due to other banks. The interest rate on due to other banks decreased in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 mainly due to the fact that, as discussed above, during the first six months of 2012, RSB obtained several loans from the CBR. In the six months ended 30 June 2011, RSB had relatively small amounts due to other banks that mainly represented short-term (up to 1 month) interbank borrowings, which generally fluctuated significantly, making the quarterly average balances and the respective average interest rates calculated for the six months ended 30 June 2011 less representative than the more stable ones calculated for the six months ended 30 June Changes in Retailer Incentive Fee Arrangements RSB built its POS loan business primarily through partnerships with major retailers located across Russia. As of 30 June 2012, RSB had distribution agreements with retailers at approximately 53,000 points of sale. RSB typically acquired its POS loan customers through point of sale financing transactions at retail stores. If a POS loan customer acquired by RSB through a point of sale transaction were to satisfy certain lending criteria, RSB would attempt to cross sell other consumer finance products to such a customer, including credit cards or personal loans. Following the global financial and economic crisis, RSB refocused its retail partner strategy to concentrate on major retailers with whom it has negotiated agreements on significantly improved terms as compared to the period before the crisis, and also with a large number of regional retailers. Before the crisis, it was common for RSB to pay an incentive fee to the retailer for each POS loan that was extended at one of the retailer s stores. During and after the crisis, RSB negotiated an end to these incentive fees. However, in 2010 and thereafter there has been a return to the use of incentive fees, albeit at lower levels than before the crisis. As a result, as these commissions comprise a part of the effective yield of POS loans and, as such, represent a portion of interest income, POS loans interest income and interest margins have been adversely affected

75 RSB s current lending strategy envisages placing less reliance on points of sale for attracting new customers and extending loans than previously. Points of sale will continue to play an important role, but RSB intends to rely less on retailers or third party agents by leveraging its brand and expanding its office network to attract new customers directly. Exchange Rate Volatility Most of RSB s loan portfolio is denominated in roubles, whereas some of RSB s liabilities (mainly debt securities issued and some of retail and corporate deposits) are denominated in foreign currencies, principally the U.S. dollar. As a result, RSB is exposed to fluctuations in exchange rates. In general, the appreciation of the rouble against the U.S. dollar results in lower interest expense on RSB s U.S. dollar denominated borrowings in rouble terms, which improves RSB s profitability because most of RSB's interest income is earned in roubles. The appreciation of the rouble against the U.S. dollar also results in gains from translation of U.S. dollar-denominated monetary liabilities into roubles at the end of each reporting period. The depreciation of the rouble against the U.S. dollar has the opposite effect. Although RSB makes a limited use of derivative financial instruments (foreign exchange forwards) to hedge its foreign currency exposure (see "Asset, Liability and Risk Management Market Risks Currency Risk" for more detail), RSB also seeks to create a partial "natural hedge" by holding most of its excess cash in U.S. dollars or bonds denominated in U.S. dollars. As a result of the global financial and economic crisis and a sharp decline in prices of oil and other commodities, the rouble significantly depreciated against the U.S. dollar towards the end of 2008 and in the beginning of 2009 from RUB per U.S. dollar as of 16 July 2008 to a low of RUB per U.S. dollar as of 19 February 2009, thereby raising the cost of funding for financial institutions and corporations that borrowed in U.S. dollars. As global and Russian economic conditions began to improve and prices of oil and other commodities began to rise in 2010, the rouble recovered somewhat and the exchange rate was RUB per U.S. dollar as of 31 December The rouble continued to strengthen against the U.S. dollar in the first half of 2011 and the exchange rate fell as low as RUB per U.S. dollar as of 28 July In the second half of 2011, concerns over global economy and euro-zone sovereign debt resulted in volatility in global financial and capital markets and a decline in prices of oil and other commodities. As a result, the rouble depreciated to RUB per U.S. dollar as of 30 June RSB s net losses from operations with foreign currencies (comprised of translation differences gains/losses and dealing gains/losses) decreased to RUB 496 million in the year ended 31 December 2011 from RUB 902 million in the year ended 31 December 2010 and RUB 5,920 million in the year ended 31 December The decreases were principally due to the improvements in RSB s currency-related matching of liabilities to assets, such as repayment of USD-denominated Eurobonds and issuing rouble-denominated domestic bonds (as a result smaller amounts needed to be hedged) and decreases in foreign exchange rates volatility, resulting in lower hedging costs. Foreign exchange rates volatility was particularly acute during 2009 due to the effects of the global financial and economic crisis and therefore was the main reason for RSB s RUB 5,920 million net losses from operations with foreign currencies in that year. For similar reasons, RSB's net losses from operations with foreign currencies decreased from RUB 359 million in the six months ended 30 June 2011 to RUB 244 million in the six months ended 30 June Recent Developments In July 2012, the Group issued USD 350 million 9.25 per cent. Eurobonds due July 2017 at nominal amount. The holders of these bonds have the right to redeem them at nominal value in July

76 Description of Principal Statement of Comprehensive Income Items Interest Income RSB's interest income is comprised of (a) interest paid to RSB by consumer and corporate clients that have borrowed funds from RSB, (b) fees and commissions payable by customers directly attributable to loans, (c) interest paid by issuers of debt securities owned by RSB and (d) interest paid by credit institutions which have borrowed funds from RSB on interbank terms and at interbank rates. Fees and commissions paid by RSB to retailers are accounted for in the interest income line, reducing interest income. Interest Expense RSB's interest expense consists of interest paid by RSB on retail and corporate customer accounts (including current accounts and term deposits) and on debt securities issued by RSB (principally bonds, promissory notes, asset-backed notes, euro-commercial papers, bank loans and loan participation notes). Net Interest Income Net interest income is calculated as the difference between interest income and interest expense. The predominance of interest income generated by consumer loans to customers reflects RSB's focus on its consumer finance business, as opposed to corporate lending. The amount of net interest income earned by RSB is affected by a number of factors. It is primarily determined by the volume of interest-earning assets (mainly loans to individuals and, to a lesser extent, debt securities portfolio or placements with other banks and loans to legal entities), interestbearing liabilities (such as customer accounts, debt securities issued, subordinated loans and deposits from other credit institutions), and the differential between rates on interest-earning assets and interestbearing liabilities and the relative margins of RSB's consumer finance portfolio and its own funding. Interest-earning assets are composed primarily of credit card loans, personal loans, POS loans, debt securities and loans to other credit institutions and legal entities. However, the overwhelming proportion of RSB's interest-earning assets relates to credit card loans and consumer loans. Since 2006, interest income earned by RSB on its credit card loans has represented the largest component of its interest income. Provision for Loan Impairment The provision for loan impairment comprises changes in allowances for impairment of loans and advances to customers. RSB's criteria for loans written-off as uncollectible are based on the portfolio behaviour. RSB has the following criteria for writing-off loans as uncollectible: loans identified as fraudulent, loans overdue for 120 days with a principal amount less than RUB 50,000 and loans overdue for 360 days irrespective of the principal amount. Fee and Commission Income Fee and commission income is principally comprised of commissions generated by RSB s consumer lending business and mainly consists of fees and commissions received for credit card transactions (which primarily comprise acquiring commissions received from merchants), and fees received in connection with settlement operations and guarantees. Fee and Commission Expense Fee and commission expense is primarily comprised of fees and commissions related to RSB s credit card operations (which principally comprise interchange commissions paid to credit card companies), cash collection, and fees paid in relation to settlement operations and guarantees

77 Losses less Gains from Operations with Foreign Currencies Losses less gains from operations with foreign currencies comprise foreign exchange translation gains/losses (which arise from the translation of RSB's monetary assets and liabilities denominated in foreign currencies in Roubles at the exchange rate prevailing at the balance sheet date) and gains/losses from operations with derivatives (which represent the result of economic hedges of the Group's exposure to currency risk). RSB is exposed to currency risk because a significant part of RSB's liabilities is denominated in foreign currencies, while most of RSB's assets are denominated in Roubles. RSB does not apply the optional hedge accounting allowed under IFRS. Income from Insurance Operations Income from insurance operations consists of income received from insurance premiums less net insurance claims. Other Operating Income/Expense Other operating income principally comprises gains from previously written-off loans. Administrative and other Operating Expenses Administrative and other operating expenses are comprised of staff costs, rental expenses, depreciation of fixed assets and amortisation of intangible assets, other costs of premises and equipment, taxes other than income tax, advertising and marketing, telecommunication expenses, stationery, professional services, and other operating expenses. Income Tax Expense RSB s principal tax liability is corporate income tax. The Group pays income taxes in accordance with the laws of the Russian Federation and Ukraine. The statutory income tax rate in Russia for banks payable on profits other than interest income from state securities was 20 per cent. in the first six months of 2012 and in 2011, 2010 and The federal tax rate on interest income from state securities was 9 per cent. in each of those periods. RSB's income tax expense comprises current tax charge and deferred tax. RSB s income tax expense is based on the taxable profit of RSB and each of its subsidiaries for each period and takes into account deferred tax attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. RSB and each of its subsidiaries separately pays taxes, on an unconsolidated basis, under Russian and Ukrainian tax laws and, accordingly, losses in one entity in a tax reporting period may not be offset against gains in another entity in that period. Selected Statistical Information Average Balance Sheet and Interest Rate Data The following tables set forth for the periods indicated the consolidated average balances of interestearning assets and interest-bearing liabilities of RSB, the amounts of interest income earned and interest expense incurred by RSB, and the average interest rate at which interest income was earned on such assets and interest expense was incurred on such liabilities. For the purposes of these tables, the consolidated average balances of assets and liabilities represent (i) the average of the opening balance as of 31 December of the previous year and the unaudited balances at the end of the quarters ended 31 March and 30 June in respect of the six months ended 30 June 2012 and 2011 and (ii) the average of the opening balance as of 31 December of the previous year, the unaudited balances at the end of the quarters ended 31 March, 30 June and 30 September, and the closing balance as of 31 December in respect of the years ended 31 December 2011, 2010 and Unaudited balances as of 30 June were extracted from unaudited interim consolidated financial statements prepared in accordance with IFRS without material adjustments. Unaudited balances as of 31 March and 30 September were derived

78 from the Group's management accounts that have not been audited or reviewed. The results of this analysis would likely be different if alternative and/or more frequent averaging methods were used and such differences could be material. The average interest rates below are calculated by dividing aggregate interest income or interest expense, as applicable, for the relevant line item by the average balance for such line item for the relevant period. Average interest rates are distinct from the effective interest rates presented in RSB's Financial Statements and referred to elsewhere in this Base Prospectus. See "Critical Accounting Policies Income and Expense Recognition" for a description of the method of calculation of effective interest rates. Average balance Six months ended 30 June Interest Income/ Expense Average Rate Average balance Interest Income/ Expense Average Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals (1)(2) ,938 20, % 79,625 13, % Debt securities portfolio... 36,158 1, % 25,758 1, % Loans to legal entities (1)(2)... 5, % 4, % Due from other banks... 1, % % Total interest-earning assets ,839 22, % 110,900 14, % Interest-bearing liabilities Due to other banks... 7, % % Customer accounts ,335 5, % 74,034 3, % Debt securities in issue... 18, % 15, % Subordinated debt... 22, % 21, % Total interest-bearing liabilities ,779 7, % 111,490 4, % Net interest spread (3) % 17.8% Net interest income... 15,296 9,867 Net interest margin (4) % 17.8% Average balance 2011 Interest Income/ Expense Average Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals (1)(2)... 88,656 30, % Debt securities portfolio... 26,132 2, % Loans to legal entities (1)(2)... 4, % Due from other banks % Total interest-earning assets ,452 32, % Interest-bearing liabilities Due to other banks... 2, % Customer accounts... 83,906 6, % Debt securities in issue... 13,352 1, % Subordinated debt... 21,900 1, % Total interest-bearing liabilities ,155 9, % Net interest spread (3) % Net interest income... 22,817 Net interest margin (4) %

79 Average balance Interest Income/ Expense Average Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals (1)(2)... 76,739 25, % Debt securities portfolio... 20,009 1, % Loans to legal entities (1)(2)... 7, % Due from other banks % Total interest-earning assets ,094 28, % Interest-bearing liabilities Due to other banks... 5, % Customer accounts... 42,737 4, % Debt securities in issue... 32,374 2, % Subordinated debt... 22,243 1, % Total interest-bearing liabilities ,945 8, % Net interest spread (3) % Net interest income... 19,509 Net interest margin (4) % Average balance 2009 Interest Income/ Expense Average Rate (in millions of Roubles, except percentages) Interest-earning assets Loans and advances to individuals (1)(2) ,342 30, % Debt securities portfolio... 12,722 1, % Loans to legal entities (1)(2)... 13,119 1, % Due from other banks % Total interest-earning assets ,047 33, % Interest-bearing liabilities Due to other banks... 34,041 3, % Customer accounts... 20,933 1, % Debt securities in issue... 67,732 6, % Subordinated debt... 15,573 1, % Total interest-bearing liabilities ,279 13, % Net interest spread (3) % Net interest income... 20,690 Net interest margin (4) % (1) These values are net of provision for impairment. (2) The line item "Loans and Advances to Customers" in RSB's Financial Statements consists principally of consumer and credit card loans, as well as, to a lesser extent, other loans to individuals and direct commercial loans. (3) Net interest spread represents the difference between the average interest rate on interest-earning assets and the average interest rate on interest-bearing liabilities. (4) Net interest margin is defined as net interest income before provision for loan impairment as a percentage of average interest-earning assets. Interest-Earning Assets Average Balances. Interest-earning assets increased by RUB 52,939 million, or 47.7 per cent., from RUB 110,900 million in the six months ended 30 June 2011 to RUB 163,839 million in the six months ended 30 June The increase was principally due to a RUB 41,313 million, or 51.9 per cent., increase in loans and advances to individuals and, to a lesser extent, a RUB 10,400 million, or 40.4 per cent., increase in debt securities portfolio. The increase in loans and advances to individuals in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 was principally due to the planned growth of the RSB's retail loan portfolio, particularly credit card loans and personal loans. The increase in debt securities portfolio in the six months ended 30 June 2012 in comparison to the six

80 months ended 30 June 2011 was mainly due to the fact that RSB's management sought to strengthen its existing liquidity cushion by increasing its securities portfolio in order to balance an increased customer account portfolio in the event of customer account withdrawals. Interest-earning assets increased by RUB 15,358 million, or 14.6 per cent., from RUB 105,094 million in the year ended 31 December 2010 to RUB 120,452 million in the year ended 31 December The increase was principally due to a RUB 11,917 million, or 15.5 per cent., increase in loans and advances to individuals and, to a lesser extent, a RUB 6,123 million, or 30.6 per cent., increase in the debt securities portfolio. The increase in loans and advances to individuals in the year ended 31 December 2011 in comparison to the year ended 31 December 2010 was principally the result of an increase in the volume of issuance of existing consumer loan and credit card products and the launch of RSB's new credit products, including personal instalment loans. The increase in the consumer loan portfolio reflected the improving economic conditions in Russia in 2011, particularly in the first half of the year. The increase in the debt securities portfolio in the year ended 31 December 2011 as compared to the year ended 31 December 2010 was mainly due to the fact that RSB's management sought to create a liquidity cushion in the form of a larger securities portfolio in order to balance an increased customer account portfolio in the event of customer account withdrawals. Interest-earning assets decreased by RUB 21,953 million, or 17.3 per cent., from RUB 127,047 million in the year ended 31 December 2009 to RUB 105,094 million in the year ended 31 December The decrease was principally due to a RUB 23,603 million, or 23.5 per cent., decrease in loans and advances to individuals and, to a lesser extent, a RUB 5,238 million, or 39.9 per cent., decrease in loans to legal entities, partially offset by a RUB 7,287 million, or 57.3 per cent., increase in the debt securities portfolio. The decreases in loans and advances to individuals and loans to legal entities in the year ended 31 December 2010 in comparison to the year ended 31 December 2009 principally reflected an overall decline in demand for consumer and corporate loans due to the effects of the global financial and economic crisis as well as the new, more stringent, credit policy introduced by RSB in September 2008 in response to the crisis. See "Business History - Effect of the Global Financial and Economic Crisis". The increase in the debt securities portfolio in the year ended 31 December 2010 as compared to the year ended 31 December 2009 was mainly due to the fact that RSB's management sought to strengthen its liquidity position in general in response to the crisis and also create a liquidity cushion in light of an increased customer account portfolio in the event of customer account withdrawals. Average Interest Rates. The average interest rate on RSB's interest-earning assets increased from 26.3 per cent. in the six months ended 30 June 2011 to 27.8 per cent. in the six months ended 30 June The increase was principally due to the increase in the average interest rate on loans and advances to individuals from 33.5 per cent. in the six months ended 30 June 2011 to 34.2 per cent. in the six months ended 30 June 2012 and the increase in the average interest rate on the debt securities portfolio from 8.0 per cent. in the six months ended 30 June 2011 to 10.1 per cent. in the six months ended 30 June As the Russian economy continued to grow in the first half of 2012, RSB, similarly to other consumer finance banks in Russia, was able to increase the share of higher-interest earning products in its loan portfolio (credit cards and personal loans), resulting in the increase in the average interest rate on loans and advances to individuals. The increase in the average interest rate on debt securities portfolio in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 principally reflected the increase in market interest rates between the two periods. The average interest rate on RSB's interest-earning assets remained generally flat between 2011 and 2010 and was 27.2 per cent. in the year ended 31 December 2011 and 27.1 per cent. in the year ended 31 December The average interest rate on each category of RSB's interest-earning assets also remained generally flat between 2011 and 2010, with the exception of the debt securities portfolio the average interest rate on which decreased from 8.8 per cent. in the year ended 31 December 2010 to 8.2 per cent. in the year ended 31 December 2011, principally as a result of decreases in market interest rates in 2011 as compared to The average interest rate on RSB's interest-earning assets increased slightly from 26.7 per cent. in the

81 year ended 31 December 2009 to 27.1 per cent. in the year ended 31 December The increase principally reflected the increase in the average interest rate on loans and advances to individuals from 30.8 per cent. in 2009 to 33.8 per cent. in 2010, partially offset by the decreases in the average interest rate on loans to legal entities from 12.9 per cent. in 2009 to 8.7 per cent. in 2010 and in the average interest rate on debt securities portfolio from 9.8 per cent. in 2009 to 8.8 per cent. in As the state of the Russian economy began to improve in 2010, RSB, similarly to other consumer finance banks in Russia, was able to increase interest rates on its consumer loan products, resulting in the increase in the average interest rate on loans and advances to individuals. The decrease in the average interest rate on loans to legal entities in the year ended 31 December 2010 as compared to the year ended 31 December 2009 was mainly due to the change in the composition of the legal entities loan portfolio as a result of the repayment of some of the higher interest-earning loans. The average interest rate on the debt securities portfolio decreased in the year ended 31 December 2010 as compared to the year ended 31 December 2009 principally as a result of a decrease in market interest rates in 2010 as compared to Interest-Bearing Liabilities RSB relies on interest-bearing liabilities as its major source of financing for interest-earning assets. The temporarily unused cash received from/collected for repayment of debt securities is generally placed in highly liquid securities or deposited with other banks. Average Balances. Interest-bearing liabilities increased by RUB 58,289 million, or 52.3 per cent., from RUB 111,490 million in the six months ended 30 June 2011 to RUB 169,779 million in the six months ended 30 June The increase was principally due to a RUB 47,301 million, or 63.9 per cent., increase in customer accounts and, to a lesser extent, a RUB 6,503 million increase in due to other banks. The increase in customer accounts in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 principally reflected RSB's continued focus on growing its customer accounts portfolio, a strategy that it had adopted in response to the lack of funding during the global financial and economic crisis but also in order to diversify its funding base and decrease its dependence on the wholesale market in general. The increase in due to other banks in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 mainly resulted from the fact that during the first six months of 2012, RSB obtained several loans from the CBR in the aggregate amount of RUB 5,007 million as of 30 June CBR loans were made available to Russian banks in 2012 in response to the decrease in liquidity on international and domestic capital markets in the autumn of 2011 resulting from alleviated concerns over the euro-zone sovereign debt crisis and the health of the global economy. CBR loans obtained by RSB bear interest at fixed interest rates that range from 7.0 per cent. to 8.0 per cent. per annum, representing a relatively low cost of funding for RSB, which was the main reason for RSB's decision to obtain this funding from the CBR. Interest-bearing liabilities increased by RUB 19,210 million, or 18.7 per cent., from RUB 102,945 million in the year ended 31 December 2010 to RUB 122,155 million in the year ended 31 December The increase was principally due to a RUB 41,169 million, or 96.3 per cent., increase in customer accounts, partially offset by a RUB 19,022 million, or 58.8 per cent., decrease in debt securities issued. The increase in customer accounts in the year ended 31 December 2011 in comparison to the year ended 31 December 2010 principally resulted from an increase in term deposits from individuals, which increased by 64.3 per cent. from RUB 45,559 as of 31 December 2010 to RUB 74,855 million as of 31 December The increase mainly reflected RSB's continued focus on growing its customer accounts portfolio, a strategy that it had adopted in response to the lack of funding during the global financial and economic crisis but also in order to diversify its funding base and decrease its dependence on the wholesale market in general. In line with this strategy, in 2011 RSB repaid some of its maturing debt securities and repurchased some of its outstanding debt securities, which resulted in a decrease in its debt securities issued in the year ended 31 December 2011 as compared to the year ended 31 December Interest-bearing liabilities decreased by RUB 35,334 million, or 25.6 per cent., from RUB 138,279 million in the year ended 31 December 2009 to RUB 102,945 million in the year ended 31 December

82 2010. The decrease was principally due to a RUB 35,358 million, or 52.2 per cent., decrease in debt securities issued and a RUB 28,450 million, or 83.6 per cent., decrease in due to other banks, partially offset by a RUB 21,804 million, or per cent., increase in customer accounts. Debt securities issued decreased in the year ended 31 December 2010 in comparison to the year ended 31 December 2009 primarily due to repayment of debt securities at maturity or repurchase of outstanding debt securities, in line with RSB's strategy to decrease its dependence on this category of funding while increasing the share of customer funds in its funding base. The share of debt securities as a proportion of total RSB liabilities decreased from 38.6 per cent. as of 31 December 2009 to 19.1 per cent. as of 31 December 2010 as a result of RSB's strategy to reduce its exposure to global capital markets during the crisis. The decrease in due to other banks in the year ended 31 December 2010 as compared to the year ended 31 December 2009 principally reflected the repayment by RSB of its borrowings from the CBR, which comprised loans from the CBR as well as sale and repurchase agreements with the CBR. As described above, in response to the lack of funding during the global financial and economic crisis, in 2008 and 2009 RSB actively developed an individual deposits programme, which was the main reason for the increase in RSB's customer accounts, particularly term deposits from individuals, in the year ended 31 December 2010 in comparison to the year ended 31 December Average Interest Rates. The average interest rate on RSB's interest-bearing liabilities increased from 8.5 per cent. in the six months ended 30 June 2011 to 8.8 per cent. in the six months ended 30 June The increase was principally due to a slight increase in the average interest rate on customer accounts from 8.7 per cent. in the six months ended 30 June 2011 to 8.9 per cent. in the six months ended 30 June 2012, partially offset by a decrease in the average interest rate on due to other banks from 18.7 per cent. in the six months ended 30 June 2011 to 12.2 per cent. in the six months ended 30 June The average interest rate on due to other banks decreased in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 mainly due to the fact that, as discussed above, during the first six months of 2012, RSB obtained several loans from the CBR. In the six months ended 30 June 2011, RSB had relatively small amounts due to other banks that mainly represented short-term (up to 1 month) interbank borrowings, which generally fluctuated significantly, making the quarterly average balances and the respective average interest rates calculated for the six months ended 30 June 2011 less representative than the more stable ones calculated for the six months ended 30 June The average interest rate on RSB's interest-bearing liabilities decreased from 8.7 per cent. in the year ended 31 December 2010 to 8.2 per cent. in the year ended 31 December The decrease was principally due to a decrease in the average interest rate on customer accounts from 10.3 per cent. in 2010 to 8.1 per cent. in The average interest rate on customer accounts decreased in the year ended 31 December 2011 in comparison to the year ended 31 December 2010 mainly due to the fact that as economic conditions in Russia improved in 2011 (particularly in the first half of the year), RSB and other consumer finance institutions in Russia were able to reduce the interest rates offered on its current and term deposit accounts, while still attracting new and existing customers. The average interest rate on RSB's interest-bearing liabilities decreased from 9.6 per cent. in the year ended 31 December 2009 to 8.7 per cent. in the year ended 31 December The decrease was principally due to a decrease in the average interest rate on due to other banks from 11.7 per cent. in 2009 to 6.6 per cent. in 2010, a decrease in the average interest rate on subordinated debt from 9.0 per cent. in 2009 to 6.4 per cent. in 2010 and a decrease in the average interest rate on debt securities issued from 9.1 per cent. in 2009 to 8.4 per cent. in 2010, partially offset by an increase in the average interest rate on customer accounts from 8.2 per cent. in 2009 to 10.3 per cent. in In the period starting from the onset of the global financial and economic crisis until mid-2010, RSB was largely dependent on funding by the CBR, which initially raised its discount rate in late 2008 to defend the Rouble, before lowering it gradually in the second half of 2009 and then more aggressively in the first two months of As a result, RSB s average interest rate payable on amounts due to other banks (which principally comprised the amounts due to the CBR) decreased from 11.7 per cent. in the year ended 31 December 2009 to 6.6 per cent. in the year ended 31 December The average interest rate on subordinated debt decreased in the year ended 31 December 2010 as compared to the year

83 ended 31 December 2009 principally due to the decrease in the interest rate on subordinated loan from VEB from 8.0 per cent. to 6.5 per cent. and the decrease in the interest rate on subordinated loan from Closed Joint Stock Company "Russian Standard" Corporation" from 8.0 per cent. to 6.5 per cent. The decrease in the year ended 31 December 2010 as compared to the year ended 31 December 2009 in the average interest rate on debt securities issued was principally the result of overall decrease in market rates. Increased competition for customer deposits due to a lack of other funding sources as a result of the global financial and economic crisis resulted in higher interest rates being payable on customer deposits by Russian banks, which was the principal reason for the increase in the average interest rate on customer accounts in the year ended 31 December 2010 as compared to the year ended 31 December Net Interest Spread and Net Interest Margin RSB's net interest spread, defined as the difference between the average interest rate on interestearning assets and the average interest rate on interest-bearing liabilities, was 19.0 per cent. for the six months ended 30 June 2012, as compared to 17.8 per cent. for the six months ended 30 June The increase principally reflected the increase in the average interest rate on interest-earning assets, partially offset by an increase in the average interest rate on interest-bearing liabilities. RSB's net interest spread was 19.0 per cent. for the year ended 31 December 2011, as compared to 18.4 per cent. and 17.1 per cent. for the years ended 31 December 2010 and 2009, respectively. The year-on-year increases in RSB's net interest spread were mainly due to the year-on-year decreases in the average interest rate on interest-bearing liabilities and, with respect to the increase in RSB's net interest spread from 2009 to 2010, also the increase in the average interest rate on interest-earning assets. RSB's net interest margin, defined as net interest income before the provision for loan impairment as a percentage of average interest-earning assets, was 18.7 per cent. for the six months ended 30 June 2012, as compared to 17.8 per cent. for the six months ended 30 June The increase was principally due to the increase in RSB's average interest rate on interest-earning assets from 26.3 per cent. in the six months ended 30 June 2011 to 27.8 per cent. in the six months ended 30 June RSB's net interest margin was 18.9 per cent. for the year ended 31 December 2011 as compared to 18.6 per cent. and 16.3 per cent. for the years ended 31 December 2010 and 2009, respectively. The increase in RSB's net interest margin in 2011 as compared to 2010 was principally due to the decrease in RSB's average interest rate on interest-bearing liabilities from 8.7 per cent. in 2010 to 8.2 per cent. in The increase in RSB's net interest margin in 2010 as compared to 2009 was mainly due to the decrease in RSB's average interest rate on interest-bearing liabilities from 9.6 per cent. in 2009 to 8.7 per cent. in 2010 and the increase in RSB's average interest rate on interest-earning assets from 26.7 per cent. in 2009 to 27.1 per cent. in Net Changes in Interest Income and Interest Expense Volume and Rate Analysis The following tables provide a comparative analysis of net changes in interest income and interest expense by reference to changes in average volume and rates for the periods indicated. Net changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for interest-earning assets and sources of funds on which interest is received or paid. Volume change is calculated as the change in volumes multiplied by the sum of average rates for two compared periods divided by two, while rate change is the change in rate multiplied by the sum of average volumes for two compared periods divided by two. Average balances represent the average of the opening, quarterly and closing balances for the respective years. Six months ended 30 June 2012 / Six months ended 30 June 2011 Increase/(decrease) due to changes in Volume Rate Net change (in millions of Roubles)

84 Interest Income Loans and advances to individuals... 6, ,348 Debt securities portfolio Loans to legal entities Due from other banks (39) 3 Total interest income... 7, ,196 Interest Expense Due to other banks (127) 376 Customer accounts... 2, ,219 Debt securities in issue Subordinated debt (34) 3 Total interest expense... 2,768 (1) 2,767 Net change in net interest income... 4, , / /2009 Increase/(decrease) due to changes in Volume Rate Increase/(decrease) due to changes in Net change Volume Rate (in millions of Roubles) Net change Interest Income Loans and advances to individuals... 4, ,207 (7,629) 2,634 (4,995) Debt securities portfolio (149) (157) 519 Loans to legal entities... (260) 1 (259) (566) (434) (1,000) Due from other banks (33) 4 (29) Total interest income... 4, ,344 (7,552) 2,047 (5,505) Interest Expense Due to other banks... (246) 245 (1) (2,599) (998) (3,597) Customer accounts... 3,794 (1,387) 2,407 2, ,687 Debt securities in issue... (1,570) (57) (1,627) (3,090) (361) (3,451) Subordinated debt... (24) (477) 37 Total interest expense... 1,954 (918) 1,036 (3,155) (1,169) (4,324) Net change in net interest income... 2, ,308 (4,397) 3,216 (1,181) The 56.2 per cent. increase in RSB's interest income in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 was primarily due to an increase in the volume of loans originated by RSB as a result of its expanding lending activity. The 58.6 per cent. increase in RSB's interest expense in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011 was principally due to an increase in the volume of RSB's interest-bearing liabilities resulting from the need to finance the growth of RSB's loan portfolio. The 15.3 per cent. increase in RSB's interest income in the year ended 31 December 2011 as compared to the year ended 31 December 2010 was primarily due to an increase in the volume of loans originated by RSB as a result of its expanding lending activity. The 11.6 per cent. increase in RSB's interest expense in the year ended 31 December 2011 as compared to the year ended 31 December 2010 was principally due to an increase in the volume of RSB's interest-bearing liabilities resulting from the need to finance the growth of RSB's loan portfolio, partially offset by a decrease in the interest rate payable on these liabilities. The 16.2 per cent. decrease in RSB's interest income in the year ended 31 December 2010 as

85 compared to the year ended 31 December 2009 was mainly attributable to a contraction of RSB's loan portfolio as a result of the tightening of its underwriting policies in 2009, partially offset by an increase in the interest rate earned on RSB's interest-bearing assets. The 32.6 per cent. decrease in RSB's interest expense in the year ended 31 December 2010 as compared to the year ended 31 December 2009 was principally due to a decrease in the volume of RSB's interest-bearing liabilities and, to a lesser extent, a decrease in the interest rate payable on these liabilities. See " Results of Operations for the Six Months Ended 30 June 2012 and 2011 Interest Income, Interest Expense and Net Interest Income" and " Results of Operations for the Years Ended 31 December 2011, 2010 and 2009 Interest Income, Interest Expense and Net Interest Income" for a discussion of the changes in RSB's interest income, interest expense and net interest income during the periods under review. Results of Operations for the Six Months Ended 30 June 2012 and 2011 Summary The following table sets forth the principal components of RSB's net profit for the periods indicated: For the six months ended 30 June Change from prior period (in millions of Roubles) (in per cent.) Interest income... 22,782 14, % Interest expense... (7,486) (4,719) 58.6% Net interest income... 15,296 9, % Provision for impairment of loans to customers... (5,261) (1,689) 211.5% Net interest income after provision for loan impairment... 10,035 8, % Non-interest income... 3,917 2, % Operating income... 13,952 10, % Administrative and other operating expenses... (10,113) (7,598) 33.1% Profit before tax... 3,839 3, % Income tax expense... (768) (615) 24.9% Profit for the period... 3,071 2, % Cost/Income Ratio (1) % 61.5% (14.4)% (1) Cost/income ratio is calculated as administrative and other operating expenses divided by operating income excluding provision for loan impairment and other provisions. Interest Income, Interest Expense and Net Interest Income The following table sets out the principal components of RSB's net interest income and average interest-earning assets, calculated as the average of the opening, 31 March and closing balances for each period under review. For the six months ended 30 June Change from prior period (in millions of Roubles) (in per cent.) Interest income Loans and advances to individuals... 20,666 13, % Debt securities portfolio... 1,833 1, % Loans to legal entities % Cash and cash equivalents and due from other banks % Total interest income... 22,782 14, %

86 For the six months ended 30 June Change from prior period (in millions of Roubles) (in per cent.) Total interest expense... 7,486 4, % Net interest income... 15,296 9, % Average interest-earning assets Loans and advances to individuals ,938 79, % Debt securities portfolio... 36,158 25, % Loans to legal entities... 5,461 4, % Due from other banks... 1, % Total average interest-earning assets , , % Interest Income Interest income increased by RUB 8,196 million, or 56.2 per cent., from RUB 14,586 million in the six months ended 30 June 2011 to RUB 22,782 million in the six months ended 30 June The principal reason for the increase was a RUB 7,348 million, or 55.2 per cent., increase in interest income earned on RSB's consumer loan portfolio. Interest income earned on RSB's consumer loan portfolio primarily increased as a result of the growth of RSB's consumer loan portfolio, which expanded mainly due to improving economic conditions in Russia. The average balance of RSB's loans and advances to individuals increased by RUB 41,313 million, or 51.9 per cent., from RUB 79,625 million in the six months ended 30 June 2011 to RUB 120,938 million in the six months ended 30 June The following table sets out the principal components of RSB's interest income in the six months ended 30 June 2012 and For the six months ended 30 June 2012 Percentage of total interest income For the six months ended 30 June 2011 Percentage of total interest income (in millions of Roubles, except percentages) Total interest income... 22, % 14, % of which from loans to individuals... 20, % 13, % from debt securities portfolio... 1, % 1, % from loans to legal entities % % cash and cash equivalents and due from other banks % % Interest Expense The following table sets out the principal components of RSB's interest expense in the six months ended 30 June 2012 and 2011 and average interest-bearing liabilities, calculated as the average of the opening, 31 March and closing balances for each period under review. For the six months ended 30 June Change from prior period (in millions of Roubles, except percentages) Interest expense Customer accounts... 5,422 3, % USD denominated loan participation notes (52.9)% Subordinated debt % RR denominated bonds % Due to other banks %

87 For the six months ended 30 June Change from prior period (in millions of Roubles, except percentages) Promissory notes issued % Total interest expense... 7,486 4, % Average interest-bearing liabilities Due to other banks... 7, % Customer accounts ,335 74, % Debt securities in issue (1)... 18,849 15, % Subordinated debt... 22,430 21, % Total average interest-bearing liabilities , , % (1) Debt securities in issue include loan participation notes, bonds, asset-backed notes, euro-commercial paper and promissory notes. Interest expense increased by RUB 2,767 million, or 58.6 per cent., from RUB 4,719 million in the six months ended 30 June 2011 to RUB 7,486 million in the six months ended 30 June The increase was principally due to the RUB 2,219 million, or 69.3 per cent., increase in interest expense paid on customer accounts. Interest expense paid on customer accounts increased in the six months ended 30 June 2012 as compared to the six months ended 30 June 2012 principally due to an increase in customer accounts balances, which reflected RSB's continued focus on increasing its customer accounts portfolio, a strategy that it had adopted in response to the lack of funding during the global financial and economic crisis but also in order to diversify its funding base and decrease its dependence on the wholesale market in general). The average balance of RSB's customer accounts increased by RUB 47,301 million, or 63.9 per cent., from RUB 74,034 million in the six months ended 30 June 2011 to RUB 121,335 million in the six months ended 30 June Net Interest Income Net interest income increased by RUB 5,429 million, or 55.0 per cent., from RUB 9,867 million in the six months ended 30 June 2011 to RUB 15,296 million in the six months ended 30 June The increase was due to a 56.2 per cent. increase in interest income, partially offset by a 58.6 per cent. increase in interest expense. Effective Interest Rates The following table summarises the effective interest rates by major currencies for major monetary financial instruments of RSB as of 30 June 2012 and The analysis has been prepared based on period-end effective rates used for amortisation of the respective assets and liabilities. As of 30 June RUB USD Euro RUB USD Euro Assets Cash balances with the CBRF Correspondent accounts and overnight placements with other banks Debt securities at fair value through profit or loss Due from other banks Loans and advances to customers - consumer loans credit card loans (1) direct commercial loans Debt securities available for sale Liabilities Due to other banks... Customer accounts

88 - term deposits of legal entities... - term deposits of individuals Debt securities in issue RR denominated bonds... - USD denominated loan participation notes EUR denominated notes Subordinated debt (1) The effective interest rate for credit card loans was calculated based on the assumption that customers exercise in full the credit card cash limit (which in Russia is usually the same as the overall credit card limit) and repay it within the next 14 to 16 months. Non-Interest Income The following table sets out the principal components of RSB's non-interest income for the six months ended 30 June 2011 and For the six months ended 30 June (in millions of Roubles) Income from insurance operations... 3,308 1,896 Fee and commission income... 2,216 1,211 Fee and commission expense... (1,582) (889) Losses less gains from operations with foreign currencies... (244) (359) (Losses less gains) / gains less losses from operations with securities... (30) 30 Other operating income Total non-interest income... 3,917 2,495 Income from insurance operations increased by RUB 1,412 million, or 74.5 per cent., from RUB 1,896 million for the six months ended 30 June 2011 to RUB 3,308 million for the six months ended 30 June The increase was mainly due to an increase in volumes of loans and advances to customers and the fact that volume of insurance products sold generally correlates to consumer loan origination. Fee and commission income increased by RUB 1,005 million, or 83.0 per cent., from RUB 1,211 million for the six months ended 30 June 2011 to RUB 2,216 million for the six months ended 30 June The increase was principally due to the increase in acquiring and interchange commission income, which represents fees paid by merchants for accepting credit card payments, mainly resulting from the increase in the volume of credit cards issued by RSB. Fee and commission expense increased by RUB 693 million, or 78.0 per cent., from RUB 889 million for the six months ended 30 June 2011 to RUB 1,582 million for the six months ended 30 June The increase was primarily due to the increase in acquiring and interchange commission expense, which represents fees paid by RSB to credit card companies, mainly resulting from the increase in the volume of credit cards issued by RSB. RSB s net losses from operations with foreign currencies (comprised of translation differences gains/losses and dealing gains/losses) decreased by RUB 115 million, or 32.0 per cent., from RUB 359 million for the six months ended 30 June 2011 to RUB 244 million for the six months ended 30 June The decrease was principally due to the improvement in RSB s currency-related matching of liabilities to assets, such as repayment of USD-denominated Eurobonds and issuing roubledenominated domestic bonds (as a result smaller amounts needed to be hedged) and decreases in foreign exchange rates volatility, resulting in lower hedging costs. Other operating income decreased by RUB 357 million, or 58.9 per cent., from RUB 606 million for the six months ended 30 June 2011 to RUB 249 million for the six months ended 30 June The decrease was mainly due to the fact that in the six months ended 30 June 2012 RSB's gains from assignment of bad debts to third party purchasers were lower than during the same period of

89 Administrative and Other Operating Expenses The following table sets out RSB's administrative and other operating expenses for the six months ended 30 June 2012 and For the six months ended 30 June Change from prior period (in millions of Roubles, except percentages) Staff cost... 6,039 4, % Rent expenses % Depreciation and amortisation charge % Other costs of premises and equipment % Taxes other than on income (2.6)% Advertising and marketing % Low value items and stationery % Telecommunication % Security % Professional services (7.3)% Business trips % Charity % Mail % Statutory duties % Other % Total administrative and other operating expenses... 10,113 7, % Almost all of RSB's administrative and other operating expenses increased in the six months ended 30 June 2012 as compared to the six months ended 30 June 2011, principally as a result of the expansion of RSB's operations and the increase in RSB's loan portfolio between the two periods. Staff Costs Staff costs increased by RUB 1,728 million, or 40.1 per cent., from RUB 4,311 million for the six months ended 30 June 2011 to RUB 6,039 million for the six months ended 30 June The increase was principally due to the increase in headcount, including due to the expansion of RSB's branch network, as well as employees' salaries. Rent Expenses Rent expenses increased by RUB 269 million, or 40.6 per cent., from RUB 663 million for the six months ended 30 June 2011 to RUB 932 million for the six months ended 30 June The increase was mainly due to the expansion of RSB's branch network. Income Tax Expense RSB s income tax expense increased by RUB 153 million, or 24.9 per cent., from RUB 615 million in the six months ended 30 June 2011 to RUB 768 million in the six months ended 30 June The principal reason for the increase was the increase in RSB's profit before tax between these two periods. Profit for the Period For the reasons set forth above, RSB's profit for the period increased by RUB 611 million, or 24.8 per cent., from RUB 2,460 million in the six months ended 30 June 2011 to RUB 3,071 million in the six months ended 30 June Revaluation of Securities Available for Sale In the six months ended 30 June 2012, RSB recorded a RUB 542 million loss from revaluation of securities available for sale net of deferred tax, as compared to a RUB 6 million profit in the six

90 months ended 30 June The change was principally due to unfavourable market conditions in the second quarter of 2012 resulting from concerns over escalating euro-zone sovereign debt crisis. Results of Operations for the Years ended 31 December 2011, 2010 and 2009 Summary The following table sets forth the principal components of RSB's net profit for the periods indicated: For the year ended 31 December Change from prior period (in millions of Roubles) (in per cent.) Interest income... 32,776 28, % Interest expense... (9,959) (8,923) 11.6% Net interest income... 22,817 19, % Provision for impairment of loans to customers... (4,603) (6,345) (27.5)% Net interest income after provision for loan impairment... 18,214 13, % Non-interest income... 5,594 3, % Operating income... 23,808 16, % Administrative and other operating expenses... (17,206) (13,696) 25.6% Profit before tax... 6,602 2, % Income tax expense... (1,591) (686) 131.9% Profit for the year... 5,011 1, % Cost/Income Ratio (1) % 60.7% (0.2)% For the year ended 31 December Change from prior period (in millions of Roubles) (in per cent.) Interest income... 28,432 33,937 (16.2)% Interest expense... (8,923) (13,247) (32.6)% Net interest income... 19,509 20,690 (5.7)% Provision for impairment of loans to customers... (6,345) (12,485) (49.2)% Net interest income after provision for loan impairment... 13,164 8, % Non-interest income/(expense)... 3,063 (580) (628.1)% Operating income... 16,227 7, % Administrative and other operating expenses... (13,696) (13,195) 3.8% Profit/loss before tax... 2,531 (5,570) (145.4)% Income tax (expense)/credit... (686) 1,043 (165.8)% Profit/(loss) for the year... 1,845 (4,527) (140.8)% Cost/Income Ratio (1) % 65.6% (7.5)% (1) Cost/income ratio is calculated as administrative and other operating expenses divided by operating income excluding provision for loan impairment and other provisions. Interest Income, Interest Expense and Net Interest Income The following table sets out the principal components of RSB's net interest income and average interest-earning assets, calculated as the average of the opening, quarterly and closing balances for each year under review. For the year ended 31 December Change from prior year

91 / /2009 (in millions of Roubles, except percentages) Interest income Loans and advances to individuals... 30,151 25,944 30, % (16.1)% Debt securities portfolio... 2,130 1,760 1, % 41.8% Loans to legal entities ,688 (37.6)% (59.2)% Cash and cash equivalents and due from other banks % (42)% Total interest income... 32,776 28,432 33, % (16.2)% Total interest expense... (9,959) (8,923) (13,247) 11.6% (32.6)% Net interest income... 22,817 19,509 20, % (5.7)% Average interest-earning assets Loans and advances to individuals... 88,656 76, , % (23.5)% Debt securities portfolio... 26,132 20,009 12, % 57.3% Loans to legal entities... 4,902 7,881 13,119 (37.8)% (39.9)% Due from other banks % (46.2)% Total average interest-earning assets , , , % (17.3)% Interest Income Interest income increased by RUB 4,344 million, or 15.3 per cent., from RUB 28,432 million in the year ended 31 December 2010 to RUB 32,776 million in the year ended 31 December The principal reason for the increase was a RUB 4,207 million, or 16.2 per cent., increase in interest income earned on RSB's consumer loan portfolio. Interest income earned on RSB's consumer loan portfolio primarily increased as a result of the growth of RSB's consumer loan portfolio, which expanded mainly due to improving economic conditions in Russia. Volumes of all RSB's consumer loan products (credit cards, POS loans and personal loans) witnessed growth in 2011, with the exception of auto loans, which decreased in 2011 as compared to 2010 due to RSB's decision at the end of 2008 to suspend new auto loan origination following the global financial and economic crisis, and restructured loans, which decreased as a result of improving economic conditions in Russia. Interest income decreased by RUB 5,505 million, or 16.2 per cent., from RUB 33,937 million in the year ended 31 December 2009 to RUB 28,432 million in the year ended 31 December The decrease was principally due to a decrease in interest income from loans and advances to customers and, to a lesser extent, a decrease in interest income from loans to legal entities. Interest income from loans and advances to customers decreased in the year ended 31 December 2010 as compared to the year ended 31 December 2009 as a result of a decrease in the consumer loan portfolio due to stricter policies towards originating new loans and the impact of the global financial and economic crisis. This was partially offset by an increase in the average interest rate on loans and advances to individuals. As the state of the Russian economy began to improve in 2010, RSB, similarly to other consumer finance banks in Russia, was able to increase interest rates on its consumer loan products, resulting in the increase in the average interest rate on loans and advances to individuals. Interest income from loans to legal entities decreased in the year ended 31 December 2010 as compared to the year ended 31 December 2009 due to the decrease in the size of legal entities loan portfolio (some of the loans to legal entities were repaid by the borrowers and RSB decided to issue less such loans and focus on consumer loans, which generally have higher interest rates) and, to a lesser extent, the decrease in the interest rate earned on loans to legal entities, mainly due to repayment of higher interest-earning loans to legal entities. The following table sets out the principal components of RSB's interest income in the years ended 31 December 2011, 2010 and Percentage of total interest income 2010 Percentage of total interest income 2009 Percentage of total interest income

92 (in millions of Roubles, except percentages) Total interest income... 32, % 28, % 33, % of which from loans to individuals... 30, % 25, % 30, % from debt securities portfolio... 2, % 1, % 1, % from loans to legal entities % % 1, % cash and cash equivalents and due from other banks % % % Interest Expense The following table sets out the principal components of RSB's interest expense in the years ended 31 December 2011, 2010 and 2009 and average interest-bearing liabilities, calculated as the average of the opening, quarterly and closing balances for each period under review. For the year ended 31 December Change from prior period / /2009 (in millions of Roubles, except percentages) Interest expense Customer accounts... 6,814 4,407 1, % 156.2% USD denominated loan participation notes ,197 3,543 (75.0)% (38)% Subordinated debt... 1,691 1,434 1, % 2.6% RR denominated bonds , % (62.7)% Due to other banks ,967 (0.3)% (90.7)% Promissory notes issued (82.4)% (37)% Euro denominated notes ,257 - (100)% Total interest expense... 9,959 8,923 13, % (32.6)% Average interest-bearing liabilities Due to other banks... 2,997 5,591 34,041 (46.4)% (83.6)% Customer accounts... 83,906 42,737 20, % 104,2% Debt securities in issue (1)... 13,352 32,374 67,732 (58.8)% (52.2)% Subordinated debt... 21,900 22,243 15,573 (1.5)% 42.8% Total average interest-bearing liabilities. 122, , , % (25.6)% (1) Debt securities in issue include loan participation notes, bonds, asset-backed notes, euro-commercial paper and promissory notes. Interest expense increased by RUB 1,036 million, or 11.6 per cent., from RUB 8,923 million in the year ended 31 December 2010 to RUB 9,959 million in the year ended 31 December The increase was mainly due to an increase in interest expense paid on customer accounts, partially offset by a decrease in interest expense incurred on debt securities issued. Interest expense paid on customer accounts increased in the year ended 31 December 2011 as compared to the year ended 31 December 2010 due to an increase in customer accounts balances (which reflected RSB's continued focus on increasing its customer accounts portfolio, a strategy that it had adopted in response to the lack of funding during the global financial and economic crisis but also in order to diversify its funding base and decrease its dependence on the wholesale market in general), partially offset by a decrease in interest rates paid on customer accounts, mainly due to the fact that as economic conditions in Russia improved in 2011 (particularly in the first half of the year) customers' confidence in the Russian banking sector increased. As a result, RSB and other consumer finance institutions in Russia were able to reduce interest rates offered on its current and term deposit accounts, while still attracting new and existing customers. The decrease in the year ended 31 December 2011 as compared to the year ended 31 December 2010 in interest expense incurred on debt securities issued was principally due to a decrease in the volume of debt securities issued in 2011 as compared to 2010, which resulted from RSB's continuing strategy to decrease its dependence on capital markets funding. Interest expense decreased by RUB 4,324 million, or 32.6 per cent., from RUB 13,247 million in the year ended 31 December 2009 to RUB 8,923 million in the year ended 31 December The

93 decrease was principally due to decreases in interest expense paid on amounts due to other banks and on debt securities issued, partially offset by an increase in interest expense paid on customer accounts. Interest expense incurred on amounts due to other banks decreased in the year ended 31 December 2010 as compared to the year ended 31 December 2009 as a result of a decrease in the balance of amounts owed to other banks (principally as a result of repayment by RSB of its indebtedness to the CBR in 2010) and, to a lesser extent, a decrease in the interest rate paid on due to other banks (mainly due to the fact that the amounts owed to the CBR generally bore interest at higher rates than loans to other banks). The decrease in interest expense paid on debt securities issued was mainly due to a decrease in the volume of debt securities issued by RSB, principally due to RSB's strategy to decrease its dependence on this category of funding while increasing the share of customer funds in its funding base. The increase in interest expense paid on customer accounts mainly resulted from an increase in the customer account balances. As described above, in response to the lack of funding during the global financial and economic crisis, in 2008 and 2009 RSB actively developed an individual deposits programme, which was the main reason for the increase in RSB's customer accounts, particularly term deposits from individuals, in the year ended 31 December 2010 in comparison to the year ended 31 December Net Interest Income Net interest income increased by RUB 3,308 million, or 17.0 per cent., from RUB 19,509 million in the year ended 31 December 2010 to RUB 22,817 million in the year ended 31 December The increase was due to a 15.3 per cent. increase in interest income, partially offset by an 11.6 per cent. increase in interest expense. Net interest income decreased by RUB 1,181 million, or 5.7 per cent., from RUB 20,690 million in the year ended 31 December 2009 to RUB 19,509 million in the year ended 31 December The decrease was due to a 16.2 per cent. decrease in interest income, partially offset by a 32.6 per cent. increase in interest expense. Effective Interest Rates The following table summarises the effective interest rates by major currencies for major monetary financial instruments of RSB as of 31 December 2011, 2010 and The analysis has been prepared based on period-end effective rates used for amortisation of the respective assets and liabilities. 31 December RUB USD Euro RUB USD Euro RUB USD Euro Assets Cash balances with the CBRF Correspondent accounts and overnight placements with other banks Debt securities at fair value through profit or loss Due from other banks Loans and advances to customers - consumer loans credit card loans (1) direct commercial loans Debt securities available for sale Liabilities Due to other banks Customer accounts... - term deposits of legal entities term deposits of individuals Debt securities in issue - RR denominated bonds USD denominated loan participation notes EUR denominated notes

94 Subordinated debt (1) The effective interest rate for credit card loans was calculated based on the assumption that customers exercise in full the credit card cash limit (which in Russia is usually the same as the overall credit card limit) and repay it within the next 14 to 16 months. Non-Interest Income/(Expense) The following table sets out the principal components of RSB's non-interest income/(expense) for the years ended 31 December 2011, 2010 and For the year ended 31 December (in millions of Roubles) Income from insurance operations... 4,415 2,488 2,612 Fee and commission income... 3,088 1, Fee and commission expense... (2,230) (986) (597) Losses less gains from operations with foreign currencies... (496) (902) (5,920) (Losses less gains) / gains less losses from operations with securities... (244) (56) 197 Gains from early debt retirement ,696 Other operating income... 1,061 1, Total non-interest income/(expense)... 5,594 3,063 (580) Income from insurance operations for the year ended 31 December 2011 increased to RUB 4,415 million from RUB 2,488 million for the year ended 31 December This increase was mainly due to an increase in volumes of loans and advances to customers in the same period and the fact that volume of insurance products sold generally correlates to consumer loan origination. Income from insurance operations decreased in 2010 from RUB 2,612 million for the year ended 31 December This decrease was due to a reduction in volumes of loans and advances to customers in the same period. Fee and commission income increased to RUB 3,088 million for the year ended 31 December 2011 from RUB 1,320 million and RUB 841 million for the years ended 31 December 2010 and 2009, respectively. The year-on-year increases were principally due to the increases in acquiring and interchange commission income, which represents fees paid by merchants for accepting credit card payments, to RUB 1,962 million for the year ended 31 December 2011 from RUB 1,045 million and RUB 715 million for the years ended 31 December 2010 and 2009, respectively. Fee and commission expense increased to RUB 2,230 million for the year ended 31 December 2011 from RUB 986 million and RUB 597 million for the years ended 31 December 2010 and 2009, respectively. The year-on-year increases were primarily due to the increases in acquiring and interchange commission expense, which represents fees paid by RSB to credit card companies, to RUB 1,539 million for the year ended 31 December 2011 from RUB 620 million and RUB 375 million for the years ended 31 December 2010 and 2009, respectively. RSB s net losses from operations with foreign currencies (comprised of translation differences gains/losses and dealing gains/losses) decreased to RUB 496 million in the year ended 31 December 2011 from RUB 902 million in the year ended 31 December 2010 and RUB 5,920 million in the year ended 31 December The decreases were principally due to the improvements in RSB s currency-related matching of liabilities to assets, such as repayment of USD-denominated Eurobonds and issuing rouble-denominated domestic bonds (as a result smaller amounts needed to be hedged) and decreases in foreign exchange rates volatility, resulting in lower hedging costs. Foreign exchange rates volatility was particularly acute during 2009 due to the effects of the global financial and economic crisis and therefore was the main reason for RSB s RUB 5,920 million net losses from operations with foreign currencies in that year

95 For the year ended 31 December 2009, RSB recorded a RUB 1,696 million gain from early debt retirement. Gains from early debt retirement represent gains resulting from early repayment or repurchase of debt securities issued by RSB. RSB repurchased some of its debt securities in the market in 2009, principally in order to decrease its outstanding liabilities (as very few new loans were originated) and interest expense in light of the effects of the global financial and economic crisis. RSB had no gains from early debt retirement in 2010 or For the year ended 31 December 2011, other operating income amounted to RUB 1,061 million as compared to RUB 1,199 million and RUB 591 million for the years ended 31 December 2010 and 2009, respectively. Changes in other operating income in 2011 and 2010 are largely attributable to gains from assignment of bad debts to third party purchasers of RUB 789 million, RUB 1,020 million and RUB 157 million for the years ended 31 December 2011, 2010 and 2009, respectively. Administrative and Other Operating Expenses The following table sets out RSB's administrative and other operating expenses for the years ended 31 December 2011, 2010 and For the year ended 31 December Change from prior period / /2009 (in millions of Roubles, except percentages) Staff cost... 9,878 7,281 5, % 24.7% Rent expenses... 1,536 1,112 1, % (33.5)% Depreciation and amortisation charge... 1,302 1,491 1,301 (12.7)% 14.6% Other costs of premises and equipment... 1, % (7.1)% Taxes other than on income... 1, % (13.9)% Advertising and marketing % 19.6% Telecommunication (0.5)% (38.7)% Low value items and stationery (0.6)% 6.6% Professional services % 26.1% Security % (29.3)% Other (24.2)% 28.8% Mail % (66.0)% Business trips % (18.8)% Insurance (46.5)% (30.3)% Statutory duties (14.3)% (39.1)% Charity (53.7)% (29.9)% Total administrative and other operating expenses... 17,206 13,696 13, % 3.8% Staff Costs For the year ended 31 December 2011 staff costs increased by 35.7 per cent. to RUB 9,878 million from RUB 7,281 million for the year ended 31 December 2010, which in turn represented an increase of 24.7 per cent. from RUB 5,839 million for the year ended 31 December The year-on-year increases in staff costs were principally due to the increased headcount, including due to the expansion of RSB's branch network, as well as employees' salaries. RSB and its subsidiaries employed 21,639 persons as of 31 December 2011 as compared to 14,816 persons and 12,285 persons employed by RSB and its subsidiaries as of 31 December 2010 and 2009, respectively. Rent Expenses For the year ended 31 December 2011, rent expenses increased by 38.1 per cent. to RUB 1,536 million from RUB 1,112 million for the year ended 31 December Such increase in rent expenses was due to the expansion of RSB's branch network in For the year ended 31 December 2010 rent expenses decreased by 33.5 per cent. from RUB 1,671 million for the year ended 31 December Such decrease was primarily due to cost-cutting measures (including a significant reduction in the

96 number of RSB's branches and points of sale) introduced and implemented in 2009 which became effective in Depreciation and Amortisation Depreciation of fixed assets and amortisation of intangible assets decreased by 12.7 per cent. to RUB 1,302 million for the year ended 31 December 2011 from RUB 1,491 million for the year ended 31 December This reduction was due to the increase in the volume of fully depreciated fixed assets. Depreciation of fixed assets and amortisation of intangible assets increased in 2010 by 14.6 per cent. from RUB 1,301 million for the year ended 31 December 2009, reflecting growth in RSB's intangible assets. Taxes Other Than Income Tax Taxes other than income tax increased by 40.1 per cent. to RUB 1,009 million for the year ended 31 December 2011 from RUB 720 million for the year ended 31 December Taxes other than income tax consist mainly of VAT which is imposed on certain services and on property and fixed assets. Such increase in 2011 was primarily due to increase in RSB's VAT-chargeable expenses (mainly administrative and operating expenses). Taxes other than income tax decreased in 2010 by 13.9 per cent. from RUB 836 million in the year ended 31 December 2009 as a result of the decrease in RSB's expenses on which VAT is imposed (mainly reduction in administrative and operating expenses due to cost-cutting measures implemented by RSB during the global financial and economic crisis). Advertising and Marketing RSB advertises its consumer finance products primarily by using the telemarketing capability of RSB's call centre, direct-marketing tools at RSB's points of sale and TV advertising. Advertising and marketing expenses increased by 48.3 per cent. to RUB 651 million for the year ended 31 December 2011 from RUB 439 million for the year ended 31 December Advertising and marketing expenses increased in 2010 by 19.6 per cent. from RUB 367 million for the year ended 31 December These year-on-year increases principally reflected overall growth in advertising activity associated with RSB's launch of new products as well as the expansion of its branch network. Income Tax Expense RSB s income tax expense increased by RUB 905 million, or per cent., from RUB 686 million in the year ended 31 December 2010 to RUB 1,591 million in the year ended 31 December The principal reason for the increase was the increase in RSB's profit before tax between these two years. In the year ended 31 December 2010, RSB s income tax expense amounted to RUB 686 million, as compared to an income tax credit of RUB 1,043 million in the year ended 31 December The main reasons for the change were the fact that RSB had a RUB 2,531 million profit before tax for the year in 2010 as compared to a RUB 5,570 million loss before tax for the year in 2009, and the fact that in 2009 RSB had a RUB 1,528 million deferred tax credit. Profit for the Year For the reasons set forth above, RSB recorded profit for the year in the amounts of RUB 5,011 million and RUB 1,845 million in the years ended 31 December 2011 and 2010, respectively, as compared to the loss for the year in the amount of RUB 4,527 million in the year ended 31 December Liquidity and Capital Resources Liquidity RSB's liquidity needs arise primarily from its issuing or extending loans and advances to customers, which is its core business as a consumer finance company. To date, RSB's liquidity needs have been

97 funded largely through customer accounts, debt issuances, interest received on loans and advances to customers, and amounts received from other banks, including the CBR. Cash Flow The following table sets out RSB's main sources of cash in the six months ended 30 June 2012 and 2011 and the years ended 31 December 2011, 2010 and Six months ended 30 June Year ended 31 December (in millions of Roubles) Cash flows from operating activities before changes in operating assets and liabilities... 10,275 4,098 12,522 11,612 8,942 Net cash (used in)/from operating activities... (2,870) 12,253 19,686 22,786 9,118 Net cash used in investing activities... (906) (560) (2,131) (732) (1,316) Net cash from/(used in) financing activities... 1,060 (13,809) (10,285) (22,850) (47,069) Effect of exchange rate changes on cash and cash equivalents... (225) (1,038) (396) (367) 3,208 Net (decrease)/increase in cash and cash equivalents... (2,941) (3,154) 6,874 (1,163) (36,059) Cash and cash equivalents as of the end of the period... 15,325 8,238 18,266 11,392 12,555 Cash flows from operating activities before changes in operating assets and liabilities increased from RUB 4,098 million in the six months ended 30 June 2011 to RUB 10,275 million in the six months ended 30 June 2012, principally due to increases in interest received on RSB's interest-earning assets (mainly its loan portfolio), net income from insurance operations, and fees and commission income, partially offset by increases in interest paid on RSB's interest-bearing liabilities, administrative and other operating expenses, and fee and commission expense. Changes in operating assets and liabilities, mainly a net increase in loans and advances to customers, partially offset by a net increase in customer accounts and due to other banks, resulted in a RUB 13,145 million cash outflow in the six months ended 30 June 2012, as compared to a RUB 8,155 million cash inflow in the six months ended 30 June As a result of these developments, net cash from/(used in) operating activities changed from a RUB 12,253 million cash inflow in the six months ended 30 June 2011 to a RUB 2,870 million cash outflow in the six months ended 30 June Net cash (used in)/from financing activities changed from a RUB 13,809 million cash outflow in the six months ended 30 June 2011 to a RUB 1,060 million cash inflow in the six months ended 30 June The change was principally due to the net issuance of debt securities (other than promissory notes) in the amount of RUB 4,649 million in the six months ended 30 June 2012 as compared to the net repayment of debt securities (other than promissory notes) in the amount of RUB 11,879 million in the six months ended 30 June 2011, partially offset by an increase in the dividend payment from RUB 1,619 million in the six months ended 30 June 2011 to RUB 3,589 million in the six months ended 30 June Most of RSB's cash is used to extend credit card and consumer loans. Before the global financial and economic crisis, RSB's deposits from customers were not sufficient to match the rate of growth of RSB's credit card loan and consumer loan businesses, and RSB therefore relied on debt securities as a source of funding. In response to the lack of credit during the crisis, in RSB began to grow its customer deposits as an alternative source of funding. RSB increased the amount of term deposits from individuals by per cent. as of 31 December 2010 compared to 31 December During the year ended 31 December 2011 RSB increased the amount of term deposits from individuals further by 64.3 per cent. to RUB 74,855 million as compared to 31 December As a result, RSB's repayment of debt securities (other than promissory notes) net of issuance of debt securities (other than promissory notes) amounted to RUB 51,818 million, RUB 21,446 million and RUB 4,974 million in the years ended 31 December 2009, 2010 and 2011, respectively, which was the principal reason for year-on-year decreases in RSB's net cash used in financing activities during these years

98 Furthermore, due to the effects of the global financial and economic crisis, the composition of RSB's assets and liabilities changed significantly. See " Significant Factors Affecting Financial Condition and Results of Operations Changes in the Size and Composition of RSB s Loan Portfolio" and " Significant Factors Affecting Financial Condition and Results of Operations Changes in the Size and Composition of RSB s Funding Base" for more details. As a result of the cash flow movements due to these changes, RSB's net cash from operating activities more than doubled in the year ended 31 December 2010 as compared to the year ended 31 December Funding RSB's current sources of funding principally comprise customer accounts, subordinated debt, debt securities in issue and amounts due to other banks. The following table sets forth RSB's funding sources as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June 2012 % of total 2011 % of total 2010 As of 31 December % of total 2009 (in millions of Roubles, except percentages) Customer accounts Term deposits of individuals... 96, % 74, % 45, % 18, % Current/demand accounts of individuals... 32, % 26, % 16, % 7, % Term deposits of state and municipal... 4, % 7, % Current/settlement accounts of legal entities % % % % Term deposits of legal entities % % % % Total customer accounts , % 109, % 62, % 26, % Subordinated debt USD 200 million 7.73% loan participation notes due December , % 6, % 6, % 6, % USD 200 million 7.56% loan participation notes due December , % 6, % 6, % 6, % RUB 5,000 million 6.5% loan due July , % 5, % 5, % 5, % RUB 4,959 million 6.5% loan due December , % 4, % 4, % 4, % Total subordinated debt... 22, % 22, % 21, % 22, % Debt securities in issue USD 150 million 5.5% euro commercial papers due April , % USD 100 million 9.1% euro commercial papers due May , % USD 350 million 8.6% loan participation notes due May , % 10, % USD 100 million 8.0% euro commercial papers due October , % - - USD 500 million 7.5% loan participation notes due October , % USD 400 million 8.5% loan participation notes due June , % RUB 5,000 million 9.0% bonds due March , % RUB 5,000 million 9.4% bonds due May , % RUB 5,000 million 11.0% bonds due November , % 5, % RUB 5,000 million 7.8% bonds due April , % 1, % % RUB 5,000 million 7.8% bonds due September , % 1, % RUB 6,000 million 10.8% bonds due February , % 6, % RUB 5,000 million 13.0% bonds due September % UAH 100 million 15.0% bonds due February % % of total

99 As of 30 June 2012 % of total 2011 % of total 2010 As of 31 December % of total 2009 (in millions of Roubles, except percentages) Promissory notes issued % % % % Total debt securities in issue... 20, % 15, % 21, % 42, % Due to other banks... 10, % 5, % % 15, % Other liabilities... 9, % 7, % 3, % 3, % Total funding , % 161, % 110, % 110, % % of total Customer Accounts The substantial growth in RSB's customers accounts in the six months ended 30 June 2012 and the years ended 31 December 2011 and 2010, both in absolute terms and as a percentage of RSB's total funding in 2011 and 2010, was due to RSB's strategy to diversify its funding base and decrease its reliance on the global financial markets. The increase in RSB's customers accounts during these periods was principally driven by the growth of term deposits and current/demand accounts of individuals, which was mainly the result of RSB launching various programs in aimed at attracting retail deposits. Subordinated Debt In December 2005, RSB issued loan participation notes in the amount of U.S.$ 200 million due in December The notes bore a fixed interest rate of per cent. until December The interest rate for the period starting from December 2010 was set at 7.73 per cent. per annum. In December 2006, RSB issued loan participation notes in the amount of U.S.$ 200 million due in December The notes bear a fixed interest rate of 9.75 per cent. until December The interest rate for the period starting from December 2011 was set at 7.56 per cent. per annum. In July 2009, RSB obtained a subordinated loan from RSC in the amount of RUB 5,000 million due in January As of the date of this Base Prospectus, the interest rate on this loan is 6.5 per cent. per annum. In May 2012, maturity of the loan was extended to July In October 2009, RSB obtained a subordinated loan from VEB in the amount of RUB 4,959 million with a 8.0 per cent. per annum interest rate and the maturity date in December RSB was able to obtain this loan from VEB as a result of the subordinated loan received from its parent company in amount that exceeded this loan. According to the Federal Law No. 206-FZ "On amendments to the Federal Law "On follow-up sponsorship of financial system of Russia" dated 27 July 2010, the interest rate for the loan was changed from 8.0 per cent. to 6.5 per cent. starting in August The claims of the lenders against the Group in respect of the principal and interest on the subordinated loans are subordinated to the claims of other creditors in accordance with the legislation of Russia. Debt Securities in Issue In order to refinance some of its maturing existing indebtedness and fund the growth of its loan portfolio, in the six months ended 30 June 2012 RSB issued USD 150 million 5.5 per cent. euro commercial paper due April 2013 as well as RUB 5,000 million 9.0 per cent. bonds due March 2015 and RUB 5,000 million 9.4 per cent. bonds due May 2015, while repaying USD 100 million 9.1 per cent. euro commercial paper due May 2012 and RUB 5,000 million 7.8 per cent. bonds due April As a result, RSB's debt securities issued recorded a net increase as of 30 June 2012 as compared to 31 December In line with the increases in customer accounts and in order to decrease its dependence on the capital markets, in the years ended 31 December 2011 and 2010 RSB sought to decrease it debt securities

100 issued. RSB repurchased some of its outstanding debt securities in 2009 and 2010, while some of its other debt securities matured in As a result, RSB's debt securities in issue significantly decreased from RUB 42,724 million, or 38.6 per cent. of the Group's total liabilities, as of 31 December 2009 to RUB 21,039 million, or 19.1 per cent. of the Group's total liabilities, and RUB 15,748 million, or 9.8 per cent. of the Group's total liabilities, as of 31 December 2010 and 2011, respectively. Due to Other Banks During the first six months of 2012, RSB obtained several loans from the CBR in the aggregate amount of RUB 5,007 million as of 30 June 2012, which was the principal reason for the increase in due to other banks from 31 December 2011 to 30 June CBR loans were made available to Russian banks in 2012 in response to the decrease in liquidity on international and domestic capital markets in the autumn of 2011 resulting from alleviated concerns over the euro-zone sovereign debt crisis and the health of the global economy. CBR loans obtained by RSB bear interest at fixed interest rates that range from 7.0 per cent. to 8.0 per cent. per annum, representing a relatively low cost of funding for RSB, which was the main reason for RSB's decision to obtain this funding from the CBR. These CBR loans mature between September 2012 and June As a result of the global financial and economic crisis, in 2009, similarly to other Russian banks, RSB was reliant to a considerable extent on CBR lending under a temporary liquidity program available to Russian banks to meet its funding needs. During 2010, RSB repaid all its loans to the CBR, which amounted to RUB 13,238 million as of 31 December 2009, and had no amounts due to the CBR as of 31 December 2010 and 31 December As a result, amounts due to other banks significantly decreased from 2009 to The CBR has since discontinued the temporary liquidity program it established during the crisis. In September 2011, RSB received a loan from the European Bank for Reconstruction and Development in the amount of RUB 4,000 million bearing interest at a floating rate based on Mosprime rate, which resulted in an increase in due to other banks from 2010 to Loan Portfolio The following table sets forth the RSB s loan portfolio as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June 2012 % of total 2011 % of total 2010 As of 31 December % of total 2009 (in millions of Roubles, except percentages) Loans to individuals Credit card loans... 80, , , , Personal loans... 36, , , , POS loans... 22, , , , Auto loans , , , Restructured loans , , Other... 1, , , Total loans to individuals , , , , Loans to legal entities... 9, , , , Gross loans and advances to customers , , , , % of total As of 30 June 2012, RSB's total net loans and advances to customers were RUB 140,790 million, representing 63.2 per cent. of its total assets, as compared to RUB 113,753 million as of 31 December 2011, representing 60.5 per cent. of its total assets, and RUB 81,930 million as of 31 December 2010, representing 59.8 per cent. of its total assets. These increases were principally due to the increases in RSB's lending activity during these periods. As of 31 December 2009, RSB's total net loans and advances to customers were RUB 92,985, representing 66.4 per cent. of its total assets. Decrease in RSB's total net loans and advances to customers in 2010 was principally due to the tightening of RSB's

101 underwriting standards and lending criteria as well as an overall decrease in demand for consumer loans as a result of the global financial and economic crisis. As of 30 June 2012, credit card loans amounted to RUB 80,679 million, as compared to RUB 60,158 million as of 31 December 2011 and RUB 44,776 million as of 31 December These increases were mainly due to RSB's increased focus on the credit card market and, as a result, increased sales of credit card products through RSB's distribution channels. In 2010, credit card loans decreased from RUB 49,449 million as of 31 December This decrease was primarily due to RSB's intention to reduce the volumes of credit card loans (as such loans have a lower predictability of drawdowns and repayments) and limit the sales offering of card products only to existing clients during the period of instability in the market. As of 30 June 2012, personal loans amounted to RUB 36,671 million, as compared to RUB 24,325 million as of 31 December 2011 and RUB 12,249 million as of 31 December The increases were primarily due to the RSB's efforts in marketing personal instalment loans. Personal loans decreased in 2010 from RUB 16,513 million as of 31 December This decrease was mainly due to the tightening of RSB's underwriting criteria as well as limitation of sales by offering new loans only to RSB's existing clients during the crisis. As of 30 June 2012, POS loans decreased to RUB 22,500 million from RUB 25,226 million as of 31 December The decrease was principally due to a seasonal decrease in mid-year portfolio resulting from a seasonal decrease in demand for POS loans, reflecting the fact that more POS loans are issued in December ahead of the winter holidays. RSB's management believes that in the medium term profitability of the POS loan business may contract to levels at which such business will be principally used as a vehicle for acquiring credit card customers. As of 31 December 2011, POS loans increased to RUB 25,226 million as compared to RUB 16,634 as of 31 December 2010 and RUB 11,697 million as of 31 December These year-on-year increases were principally due to an increase in consumer demand for POS loans in those periods. As a result of the effects of the global financial and economic crisis, at the end of 2008 RSB suspended origination of auto loans. As a result, the RSB's auto loans portfolio decreased from RUB 11,013 million as of 31 December 2009 to RUB 5,338 million as of 31 December 2010 and then further decreased to RUB 1,484 million as of 31 December 2011 and RUB 611 million as of 30 June Due to improvements of the state of the Russian economy in 2010, 2011 and the first half of 2012, RSB's restructured loans decreased from RUB 1,810 million as of 31 December 2009 to RUB 1,032 million as of 31 December 2010 and further decreased to RUB 604 million as of 31 December 2011 and RUB 574 million as of 30 June The following table sets out RSB's net loan portfolio (loans and advances to customers, net of provision for loan impairment) by maturity as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December 2012 % 2011 % 2010 % 2009 % (in millions of Roubles, except percentages) Demand and less than 1 month... 13, , , , From 1 to 3 months... 23, , , , From 3 to 12 months... 77, , , , More than 1 year... 26, , , , Total , , , , Short-term loans (loans maturing within 12 months) are dominant in RSB's consumer finance portfolio, and are customary in the Russian consumer lending market. When estimating the maturity

102 of credit card loans, RSB relies on the outstanding balance as of a reporting date and assumes that the future repayment schedule will be similar to the past repayment schedule. The following table sets out loans and advances to customers, including overdue loans and provision for loan impairment, as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December Change from prior period 30 June 2012/31 December / /2009 (in millions of Roubles, except percentages) Current loans and advances , ,677 84,392 96, (12.9) Non-performing loans and advances... 7,891 5,559 5,330 5, (3.6) Gross loans and advances , ,236 89, , (12.4) Less: provision for loan impairment... (11,427) (8,483) (7,792) (9,476) (17.8) Total , ,753 81,930 92, (11.9) Provision for loan impairment as a percentage of total gross loans and advances % 6.9% 8.7% 9.2% 0.6% (1.8)% (0.5)% Provision for loan impairment as a percentage of non-performing loans % 152.6% 146.2% 171.4% (7.8)% 6.4% (25.2)% Non-performing loans as a percentage of total gross loans and advances % 4.5% 5.9% 5.4% 0.7% (1.4)% 0.5% Non-performing loans as a percentage of total gross loans and advances to customers increased from 4.5 per cent. as of 31 December 2011 to 5.2 per cent. as of 30 June 2012, principally as a result of the loan portfolio maturing and the resulting actual realisation of the previously provided for losses. As of 31 December 2011, non-performing loans as a percentage of total gross loans and advances to customers was 4.5 per cent., as compared to 5.9 per cent. as of 31 December The decrease mainly reflected the improving economic conditions in Russia. As of 31 December 2010, nonperforming loans as a percentage of total gross loans and advances to customers was 5.9 per cent., as compared to 5.4 per cent. as of 31 December The increase was mainly due to the effects of the global financial and economic crisis. Provision for loan impairment as a percentage of gross loans and advances to customers increased from 6.9 per cent. as of 31 December 2011 to 7.5 per cent. as of 30 June The increase principally reflected the expected increase in non-performing loans as a result of the more mature loan portfolio. As of 31 December 2011, provision for loan impairment as a percentage of gross loans and advances to customers was 6.9 per cent. as compared to 8.7 per cent. and 9.2 per cent. as of 31 December 2010 and 2009, respectively. These year-on-year decreases were principally the result of improvements in RSB's credit procedures and risk management policy and the overall recovery of the Russian economy. Non-Performing Loans The following table sets forth the analysis by credit quality of loans outstanding as of 30 June Credit card loans POS loans Auto loans Personal loans Restruct ured loans Other Loans to legal entities Total (in millions of Roubles) Current and not impaired... 11,261 3, , ,975 Total current and not impaired... 11,261 3, , ,975 Loans collectively assessed for impairment (gross) Non-overdue or less than 30 days overdue... 65,542 17, , , , to 90 days overdue... 2, ,056 Non-performing loans (loans over 90 days 1, ,

103 Credit card loans POS loans Auto loans Personal loans Restruct ured loans Other Loans to legal entities overdue)... Total collectively assessed for impairment (gross)... 69,418 18, , , ,309 Loans individually determined to be impaired (gross) Non-overdue or less than 30 days overdue ,812 4,812 Non-performing loans ,121 5,121 Total individually impaired loans (gross) ,933 9,933 Less impairment provisions... (2,783) (1,260) (31) (2,617) (133) (61) (4,542) (11,427) Total loans and advances to customers... 77,896 21, , ,188 5, ,790 Total The following table sets forth the analysis by credit quality of loans outstanding as of 31 December Credit card loans POS loans Auto loans Personal loans Restructured loans Other Loans to legal entities Total (in millions of Roubles) Current and not impaired... 7,520 6, , ,056 Total current and not impaired... 7,520 6, , ,056 Loans collectively assessed for impairment (gross) Non-overdue or less than 30 days overdue... 50,360 17,898 1,397 20, ,169-91, to 90 days overdue... 1, ,320 Non-performing loans (loans over 90 days overdue) ,743 Total collectively assessed for impairment (gross)... 52,638 18,639 1,477 21, ,208-95,949 Loans individually determined to be impaired (gross) Non-overdue or less than 30 days overdue ,415 5,415 Non-performing loans ,816 3,816 Total individually impaired loans (gross) ,231 9,231 Less impairment provisions... (1,966) (1,079) (72) (1,123) (131) (56) (4,056) (8,483) Total loans and advances to customers... 58,192 24,147 1,412 23, ,152 5, ,753 The following table sets forth the analysis by credit quality of loans outstanding as of 31 December Credit card loans POS loans Auto loans Personal loans Restructured loans Other Loans to legal entities Total (in millions of Roubles) Current and not impaired... 5,800 4, ,011 Total current and not impaired... Loans collectively assessed for impairment (gross) Non-overdue or less than 30 days overdue to 90 days overdue... 5,800 4, ,011 36,890 11,749 5,049 10, ,029-66,253 1, ,

104 Credit card loans POS loans Auto loans Personal loans Restructured loans Other Loans to legal entities Total (in millions of Roubles) Non-performing loans (loans over 90 days overdue) ,717 Total collectively assessed for impairment (gross)... 38,976 12,201 5,338 11, ,063-70,081 Loans individually determined to be impaired (gross) Non-overdue or less than 30 days overdue ,017 5,017 Non-performing loans ,613 3,613 Total individually impaired loans (gross) ,630 8,630 Less impairment provisions... (1,561) (497) (191) (1,127) (480) (49) (3,887) (7,792) Total loans and advances to customers... 43,215 16,137 5,147 11, ,014 4,743 81,930 The following table sets forth the analysis by credit quality of loans outstanding as of 31 December Credit card loans POS loans Auto loans Personal loans Restructured loans Other Loans to legal entities Total (in millions of Roubles) Current and not impaired... 2,825 3, ,114 Total current and not impaired... 2,825 3, ,114 Loans collectively assessed for impairment (gross) Non-overdue or less than 30 days overdue... 42,380 8,134 9,949 14,149 1, , to 90 days overdue... 2, ,623 Non-performing loans (loans over 90 days overdue)... 2, , ,138 Total collectively assessed for impairment (gross)... 46,624 8,643 11,013 16,513 1, ,937 Loans individually determined to be impaired (gross) Non-overdue or less than 30 days overdue ,020 11,020 Non-performing loans Total individually impaired loans (gross) ,410 11,410 Less impairment provisions... (2,783) (686) (794) (2,527) (953) (29) (1,704) (9,476) Total loans and advances to customers... 46,666 11,011 10,219 13, ,886 92,985 Provision for Loan Impairment The following tables set out movements in RSB's provision for loan impairment relating to RSB's gross loans and advances to customers for the six months ended 30 June 2012 and 2011 and the years ended 31 December 2011, 2010 and For the six months ended 30 June (in millions of Roubles, except percentages)

105 Provision for loan impairment as of 1 January... 8,483 7,792 Provision for loan impairment during the period... 5,865 2,504 Amounts written-off during the period as uncollectible... (2,921) (2,652) Provision for loan impairment as of 30 June... 11,427 7,644 Gross loans and advances to customers ,217 96,369 Provision for loan impairment as a percentage of gross loans and advances to customers % 7.9% For the year ended 31 December (in millions of Roubles, except percentages) Provision for loan impairment as of 1 January... 7,792 9,476 8,628 Provision for loan impairment during the year... 6,108 8,219 14,668 Amounts written-off during the year as uncollectible... (5,417) (9,903) (13,820) Provision for loan impairment as of 31 December... 8,483 7,792 9,476 Gross loans and advances to customers ,236 89, ,461 Provision for loan impairment as a percentage of gross loans and advances to customers % 8.7% 9.2% As of 30 June 2012, the provision for loan impairment as a percentage of gross loans and advances to customers decreased to 7.5 per cent. from 7.9 per cent. as of 30 June The provisions for loan impairment during the six months ended 30 June 2012 and 2011 differ from the amounts presented in the consolidated statement of comprehensive income by RUB 604 million and RUB 815 million, respectively, due to recovery of such amounts previously written-off as uncollectable which were credited directly to the provisions line in the consolidated statement of comprehensive income. Provision for loan impairment as a percentage of gross loans and advances to customers increased from 6.9 per cent. as of 31 December 2011 to 7.5 per cent. as of 30 June The increase principally reflected the expected increase in non-performing loans as a result of the more mature loan portfolio. As of 30 June 2012, the total amount of non-performing loans in RSB's retail portfolio was RUB 2,770 million compared to RUB 1,743 million as of 31 December The ratio of non-performing loans to the total loan portfolio of loans to individuals (gross of provisions) was 1.9 per cent. as of 30 June 2012 compared to 1.5 per cent. as of 31 December The increase of non-performing loans ratio in the first half of 2012 was principally due to a more mature loan portfolio and the resulting actual realisation of the previously provided for losses. The cover ratio for the portfolio of loans to individuals, calculated as total provisions divided by the total amount of non-performing loans, was per cent. as of 30 June 2012, as compared to per cent. as of 31 December Loans written-off during the period as uncollectible increased by 10.1 per cent. for the six months ended 30 June 2012 as compared to the six months ended 30 June 2011, principally due to the overall increase in the size of RSB's loan portfolio. As of 31 December 2011, the provision for loan impairment as a percentage of gross loans and advances to customers decreased to 6.9 per cent. from 8.7 per cent. and 9.2 per cent. as of 31 December 2010 and 2009, respectively. The provisions for loan impairment during the years ended 31 December 2011, 2010 and 2009 differ from the amounts presented in the consolidated statement of comprehensive income by RUB 1,505 million, RUB 1,874 million and RUB 2,183 million, respectively, due to recovery of such amounts previously written-off as uncollectable which were credited directly to the provisions line in the consolidated statement of comprehensive income. The decrease in provisions as a percentage of gross loans and advances to customers in 2011 and 2010 was a result of the overall recovery of the Russian economy and improvements in RSB's loan origination procedures and risk management policy and, as a result of this, the quality of RSB's loan portfolio improved

106 As of 31 December 2011, the total amount of non-performing loans in RSB's retail portfolio was RUB 1,743 million compared to RUB 1,717 million and RUB 5,138 million as of 31 December 2010 and 2009, respectively. The ratio of non-performing loans to the total loan portfolio of loans to individuals (gross of provisions) was 1.5 per cent. as of 31 December 2011 compared to 2.1 per cent. and 5.7 per cent. as of 31 December 2010 and 2009, respectively. The decrease of non-performing loans ratio in 2011 and 2010 was due to an improved quality of RSB's loan portfolio as a result of measures introduced by RSB in 2009 (focusing on products with lower credit risk and tightening underwriting criteria). The cover ratio for the portfolio of loans to individuals was per cent. as of 31 December 2011, as compared to per cent. and per cent. as of 31 December 2010 and 2009, respectively. Loans written-off as uncollectible during the year ended 31 December 2011 decreased by 45.3 per cent. compared to the year ended 31 December 2010, principally due to the improvement of the quality of RSB's loan portfolio as a result of improving economic conditions in Russia. Loans writtenoff as uncollectible during the year ended 31 December 2010 decreased by 28.3 per cent. compared to the year ended 31 December 2009, mainly as a result of the recovery of the Russian economy from the effects of the global financial and economic crisis and the resulting improvement of the quality of RSB's loan portfolio, improvements in RSB's loan origination procedures and risk management policy, and the decrease in the size of RSB's loan portfolio between the two years. Investment Securities Available for Sale The following table sets forth RSB's investment securities available for sale as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles) Unquoted shares of Russian company (1)... 6,473 6,473 6,473 - Shares of OECD company Bonds issued by Russian companies... 5,096 5,082 5, Bonds issued by OECD company... 4,863 2, Total investment securities available for sale... 16,432 14,266 11, (1) Represents 14.5 per cent. of the share capital of JSC Company Russian Standard, the immediate parent of RSB, purchased from its parent, Roust Trading Limited in In 2010, in order to create a liquidity cushion to balance the increased customer account portfolio in the event of customer account withdrawals, RSB purchased various marketable debt securities that can either be used as collateral in order to raise additional funding or sold on the open market. Capital Adequacy and Other Ratios RSB's capital adequacy ratio (the "CAR") is calculated in accordance with the international framework for capital measurement and capital standards for banking institutions set by the Basel Committee on Banking Regulation and Supervisory Practices (commonly referred to as Basel I). The following table sets out the principal components of RSB's CAR as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles, except percentages) Total tier I capital (1)... 23,596 24,108 24,329 27,063 Tier II capital... 11,634 12,432 12,274 13,536 Total capital... 35,230 36,540 36,603 40,

107 Tier I capital ratio % 14.0% 18.7% 20.2% Total capital ratio (2) % 21.3% 28.2% 30.3% RoE (3) % 18.3% 6.3% (14.2)% Cost of risk (4) % 4.9% 7.5% 11.0% RoA (5) % 3.2% 1.4% (2.6)% (1) Tier I capital is calculated in accordance with Basel I requirements. Total capital was adjusted for goodwill in respective periods. (2) RSB is committed to maintain CAR at level above 15 per cent. which is significantly above minimum capital standards set by the Basel Committee on Banking Regulations and Supervisory Practices (commonly referred to as Basel I). (3) ROE (Return On Equity) is calculated as respective profit/(loss) divided by total equity, representing the average of the opening, quarterly and closing balances for the respective period. (4) Cost of risk is calculated as respective provision charge for loan impairment divided by net loan portfolio, representing the average of the opening, quarterly and closing balances for the respective period. (5) ROA (Return On Assets) is calculated as respective profit/(loss) divided by total assets, representing the average of the opening, quarterly and closing balances for the respective period. The period-to-period decreases in Tier I and total capital ratios were principally due to the increases in RSB's total assets, which increased mainly as a result of the growth of RSB's loan portfolio. The CBR requires banks to maintain a total capital adequacy ratio of 10 per cent. of risk-weighted assets, computed based on RAS. As of 30 June 2012, RSB's capital adequacy ratio calculated on this basis was 14.4 per cent. The decreases in cost of risk from 11.0 per cent. as of 31 December 2009 to 7.5 per cent. as of 31 December 2010 and further to 4.9 per cent. as of 31 December 2011 were principally due to decreases in RSB's provision charge for loan impairment in 2011 as compared to 2010 and in 2010 as compared to 2009 and, to a lesser extent, the growth of RSB's net loan portfolio in 2011 and The increase in cost of risk from 4.9 per cent. as of 31 December 2011 to 8.3 per cent. as of 30 June 2012 was mainly due to an increase in RSB's provision charge for loan impairment, partially offset by an increase in RSB's net loan portfolio. Dividends and other profit distributions declared and paid during the six months ended 30 June 2012 and during the years ended 31 December 2011, 2010 and 2009 amounted to RUB 3,589 million, RUB 5,000 million, RUB 1,400 million and RUB 3,955 million, respectively. Dividends for the year are normally paid in the first half of the subsequent year, and dividends for the first six months of the year are usually paid in the second half of the same year. RSB has not declared or paid any dividends with respect to any period of the year ended 31 December Off-Balance Sheet Arrangements The primary purpose of RSB's off-balance sheet arrangements is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit (which represent irrevocable assurances that RSB will make payments in the event that a customer cannot meet its obligations to third parties) carry the same credit risk as loans. Documentary and commercial letters of credit, which are written undertakings by RSB on behalf of a customer authorising a third party to draw drafts against RSB up to a stipulated amount under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or cash deposits and therefore carry less risk than a direct borrowing. Undrawn credit lines and other commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans or guarantees. With respect to credit risk on undrawn credit lines and commitments to extend credit, RSB is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards. RSB monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments

108 The total outstanding contractual amount of undrawn credit lines, letters of credit, and guarantees does not necessarily represent future cash requirements, as these financial instruments may expire or terminate without being funded. The following table sets out RSB's credit-related commitments as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles) Undrawn credit lines on credit cards... 33,615 23,366 18,423 17,298 Guarantees issued... 10,044 4,810 2,098 4,674 Undrawn credit lines on loans to customers Import letters of credit Total credit related commitments... 43,977 28,518 21,070 22,072 The following table sets out RSB's credit related commitments by currency as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles) Russian roubles... 40,745 25,564 19,278 20,015 US Dollars... 2,427 2,160 1,710 1,874 Euro Total... 43,977 28,518 21,070 22,072 Where RSB has operating lease commitments as the lessee, the future minimum lease payments under non-cancellable premises operating leases were as follows as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles) Not later than 1 year... 1,542 1, Later than 1 year and not later than 5 years... 3,533 2,724 1,435 1,609 Later than 5 years , Total operating lease commitments... 5,407 6,419 2,723 2,862 Derivative Financial Instruments Derivative financial instruments, including foreign exchange contracts, currency and interest rate swaps, cross currency interest rate swaps and interest rate options, are carried at their fair value. All derivative financial instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Any change in the fair value of derivative financial instruments is included in profit or loss. RSB does not apply hedge accounting. Foreign exchange derivative financial instruments entered into by RSB are generally traded in the over-the-counter market with professional market counterparties on standardised contractual terms and conditions. Derivatives have potentially favourable (assets) or unfavourable (liabilities) conditions as

109 a result of fluctuations in market interest rates, foreign exchange rates and other variables relative to their terms. The aggregate fair value of derivative financial assets and liabilities can fluctuate significantly from time to time. RSB uses foreign exchange derivatives financial instruments for economic hedging purposes. These instruments represent commitments to purchase foreign and domestic currency after the reporting date. The following table sets out fair values at the reporting date of currencies receivable or payable under derivative contracts entered into by RSB. The table reflects gross positions before the netting of any counterparty positions and payments and covers the contracts with settlement dates after the respective reporting date. Foreign exchange forwards and futures: fair values as of the reporting date of As of 30 June Contracts with positive fair value As of 31 December Contracts with negative fair value Contracts with positive fair value Contracts with negative fair value Contracts with positive fair value (in millions of Roubles) Contracts with negative fair value Contracts with positive fair value Contracts with negative fair value -USD receivable on settlement... 3,257 11,988 16,020 1,299 22,338 1,828 23,287 6,694 -USD payable on settlement... (33) (1,641) - (2,264) (1,858) Euros receivable on settlement... 2,686 2,851 4,167-2,992-2, Euros payable on settlement (208) RUB receivable on settlement ,640-2,453 1, RUB payable on settlement... (5,669) (13,890) (19,673) (1,290) (25,216) (1,525) (25,168) (6,694) -Other CCY receivable/(payable) on settlement... (260) (989) (406) (307) - - Net fair value of derivatives (41) 108 (10) 110 (4) Forex derivatives with positive fair values are included in other assets, while forex derivatives with negative fair values are included in other liabilities. RSB uses derivative instruments to hedge foreign exchange open position risk resulting from the fact that part of its funding base, mainly subordinated loans, loan participation notes and customer accounts, are denominated in foreign currencies. See "Asset, Liability and Risk Management Market Risks Currency Risk" for more detail. The principal amounts of certain types of financial instruments provide a basis for comparison with instruments recorded on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate RSB's exposure to credit or price risks. Critical Accounting Policies RSB's consolidated results of operations and financial condition presented in the Financial Statements and the notes thereto and in the selected statistical and other information appearing elsewhere in this Base Prospectus are, to a large degree, dependent upon RSB's accounting policies. The selection and application of its accounting policies involve judgments, estimates and uncertainties that are susceptible to change. RSB's significant accounting policies are described in the Notes to the Financial Statements appearing elsewhere in this Base Prospectus. RSB has identified the following accounting policies that it believes are the most critical to an understanding of the consolidated results of operations and financial condition of RSB. These critical accounting policies require management's subjective and complex judgment about matters that are inherently uncertain. The impact of, and any associated risks related to, RSB's critical accounting

110 policies on its business operations, are discussed throughout this section where these policies affect RSB's consolidated financial results as presented in this Base Prospectus. Impairment on Loans and Advances RSB regularly reviews its loan portfolios to assess impairment. In determining whether an impairment loss should be recorded in the income statement, RSB makes judgements as to whether there are any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on RSB's assets. The primary factor that RSB considers as objective evidence of impairment is the overdue status of the loan. If RSB determines that no objective evidence exists that impairment was incurred for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Provision for loan impairment consists of (i) incurred losses when the loan has missed four monthly instalments and then RSB assumes no recovery, except for auto loans, and (ii) losses when the loan has signs of impairment (missed at least one monthly instalment) as of the reporting date; such losses are calculated based on historical statistical data on the performance of other loans with the similar characteristics. In general, loans where there are no breaches in loan servicing are considered to be individually unimpaired. Given the nature of the borrowers and the loans extended, it is RSB's view and experience that the time lag between a possible loss event that could lead to impairment and the non- or under- payment of a monthly instalment is minimal. RSB's management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce differences between loss estimates and actual loss experience. In accordance with internal methodology for the provision estimation RSB uses all available loss statistics for the whole period of its operations. The statistics of losses for the last six-month period produces the most significant effect on the amount of provisions. Such approach lets RSB build the effect of the latest trends into its model for loss provision calculation. To the extent that the provision for loan impairment as of 31 December 2011 decreases/increases by 10 per cent., the profit before tax would be approximately RUB 848 million higher or lower, respectively. To the extent that the provision for loan impairment as of 31 December 2010 decreases/increases by 10 per cent., the profit before tax would be approximately RUB 779 million higher or lower, respectively. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for such groups of assets because RSB believes they are indicative of the debtors' ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and the experience of management in respect of the extent to which amounts will become overdue as a result of past loss events and the success of recovery of overdue amounts. Past experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect past periods and to remove the effects of past conditions that do not exist currently. Impairment losses are always recognised through an allowance account to write down the asset's carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the

111 cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. 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 recorded (such as an improvement in the debtor's credit rating), the previously recorded impairment loss is reversed by adjusting the allowance account through profit or loss. Uncollectible assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been completed, RSB's Credit Committee has formally recognised assets as uncollectible and the amount of the loss has been determined. Income and Expense Recognition Interest income and expense are recorded in the consolidated income statement for all debt instruments on an accrual basis using the effective interest method. This method defers, as part of interest income or expense, all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. The effective interest rate method is a method of allocating interest income or interest expense over the relevant period so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate. Fees integral to the effective interest rate include origination fees received or paid by the entity relating to the creation or acquisition of a financial asset or issuance of a financial liability, for example fees for evaluating creditworthiness, evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing transaction documents. Commitment fees received by RSB to originate loans at market interest rates are integral to the effective interest rate if it is probable that RSB will enter into a specific lending arrangement and does not expect to sell the resulting loan shortly after origination. RSB does not designate loan commitments as financial liabilities at fair value through profit or loss. When loans and other debt instruments become doubtful of collection, they are written down to the present value of expected cash inflows and interest income is thereafter recorded for the unwinding of the present value discount based on the asset's effective interest rate which was used to measure the impairment loss. All other fees, commissions and other income and expense items are generally recorded on an accrual basis by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Income Taxes Income taxes have been provided for in the consolidated financial statements in accordance with Russian and Ukrainian tax legislation enacted or substantively enacted by the reporting date. The income tax charge comprises current tax and deferred tax and is recognised in the consolidated income statement except if it is recognised directly in equity because it relates to transactions that are also recognised, in the same or a different period, directly in equity

112 Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates if financial statements are authorised prior to filing relevant tax returns. Taxes, other than on income, are recorded within administrative and other operating expenses. Deferred income tax is provided using the balance sheet liability method for tax loss carry-forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill and subsequently for goodwill which is not deductible for tax purposes. Deferred tax balances are measured at tax rates enacted or substantively enacted at the reporting date which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of RSB. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deductions can be utilised. Deferred income tax is provided on post acquisition retained earnings of subsidiaries, except where RSB controls the subsidiary's dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future. Changes in Accounting Policies Certain new standards and interpretations have been published that are mandatory for the Group's accounting periods beginning on or after 1 January 2012 or later periods, which the Group has not early-adopted. A number of new standards, amendments to standards, and interpretations are not yet effective as of 30 June 2012, and have not been applied in preparing the Financial Statements. Of these pronouncements, the following will have a potential impact on the Group's operations. The Group plans to adopt these pronouncements when they become effective. The Group is in the process of analysing the likely impact of these pronouncements on its consolidated financial statements. The following new standards and interpretations became effective for the Group from 1 January Recovery of Underlying Assets Amendments to IAS 12 (issued in December 2010 and effective for annual periods beginning on or after 1 January 2012). The amendment introduced a rebuttable presumption that an investment property carried at fair value is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. SIC-21, Income Taxes Recovery of Revalued Non-Depreciable Assets, which addresses similar issues involving non-depreciable assets measured using the revaluation model in IAS 16, Property, Plant and Equipment, was incorporated into IAS 12 after excluding from its scope investment properties measured at fair value. The amendment did not have an impact on the Interim Financial Statements. Since the Group published its last annual financial statements, certain new standards and interpretations have been published that are mandatory for the Group s accounting periods beginning on or after 1 July 2012 or later and which the Group has not early-adopted. Improvements to International Financial Reporting Standards (issued in May 2012 and effective for annual periods beginning 1 January 2013). The improvements consist of changes to five standards. IFRS 1 was amended to (i) clarify that an entity that resumes preparing its IFRS financial statements may either repeatedly apply IFRS 1 or apply all IFRSs retrospectively as if it had never stopped applying them, and (ii) to add an exemption from applying IAS 23, Borrowing costs,

113 retrospectively by first-time adopters. IAS 1 was amended to clarify that explanatory notes are not required to support the third balance sheet presented at the beginning of the preceding period when it is provided because it was materially impacted by a retrospective restatement, changes in accounting policies or reclassifications for presentation purposes, while explanatory notes will be required when an entity voluntarily decides to provide additional comparative statements. IAS 16 was amended to clarify that servicing equipment that is used for more than one period is classified as property, plant and equipment rather than inventory. IAS 32 was amended to clarify that certain tax consequences of distributions to owners should be accounted for in the income statement as was always required by IAS 12. IAS 34 was amended to bring its requirements in line with IFRS 8. IAS 34 will require disclosure of a measure of total assets and liabilities for an operating segment only if such information is regularly provided to chief operating decision maker and there has been a material change in those measures since the last annual financial statements. The Group is currently assessing the impact of the amended standard on its financial statements. Transition Guidance Amendments to IFRS 10, IFRS 11 and IFRS 12 (issued on 28 June 2012 and effective for annual periods beginning 1 January 2013). The amendments clarify the transition guidance in IFRS 10 Consolidated Financial Statements. Entities adopting IFRS 10 should assess control at the first day of the annual period in which IFRS 10 is adopted, and if the consolidation conclusion under IFRS 10 differs from IAS 27 and SIC 12, the immediately preceding comparative period (that is, year 2012 for a calendar year-end entity that adopts IFRS 10 in 2013) is restated, unless impracticable. The amendments also provide additional transition relief in IFRS 10, IFRS 11, Joint Arrangements, and IFRS 12, Disclosure of Interests in Other Entities, by limiting the requirement to provide adjusted comparative information only for the immediately preceding comparative period. Further, the amendments will remove the requirement to present comparative information for disclosures related to unconsolidated structured entities for periods before IFRS 12 is first applied. The Group is currently assessing the impact of the amended standard on its financial statements

114 BUSINESS Overview RSB is a Russian retail bank primarily focused on consumer finance products and services, such as credit card loans, personal loans, POS loans and retail deposits. As of 30 June 2012, RSB attracted approximately 25 million retail customers acquired through a wide range of channels, including points of sale, banking offices, Internet sales and telesales. To complement its consumer finance products, RSB offers insurance products (such as life insurance, permanent disability insurance and unemployment insurance) to all of its customers through two wholly-owned subsidiaries of the Group, RSI and BAC. RSB's revenue is derived principally from interest income on retail loans, fee and commission income, and insurance income. RSB's primary sources of funds are customer accounts, subordinated debt and debt securities issued (including domestic bonds, loan participation notes and euro-commercial paper). Most of RSB's operations are concentrated in Russia, although RSB offers some lending products in Ukraine as well, mostly POS loans and credit card loans. RSB services the financial interests of a broad range of retail customers by continuing to expand its list of products and services offered to customers, while developing new distribution channels as a means to reach these customers. As of 30 June 2012, in addition to 197 banking offices, RSB's distribution network included approximately 53,000 points of sale, over 1,750 automated teller machines ("ATMs") and automated cash deposit machines ("cash-in machines") and over 2,650 instant payment terminals located in RSB's banking offices, third-party retail chains and outlets. According to the Interfax Centre for Economic Analysis, RSB was the 26 th largest bank in Russia by assets as of 30 June According to RosBusinessConsulting, RSB was the 24 th largest bank in Russia by net assets as of 30 June 2012.RSB has a "Ba3" long term rating with a "stable" outlook from Moody's. RSB also has long term rating of "B+" and short term rating of "B" with a "stable" outlook from Standard & Poor's and a long term rating of "B+" with a "stable" outlook from Fitch. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. In the six months ended 30 June 2012 and the year ended 31 December 2011, the Group's net profit for the period was RUB 3,071 million and RUB 5,011 million, respectively. As of 30 June 2012, the total assets of the Group amounted to RUB 222,777 million, as compared to RUB 188,121 million as of 31 December The Group had total equity of RUB 26,042 million as of 30 June 2012, as compared to RUB 27,096 million as of 31 December RSB is organised as a closed joint stock company under the laws of Russian Federation, with a full (general) banking licence No RSB's registered legal address is bld. 36 Tkatskaya Street, Moscow, , Russia. RSB is registered in the Unified State Register of Legal Entities with the Principal State Registration Number History Incorporation and Development RSB was incorporated as Agrooptorgbank ("ATB") and received its banking licence from the CBR on 31 March RSB's original function was to act as a settlement bank for the Russian agricultural sector. At this time, a number of Russian agricultural companies were shareholders in RSB. Following agricultural reforms and the general decline of the Russian agricultural sector in 1998, ATB ceased to act as the agricultural sector settlement bank and in 1999, ROUST acquired approximately 99.4 per cent. of the shares in ATB, subsequently renaming ATB Russian Standard Bank, to keep in line with ROUST's licenced brand "Russian Standard". On 19 July 2001, the CBR granted RSB a full (general) banking licence No Since 2001, RSB has developed a network of offices in Moscow and branches and representative offices throughout Russia and Ukraine. In February 2003, International Finance Corporation ("IFC")

115 acquired per cent. of RSB's share capital for U.S.$10 million. In the same year, following an additional share issuance agreed between RSB's principal shareholders (to which IFC did not subscribe), IFC's shareholding in RSB was diluted to 6.42 per cent. of RSB's total share capital. In July 2006, IFC sold its share holdings to the principal shareholder, RSC, thereby increasing RSC's shareholding to per cent. of RSB's outstanding capital and specifically increasing Mr. Roustam Tariko's direct and indirect ownership to per cent. of RSB's outstanding capital. In 2001, RSB commenced its regional expansion program. By the end of 2003, RSB had implemented consumer lending programmes in 14 regions of Russia and extended loans to more than two million people, with an overall volume of loans extended exceeding RUB 26 billion. By 1 January 2004, RSB issued more than 460,000 credit cards, with total credit extended of RUB 4.6 billion under credit card agreements during In 2004, RSB significantly expanded its network of partner retail outlets within the framework of its consumer lending programme. As a result, by the end of 2004 more than 7,400 new retail outlets joined RSB's consumer lending programme. By the beginning of 2005, the overall number of RSB's partner retail outlets exceeded 11,200. In April 2005, RSB and American Express International entered into a long-term agreement for the exclusive issue and distribution of new rouble and U.S. dollar-denominated American Express credit products. In December 2005, RSB introduced these cards in the Russian market and since 1 June 2007 RSB has been an exclusive acquirer of American Express cards in Russia. Throughout 2005, RSB considerably increased its credit card business, issuing more than 6.4 million credit cards. By 1 January 2006, RSB issued 8.3 million credit cards and the value of RSB s credit card portfolio exceeded RUB 48.6 billion. In 2006, RSB started offering a new credit product, "Cash Credit". The first "Cash Credit" loan was issued in Moscow in March One of the main features of this product is that credit is made available without a contract of security or a guarantee and RSB makes a tentative decision on whether to extend the loan to a particular applicant within one business day. Currently, the product is available in most branch offices of RSB. In 2008, RSB also launched a new service that enabled customers to make their utility, telephone, Internet payments, as well as other bill payments, from any ATM in RSB s network at no additional cost. In addition, in 2008 RSB launched a dynamic retail deposit program, considerably broadening a range of deposit products. In December 2008, the Bank's customers were offered new deposit products: the "RS-Interest-At-Once" deposit product, enabling them to establish an interest-bearing deposit on the second day after buying the product; "RS-Special", a deposit product, featuring a calculation of interest mechanism in case of an early withdrawal, depending on the actual time of deposit; and "RS- Precise Calculation", a deposit product which allows the customer to independently determine the term of the deposit. In 2008, RSB's American Express business department focused on opportunities to develop cobranded products. RSB launched two co-branding projects in 2008 with Transaero and British Airways airlines. In 2008, RSB's acquiring network reached a total turnover of RUB 21 billion. In the course of the year, 2.4 million banking cards were accepted for payment. As a result of the work done in 2008, the share of American Express cards in the overall card portfolio of RSB has doubled since Effect of the Global Financial and Economic Crisis Prior to the onset of the global financial and economic crisis in the second half of 2008, RSB's lending strategy focused on rapid expansion of its customer base across a wide geographical area and concentrated on extending a high volume of loans. As part of this strategy, RSB targeted lower income Russian residents offering financing for household appliances and other durable consumer

116 goods. RSB also targeted middle and high income individuals, offering consumer loans, auto loans, cash loans and credit card loans as well as current accounts and deposits. In response to the global financial and economic crisis, RSB began to implement certain business optimisation measures aimed at mitigating the effect of the reduced customer demand for RSB's products, a decline in borrowers' creditworthiness and increased costs of funding. These measures included: Diversification of Funding Base. In order to diversify its funding base and decrease its dependence on the wholesale market, RSB launched a retail deposit programme. As a result, the Group's customer accounts increased from RUB 26,835 million, or 24.3 per cent. of the Group's total liabilities, as of 31 December 2009 to RUB 62,890 million, or 57.1 per cent. of the Group's total liabilities, and RUB 109,479 million, or 68.0 per cent. of the Group's total liabilities, as of 31 December 2010 and 2011, respectively. The Group's customer accounts further increased to RUB 133,836 million, or 68.0 per cent. of the Group's total liabilities, as of 30 June Strengthening Risk Management. RSB tightened its underwriting standards and lending criteria (for example by significantly reducing credit limits for certain categories of its customers and introducing a requirement that potential borrowers must present at least two documents confirming their identity) and adjusted its fraud prevention systems. In late 2008 and 2009, RSB also significantly reduced sales of its loan products, offering such products only to existing clients with a favourable credit history. Restructuring was also made available only to clients with a good credit history and subject to prepayment of a portion of the restructured loan. Optimisation of Product Line. The effects of the global financial and economic crisis led RSB to overhaul its lending strategy. RSB suspended origination of auto loans and reduced its credit card loan portfolio due to lower predictability of drawdowns and repayments under this type of credit facility. RSB also decreased origination of POS loans and personal loans, providing such loans only to customers with reliable payment histories who thereby represented lower credit risks. As a result, credit card loans, personal loans and POS loans all decreased in the year ended 31 December 2009 as compared to the year ended 31 December Capital Preservation and Cost-cutting. In order to preserve capital, RSB repurchased some of its outstanding debt securities and reduced the scale of its operations by closing over 100 branches and over 6,000 points of sale. RSB also reduced its headcount by approximately 54 per cent. during the period from October 2008 to October 2009 in order to minimise its operating costs. As a result, RSB's administrative and other operating expenses decreased by more than 25 per cent. in the year ended 31 December 2009 as compared to the year ended 31 December In 2010, as the global and Russian economies began to see signs of recovery from the global financial and economic crisis, RSB started to expand its distribution network, increased its headcount and launched certain new products, such as the "Bank-in-Pocket" programme. RSB has since also refocused on credit card loans, which increased to RUB 80,679 million as of 30 June 2012 from RUB 60,158 million as of 31 December 2011 and RUB 44,776 million as of 31 December Competitive Strengths RSB believes that the following competitive strengths will help it to grow and develop its business and achieve its strategic objectives: Large Customer Base As an early entrant into the Russian consumer finance market, RSB was able to gain access to a large customer base and accumulate a significant amount of information on its customers. As of 30 June 2012, RSB had approximately 25 million retail customers in all segments from the mass market to premium clients. Having formed a large customer base over the years, RSB is now able to cross-sell to such customers. In addition, a substantial amount of information that RSB collected over the years

117 on its customers is particularly important for RSB's underwriting procedures and risk management. Strong Cross-Sale Expertise RSB has an extensive database consisting of more than 30 million records, which includes both RSB s customers and applicants who are not existing RSB clients. Cross-sales remain one of the main distribution channels for RSB. RSB uses POS loans as the main tool for acquisition of new clients. Analysis of RSB's client database allows it to sell its additional products to existing clients taking into account their credit and payment histories. Wide Range of Financial Products The Group offers its customers a wide range of financial products and services, such as credit and debit cards, POS loans, personal loans, deposits, virtual and gift prepaid cards, money transfer services, instant cards, transportation cards, private banking services, insurance services, mutual funds, brokerage and asset management services. The Group targets all groups of customers and tailors its offering to their specific preferences and needs. It also develops unique hybrid products (such as "Bank-in-Pocket" and "Transport Card") combining different types of services, such as credit and payment services. Large Distribution Network RSB is represented in 56 regions of Russia. As of 30 June 2012, RSB had its offices and branches in 84 Russian cities, while RSB's products and services were offered in more than 1,500 towns and villages. Supported by the growth of the Russian consumer finance market, RSB intends to further expand its distribution network in order to increase its presence throughout the country. According to the CBR, total retail loans of Russian banks increased from RUB 4,085 billion as of 1 January 2011 to RUB 5,551 billion as of 1 January 2012 and to RUB 6,365 billion as of 1 June RSB intends to increase the number of its banking offices to over 250 as of 31 December Well-developed Credit-Scoring Technology and Information Technology System RSB offers its customers the advantages of its centralised proprietary automated scoring system ("PASS"). RSB believes that PASS is the largest consumer finance database in Russia, with over 200 million entries. PASS has the capacity to process large volumes of credit applications and to do so generally within 15 minutes of an application being input into PASS, even during peak times. RSB's management believes that PASS allows RSB to process credit applications faster than many of RSB's competitors. In addition, RSB has implemented a customer relationship management ("CRM") system which allows it to manage its interactions with customers, including special sales campaigns. Experience in the Consumer Finance Sector Since 2000, RSB has extended consumer loans to approximately 25 million customers in Russia. As a result, RSB has accumulated substantial experience in the consumer finance sector, including the management of non-performing loans. In addition, RSB has developed an advanced database containing payment and credit records with respect to its past and current customers. This credit database allows RSB to perform detailed analyses of the trends in the Russian consumer finance market and to better manage credit risks generally associated with this market. Brand Recognition RSB's brand originated from the more generic "Russian Standard" brand associated with Russian vodka. However, RSB has developed its own banking brand and has achieved widespread recognition in the Russian consumer finance market. Principal factors that have contributed to RSB's brand recognition are its well-established track record of consumer financing, continuing regional expansion and well-targeted public relations communications and advertising

118 Strategy According to the CBR, as of 1 August 2012, 965 banks and non-banking credit organisations were operating in Russia, with most of the large Russian banks' operations based in Moscow. RSB estimates that, as of 30 June 2012, it had a market share of 16.4 per cent. in the credit card (2 nd position among all Russian banks), 11.6 per cent. in the POS loan (4 th position among all Russian banks), 1.1 per cent. in the cash (personal) loan and 0.73 per cent. in the retail deposit markets in Russia. RSB's long term objective is to become a full service retail bank focused on credit cards. To achieve this goal, RSB intends to: Pursue a Profitable Growth Strategy RSB believes that the retail banking markets in Russia and Ukraine have potential for further growth. Consequently, RSB intends to not only maintain but also increase its market share across its principal product lines, such as credit card loans, which are expected to remain the main focus of RSB's strategy, and personal loans. RSB believes that expanding its network of banking offices will also allow it to grow its retail deposit base. Develop New Customer Acquisition Channels RSB intends to actively develop new customer acquisition channels, including remote channels such as Internet banking, mobile banking, telesales and self-service channels. RSB believes such new customer acquisition channels will enable it to expand considerably its customer base and help it develop stronger positions in the consumer finance market. RSB also intends to continue using its POS and personal loan businesses as a vehicle for acquiring credit card customers. For example, in 2009 RSB launched the "Bank-in-Pocket" product, which offers customers easy and convenient access to their current accounts and other financial products and services. In 2010, RSB attracted almost one million new clients via "Bank-in-Pocket". In 2011, RSB further strengthened this product's competitive position by adding new features to the product. RSB also intends to continue to develop its newest business line Virtual and Gift Cards targeting the mass market segment. RSB believes that these products will create a new customer solicitation channel and increase the volume of sales. Further Develop Payments Infrastructure RSB intends to further develop its payments infrastructure. In particular, RSB is planning to improve its mobile banking solutions, which already support such platforms as iphone, Android, J2ME and Windows mobile. Mobile banking allows RSB customers to perform banking operations using their mobile devices without contacting RSB operators. Telephone banking enables RSB customers to carry out banking operations by calling RSB operators with a follow-up SMS confirmation of the transaction. RSB is also focused on e-commerce and providing support to all types of payments made via the Internet. RSB expects that its payments infrastructure will enable it to stay close to its clients and cross-sell other products. RSB believes that in the long-term, Internet banking, mobile banking and telephone banking will increase its efficiency and reduce its operating costs. Further Expand Distribution Network RSB's multi-channel distribution network provides customers with various banking solutions to meet their needs. According to RSB's estimates, its distribution network currently covers over 88 per cent. of the Russian population in large cities, as well as smaller population centres with relatively untapped demand. RSB intends to substantially increase its distribution network by opening new branches, mini-offices (small-scale offices in trading centres and outlets) and points of sale in the regions where RSB believes there is an increased or unsatisfied demand for its products or where RSB does not have sufficient presence. RSB believes that its branch network remains the most reliable channel for attracting new clients and cross-selling RSB's products to its existing clients

119 Improve Business Performance with Support of Efficient Information Technology System RSB intends to continue to develop its information technology systems in order to improve its operational efficiency. In the credit card market, RSB plans to continue expanding the functionality of its credit cards in order to increase the number of transactions entered into by RSB customers. RSB also intends to expand the number of plastic card products offered to its customers and encourage more active use of credit card products. To achieve this goal, RSB has actively developed and promoted the non-financial service components of its credit cards and has strengthened the security requirements for the use of its credit cards. Security innovations, including increased use of smart cards and implementation of 3-D secure technology, are among the measures implemented to enhance security of RSB credit card products. Banking Products and Services RSB specialises in multi-channel consumer finance lending, offering a variety of products, including credit card loans, personal loans, POS loans and other types of loan products, as well as in retail deposits. RSB also offers merchant acquiring services and distributes certain insurance products. Descriptions of the main products offered by RSB are set out below. Credit Card Loans According to RSB's estimates, RSB held 16.4 per cent. of the Russian credit card market as of 30 June 2012, with more than 34 million cards (including approximately 31.6 million credit cards) issued since RSB is the only bank issuing and acquiring cards of the five largest international payment systems in Russia: VISA International, MasterCard WorldWide, American Express, Diners Club International and JCB International. RSB earns interest income from credit cards through the interest rate (which currently ranges from 22 per cent. to 42 per cent. per annum) charged to the customer in respect of outstanding card balances, as well as fee and commission income received from merchants for credit card operations. As of 30 June 2012, RSB's outstanding credit card loans amounted to RUB 80,679 million, representing 53.0 per cent. of RSB's gross loans and advances to customers, as compared to RUB 60,158 million, or 49.2 per cent. of RSB's gross loans and advances to customers, RUB 44,776 million, or 49.9 per cent. of RSB's gross loans and advances to customers, and RUB 49,449 million, or 48.3 per cent. of RSB's gross loans and advances to customers, as of 31 December 2011, 2010 and 2009, respectively. RSB aims to diversify the acquisition channels for the distribution of its credit cards. Initially, credit cards were primarily offered by RSB to existing customers with an existing and satisfactory credit record and, therefore, initial contact was primarily through RSB's consumer loan network. As RSB's business has developed, credit cards have also been issued via a direct offering and upon the customer's application, independent of the customer's loan history with RSB. RSB's customers can also apply for credit cards in RSB offices as well as via the Internet and via mobile phone. RSB is also developing new credit card customer acquisition channels, including corporate channels and by placing sales representatives in major airports. Credit cards typically have a limit from RUB 30,000 to RUB 750,000, and a monthly minimum payment from 5 per cent. to 20 per cent. of the outstanding balance. Although the use of credit cards for operations other than cash withdrawals is gradually increasing in Russia, RSB's customers still primarily use credit cards for cash withdrawals, which contribute not only to RSB's interest income but also to its fee and commission income. RSB has been a principal member of MasterCard International since In 2001, RSB became one of the first Russian banks to offer credit cards on the Russian retail market by offering its own branded credit cards as an extension of its consumer lending programme. In 2002, this move was followed by RSB offering its customers MasterCard Standard credit cards. In addition to its MasterCard Standard credit cards, RSB has offered MasterCard Electronic credit cards and Gold MasterCard cards. In 2011, RSB started offering World MasterCard cards and issuing Instant credit cards (MasterCard Standard Unembossed Card). RSB is also a member of VISA International

120 with authority to issue credit cards. RSB began issuing these cards in September Many of them require electronic authorisation, while a few can be operated manually using a credit card slip. In 2011, RSB also started issuing MasterCard and VISA International EMV cards. The design of both MasterCard and VISA International cards can be determined and customised by the client himself. In 2005, RSB became a strategic partner of American Express in Russia. RSB started issuing both Rouble and U.S. Dollar-denominated American Express cards in December RSB's licence provides RSB with the exclusive right to issue the Centurion line of American Express cards (Centurion, Platinum, Gold, Green and Blue American Express cards) and non-exclusive right to issue American Express Network cards (Blue Box cards). In April 2007, RSB entered into a further agreement with American Express which granted RSB the exclusive right to develop the acquiring network for American Express cards in Russia. Under this agreement, RSB was responsible for developing the acquiring network for American Express cards, attracting new partners into the network and processing all American Express transactions in Russia. American Express transferred its acquiring business in Russia to RSB on 1 July The American Express acquiring business allowed RSB to become one of the biggest acquirers in Russia, with approximately 217,000 merchant contracts signed as of 30 June As of 30 June 2012, RSB had issued approximately 1.4 million American Express cards. According to RSB's estimates, as a result of cooperation with RSB in the market share of American Express cards in Russia grew from less than 1 per cent. to at least 5 per cent. In January 2012, RSB started to issue Euro-denominated American Express cards. In March 2012, RSB also launched the most exclusive card of American Express portfolio worldwide the Titanium card, which is offered exclusively to existing American Express Centurion members and by RSB's invitation only. In March 2011, RSB became an acquiring partner of the rapidly developing payment system China UnionPay. As a result of this partnership, China UnionPay cardholders are now able to use RSB's point-of-sale and ATM networks. In June 2011, RSB acquired the exclusive right to issue Diners Club International ("DCI") cards and develop the acquiring network for DCI cards in Russia and Ukraine. In July 2012, RSB started issuing Rouble, Euro and U.S. Dollar denominated Diners Club International cards. Two products have been launched targeting premium and super-premium segments Diners Club Premium Card and Diners Club Exclusive Card. Diners Club International cards offer their card members multiple benefits such as the Diners Club Rewards programme, access to lounges all over the world with DCI Lounges programme, a concierge service and extensive travel insurance packages. RSB opened a dedicated DCI branch in the centre of Moscow to provide premium services for RSB DCI card members. In April 2012, RSB started to offer its clients the possibility to issue credit cards with personalised designs. In June 2012, RSB started to issue a new rewards based credit product RSB World MasterCard Cash Back Card. Holders of this card receive up to three per cent. of their monthly spend in the form of a cash back, which is automatically credited to their credit card account. In August 2012, RSB started issuing a new credit card Blue from American Express. The cardholders of the RSB Blue from American Express Cards receive up to two per cent. of their monthly spend in the form of a cash back, which is automatically credited to their separate current account. In September 2012, RSB became a strategic partner of Discover in Russia. RSB acquired exclusive rights to issue Discover cards and develop the acquiring network for Discover in Russia. RSB plans to start issuing Discover cards in RSB also issues co-branded cards offered jointly with other companies in various industries (such as JSC "Aeroflot" ("Aeroflot"), MTS OJSC, British Airways, OJSC "TRANSAERO Airlines", LLC "Netto-Systema" (WebMoney), Loyalty Partners Vostok (Malina) and New Economic School), a segment that RSB has actively developed since RSB was one of the first market participants to

121 start issuing co-branded cards by signing an agreement with Aeroflot in The project with Aeroflot was then extended to incorporate new products offered by RSB to its customers. In 2010, RSB began to issue Classic, Gold and Premium Aeroflot American Express credit cards based on the American Express payment system, and Aeroflot MasterCard Standard debit cards based on the MasterCard payment system. Miles accumulated by using these credit cards are exchanged for tickets for flights by Aeroflot and other airlines of the SkyTeam alliance, and can also be used for ticket upgrades. RSB also co-brands its credit cards with popular cultural events or activities that build long-term marketing relationships. In May 2010, RSB and Kazan Unics, a leading national basketball club, started issuing co-branded Russian Standard-UNICS cards that featured a unique design developed specifically for basketball fans and based on a cutting-edge dotted lacquer coating technique that makes the surface of the card feel like a basketball ball. In June 2010, RSB issued Visa FIFA cards developed specifically for the World Cup in South Africa where a certain percentage of the amount of each transaction would benefit the children's football programme. RSB seeks to design its loyalty programmes aimed at encouraging customers' continued use of RSB credit cards. For example, in November 2010 RSB implemented the MALINA loyalty programme that linked Malina Classic and Malina Gold packages to American Express and MasterCard Worldwide. Use of these credit cards generates points that can be exchanged for numerous bonuses from the catalogue of the MALINA loyalty programme or redeemed against goods or services provided by MALINA loyalty programme partners, while customers gain access to the benefits of American Express and MasterCard services and discounts. In 2011, RSB launched a new credit card project based on RSB proprietary loyalty programme. RSB's clients can apply for RSB Travel Classic or RSB Travel Premium package that offer two credit cards American Express and MasterCard Worldwide. Cardholders can earn bonus points which may be used for travel-related purchases. Unlike co-branded cards with individual airlines, this product is more flexible as customers may choose any airline, destination and dates when using their bonus points. Most of RSB's credit card loans are offered through its branch network and cross-sales to existing customers. Other distribution channels for credit card loans are the Internet and direct sales. "Bank-in-Pocket" In 2009, RSB launched a new multi-functional financial product, "Bank-in-Pocket", which is a debit card with a small overdraft facility that gives access to a variety of products and services, such as payments (which are free of charge), transfers, deposits, loans, insurance products and other services. "Bank-in-Pocket" also offers up to 10 per cent. per annum interest on the balance of the card account and discounts in certain retail chains. As of 30 June 2012, RSB issued more than 4.6 million "Bankin-Pocket" cards, including 1.8 million "Bank-in-Pocket" cards issued in 2011 and 0.8 million "Bankin-Pocket" cards issued in the first half of "Bank-in-Pocket" cards are offered to walk-in customers and RSB's existing clients. RSB believes "Bank-in-Pocket" cards are an effective crossselling tool and an additional source of funding. In addition, the overdraft facility embedded in "Bank-in-Pocket" generates interest income for RSB. RSB continually seeks to improve its service content and expand its functionality. In 2010, RSB added the following capabilities to "Bank-in-Pocket" existing services and features: applying for a Virtual Prepaid Card with the required limit via the Internet banking system ("Internet Bank") or RSB's website; applying for up to 3 "Bank-in-Pocket" cards per person; changing the overdraft limit as necessary by calling RSB's call centre ("Call Centre");

122 applying for a loan of up to RUB 300,000 through the card account via the Internet Bank; paying for insurance policies; making internal or external transfers with minimum information on the payer, for example only the plastic card number of RSB's customer; and receiving bonuses and discounts of up to 30 per cent. while paying for goods and services with the "Bank-in-Pocket" card. RSB distributes "Bank-in-Pocket" cards through its offices, retail partner stores and post offices. In the short term, RSB intends to develop additional card marketing channels such as shopping malls, insurance companies and transport card sales outlets. Since July 2010, RSB has been developing the lending component of the "Bank-in-Pocket" service package by launching a new line of integrated loan products for its holders. The service rapidly became popular among customers, with the amount of loans totalling RUB 34,757 million as of 30 June In June 2012, RSB extended the "Bank-in-Pocket" product line by launching the "Bank-in-Pocket Gold" and "Bank-in-Pocket Platinum" debit cards with higher interest rates specifically designed for the active users of the "Bank-in-Pocket" services. Prepaid Gift Card In 2010, RSB launched its prepaid gift card product ("Gift Card"). The wide acceptance network is the key advantage of Gift Card over popular gift certificates of retail chains that give the right to buy a product or a service only from specific stores or companies. RSB runs a large-scale advertising campaign to support the product in federal and regional media, on the Internet, and directly at the points of sale of Gift Card. Gift Card is also marketed through RSB offices. Virtual Prepaid Card In 2010, RSB launched virtual prepaid cards ("Virtual Prepaid Card"), an online payment product. Virtual Prepaid Card is a VISA bank card with no tangible carrier designed to enhance online payment security. By using the Internet Bank, RSB's mobile banking services (the "Mobile Bank"), the RSB's website, RSB s ATMs or a self-service terminal, RSB's customers may issue their own Virtual Prepaid Cards with the limit they need (from RUB 100 to RUB 100,000 via Internet Bank and up to RUB 15,000 via other channels). The details of Virtual Prepaid Card may be used to pay for any goods or services on the Internet without fearing that the information on the customer's standard bank card will be compromised. As of 30 June 2012, RSB sold more than 128,000 Virtual Prepaid Cards to its clients. Other New Credit Card Products During 2011, RSB launched a number of new credit card products: "Credit-in-Pocket" is a credit card on the MasterCard payment system with a RUB 30,000 initial credit limit. This credit card can be issued immediately upon a client's demand. "Credit-in-Pocket" credit cards are offered in all RSB's POS locations and also at airports. RSB uses "Credit-in-Pocket" credit cards as an effective tool for attracting new clients. "Transport Card" is a full-service debit card on the MasterCard payment system. It can be used as a ticket for paying the public transport fare in Moscow, Saint-Petersburg and Yekaterinburg. RSB plans to make the Transport Card available in other Russian cities with population of over one million. "Student Card" is issued to year-old students in Russia. "Student Card" has a reduced

123 Personal Loans interest rate of 29 per cent. per annum and a maximum credit limit of RUB 150,000. RSB offers unsecured cash loans of up to RUB 1 million with a tenor of between six months and four years. Personal loans provided by RSB have fixed interest rates with a minimum interest rate of 24 per cent. per annum. RSB's customers are typically middle-class borrowers seeking to finance home improvements, children's education, and travel and vacation, as well as small business owners seeking to finance their primary business needs such as equipment and car purchases. Personal loans are not conditional on the purchase of goods or services and can be used for any purpose. Compared to POS loans, personal loans have longer terms and higher principal amounts. RSB has focused on providing personal loans to existing clients with established credit history rather than new customers to reduce the risks of nonperformance. Before extending a personal loan, an RSB employee conducts a personal interview, checks the applicant's documentation and sets the credit limit. A credit officer then verifies the applicant's contact information and credit history and decides whether or not to grant the loan. As of 30 June 2012, 24.1 per cent. of RSB's gross loans and advances to customers were represented by personal loans, as compared to 19.9 per cent., 13.7 per cent. and 16.1 per cent. as of 31 December 2011, 2010 and 2009, respectively. RSB is currently targeting its personal loans at customers in most of the Russian regions through its regional branches, which are the main distribution channel for this type of loans. RSB plans to expand the number of its branches and to adapt certain existing front offices to handle personal loan applications. The following table sets forth information on the average amount, average tenor and average yield of personal loans made by RSB in the six months ended 30 June 2012 and the years ended 31 December 2011 and Such information is not available for the year ended 31 December Six months ended 30 June Year ended 31 December Average amount (in thousands of Roubles) Average tenor (in months) Average yield (in per cent.) (1) (1) Average yield is calculated as a weighted average of the effective interest rate of new personal loans divided by new personal loan volume for the period indicated. POS Loans POS loans are generally used for the purchase of consumer durable goods, mobile phones, household appliances, furniture and computer equipment. As of 30 June 2012, 14.8 per cent. of RSB's gross loans and advances to customers were represented by POS loans, as compared to 20.6 per cent., 18.5 per cent. and 11.4 per cent. as of 31 December 2011, 2010 and 2009, respectively. According to RSB's estimates, as of 30 June 2012, RSB's POS loan products were represented in more than 53,000 merchants across almost all Russian regions covering 88 per cent. of the Russian population. POS loans are offered to the mass market segment. POS loans generally have a tenor between 3 and 24 months and their average amount is approximately RUB 20,600. A very small number of POS loans (approximately 0.6 per cent.) are in amounts exceeding RUB 100,000. All POS loans granted by RSB are denominated in Roubles, require a down-payment and are repaid in monthly instalments. RSB was one of the first banks to enter the Russian POS loan market. During the global financial and economic crisis, RSB limited the issuance of new POS loans and reduced its POS loan portfolio. See "History Effect of the Global Financial and Economic Crisis Optimisation of Product Line"). In

124 2010, RSB reinforced its relations with leading retail chains selling home appliances, electronics and furniture, and expanded relationships with non-chain merchants. Key partners of RSB include M.Video, Evroset (Russian mobile phone retail chains) and Expert (Russian consumer electronics retail chains). RSB also continued upgrading its product range in the POS loan segment by lowering its interest rates and loan maturities while implementing programmes to improve its after-sale service quality. As a result, RSB's POS loan portfolio increased from RUB 16,634 million as of 31 December 2010 to RUB 25,226 million as of 31 December 2011 and RUB 22,500 million as of 30 June RSB continues expanding its merchant lending programme under which loans are processed by merchant staff without assistance from RSB employees or other RSB agents. As a result, RSB's POS lending programmes now include non-chain companies and others located in remote regions of Russia. According to RSB's estimates, RSB had a 11.6 per cent. share in the Russian POS loan market as of 30 June RSB intends to maintain its present share in the market, as POS loans generate interest income and constitute an important cross-selling channel for RSB's other banking products and services. In the past, RSB had succeeded in negotiating commercially favourable terms of cooperation with its retail partners, including with respect to the level of commissions in certain circumstances for helping to generate product sales. However, in times of increasing competition resulting from Russia's economic growth in 2010 and 2011, retailers have been able to re-negotiate terms for cooperation with RSB and receive higher commissions paid by RSB. The following table sets forth a break-down of POS loans made by RSB in the six months ended 30 June 2012 by the loan's original size. Range of size of loans (in thousands of Roubles) Number of loans (thousands) Share of total POS loan (per cent.) Over Total The following table sets forth information on the average amount, average tenor and average yield of POS loans made by RSB in the six months ended 30 June 2012 and the years ended 31 December 2011, 2010 and Six months ended 30 June Year ended 31 December Average amount (in thousands of Roubles) Average tenor (in months) Average yield (in per cent.) (1) (1) Average yield is calculated as a weighted average of the effective interest rate of new POS loans divided by new POS loans volume for the period indicated. Consumer Deposits Following the onset of the global financial and economic crisis, in late 2008 and 2009 RSB started to diversify its funding base and increase the share of customer accounts in its liabilities. RSB started

125 offering term and demand deposits in Roubles, U.S. Dollars and Euro, which vary by term, amount and interest. In 2010, RSB continued developing its deposit business by improving its product range and related products offered to new depositors. RSB's ability to attract new depositors depends on the interest rates offered by RSB as compared to those offered by RSB's competitors, which in turn affects RSB's cost of funds. As of 30 June 2012, customer accounts represented 68.0 per cent. of RSB's total liabilities, as compared to 68.0 per cent., 57.1 per cent. and 24.3 per cent. as of 31 December 2011, 2010 and 2009, respectively. Retail deposits amounted to RUB 128,709 million, or 96.2 per cent. of RSB's total customer accounts, as of 30 June 2012, as compared to RUB 101,446 million, or 92.7 per cent. of RSB's total customer accounts, RUB 62,230 million, or 99.0 per cent. of RSB's total customer accounts, and RUB 26,353 million, or 98.2 per cent. of RSB's total customer accounts, as of 31 December 2011, 2010 and 2009, respectively. Retail deposits are expected to remain one of the focuses of RSB's business. However, given that retail deposits can be withdrawn at any time, RSB intends to maintain the share of retail deposits in its liabilities at approximately per cent., with the rest of the funding base represented largely by wholesale funding products. RSB also seeks to mitigate the effects of any potential substantial deposit withdrawals by maintaining a liquidity cushion in the form of securities portfolio. RSB's retail deposits are primarily denominated in Roubles. Interest rates for Rouble deposits vary from 5.25 per cent. to 12.0 per cent. per annum and interest rates for foreign currency deposits vary from 2.25 per cent. to 7.0 per cent. per annum depending on the deposits' size, tenor, currency and other terms and conditions. RSB's retail deposits have a tenor generally between 3 and 24 months. The following table sets forth information on the average amount, average tenor and average yield of RSB's retail deposits in Russia outstanding as of 30 June 2012 and 31 December 2011, 2010 and Six months ended 30 June Year ended 31 December Average amount (in thousands of Roubles) Average tenor (in months) Average yield (in per cent.) (1) (1) Average yield is calculated as a weighted average of the effective yield of retail term deposits in Russia. The following table sets forth the break-down of RSB's retail deposits in Russia between term deposits and current accounts/demand deposits as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June As of 31 December (in millions of Roubles) Term deposits... 96,552 74,855 45,559 18,990 Current accounts and demand deposits... 32,157 26,591 16,671 7,363 Total deposits from individuals , ,446 62,230 26,353 As of 30 June 2012, RSB had approximately 175 thousand retail deposit accounts in Russia with an average principal amount of RUB 531 thousand per account, as compared to approximately 152 thousand, 114 thousand and 64 thousand retail deposit accounts with an average principal amount of RUB 481 thousand, RUB 386 thousand and RUB 286 thousand per account as of 31 December 2011, 2010 and 2009, respectively. The following table sets forth the break-down of RSB's legal entities deposits in Russia between term deposits and current accounts/demand deposits as of 30 June 2012 and 31 December 2011, 2010 and

126 As of 30 June As of 31 December (in millions of Roubles) Term deposits Current accounts and demand deposits Total deposits from legal entities... 1, Merchant Acquiring and Payment Terminals In 2010, RSB aggressively pursued the development of its merchant acquiring business, which is the process that enables merchants to accept credit and debit cards. Acquirers, such as RSB, charge a fee for card purchase transactions (which forms the income side associated with the transaction) and pay interchange fees to the card issuers for each purchase transaction (which is the cost side associated with the transaction). The fee charged by the acquirer depends on the card type, transaction type, merchant industry category and volume. In August 2010, RSB became the first bank in Russia to successfully complete the audit procedure of Trustwave and receive certification for conformity to the Payment Card Industry Data Security Standard ("PCI DSS"), which represents the highest compliance standard of data security of international payment schemes such as Visa, MasterCard, American Express, JCB and Discover. In August 2011, RSB successfully passed all of the audit requirements and received this certificate for the second time. In August 2012, RSB again received this certificate. During 2010 and 2011, RSB heavily targeted the "non-card-accepting universe", enabling card acceptance by merchants which never accepted cards in Russia before. Cooperation between RSB and McDonald's restaurants is an example of such a case and was a milestone project for the national merchant acquiring market. RSB is providing 330 McDonald s restaurants in Russia with card accepting equipment. Another example of RSB's efforts of targeting the "non-card-accepting universe" is the launch of the card acceptance project with Magnit (one of the largest retail grocery chains in Russia). RSB has equipped most of Magnit's supermarkets with payment terminals, which was followed by a marketing campaign in the mass media to increase general awareness of Magnit's ability to accept cards. In 2011, RSB entered into exclusive issuing and acquiring deals with American Express and Diners Club. It also signed an acquiring agreement with China UnionPay, becoming the first bank in Russia able to offer its clients acceptance of seven payment schemes via its points of sale terminals (Visa, MasterCard, American Express, Diners Club, JCB, CUP and Golden Crown). Such versatility has helped RSB to sign contracts for acquiring and servicing of over 215,000 merchant locations, making RSB one of the leading banks in Russia both by the number of serviced merchant locations and the number of processed transactions. In the first half of 2012, RSB has been further strengthening its role as a technology leader by concentrating on the deployment of contactless technology, enabling acceptance of MasterCard PayPass and Visa PayWave cards by its terminals. RSB has signed a contract with "Subway", the fast food restaurant chain, for contactless acceptance of its cards, and currently approximately 100 Subway restaurants accept such cards. RSB has also signed a number of contracts with other market leaders in the national fast food segment and in the retail industry for deployment of contactless technology, which are currently at various stages of implementation. All these efforts have allowed RSB to become one of the leaders in the total number of contactless terminals installed in Russia. Being one of the largest merchant acquirers in Russia, RSB concentrates on the value added side of payment processing as well. Thus, it has built a loyalty programme in Russia with over 3,000 participating merchants, offering various discounts to RSB card holders. The value of these discounts is programmed at the POS terminal level and is applied automatically at purchase

127 In 2011, RSB started offering money transfer services to holders of cards of Russian banks. This service allows cardholders to transfer funds instantly from one card to another. Previously some other banks allowed only Visa to Visa money transfers as part of the Visa Money Transfer platform. As a result, RSB became one of the first banks in Russia and Europe to implement MasterCard Money Send technology allowing MasterCard to MasterCard money transfers. To the best of its knowledge, RSB was also one of the first banks worldwide to allow cross payment system transfers, making it possible to transfer money from a Visa card to a MasterCard card and vice versa. In 2011, RSB won the "Channel Award" from the European Card Acquiring Forum for its Card-to-Card Money Transfer service. RSB is promoting this service to its clients and to the clients of other banks under the brand name "RS Express". In July 2012, RSB launched a person-to-person payment service in cooperation with PayPal Pte. Ltd. ("PayPal"), a leading global payment company with more than 110 million active accounts in more than 190 countries and regions, which allows RSB to offer its customers a fast and convenient way of transferring money to PayPal accounts using Internet Bank. In 2011, RSB purchased over 2,000 payment terminals from Euroset and launched a payment service which allows card holders of any bank to top-up their mobile phones at RSB payment terminals. RSB earns a commission from such operations. Such terminals are also used for advertising and to expand the RSB client base by obtaining potential clients' mobile phone numbers, which presents further cross-selling opportunities. RSB also maintains the secure Online Merchant Service portal, which allows merchants to receive analytical information on payment transactions made online by logging in via a website dedicated to merchant acquiring in Russia at Insurance Products RSB offers a wide range of insurance products underwritten by RSI (a life insurance company whollyowned by RSB) and BAC (an insurance company 99.8 per cent. owned by the Group and specialising in other types of insurance) through RSB's distribution network. In the six months ended 30 June 2012, the Group's income from insurance operations amounted to RUB 3,308, as compared to RUB 4,415 million, RUB 2,488 million and RUB 2,612 million in the years ended 31 December 2011, 2010 and 2009, respectively. RSI Products RSI was founded in 2003 in order to offer life and other insurance products to RSB customers. In 2007, RSB acquired per cent. of RSI's share capital from BNP Paribas Assurance. The remaining per cent. of RSI's share capital was held by RSInv. Between November 2007 and January 2009, RSB acquired 100 per cent. of RSInv's share capital and consequently acquired the remaining per cent. of RSI's share capital. In May 2011, the Group acquired the Non-State Pension Fund "Russian Standard" (the "Fund"). RSI is the sole shareholder of the Fund. The Fund provides mandatory state pension and non-state pension services not only to its employees but also to other individuals. The number of RSI's clients currently exceeds two million individuals. According to RosBusinessConsulting, RSI was the 26 th largest insurance company by volume of insurance premiums sold in Major products of RSI offered by RSB include: Life insurance for credit card loan and personal loan borrowers. The terms of life insurance policies provide that, in case of death or permanent disability of a client, the client's outstanding debt to RSB is repaid by RSI

128 Accident insurance. Accident insurance is represented by "First Aid" and "Be Careful- Children" programmes. Accident insurance policies cover such risks as sport accidents, flight accidents, revolts and terrorist attacks. Endowment insurance. Under the terms of endowment insurance, a sum of money is paid to the insured person upon a certain date (such as reaching certain age) or upon occurrence of certain events (such as health problems). RSB also uses endowment insurance as an additional cross-selling channel for deposit products. RSB offers to the insured the "Russian Standard Capital" deposit product with a maximum interest rate of 12.5 per cent. per annum. BAC Products BAC was founded in 2006 with RSI's share of 25 per cent. in BAC's share capital. In June 2011, RSB acquired per cent. of BAC's share capital from RSC. Following that, RSB increased BAC's share capital by RUB 150 million which resulted in consolidation by RSB of per cent. of BAC's share capital. The remaining 0.16 per cent. of BAC's share capital also belongs to the Group. BAC specialises in personal financial risks insurance. BAC also offers property insurance solutions. It has more than 500,000 clients throughout Russia. Major products of BAC offered by RSB include: Involuntary loss of employment insurance for credit card loan and personal loan borrowers. This type of insurance covers the risks of the client's redundancy or liquidation of its employer. BAC undertakes to make periodic payments to the client so that the client can meet its financial obligations under the loan agreement with RSB. Cardholders' insurance. Under the terms of this insurance policy, BAC agrees to cover the damages incurred by RSB's cardholders as a result of fraud or robbery when using an ATM to withdraw cash. Property and civil liability insurance. This product insures the client's property (including furniture and personal belongings) and covers the client's civil liability to its neighbours in case of damage to their apartments at client's fault. Postal Bank In March 2010, RSB filed an application for participation in the development of a postal bank in Russia. The tender is being held by VEB, the largest state-owned development bank in Russia. RSB's application was, together with an application of one other Russian bank, selected by VEB for the second step of the tender. If RSB wins the tender, it expects it will be required to provide the new bank with product and technological support. RSB believes the cooperation with the Russian Federal Post ("RFP") and VEB would allow it to increase its penetration in the retail banking market. See "Risk Factors - Risks Related to RSB's Business and Banking Sector - RSB's participation in the development of a postal bank in Russia may adversely affect RSB's results of operations and prospects". Mutual Funds In the second half of 2011, RSB made a decision to develop its own investment and asset management business based on RSB's fully-owned subsidiary, Management Company Russian Standard Ltd ("MCRS"), established in 2006 in Russia. In 2011, MCRS established four open-end mutual funds. RSB's distribution network is used by MCRS for selling participation units in those funds. Investment and asset management is still being tested by RSB and represents only a small part of RSB's business. Total net asset value of all four mutual funds amounted to approximately RUB 76 million as of 30 June

129 Multi-Channel Distribution Network As of 30 June 2012, RSB's distribution network included 197 banking offices, approximately 53,000 points of sale, over 1,750 ATMs and cash in machines, and over 2,650 instant payment terminals located in RSB's branches, third-party retail chains or outlets. In addition, RSB offers telephone banking and Internet banking options and the Call Centre with more than 1,000 employees as of 30 June 2012, operating 24 hours every day of the year. RSB also intends to open approximately 60 additional banking offices by 31 December Branch Network RSB's branch network focuses on providing its customers individualised attention and products that best satisfy their financial needs. RSB's distribution network policy focuses on opening new banking offices in regions with an increased customer demand for RSB's products. RSB's mini-offices are opened in trading centres and outlets with significant customer traffic. RSB's mini-offices usually consist of one or two RSB officers, a fully equipped computer desk and an ATM. Such mini-offices enable RSB customers to perform a variety of banking operations, including loan repayments, deposits, money transfers and bill payments. RSB's extensive branch network remains the most reliable channel for attracting new clients and cross-selling of RSB products to its existing clients. Points of Sale RSB's points of sale in retail partners' outlets are opened on the basis of distribution agreements between RSB and the relevant retailer. These distribution agreements are generally for an indefinite period and may require RSB to pay retailers a commission, agreed upon from time to time, based on the amount of credit generated by sales and the type of credit product that is sold. RSB has developed and implemented a key client management system whereby a team of experienced managers is responsible for all aspects of RSB's relationship with major retail partners. None of RSB's retail partners are exclusive to RSB nor bound by any contractual lock-in provisions. RSB's retail partners include a number of Russian and foreign-owned retail chains such as MVideo (one of the biggest Russian consumer electronics retail chains) and Evroset (Russian mobile phone retail chain). The majority of RSB's points of sale are equipped with RSB's software allowing direct access to RSB's PASS. Some of RSB's points of sale (including those in retail outlets) can accept loan repayments. Depending on the volume of sales and the range of products offered, RSB's points of sale are staffed either with RSB loan officers or employees of RSB's retail partners (with each point of sale staffed by between one and eight persons). The responsibilities of the points of sale staff include both selling and actively promoting RSB's brand and consumer loan products. As of 30 June 2012, out of over 53,000 points of sale, approximately 18,800 were staffed with at least one RSB loan officer. RSB's loan officers and employees of its retail partners offering consumer loan products are trained and certified by RSB's training centre, which is run by its Network Development Department, and undergo a mandatory internal security check prior to their employment. Each of RSB's points of sale is subject to bi-weekly or monthly internal audits to ensure compliance with RSB's lending procedures. See "Employees". Call Centre RSB's Call Centre remains a key channel for communication with existing and prospective customers. There are specialised lines at the Call Centre for complaints (Hot Line), deposit owners, VIPcustomers and for customers who purchased Gift Cards. All lines are equipped with a call routing system, which allows it (if the call is in a queue) to search for a free operator on another line who is capable of handling the call. This service advantage helps to minimise the customer's waiting time

130 The Call Centre also focuses on new customer communication channels. For example, RSB launched a support line for Internet Bank/Mobile Bank systems specifically to support customers using online services where RSB's employees advise customers on matters related to the connection and use of remote banking systems. Video and Phone Bank Consulting Services ("Videoconsultant" and "Telephonebank", respectively) were launched in Another focus of the Call Centre is servicing RSB's high net worth customers, primarily holders of American Express cards. Apart from support to holders of medium and standard level American Express cards, the Call Centre provides 24/7 support to key customers of RSB who hold American Express Platinum/Centurion cards, premium cards co-branded with British Airways, Aeroflot, Transaero airlines and Imperia cardholders. Based in Moscow, the Call Centre operates 24 hours a day, every day of the year, and is serviced by more than 1,000 operators working in shifts. RSB's call centre handles over 50,000 telephone calls per day from all areas of Russia where RSB has operations. The Call Centre's subdivision is located in Tula, and a new subdivision opened in Kazan in 2011 in order to optimise RSB's costs. Other Channels Internet Banking Internet banking is becoming an increasingly important distribution channel for RSB's business in Russia. RSB's website allows customers to apply for RSB products, including loans and deposits, online, with written loan documentation executed separately after the application is made. In the six months ended 30 June 2012, approximately 3.8 customers used RSB's online banking platform, generating 4.8 million transactions. Internet banking enables RSB customers to make various types of payments (such as public utilities, mobile, Internet and cable TV) and provides them with money transfer options (including via card number or phone number). In 2010, RSB abolished commissions for utility bill payments made through its Internet banking platform. Since 2010, RSB implemented various improvements to its Internet banking platform, such as a more advanced interface design and simplified money transfer procedures. The volume of Internet banking operations increased in 2011 and has been gradually growing in RSB believes Internet banking reduces its operating costs and increases its efficiency and brand recognition. In 2011, RSB established accounts on popular social networks, such as Facebook, VKontakte, Odnoklassniki, Twitter and Foursquare. Mobile Banking Mobile banking is a mobile application which allows RSB customers to use their mobile phones for banking operations such as checking account balances, bill payment and money transfers. Currently Mobile Bank supports devices running iphone, Android, J2ME and Windows Mobile systems. Post Offices RSB has a non-exclusive distribution agreement with RFP which, as of 30 June 2012, covered 42,000 RFP branches and allows RSB borrowers to repay their loans through RFP offices equipped to handle electronic wire transfers. The agreement with RFP has particular importance in regions where RSB does not have banking offices. As RSB expands its network of banking offices, RSB's reliance on RFP may decrease in the future. Loan Repayment RSB issues monthly statements to its borrowers on the date specified in the agreement for each borrower. The information set out in such statements summarises the borrower's account activity during the last calculation period, including account balance. Statements are sent out to borrowers via

131 RFP, and the Internet Bank. RSB's loans can be repaid in the following ways: (i) (ii) (iii) (iv) The RSB Network. Borrowers can repay their loans through an RSB office. As of 30 June 2012, RSB had 197 banking offices and more than 3,800 self-service machines located throughout Russia. Usually, payments made by borrowers through RSB offices are allocated intraday. Commercial Banks. Loan payments made through other Russian commercial banks are subject to a commission fee of 1.5 per cent. payable by the borrower to the other bank. The time delay between cash payment and its receipt by RSB is between one and three working days. Electronic Payment Systems. There are agreements between RSB and the largest Russian electronic payment systems (Rapida, QIWI/OSMP, Cyberplat and Elecsnet) allowing borrowers to repay loans through over 500,000 electronic terminals. These payments are subject to a 1.5 per cent. fee payable to the electronic payment system by the borrower. In case of payment via any electronic payment system, it normally takes up to one day to allocate the payment to the borrower's account. Russian Federal Post. RSB has an agreement with RFP which allows RSB borrowers to repay their loans through RFP offices equipped to handle electronic wire transfers. Loan repayments through RFP offices are subject to a 1.5 per cent. commission fee payable to RFP by the borrower. There can be a time delay of between one and three working days between the borrower's cash payment and its receipt by RSB. Operations in Ukraine RSB conducts its business in Ukraine through its wholly-owned subsidiary, Public Joint Stock Company "Russian Standard Bank" ("RSB Ukraine"). As of 30 June 2012, RSB Ukraine had a head office in Kyiv and 18 branches in Kyiv, Donetsk, Kharkov, Dnepropetrovsk and Odessa. RSB Ukraine is focused on the issuance of POS loans and credit card loans. In addition, it has insignificant portfolios of auto loans and personal loans. As of 30 June 2012, POS loans and credit card loans accounted for 41.8 per cent. and 41.8 per cent., respectively, of RSB Ukraine's total retail loan portfolio. According to the GfK Group's estimates, as of 30 June 2012, RSB Ukraine had a market share of 10.3 per cent. in the Ukrainian POS loan market. The share of non-performing loans in RSB Ukraine's total retail loan portfolio was 2.6 per cent. as of 30 June 2012, as compared to 1.3 per cent. as of 31 December The increase principally represents a more mature portfolio and results from the actual realisation of expected risks. RSB's Russian operations are the main source of liquidity for RSB Ukraine. However, RSB intends to increase the share of retail deposits in RSB Ukraine's liabilities to make RSB Ukraine a more self-sustaining bank. Other Activities RSB's treasury and trading business units engage in foreign currency exchange, securities and money market trading in order to manage RSB's liquidity and support the activities of its corporate clients. RSB provides payment and account services to and on behalf of its corporate clients and also offers these customers traditional credit products (loans, loan facilities and overdrafts) and trade finance products. RSB supports its corporate clients' trading activities by providing letters of credit, guarantees, stand-by letters of credit and trade related loan facilities. RSB continues to expand the range of operations run jointly with major Russian and international financial institutions. RSB has correspondent relations with more than 120 Russian and foreign banks. The existing correspondent network enables RSB to effect settlements in all major currencies on a timely basis and offer its customers attractive and high quality services

132 Information Technology Infrastructure RSB continually invests in new technology and the maintenance of existing equipment and infrastructure in order to improve the customer value proposition, increase efficiency and support business growth. RSB technology systems focus on new customer communication channels. Internet Bank and Mobile Bank have a wide variety of functions. For example, these applications can restore logins and passwords, block or unblock access, and obtain information on electronic orders. RSB supports correspondence between its customers and RSB through Internet Bank's secured mail system. Once a question is sent, the customer will receive a quick response containing both general and customer specific information. Information technology is an integral part of RSB's daily operations. RSB regularly implements new technologies in order to support its present and future business. RSB operates a high-power IT system. RSB's scoring system processes on average 40,000 loan applications per day (having a maximum capacity of 200,000). Back-up facilities have been established in different locations. As of 30 June 2012, the IT department employs approximately 160 experts in Moscow and 120 outside Moscow. RSB upgraded its servers (FujitsuSiemens) in October 2009 which led to a two-fold improvement in the system performance. In 2009, RSB started using Teradata CRM Solution which allowed users to receive more detailed information on their operations. The core of RSB's integrated banking information system, known as "Bankir", is comprised of the RSB call centre, credit card processing and credit scoring systems. "Bankir" also supports RSB's corporate banking services allowing for remote access to customers' accounts through RSB's "Bank Client" systems. In its business activities, RSB employs a variety of sophisticated software, including "Bankir" core banking system (manufactured by CSBI EE), the Transmaster credit card system (manufactured by Tieto Enator) and the "Bank Client" remote account access and management system (manufactured by Komita). In order to ensure the safety of collected data, RSB also uses IBM multi-processor cluster systems which allow back-up storage for both servers and disks. RSB's information technology systems also provide for the backup of communication and power supply systems. Scalability of RSB's information technology systems allows RSB to increase capacity by adding new hardware, such as disks and processors. There are different levels of user access rights for employees of different departments of RSB. RSB has implemented disaster recovery plans to ensure business continuity in case a disaster affects the primary servicing and collections headquarters. The following fully automated process, based on manual procedures, will be implemented in case of any such disaster: (i) electricity will be provided for the first five minutes by an uninterruptible power supply and then by diesel generators thereafter; (ii) servers-start of second site in a cluster; (iii) disk arrays-restoring tape copy on another disk array and starting the server; (iv) computer centre-switching to second computer centre and copying data from disk arrays, unless tape copy on another disk array is restored and the server is started. RSB believes that its information technology systems can be easily adapted and modified to address RSB's growing business volumes and regional expansion. RSB's information technology infrastructure can be adjusted by incorporating new modules to reflect the expansion of RSB's product range. In order to provide high quality service to its customers, RSB regularly seeks to improve the capacity and security of its Call Centre. In 2002, RSB implemented a Cisco IP Contact Centre, which is considered to be a highly secure and scalable solution for call centres. In May 2005, RSB received the Certificate of TUV Rheinland InterCert Kft. confirming establishment of a quality management system by RSB for the provision of services related to information technologies and information security. Proof has been furnished that the requirements of ISO 9001:2000 are fulfilled

133 Competition RSB faces competition in all the regions and retail banking segments in which it operates, and considers that its primary competitors are: in the credit card market: Sberbank, VTB 24, TCS Bank, OTP Bank, Svyaznoy Bank, Home Credit & Finance Bank, Orient Express Bank and Alfa Bank; in the personal loan market: Sberbank, VTB 24, Russian Agricultural Bank, Orient Express Bank and Home Credit & Finance Bank; in the POS loan market: Home Credit & Finance Bank, OTP Bank, Alfa Bank, Rusfinance Bank, Credit Europe Bank and Cetelem (part of BNP Paribas group); and in the retail deposit market: Sberbank and VTB 24. RSB has faced increasing competition from state-owned banks (such as Sberbank and VTB 24) and from the Russian subsidiaries of major foreign financial institutions. In addition, in December 2011, Sberbank (which is the largest bank in Russia) and Cetelem (part of the BNP Paribas group) signed a definitive agreement to establish a new bank to focus primarily on the Russian POS loan market, which is expected to become operational in the second half of On 5 September 2012, Sberbank and BNP Paribas announced the establishment of the joint Russian POS finance bank. Following the closing of the transaction on 31 August 2012, the joint bank, BNP Paribas Vostok LLC, will operate under the Cetelem brand. Sberbank has a 70 per cent. stake in the bank with the remaining 30 per cent. being owned by BNP Paribas Personal Finance France, which owns the Cetelem brand. Employees As of 30 June 2012, RSB and its subsidiaries had 21,707 employees, as compared to 21,639, 14,816 and 12,285 employees as of 31 December 2011, 2010 and 2009, respectively. RSB offers a sales course for its sales staff and employees of RSB's retail partners engaged in promoting and selling RSB's consumer credit products. The course covers RSB's history, an overview of its consumer credit products, and sales techniques and procedures. Following the completion of the sales course, RSB's loan officers and employees of retail partners offering credit products receive training certificates which are renewable on an annual basis. Litigation RSB has been, and continues to be, the subject of legal proceedings and adjudications from time to time, none of which has had, individually or in aggregate, a material adverse effect on RSB. There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened, of which RSB is aware) which may have or have had during the 12 months prior to the date of this Base Prospectus a significant effect on the consolidated financial position or profitability of RSB

134 ASSET, LIABILITY AND RISK MANAGEMENT This section provides an overview of risk management coordination by the Group, but primarily covers risk management procedures of RSB. Unless indicated otherwise, financial information is presented on a consolidated basis under IFRS. Introduction The purpose of RSB's asset, liability and risk management ("risk management") strategy is to evaluate, monitor and manage the size and concentration of the risks arising in the context of RSB's activities. The principal categories of risk inherent in RSB's business are credit risk, operational risk, market risk and liquidity risk. RSB designed its risk management policy to manage these risks by establishing procedures and setting limits which are monitored by the appropriate RSB departments. RSB's risk management policies focus on identifying and analysing the above mentioned risks, establishing mechanisms designed to manage, mitigate and monitor these risks on a regular basis as well as facilitating compliance with risk management procedures. RSB's risk management policies, procedures and methodologies are regularly reviewed in order to improve them and reflect changing market conditions, the effect of new products and services offered by RSB, the growth in scope of its operations and the development of risk management methodologies used in the international and Russian banking sectors. In developing its risk management policies, RSB follows international best practices, principles and guidelines from the Basel Committee on Banking Supervision as well as the requirements of Russian laws and regulations, including recommendations issued by the CBR. RSB actively cooperates with international financial institutions and implements best practices of global consumer lending leaders in its business. RSB has built a uniform distributed lending infrastructure which is in compliance with global standards and successfully maintains an optimal liquidity level. Recent initiatives in the risk management area at RSB have been focused on: improving flexibility of credit approval procedures by establishing client segments based on evaluation of the risks relating to a customer and estimation of his paying capacity on the basis of data contained in application form, payment history and information provided by credit bureaus. RSB also considers establishing new retail lending limits to be dependent on a customer's total debt (owed to RSB and other banks) and the sum of all his monthly payments; identifying low risk segments and expanding RSB's business in such segments. RSB makes regular researches in order to detect, and restrict its exposure to, client segments with high credit risk and detect, and increase its exposure to, client segments with low credit risk by promotion of RSB's services, acquisition of payroll customers and issuance of corporate cards; and launching the "next best offer" project in order to offer the most appropriate products for RSB's customers based on their credit and payment history with RSB. An automated system identifies from 3 to 5 "best" (individually for each customer) credit or insurance products, taking into account client's tendency to default, estimated overall credit exposure and credit limits for offered products, probability of internal approval, client's acceptance of products offered (including, terms and provisions of credit products) and profitability of products. Risk Management Organisational Structure RSB's risk management organisation is divided between the bodies that are responsible for establishing risk management policies and procedures, including the establishment of limits, and bodies whose function is to implement those policies and procedures, including monitoring and controlling risks and limits on an ongoing basis

135 Decision Making The decision making level of RSB's risk management operations is comprised of the Board of Directors, the Management Board, the Credit Committee (Kreditniy comitet), and the Asset and Liability Management Committee (Komitet po upravleniy aktivami i passivami) ("ALCO"). These bodies perform the following functions: The Board of Directors. The Board of Directors approves RSB's credit policy (the "Credit Policy"), determines the threshold level and other characteristics of credit risks. It also appoints the Credit Committee and approves certain decisions that fall outside the scope of the Credit Committee's authority. The Management Board. The Management Board has overall responsibility for RSB's asset, liability and risk management operations, policies and procedures. The Management Board delegates individual risk management functions to each of the various decision-making and execution bodies within RSB's risk management structures. The Credit Committee. The Credit Committee supervises and manages RSB's credit risks. In particular, the Credit Committee establishes the terms of RSB's retail credit products and borrower's approval conditions, approves individual credit transactions, establishes credit risk categories and provisioning rates and adopts decisions on the recognition and write-off of NPLs. The Credit Committee is comprised of ten members. The Chairman of the Management Board acts as the Chairman of the Credit Committee. The Credit Committee meets on a weekly basis and makes its decision by a simple majority vote of all members present provided that a quorum of at least half of the elected members of the Credit Committee is present. Where votes are tied, the Chairman of the Credit Committee (or his deputy) shall cast the deciding vote. The ALCO. The ALCO establishes RSB's policy with respect to capital adequacy and market risks, including market limits, manages RSB's assets and liabilities, establishes RSB's medium- and longterm liquidity risk management policy and sets interest rate policy and charges with respect to retail credit products and programmes for individual borrowers. The ALCO is comprised of ten members. The Chairman of the Management Board acts as the Chairman of the ALCO. The ALCO meets on a weekly basis and makes its decision by simple majority provided that a quorum of at least half of the elected members of the ALCO is present. Where votes are tied, the Chairman of the Committee (or his deputy) shall cast the deciding vote. Implementation The implementation level of RSB's risk management is comprised of the Risk Analysis and Control Department (Upravlenie analiza i controlya riskov Finansovogo departamenta) which is a part of the Financial Department (Finansoviy departament), Credit Department (Kreditnaya direktsiya), Corporate Business Division (Upravlenie corporativnogo bisnesa), Compliance Control Department (Departament vnutrennego controlya), Financial Institutions Department (Upravlenie finansovih institutov), Security Department (Departament bezopasnosti), Legal Department (Juridicheskiy departament) and Financial Markets Department (Departament operatsiy na finansovih rinkah). These bodies perform the following functions: Risk Analysis and Control Department. The Risk Analysis and Control Department reports to the Head of the Financial Department and is responsible for monitoring compliance with the ratios established by RSB's Credit Policy, assisting the Credit Committee with establishing credit risk categories and provisioning rates, estimating credit risk on corporate borrowers, banks and issuers of securities, and preparing recommendations on altering the composition of the loan portfolio. RSB's Risk Analysis and Control Department is independent of other departments that are responsible for risk management. Credit Department. The Credit Department is responsible for approving loan applications with respect to retail consumer finance products (including credit card issuance), monitoring of outstanding

136 indebtedness owed to RSB and collecting amounts due but unpaid from RSB's retail customers. Corporate Business Division. The Corporate Business Division is responsible for monitoring credit risks arising in the context of lending to corporate clients and some individual borrowers (such as RSB's employees and Imperia private banking clients). Compliance Control Department. The Compliance Control Department assesses the adequacy of, and compliance with CBR and other government supervisions, as well as internal procedures at all levels throughout RSB. Financial Institutions Department. The Financial Institutions Department is responsible for monitoring credit risks arising in the context of lending to banks and other financial institutions. Financial Markets Department. The Financial Markets Department is responsible for managing RSB's short-term liquidity, open currency positions and monitoring the RSB's securities portfolio risk. Security Department. The Security Department is primarily responsible for approving all new counterparties on any business transaction entered into by RSB, excluding retail loans. Legal Department. The Legal Department is responsible primarily for management of the legal risks and performs ongoing monitoring of changes in laws and applicable regulations with a view of making an assessment of impact of any such changes on RSB' business and of any related risks. Responsibilities of the Legal Department include the review of all of RSB's legal documentation and preparation of the standard form documentation used for different types of banking products offered by RSB. The Legal Department is involved in the assessment of legal risks relating to contracts and agreements to be entered into by RSB. Management Reporting RSB has implemented a management reporting system that requires the preparation, by the departments of RSB responsible for the implementation of RSB's risk management system, of the following reports and calculations: Daily basis - sales report, treasury report (with respect to RSB's open foreign exchange positions, cash flow and limits) and operating expenses report; Weekly basis - consumer business report, statement of financial position and profit and loss statements analysis, structural liquidity gap report, interest rate risk calculation and operational risk report; and Monthly basis - IFRS financial statements, analytical report on consumer credit risk and lending, report on the status of RSB's consumer finance business accompanied by comments and analysis and report on RSB's performance versus its budget. These reports are submitted for the review of RSB's Board of Directors and Management Board. Credit Risk RSB is exposed to credit risk, which is the risk that a borrower or counterparty will be unable to pay amounts in full when due. Credit risk is the principal category of financial risk related to RSB's operations. This risk arises mainly in the context of RSB's consumer finance activities such as retail loans issued by RSB under large-scale lending programmes: credit card loans, POS loans and personal loans, among others. The general principles of RSB's credit approach are outlined in its Credit Policy, which is approved by RSB's Board of Directors and reviewed at least every two years. The current Credit Policy was adopted in December The Credit Policy designates in accordance with RSB's general strategy,

137 among others, the following: RSB's goals and objectives with respect to its lending activities; types of RSB's lending activity, requirements for origination of RSB's loan portfolio and RSB's business priorities with respect to its lending activity; principles of organisation of RSB's lending activity and decision making procedure with respect to operations exposed to credit risk; credit risk management system, lending operations monitoring and control system and overdue loans management procedure. When applying the Credit Policy, RSB seeks to: strengthen RSB's image as a reliable partner and high tech bank; increase the volume of operations in its business segments by expanding the client base (including expanding its activities in different geographical regions), promotion of new credit products offered by RSB, exploration of new client segments, while maintaining a low credit risk level in RSB's loan portfolio; gain maximum profit by decreasing the level of credit risk and improving the credit approval system; permanently improve the quality of RSB's loan portfolio by acquisition of reliable clients and improving the credit risks management system (accumulation and utilisation of statistical information for, among others, improving the current credit products and offering new credit products, and enhancement of overdue loans collection procedure); and maintain a sufficient liquidity level and comply with the liquidity ratios. RSB's main priorities in its lending activities are the following: to synchronize the balance between the substantial volume of retail lending operations and minimum level of credit risk; and to accomplish the optimum balance between the profitability of credit operations and the level of credit risk; and to offer the wide range of credit products and other RSB's services. Credit Risk Assessment and Management To mitigate credit risk, RSB sets counterparty exposure limits in accordance with its Credit Policy. The procedure for establishment of exposure limits varies for retail borrowers, corporate borrowers, financial institutions and related parties. According to RSB's Credit Policy, the maximum credit limit of one unrelated party shall not exceed 20 per cent. of RSB's capital and the total exposure to major credit risks (major credit risk means the aggregate of operations with one borrower or the group of related borrowers exceeding 10 per cent. of RSB's capital) shall not exceed 100 per cent of RSB's capital. Credit risk assessment in RSB is conducted in three stages: Prior assessment of credit loss risk (which is performed before execution of a credit operation with consideration of the advisability of such operation; aspects of risk assessment vary for different types of clients and counterparties);

138 Periodic assessment of credit loss risk, creation of loss provisions and adjustment of existing loss provisions; and Monitoring the sufficiency of existing loss provisions. The control over RSB's credit portfolio is exercised by the following departments: the Risk Analysis and Control Department is responsible for monitoring the compliance with limits established by the Credit Policy, the Board of Directors and the Credit Committee; the Financial Department is responsible for monitoring the compliance of RSB's managers with the financial plan regarding the volumes of RSB's loan portfolio and its profitability; the Risk Analysis and Control Department and Corporate Business Division (regarding its operations performed by the Corporate Business Division) are responsible for monitoring the analysis of the quality of RSB's loan portfolio and loss provisions calculation; the Compliance Control Department is responsible for monitoring the compliance of RSB's officers with RSB's internal procedures and regulations. RSB structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers. Such risks are controlled on a revolving basis and subject to review on an annual basis, at minimum. Credit risk limits by individual borrower, transaction and group of financial instruments are set by the Credit Committee. The Board of Directors approves certain decisions that fall outside the scope of the Credit Committee's authority. The exposure to any one borrower, including banks, is further restricted by sub-limits covering onand off-balance sheet exposures and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts. Actual exposures against limits are monitored daily. Exposure to credit risk is managed through regular analyses of the ability of borrowers and potential borrowers to meet interest and principal repayment obligations and by changing these lending limits where appropriate. Exposure to credit risk is also managed, in part, by obtaining collateral and corporate and personal guarantees. See "Collateral" RSB's maximum exposure to credit risk is primarily reflected in the carrying amounts of financial assets on the consolidated statement of financial position. The impact of possible netting of assets and liabilities to reduce potential credit exposure is not significant. Off-Balance Sheet Financial Instruments Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss as a result of another party to a financial instrument failing to perform in accordance with the terms of the contract. RSB uses the same credit policies in entering into conditional obligations as it does for on-balance sheet financial instruments through established credit approvals, risk control limits and monitoring procedures. Provisioning RSB also creates provisions for potential losses under loans and other claims exposed to credit risk to offset expected losses, and such provisioning is one of the key credit risk methods used by RSB. The provisions are recognised as RSB's expenses and reflected in the cost of respective financial instruments. As RSB prepares its financial statements both under IFRS and Russian accounting standards, it must calculate provisions for impairment of loans and other financial assets under both IFRS and Russian accounting standards. IFRS Provisioning Impairment losses are recognised in profit or loss when incurred as a result of one or more events

139 ("loss events") that occurred after the initial recognition of the financial asset and which have an impact on the amount or timing of the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If RSB determines that no objective evidence exists that impairment was incurred for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. The primary factors that RSB considers as to whether a financial asset is impaired are its overdue status and the case at which related collateral, if any, can be realised. The following other principal criteria are also used to determine that there is objective evidence that an impairment loss has occurred: any instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems; the borrower experiences a significant financial difficulty as evidenced by borrower's financial information that RSB obtains; the borrower considers bankruptcy or a financial reorganisation; and there is an adverse change in the payment status of the borrower as a result of changes in the national or local economic conditions that impact the borrower or the value of collateral significantly decreased as a result of deteriorating market conditions. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors' ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets and the experience of management in respect of the extent to which amounts will become overdue as a result of past loss events and the success of recovery of overdue amounts. Past experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect past periods and to remove the effects of past conditions that do not exist currently. Impairment losses are always recognised through an allowance account to write down the asset's carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. 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 recorded (such as an improvement in the debtor's credit rating), the previously recorded impairment loss is reversed by adjusting the allowance account through profit or loss. Uncollectable assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been completed, the Credit Committee of RSB has formally recognised assets as uncollectable and the amount of the loss has been determined. RSB regularly reviews its loan portfolios to assess impairment. In determining whether an impairment loss should be recorded in the income statement, RSB makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in RSB. The primary factor that RSB considers as objective evidence of impairment is the

140 overdue status of the loan. Provision for loan impairment consists of (i) incurred losses when the loan has missed four monthly instalments and then RSB assumes no recovery, except for auto loans, and (ii) losses when the loan has signs of impairment (missed at least one monthly instalment) as at the reporting date; such losses are calculated based on the historical statistical data considering the performance of other loans with the similar characteristics. In general, loans where there are no breaches in loan servicing are considered to be individually unimpaired. Given the nature of the borrowers and the loans extended, it is RSB's view and experience that the time lag between a possible loss event that could lead to impairment and the non- or underpayment of a monthly instalment is minimal. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce differences between loss estimates and actual loss experience. Under IFRS, as of 30 June 2012 RSB's provision for loan impairment was 7.5 per cent. with respect to its gross loan portfolio, 6.7 per cent. with respect to its portfolio of consumer loans and 3.4 per cent. with respect to its portfolio of credit cards. As of 31 December 2011, RSB's provision for loan impairment was 6.9 per cent. with respect to its gross loan portfolio, 4.7 per cent. with respect to its portfolio of consumer loans and 3.3 per cent. with respect to its portfolio of credit cards. As of 31 December 2010, RSB's provision for loan impairment was 8.7 per cent. with respect to gross loan portfolio, in particular 6.5 per cent. with respect to its portfolio of consumer loans, and 3.5 per cent. with respect to its portfolio of credit cards. CBR Provisioning RSB currently applies a methodology based on Russian accounting standards to calculate loan provisioning and determine expected losses. Under applicable CBR regulations, provisions for loan impairment are established following the borrower's default under the loan or where there is an objective evidence of potential inability of the borrower to repay the loan. In case of consumer finance, RSB creates provisions by reference to homogenous credit portfolios, i.e. groups of loans consolidated on the basis of certain credit risk criteria (type of credit product and quantity of payments missed) as well as individual credit products. CBR loan provisions are created by reference to the aggregate of the amount of actual and expected losses. Provisions with respect to individual credit products are calculated based on the borrower's financial condition and debt service quality. Under applicable CBR regulations, loans extended to individuals should be grouped into portfolios according to the period of overdue payments. RSB's consumer portfolio structure is based on its consumer financial instruments and the level of delinquency under CBR norms. Overall, RSB calculates its credit risk on its consumer portfolio as the sum of products of the volumes of debt in each level of delinquency by provisioning rates, determined in accordance with CBR requirements. As of 30 June 2012, RSB's average provisioning allowance was 8.1 per cent. with respect to its retail consumer finance loan portfolio and 27.4 per cent. with respect to its portfolio of other loans. As of 31 December 2011, RSB's average provisioning allowance was 8.9 per cent. with respect to its retail consumer finance loan portfolio and 26.5 per cent. with respect to its portfolio of other loans. As of 31 December 2010, RSB's average provisioning allowance was 15.7 per cent. with respect to its retail consumer finance loan portfolio and 29.2 per cent. with respect to its portfolio of other loans. Administration of Debt with Signs of Impairment RSB permanently monitors its credit operations with respect to signs of impairment. If the responsible department reveals the signs of impairment, the primary task will be to find out the cause of such signs and to consider applicable remedies. The debt owed by legal entities is treated as having signs of impairment, among others, in the

141 following cases: deterioration of financial position of the debtor; considerable reduction of turnover of the debtor; unprofitable activity of the debtor during the preceding 12 months; adverse change of certain indicators of financial activity of the borrower as compared to optimal indicators of financial activity achieved during preceding 12 months; commencement of legal proceedings, claims of tax authorities and other state regulators which could have material adverse effect on debtor's business activity; significant impairment, forfeiture/damage/stealing of collateral; default of debtor's obligations (including payment default); other circumstances which may be possibly followed by default of debtor's obligations; The debt owed by retail clients is treated as having signs of impairment in the following cases: payment default; circumstances beyond the control of the debtor (accident, job loss, fire event, death and long period illness of the debtor or his close relatives, prosecution and etc.); and other circumstances suggesting that the debtor may not be able to perform their obligations. RSB's standard management procedure with respect to debt with signs of impairment includes, among others, distribution of notifications to clients; contacting the clients (via telephone or personal contact); analysis of circumstances beyond control of the client (subject to existence of objective reasons, it may be appropriate to cancel the penalties); restructuring of indebtedness; obtaining services of third parties regarding collection of debt; sale of RSB's rights to third parties and commencement of legal proceedings. IFRS Write-off Policy Loans are written off from the consolidated statement of financial position in accordance with the Group's internal policy. The Group's criteria for loans written off are based on the portfolio behaviour. The Group has the following criteria for writing off loans as uncollectible: loans identified as fraudulent, loans overdue more than 120 days with a principal amount less than RUB 50,000 and loans overdue more than 360 days regardless of principal amount. Retail Lending The principal body responsible for consideration of loan applications and allocation of credit limits is RSB's Credit Department. Verification of the credit quality of prospective borrowers consists of several stages such as checking of an application form and credit history, personal data verification and personal telephone interview. The lending policies specific to each RSB product line are described in greater detail below

142 Credit Cards Depending on the type of credit card, the credit limits are calculated in one of the ways described below. For the cross-sale credit cards offered to the borrowers who have already proved their creditworthiness by borrowing and successfully repaying a POS loan, the credit limit: (i) (ii) (iii) usually does not exceed RUB 75,000 for the borrowers in RSB's regional centres; is RUB 50,000 for the borrowers in RSB's representative offices; and is RUB 30,000 for the borrowers in the sub-divisions of RSB's representative offices. These limits may be decreased depending on the payment history under the borrower's original consumer loan. These limits allow the customer to make minimum monthly payments under the credit card agreement calculated on the basis of the scheduled monthly payment under the original consumer loan agreement. For new borrowers, RSB's direct-sale credit cards and RSB's co-branded credit cards, the credit limit is calculated: (i) (ii) automatically by RSB's scoring system where the requested amount does not exceed RUB 30,000 for a borrower with no credit history with RSB, RUB 100,000 for a borrower with a positive credit history with RSB, and RUB 10,000 for credit cards quickly issued in points of sale such as Visa Electron and Maestro (except for the credit cards issued in airports which have a credit limit up to RUB 30,000); and manually by RSB's loan officers for "Gold" credit cards and where the requested amount exceeds RUB 50,000 for "Classic" credit cards. When determining a borrower's credit limit, RSB focuses on a borrower's payments history under prior consumer loans and other factors. POS Loans At the first stage in the lending process, RSB considers an application form consisting of 50 different information fields (including 15 fields used in the scoring procedure) along with the borrower's identification document (typically, a passport). This information is entered into RSB's proprietary automated scoring system ("PASS") either by RSB loan officers or by authorised employees of its retail partners or outlets. RSB's PASS processes information provided by an applicant, including credit history, age, education, employment details, property ownership and income. Information supplied by the prospective borrower is verified as to the fullest extent possible through RSB's database which contains over 30 million entries. RSB has entered into access agreements with a number of Russian state institutions, entities and companies allowing it to verify certain information with respect to applicants through these third party databases. As a matter of practice, information supplied by applicants is verified (where possible) through an address database, a property database and a civil status database. In addition to various telephone, address and property directories, RSB also uses the databases of the three largest Russian credit bureaus: OJSC "National Bureau of Credit Histories", "United Bureau of Credit Histories" LLC, "Equifax Credit Services" LLC. To make the credit scoring procedure more efficient, RSB requires additional information, such as a personal income tax certificate and other RSB-approved forms. RSB allows its customers to have several outstanding loans to RSB at the same time; however, their aggregate value and aggregate monthly payment may not exceed the total credit limit and maximum monthly payment, respectively, assigned to the client by PASS or manually

143 RSB's PASS operates 24 hours a day, seven days a week, and processes approximately 40,000 applications daily. In July 2012, RSB implemented new lending limits in its POS lending segment. The limits (i.e. the maximum amount and the terms of the POS loans) became diversified on the basis of the type of goods purchased by RSB's clients. Personal Loans RSB's two-stage personal loan application process applies stricter pre-scoring standards than for its consumer loans as well as longer verification times. For example, a personal loan application has a minimum age requirement as well as a minimum wait of one business day to verify information. First, an RSB employee conducts a personal interview and checks the applicant's employment history, proof of income and any other relevant information. A Moscow-based RSB credit officer subsequently verifies the applicant's contact information and credit history, and sets the credit limit. RSB evaluates its consumer lending portfolio on a regular basis by monitoring both the overall performance of each loan portfolio, the performance of each loan portfolio for each type of good financed as well as each particular consumer loan. RSB implements the following lending limits with respect to its personal loans segment: the maximum amount shall not exceed RUB 300,000 and the maximum term of the loan shall not exceed 3 years. However, the lending limits for personal loans to existing clients of RSB with a positive credit history are less stringent. An existing client of RSB with a positive credit history may: borrow up to a maximum amount of RUB 500,000 without providing collateral, up to a maximum term of 5 years; or borrow an amount exceeding RUB 500,000 with the provision of collateral, up to a maximum term of 5 years. Monitoring of Retail Loans The Credit Department is responsible for monitoring the retail credit operations (as a part of offering mass-market credit products such as POS loans and credit card loans) regarding due and full performance by retail clients of their obligations under the loan agreement. The retail credit operations are monitored by responsible departments of RSB. In particular, they: monitor the client's performance of his repayment obligations in accordance with the payment schedule; periodically (not less than quarterly) analyse the statistical data of the frequency of the clients' default, percentage of such defaulted obligations (in connection with the offering of massmarket products such as POS loans and credit card loans). The Risk Analysis and Control Department is responsible for monitoring efficiency and accuracy of reserves made as a result of retail credit operations. Retail Loan Collection RSB has created a multi-stage collection system that enables RSB to recover overdue loans more efficiently. RSB's loan collection system involves the following steps and procedures: First Missed Minimum Monthly Payment. Following the first missed payment, a telephone call is made to the relevant borrower informing them of the missed payment and advising on the repayment

144 options. After a 15 days' grace period in addition, the borrower is charged a late payment fee in the amount of RUB 300 RSB has implemented a new system of speech control supported by Cisco and Verint. This system analyses the phone calls between the RSB's credit managers and clients during the process of loan collection. Two Missed Minimum Monthly Payments. In case of a borrower's failure to make two sequential payments, a follow-up call is made advising the borrower of the possible consequences of nonpayment. RSB's representative visits the borrower at home in order to support the follow-up call mentioned above and assess the reasons for the default by the borrower. In addition, the borrower is charged a late payment fee of RUB 500. Three Missed Minimum Monthly Payments. In case of three consecutive missed payments by the borrower, the borrower is also contacted in person and informed about the possibility of issuing a final statement requiring repayment of all outstanding principal amount, accrued interest and other amounts payable within 30 days. In addition, the borrower is charged a late payment fee of RUB 1,000. Four Missed Minimum Monthly Payments. In case of four consecutive missed payments by the borrower, a final statement is sent to the relevant borrower and a telephone call is made informing the borrower about the possibility of litigation and a daily penalty of 0.2 per cent. of the total indebtedness, which is charged from the due date stated in the final statement. In addition, the borrower is charged a late payment fee of RUB 2,000. Assessment. Loans which remain overdue for more than 90 days (and in respect of which a final statement was sent to the relevant borrower) are reviewed by RSB's analysts (who are monitored by the Compliance Control Department) who are authorised (1) to reschedule the loans, or (2) to classify the loans as non-recoverable in accordance with existing policy taking into account the outstanding indebtedness and expediency of collection procedures, or (3) to classify the loan as recoverable either through litigation (normally where the amount exceeds RUB 100,000) or through transfer to the Pre- Litigation Collection division of RSB (normally where the amount does not exceed RUB 100,000), or (4) to classify the loan as a fraud case to be processed through a criminal court. Assignment. Loans that remain due but unpaid for 120 days but are still considered collectible are passed to the Collection Department formed within the Credit Department of RSB. The Collection Department is engaged both in the pre-litigation and litigation debt collection procedures. Overdue loans remain in the Collection Department or in the Fraud Investigation Group for one year. After that, if overdue loans are not collected, RSB writes them off or sells to the debt collection agencies under long-term agreements. Corporate Lending and Operations with Financial Institutions The Credit Committee is responsible for establishing exposure limits on a case-by-case basis with respect to corporate borrowers and financial institutions (on the basis of supporting documentation supplied by the Corporate Business Division and Financial Institutions Department, respectively, and the Risk Control Department). In order to manage the credit risk exposure of corporate loans and financial market instruments, RSB implements a system of internal credit ratings with a comprehensive estimate of the current financial standing of a borrower, its industry, cash flow, financial outcome, terms of transaction and credit history as a means to assess RSB's ability to assume additional credit exposure. Monitoring of Corporate Loans The Corporate Business Division with assistance of the Risk Analysis and Control Department, Security Department and Legal Department, controls and monitors the status of corporate credit operations. In particular: the Corporate Business Division monitors the proper use of originated loans, due and full

145 performance by the borrower/pledgor/guarantor of its obligations, condition and safety of collateral; the Risk Analysis and Control Department periodically analyse (not less than quarterly) the borrower's financial condition; RSB's departments (mainly, the Corporate Business Division, Security Department, Risk Analysis and Control Department and Legal Department) collect and analyse any information regarding the borrower (including industry risks, reputation, and relationship with other banks). Monitoring of Operations with Financial Institutions The Risk Analysis and Control Department with assistance of the Financial Institutions Department, Financial Markets Department, Security Department and Legal Department, controls and monitors the status of operations with financial institutions. In particular: the Financial Markets Department permanently monitors the adequacy of transactional rates as compared to markets rates and due and full performance by the counterparty of its obligations. It also collects and analyses any information regarding the counterparty (reputation, relationship with other banks, change of control, shareholder and etc.); the Risk Analysis and Control Department monitors compliance with established limits. It also monitors the counterparty's financial position (monthly with respect to Russian banks and annually with respect to foreign banks) and updates (not less than annually) the limits established in RSB. Corporate Loan Collection As the portion of corporate loans in RSB's loan portfolio is relatively small, the collection of corporate loans is performed on case-by-case basis. Generally, the procedures include contacting RSB's corporate clients (which is performed by the credit managers) and initiating the legal proceedings in order to collect the outstanding dept and enforce the security (which is performed by the Legal Department). Insurance Risk The Group is exposed to insurance risk, which is the risk that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. For a portfolio of insurance contracts where the theory of probabilities is applied to pricing and reserving, the principal risk that the insurance company faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year from the estimate established using actuarial techniques. Factors that aggravate insurance risk include a lack of risk diversification in terms of the type and amount of risk, the geographical location and the type of policyholder base covered. Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected pervasively by a change in any subset of the portfolio. RSI has developed its insurance underwriting strategy to diversify the gender, age and geography of insurance risks accepted and within each of these categories to achieve a sufficiently large population to reduce the variability of the expected outcome

146 Market Risks RSB takes on exposure to market risks which arise from open interest rate and currency positions as well as its fixed income securities, all of which are exposed to market volatility. Key market risk management processes are intended to prevent potential considerable one-off losses that may have critical implications for RSB. Market risks are assessed by RSB using, among others, the stress testing procedures. RSB has limited proprietary trading operations. It has mismatches in its positions that arise generally due to the lending in Roubles and significant borrowings in U.S. Dollars. RSB manages the positions through hedging operations, matching, or controlled mismatching. The general principles of RSB's market risk management policy are set out by the ALCO. The goal of RSB's market risk management is to limit and reduce the amount of possible losses on open market positions that may be incurred by RSB due to negative changes in currency exchange rates and interest rates. The ALCO manages market risks by establishing limits on possible losses for each type of operation and the Risk Analysis and Control Department and the Financial Markets Department monitor compliance with such limits. Some of RSB's methods of managing risk are based upon its use of observed historical market behaviour. As a result, these methods may not predict future risk exposures, which could be significantly greater than the historical measures indicate. RSB manages its market risk through sub-limits for types of exposures to various types of fixed income securities and position limits for issuers and individual instruments. Limits on fixed income securities are approved by the Credit Committee based on analysis performed by the Risk Analysis and Control Department. RSB uses mark-to-market analysis and sensitivity analysis to measure its market risk. Currency Risk RSB is exposed to fluctuations in prevailing foreign currency exchange rates on its consolidated financial position, results of operations and cash flows. RSB's currency risk is calculated as an aggregate of open positions of RSB and is limited by CBR mandatory guidelines requiring that RSB's standalone open foreign exchange in any single currency be not more than 10 per cent. of its net equity and open foreign exchange in all currencies be not more than 20 per cent. of its net equity (all figures based on RSB statutory accounts). Within these limitations, the open positions are controlled by setting value-at-risk limits (established by the ALCO) with respect to current market fluctuations. The open positions are also tested on different stress scenarios which include both historic and hypothetical events. RSB's open currency positions are managed by the Financial Markets Department on a daily basis. The ALCO sets open currency position limits with respect to both overnight and intra-day positions and stop-loss limits. Compliance with these limits and the CBR open position limits is monitored on a daily basis by the Risk Analysis and Control Department. In order to hedge its foreign exchange risk, RSB enters into spot foreign exchange transactions, including currency swaps, with the largest Russian banks and international banks. The tables below present, on a consolidated basis, RSB's exposure to foreign currency exchange rate risk as of 30 June 2012 and 31 December 2011, 2010 and Included in the table are RSB's assets and liabilities, categorised by currency (the analysis includes only monetary assets and liabilities; nonmonetary assets and liabilities are not considered as posing any material currency risk)

147 Monetary financial assets As of 30 June 2012 Monetary financial liabilities Derivatives (1) Net position (2) (in millions of Roubles) RUB ,228 (147,630) (17,886) 13,712 U.S.$... 16,235 (33,449) 13,571 (3,643) EURO... 1,432 (6,648) 5, Other... 6,496 (2,956) (1,249) 2,291 Total ,391 (190,683) (27) 12,681 Monetary financial assets As of 31 December 2011 Monetary financial liabilities Derivatives (1) Net position (2) (in millions of Roubles) RUB ,302 (118,501) (18,510) 14,291 U.S.$... 10,899 (30,081) 15,055 (4,127) EURO... 2,085 (5,870) 3, Other... 5,048 (1,896) (406) 2,746 Total ,334 (156,348) 98 13,084 As of 31 December 2010 Monetary financial assets Monetary financial liabilities Derivatives (1) Net position (2) (in millions of Roubles) RUB ,847 (70,312) (25,194) 16,341 U.S.$... 5,579 (31,911) 22,308 (4,024) EURO... 1,428 (4,483) 2,992 (63) Other... 1,458 (613) Total ,312 (107,319) ,099 As of 31 December 2009 Monetary financial assets Monetary financial liabilities Derivatives (1) Net position (2) (in millions of Roubles) RUB ,644 (55,772) (31,862) 22,010 U.S.$... 17,119 (49,159) 29,981 (2,059) EURO... 2,080 (3,728) 2, Other (28) Total ,297 (108,687) ,906 (1) Derivatives represent the fair value of the respective currency at the reporting date that RSB agreed to buy (positive amount) or sell (negative amount) (all amounts by currency are stated gross) before netting of positions and payments with the counterparty. (2) The net total represents fair value of the currency derivatives

148 The following table represents sensitivities of profit and loss and equity to reasonably possible changes in exchange rates applied at the reporting date provided that all other variables held constant: Impact on profit or loss As of 30 June 2012 As of 31 December 2011 Impact on equity (in millions of Roubles) Impact on profit or loss Impact on equity U.S.$ strengthening by 10 %... (364) (364) (413) (413) U.S.$ weakening by 10 % Euro strengthening by 10 % Euro weakening by 10 %... (32) (32) (17) (17) As of 31 December 2010 As of 31 December 2009 Impact on profit or loss Impact on equity (in millions of Roubles) Impact on profit or loss Impact on equity U.S.$ strengthening by 10 %... (402) (402) (206) (206) U.S.$ weakening by 10 % Euro strengthening by 10 %... (6) (6) Euro weakening by 10 % (53) (53) The exposure was calculated only for monetary balances denominated in currencies other than the functional currency of the respective entity of RSB. Interest Rate Risk RSB is exposed to interest rate risk, principally as a result of lending at fixed interest rates, in amounts and for periods which differ from those of term borrowings at fixed interest rates. Interest margins on assets and liabilities having different maturities may increase as a result of changes in market interest rates. RSB manages its interest rate risk by maintaining an interest rate margin (net interest income as a percentage of average total interest-earning assets) sufficient to cover operational expenses and risk premium. For the period of six months ended 30 June 2012, RSB's net interest margin was 18.7 per cent. For the years ended 31 December 2011 and 2010, RSB's net interest margin was 18.9 per cent. and 18.6 per cent., respectively. The ALCO sets ranges of interest rates for different maturities at which RSB may place assets and attract liabilities with and without approvals. Compliance with the interest rate policy is monitored by the Treasury Department and the Finance Department (which prepares weekly interest rate risk reports submitted to the ALCO). In the absence of an effective market for hedging, RSB normally seeks to match its interest rate positions. For the period of six months ended 30 June 2012, RSB's interest income was RUB 22,782 million and its interest expense was RUB 7,486 million, resulting in net interest income of RUB 15,296 million. For the years ended 31 December 2011 and 2010, RSB's interest income was RUB 32,776 million and RUB 28,432 million and its interest expense was RUB 9,959 million and RUB 8,923 million, resulting in net interest income of RUB 22,817 million and RUB 19,509 million, respectively. The table below summarises RSB's exposure to interest rate risks as of 30 June 2012 and 31 December 2011, 2010 and The table presents the aggregated amounts of RSB's financial assets and liabilities at carrying amounts, categorised by the earlier of contractual interest repricing or maturity dates

149 Demand and less than 1 months From 1 to 3 months From 3 to 6 months From 6 to 12 months More than 1 year Total 30 June 2012 (in millions of Roubles) Total financial assets... 64,685 24,409 31,523 52,973 29, ,393 Total financial liabilities... 47,995 15,721 42,867 40,195 43, ,718 Net interest sensitivity gap at 30 June ,690 8,688 (11,344) 12,778 (14,137) 12, December 2011 Total financial assets... 34,927 44,787 25,449 38,896 25, ,442 Total financial liabilities... 36,505 21,419 40,696 26,644 31, ,358 Net interest sensitivity gap at 31 December (1,578) 23,368 (15,247) 12,252 (5,711) 13, December 2010 Total financial assets... 25,231 17,134 22,638 38,809 16, ,312 Total financial liabilities... 24,143 15,988 20,678 26,217 20, ,319 Net interest sensitivity gap at 31 December ,088 1,146 1,960 12,592 (3,793) 12, December 2009 Total financial assets... 26,934 14,314 31,180 32,596 24, ,297 Total financial liabilities... 12,406 14,734 15,109 44,308 22, ,687 Net interest sensitivity gap at 31 December ,528 (420) 16,071 (11,712) 2,143 20,610 All of RSB's debt instruments reprice within five years except for RUB denominated subordinated loans due 2019 and Financial liabilities of the group are sensitive to market fluctuations in interest rates. The Group has both fixed interest rate and floating rate liabilities. For sensitivity analysis the Group has not considered future reinvestments of current long-term financing. Risk Testing The Bank runs stress testing to assess potential impact on the Bank's financial position by a number of external negative factors that are associated with extraordinary, but probable events and that, in general, cannot be forecast using statistical methods. The stress testing of the financial result of the Bank's portfolio represents a principal analytical tool that enables assessment of potential losses of the Bank from potential abrupt changes in the economic situation. RSB runs regular integrated audits of the risk management system for compliance with the requirements of supervisory agencies and internal regulations, for reliability of the information system, accuracy and reliability of risk assessment and management methods and models applied. Geographical Risk Concentration The following table sets out the geographical concentration of RSB's financial assets and liabilities as of 30 June 2012 and 31 December 2011, 2010 and As of 30 June 2012 Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents... 11,445 3, ,325 Mandatory cash balances with the CBRF... 1, ,895 Securities at fair value through profit or loss... 29, ,

150 As of 30 June 2012 Russia OECD Non OECD Total (in millions of Roubles) Due from other banks Loans and advances to customers , , ,790 Investment securities available for sale... 11,569 4,863-16,432 Other financial assets... 4, ,450 Total financial assets ,194 8,409 5, ,866 Non-financial assets... 12, ,911 Total assets ,751 8,409 5, ,777 Liabilities Due to other banks... 5,047 3, ,015 Customer accounts , , ,836 Debt securities in issue... 15,850 4,708-20,558 Subordinated debt... 9,851 13,147-22,998 Other financial liabilities... 3, ,311 Total financial liabilities ,472 22,732 3, ,718 Non-financial liabilities... 6, ,017 Total liabilities ,489 22,732 3, ,735 Net balance sheet position... 38,262 (14,323) 2,103 26,042 Credit related commitments... 43, ,977 As of 31 December 2011 Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents... 13,729 3, ,266 Mandatory cash balances with the CBRF... 1, ,380 Securities at fair value through profit or loss... 22, ,789 Due from other banks ,605 Loans and advances to customers , , ,753 Investment securities available for sale... 11,555 2,711-14,266 Other financial assets... 4, ,227 Total financial assets ,150 7,432 4, ,286 Non-financial assets... 11, ,835 Total assets ,631 7,432 5, ,121 Liabilities Due to other banks , ,311 Customer accounts , , ,479 Debt securities in issue... 10,659 4, ,748 Subordinated debt... 9,666 12,896-22,562 Other financial liabilities... 3, ,258 Total financial liabilities ,472 22,518 2, ,358 Non-financial liabilities... 4, ,667 Total liabilities ,139 22,518 2, ,025 Net balance sheet position... 39,492 (15,086) 2,690 27,096 Credit related commitments... 28, ,518 As of 31 December 2010 Russia OECD Non OECD Total

151 (in millions of Roubles) Assets Cash and cash equivalents... 8,728 2, ,392 Mandatory cash balances with the CBRF... 1, ,222 Securities at fair value through profit or loss... 17, ,568 Due from other banks Loans and advances to customers... 80,743-1,187 81,930 Investment securities available for sale... 11, ,657 Other financial assets... 2, ,503 Total financial assets ,132 2,818 1, ,785 Non-financial assets... 9, ,270 Total assets ,056 2,818 2, ,055 Liabilities Due to other banks Customer accounts... 62, ,890 Debt securities in issue... 7,361 13,678-21,039 Subordinated debt... 9,660 12,210-21,870 Other financial liabilities... 1, ,061 Total financial liabilities... 80,060 26, ,319 Non-financial liabilities... 2, ,746 Total liabilities... 82,806 26, ,065 Net balance sheet position... 49,250 (23,819) 1,559 26,990 Credit related commitments... 20, ,070 As of 31 December 2009 Russia OECD Non OECD Total (in millions of Roubles) Assets Cash and cash equivalents... 10,732 1, ,555 Mandatory cash balances with the CBRF... 1, ,263 Securities at fair value through profit or loss... 15, ,491 Due from other banks Loans and advances to customers... 92, ,985 Investment securities available for sale Other financial assets... 5, ,931 Total financial assets ,363 2, ,297 Non-financial assets... 10, ,808 Total assets ,085 2, ,105 Liabilities Due to other banks... 15, ,673 Customer accounts... 26, ,835 Debt securities in issue... 9,729 32,995-42,724 Subordinated debt... 10,131 12,114-22,245 Other financial liabilities ,210 Total financial liabilities... 62,980 45, ,687 Non-financial liabilities... 1, ,876 Total liabilities... 64,856 45, ,563 Net balance sheet position... 72,229 (43,358) ,542 Credit related commitments... 22, ,072 Assets, liabilities and credit-related commitments have generally been based on the country in which the counterparty is located. Balances with Russian counterparties actually outstanding to/from offshore companies of these Russian counterparties are allocated to the caption "Russia". Cash on hand

152 and premises and equipment have been allocated based on the country in which they are physically held. Liquidity Risks RSB is also exposed to liquidity risk, arising out of mismatches between the maturities of RSB's assets and liabilities which may result in RSB being unable to meet its obligations in a timely manner. RSB is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan drawdowns, guarantees and from margin and other calls on cash settled derivative instruments. RSB's short-term liquidity position is managed by the Financial Markets Department through interbank lending and reduction of its accounts balances. Structural (i.e. medium- and long-term) liquidity is monitored by the ALCO through weekly liquidity gap reports which include three-month projections. RSB seeks to maintain a stable funding base comprising primarily amounts due to other banks, debt securities in issue and corporate and retail customer deposits and invests the funds in diversified portfolios of liquid assets, in order to be able to respond quickly to unforeseen liquidity requirements. The liquidity management of RSB requires considering the level of liquid assets necessary to settle obligations as they fall due; maintaining access to a range of funding sources; maintaining funding contingency plans and monitoring its liquidity ratios against regulatory requirements. RSB calculates liquidity ratios on a daily basis in accordance with the requirement of the CBR. These ratios are: Instant liquidity ratio (N2), which is calculated as the ratio of highly-liquid assets to liabilities payable on demand. The ratio was 27.9 at 30 June The ratio was at 42.7, 51.7 and 58.9 at 31 December 2011, 2010 and 2009, respectively. The period-to-period increases were principally due to the increases in RSB's term deposits and customer accounts, which in Russia may be withdrawn by invididuals at any time. The statutory minimum required ratio is Current liquidity ratio (N3), which is calculated as the ratio of liquid assets to liabilities maturing within 30 calendar days. The ratio was 89.7 at 30 June The ratio was 121.0, 92.3 and at 31 December 2011, 2010 and 2009, respectively. The statutory minimum required ratio is Long-term liquidity ratio (N4), which is calculated as the ratio of assets maturing after one year to regulatory capital and liabilities maturing after one year. The ratio was 32.5 at 30 June The ratio was 29.9, 22.0 and 30.7 at 31 December 2011, 2010 and 2009, respectively. The statutory maximum allowed ratio is RSB does not maintain cash resources to meet all of these needs, as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The liquidity risk is managed by the ALCO. The Financial Markets Department receives information about the liquidity profile of RSB's financial assets and liabilities. The Financial Markets Department then provides for an adequate portfolio of short-term liquid assets, largely made up of short-term liquid trading securities, deposits with banks and other inter-bank liabilities, to ensure that sufficient liquidity is maintained within the Group as a whole. The daily liquidity position is monitored and regular liquidity stress testing under a variety of scenarios covering both normal and more severe conditions is performed by the Financial Markets Department. RSB's principal sources of funding are customer accounts, subordinated loans and debt instruments

153 (including bonds, promissory notes, asset-backed securities, loan participation notes and interbank loans). Since 2009 RSB has significantly changed his funding strategy by increasing the share of sources that are independent from the capital markets, particularly retail current accounts and term deposits. For further information, see "Business History Effect of the Global Financial and Economic Crisis Diversification of Funding Base". In accordance with Russian legislation, term deposits of individuals may be withdrawn at any time. The tables below present liabilities by their remaining contractual maturity. The amounts disclosed in the maturity tables are the contractual undiscounted cash flows, including gross finance lease obligations (before deducting future finance charges), prices specified in deliverable forward agreements to purchase financial assets for cash, contractual amounts to be exchanged under gross settled currency swaps, gross loan commitments and financial guarantees. Such undiscounted cash flows differ from the amount included in the consolidated statement of financial position while thus is based on discounted cash flows. Net settled derivatives are included at the net amounts expected to be paid. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the reporting date. Foreign currency payments are translated using the spot exchange rate at the reporting date. The maturity analysis of undiscounted financial liabilities at 30 June 2012 and 31 December 2011, 2010 and 2009 is as follows: Demand and less than 1 month From 1 to 3 months As of 30 June 2012 From 3 to 12 months From 12 months to 5 years Over 5 years (in millions of Roubles) Liabilities Due to other banks ,939 6,590 2,591-11,121 Customer accounts... 46,031 12,825 71,169 9, ,202 Debt securities in issue ,131 7,195 18,434-26,769 Subordinated debt ,246 18,729 11,883 32,263 Other financial liabilities... 2,038 1, ,311 Derivative liabilities -Inflow... 16, ,479 -Outflow... (16,520) (16,520) Loss provision Total potential future payments for financial obligations... 48,403 17,216 86,525 49,102 11, ,148 Contingences and commitments Undrawn credit commitments... 33, ,873 Guarantees and letters of credit... 10, ,104 Total potential future payments for financial obligations, contingencies and commitments... 92,380 17,216 86,525 49,102 11, ,125 Total Demand and less than 1 month From 1 to 3 months As of 31 December 2011 From 3 t o 12 months From 12 months to 5 years Over 5 years (in millions of Roubles) Liabilities Due to other banks ,268 3,535-6,431 Customer accounts... 33,990 16,509 54,337 9, ,078 Debt securities in issue ,663 6,097-18,652 Total

154 Subordinated debt ,554 18,914 12,044 32,592 Other financial liabilities... 2,078 1, ,258 Derivative liabilities -Inflow... (3,752) (3,752) -Outflow... 3, ,762 Loss provision Total potential future payments for financial obligations... 37,407 18,047 69,950 37,911 12, ,389 Contingences and commitments Undrawn credit commitments... 23, ,680 Guarantees and letters of credit... 4, ,838 Total potential future payments for financial obligations, contingencies and commitments... 65,925 18,047 69,950 37,911 12, ,907 Demand and less than 1 month From 1 to 3 months As of 31 December 2010 From 3 to 12 months From 12 months t o 5 years Over 5 years (in millions of Roubles) Liabilities Due to other banks Customer accounts... 23,300 12,867 25,337 3,683-65,187 Debt securities in issue ,928 17,694 1,486-22,108 Subordinated debt ,709 13,253 19,719 34,760 Other financial liabilities ,061 Derivative liabilities -Inflow... (1,828) (1,828) -Outflow... 1, ,832 Loss provision Total potential future payments for financial obligations... 24,194 16,362 45,035 18,498 19, ,820 Contingences and commitments Undrawn credit commitments... 18, ,972 Guarantees and letters of credit... 2, ,098 Total potential future payments for financial obligations, contingencies and commitments... 45,264 16,362 45,035 18,498 19, ,890 Total Demand and less than 1 month From 1 to 3 months As of 31 December 2009 From 3 to 12 months From 12 months to 5 years Over 5 years (in millions of Roubles) Liabilities Due to other banks... 2, , ,977 Customer accounts... 9,988 5,846 10,279 2,636-28,749 Debt securities in issue ,489 20,933-47,032 Subordinated debt ,827 7,699 27,934 37,460 Other financial liabilities ,210 Derivative liabilities Total

155 -Inflow... (93) (93) -Outflow Loss provision Total potential future payments for financial obligations... 12,503 7,173 52,618 31,298 27, ,532 Contingences and commitments Undrawn credit commitments... 17, ,390 Guarantees and letters of credit... 4, ,682 Total potential future payments for financial obligations, contingencies and commitments... 34,575 7,173 52,618 31,298 27, ,604 Payments in respect of gross settled forwards will be accompanied by related cash inflows. Customer accounts are classified in the above analysis based on contractual maturities. However, in accordance with Russian Civil Code, individuals have a right to withdraw their deposits prior to maturity if they forfeit their right to accrued interest. RSB does not use the above undiscounted maturity analysis to manage liquidity. Instead, RSB monitors expected maturities that may be summarised as of 30 June 2012 and 31 December 2011, 2010 and 2009 as follows. Demand and less than 1 month From 1 to 3 months As of 30 June 2012 From 3 t o 12 month s From 12 months to 5 years Over 5 years (in millions of Roubles) Assets Cash and cash equivalents... 15, ,325 Mandatory cash balances with the CBRF... 1, ,895 Securities at fair value through profit or loss... 29, ,976 Due from other banks Loans and advances to customers... 13,903 23,055 77,815 25, ,790 Investment securities available for sale ,215 10,217-16,432 Other financial assets... 2,920 1, ,450 Total financial assets... 64,352 24,409 84,829 36, ,866 Liabilities Due to other banks ,903 5,931 2,155-10,015 Customer accounts... 45,922 12,609 67,404 7, ,836 Debt securities in issue ,877 14,563-20,558 Subordinated debt ,181 14,319 7,095 22,998 Other financial liabilities... 2,038 1, ,311 Total financial liabilities... 48,319 15,909 80,422 38,973 7, ,718 Net liquidity surplus/(gap)... 16,033 8,500 4,407 (2,828) (6,964) 19,148 Cumulative liquidity surplus... 16,033 24,533 28,940 26,112 19,148 Total As of 31 December 2011 Demand and less than 1 month From 1 to 3 months From 3 t o 12 month s From 12 months to 5 years Over 5 years Total (in millions of Roubles)

156 Assets Cash and cash equivalents... 18, ,266 Mandatory cash balances with the CBRF... 1, ,380 Securities at fair value through profit or loss , ,789 Due from other banks , ,605 Loans and advances to customers... 11,751 20,824 62,083 18, ,753 Investment securities available for sale ,290 12,645-14,266 Other financial assets... 2,473 1, ,227 Total financial assets... 34,671 44,787 64,972 31, ,286 Liabilities Due to other banks ,773 2,872-5,311 Customer accounts... 33,871 16,281 51,505 7, ,479 Debt securities in issue ,076 5,259-15,748 Subordinated debt ,479 14,049 6,955 22,562 Other financial liabilities... 2,078 1, ,258 Total financial liabilities... 36,505 18,017 64,869 30,012 6, ,358 Net liquidity surplus/(gap)... (1,834) 26, ,701 (6,812) 19,928 Cumulative liquidity surplus... (1,834) 24,936 25,039 26,740 19,928 Demand and less than 1 month From 1 to 3 months As of 31 December 2010 From 3 t o 12 month s From 12 months to 5 years Over 5 years (in millions of Roubles) Assets Cash and cash equivalents... 11, ,392 Mandatory cash balances with the CBRF... 1, ,222 Securities at fair value through profit or loss ,728 14, ,568 Due from other banks Loans and advances to customers.. 10,786 13,540 46,236 11, ,930 Investment securities available for sale ,600-11,657 Other financial assets... 1, ,503 Total financial assets... 24,746 17,134 61,932 22, ,785 Liabilities Due to other banks Customer accounts... 23,270 12,641 23,787 3,192-62,890 Debt securities in issue ,894 16,797 1,348-21,039 Subordinated debt ,617 9,696 10,479 21,870 Other financial liabilities ,061 Total financial liabilities... 24,143 16,066 42,395 14,236 10, ,319 Net liquidity surplus/(gap) ,068 19,537 8,497 (10,239) 19,466 Cumulative liquidity surplus ,671 21,208 29,705 19,466 Total As of 31 December 2009 Demand and less From 1 to 3 From 3 t o From 12 months to Over 5 years Total

157 than 1 month months 12 month s 5 years (in millions of Roubles) Assets Cash and cash equivalents... 12, ,555 Mandatory cash balances with the CBRF... 1, ,263 Securities at fair value through profit or loss ,803 3,023-15,491 Due from other banks Loans and advances to customers... 10,197 13,245 48,722 20, ,985 Investment securities available for sale Other financial assets... 2, , ,931 Total financial assets... 26,404 14,314 64,306 24, ,297 Liabilities Due to other banks... 2, , ,673 Customer accounts... 9,906 5,582 9,239 2,108-26,835 Debt securities in issue ,469 24,360 9,891-42,724 Subordinated debt ,724 5,897 14,527 22,245 Other financial liabilities ,210 Total financial liabilities... 12,406 14,831 49,027 17,896 14, ,687 Net liquidity surplus/(gap)... 13,998 (517) 15,279 6,240 (14,390) 20,610 Cumulative liquidity surplus... 13,998 13,481 28,760 35,000 20,610 Management believes that in spite of a significant number of customer accounts being on demand, diversification of these deposits by number and type of depositors and the past experience of RSB would indicate that these customer accounts provide a long-term and stable source of funding for RSB. In accordance with Russian legislation, term deposits of individuals may be withdrawn at any time. Operational Risk Operational risk is the risk of loss resulting from personnel errors, inadequate or failed internal procedures, personnel or information system related factors, or from external events. The operational risks RSB faces include, among others, damage to property, disruptions of operations or IT systems, or irregular execution of banking transactions or other set banking processes. Operational risk management is carried out in accordance with the CBR requirements and recommendations (including maintenance of capital adequate to cover operational risk), which in most instances govern core banking transactions and processes in a detailed way, and RSB's internal policies for operational risk management and assessment, which are also consistent with the CBR requirements and recommendations. Operational risk management controls at RSB include, among others, separation of duties of the business units, monitoring staff, as well as defining responsibilities and collective decision-making (or multi-level review) for "risk-sensitive" transactions or critical internal processes; limits on functions and responsibilities of employees; overall regulation of business processes; maintaining preventive controls to reduce operational risks; implementation of measures ensuring information protection and restricted access to information systems; physical security of RSB's premises and restricted access to employee work areas; reduction of employee-related risks, including establishing criteria for hiring and background checks, staff training and automation of processes and controls; internal control of compliance with the rules and procedures applicable to operations, risk limits, information security and business continuity in emergency; improvements in the audit procedures and quality control over the automated operations and hardware; various insurance programmes and improvement of staff professionalism throughout all organisational levels. Follow-up control procedures for all accounting

158 and treasury operations are carried out on the day following the controlled operation. RSB obtains third-party insurance to cover against operational risks that it believes are significant to its business and cannot be fully managed by internal controls, subject to commercially acceptable rates. RSB's insurance coverage includes the insurance of risks of damage and/or irreparable loss and/or theft with respect to RSB's premises, movable property (including ATMs), cash (held within cash desks, ATMs), vehicles and third-party liability for damages caused thereby. Where internal controls or insurance coverage prove inadequate, RSB relies on the sufficiency and sustainability of its regulatory and economic capital for the ultimate coverage of potential operational (and other) risks. Anti-Money Laundering and Sanctions Programmes Compliance RSB's anti-money laundering measures are based on the relevant Russian legislation and the CBR regulations, and are designed to detect and prevent money laundering and terrorist financing. See "The Banking Sector and Banking Regulation in Russia - Russian Banking Regulation - Regulation of Anti-Money Laundering and Terrorist Financing". Mandatory internal control checks are conducted by RSB's Internal Control Service which directly reports to the Chairman of the Management Board. External control is provided by the CBR. The internal security department is primarily responsible for anti-money laundering compliance. RSB has procedures and operative documents aimed at preventing money laundering and terrorist financing, including a general anti-money laundering policy and internal control procedures and rules on counteracting money laundering activities. RSB regularly conducts employee education and training programmes to strengthen their awareness and skills to counteract money laundering activities. RSB has internal procedures in place for the due diligence of its customers in accordance with applicable regulatory requirements, as well as information systems for monitoring compliance with anti-money laundering regulations. Anti-money laundering procedures include "know-your-customer" procedures, requiring clear identification of customers, verification of their identity, assessment of whether they are involved in money laundering and maintenance of their records. If a risk of particular customers being involved in money laundering is determined to be significant, such customers' activities are monitored regularly and more closely. RSB reports certain transactions to the Federal Service for Financial Monitoring (Rosfinmonitoring), where required by the anti-money laundering regulations effective in Russia. The Group has business relating to countries that are (or whose nationals are) subject to foreign sanctions programmes, such as those administered by the EU and the United States (the "Sanctions Programmes"), including Ukraine. RSB does not believe that the Group's dealings with counterparties subject to the Sanctions Programmes are material to the Group's business, financial condition or results of operations, and such dealings represented a negligible part of the Group's assets and revenues as at, and for both the year ended 31 December 2011 and the six months ended 30 June The Group has implemented systems designed to ensure that any business does not violate Sanctions Programmes or domestic regulations, but RSB can provide no assurance that such systems will be effective or that materially adverse consequences will not result from any violation of applicable law. The Group seeks to cease to conduct business with customers if it believes there is a risk of such customers being involved in money laundering and/or terrorist financing, or if dealings with such customers present unacceptable risks under applicable Sanctions Programme

159 MANAGEMENT The management of RSB is separated into various levels and sub-levels, each responsible for different aspects of RSB's overall activities. The highest level of management, and the ultimate decision-making body, is the General Shareholders' Meeting. This is followed by the Board of Directors, which is responsible for the general management of RSB, including strategy coordination and general supervision. The Board of Directors elects the Management Board (which is the collective executive body of RSB) and the Chairman of the Management Board (which is the sole executive body of RSB). The Chairman of the Management Board and the Management Board are jointly responsible for RSB's day-to-day operations. A brief description of each of the General Shareholders' Meeting, the Board of Directors, the Management Board and the Chairman of the Management Board is set out below. RSB's internal business divisions report to the Chairman of the Management Board. This structure is also set out below. General Shareholders' Meeting The General Shareholders' Meeting is the supreme governance body of RSB. RSB's General Shareholders' Meetings are convened by RSB's Board of Directors at least once a year. Extraordinary General Shareholders' Meetings may be convened upon the request of the Board of Directors, the internal audit commission, the external auditor or a shareholder holding at least 10 per cent. of voting shares of RSB. The following matters can only be dealt with by the General Shareholders' Meeting and may not be delegated to other governing bodies of RSB: alteration of RSB's charter (save for amendments related to the establishment of representative offices and branches); reorganisation and liquidation of RSB, appointment of a liquidation committee and approval of interim and final liquidation balance sheets; determination of the composition of the Board of Directors, election of its members and early termination of their powers; determination of the amount, nominal value and type of authorised shares; increases and reductions in RSB's share capital; appointment of RSB's auditor; approval of dividends; approval of the annual statutory accounting and reports; approval of RSB's participation in financial groups, holdings and associations; and certain other matters provided for by the applicable legislation and under RSB's charter. The number of votes that each shareholder has in the General Shareholders' Meetings corresponds to the number of RSB's voting shares owned by such shareholder. According to RSB's charter, each RSB voting share provides the shareholder with the right of one vote

160 Board of Directors The Board of Directors is responsible for general management matters, with the exception of those matters that are designated by law and by RSB's charter as being the exclusive responsibility of the General Shareholders' Meeting. RSB's Board of Directors meets as necessary, but not less than once a quarter, and makes its decisions, generally, by simple majority of those present provided that a quorum of at least half of the elected members of the Board of Directors is present. Members of the Board of Directors are elected by the General Shareholders' Meeting and may be re-elected an unlimited number of times. The Board of Directors has the power to decide, among others, the following matters: the determination of RSB's priority business areas; the formation and early termination of the executive bodies of RSB and the Head of Internal Control Service of RSB; decisions on application of the reserves and other similar funds of RSB; the recommendations on distribution of dividends and the payment procedure thereof; the approval of interested party transactions and major transactions in the cases provided for by the applicable legislation; establishment of new branches and representative offices; and certain other matters provided for by the applicable legislation and RSB's charter. RSB's charter requires the Board of Directors to comprise at least five members. There are currently five members of RSB's Board of Directors. The current members of the Board of Directors were elected by RSB shareholders at a General Shareholders' Meeting held in April The name, position and certain other information for each member of the Board of Directors of RSB are set out below. Name Title Member of the Board Since Roustam Tariko... Chairman July 1999 Dmitry Levin... Member November 2001 Alexander Zelenov... Member March 2010 Larissa Tikhonova... Member May 2008 Mihail Khmel... Member May 2008 As of the date of this Base Prospectus, as far as RSB is aware, members of RSB's Board of Directors do not hold positions with companies outside of RSB, its subsidiaries and affiliates, unless otherwise indicated below. Roustam Tariko (age 50) has been the Chairman of RSB's Board of Directors since May 2000 and a member of RSB's Board of Directors since July Previously, Mr. Tariko was the General Director of RSC and a member of the Board of Directors of ATB. Dmitry Levin (age 47) has been a member of RSB's Board of Directors since November He is also the Chairman of RSB's Management Board and a member of the board of directors of Debt Collection Agency Ltd. Mr. Levin previously headed RSB's Interbank Operations and Financial Markets Department. Prior to joining RSB, Mr. Levin headed the Capital Markets Department of OJSC Mezhcombank

161 Alexander Zelenov (age 57) has been a member of RSB's Board of Directors since March He has been working for VEB as a Director of Financial Institutions Department since Since 2009, he has also been a member of the board of directors of OJSC "Belvnesheconombank" (Belarus), CJSC "Prominvestbank" (Ukraine), CJSC Bank GLOBEX and OJSC NOMOS Bank. Larissa Tikhonova (age 45) has been a member of RSB's Board of Directors since May Mrs. Tikhonova is also administrative director of Roust Trading. Mihail Khmel (age 50) has been a member of RSB's Board of Directors since May Previously Mr. Khmel has been working in different positions within the compliance structures of the Group. He has also been a chief executive officer of OOO "Aviatsionniye Tekhnologii" (construction company) since The business address of RSB's Board of Directors is 36, Tkatskaya street, Moscow, , Russia. Management Board and Chairman of the Management Board The day-to-day management of RSB (with the exception of those matters that are allocated by the applicable legislation and RSB's charter to the exclusive authority of the Board of Directors or the General Shareholders' Meeting) is carried out by the Chairman of the Management Board and the Management Board. The Management Board is RSB's collective executive body and controls the implementation of resolutions of the General Shareholders' Meeting and the Board of Directors. The Management Board is accountable to both the Board of Directors to which it reports on a regular basis and the General Shareholders' Meeting. Members of the Management Board are elected by the Board of Directors and may be re-elected an unlimited number of times. The Management Board meets as necessary and makes its decisions by simple majority provided that a quorum of at least half of the elected members of the Management Board is present. The Chairman of the Management Board is RSB's chief executive officer and ex officio acts on behalf of RSB in relations with third parties. The name, position and certain other information for each member of the Management Board (and not previously set out under the preceding section entitled "Board of Directors") is set out below. Unless otherwise indicated, members of RSB's Management Board do not hold positions with companies outside of the Group. Name Title Member of the Board Since Dmitry Levin... Chairman March 2000 Vladimir Pyshny... Member, First Deputy Chairman December 2002 Nikolay Itskov... Member November 2008 Denis A. Gubanov... Member June 2002 Andrey P. Frolov... Member March 2002 Irina V. Khaustova... Member March 2000 Ivan V. Glazachev... Member April 2012 Vladimir Pyshny (age 42) has been a member of RSB's Management Board since December He is also a Director of the Network Development Department and a Senior Vice-President of RSB. Previously, Mr. Pyshny was the head of the New Banking Technologies Department at Elbim-Bank. Nikolay Itskov (age 44) has been a member of RSB's Management Board since November He is also a Director of the Financial Department of RSB. Prior to joining RSB, Mr. Itskov was a Financial Director of the Renaissance Capital-Financial Consultant

162 Denis Gubanov (age 41) has been a member of RSB's Management Board since June He is also director of the Credit Department and a Senior Vice-President of RSB. Previously, Mr. Gubanov worked at RSB's Retail Operations Department. Andrey Frolov (age 50) has been a member of RSB's Management Board since March He is also a Director of the Information Technology Department and a Senior Vice-President of RSB. Prior to joining RSB, Mr. Frolov was a deputy director of the IT functional block of JSCB Investment Banking Group NIKOil. Mr. Frolov was also involved in the reorganisation of ATB in Irina Khaustova (age 50) has been a member of RSB's Management Board since March She is also Director of the Operations and Technology Department and a Senior Vice-President of RSB. Prior to that, Ms. Khaustova was a Director of the Settlements Department of OJSC Mezhcombank. Ivan Glazachev (age 35) has been a member of RSB's Management Board since April He is also Director of the Acquiring Department of RSB. Mr. Glazachev joined RSB in 2007 and previously was a Deputy Director of the Acquiring Department of RSB. The business address of the Management Board is 36, Tkatskaya street, Moscow, Russia. Allocation of Responsibilities Within the joint responsibility of RSB's management and shareholders are such areas as strategy, development of business plans, strategic alliances and key executive appointments. RSB's management cannot adopt decisions within these areas without prior consultations with RSB's shareholders. Responsibility for overseeing the various sub-levels of RSB's day-to-day management is divided between the Chairman of the Management Board (the "Chairman") and the First Deputy Chairman of the Management Board (the "First Deputy Chairman"). The Chairman is responsible for overseeing 22 departments and nine divisions combining operational and administrative activities. These include the Operations and Technology Department (which manages the cash desk, retail, currency control, settlements, financial monitoring and cash collection operations of RSB), the Financial Institutions Division (which is responsible for correspondent banking, structured finance and depository services), the Corporate Business Divison and the Public Relations Division. The "Credit" Business Unit, which consists of two departments and two divisions and is also under the supervision of the Chairman, is responsible for RSB's reporting functions, consumer finance operations, and risk monitoring and analysis. The "Credit Cards" Business Unit, which is also under the supervision of the Chairman, is responsible for RSB s credit card business. Furthermore, the Chairman oversees the Finance Department (responsible for risk control, reporting, financial planning and accounting), the Acquiring Department, the "Information and Technology" Business Unit (responsible for software development, corporate technology, data processing and hardware administration), the Security Department, the Legal Department, the Financial Markets Department, Human Resources Department and the Office of the Management Board. Finally, the Chairman supervises the activities of the Internal Control Department (which is responsible for controlling risks associated with all aspects of RSB's operations). The First Deputy Chairman is responsible for overseeing "Distribution" Business Unit consisting of six departments and two divisions, combining operational, administrative and marketing activities. The principal operational departments under the First Deputy Chairman's supervision are the Regional Development Department (which is responsible for the development of RSB's trading network) and the Branch Network Department (which is responsible for regional sales branches and representative offices). Furthermore, the First Deputy Chairman oversees the Advertising and Marketing Department (responsible for advertising, research, product development and communications development) as well as the "Ukraine" division

163 Remuneration The total compensation paid or accrued to the key management personnel amounted to RUB 1,166 million, RUB 714 million and RUB 261 million for the years ended 31 December 2011, 2010 and 2009, respectively. Conflicts of Interest There are no potential conflicts of interest between any duties to the issuing entity of the members of the Board of Directors or the Management Board and their private interests and/or other duties. Internal Business Structure of RSB The following chart sets out RSB's management and internal business divisions

164 General Shareholders Meeting Board of Directors Management Board Business Unit Credit Cards Chairman of the Management Board First Deputy Chairman of the Management Board Distribution Business Unit Cards Products Department Customer Service Department Portfolio Management and CRM Department Cards Products Sales Department Credit Cards Advertising Department Regional Development Department Retail Products Department Branch Network Department Consumer Credit Department Prepaid Products Department Division Ukraine Advertising and Marketing Department Division Mini-Offices Office of the Management Board Finance Department Internal Control Department Financial Institutions Division Administrative Department Public Relations Division Legal Department Financial Markets Department HR Department Acquiring Department Private Banking Division Corporate Business Division Security Department Operations & Technology Department Client Investment Division New Banking Technologies Department Client Service Department Brand Management Division Settlement Business Department Information and Technology Business Unit Collections Department Research and Analysis Division Credit Business Unit Risk Management Division IT Department Banking Technology Department Operational Department IT Security Division Innovation Lab Information Division Credit Department

165 SHAREHOLDING As of 30 June 2012, RSB's authorised and issued share capital was RUB 1,272,883,000 comprised of 1,272,883 ordinary registered shares with a nominal value of RUB 1,000 each. In addition, RSB has 6,263,117 authorised but unissued shares (comprised of 4,383,117 ordinary shares and 1,880,000 preference shares). The following table sets out RSB's principal shareholders as of the date of this Base Prospectus. Shareholder Number of Shares Percentage The Closed Joint Stock Company "Russian Standard" Corporation" (RSC) (1)(2)... 1,144, Limited Liability Company "Russian Standard-Invest" (RSInv) (3) , The Closed Joint Stock Company with 100% foreign investments "ROUST INCORPORATED" (ROUST) (1)... 1, Others Total... 1,272, (1) (2) (3) RSC and ROUST are subsidiaries of Roust Trading, a company incorporated in Bermuda with its registered address at Milner House, 18 Parliament Street, Hamilton, Bermuda, which is indirectly controlled by Mr. Roustam Tariko. In July 2010, RSB acquired per cent. of RSC's share capital for RUB 6,473 million. RSInv is a subsidiary of RSB incorporated in Russia with its registered address at 36, Tkatskaya street, , Moscow, Russia. RSInv is a per cent. subsidiary of RSB. Rights of RSB's Shareholders Under RSB's charter and Russian legislation, RSB's shareholders have the right to: participate and vote in the General Shareholders' Meeting on all the matters which fall under the competence of the meeting; approve and receive dividends; receive a liquidation quota upon any liquidation of RSB; have access to information and documents relating to RSB's activities and financial condition; elect and be elected into RSB's management bodies; demand, in cases stipulated by Russian legislation and RSB's charter, that part or all of a shareholder's shares be repurchased by RSB; and exercise other rights provided by the applicable legislation and RSB's charter. The rights of RSB's shareholders to dispose of their shares are limited by the pre-emptive rights of RSB and other shareholders

166 RELATED PARTY TRANSACTIONS Under IAS 24, Related Party Disclosures, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. RSB enters into banking transactions in the normal course of business with (a) its ultimate controlling shareholder Mr. Roustam Tariko and companies controlled by him, and (b) directors and management of RSB. These transactions include extending loans and trade finance, accepting deposits, provision of agency services, settlements and foreign exchange transactions. The following tables set forth the outstanding balances with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading, and RSB's management as of 30 June 2012 and 31 December 2011, 2010 and Parent company As of 30 June 2012 As of 31 December 2011 Entities under common control Key management personnel Parent company Entities under common control Key management personnel (in millions of Roubles) Loans and advances to customers Loans and advances (contractual interest rate 9 12 per cent.) , Investment securities available for sale Shares available for sale (14.5 per cent. immediate parent shares purchased from its parent) , Customer accounts Term deposits (contractual interest rates: per cent., on deposits denominated in Roubles; per cent. in deposits denominated in USD or EUR) Current accounts (non-interest bearing) Debt securities in issue Bonds guaranteed by Principal Shareholder... 4, Promissory notes Subordinated debts Subordinated debt ,

167 Parent company As of 31 December 2010 As of 31 December 2009 Entities under common control Key management personnel Parent company Entities under common control Key management personnel (in millions of Roubles) Loans and advances to customers Loans and advances (contractual interest rate 9 12 per cent.) , , Investment securities available for sale (2) Shares available for sale (14.5 per cent. immediate parent shares purchased from its parent)... 6, Customer accounts Term deposits (3) Current accounts (non-interest bearing) Debt securities in issue Bonds guaranteed by Principal Shareholder... 7, ,439 - Subordinated debts Subordinated debt, received from Principal Shareholder... 5, , (1) (2) (3) As of 31 December 2009, contractual interest rate amounted to 9 per cent. on the loans denominated in USD or EUR and 9-15 per cent. on the loans denominated in Roubles. In July 2010, RSB acquired 14,499 per cent. of RSC's (its immediate parent) share capital for RUB 6,473 million. As of 31 December 2009, contractual interest rate amounted to 9 per cent.-17 per cent. on deposits denominated in RR, and 7.5 per cent. to 12.5 per cent. on deposits denominated in USD or EUR. As of 31 December 2010, contractual interest rate amounted to per cent. to 17 per cent. on deposits denominated in Roubles and 4.25 per cent. to 12.5 per cent. on deposits denominated in USD or EUR. Other rights and obligations with related parties were as follows: As of 30 June As of 31 December Guarantees issued by the Group fully secured by promissory notes issued by the Bank Other guarantees issued by the Group ,086 Guarantees received by the Group The following table sets forth the income statement items associated with Roust Trading and its related companies as well as Roustam Tariko, the beneficial owner of Roust Trading, and RSB's management for the six months ended 30 June 2012 and 2011 and the years ended 31 December 2011, 2010 and

168 For the six months ended 30 June 2012 For the six months ended 30 June 2011 Parent company Entities under common control Key management personnel Parent company Entities under common control Key management personnel (in millions of Roubles) Interest income Loans and advances to customers Interest expense Customer accounts Subordinated debt Fee and commission income Guarantees and letters of credit For the year ended 31 December 2011 Parent company Entities under common control Key management personnel (in millions of Roubles) Interest income Loans and advances to customers Interest expense Customer accounts Subordinated debt For the year ended 31 December 2010 For the year ended 31 December 2009 Parent company Entities under common control Key management personnel Parent company Entities under common control Key management personnel (in millions of Roubles) Interest income Loans and advances to customers Interest expense Customer accounts Subordinated debt Fee and commission income Guarantees and letters of credit

169 THE ISSUER The Issuer, Russian Standard Finance S.A., was incorporated as a public limited liability company (société anonyme) on 31 March 2005 for an unlimited duration under the laws of the Grand Duchy of Luxembourg. The Issuer has its registered office at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg and telephone number The Issuer is registered with the Register of Commerce and Companies of Luxembourg under number B Its Articles of Incorporation have been published in the Mémorial C, Recueil des Sociétés et Associations (the "Mémorial") on 25 August 2005 (number 822) and amended on 23 July 2008 which have been published in the Mémorial on 17 March 2009 (number 581). The updated articles of incorporation of the Issuer may be inspected at the registered office of the Issuer. Corporate purpose of the Issuer The Issuer has been established as a special purpose vehicle for the purpose of issuing asset-backed securities. The corporate object of the Issuer, as described in Article 3 of its Articles of Incorporation is the granting of loans or other forms of financing directly or indirectly (e.g. including, but not limited to, by subscription of bonds, debentures, other debt instruments, advances, the granting of pledges or the issuing of other guarantees of any kind) to RSB. The Issuer may finance itself in whatever form including, without being limited to, through borrowing or through issuance of listed or unlisted notes and other debt instruments (e.g. including but not limited to bonds, notes, loan participation notes and subordinated notes) including under medium term note and commercial paper programmes. The Issuer may also: (a) (b) grant security for funds raised, including notes and other debt instruments issued, and for the obligations of the Issuer; and enter into all necessary agreements, including, but not limited to underwriting agreements, marketing agreements, management agreements, advisory agreements, administration agreements and other contracts for services, selling agreements, deposit agreements, hedging agreements, interest and/or currency exchange agreements and other financial derivative agreements, bank and cash administration agreements, liquidity facility agreements, credit insurance agreements and any agreements creating any kind of security interest. In addition to the foregoing, the Issuer can perform all legal, commercial, technical and financial investments or operation and in general, all transactions which are necessary or useful to fulfil its objects as well as all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above. Corporate administration The Directors (as defined in "-Management" below) have been appointed as directors (administrateurs) of the Issuer. Certain administrative and corporate services are provided to the Issuer by Deutsche Bank Luxembourg S.A. in its capacity as corporate administrator (société de domiciliation) pursuant to a domiciliation agreement. Share Capital As at the date of this Base Prospectus, the Issuer's issued share capital amounts to euro 31,000 divided into 310 registered shares with a par value of euro 100 each. All of the shares are fully paid up and issued

170 Shareholders The issued and outstanding shares in the Issuer's share capital are owned and controlled as follows: 309 shares by: Stichting Russian Standard Finance, a foundation (Stichting), established under the laws of The Netherlands, registered with the Amsterdam Chamber of Commerce under number and having its statutory office in the Netherlands at De entrée , 1101 HE Amsterdam. 1 share by: Stichting Participatie DITC Amsterdam a foundation (Stichting), established under the laws of The Netherlands, registered with the Amsterdam Chamber of Commerce under number and having its statutory office in the Netherlands at De entrée , 1101 HE Amsterdam. Management The Issuer is managed by its board of directors, who are appointed by the shareholders. The current directors ("Directors") of the Issuer are: (1) Mr. Daniel Bley, private employee, having his professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in (2) Ms. Heike Kubica, private employee, having her professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in (3) Ms. Anja Wunsch (formerly Lakoudi), private employee, having her professional address at 2, Boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg, appointed until the annual general meeting of the shareholders to be held in There are no potential conflicts of interest between the duties owed by the Directors to the Issuer and their private interests or other duties in the context of the Programme. Audit Committee In accordance with specific provisions provided for by Luxembourg law, the functions assigned to the Issuer's audit committee will be performed by the Issuer's board of Directors. The functions are to monitor the financial reporting process; the effectiveness of the Issuer's internal control, internal audit and, where applicable, risk management systems; the statutory audit of the annual accounts; and review and monitor the independence of the approved statutory auditor (réviseurs d'entreprises agréés), and in particular the provision of additional services to the Issuer. Subsidiaries The Issuer has no subsidiaries or affiliates. Real estate assets The Issuer does not own any real estate assets. Business year The business year of the Issuer begins on 1 January and ends on 31 December of each year

171 Domiciliation Agent Deutsche Bank Luxembourg S.A. is the domiciliation agent of the Issuer. Its duties include the provision of certain administrative and related services. Its appointment may be terminated by either party giving two months' prior written notice to the other party or it may be terminated with immediate effect by either party upon a serious breach of an administrative services and domiciliation agreement (which breach would include a material failure on the part of the parties to perform any of their legal or regulatory obligations under such agreement). Upon termination of the appointment of the domiciliation agent, the Issuer will appoint another company to act as the domiciliation agent. Deutsche Bank Luxembourg S.A. may (but is under no obligation to) assist the Issuer in identifying another administrator and will provide it with a list of at least three suitable service providers. Approved statutory auditor The approved statutory auditor (réviseur d'entreprises agréé) of the Issuer is FPS Audit S.à r.l. (formerly Fiduciaire Patrick Sganzerla S.à r.l.), having its registered office at 46, boulevard Grande-Duchesse Charlotte, L-1330 Luxembourg, Grand Duchy of Luxembourg and registered with the Register of Commerce and Companies of Luxembourg under number B , has been appointed to act as approved statutory auditor (réviseur d'entreprises agréé) until the annual general meeting of shareholders of the Issuer to be held in FPS Audit S.à r.l. is a member of the Institut des réviseurs d'entreprises. Principal Accounts of the Issuer The Issuer holds its principal accounts with Deutsche Bank AG, London Branch. The registered address of Deutsche Bank AG, London Branch is Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom. Deutsche Bank AG is an international investment bank with offices in more than 70 countries. It provides trustee, agent, SPV management and related services for financial structures and transactions. Loan Participation Notes In December 2005, the Issuer issued loan participation notes due December 2015 with a total nominal amount of U.S.$200 million, placed at nominal value and bearing a fixed interest rate of per cent. until December The interest rate for the period starting from December 2010 was set at 7.73 per cent. per annum. In December 2006, the Issuer issued loan participation notes due 2016 with a total nominal amount of U.S.$200 million placed at nominal value bearing interest of 9.75 per cent. until December The interest rate starting from December 2011 was set at per cent. per annum. Financial Statements Since its incorporation on 31 March 2005, the financial statements of the Issuer for the business year ended 31 December 2005 have been deposited with the Register of Commerce and Companies of Luxembourg on 13 November Any future published financial statements prepared by the Issuer (which will be in respect of the period ending on 31 December in each year) will be available from the Luxembourg Paying Agent. Financial statements are published by the Issuer on an annual basis and are audited by its approved statutory auditor FPS Audit S.à r.l. (formerly Fiduciaire Patrick Sganzerla S.à r.l.). The Issuer's audited financial statements as of and for the years ended 31 December 2011 and 2010 were approved by the annual general meeting of shareholders of the Issuer held on 24 May 2012 and 17 June 2011, respectively. Since 31 December 2011, there has been no material change in the Issuer's capitalisation, indebtedness, contingent liabilities or guarantees

172 Material Contracts Neither RSB nor the Issuer has entered into contracts outside the ordinary course of business and which could result in any member of the Group becoming subject to an obligation or entitlement that would be material to the Issuer's ability to meet its obligations to Noteholders in respect of the Notes

173 THE FACILITY AGREEMENT This Amended and Restated Facility Agreement is made on 26 September 2012 between: (1) JOINT STOCK COMPANY "RUSSIAN STANDARD BANK", a company established under the laws of the Russian Federation whose registered office is at 36 Tkatskaya Street, Moscow , Russian Federation ("RSB"); and (2) RUSSIAN STANDARD FINANCE S.A., a public limited liability company (société anonyme) established under the laws of the Grand Duchy of Luxembourg whose registered office is at 2, Bd. Konrad-Adenauer, L-1115 Luxembourg and registered with the Register of Commerce and Companies of Luxembourg under number B (the "Lender"). Whereas: (A) (B) (C) Pursuant to an amended and restated facility agreement dated 29 May 2012 (the "Original Amended and Restated Facility Agreement") the Lender, at the request of RSB, agreed to make available to RSB a loan facility. The parties hereto wish to amend and restate the Original Amended and Restated Facility Agreement as set out below. The Lender, at the request of RSB, agrees, inter alia, pursuant to this Facility Agreement (as defined in Clause 1.3.1) and any subordinated loan agreements to be entered into from time to time by the Lender and RSB (each a "Subordinated Loan Agreement"), to make available to RSB a loan (the "Facility") in the maximum amount of the Programme Limit (as defined below) on the terms and subject to the conditions of this Facility Agreement, as amended and supplemented in relation to each Loan (as defined below) by a loan supplement dated the relevant Closing Date substantially in the form set out in Schedule 1 thereto (each, a "Loan Supplement") or any Subordinated Loan Agreement; and It is intended that, concurrently with the extension of any Loan pursuant to this Facility Agreement, the Lender will issue certain loan participation notes in the same nominal amount and bearing the same rate of interest as such Loan. Now it is hereby agreed as follows: 1. Definitions and Interpretation 1.1 Definitions In this Facility Agreement (including the recitals), the following terms shall have the meanings q indicated: "Account" means an account in the name of the Lender with the Principal Paying Agent as specified in the relevant Loan Supplement. "Affiliate" has the meaning ascribed to it in Rule 405 under the Securities Act. "Agency" means any agency, authority, central bank, department, government, legislature, minister, official or public statutory person (whether autonomous or not) of, or of the government of, any state or supra-national body. "Agency Agreement" means the amended and restated paying agency agreement relating to the Programme dated 26 September 2012 between the Lender, RSB, the Trustee and the agents named therein, as may be amended or supplemented from time to time. "Arrangers" means Citigroup Global Markets Limited, Goldman Sachs International, J.P. Morgan Securities plc, UBS Limited and VTB Capital plc or any additional or replacement arranger appointed, and excluding any Arranger whose appointment has terminated pursuant

174 to the Dealer Agreement. "Auditors" means the auditors for the time being of the IFRS consolidated financial statements of the Group or, if they are unable or unwilling to carry out any action requested of them under this Facility Agreement, such other internationally recognised firm of accountants as may be approved in writing by the Lender for this purpose. "Authorised Signatory" means, in relation to RSB, any person who is duly authorised (in such manner as may be reasonably acceptable to the Lender) and in respect of whom the Lender has received a certificate signed by a director or another Authorised Signatory of RSB setting out the name and signature of such person and confirming such person's authority to act. "BIS Guidelines" means the guidelines on capital adequacy standards (including the constituents of capital included in the capital base, the risk weights by category for on-balance-sheet assets, the credit conversion factors for off-balance-sheet items, and the target standard ratio) for international banks contained in the July 1998 text of the Basel Capital Accord, published by the Basel Committee on Banking Supervision (as amended, updated or supplemented from time to time), without any amendment or other modification by any other Agency. "Business Day" means (save in relation to Clause 4) a day (other than a Saturday or Sunday) on which (a) banks and foreign exchange markets are open for business generally in the relevant place of payment, and (b) if on that day a payment is to be made in a Specified Currency other than euro hereunder, where payment is to be made by transfer to an account maintained with a bank in the Specified Currency, foreign exchange transactions may be carried on in the Specified Currency in the principal financial centre of the country of such Specified Currency and (c) if on that day a payment is to be made in euro hereunder, a day on which the TARGET System is operating and (d) in relation to a Loan corresponding to a Series of Notes to be sold pursuant to Rule 144A under the Securities Act, banks and foreign exchange markets are open for business generally in New York City. "Calculation Agent" means, in relation to a Loan, Deutsche Bank AG, London Branch, or any person named as such in the relevant Loan Supplement or any successor thereto. "Capital" means RSB s Capital as such term is defined in the BIS Guidelines. "Capital Stock" means, with respect to any person, any and all shares, interests, participations, rights to purchase, warrants, options, or other equivalents (however designated) of capital stock of a corporation and any and all equivalent ownership interests in a person other than a corporation; in each case whether now outstanding or hereafter used. "Central Bank" means the Central Bank of the Russian Federation. "Closing Date" means the date specified as such in the relevant Loan Supplement; "Day Count Fraction" has the meaning specified as such in the relevant Loan Supplement. "Dealer Agreement" means the amended and restated dealer agreement relating to the Programme dated 26 September 2012 between the Lender, RSB, the Arrangers and the other dealers appointed pursuant to it, as may be amended or supplemented from time to time. "Debt Collection Agency" means any debt collection agency established under the laws of the Russian Federation, Ukraine or any other jurisdiction. "Definitive Notes" means the definitive notes in fully registered form representing the Notes to be issued in limited circumstances pursuant to the Trust Deed

175 "Dollars", "$" and "U.S.$" means the lawful currency of the United States of America. "euro" or " " means the lawful currency of the member states of the European Union that adopted the single currency in accordance with the Treaty of Rome, as amended. "Event of Default" has the meaning assigned to such term in Clause 11.1 hereof. "Fee Side Letter" means the amended and restated fee side letter dated 26 September 2012 entered into between RSB, the Lender, the Trustee and the agents named therein in respect of the Programme. "Fixed Rate Loan" means a Loan specified as such in the relevant Loan Supplement. "Floating Rate Loan" means a Loan specified as such in the relevant Loan Supplement. "Global Notes" has the meaning assigned to it in the Trust Deed. "Group" means RSB and its Subsidiaries taken as a whole. "Guarantee" means any financial obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness or other obligation of any other person and any obligation, direct or indirect, contingent or otherwise, of such person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" will not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "IFRS" means International Financial Reporting Standards (formerly International Accounting Standards) issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (as amended, supplemented or re-issued from time to time). "Indebtedness" means any indebtedness, in respect of any person for, or in respect of, moneys borrowed or raised including, without limitation, any amount raised by acceptance under any acceptance credit facility; any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; any amount raised pursuant to any issue of shares which are expressed to be redeemable either on a compulsory basis or at the option of the shareholder; any amount raised under any other transaction (including, but without limitation to, any forward sale or purchase agreement) having the economic or commercial effect of a borrowing; and the amount of any liability in respect of any Guarantee or indemnity for any of the items referred to above. "Independent Appraiser" means any expert in the matter to be determined of international standing selected by RSB and approved by the Trustee (such approval not to be unreasonably withheld), provided, however, that such Independent Appraiser is not an Affiliate of the Group. "Interest Payment Date" means the date(s) specified as such in the relevant Loan Supplement, or, in the event of a prepayment in whole (but not in part) in accordance with Clauses 5.2 or 5.3 the date set for such redemption in respect of the Loan. "Interest Period" means each period beginning on (and including) an Interest Payment Date or, in the case of the first Interest Period, the Interest Commencement Date, and ending on

176 (but excluding) the next Interest Payment Date. "Lender Agreements" means the Dealer Agreement, this Facility Agreement, the Agency Agreement, the Principal Trust Deed and together with, in relation to each Loan, the relevant Subscription Agreement, Loan Supplement and Supplemental Trust Deed. "Lien" means any mortgage, pledge, encumbrance, easement, restriction, covenant, right-of-way, servitude, lien, charge or other security interest or adverse claim of any kind (including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction and any conditional sale or other title retention agreement or lease in the nature thereof). "Loan" means each loan to be made pursuant to, and on the terms specified in this Facility Agreement and the relevant Loan Supplement, and includes each Fixed Rate Loan and Floating Rate Loan. "Loan Agreement" means this Facility Agreement and (unless the context requires otherwise), in relation to a Loan, means this Facility Agreement as amended and supplemented by the relevant Loan Supplement. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or immediate prospects of RSB or any of its Material Subsidiaries; (b) RSB s ability to perform or comply with its obligations under the Loan Agreement or (c) the validity or enforceability of the Loan Agreement or the rights or remedies of the Lender thereunder. "Material Subsidiary" means any Subsidiary or Affiliate of RSB which (i) in accordance with IFRS, as consistently applied, would be included in the IFRS consolidated financial statements of the Group and (ii) at any given time: (a) (b) has gross income representing 10 per cent. or more of the consolidated gross income of the Group; or has total assets representing 10 per cent. or more of the consolidated total assets of the Group, in each case calculated on a consolidated basis in accordance with IFRS, as consistently applied. Compliance with the conditions set out in paragraphs (a) and (b) above shall be determined by reference to the latest audited or unaudited consolidated annual or, as the case may be, audited or unaudited consolidated interim financial statements of that Subsidiary and the latest audited consolidated annual or, as the case may be, audited or unaudited consolidated interim financial statements of the Group, provided however, that an Officers Certificate that a Subsidiary of RSB is or is not a Material Subsidiary, accompanied by a report by the Auditors addressed to the Directors of RSB as to proper extraction of the figures used in the Officers Certificate in determining the Material Subsidiaries of RSB and mathematical accuracy of the calculations shall, in the absence of manifest error, be conclusive and binding on all parties. "Moody s" means Moody s Investors Service, Inc. "Net Asset Value" means the amount by which the total value of the Group s consolidated assets exceeds the amount of its total consolidated liabilities, as defined in accordance with IFRS. "Noteholder" means, in relation to a Note, the person in whose name such Note is for the time being registered in the register of the noteholders Noteholders kept at the registered office of

177 the Lender in accordance with the provisions of the Luxembourg Law of 10th August 1915 on Commercial Companies, as amended (or, in the case of a joint holding, the first named holder thereof). "Notes" means the loan participation notes that may be issued from time to time by the Lender under the Programme in Series, each Series corresponding to a Loan and, in relation to a Loan, as defined in the relevant Loan Supplement. "Officers Certificate" means a certificate signed on behalf of RSB by two officers of RSB at least one of whom shall be the principal executive officer, principal accounting officer or principal financial officer of RSB, in a form similar to that set out in Schedule 2 hereto. "Original Financial Statements" means the most recent audited IFRS consolidated financial statements of the Group. "Permitted Liens" means: (a) any Lien over or affecting any asset acquired by a member of the Group after the date hereof and subject to which such asset is acquired, if: (i) (ii) (iii) such Lien was not created in contemplation of the acquisition of such asset by a member of the Group; the amount thereby secured has not been increased in contemplation of, or since the date of, the acquisition of such asset by a member of the Group; and such Lien is removed or discharged within three calendar months of the date of acquisition of such asset; (b) any Lien over or affecting any asset of any company which becomes a member of the Group after the date hereof, where such Lien is created prior to the date on which such company becomes a member of the Group, if: (i) (ii) (iii) such Lien was not created in contemplation of the acquisition of such company; the amount thereby secured has not been increased in contemplation of, or since the date of, the acquisition of such company; and such Lien is removed or discharged within three calendar months of such company becoming a member of the Group; (c) (d) any netting or set-off arrangement entered into by any member of the Group in the normal course of its banking arrangements for the purpose of netting debit and credit balances; any Lien upon, or with respect to, any present or future assets or revenues or any part thereof which is created pursuant to any securitisation of receivables, asset-backed financing (including covered bonds) or similar financing structure and whereby all payment obligations secured by such Lien or having the benefit of such Lien, are to be discharged solely from such assets or revenues, provided that the aggregate value of assets or revenues subject to such Lien when added to the aggregate value of assets or revenues which are the subject of any securitisation of receivables, asset-backed financing (including covered bonds) or similar financing structure permitted pursuant to Clause 10.3, does not, at any such time, exceed 30 per cent. of the loans and advances to customers, as determined at any time by reference to the most recent quarterly balance sheet of RSB prepared in accordance with IFRS;

178 (e) (f) (g) (h) (i) (j) (k) (l) (m) any title transfer or retention of title arrangement entered into by any member of the Group in the normal course of its trading activities on the counterparty's standard or usual terms; any Lien arising by operation of law and in the normal course of business, if such Lien is discharged within 10 days of arising; Liens incurred, or pledges and deposits in connection with workers' compensation, unemployment insurance and other social security benefits, and leases, appeal bonds and other obligations of like nature in the ordinary course of business; Liens for ad valorem, income or property taxes or assessments and similar charges which either are not delinquent or are being contested in good faith by appropriate proceedings for which RSB has set aside in its books of account reserves to the extent required by IFRS, as consistently applied; any Lien granted by any Subsidiary of RSB in favour of RSB; Liens upon, or with respect to, any present or future assets or revenues or any part thereof which is created pursuant to any Repo transaction; Liens arising pursuant to any agreement (or other applicable terms and conditions) which is standard or customary in the relevant market relating to the establishment of margin deposits and similar arrangements in connection with interest rate and foreign currency hedging operations; (i) bankers Lien in respect of deposit accounts, (ii) statutory landlords Lien, (iii) deposit to secure the performance of bids, trade contracts, government contracts, leases, statutory obligations, surety and appeal bonds, performance and return-of-money bonds or liabilities to insurance carriers under insurance or self-insurance arrangements and other obligations of like nature (so long as, in each case with respect to items described in sub-clauses (i), (ii) and (iii) above of this clause (l), such Lien (A) does not secure obligations constituting Indebtedness for borrowed money and (B) is incurred in the ordinary course of business), and (iv) Lien arising from any judgment, decree or other order which does not constitute an Event of Default; and any other Lien where the aggregate value of the assets or revenues subject to such Lien does not exceed U.S.$20,000,000. "person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, company, firm, trust, organisation, government, or any agency or political subdivision thereof or any other entity, whether or not having a separate legal personality. "Potential Event of Default" means any event which, after notice or passage of time or both, would be an Event of Default. "Principal Paying Agent" means Deutsche Bank AG, London Branch. "Principal Trust Deed" means the amended and restated principal trust deed dated 26 September 2012 between the Lender and the Trustee, as it may be amended or supplemented from time to time. "Programme" means the programme for the issuance of loan participation notes of the Lender. "Programme Limit" means U.S.$2,500,000,000 or its equivalent in other currencies, being the maximum aggregate principal amount of Notes that may be issued and outstanding at any

179 time under the Programme as may be increased in accordance with the Dealer Agreement. "Put Option", if applicable, means the put option granted to Noteholders pursuant to the relevant Loan Supplement and the Conditions of the relevant Series of Notes. "Put Settlement Date", if applicable, has the meaning given to it in the relevant Loan Supplement. "Rate of Interest" has the meaning assigned to such term in the relevant Loan Supplement. "Relevant Time" means, in relation to a payment in a Specified Currency, the time in the principal financial centre of such Specified Currency and, in relation to a payment in euro, Brussels time. "Repayment Date" has the meaning assigned to such term in the relevant Loan Supplement. "Repo" means a securities repurchase or resale agreement or reverse repurchase or resale agreement, a securities lending or rental agreement or any agreement relating to securities which is similar in effect to any of the foregoing and for the purposes of this definition, the term "securities" means any capital stock, share, debenture or other debt or equity instrument, or derivative thereof, whether issued by any public or private company, any government or Agency or instrumentality thereof or any supranational, international or multinational organisation. "Risk Weighted Assets" means the aggregate of the Group s consolidated balance sheet assets and off-balance sheet commitments, weighted for credit and market risk in accordance with the BIS Guidelines. "Roubles" means the lawful currency of the Russian Federation. "RSB Account" means an account in the name of RSB as specified in the relevant Loan Supplement for receipt of Loan funds. "Same-Day Funds" means funds for payment, in the Specified Currency as the Lender may at any time determine to be customary for the settlement of international transactions in the principal financial centre of the country of the Specified Currency or, as the case may be, euro funds settled through the TARGET System or such other funds for payment in euro as the Lender may at any time reasonably determine to be customary for the settlement of international transactions in Brussels of the type contemplated hereby. "Securities Act" means the U.S. Securities Act of "Series" means a series of Notes that (except in respect of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the same series number. "Specified Currency" means the currency specified as such in the relevant Loan Supplement. "Standard & Poor s" means Standard & Poor s Ratings Service, a division of The McGraw-Hill Companies, Inc. "Subscription Agreement" means the agreement specified as such in the relevant Loan Supplement. "Subsidiary" of any specified person means any corporation, partnership, joint venture, association or other business or entity, whether now existing or hereafter organised or acquired, (a) in the case of a corporation, of which more than 50 per cent. of the total voting power of the Voting Stock is held by such first-named person and/or any of its Subsidiaries

180 and such first-named person or any of its Subsidiaries has the power to direct the management, policies and affairs thereof; or (b) in the case of a partnership, joint venture, association, or other business or entity, with respect to which such first-named person or any of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise if (in each case) in accordance with IFRS, as consistently applied, such entity would be consolidated with the first-named person for financial statement purposes. "Supplemental Trust Deed" means a supplemental trust deed in respect of a Series of Notes which constitutes and secures, inter alia, such Series dated the relevant Closing Date and made between the Lender and the Trustee (substantially in the form set out in Schedule 9 of the Principal Trust Deed). "TARGET System" means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007, or any successor thereof. "Trust Deed" means the Principal Trust Deed as supplemented by the relevant Supplemental Trust Deed and specified as such in the relevant Loan Supplement. "Trustee" means Deutsche Trustee Company Limited, as trustee under the Trust Deed and any other trustee or trustees thereunder. "Voting Stock" means, in relation to any person, Capital Stock entitled (without the need for the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. 1.2 Other Definitions Unless the context otherwise requires, terms used in this Facility Agreement which are not defined in this Facility Agreement but which are defined in the Principal Trust Deed, the relevant Notes, the Agency Agreement, the Dealer Agreement or the relevant Loan Supplement shall have the meanings assigned to such terms therein. 1.3 Interpretation Unless the context or the express provisions of this Facility Agreement otherwise require, the following shall govern the interpretation of this Facility Agreement: All references to "this Facility Agreement" are references to this Amended and Restated Facility Agreement dated 26 September All references to "Clause" or "sub-clause" are references to a Clause or sub-clause of this Facility Agreement The terms "hereof", "herein" and "hereunder" and other words of similar import shall mean the relevant Loan Agreement as a whole and not any particular part hereof Words importing the singular number include the plural and vice versa All references to "taxes" include all present or future taxes, levies, imposts and duties of any nature and the terms "tax" and "taxation" shall be construed accordingly The table of contents and the headings are for convenience only and shall not affect the construction hereof Any reference herein to a document being in "agreed form" means that the document in question has been agreed between the proposed parties thereto, subject to any

181 amendments that such parties may agree upon prior to the Issue Date. 1.4 Amendment and Restatement 2. Loans The parties hereto agree that this Facility Agreement amends and restates the Original Amended and Restated Facility Agreement. Any Loans made on or after the date hereof shall have the benefit of this Facility Agreement. The amendments set out herein do not affect any Loans made prior to the date of this Facility Agreement. 2.1 Loans On the terms and subject to the conditions set forth herein and, as the case may be, in each Loan Supplement, the Lender hereby agrees to make available to RSB Loans in principal amounts which, when aggregated with the principal amounts advanced under any Subordinated Loan Agreement, will not exceed the total aggregate amount equal to the Programme Limit. 2.2 Purpose The proceeds of each Loan will be used for general banking purposes (unless otherwise specified in the relevant Loan Agreement), but the Lender shall not be concerned with the application thereof. 2.3 Separate Loans It is agreed that with respect to each Loan, all the provisions of this Facility Agreement and the Loan Supplement shall apply mutatis mutandis separately and independently to each such Loan and the expressions "Account", "Arrangement Fee", "Closing Date", "Day Count Fraction", "Interest Payment Date", "Loan Agreement", "Notes", "Rate of Interest", "Repayment Date", "Specified Currency", "Subscription Agreement" and "Trust Deed", together with all other terms that relate to such a Loan shall be construed as referring to those of the particular Loan in question and not of all Loans unless expressly so provided, so that each such Loan shall be made pursuant to this Facility Agreement and the relevant Loan Supplement, together comprising the Loan Agreement in respect of such Loan and that, unless expressly provided, events affecting one Loan shall not affect any other. 3. Drawdown 3.1 Drawdown On the terms and subject to the conditions set forth herein and, as the case may be, in each Loan Supplement, on the Closing Date thereof the Lender shall make a Loan to RSB and RSB shall make a single drawing in the full amount of such Loan. 3.2 Loan Arrangement Fee In consideration of the Lender s undertaking to make a Loan available to RSB, RSB hereby agrees that it shall, one Business Day before each Closing Date, pay to the Lender, in Same-Day Funds, an Arrangement Fee (as defined in the relevant Loan Supplement) in connection with the financing of such Loan. The total amount of the Arrangement Fee as increased by the front-end commissions, fees and expenses to be as specified in the relevant Loan Supplement. 3.3 Disbursement Subject to the conditions set forth herein and, as the case may be, in each Loan Supplement,

182 on each Closing Date the Lender shall transfer the full amount of the relevant Loan to the RSB Account specified in the relevant Loan Supplement. 3.4 Ongoing Fees and Expenses In consideration of the Lender establishing and maintaining the Programme and agreeing to make Loans to RSB, RSB shall pay on demand to the Lender as and when such payments are due an amount or amounts to reimburse the Lender for its expenses relating to its management and operation in servicing the Loans as set forth to RSB in an invoice from the Lender. 4. Interest 4.1 Rate of Interest for Fixed Rate Loans Each Fixed Rate Loan bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate(s) per annum (expressed as a percentage) equal to the applicable Rate of Interest. If a Fixed Amount or a Broken Amount is specified in the relevant Loan Supplement, the amount of interest payable on each Interest Payment Date will amount to the Fixed Amount or, if applicable, the Broken Amount so specified and in the case of the Broken Amount will be payable on the particular Interest Payment Date(s) specified in the relevant Loan Supplement. 4.2 Payment of Interest for Fixed Rate Loans Interest at the Rate of Interest shall accrue on each Fixed Rate Loan from day to day, starting from (and including) the Interest Commencement Date and thereafter from (and including) each Interest Payment Date, to (but excluding) the next Interest Payment Date and shall be paid in arrear by RSB to the Account not later than a.m. (Relevant Time) one Business Day prior to each Interest Payment Date. 4.3 Interest for Floating Rate Loans Interest Payment Dates: Each Floating Rate Loan bears interest on its outstanding principal amount from (and including) the Interest Commencement Date and thereafter from (and including) each Interest Payment Date, to (but excluding) the next Interest Payment Date at the rate per annum (expressed as a percentage) equal to the applicable Rate of Interest, which interest shall be paid in arrear by RSB to the relevant Account not later than a.m. (Relevant Time) one Business Day prior to each Interest Payment Date. Such Interest Payment Date(s) is/are either shown in the relevant Loan Supplement as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown in the relevant Loan Supplement, Interest Payment Date shall mean each date which falls the number of months or other period shown in the relevant Loan Supplement as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date Business Day Convention: If any date referred to in the relevant Loan Supplement that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (C) the Modified Following

183 Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day Rate of Interest for Floating Rate Loans: The Rate of Interest in respect of Floating Rate Loans for each Interest Accrual Period shall be determined in the manner specified in the relevant Loan Supplement and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is specified in the relevant Loan Supplement. (i) ISDA Determination for Floating Rate Loans Where ISDA Determination is specified in the relevant Loan Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (i), "ISDA Rate" for an Interest Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: (a) the Floating Rate Option is as specified in the relevant Loan Supplement; (b) (c) the Designated Maturity is a period specified in the relevant Loan Supplement; and the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified in the relevant Loan Supplement. For the purposes of this sub-paragraph (i), "Floating Rate", "Calculation Agent", "Floating Rate Option", "Designated Maturity", "Reset Date" and "Swap Transaction" have the meanings given to those terms in the ISDA Definitions. (ii) Screen Rate Determination for Floating Rate Loans Where Screen Rate Determination is specified in the relevant Loan Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent at or about the Relevant Time on the Interest Determination Date in respect of such Interest Accrual Period in accordance with the following: (a) if the Primary Source for Floating Rate is a Page, subject as provided below, the Rate of Interest shall be: (I) (II) the Relevant Rate (where such Relevant Rate on such Page is a composite quotation or is customarily supplied by one entity); or the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Page, in each case appearing on such Page at the Relevant Time on the Interest Determination Date;

184 (b) (c) if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph (a)(i) above applies and no Relevant Rate appears on the Page at the Relevant Time on the Interest Determination Date or if sub-paragraph (a)(ii) above applies and fewer than two Relevant Rates appear on the Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall be the arithmetic mean of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Interest Determination Date, as determined by the Calculation Agent; and if paragraph (b) above applies and the Calculation Agent determines that fewer than two Reference Banks are so quoting Relevant Rates, subject as provided below, the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) that the Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in respect of a Representative Amount of the Specified Currency that at least two out of five leading banks selected by the Calculation Agent in the Relevant Financial Centre of the country of the Specified Currency or, if the Specified Currency is euro, in Europe as selected by the Calculation Agent are quoting at or about the Relevant Time on the date on which such banks would customarily quote such rates for a period commencing on the Effective Date for a period equivalent to the Specified Duration (I) to leading banks carrying on business in Europe, or (if the Calculation Agent determines that fewer than two of such banks are so quoting to leading banks in Europe) (II) to leading banks carrying on business in the Relevant l Financial Centre; except that, if fewer than two of such banks are so quoting to leading banks in the Relevant Financial Centre, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date (after readjustment for any difference between any Margin, Rate Multiplier or Maximum or Minimum Rate of Interest applicable to the preceding Interest Accrual Period and to the relevant Interest Accrual Period). 4.4 Accrual of Interest Interest shall cease to accrue on each Loan on the due date for repayment unless payment is improperly withheld or refused, in which event interest shall continue to accrue (as well after as before judgment) at the applicable Rate of Interest to, but excluding, the date on which payment in full of the principal thereof is made. 4.5 Margin, Maximum/Minimum Rates of Interest, Rate Multipliers and Rounding If any Margin or Rate Multiplier is specified in the relevant Loan Supplement (either (x) generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with Clause 4.3 above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin or multiplying by such Rate Multiplier, subject always to the next paragraph If any Maximum or Minimum Rate of Interest is specified in the relevant Loan Supplement, then any Rate of Interest shall be subject to such maximum or minimum, as the case may be

185 4.5.3 For the purposes of any calculations required pursuant to a Loan Agreement (unless otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up), save in the case of yen, which shall be rounded down to the nearest yen. For these purposes "unit" means the lowest amount of such currency that is available as legal tender in the country or countries of such currency. 4.6 Calculations The amount of interest payable in respect of any Loan for any period shall be calculated by multiplying the product of the Rate of Interest and the outstanding principal amount of such Loan by the Day Count Fraction, unless an Interest Amount (or a formula for its calculation) is specified in the relevant Loan Supplement in respect of such period, in which case the amount of interest payable in respect of such Loan for such period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable in respect of such Interest Period shall be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods. 4.7 Determination and Notification of Rates of Interest and Interest Amounts As soon as practicable after the Relevant Time on each Interest Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, it shall determine such rate and calculate the Interest Amounts in respect of such Floating Rate Loan for the relevant Interest Accrual Period, obtain such quotation or make such determination or calculation, as the case may be, and cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to RSB, the Trustee, the Lender, each of the Paying Agents and any other Calculation Agent appointed in respect of such Floating Rate Loan that is to make a further calculation upon receipt of such information. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to sub-clause 4.3.2, the Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made with the consent of RSB and the Lender by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If such Floating Rate Loan becomes due and payable under Clause 11, the accrued interest and the Rate of Interest payable in respect of such Floating Rate Loan shall nevertheless continue to be calculated as previously in accordance with this Clause. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties. 4.8 Determination or Calculation by Trustee If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Period or any Interest Amount in relation to a Floating Rate Loan in accordance with the terms of this Agreement and Clause 4.3 above, the Lender and RSB agree that such determination or calculation may be made by or at the direction of the Trustee or any agent of the Trustee. The Trustee shall incur no liability to any party in respect of such determination or calculation and such determination or calculation shall be binding on all parties in the absence of manifest error. 4.9 Definitions In this Clause 4, unless the context otherwise requires, the following defined terms shall have

186 the meanings set out below: "Benchmark" has the meaning specified in the relevant Loan Supplement; "Business Day" means: (i) (ii) (iii) in the case of a Specified Currency other than euro, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such Specified Currency; and/or in the case of euro, a day on which the TARGET system is operating (a "TARGET Business Day"); and/or in the case of a Specified Currency and/or one or more Business Centres a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Business Centre(s) or, if no currency is indicated, generally in each of the Business Centres. "Day Count Fraction" means, in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period, the "Calculation Period"): (i) (ii) (iii) (iv) if "Actual/Actual" or "Actual/Actual - ISDA" is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); if "Actual/365 (Fixed)" is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 365; if "Actual/360" is specified in the relevant Loan Supplement, the actual number of days in the Calculation Period divided by 360; if "30/360", "360/360" or "Bond Basis" is specified hereon, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: Day Count Fraction = [ x (Y Y )] + [ 30 x (M M )] (D2 D1) 360 where: "Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls; "Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; "M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; "M2" is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls; "D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and

187 "D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30; (v) if "30E/360" or "Eurobond Basis" is specified hereon, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: Day Count Fraction = [ x (Y Y )] + [ 30 x (M M )] (D2 D1) 360 where: "Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls; "Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; "M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; "M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; "D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and "D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; (vi) if "30E/360 (ISDA)" is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: Day Count Fraction = [ x (Y Y )] + [ 30 x (M M )] (D2 D1) 360 where: "Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls; "Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; "M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; "M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; "D1" is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and "D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not

188 the Maturity Date or (ii) such number would be 31, in which case D2 will be 30; (vii) if "Actual/Actual-ICMA" is specified in the relevant Loan Supplement: (a) (b) If the Calculation Period is equal to or shorter than the Determination Period during which it falls, the number of days in the Calculation Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and if the Calculation Period is longer than one Determination Period, the sum of: (I) (II) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and (the number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year where: "Determination Period" means the period from and including a Determination Date in any year to but excluding the next Determination Date. "Determination Date" means the date specified in the relevant Loan Supplement or, if none is so specified, the Interest Payment Date. "Effective Date" means, with respect to any Floating Rate to be determined on an Interest Determination Date, the date specified as such in the relevant Loan Supplement or, if none is so specified, the first day of the Interest Accrual Period to which such Interest Determination Date relates. "Interest Accrual Period" means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date. "Interest Amount" means the amount of interest payable, and in the case of Fixed Rate Loans, means the Fixed Amount or Broken Amount, as the case may be. "Interest Commencement Date" means the Closing Date or such other date as may be specified in the relevant Loan Supplement. "Interest Determination Date" means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such in the relevant Loan Supplement or, if none is so specified, (i) the first day of such Interest Accrual Period if the Specified Currency is Sterling or (ii) the day falling two Business Days in London and for the Specified Currency prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor euro or (iii) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is euro. "Interest Period" means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date

189 "Interest Period Date" means each Interest Payment Date unless otherwise specified herein. "ISDA Definitions" means the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc., unless otherwise specified in the relevant Loan Supplement. "Page" means such page, section, caption, column or other part of a particular information service (including, but not limited to, Reuters Markets 3000 ("Reuters") and Telerate ("Telerate")) as may be specified for the purpose of providing a Relevant Rate, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to that Relevant Rate. "Reference Banks" means the institutions specified as such in the relevant Loan Supplement or, if none, four major banks selected by the Calculation Agent in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that are most closely connected with the Benchmark (which, if EURIBOR is the relevant Benchmark, shall be Europe). "Relevant Financial Centre" means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the financial centre as may be specified as such in the relevant Loan Supplement or, if none is so specified, the financial centre with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR, shall be Europe) or, if none is so connected, London. "Relevant Rate" means the Benchmark for a Representative Amount of the Specified Currency for a period (if applicable or appropriate to the Benchmark) equal to the Specified Duration commencing on the Effective Date. "Relevant Time" means, with respect to any Interest Determination Date or Repayment Date, the local time in the Relevant Financial Centre specified in the relevant Loan Supplement or, if no time is specified, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Specified Currency in the interbank market in the Relevant Financial Centre and for this purpose "local time" means, with respect to Europe as a Relevant Financial Centre, hours, Brussels time. "Representative Amount" means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the amount specified as such in the relevant Loan Supplement or, if none is specified, an amount that is representative for a single transaction in the relevant market at the time. "Specified Duration" means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the duration specified in the relevant Loan Supplement or, if none is specified, a period of time equal to the relevant Interest Accrual Period, ignoring any adjustment pursuant to sub-clause Calculation Agent and Reference Banks The Lender (failing which RSB) shall procure that there shall at all times be specified no less than four Reference Banks (or such other number as may be required) with offices in the Relevant Financial Centre and appointed one or more Calculation Agents if provision is made for them in a Loan Supplement and for so long as any amount remains outstanding under a Loan Agreement. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank, then the Lender shall (with the prior approval of RSB) appoint another Reference Bank with an office in the Relevant Financial Centre to act as such in its place. Where more than one Calculation Agent is appointed in respect of a Loan,

190 references in the relevant Loan Agreement to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the relevant Loan Agreement. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Period or Interest Accrual Period or to calculate any Interest Amount, or to comply with any other requirement, the Lender shall (with the prior approval of RSB) appoint a leading bank or investment banking firm engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid. Both RSB and the Lender agree that such successor Calculation Agent will be appointed on the terms of the Agency Agreement in relation to the relevant Loan Agreement. 5. Repayment and Prepayment 5.1 Repayment Except as otherwise provided herein and in the applicable Loan Supplement, RSB shall repay each Loan not later than a.m. (Relevant Time) one Business Day prior to the Repayment Date therefor. 5.2 Prepayment in the event of Taxes or Increased Costs If, as a result of the application of or any amendments or clarification of, or change (including a change in interpretation or application) in, the double tax treaty between the Russian Federation and Luxembourg or the laws or regulations of the Russian Federation or Luxembourg or of any political sub-division thereof or any authority therein having power to tax or the enforcement of the security provided for in any Trust Deed, RSB would thereby be required to make or increase any payment due pursuant to a Loan Agreement as provided in Clauses 6.2 or 6.3 (other than, in each case, where the increase in payment is in respect of any amounts due or paid pursuant to Clauses 3 and 13), or if (for whatever reason) RSB would have to or has been required to pay additional amounts pursuant to Clause 8, and in any such case such obligation cannot be avoided by RSB taking reasonable measures available to it, then RSB may (without premium or penalty), upon not less than 30 days notice to the Lender (which notice shall be irrevocable), prepay the Loan relating to such Loan Agreement in whole (but not in part) on any Interest Payment Date, in the case of a Floating Rate Loan, or at any time, in the case of a Fixed Rate Loan. Prior to giving any such notice in the event of an increase in payment pursuant to Clause 6.2, RSB shall deliver to the Lender an Officers Certificate confirming that it would be required to increase the amount payable, supported by an opinion of an independent tax adviser addressed to the Lender. 5.3 Prepayment in the event of Illegality If, at any time after the date of the relevant Loan Agreement, the Lender reasonably determines that it is or would be unlawful or contrary to any applicable law, regulation, regulatory requirement or directive of any Agency of any state or otherwise for the Lender to allow all or part of the Loan relating to such Loan Agreement or the corresponding Series of Notes to remain outstanding or for the Lender to maintain or give effect to any of its obligations in connection with the relevant Loan Agreement and/or to charge or receive or to be paid interest at the rate then applicable to such Loan (an "Event of Illegality"), then upon notice by the Lender to RSB in writing, RSB and the Lender shall consult in good faith as to a basis which eliminates the application of such Event of Illegality; provided, however, that the Lender shall be under no obligation to continue such consultation if a basis has not been determined within 30 days of the date on which it so notified RSB. If such a basis has not been determined

191 within the 30 days, then upon written notice by the Lender to RSB and the Trustee, RSB shall prepay such Loan in whole (but not in part), in the case of a Fixed Rate Loan, on the next Interest Payment Date therefor, in the case of a Floating Rate Loan, or on the next Interest Payment Date or on such earlier date as the Lender shall (acting reasonably) certify to be necessary to comply with such requirements. 5.4 Reduction of a Loan Upon Cancellation of Corresponding Notes RSB may from time to time deliver to the Lender Definitive Notes, having an aggregate principal value of at least U.S.$1,000,000 (or its equivalent in a Specified Currency), together with a request for the Lender to present such Definitive Notes to the Registrar for cancellation, and may also from time to time procure the delivery to the Registrar of the relevant Global Notes with instructions to cancel a specified aggregate principal amount of Notes (being at least U.S.$1,000,000 or its equivalent in a Specified Currency) represented thereby (which instructions shall be accompanied by evidence satisfactory to the Registrar that RSB is entitled to give such instructions), whereupon the Lender shall, pursuant to Clause 8.1 of the Agency Agreement, request the Registrar to cancel such Notes (or specified aggregate principal amount of Notes represented by the relevant Global Notes). Upon any such cancellation by or on behalf of the Registrar, the principal amount of the Loan corresponding to the principal amount of such Notes together with accrued interest and other amounts (if any) thereon shall be extinguished for all purposes as of the date of such cancellation. 5.5 Payment of Other Amounts If a Loan is to be prepaid by RSB pursuant to any of the provisions of Clause 5.2 or Clause 5.3 or pursuant to the terms of the relevant Loan Agreement, RSB shall, simultaneously with such prepayment, pay to the Lender accrued interest thereon to the date of actual payment and all other sums payable by RSB pursuant to the relevant Loan Agreement. For the avoidance of doubt, if the principal amount of such Loan is reduced pursuant to the provisions of Clause 5.4, then no interest shall accrue or be payable during the Interest Period in which such reduction takes place in respect of the amount by which such Loan is so reduced and RSB shall not be entitled to any interest in respect of the cancelled Notes. 5.6 Provisions Exclusive RSB shall not prepay or repay all or any part of any Loan except in accordance with the express terms of the relevant Loan Agreement. Any amount prepaid may not be re-borrowed under such Loan Agreement. 5.7 Optional Prepayment under Put Option If a Put Option is specified in the relevant Loan Supplement, provided that the Borrower has received notice from the Issuer at least five Business Days prior to the Put Settlement Date, the Borrower shall prepay the Loan (without premium or penalty), to the extent of the aggregate principal amount of the Notes to be properly redeemed in accordance with Condition 6(e) of the Notes, two Business Days prior to the Put Settlement Date

192 6. Payments 6.1 Making of Payments All payments of principal, interest and additional amounts (other than those in respect of Reserved Rights) to be made by RSB under each Loan Agreement shall be made unconditionally by credit transfer to the Lender not later than a.m. (Relevant Time) one Business Day prior to each Interest Payment Date or the Repayment Date (as the case may be) in Same-Day Funds to the relevant Account or as the Trustee may otherwise direct following the occurrence of an Event of Default or a Relevant Event. RSB shall, before a.m. (Relevant Time) on the second Business Day prior to each Interest Payment Date or the Repayment Date or such other date (as the case may be), procure that the bank effecting such payments on its behalf confirms to the Principal Paying Agent by tested telex or authenticated SWIFT the payment instructions relating to such payment. The Lender agrees with RSB that it will not deposit any other monies into such Account and that no withdrawals shall be made from such Account other than as provided for and in accordance with the relevant Trust Deed and the Agency Agreement. 6.2 No Set-Off, Counterclaim or Withholding; Gross-Up All payments to be made by RSB under each Loan Agreement shall be made in full without set-off or counterclaim and (except to the extent required by law or by agreement with a taxing authority) free and clear of and without deduction for or on account of any taxes. If RSB shall be required by applicable law to make any deduction or withholding from any payment under a Loan Agreement for or on account of any such taxes, it shall, on the due date for such payment, increase any payment of principal interest or any other payment due under such Loan Agreement to such amount as may be necessary to ensure that the Lender receives a net amount in the Specified Currency equal to the full amount which it would have received had payment not been made subject to such taxes, shall promptly account to the relevant authorities for the relevant amount of such taxes so withheld or deducted within the time allowed for such payment under the applicable law and shall deliver to the Lender without undue delay evidence satisfactory to the Lender of such deduction or withholding and of the accounting therefor to the relevant taxing authority. If the Lender pays any amount in respect of such taxes (including penalties or interest, but excluding any amount referable to taxes payable by the Lender on its overall net income (except to the extent that the Lender is unable to obtain a deduction for tax purposes on payments to the Noteholders which offsets any tax liability on equivalent amounts received under this Facility Agreement)), RSB shall reimburse the Lender in the Specified Currency for such payment on demand. The preceding two sentences shall not apply with respect to any tax or amounts owed pursuant to an agreement with a taxing authority that would not have been imposed but for a failure by the Lender (or any financial institution through which payment on any Loan is made) to (i) enter into an agreement described in Section 1471(b)(1) of the U.S. Internal Revenue Code of 1986 (the "Code") or otherwise comply with Sections 1471 through 1474 of the Code or any regulations promulgated thereunder (or under any implementing legislation adopted by another jurisdiction), (ii) provide information sufficient for RSB to determine whether the Lender (or financial institution through which payment on any Loan is made) is a U.S. person or should otherwise be treated as holding a "United States account" of the Borrower (or comply with similar requirements under any implementing legislation adopted by a non-u.s. jurisdiction), or (iii) consent, where necessary, to have information about it reported to the U.S. taxing authorities. 6.3 Withholding on Notes Without prejudice to the provisions of Clause 6.2, if the Lender notifies RSB that it has become obliged to make any withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied,

193 collected, withheld or assessed by or on behalf of Luxembourg or any political subdivision or any authority thereof or therein having the power to tax from any payment which it is obliged to make under or in respect of a Series of Notes, RSB agrees to pay to the Lender, not later than 10:00 a.m. (Relevant Time) one Business Day prior to the date on which payment is due to the Noteholders of such Series in Same-Day Funds to the relevant Account, such additional amounts as are equal to the additional amounts which the Lender would be required to pay in order that the net amounts received by the Noteholders, after such withholding or deduction, will equal the respective amounts which would have been received by the Noteholders in the absence of such withholding or deduction; provided, however, that the Lender shall procure that immediately upon receipt from any Paying Agent of any reimbursement of the sums paid pursuant to this provision, to the extent that any Noteholders of such Series, are not entitled to such additional amounts pursuant to the Conditions of such Series of Notes, pay such amounts received by way of such reimbursement to RSB (it being understood that neither the Lender, nor the Principal Paying Agent nor any Paying Agent shall have any obligation to determine whether any Noteholder of such Series or such other Party is entitled to any such additional amount). Any notification by the Lender to RSB in connection with this Clause 6.3 shall be given as soon as reasonably practicable after the Lender becomes aware of any obligation on it to make any such withholding or deduction. 6.4 Reimbursement To the extent that the Lender subsequently obtains or uses any tax credit or allowance or other reimbursements relating to a deduction or withholding with respect to which RSB has made a payment pursuant to this Clause 6, it shall pay to RSB so much of the benefit it received as will leave the Lender in substantially the same position as it would have been in had no additional amount been required to be paid by RSB pursuant to this Clause 6; provided, however, that the question of whether any such benefit has been received, and accordingly, whether any payment should be made to RSB, the amount of any such payment and the timing of any such payment, shall be determined solely by the Lender, provided that the Lender shall notify RSB promptly upon determination that it has received any such benefit. The Lender shall have the absolute discretion whether, and in what order and manner, it claims any credits or refunds available to it, and the Lender shall in no circumstances be obliged to disclose to RSB any information regarding its tax affairs or computations If as a result of a failure to obtain relief from deduction or withholding of any taxes referred to in Clause 6.2 (i) such taxes are deducted or withheld by RSB and pursuant to Clause 6.2 an increased amount is paid by RSB to the Lender in respect of such deduction or withholding and (ii) following the deduction or withholding of taxes as referred to above the Lender (upon instructions by RSB) applies to the competent taxing authority for a withholding tax refund and such withholding tax is refunded or repaid by the relevant taxing authority, the Lender shall as soon as reasonably practicable notify RSB of the receipt of such withholding tax refund and promptly transfer the actually received amount of the withholding tax refund in the currency actually received and less any applicable costs to a bank account of RSB specified for that purpose by RSB. 6.5 Representations of the Lender The Lender represents that, at the date hereof, (a) it is at the date hereof a resident of Luxembourg, is subject to taxation in Luxembourg on the basis of its registration as a legal entity, location of its management body or another similar criterion and it is not subject to taxation in Luxembourg merely on income from sources in Luxembourg or connected with property located in Luxembourg and it will be able to receive certification to this effect from

194 the Luxembourg taxing authorities, (b) it does not have a permanent establishment in the Russian Federation, (c) it does not have any current intentions to effect, during the term of any Loan, any corporate action or reorganisation or change of taxing jurisdiction that would result in the Lender ceasing to be a resident of Luxembourg and subject to taxation in Luxembourg, (d) it is not a holding company within the meaning of Article 29 of the double tax treaty between the Russian Federation and Luxembourg and (e) it will account for each Loan on the relevant Closing Date on its balance sheet as an asset under "Financial Assets" (or equivalent) and the corresponding Series of Notes as a liability under "Bonds" (or equivalent). 6.6 Notification and Substitution The Lender agrees upon becoming aware of such, promptly to notify RSB if it ceases to be resident in Luxembourg or opens a permanent establishment in Russia or if any of the representations set forth in Clause 6.5 are no longer true and correct If the Lender ceases, as a result of the Lender s actions, to be tax resident in a jurisdiction for the purposes of a double taxation treaty between the Russian Federation and such jurisdiction, and such cessation results in RSB being required to make payments pursuant to Clause 6.2, then, except in circumstances where the Lender has ceased to be tax resident in such jurisdiction by reason of any change of law (as described in Clause 5.2) (including, without limitation, a change in a double taxation treaty or in such law or treaty s application or interpretation), RSB may require the Lender to seek the substitution of the Lender as Issuer of the Notes and as lender under any Loan Agreement pursuant to and in accordance with the provisions of Clause 17 of the Trust Deed. RSB shall bear all costs and expenses relating to or arising out of such substitution. 6.7 Mitigation If at any time either party hereto becomes aware of circumstances which would or might, then or thereafter, give rise to an obligation on the part of RSB to make any deduction, withholding or payment as described in Clauses 6.2 or 6.3, then, without in any way limiting, reducing or otherwise qualifying the Lender s rights, or RSB s obligations, under such Clauses, the Lender shall, upon becoming aware of the same, notify RSB thereof and, in consultation with RSB and to the extent it can lawfully do so and without prejudice to its own position, take all reasonable steps to remove such circumstances or mitigate the effects of such circumstances; provided that the Lender shall be under no obligation to take any such action if, in its reasonable opinion, to do so might reasonably be expected to have any adverse effect upon its business, operations or financial condition or might be in breach of any provision of the Trust Deed or the Notes. 6.8 Tax Treaty Relief The Lender shall, provided that in each case a corresponding request from RSB is received by the Lender no later than 25 Business Days prior to the first Interest Payment Date or, as applicable, the beginning of each calendar year, and at RSB s cost, to the extent it is able to do so under applicable law including, without limitation, Russian laws, use best efforts to obtain and to deliver to RSB no later than 10 Business Days before the first Interest payment Date or, as applicable, the beginning of each calendar year a certificate issued by the competent taxing authority in Luxembourg confirming that the Lender is tax resident in Luxembourg and such other information or forms as may need to be duly completed and delivered by the Lender to enable RSB to apply to obtain relief from deduction or withholding of Russian taxes after the date of this Agreement or, as the case may be, to apply to obtain a tax refund if a relief from deduction or withholding of Russian taxes has not been obtained. The Lender shall, at the request of RSB and at RSB s cost, to the extent it is able to do so under applicable law including, without limitation, Russian laws, from time to time use its commercially reasonable

195 efforts to obtain and to deliver to RSB any additional duly completed application forms as need to be duly completed and delivered by the Lender to enable RSB to apply to obtain relief from deduction or withholding of Russian taxes or, as the case may be, to apply to obtain a tax refund if a relief from deduction or withholding of Russian taxes has not been obtained. The certificate and, if required, other forms referred to in this Clause 6.8 shall be duly signed by the Lender, if applicable, and stamped or otherwise approved by the competent taxing authority in Luxembourg, if applicable. Together with any such certificate and, if required, other forms, the Lender shall deliver to the Borrower a copy of the same, certified by a Luxembourg notary to be a true and up to date copy of the original document. Any such notary s certificate shall be apostilled or otherwise legalised. If a relief from deduction or withholding of Russian taxes under this Clause 6.8 has not been obtained and further to an application of RSB to the relevant Russian taxing authorities the latter requests the Lender s rouble bank account details, the Lender shall at the request of RSB (a) use its commercially reasonable efforts, at RSB s cost, to procure that such rouble bank account of the Lender is duly opened and maintained, and (b) thereafter furnish RSB with the details of such rouble bank account. 7. Conditions Precedent 7.1 Documents to be Delivered The obligation of the Lender to make each Loan shall be subject to the receipt by the Lender on or prior to the relevant Closing Date of evidence that the persons mentioned in sub-clauses and hereof have agreed to receive process in the manner specified therein. 7.2 Further Conditions The obligation of the Lender to make each Loan shall be subject to the further conditions precedent that as of the relevant Closing Date (a) the representations and warranties made and given by RSB in Clause 9 shall be true and accurate as if made and given on the relevant Closing Date with respect to the facts and circumstances then existing, (b) no event shall have occurred and be continuing that constitutes, or that, with the giving of notice or the lapse of time, or both, would constitute, an Event of Default, (c) RSB shall not be in breach of any of the terms, conditions and provisions of the relevant Loan Agreement, (d) the relevant Subscription Agreement, Trust Deed and the Agency Agreement shall have been executed and delivered, and the Lender shall have received the full amount of the proceeds of the issue of the corresponding Series of Notes pursuant to such Subscription Agreement and (e) the Lender shall have received in full the amount referred to in Clause 3.2, if due and payable, above, as specified in the relevant Loan Supplement. 8. Change in Law or Increase in Cost 8.1 Compensation In the event that after the date of a Loan Agreement there is any change in or introduction of any tax, law, regulation, regulatory requirement or official directive (whether or not having the force of law but, if not having the force of law, the observance of which is in accordance with the generally accepted financial practice of financial institutions in the country concerned) or in the interpretation or application thereof by any person charged with the administration thereof and/or any compliance by the Lender in respect of the Loan with any request, policy or guideline (whether or not having the force of law but, if not having the force of law, the observance of which is in accordance with the generally accepted financial practice of financial institutions in the country concerned) from or of any central bank or other fiscal, monetary or other authority, agency or any official of any such authority, which: subjects or will subject the Lender to any taxes with respect to payments of principal of or interest on such Loan or any other amount payable under such Loan Agreement (other than any taxes payable by the Lender on its overall net income or any taxes

196 referred to in Clauses 6.2 or 6.3); or increases or will increase the taxation of or changes or will change the basis of taxation of payments to the Lender of principal of or interest on such Loan or any other amount payable under such Loan Agreement (other than any such increase or change which arises by reason of any increase in the rate of tax payable by the Lender on its overall net income or as a result of any taxes referred to in Clauses 6.2 or 6.3); or imposes or will impose on the Lender any other condition affecting such Loan Agreement or such Loan, and if as a result of any of the foregoing: (i) (ii) (iii) the cost to the Lender of making, funding or maintaining such Loan is increased; or the amount of principal, interest or additional amounts payable to or received by the Lender under such Loan Agreement is reduced; or the Lender makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount of any sum receivable by it from RSB hereunder or makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount of such Loan, then subject to the following, and in each such case: (a) (b) the Lender shall, as soon as practicable after becoming aware of such increased cost, reduced amount or payment made or foregone, give written notice to RSB, together with a certificate describing in reasonable detail the introduction or change or request which has occurred and the country or jurisdiction concerned and the nature and date thereof and demonstrating the connection between such introduction, change or request and such increased cost, reduced amount or payment made or foregone, and providing all relevant supporting documents evidencing the matters set out in such certificate; and upon demand by the Lender to RSB, RSB, in the case of paragraphs (i) and (iii) above, shall on demand by the Lender, pay to the Lender such additional amount as shall be necessary to compensate the Lender for such increased cost, and, in the case of paragraph (ii) above, at the time the amount so reduced would otherwise have been payable, pay to the Lender such additional amount as shall be necessary to compensate the Lender for such reduction, payment or foregone interest or other return; provided however, that the amount of such increased cost, reduced amount or payment made or foregone shall be deemed not to exceed an amount equal to the proportion which is directly attributable to this Facility Agreement, and provided, further, that the Lender will not be entitled to such additional amount where such reduction, payment or foregone interest or other return arises as a result of the negligence or wilful default of the Lender, 8.2 Mitigation provided that this Clause 8.1 will not apply to or in respect of any matter for which the Lender has already been compensated under Clauses 6.2 or 6.3. In the event that the Lender becomes entitled to make a claim pursuant to Clause 8.1 the Lender shall consult in good faith with RSB and shall use reasonable efforts (based on the Lender s reasonable interpretation of any relevant tax, law, regulation, requirement, official directive, request, policy or guideline) to reduce, in whole or in part, RSB s obligations to pay any additional amount pursuant to such Clause except that nothing in this Clause 8.2 shall

197 obligate the Lender to incur any costs or expenses in taking any action hereunder which, in the reasonable opinion of the Lender, is prejudicial to it unless RSB agrees to reimburse the Lender such costs or expenses. 9. Lender s Representations and Warranties The Lender represents and warrants to RSB as follows: the Lender is a duly incorporated company validly existing under the laws of and is resident for Luxembourg taxation purposes in Luxembourg and has full power and capacity to execute the Lender Agreements and to undertake and perform the obligations expressed to be assumed by it herein and therein and the Lender has taken all necessary action to approve and authorise the same; the execution of the Lender Agreements and the undertaking and performance by the Lender of the obligations expressed to be assumed by it herein and therein will not conflict with, or result in a breach of or default under, the laws of Luxembourg or any agreement or instrument to which it is a party or by which it is bound or in respect of indebtedness in relation to which it is a surety; the Lender Agreements have been duly executed by and constitute legal, valid and binding obligations of the Lender subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors rights generally; and all authorisations, consents and approvals required by the Lender for or in connection with the execution of the Lender Agreements, the performance by the Lender of the obligations expressed to be undertaken by it herein and therein have been obtained and are in full force and effect. 10. Covenants So long as any amount remains outstanding under a Loan Agreement: 10.1 Negative Pledge RSB shall not, and shall not permit any of its Material Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Liens, other than Permitted Liens, on any of its assets, now owned or hereafter acquired, or any income or profits therefrom, securing any Indebtedness, unless, at the same time or prior thereto, RSB s obligations hereunder are to the satisfaction of the Trustee secured equally and rateably with such other Indebtedness Mergers (i) RSB shall not enter into any reorganisation (by way of a merger, accession, division, separation or transformation, or other bases or procedures for reorganisation contemplated or as may be contemplated from time to time by Russian legislation, as these terms are construed by applicable Russian legislation), and (ii) RSB shall ensure that, without the prior written consent of the Lender, no Material Subsidiary (A) enters into any reorganisation (whether by way of a merger, accession, division, separation or transformation as these terms are construed by applicable Russian legislation), or (B) in the case of a Material Subsidiary incorporated in a jurisdiction other than Russia participates in any type of corporate reconstruction or other analogous event (as determined under the legislation of the relevant jurisdiction), if (in the case of either (i) or (ii) above) any such reorganisation or other type of corporate reconstruction might have a Material Adverse Effect. For the avoidance of doubt, any such reorganisation or other type of corporate reconstruction contemplated by this Clause will not be considered to be capable of having a Material Adverse Effect for the purposes of this Clause in the event that it does not lead to a downgrading of either the senior unsecured issuer rating given to RSB by

198 Standard & Poor s or the issuer rating of RSB given to RSB by Moody s or, in the circumstances under (i) above where RSB is not the surviving entity following such reorganisation or other type of corporate reconstruction, the ratings granted to such surviving entity immediately following such reorganisation by Moody s and Standard & Poor s are no less than the ratings granted to RSB by each of Moody s and Standard & Poor s immediately prior to such reorganisation or other type of corporate reconstruction Disposals RSB shall not and shall ensure that its Material Subsidiaries do not (in each case disregarding sales of stock in trade on an arm s length basis in the ordinary course of business) sell, lease, transfer or otherwise dispose of, by one or more transactions or series of transactions (whether related or not), the whole or any part (the book value of which is 10 per cent. or more of the book value of the whole) of its revenues or its assets unless, without prejudice to Clause 10.12, such transaction(s) is/are (a) on an arm's length basis and on commercially reasonable terms and (b) has/have been approved by a resolution of the appropriate decision making body of RSB resolving that the transaction complies with the requirements of this Clause 10.3 and such resolution has been adopted by a majority of the members of such appropriate decision making body disinterested with respect to such transaction or series of transactions or, if there are insufficient disinterested members, by an Independent Appraiser. For the avoidance of doubt, this Clause 10.3 shall not apply to (i) any revenues or assets (or any part thereof) the subject of any securitisation of receivables, asset-backed financing or similar financing structure originated by RSB whereby all payment obligations are to be discharged solely from such assets or revenues, provided that the aggregate value of assets or revenues which are the subject of all such securitisations of receivables, asset-backed financing or similar financing structures, when added to the aggregate value of assets or revenues subject to any Lien described under (d) in the definition of "Permitted Liens" and permitted under the terms of the Loan Agreements, does not at any time exceed 30 per cent. of loans and advances to customers, as determined at any such time by reference to the most recent quarterly balance sheet of RSB prepared in accordance with IFRS (or the RUB amount equivalent in other currencies), or (ii) any defaulted or non-performing loans transferred to Debt Collection Agency Transactions with Affiliates RSB shall not and shall ensure that none of its Subsidiaries shall, directly or indirectly, conduct any business, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, transfer, assignment, lease, conveyance or exchange of any property or the rendering of any service) with, or for the benefit of, any Affiliate (an "Affiliate Transaction") including, without limitation, intercompany loans unless (a) the terms of such Affiliate Transaction are no less favourable to RSB or such Subsidiary, as the case may be, than those that could be obtained in a comparable arm's length transaction with a person that is not an Affiliate of RSB or such Subsidiary; or (b) such Affiliate Transaction is made pursuant to a contract existing on the date of this Facility Agreement (excluding any amendments or modifications thereof). With the exception of any Affiliate Transaction involving the transfer of defaulted or non-performing loans to Debt Collection Agency, with respect to an Affiliate Transaction involving aggregate payments or value in excess of ten per cent. of the Net Asset Value (or its equivalent in other currencies), RSB shall deliver to the Lender a written opinion from an Independent Appraiser to the effect that such Affiliate Transaction is fair, from a financial point of view, to RSB or the relevant Subsidiary, as the case may be. This Clause 10.4 does not apply to (a) compensation or employee benefit arrangements with any officer or director of RSB or a Subsidiary, as the case may be, arising as a result of their employment contract, or (b) any Affiliate Transaction between RSB and any of its Subsidiaries

199 or between any Subsidiaries of RSB Maintenance of Authorisations (i) RSB shall, and shall procure that each of its Material Subsidiaries shall, take all necessary action to obtain and do or cause to be done all things reasonably necessary, in the opinion of RSB or the relevant Material Subsidiary, to ensure the continuance of its corporate existence, its business and intellectual property relating to its business and (ii) RSB shall take all necessary action to obtain, and do or cause to be done all things reasonably necessary to ensure the continuance of, all consents, licences, approvals and authorisations, and make or cause to be made all registrations, recordings and filings, which may at any time be required to be obtained or made in the Russian Federation for the execution, delivery or performance of the Loan Agreements or for the validity or enforceability thereof, provided that, in any case if RSB and/or the relevant Material Subsidiary, as the case may be, can remedy any failure to comply with this Clause 10.5 within 90 days of such failure or of the occurrence of such event, then this covenant shall be deemed not to have been breached Maintenance of Property RSB shall cause all property used in the conduct of its or their business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of RSB, may be reasonably necessary so that the business carried on in connection therewith may be properly conducted at all times, provided that if RSB can remedy any failure to comply with the above within 90 days or any failure relates to property with a value not exceeding U.S.$20,000,000 (or its equivalent in other currencies), this covenant shall be deemed not to have been breached Payment of Taxes and Other Claims RSB shall, and shall ensure that its Material Subsidiaries will, pay or discharge or cause to be paid or discharged, before the same shall become overdue and without incurring penalties, (a) all taxes, assessments and governmental charges levied or imposed upon, or upon the income, profits or property of, RSB and its Material Subsidiaries and (b) all lawful claims for labour, materials and supplies which, if unpaid, might by law become a Lien (other than a Permitted Lien) upon the property of RSB or any of its Material Subsidiaries; provided, however, that none of RSB nor any Material Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim (a) whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with IFRS, as consistently applied or other appropriate provision has been made, or (b) whose amount, together with all such other unpaid or undischarged taxes, assessments, charges and claims, does not in the aggregate exceed U.S.$20,000,000 (or its equivalent in other currencies) Withholding Tax Exemption RSB shall give to the Lender all the assistance it reasonably requires to ensure that, prior to the first interest payment and at the beginning of each calendar year the Lender can provide RSB with the documents required under Russian laws for the relief of the Lender from Russian withholding tax in respect of payments hereunder Maintenance of Insurance So long as any amount remains outstanding under any Loan Agreement, RSB shall and shall ensure that each of its Material Subsidiaries will, keep those of their properties which are of an insurable nature insured with insurers of good standing against loss or damage to the extent that property of similar character is usually so insured by corporations in the same jurisdictions

200 similarly situated and owning like properties in the same jurisdictions Financial Information RSB shall as soon as the same become available, but in any event within 150 days after the end of each of its financial years, deliver to the Lender the IFRS consolidated financial statements of the Group for such financial year, in each case audited by the Auditors RSB shall as soon as the same become available, but in any event within 120 days after the end of each half of each of its financial years, deliver to the Lender the IFRS consolidated financial statements of the Group for such period RSB shall, so long as any amount remains outstanding under any Loan Agreement, deliver to the Lender, without undue delay, such additional information regarding the financial position or the business of RSB and its Subsidiaries as the Lender may reasonably request including providing certification and a report of the Auditors addressed to the Directors of the Lender as to the definition of "Material Subsidiary" RSB shall ensure that each set of IFRS consolidated financial statements of the Group delivered by it pursuant to this Clause is: (i) prepared on the same basis as was used in the preparation of its Original Financial Statements and in accordance with IFRS and consistently applied; and (ii) in the case of the statements provided pursuant to sub-clause , accompanied by a report thereon of the Auditors referred to in sub-clause (including opinions of such Auditors with accompanying notes and annexes) in each case, in a form satisfactory to the Lender; and (iii) in the case of the statements provided pursuant to sub-clause , certified by an Authorised Signatory of RSB as giving a true and fair view of the Group's consolidated financial condition as at the end of the period to which those IFRS consolidated financial statements of the Group relate and of the results of the Group's operations during such period RSB shall from time to time, on the request of the Lender or the Trustee, furnish the Lender with such information about the business and consolidated financial condition of RSB or the Group as the Lender or the Trustee may reasonably require or such Officer s Certificate as either the Lender or the Trustee may request Financial covenants RSB shall (except as otherwise specifically provided or agreed by the Lender) at all times (save in respect of sub-clause below, which will apply in respect of the time periods set out therein) maintain: full compliance with prudential supervision ratios and other requirements of the Central Bank; and a ratio of Capital to Risk Weighted Assets: (i) at any time that either (a) each of the senior unsecured issuer rating given to RSB by Standard & Poor s is below BB and the issuer rating of RSB given to RSB by Moody s is below Ba2, or (b) neither Moody s nor Standard & Poor s is rating RSB, of not less than 11 per cent.; or

201 10.12 Change of business (ii) at any time that either the senior unsecured issuer rating given to RSB by Standard & Poor s is at BB or above, or the issuer rating of RSB given to RSB by Moody s is at Ba2 or above, of not less than 10 per cent. RSB shall procure that no material change is made to the general nature of the business of itself or any of the Material Subsidiaries from that carried on at the date of this Facility Agreement Ranking of Claims RSB shall ensure that at all times the claims of the Lender against it under each Loan Agreement rank at least pari passu with the claims of all its other unsecured creditors, save those whose claims are preferred by any bankruptcy, insolvency, liquidation or similar laws of general application. 11. Events of Default 11.1 Events of Default If one or more of the following events of default (each, an "Event of Default") shall occur, the Lender shall be entitled to the remedies set forth in Clause RSB fails to pay any amount payable under the Loan Agreement as and when such amount becomes payable in the currency and in the manner specified herein, provided such failure to pay continues for more than five Business Days RSB fails to perform or observe any covenant or agreement under the Loan Agreement to be performed or observed by it, provided such failure continues for more than 30 Business Days Any representation or warranty of RSB or any statement deemed to be made by RSB in connection with the Loan Agreement, certificate or notice delivered by RSB in connection with the Lender Agreements or the issue of Notes proves to have been inaccurate, incomplete or misleading in any material respect in the opinion of the Lender at the time it was made or repeated or deemed to have been made or repeated unless remedied by RSB within 30 days (i) (ii) Any Indebtedness of RSB or any of its Material Subsidiaries is not paid when due (after the expiry of any applicable grace period); or any such Indebtedness becomes due and payable prior to its stated maturity otherwise than at the option of RSB or (as the case may be) the relevant Material Subsidiary or (provided that no event of default, howsoever described, has occurred) any person entitled to such Indebtedness, provided that the amount of Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above, individually or in the aggregate, exceeds U.S.$20,000,000 (or its equivalent amount in any other currency or currencies) The occurrence of any of the following events: (i) any of RSB, or any of its Material Subsidiaries seeking or consenting to the introduction of proceedings for its liquidation or the appointment of a liquidation commission (likvidatsionnaya komissiya) or a similar officer of any of RSB, or any of its Material Subsidiaries as the case may be; (ii) the presentation or filing of a petition in respect of any of RSB or its Material Subsidiaries in any court, arbitration court or before any agency alleging, or for, the

202 bankruptcy, insolvency, dissolution, liquidation (or any analogous proceedings) of any of RSB or its Material Subsidiaries, unless such petition is demonstrated to the reasonable satisfaction of the Lender to be vexatious or frivolous; (iii) the institution of the supervision (nablyudeniye), financial rehabilitation (finansovoye ozdorovlenie), external management (vneshneye upravleniye), bankruptcy management (konkursnoye proizvodstvo) over RSB or any of its Material Subsidiaries, (iv) the entry by RSB or any of its Material Subsidiaries into, or the agreeing by RSB or any of its Material Subsidiaries to enter into, amicable settlement (mirovoe soglashenie) with its creditors, as such terms are defined in the Federal Law of Russia No. 127-FZ "On Insolvency (Bankruptcy)" dated 26 October 2002 (as amended or replaced from time to time); (v) the institution of the financial rehabilitation (finansovoye ozdorovlenie), pursuant to the request of the Central Bank, temporary administration (vremennoye upravleniye) or reorganisation (reorganizatsiya) with respect to RSB or any of its Material Subsidiaries as such terms are defined in the Federal Law of the Russian Federation No- 40-FZ "On Insolvency (Bankruptcy) of Credit Organisations" dated 25 February 1999 (as amended or replaced from time to time); (vi) any judicial liquidation in respect of RSB or any of its Material Subsidiaries; and/or (vii) revocation of the general banking licence or the licence for taking deposits from individuals of RSB or, if applicable, of any of its Material Subsidiaries RSB or any of its Material Subsidiaries is unable or admits inability to pay its debts as they fall due, generally suspends making payments on its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness; the value of the assets of any of RSB or its Material Subsidiaries is less than its liabilities; and/or a moratorium is declared in respect of any Indebtedness of any of RSB or its Material Subsidiaries Any expropriation, attachment, sequestration, execution or distress is levied against, or an encumbrancer takes possession of or sells, the whole or any material part of, the property, undertaking, revenues or assets of RSB or any of its Material Subsidiaries Any governmental authorisation necessary for the performance of any obligation of RSB under the Loan Agreement fails to be in full force and effect Any government, Agency or court takes any action that, in the opinion of the Lender, has a Material Adverse Effect on RSB or any of its Material Subsidiaries, including, without prejudice to the foregoing: (i) the management of any member of the Group is wholly or partially displaced or the authority of any member of the Group in the conduct of its business is wholly or partially curtailed; or (ii) all or a majority of the issued shares of any member of the Group or the whole or any part (the book value of which is 20 per cent. or more of the book value of the whole) of its revenues or assets is seized, nationalised, expropriated or compulsorily acquired; or (iii) RSB s banking licence or its licence for taking deposits from individuals is revoked The shareholders of RSB shall have approved any plan of liquidation or dissolution of RSB The aggregate amount of unsatisfied judgments, decrees or orders of courts or other appropriate law-enforcement bodies for the payment of money against RSB and other Material Subsidiaries in the aggregate exceeds U.S.$20,000,000, or the equivalent thereof in any other currency or currencies and there is a period of 60 days following the entry thereof during which such judgment, decree or order is not appealed, discharged, waived or the execution thereof stayed and such default continues for 10 days after the notice specified in Clause

203 At any time it is or becomes unlawful for RSB to perform or comply with any or all of its obligations under the Loan Agreement or any of such obligations (subject as provided in sub-clause of the Dealer Agreement) are not, or cease to be, legal, valid, binding and enforceable RSB or any of its Material Subsidiaries ceases to carry on the principal business it carried on at the date hereof RSB repudiates or evidences an intention to repudiate any of the Lender Agreements The charter of RSB is amended in a way which would contravene or result in the contravention of any material provision of the Loan Agreement Any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing Clauses Notice of Default RSB shall deliver to the Lender within (i) 10 days of any written request by the Lender or (ii) within 30 days after the occurrence thereof, written notice in the form of an Officers Certificate, substantially in the form set out in Schedule 2, stating whether any Potential Event of Default or Event of Default has occurred, its status and what action RSB is taking or proposes to take with respect thereto Default Remedies If any Event of Default shall occur and be continuing, the Lender may, by notice to RSB, (a) declare the obligations of the Lender under the relevant Loan Agreement to be terminated, whereupon such obligations shall terminate, and (b) declare all amounts payable under such Loan Agreement by RSB that would otherwise be due after the date of such termination to be immediately due and payable, whereupon all such amounts shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or notice of any kind, which are expressly waived by RSB; provided, however, that if any event of any kind referred to in sub-clauses , , or , occurs, the obligations of the Lender under such Loan Agreement shall immediately terminate, and all amounts payable under such Loan Agreement by RSB that would otherwise be due after the occurrence of such event shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or notice of any kind, which are expressly waived by RSB Rights Not Exclusive The rights provided for in the Loan Agreement are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law. 12. Indemnity 12.1 Indemnification RSB undertakes to the Lender, that if the Lender or any of its Affiliates, each director, officer, employee or agent of the Lender and each person controlling the Lender within the meaning of the United States securities laws (each an "indemnified party") incurs any loss, liability, cost, claim, charge, expense (including without limitation taxes, legal fees, costs and expenses), demand or damage (a "Loss") as a result of or in connection with the Loan, the Loan Agreement (or enforcement thereof), and/or the issue, constitution, sale, listing and/or enforcement of the Notes and/or the Notes corresponding to such Loan or Loan Agreement being outstanding, RSB shall pay to the Lender on demand an amount equal to such Loss and all costs, charges and expenses which it or any indemnified party may pay or incur in connection with investigating, disputing or defending any such action or claim as such costs,

204 charges and expenses are incurred unless such Loss was either caused by such indemnified party s negligence or wilful misconduct or arises out of a breach of the representations and warranties of the Lender contained in the Dealer Agreement. The Lender shall not have any duty or obligation whether as fiduciary or trustee for any indemnified party or otherwise, to recover any such payment or to account to any other person for any amounts paid to it under this Clause Independent Obligation Clause 12.1 constitutes a separate and independent obligation of RSB from its other obligations under or in connection with each Loan Agreement or any other obligations of RSB in connection with the issue of the Notes by the Lender and shall not affect, or be construed to affect, any other provision of any Loan Agreement or any such other obligations Evidence of Loss A certificate of the Lender setting forth the amount of losses, expenses and liabilities described in Clause 12.1 and specifying in full detail the basis therefor shall, in the absence of manifest error, be conclusive evidence of the amount of such losses, expenses and liabilities Currency Indemnity To the fullest extent permitted by law, the obligation of RSB under this Facility Agreement and any Subscription Agreement in respect of any amount due in the currency (the "first currency") in which the same is payable shall, notwithstanding any payment in any other currency (the "second currency") (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the first currency that the Relevant Dealer may, acting reasonably and in accordance with normal banking procedures, purchase with the sum paid in the second currency (after any premium and costs of exchange) on the Business Day immediately following the day on which the Relevant Dealer receives such payment. If the amount in the first currency that may be so purchased for any reason falls short of the amount originally due (the "Due Amount"), RSB hereby agrees to indemnify and hold harmless each Relevant Dealer against any deficiency in the first currency. Any obligation of RSB not discharged by payment in the first currency shall, to the fullest extent permitted by applicable law, be due as a separate and independent obligation and, until discharged as provided in this Facility Agreement and any Subscription Agreement, shall continue in full force and effect Survival The obligations of RSB pursuant to Clauses 6.2, 6.3, 12 and 14.2 shall survive the execution and delivery of each Loan Agreement and the drawdown and repayment of the relevant Loan, in each case by RSB. 13. Expenses 13.1 Reimbursement of Front-end Expenses for the Extension of the Loan by the Lender RSB shall, pursuant to Clause 3.2 hereof and the relevant Loan Supplement, reimburse the Lender in the Specified Currency for all reasonable costs and expenses incurred by the Lender in connection with the negotiation, preparation and execution of each Loan Agreement and all related documents and other expenses connected with the extension of each Loan, including, without limitation, the fees and expense of its counsel Payment of Ongoing Expenses In addition, RSB hereby agrees to pay to the Lender on demand in the Specified Currency all ongoing commissions, costs, fees and expenses (including, without limitation, enforcement costs), payable by the Lender under or in respect of the Lender Agreements and the Fee Side

205 Letter. RSB shall also pay the Lender for any indemnification or other payment obligations of the Lender under or in respect of the Agency Agreement, Trust Deed and/or the Fee Side Letter (other than the obligation of the Lender to make payments of principal, interest or additional amounts in respect of the corresponding Series of Notes). Payments to the Lender referred to in this Clause 13.2 shall be made by RSB at least one Business Day before the relevant payment is to be made or expense incurred. 14. General 14.1 Evidence of Debt The entries made in the relevant Account shall, in the absence of manifest error, constitute prima facie evidence of the existence and amounts of RSB s obligations recorded therein Stamp Duties RSB shall pay all stamp, registration and documentary taxes or similar charges (if any) imposed on RSB by any person in the United Kingdom, the Russian Federation, Luxembourg or the United States of America which may be payable or determined to be payable in connection with the execution, delivery, performance, enforcement, or admissibility into evidence of any Loan Agreement and shall indemnify the Lender against any and all costs and expenses which may be incurred or suffered by the Lender with respect to, or resulting from, delay or failure by RSB to pay such taxes or similar charges RSB agrees that if the Lender incurs a liability to pay any stamp, registration and documentary taxes or similar charges (if any) imposed by any person in the United Kingdom, the Russian Federation, Luxembourg or the United States of America which may be payable or determined to be payable in connection with the execution, delivery, performance, enforcement, or admissibility into evidence of any Loan Agreement and any documents related thereto, RSB shall repay the Lender on demand an amount equal to such stamp or other documentary taxes or duties and shall indemnify the Lender against any and all costs and expenses which may be incurred or suffered by the Lender with respect to, or resulting from, delay or failure by RSB to procure the payment of such taxes or similar charges Waivers No failure to exercise and no delay in exercising, on the part of the Lender or RSB, any right, power to privilege under any Loan Agreement, and no course of dealing between RSB and the Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies provided in each Loan Agreement are cumulative and not exclusive of any rights, or remedies provided by applicable law Notices All notices, requests, demands or other communications to or upon the respective parties to each Loan Agreement shall be given or made in writing and in English by , by facsimile, by hand or by courier, to the party to which such notice, request, demand or other communication is required or permitted to be given or made under such Loan Agreement addressed as follows:

206 if to RSB: Joint Stock Company "Russian Standard Bank" 36 Tkatskaya Street Moscow Russian Federation Fax: Attention: Mr. Maxim Timoshenko, Vice-President, Director Financial Markets if to the Lender: Russian Standard Finance S.A. 2, Bd. Konrad-Adenauer L-1115 Luxembourg Fax: Anja. Attention: The Board of Directors or to such other address, fax number or electronic address as any party may hereafter specify in writing to the other. Any notice sent by post as provided in Clause 14.4 shall be deemed to have been given, made or served when delivered and any notice sent by facsimile transmission as provided in this Clause 14.4 shall be deemed to have been given, made or served when the relevant delivery receipt is received by the sender and any notice sent by electronic communication as provided in this Clause 14.4 shall be deemed to have been given, made or served when the relevant receipt of such communication being read is given, or where no read receipt is requested by the sender, at the time of sending, provided that no delivery failure notification is received by the sender within 24 hours of sending such communication; provided that any communication which is received (or deemed to take effect in accordance with the foregoing) outside business hours or on a non-business day in the place of receipt shall be deemed to take effect at the opening of business on the next following business day in such place. Any communication delivered to any party under this Agreement which is to be sent by facsimile transmission or electronic communication will be written legal evidence Assignment Each Loan Agreement shall inure to the benefit of and be binding upon the parties, their respective successors and any permitted assignee or transferee of some or all of a party s rights or obligations under such Loan Agreement. Any reference in a Loan Agreement to any party shall be construed accordingly and, in particular, references to the exercise of rights and discretions by the Lender, following the enforcement of the security and/or assignment referred to in sub-clause below, shall be references to the exercise of such rights or discretions by the Trustee (as Trustee). Notwithstanding the foregoing, the Trustee shall not be entitled to participate in any determinations by the Lender, or any discussions between the Lender and RSB or any agreements of the Lender or RSB pursuant to Clauses 6.4 or 6.6 or Clause RSB shall not to be entitled to assign or transfer all or any part of its rights or obligations hereunder to any other person Subject to Clause 25 of the Trust Deed, the Lender may not assign or transfer, in whole or in part, any of its rights and benefits or obligations under any Loan Agreement (other than the Reserved Rights) except (i) the charge by way of first fixed charge

207 14.6 Prescription granted by the Lender in favour of the Trustee (as Trustee) of certain of the Lender s rights and benefits under such Loan Agreement and (ii) the absolute assignment by the Lender to the Trustee of certain rights, interests and benefits under such Loan Agreement, in each case, pursuant to Clause 6 of the relevant Supplemental Trust Deed. Subject to the Lender having received the principal amount thereof or interest thereon from RSB, the Lender shall forthwith repay to RSB the principal amount or the interest amount thereon, respectively, of any Series of Notes upon such Series of Notes becoming void pursuant to Condition 11 of such Notes Contracts (Rights of Third Parties) Act 1999 A person who is not a party to a Loan Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of such Loan Agreement Governing Law This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, the laws of England Jurisdiction The parties irrevocably agree that any dispute arising out of or in connection with this Agreement, including a dispute as to the validity, existence or termination of this Agreement or the consequences of its nullity and/or this Clause 14.9 (a "Dispute"), shall be resolved by arbitration in London, England, conducted in the English language by three arbitrators, in accordance with the rules set down by the LCIA (formerly the London Court of International Arbitration) ("LCIA Rules"), which rules are deemed to be incorporated by reference into this Clause, save that Article 5.6 of the LCIA Rules shall be amended as follows: unless the parties agree otherwise, the third arbitrator, who shall act as chairman of the tribunal, shall be nominated by the two arbitrators nominated by or on behalf of the parties. If he is not so nominated within 30 days of the date of nomination of the later of the two party-nominated arbitrators to be nominated, he shall be chosen by the LCIA. Save as provided in sub-clause below, the parties agree to exclude the jurisdiction of the English court under sections 45 and 69 of the Arbitration Act Process Agents The Lender irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, United Kingdom to accept service of process in England in any Dispute, provided that: (i) (ii) (iii) service upon the Lender s Agent shall be deemed valid service upon the Lender whether or not the process is forwarded to or received by the Lender; the Lender shall inform all other parties to this Agreement, in writing, of any change in the address of the Lender s Agent within 28 days of such change; if the Lender s Agent ceases to be able to act as a process agent or to have an address in England, the Lender irrevocably agrees to appoint a new process agent in England acceptable to the other parties to the Agreement and to deliver to the other parties to the Agreement within 14 days a copy of a written acceptance of appointment by the new process agent; and

208 (iv) nothing in this Agreement shall affect the right to serve process in any other manner permitted by law RSB irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, United Kingdom to accept service of process in England in any Dispute, provided that: (i) (ii) (iii) (iv) service upon RSB s Agent shall be deemed valid service upon RSB whether or not the process is forwarded to or received by RSB; RSB shall inform all other parties to this Agreement, in writing, of any change in the address of RSB s Agent within 28 days of such change; if RSB s Agent ceases to be able to act as a process agent or to have an address in England, RSB irrevocably agrees to appoint a new process agent in England acceptable to the other parties to the Agreement and to deliver to the other parties to the Agreement within 14 days a copy of a written acceptance of appointment by the new process agent; and nothing in this Agreement shall affect the right to serve process in any other manner permitted by law Waiver of Immunity To the extent RSB or the Issuer may, in relation to any Dispute, claim for itself or its assets or revenues, immunity from the jurisdiction of any tribunal, service of process, interim relief, or any process for execution of any award against its property, RSB and the Issuer irrevocably waive such immunity Counterparts Each Loan Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same agreement Language The language which governs the interpretation of each Loan Agreement is the English language Amendments Except as otherwise provided by its terms, each Loan Agreement may not be varied except by an agreement in writing signed by the parties hereto. 15. Severability In case any provision in or obligation under any Loan Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby

209 Schedule 1 to the Facility Agreement Form of Loan Supplement [DATE] JOINT STOCK COMPANY "RUSSIAN STANDARD BANK" and RUSSIAN STANDARD FINANCE S.A. LOAN SUPPLEMENT to be read in conjunction with a Amended and Restated Facility Agreement dated 26 September 2012 in respect of a Loan of [ ] Series [ ]

210 This Loan Supplement is made on [SIGNING DATE] between: (1) RUSSIAN STANDARD FINANCE S.A., a public limited liability company (société anonyme) established under the laws of the Grand Duchy of Luxembourg whose registered office is at 2, Bd. Konrad-Adenauer L-1115 Luxembourg, registered with the Register of Commerce and Companies of Luxembourg under number B (the "Lender"); and (2) JOINT STOCK COMPANY "RUSSIAN STANDARD BANK", a company established under the laws of the Russian Federation whose registered office is at 36 Tkatskaya Street, Moscow , Russian Federation ("RSB"). Whereas: (A) RSB has entered into an amended and restated facility agreement dated 26 September 2012 (the "Facility Agreement") with the Lender in respect of RSB's U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes (the "Programme"). (B) RSB proposes to borrow [ ] (the "Loan") and the Lender wishes to make such Loan on the terms set out in the Facility Agreement and this Loan Supplement. It is agreed as follows: 1. Definitions Capitalised terms used but not defined in this Loan Supplement shall have the meaning given to them in the Facility Agreement save to the extent supplemented or modified herein. 2. Additional Definitions For the purpose of this Loan Supplement, the following expressions used in the Facility Agreement shall have the following meanings: "Account" means the account in the name of the Lender with the Principal Paying Agent (account number [ ], [ ]) or such other account as may from time to time be agreed between the Lender and the Trustee pursuant to the Trust Deed and notified to the Borrower in writing at least 5 Business Days in advance of such change; ["Calculation Agent" means Deutsche Bank AG, London Branch;] "Closing Date" means [ ]; "Loan Agreement" means the Facility Agreement as amended and supplemented by this Loan Supplement; "Notes" means [ ] [[ ] per cent.][floating Rate] Loan Participation Notes due [ ] issued by the Lender as Series [ ] under the Programme; ["Put Settlement Date" means [ ];] [include if Put Option applicable, otherwise delete] "Repayment Date" means [ ] [amend as required for Floating Rate Notes]; "RSB Account" means the account in the name of RSB (account number [ ] [FURTHER DETAILS]); "Specified Currency" means [ ]; "Subscription Agreement" means an agreement between the Lender, RSB and [MANAGERS] dated [ ] relating to the Notes; and

211 "Trust Deed" means the Amended and Restated Principal Trust Deed between the Lender and the Trustee dated [ ] 2012 as amended and supplemented by a Supplemental Trust Deed dated [ ] constituting and securing the Notes. 3. Incorporation by Reference Except as otherwise provided, the terms of the Facility Agreement shall apply to this Loan Supplement as if they were set out herein and the Facility Agreement shall be read and construed, only in relation to the Loan constituted hereby, as one document with this Loan Supplement. 4. The Loan 4.1 Drawdown Subject to the terms and conditions of the Loan Agreement, the Lender agrees to make the Loan on the Closing Date to RSB and RSB shall make a single drawing in the full amount of the Loan. 4.2 Interest The Loan is a [Fixed Rate][Floating Rate] Loan. Interest shall be calculated, and the following terms used in the Facility Agreement shall have the meanings, as set out below: Fixed Rate Loan Provisions [Applicable/Not Applicable] (i) Interest Commencement Date [ ] (If not applicable, delete the remaining sub paragraphs of this paragraph) (ii) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually] in arrear] (iii) Interest Payment Date(s): [ ] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of "Business Day"]/not adjusted] (iv) Fixed Amount[(s)]: [ ] per [ ] in principal amount (v) Broken Amount: [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Amount [(s)] and the Interest Payment Date(s) to which they relate] (vi) Day Count Fraction: [ ] (Day count fraction should be Actual/Actual-ICMA for all fixed rate loans other than those denominated in U.S. dollars, unless specified) (vii) Determination Date(s): [ ] in each year. [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last

212 interest period] ** Floating Rate Loan Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Commencement Date [ ] (ii) Interest Period(s): [ ] (iii) Specified Interest Payment Dates: [ ] (iv) Business Day Convention: [Floating Rate Business Day Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] (v) Business Centre(s) (Clause 4.9): [ ] (vi) Manner in which the Rate(s) of Interest is/are to be determined: [Screen Rate Determination/ISDA Determination] (vii) Interest Period Date(s): [Not Applicable/specify dates] (viii) Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): [ ] (ix) Screen Rate Determination (sub-clause 4.3.3): - Relevant Time: [ ] - Interest Determination Date: [[ ] [TARGET] Business Days in [specify city] for [specify currency] prior to [the first day in each Interest Accrual Period/each Interest Payment Date]] ** Only to be completed for a Loan where Day Count Fraction is Actual/Actual-ICMA

213 - Primary Source for Floating Rate: [Specify relevant screen page and rate or "Reference Banks"] - Reference Banks (if Primary Source is "Reference Banks"): [Specify four] - Relevant Financial Centre: [The financial centre most closely connected to the Benchmark - specify if not London] - Benchmark: [LIBOR, LIBID, LIMEAN, EURIBOR] - Representative Amount: [Specify if screen or Reference Bank quotations are to be given in respect of a transaction of a specified notional amount] - Effective Date: [Specify if quotations are not to be obtained with effect from commencement of Interest Accrual Period] - Specified Duration: [Specify period for quotation if not duration of Interest Accrual Period] (x) ISDA Determination (Clause 4.3): - Floating Rate Option: [ ] - Designated Maturity: [ ] - Reset Date: [ ] - ISDA Definitions: [ ] (xi) Margin(s): [+/-][ ] per cent. per annum (xii) Minimum Rate of Interest: [ ] per cent. per annum (xiii) Maximum Rate of Interest: [ ] per cent. per annum (xiv) Day Count Fraction (Clause 4.9): [ ]

214 (xv) Rate Multiplier: [ ] Put Option [Applicable / Not Applicable] 5. Fees and Expenses Pursuant to Clause 3.2 of the Facility Agreement and in consideration of the Lender making the Loan to RSB, RSB hereby agrees that it shall, one Business Day before the Closing Date, pay to the Lender, in Same-Day Funds, the total amount of [ ], being the "Arrangement Fee" in respect of the Loan, representing the reasonable costs and expenses incurred by the Lender in connection with such Loan, increased by front-end fees, commissions and expense, which shall include the amount of all of the commissions, fees, costs and expenses as set forth in Clause 5.1 of the Subscription Agreement, paragraph 1 of the Fee Side Letter and Clauses 3.2 and 13.1 of the Facility Agreement pursuant to an invoice submitted by the Lender to RSB in the total amount. 6. Governing Law This Loan Supplement and any non-contractual obligations arising out of it or in connection with it shall be governed by, and construed in accordance with, English law. The provisions of Clauses 14.9 to (inclusive) of the Facility Agreement shall apply to the parties to this Agreement as if specifically incorporated herein. This Loan Supplement has been entered into on the date stated at the beginning. JOINT STOCK COMPANY RUSSIAN STANDARD BANK By: By: RUSSIAN STANDARD FINANCE S.A. By: Title: DIRECTOR By: Title: DIRECTOR

215 Schedule 2 to the Facility Agreement Form of Officers Certificate To: Deutsche Trustee Company Limited Winchester House 1 Great Winchester Street London EC2N 2DB From: Joint Stock Company Russian Standard Bank Dated: [ ] Dear Sirs Joint Stock Company "Russian Standard Bank" Amended and Restated Facility Agreement dated 26 September 2012 (the "Facility Agreement") We refer to the Facility Agreement. Terms defined therein shall mean the same herein. This is an Officers Certificate for the purposes thereof: For and on behalf of Joint Stock Company Russian Standard Bank Signed:. principal executive officer/ principal accounting officer/ principal financial officer of Joint Stock Company "Russian Standard Bank".. [officer] of Joint Stock Company "Russian Standard Bank" [encl:] [Auditors report as to extraction]

216 TERMS AND CONDITIONS OF THE NOTES The following is the text of the Terms and Conditions of the Notes, which contain summaries of certain provisions of the Trust Deed, and which (subject to completion and amendment in accordance with the provisions of Part A of the relevant Final Terms) will be attached to the Notes in definitive form, if issued, and (subject to the provisions thereof) apply to the Global Notes representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of Part A of the relevant Final Terms or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such definitive Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the Trust Deed and the relevant Final Terms. Those definitions will be endorsed on the definitive Notes. References in the Conditions to "Notes" are to the Notes of one Series only, not to all Notes that may be issued under the Programme. The Notes are constituted by, are subject to, and have the benefit of, a supplemental trust deed dated the Issue Date specified hereon (the "Supplemental Trust Deed") supplemental to an amended and restated trust deed (as further amended or supplemented as at the Issue Date, the "Principal Trust Deed") dated 26 September 2012, each made between Russian Standard Finance S.A. (the "Issuer") and Deutsche Trustee Company Limited (the "Trustee", which expression shall include any trustee or trustees for the time being under the Trust Deed) as trustee for the holders of the Notes (the "Noteholders"). The Principal Trust Deed and the Supplemental Trust Deed as modified from time to time in accordance with the provisions therein contained and any deed or other document expressed to be supplemental thereto, as from time to time so modified, are together referred to as the "Trust Deed". The Issuer has authorised the creation, issue and sale of the Notes for the sole purpose of financing either a senior loan (if the status of the Loan is specified as "Senior" in the relevant Final Terms, a "Senior Loan") or a subordinated loan (if the status of the Loan is specified as "Subordinated" in the relevant Final Terms, a "Subordinated Loan" and together with a Senior Loan, the "Loans", and any one of them a "Loan") to Joint Stock Company "Russian Standard Bank" ("RSB"), as borrower, subject to, and in accordance with, either (i) in relation to a Senior Loan, a facility agreement between the Issuer and RSB dated 26 September 2012 (such facility agreement, the "Facility Agreement") as amended and supplemented by a loan supplement to be dated the Issue Date (the "Loan Supplement" and, together with the Facility Agreement, the "Senior Loan Agreement"), or (ii) in relation to a Subordinated Loan, a subordinated loan agreement between the Issuer and RSB (the "Subordinated Loan Agreement"), in such form as may be agreed between the Issuer, RSB and the Trustee. In these Conditions, "Loan Agreement" shall mean either (i) a Senior Loan Agreement (in respect of a Senior Loan) or (ii) a Subordinated Loan Agreement (in respect of a Subordinated Loan), as applicable. In each case where amounts of principal, interest and additional amounts (if any) are stated herein or in the Trust Deed to be payable in respect of the Notes, the obligations of the Issuer to make any such payment shall constitute an obligation only to account to the Noteholders on each date upon which such amounts of principal, interest and additional amounts (if any) are due in respect of the Notes, for an amount equivalent to sums of principal, interest and additional amounts (if any) actually received by or for the account of the Issuer pursuant to the relevant Loan Agreement, less any amounts in respect of the Reserved Rights (as defined below). Noteholders must therefore rely solely and exclusively on the covenant to pay under the relevant Loan Agreement and the credit and financial standing of RSB. Noteholders shall have no recourse (direct or indirect) to any other assets of the Issuer. None of the Noteholders, the Trustee or the other creditors (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, administration, moratorium, reorganisation, controlled management, arrangement, insolvency, winding-up or liquidation proceedings or similar insolvency proceedings under any applicable bankruptcy or similar law in connection with any obligation of the Issuer relating to the Notes or otherwise owed to the creditors or the Trustee for so long as the Notes are outstanding, save for lodging a claim in the liquidation of the Issuer which is initiated by another party or taking proceedings to obtain a declaration or judgment as to the

217 obligations of the Issuer. The Issuer has charged by way of first fixed charge in favour of the Trustee certain of its rights and interests as lender under the relevant Loan Agreement (other than any rights and benefits constituting Reserved Rights) as security for its payment obligations in respect of the Notes and under the Trust Deed (the "Charge") and has assigned absolutely certain other rights under the relevant Loan Agreement to the Trustee (together with the Charge, the "Security Interests"). "Reserved Rights" are the rights excluded from the Security Interests, being all and any rights, interests and benefits of the Issuer in respect of the obligations of RSB (i) in respect of a Senior Series (as defined in the Trust Deed), under Clauses 3.4, 5.3 (other than the right to receive any amount payable under such Clause), 6.2 (to the extent that RSB shall reimburse the Issuer on demand for any amount paid by the Issuer in respect of Russian Federation taxes, penalties or interest), 6.3 (only to the extent that the Issuer has received amounts to which the Noteholders are not entitled), 3.2, 8, 10.8, , 13.1 and 14.2 (to the extent that RSB shall reimburse the Issuer for any amount paid by the Issuer in respect of such taxes, charges or costs) of the Facility Agreement and, for the avoidance of doubt, Clauses 6.4, 6.5 and 6.6 of the Facility Agreement, and (ii) in respect of a Subordinated Series (as defined in the Trust Deed), as set out in the relevant Supplemental Trust Deed. In certain circumstances, the Trustee can (subject to it being indemnified and/or secured to its satisfaction) be required by Noteholders holding at least one quarter of the principal amount of the Notes outstanding or by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders to exercise certain of its powers under the Trust Deed (including those arising under the Security Interests). The Notes have the benefit of, and payments in respect of the Notes will be made (subject to the receipt of the relevant funds from RSB) pursuant to, the amended and restated paying agency agreement (the "Agency Agreement") dated 26 September 2012 and made between the Issuer, Deutsche Bank Luxembourg S.A., Deutsche Bank Trust Company Americas, and Deutsche Bank AG, London Branch. Deutsche Bank AG, London Branch will act as principal paying agent (the "Principal Paying Agent" and a "Paying Agent"), a transfer agent (a "Transfer Agent") and calculation agent (the "Calculation Agent"). Deutsche Bank Luxembourg S.A. will act as Luxembourg paying agent (the "Luxembourg Paying Agent" and a "Paying Agent"), a transfer agent (a "Transfer Agent") and registrar in respect of Regulation S Notes (the "Luxembourg Registrar"). Deutsche Bank Trust Company Americas will act as United States paying agent (the "U.S. Paying Agent" and a "Paying Agent"), a transfer agent (a "Transfer Agent") and registrar in respect of the 144A Notes (the "U.S. Registrar"). The U.S. Registrar and the Luxembourg Registrar are together the "Registrars". Copies of the Trust Deed, the Facility Agreement (in the case of a Senior Series only), each Loan Supplement (in the case of a Senior Series only), each Subordinated Loan Agreement (in the case of a Subordinated Series only), the Agency Agreement and the Final Terms are available for inspection by Noteholders during normal business hours at the principal office of the Trustee being, at the date hereof, at Winchester House, 1 Great Winchester Street, London EC2N 2DB, at the specified office of the Principal Paying Agent and at the specified office of the Luxembourg Paying Agent. Certain provisions of these terms and conditions (the "Conditions") include summaries or restatements of, and are subject to, the detailed provisions of the Trust Deed, the Final Terms, the relevant Loan Agreement (the form of which is scheduled to and incorporated in the Trust Deed) and the Agency Agreement. Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions thereof. 1. Status The sole purpose of the issue of the Notes is to provide the funds for the Issuer to finance the Loan. The Notes constitute the obligation of the Issuer to apply the proceeds from the issue of the Notes solely for financing the Loan and to account to the Noteholders for an amount

218 equivalent to sums of principal, interest and additional amounts (if any) actually received by or for the account of the Issuer pursuant to the relevant Loan Agreement, less any amount in respect of the Reserved Rights. The Trust Deed provides that payments in respect of the Notes equivalent to the sums actually received by or for the account of the Issuer by way of principal, interest or additional amounts (if any) pursuant to the relevant Loan Agreement, less any amounts in respect of the Reserved Rights, will be made pro rata among all Noteholders, on the date of, and in the currency of, and subject to the conditions attaching to, the equivalent payment pursuant to the relevant Loan Agreement. The Issuer shall not be liable to make any payment in respect of the Notes other than as expressly provided herein and in the Trust Deed. As provided therein, neither the Issuer nor the Trustee shall be under any obligation to exercise in favour of the Noteholders any rights of set-off or of banker s lien or to combine accounts or counterclaim that may arise out of other transactions between the Issuer and RSB. Noteholders have notice of, and have accepted, these Terms and Conditions, the Final Terms and the contents of the Trust Deed, the Agency Agreement and the relevant Loan Agreement. It is hereby expressly provided that, and Noteholders are deemed to have accepted that: 1.1 neither the Issuer nor the Trustee makes any representation or warranty in respect of, or shall at any time have any responsibility for, or, save as otherwise expressly provided in the Trust Deed, in the relevant Loan Agreement (in the case of the Issuer) or in paragraph 1.6 below, liability or obligation in respect of the performance and observance by RSB of its obligations under the relevant Loan Agreement or the recoverability of any sum of principal or interest (or any additional amounts) due or to become due from RSB under the relevant Loan Agreement; 1.2 neither the Issuer nor the Trustee shall at any time have any responsibility for, or obligation or liability in respect of, the financial condition, creditworthiness, affairs, status or nature of RSB; 1.3 neither the Issuer nor the Trustee shall at any time be liable for any representation or warranty or any act, default or omission of RSB under or in respect of the relevant Loan Agreement; 1.4 neither the Issuer nor the Trustee shall at any time have any responsibility for, or liability or obligation in respect of, the performance and observance by the Principal Paying Agent, any of the Paying Agents, the Registrars or the Transfer Agents, of their respective obligations under the Agency Agreement; 1.5 the financial servicing and performance of the terms of the Notes depend solely and exclusively upon performance by RSB of its obligations under the relevant Loan Agreement and its covenant to make payments under the relevant Loan Agreement and its credit and financial standing. RSB has represented and warranted to the Issuer that (subject to certain qualifications) the relevant Loan Agreement constitutes a legal, valid and binding obligation of RSB; and 1.6 the Issuer and the Trustee shall be entitled to rely on certificates signed by two duly authorised officers of RSB (and, where applicable, certification by third parties) as a means of monitoring whether RSB is complying with its obligations under the relevant Loan Agreement and identifying Material Subsidiaries and shall not otherwise be responsible for investigating any aspect of RSB s performance in relation thereto and, subject as further provided in the Trust Deed, the Trustee will not be liable for any failure to make the usual or any investigations which might be made by a security holder in relation to the property which is the subject of the Trust Deed and held by way of security for the Notes, and shall not be bound to enquire into or be liable for any defect or failure in the right or title of the Issuer to the assigned property which is subject to the Security

219 Interests whether such defect or failure was known to the Trustee or might have been discovered upon examination or enquiry or whether capable of remedy or not, nor will it have any liability for the enforceability of the security created by the Security Interests whether as a result of any failure, omission or defect in registering or filing or otherwise protecting or perfecting such security and the Trustee has no responsibility for the value of such security. The obligations of the Issuer in respect of the Notes rank pari passu and rateably without any preference among themselves. In respect of a Note issued under a Subordinated Series (as defined in the Trust Deed) only, the claims of the Issuer under the relevant Subordinated Loan Agreement, excluding the Reserved Rights, constitute the direct, unconditional, unsecured subordinated obligations of RSB (whether actual or contingent) and will rank at least equally with all other unsecured subordinated obligations of RSB (whether actual or contingent) as more fully set out in the relevant Subordinated Loan Agreement. In the event that the payments under the relevant Loan Agreement are made by RSB to, or to the order of, the Trustee or (subject to the provisions of the Trust Deed) the Principal Paying Agent, they will pro tanto satisfy the obligations of the Issuer in respect of the Notes. Save as otherwise expressly provided herein and in the Trust Deed, no proprietary or other direct interest in the Issuer s rights under or in respect of the relevant Loan Agreement or the Loan exists for the benefit of the Noteholders. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to enforce the relevant Loan Agreement or have direct recourse to RSB except through action by the Trustee pursuant to the relevant Security Interests granted to the Trustee in the Trust Deed. Neither the Issuer nor, following the enforcement of the Security Interests created in the Trust Deed, the Trustee shall be required to take proceedings to enforce payment under the relevant Loan Agreement unless it has been indemnified and/or secured by the Noteholders to its satisfaction. 2. Form, Denomination and Title The Notes will be issued in fully registered form, and in the Specified Denomination shown hereon (which shall be not less than EUR100,000 or its equivalent in other currencies) or integral multiples in excess thereof, without interest coupons, provided that (i) interests in the Rule 144A Notes shall be held in amounts of not less than U.S.$200,000 and (ii) Notes with a maturity of less than 365 days shall be held in amounts not less than 100,000 (or its equivalent in other currencies). A Note issued under the Principal Trust Deed may be a Fixed Rate Note, a Floating Rate Note, a combination of the foregoing or any other kind of Note, depending upon the Interest and Redemption/Payment Basis specified hereon. 3. Register, Title and Transfers 3.1 Registers The Luxembourg Registrar will maintain a register in respect of the Regulation S Notes (the "Regulation S Register") and the U.S. Registrar will maintain a register in respect of the Rule 144A Notes (the "Rule 144A Register" and, together with the Regulation S Register, the "Registers"), all in accordance with the provisions of the Agency Agreement. In these Conditions the "holder" of a Note means the person in whose name such Note is for the time being registered in the relevant Register (or, in the case of a joint holding, the first named thereof) and "Noteholder" shall be construed accordingly. A Note will be issued to each Noteholder in respect of its registered holding. The Issuer will also maintain a register (the "Issuer s Register") at its registered office. Under the terms of the Agency Agreement, the

220 Registrars will provide to the Issuer such information about changes in the Registers as shall enable the Issuer to maintain the Issuer s Register up-to-date. In case of inconsistency between the Registers and the Issuer s Register, the Issuer s Register shall prevail for the purpose of applicable Luxembourg law. 3.2 Title The holder of each Note shall (except as otherwise required by law) be treated as the absolute owner of such Note for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing on the Note relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft of such Note) and no person shall be liable for so treating such holder. 3.3 Transfers Subject to Conditions 3.6 and 3.7, a Note may be transferred upon surrender of the relevant Note, with the endorsed form of transfer duly completed, at the specified office of the relevant Registrar or at the specified office of a Transfer Agent, together with such evidence as the relevant Registrar or such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer. Where not all the Notes represented by the surrendered Note are the subject of the transfer, a new Note in respect of the balance of the Note will be issued to the transferor. 3.4 Registration and Delivery of Notes Within five Business Days of the surrender of a Note in accordance with Condition 3.3, the relevant Registrar will register the transfer in question and deliver a new Note to each relevant holder for collection at its specified office or (at the request and risk of such relevant holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant holder. In this paragraph, "Business Day" means a day on which commercial banks are open for business (including dealings in foreign currencies) in the city where the relevant Registrar has its specified office. 3.5 No Charge The transfer of a Note will be effected without charge but against such indemnity as the relevant Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer. 3.6 Closed Periods Noteholders may not require transfers to be registered during the period of 15 days ending on the due date for any payment of principal or interest in respect of the Notes. 3.7 Regulations Concerning Transfers and Registration All transfers of Notes and entries on the Registers are subject to the detailed regulations concerning the transfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Lender with the prior written approval of the Trustee and the Registrars. A copy of the current regulations will be mailed (free of charge) by either Registrar to any Noteholder who requests in writing a copy of such regulations. 4. Restrictive Covenants As provided in the Trust Deed, so long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer will not, without the prior written consent of the Trustee, agree to any amendments to or any modification of (in each preceding case, in respect of a Note issued under a Subordinated Series only, with the consent of the Central Bank of Russia if applicable

221 ("CBR")) or waiver of, or authorise any breach or proposed breach of, the terms of the Trust Deed or the relevant Loan Agreement and will act at all times in accordance with any instructions of the Trustee from time to time with respect to the relevant Loan Agreement, except as otherwise expressly provided in the relevant Loan Agreement. Any such amendment, modification, waiver or authorisation made with the consent of the Trustee shall be binding on the Noteholders and, unless the Trustee agrees otherwise, any such amendment or modification shall be notified by the Issuer to the Noteholders in accordance with Condition 14. Save as provided above, so long as any Note remains outstanding, the Issuer, without the prior written consent of the Trustee, shall not, inter alia, incur any indebtedness for borrowed moneys (other then issuing further Notes (which may be consolidated and form a single series with Notes of any Series) and/or creating or incurring further obligations relating to such Notes), engage in any business (other than entering into the Programme, issuing Notes thereunder from time to time for the sole purpose of financing Loans to RSB in accordance with (i) the Facility Agreement and each Loan Supplement in the case of a Senior Series or (ii) the relevant Subordinated Loan Agreement in the case of a Subordinated Series, as applicable, entering into related agreements and transactions and performing any act incidental or necessary in connection with any of the foregoing) declare any dividends, have any subsidiaries or employees, purchase, own, lease or otherwise acquire any real property (including office premises or like facilities), consolidate or merge with any other person or convey or transfer its properties or assets substantially as an entity to any person (otherwise than as contemplated in these Conditions and the Trust Deed), issue any shares (other than such shares as are in issue at the date of the Principal Trust Deed), give any guarantee or assume any other liability, or subject to the laws of Luxembourg, petition for any winding-up or bankruptcy. 5. Interest 5.1 Interest on Fixed Rate Notes Each Fixed Rate Note bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate(s) per annum (expressed as a percentage) equal to the Rate(s) of Interest specified hereon which shall be equal to the rate per annum at which interest under the Loan accrues. Accordingly, on each Interest Payment Date or as soon as thereafter as the same is received the Issuer shall account to the Noteholders for an amount equivalent to amounts of interest under the Loan received by or for the account of the Issuer pursuant to the relevant Loan Agreement. If a Fixed Coupon Amount is specified in the relevant Final Terms, the amount of interest per Calculation Amount payable on each Interest Payment Date shall be an amount equal to the Fixed Coupon Amount, provided that if a Broken Amount is specified in the relevant Final Terms as being payable on any Interest Payment Date, the amount of interest per Calculation Amount payable on such Interest Payment Date shall be an amount equal to the Broken Amount. If no Fixed Coupon Amount or Broken Amount is specified in the relevant Final Terms, the amount of interest payable shall be determined in accordance with Condition Interest on Floating Rate Notes (i) Interest Payment Dates: Each Floating Rate Note bears interest on its outstanding principal amount from (and including) the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest specified hereon, which shall be equal to the rate per annum at which interest under the Loan accrues, such interest being payable in arrear on each Interest Payment Date or as soon as thereafter as the same is received. Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are

222 shown hereon, Interest Payment Date shall mean each date which falls the number of months or other period shown hereon as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. Accordingly, on each such date, the Issuer shall account to the Noteholders for an amount equivalent to amounts of interest under the Loan received by or for the account of the Issuer pursuant to the relevant Loan Agreement. (ii) (iii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (C) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day. Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period (as defined in the relevant Loan Agreement) shall be determined in the manner specified hereon and as set out in the relevant Loan Agreement. 5.3 Accrual of Interest Interest shall cease to accrue on each Note on the due date for redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in this Condition 5 to the Relevant Date (as defined in Condition 8). 5.4 Calculations The amount of interest payable per Calculation Amount in respect of any Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount specified hereon and the Day Count Fraction for such Interest Accrual Period as specified hereon and in the relevant Loan Agreement, unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case the amount of interest payable per Calculation Amount in respect of such Note for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated, the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated. 5.5 Publication of Rates of Interest and Interest Amounts As soon as practicable after calculating or determining the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date as set out in the relevant Loan Agreement, the Calculation Agent shall cause such Rate of Interest and Interest Amounts to be notified to the Trustee, the Issuer, RSB, each of the Paying Agents, the Noteholders, any other Calculation Agent appointed in respect of the Notes that is to make a

223 further calculation upon receipt of such information and, if the Notes are listed on a stock exchange and the rules of such exchange or other relevant authority so require, such exchange or other relevant authority as soon as possible after their determination, but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 5.2(ii), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If a Loan become due and payable under Clause 11 of the relevant Loan Agreement, the accrued interest and the Rate of Interest payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties. 5.6 Determination or Calculation by Trustee If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Period or any Interest Amount pursuant to the relevant Loan Agreement, the Trustee shall do so (or shall appoint an agent on its behalf to do so) and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee shall apply the foregoing provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. 6. Redemption 6.1 Scheduled redemption Unless the Loan is previously prepaid or repaid pursuant to (i) Clause 5.2 or 5.3 of the Facility Agreement in the case of a Senior Series of Notes or (ii) the terms of the relevant Subordinated Loan Agreement in the case of a Subordinated Series of Notes, RSB will be required to repay the Loan one Business Day (as defined in the relevant Loan Agreement) before its Repayment Date (as defined in the relevant Loan Agreement) and, subject to such repayment, as set forth in the relevant Loan Agreement, all the Notes then remaining outstanding will be redeemed or repaid by the Issuer in the relevant Specified Currency on the Maturity Date specified hereon at their Final Redemption Amount (which, unless otherwise specified hereon, is 100 per cent. of the principal amount thereof). 6.2 Early redemption If the Loan should become repayable (and be repaid) or be prepaid pursuant to the relevant Loan Agreement prior to its scheduled repayment date, all Notes then remaining outstanding will thereupon become due and redeemable or repayable at their Early Redemption Amount (which, unless otherwise specified hereon is par together with interest accrued to the date of redemption) and the Issuer will endeavour to give not less than fifteen nor more than thirty days notice thereof to the Trustee and the Noteholders in accordance with Condition 14. To the extent that the Issuer receives amounts of principal, interest and/or additional amounts, if any, (other than amounts in respect of the Reserved Rights) following acceleration of the Loan pursuant to the relevant Loan Agreement, the Issuer shall pay an amount equal to and in the same currency as such amounts on the Business Day following receipt of such amounts, subject as provided in Condition

224 6.3 Rule 144A notes The Issuer may compel any beneficial owner of an interest in the Rule 144A Notes to sell its interest in such Notes, or may sell such interest on behalf of such holder, if such holder is not a qualified institutional buyer (as defined in Rule 144A under the Securities Act) and a qualified purchaser (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940). 6.4 Cancellation The Facility Agreement also provides that the RSB may, among other things, from time to time deliver Notes to the Issuer, having an aggregate principal value of at least U.S.$1,000,000, together with a request for the Issuer to present such Notes to the relevant Registrar for cancellation, whereupon the Issuer shall, pursuant to the Agency Agreement, request the relevant Registrar to cancel such Notes. Upon any such cancellation by or on behalf of the relevant Registrar, the principal amount of the Loan corresponding to the principal amount of such Notes surrendered for cancellation shall be extinguished as of the date of such cancellation and no further payment shall be made or required to be made by the Issuer in respect of such Notes. This Condition 6.4 will only apply to Notes issued under a Subordinated Series to the extent provided for in the relevant Subordinated Loan Agreement. 6.5 Put Option If a Put Option is specified hereon, the Issuer shall, at the option of any holder of a Note in respect of a Senior Series (a "Senior Note"), redeem such Senior Note on the Put Settlement Date specified hereon (the "Put Option") at its principal amount together with accrued interest. To exercise such option a holder of a Senior Note must deposit the Senior Note or Senior Notes to be redeemed with any Paying Agent together with a duly completed put option notice ("Put Option Notice") in the form obtainable from any of the Paying Agents, not more than 60 but not less than 30 days prior to the Put Settlement Date (the "Put Period") save in circumstances where an alternative put period is specified in the relevant final terms (an "Alternative Put Period"). No Senior Note so deposited may be withdrawn. Provided, however, that if, prior to the Put Settlement Date, a Relevant Event has occurred or, upon due presentation of any Senior Note on the Put Settlement Date, payment of the redemption moneys is improperly withheld or refused, such Senior Note shall, without prejudice to the exercise of the Put Option, be returned to the holder of such Senior Note by uninsured first class mail (airmail if overseas) at such address as may have been given by such holder of a Senior Note in the relevant Put Option Notice. The Issuer shall notify the Borrower, not more than three Business Days after receipt of notice thereof from the Paying Agent, of the amount of the Loan to be prepaid as a consequence of the exercise of the Put Option. Subject to timely receipt of the relevant amounts from the Borrower under the relevant Loan Agreement, the Issuer shall redeem the Senior Notes in accordance with this Condition 6.5 on the Put Settlement Date, subject as provided in Condition Payments and Agents 7.1 Principal Payments of principal shall be made against presentation and surrender of the relevant Notes at the specified office of the Principal Paying Agent or at the specified office of any Transfer Agent or Registrar and in the manner provided in the Condition below. 7.2 Interest Interest shall be paid to the person shown on the relevant Register at the opening of business on the fifteenth day before the due date for payment thereof (the "Record Date"). Payments of

225 interest shall be made in the Specified Currency by cheque drawn on a bank in the principal financial centre for the Specified Currency or, in the case of euro, in a city in which banks have access to the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System or any successor thereof (a "Bank") and mailed to the Noteholder (or to the first named of joint Noteholders) of such Note at its address appearing in the relevant Register. Upon application by the holder to the specified office of the relevant Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank, or by transfer to an account in the Specified Currency maintained by the payee with, a Bank in the principal financial centre of such Specified Currency or in the case of euro, a Bank specified by the payee or at the option of the payee, by a euro-cheque and (in the case of interest payable on redemption) upon surrender of the relevant Notes at the specified office of the Principal Paying Agent or at the specified office of any Transfer Agent. 7.3 Payments Subject to Fiscal Laws All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 8. No commissions or expenses shall be charged to the Noteholders in respect of such payments. 7.4 Payments on Business Days If the due date for payments of interest or principal is not a Business Day, a Noteholder shall not be entitled to payment of the amount due until the next following Business Day and shall not be entitled to any further interest or other payment in respect of any such delay. In this paragraph, "Business Day" means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation, in such jurisdictions as shall be specified as "Financial Centres" hereon, and (i) (in the case of a payment in a currency other than euro) where payment is to be made by transfer to an account maintained with a bank in the relevant currency, on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency or (ii) (in the case of a payment in euro) which is a TARGET Business Day. 7.5 Accrued Interest The names of the initial Paying Agents and their initial specified offices are set out below. The Agency Agreement provides that the Issuer may at any time, with the prior written approval of the Trustee, vary or terminate the appointment of the Principal Paying Agent or any of the Paying Agents, and appoint additional or other paying agents provided that (i) so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant authority, there will be a paying agent and transfer agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority and (ii) there will be a Paying Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN Council meeting of November 2000 on the taxation of savings income or any law implementing or complying with or introduced in order to conform to such Directive. Any such variation, termination or appointment shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not more than 45 days and not less than 30 days notice thereof shall have been given to the Noteholders in accordance with Condition 14. In addition, if the due date for redemption or repayment of a Note is not an Interest Payment Date, interest accrued from the preceding Interest Payment Date or, as the case may be, from the Issue Date as specified hereon shall be payable only as and when actually received by or

226 for the account of the Issuer pursuant to the relevant Loan Agreement. 7.6 Payments by RSB Save as otherwise directed by the Trustee at any time after any of the Security Interests created in the Trust Deed becomes enforceable, the Issuer will, pursuant to Clause 6 of the Agency Agreement require RSB to make all payments of principal and interest and any additional amounts to be made pursuant to the relevant Loan Agreement to an account in the name of the Issuer with the Principal Paying Agent (the "Account"). Under the Charge, the Issuer will charge by way of first fixed charge all the rights, title and interest in and to all sums of money then or in the future deposited in the Account in favour of the Trustee for the benefit of the Noteholders. 8. Taxation All payments in respect of the Notes by or on behalf of the Issuer will be made without deduction or withholding for or on account of any present or future taxes, duties or assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Luxembourg or any political subdivision or any authority thereof or therein having the power to tax, unless the deduction or withholding of taxes or duties is required by law. In such event, the Issuer shall make such additional payments as shall result in the receipt by the Noteholders of such amount as would have been received by them if no such withholding or deduction had been required but only to the extent and only at such time as the Issuer receives an equivalent amount from RSB under the relevant Loan Agreement. To the extent that the Issuer receives a lesser additional amount from RSB, the Issuer will account to each Noteholder for an additional amount equivalent to a pro rata proportion of such additional amount (if any) as is actually received by, or for the account of, the Issuer pursuant to the relevant Loan Agreement on the date of, in the currency of, and subject to any conditions attaching to the payment of such additional amount to the Issuer, provided that no additional amount will be payable in respect of any Note: 8.1 to a Noteholder who (a) is able to avoid such deduction or withholding by satisfying any statutory requirements or by making a declaration of non-residence or other claim for exemption to the relevant tax authority; or (b) is liable for such taxes or duties by reason of his having some connection with Luxembourg other than the mere holding of such Note or the receipt of payments in respect thereof; 8.2 in respect of any tax or amounts owed pursuant to an agreement with a taxing authority that would not have been imposed but for a failure by the Noteholder or beneficial owner (or any financial institution through which the Noteholder or beneficial owner holds any Note or through which payment on the Note is made) to (i) enter into an agreement described in Section 1471(b)(1) of the U.S. Internal Revenue Code of 1986 (the "Code") or otherwise comply with Sections 1471 through 1474 of the Code or any regulations promulgated thereunder (or under any implementing legislation adopted by Luxembourg), (ii) provide information sufficient for the Issuer to determine whether the Noteholder or beneficial owner (or financial institution through which the Noteholder or beneficial owner holds any Note or through which payment on the Note is made) is a U.S. person or should otherwise be treated as holding a "United States account" of the Issuer (or comply with similar requirements under any implementing legislation adopted by Luxembourg) or (iii) consent, where necessary, to have information about it reported to the U.S. taxing authorities; 8.3 presented for payment of principal more than 30 days after the Relevant Date except to the extent that such additional payment would have been payable if such Note had been presented for payment on such 30th day;

227 8.4 where such withholding or deduction is imposed on a payment to an individual or a residual entity within the meaning of the Council Directive 2003/48/EC and is required to be made pursuant to (i) European Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN Council meeting of November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive (ii) the law of 23 December 2005 introducing a 10 per cent. final withholding tax as regards Luxembourg resident individuals and (iii) the agreements on savings income concluded by the Grand Duchy of Luxembourg with several dependant or associated territories of the EU (being Jersey, Guernsey, the Isle of Man, the British Virgin Islands, Montserrat, the former Dutch Antilles and Aruba); or 8.5 presented for payment by or on behalf of a Noteholder who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Paying Agent in a Member State of the European Union. As used herein, "Relevant Date" (i) means the date on which any payment under the relevant Loan Agreement first becomes due but (ii) if the full amount payable by RSB has not been received by, or for the account of, the Issuer pursuant to the relevant Loan Agreement on or prior to such date, it means the date on which such moneys shall have been so received and notice to that effect shall have been duly given to the Noteholders by or on behalf of the Issuer in accordance with Condition 14. Any reference herein or in the Trust Deed to payments in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable in accordance with the Trust Deed and this Condition 8 or any undertaking given in addition thereto or in substitution therefor pursuant to the Trust Deed. 9. Enforcement The Trust Deed provides that only the Trustee may pursue the remedies under the general law, the Trust Deed or the Notes to enforce the rights of the Noteholders and no Noteholder will be entitled to pursue such remedies unless the Trustee (having become bound to do so in accordance with the terms of the Trust Deed) fails or neglects to do so within a reasonable time and such failure or neglect is continuing. At any time after the occurrence of (i) an Event of Default (as defined in the Facility Agreement and in the case of a Senior Series only), (ii) an Acceleration Event (as defined in the relevant Subordinated Loan Agreement and in the case of a Subordinated Series only), or (iii) a Relevant Event (as defined in the Trust Deed), the Trustee may, at its discretion and without notice and shall, if requested to do so by Noteholders holding 25 per cent. in aggregate principal amount of the Notes outstanding, or if directed to do so by an Extraordinary Resolution and, in each case, subject to it being secured and/or indemnified to its satisfaction, (i) (in the case of an Event of Default in respect of a Note issued under a Senior Series only) declare all amounts payable under the relevant Senior Loan Agreement by RSB to be due and payable, (ii) (in the case of an Acceleration Event in respect of a Note issued under a Subordinated Series only) take the action permitted to be taken by the Issuer under the relevant Subordinated Loan Agreement, or (iii) (in the case of a Relevant Event) enforce the security created in the Trust Deed in favour of the Trustee. Upon repayment of the Loan following (i) an Event of Default (in the case of a Senior Series) or (ii) an Acceleration Event (in the case of a Subordinated Series), and, in either case, a declaration as provided herein, the Notes will be redeemed or repaid at their principal amount together with interest accrued to the date fixed for redemption and thereupon shall cease to be outstanding

228 10. Meetings of Noteholders; Modification of Notes, Trust Deed and relevant Loan Agreement; Waiver; Substitution of the Issuer; Appointment/Removal of Trustees 10.1 Meetings of Noteholders The Trust Deed contains provisions for convening meetings of Noteholders to consider any matter affecting their interests, including any modification of, or any arrangement in respect of, the Notes, the relevant Loan Agreement or the Trust Deed. Noteholders will vote pro rata according to the principal amount of their Notes. Special quorum provisions apply for meetings of Noteholders convened for the purpose of amending certain terms concerning, inter alia, the amounts payable on, and the currency of payment in respect of, the Notes and the amounts payable and currency of payment under the relevant Loan Agreement. Any resolution duly passed at a meeting of Noteholders will be binding on all the Noteholders, whether present or not. The Trust Deed provides that a written resolution signed by the holders of 75 per cent. in nominal amount of the Notes outstanding shall take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders Modification and Waiver The Trustee may agree, without the consent of the Noteholders, to any modification of the Notes and the Trust Deed or the relevant Loan Agreement which in the opinion of the Trustee is of a formal, minor or technical nature, is made to correct a manifest error or is not materially prejudicial to the interests of the Noteholders (as a class). The Trustee may also waive or authorise or agree to the waiving or authorising of any breach or proposed breach by the Issuer of the Conditions or the Trust Deed or by RSB of the terms of the relevant Loan Agreement, or determine that any event which would or might otherwise give rise to a right of acceleration under the relevant Loan Agreement shall not be treated as such, if, in the opinion of the Trustee, to do so would not be materially prejudicial to the interests of the Noteholders (as a class); provided always that (subject to certain exceptions) the Trustee may not exercise such power of waiver in contravention of any express direction by an Extraordinary Resolution of the Noteholders. Any such modification, waiver or authorisation shall be binding on the Noteholders and, unless the Trustee agrees otherwise, any such modification shall be notified to the Noteholders as soon as practicable thereafter in accordance with Condition Substitution The Trust Deed contains provisions to the effect that the Issuer may, and at the request of RSB shall, having obtained the consent of RSB (if such substitution is not to be made at the request of RSB) and the Trustee (which latter consent may be given without the consent of the Noteholders) and having complied with such certain requirements as the Trustee may direct in the interests of the Noteholders, substitute any entity in place of the Issuer as creditor under the relevant Loan Agreement, as issuer and principal obligor in respect of the Notes and as principal obligor under the Trust Deed, subject to the relevant provisions of the Trust Deed and the substitute s rights under the relevant Loan Agreement being charged and assigned, respectively, to the Trustee as security for the payment obligations of the substitute obligor under the Trust Deed and the Notes. Not later than 14 days after compliance with the aforementioned requirements, notice thereof shall be given by the Issuer to the Noteholder in accordance with Condition 14 or RSB shall use its best endeavours to ensure that the substitute obligor does so

229 10.4 Exercise of Powers In connection with the exercise of any of its powers, trusts, authorities or discretions, the Trustee shall have regard to the interests of the Noteholders as a class and, in particular, shall not have regard to the consequences of such exercise for individual Noteholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory. No Noteholder is entitled to claim from the Issuer, RSB or the Trustee any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders Appointment and Removal of Trustee The Trust Deed contains provisions for the appointment or removal of a Trustee by a meeting of Noteholders passing an Extraordinary Resolution, provided that, in the case of removal of a Trustee, at all times there remains a trustee in office after such removal. Any appointment or removal of a Trustee shall be notified to the Noteholders by the Issuer in accordance with Condition 14. The Trustee may also resign such appointment giving not less than three months notice to the Issuer provided that such resignation shall not become effective unless there remains a trustee in office after such resignation. 11. Prescription Notes will become void unless presented for payment within 10 years (in the case of principal) or five years (in the case of interest) from the due date for payment in respect thereof. 12. Indemnification of Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility in certain circumstances, including provisions relieving it from taking proceedings to enforce payment unless indemnified to its satisfaction and to be paid its costs and expenses in priority to the claims of Noteholders. The Trustee is entitled to enter into contracts or transactions with the Issuer and/or RSB and any entity related to the Issuer and/or RSB without accounting for any profit, fees, corresponding interest, discounts or share of brokerage earned, arising or resulting from any such contract or transactions. The Trustee s responsibilities are solely those of trustee for the Noteholders on the terms of the Trust Deed. Accordingly, the Trustee makes no representations and assumes no responsibility for the validity or enforceability of the relevant Loan Agreement or the security created in respect thereof or for the performance by the Issuer of its obligations under or in respect of the Notes and the Trust Deed or by RSB in respect of the relevant Loan Agreement. The Trustee has no liability to Noteholders for any shortfall arising from the Trustee being subject to tax as a result of the Trustee holding or realising the Security Interests. 13. Replacement of Notes If any Note shall become mutilated, defaced, lost, stolen or destroyed it may, subject to all applicable laws and regulations and stock exchange requirements, be replaced at the specified office of either Registrar or at the specified office of the Principal Paying Agent in London on payment of such costs, expenses, taxes and duties as may be incurred in connection therewith and on such terms as to evidence, security and indemnity and otherwise as may reasonably be required by or on behalf of the Issuer or the Trustee. Mutilated or defaced Notes must be surrendered before replacements will be issued

230 14. Notices All notices to the Noteholders shall be deemed to have been duly given if (i) posted to such Noteholders at their respective addresses as shown on the relevant Register and (ii) so long as the Notes are listed on the Irish Stock Exchange and the rules of that exchange so require, filed with the Companies Announcement Office of the Irish Stock Exchange. Any such notice shall be deemed to have been given on the first date on which both conditions shall have been met. In case by reason of any other cause it shall be impracticable to publish any notice to holders of Notes as provided above, then such notification to such holders as shall be given with the approval of the Trustee shall constitute sufficient notice to such holders for every purpose hereunder. 15. Further Issues The Issuer may from time to time, without the consent of the Noteholders, create and issue further Notes having the same terms and conditions as the Notes in all respects (or in all respects except for the amount and the date of the first payment of interest) so as to be consolidated and form a single series with the Notes. Such further Notes shall be constituted by a deed supplemental to the Trust Deed between the Issuer and the Trustee. The Trust Deed contains provisions for convening a single meeting of Noteholders and the holders of Notes of other series in certain circumstances where the Trustee so decides. In relation to any further issue which is to be consolidated and form a single series with the Notes, the Issuer will enter into a loan agreement supplemental to the relevant Loan Agreement with RSB on substantially the same terms as the relevant Loan Agreement (or in all respects except for the amount and the date of the first payment of interest on the further Notes). The Issuer will provide a further fixed charge in favour of the Trustee and amend the existing Security Interests in respect of certain of its rights and interests under such loan agreement and will assign absolutely certain of its rights under such loan agreement which will secure both the Notes and such further Notes and which will amend and supplement the Security Interests in relation to the existing Notes of such Series. 16. Contracts (Rights of Third Parties) Act 1999 No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act Governing Law The Notes, the Agency Agreement, the Trust Deed and any non-contractual obligations arising out of or in connection with any of them shall be governed by, and construed in accordance with, English law. The Issuer has submitted in the Trust Deed to the jurisdiction of the courts of England and has appointed an agent for the service of process in England. For the avoidance of doubt, the provisions of articles 86 to 94-8 of the Luxembourg law of 10 August 1915 on commercial companies, as amended, are excluded

231 FORM OF FINAL TERMS Final Terms dated [ ] 1 Joint Stock Company "Russian Standard Bank" Issue of [Aggregate Principal Amount of Series] [Title of Loan Participation Notes] by Russian Standard Finance S.A. for the purpose of financing a Loan to Joint Stock Company "Russian Standard Bank" under a U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes PART A CONTRACTUAL TERMS Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in the Base Prospectus dated 26 September 2012 [and the supplemental Base Prospectus dated [ ]] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) as amended from time to time (the "Prospectus Directive"). This document constitutes the Final Terms of the Notes described herein and has been preparedfor the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Base Prospectus [as so supplemented]. Full information on the Issuer and RSB and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. [The Base Prospectus [and the supplemental Base Prospectus] [is] [are] available for viewing at [address] [and] [website] and copies may be obtained from the offices of Russian Standard Finance S.A. at 2, Bd. Konrad Adenauer, L-1115 Luxembourg and Deutsche Bank AG, London Branch as Principal Paying Agent at Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom.] 2 The following alternative language applies if the first tranche of an issue which is being increased was issued under a Base Prospectus with an earlier date. Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Notes (the "Conditions") set out on pages 145 to 156 of the base prospectus dated 29 May 2012 and which are incorporated by reference into the Base Prospectus dated 26 September 2012 [and the supplemental Base Prospectus dated [ ]] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) as amended from time to time (the "Prospectus Directive"). This document constitutes the Final Terms of the Notes described herein and has been prepared for the purposes of Article 5(4) of the Prospectus Directive and must be read in conjunction with the Base Prospectus dated 26 September 2012 [as so supplemented]. Full information on the Issuer and RSB and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. [The Base Prospectus [and the supplemental Base Prospectus] are available for viewing at [address] [and] [website] and copies may be obtained from the offices of Russian Standard Finance S.A. at 2, Bd. Konrad Adenauer, L-1115 Luxembourg and Deutsche Bank AG, London Branch as Principal Paying Agent at Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom.] 1 1 In the case of a Subordinated Series, the issue terms of the notes will be included in the relevant Drawdown Prospectus in substantially the same form as these final terms. For the avoidance of doubt, such issue terms will not constitute Final Terms for the purposes of Article 5.4 of the Prospectus Directive. 2 Article 14.2 of the Prospectus Directive provides that a Prospectus is deemed available to the public when, inter alia, made available (i) in printed form free of charge at the offices of the market on which securities are being admitted to trading; OR (ii) at the registered office of the Issuer and at the offices of the Paying Agents; OR (iii) in an electronic form on the Issuer s website. Article 16 of the Prospectus Directive requires that the same arrangements are applied to supplemental Prospectuses

232 [Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.] 1. (i) Issuer: Russian Standard Finance S.A. (ii) Borrower: Joint Stock Company "Russian Standard Bank" 2. [(i)] Series Number: [ ] [(ii) Tranche Number: [ ] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible)] 3. Specified Currency or Currencies: [ ] (If Notes are being cleared through DTC with interest and/or principal payable in a currency other than U.S. Dollars, check whether DTC will accept payments in such currency) 4. Aggregate Nominal Amount of Notes admitted to trading: [ ] [(i)] Series: [ ] [(ii)] Tranche: [ ] 5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (in the case of fungible issues only, if applicable)] 6. (i) Specified Denominations: [ ] 3 (ii) Calculation Amount [ ] 7. (i) Issue Date: [ ] (ii) Interest Commencement Date: [ ] 3 Section 6: The issue of Notes with a maturity of less than one year by the Issuer, where the issue proceeds are to be accepted in the United Kingdom, will be subject to S19 FSMA unless their denomination is 100,000 or more (or its equivalent in other currencies) and they are only issued to professionals within Article 9(2) of the Financial Services and Markets Act (Regulated Activities) Order 2001: Notes (including Notes denominated in Sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of S19 FSMA and] which have a maturity of less than one year must have a minimum redemption value of 100,000 (or its equivalent in other currencies). Add appropriate provisions to terms and conditions if included

233 8. Maturity Date: [specify date or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year] 9. Notes Interest Basis: [[ ] per cent. Fixed Rate] [[specify reference rate] +/- [ ] per cent Floating Rate] [subject to interest rate step-up as specified below (in the case of a Subordinated Series)] [[specify reference rate] +/- [ ] per cent Floating Rate] [subject to margin step-up as specified below (in the case of a Subordinated Series)] [(further particulars specified below)] 10. Redemption/Payment Basis: [Redemption at par/other (specify)] 11. (i) Status and Form of the Notes: Senior, Registered (ii) Status of the Loan: [Senior/Subordinated] [(iii)] [Date [Board] approval for issuance of Notes obtained: [ ] [and [ ], respectively]] (N.B. Only relevant where Board (or similar) authorisation is required for the particular tranche of Notes)] 12. Method of distribution: [Syndicated/Non-syndicated] 13. Financial Centres (Condition 7): [ ] PROVISIONS RELATING TO INTEREST PAYABLE UNDER THE LOAN 14. Fixed Rate Note Provisions: [Applicable/Not Applicable] (if not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Rate [(s)] of Interest: [ ] per cent. per annum payable [annually/semi-annually] in arrear (in the case of a Senior Series) [DETAILS OF INITIAL INTEREST RATE AND INTEREST RATE STEP-UP] (in the case of a Subordinated Series) (ii) Interest Payment Date(s): [ ] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of "Business Day"]/not adjusted] (iii) Fixed Coupon Amount [(s)]: [ ] per Calculation Amount

234 (iv) Broken Amount: [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Coupon Amount [(s)] and the Interest Payment Date(s) to which they relate] (v) Day Count Fraction (Condition 5): [ ] [Day count fraction should be Actual/Actual-ICMA for all fixed rate issues other than those denominated in U.S. dollars] (vi) Determination Date(s) (Condition 5): [ ] in each year. [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon] Floating Rate Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Period(s): [ ] (ii) Specified Interest Payment Dates: [ ] (iii) Business Day Convention: [Floating Rate Business Day Convention/ Following Business Day Convention/Modified Following Business Day Convention/ Preceding Business Day/Convention] (iv) Additional Business Centre(s): [ ] (v) Manner in which the Rate(s) of Interest is/ are to be determined: [Screen Rate Determination/ISDA Determination] (vi) Interest Period Date(s): [Not Applicable/specify dates] (vii) Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): [ ] (viii) Screen Rate Determination: See paragraph 7 under Part B (ix) ISDA Determination: See paragraph 7 under Part B (x) Margin(s): [+/-] [ ] per cent. per annum (xi) Minimum Rate of Interest: [ ] per cent. per annum (xii) Maximum Rate of Interest: [ ] per cent. per annum (xiii) Day Count Fraction (Condition 5): [ ] 4 Only to be completed for an issue where Day Count Fraction is Actual/Actual-ICMA

235 (xiv) Rate Multiplier: [ ] PROVISIONS RELATING TO REDEMPTION 16. Final Redemption Amount of each Note: [[ ] per Note of [ ] specified denomination] 17. Early Redemption Amount(s) of each Note payable if the Loan should become repayable under the Loan Agreement prior to the Maturity Date: Principal amount 18. Put Option [Applicable/Not Applicable] [if not applicable, delete the remaining sub-paragraphs of this paragraph] (i) Put Settlement Date(s): [ ] (ii) Alternative Put Period: [Not Applicable/[ ]] DISTRIBUTION 19. (i) If syndicated, names of Managers: [Not Applicable/give names] (ii) Stabilising Manager(s) (if any): [Not Applicable/give name] 20. If non-syndicated, name of Dealer: [Not Applicable/give name] [LISTING AND ADMISSION TO TRADING APPLICATION These Final Terms comprise the final terms required to list and have admitted to trading the issue of Notes described herein pursuant to the U.S.$2,500,000,000 Programme for the Issuance of Loan Participation Notes of RSB.] RESPONSIBILITY The Issuer and RSB accept responsibility for the information contained in these Final Terms [[ ] has been extracted from [ ]]. [Each of the Issuer and RSB confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by [ ], no facts have been omitted which would render the reproduced inaccurate or misleading.] Signed on behalf of the Issuer: Signed on behalf of RSB: By: Director By: Duly authorised By: Director By: Duly authorised

236 PART B OTHER INFORMATION 1. LISTING (i) Listing: [Irish Stock Exchange/London Stock Exchange/None] (ii) Admission to trading: [Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market with effect from [ ].] [Application has been made to the London Stock Exchange for the Notes to be admitted to trading on its regulated market with effect from [ ].] [Not Applicable] (iii) Estimate of total expenses related to admission to trading: [ ] 2. RATINGS Ratings: [Not Applicable/The Notes to be issued have been rated: [Fitch: [Moody's: [Standard & Poor's: [ ]] [ ]] [ ]] (The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating.) [Insert legal name of credit rating agency] is established in the EU and registered under Regulation (EC) No 1060/2009, as amended (the "CRA Regulation").] [Insert legal name of credit rating agency] is established in the EU and is not registered under Regulation (EC) No 1060/2009 (the "CRA Regulation").] [Insert legal name of credit rating agency] is not established in the EU but the rating it has given to the Notes is endorsed by [insert legal name of credit rating agency], which is established in the EU and registered under Regulation (EC) No 1060/2009 (the "CRA Regulation").] [Insert legal name of credit rating agency] is not established in the EU but is certified under Regulation (EC) No 1060/2009 (the "CRA Regulation").]

237 [Insert legal name of credit rating agency] is not established in the EU and is not certified under Regulation (EU) No 1060/2009, (the "CRA Regulation") and the rating it has given to the Notes is not endorsed by a credit rating agency established in the EU and registered under the CRA Regulation.] 3. [NOTIFICATION The [include name of competent authority in EEA home Member State] [has been requested to provide/has provided - include first alternative for an issue which is contemporaneous with the establishment or update of the Programme and the second alternative for subsequent issues] the [include names of competent authorities of host Member States] with a certificate of approval attesting that the Base Prospectus has been drawn up in accordance with the Prospectus Directive.] 4. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER] If applicable a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest is to be included. This may be satisfied by the inclusion of the following statement: "Save as discussed in ["Subscription and Sale"] in the Base Prospectus, so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer."] 5 5. [Fixed Rate Notes only YIELD Indication of yield: [[ ]. The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield (in the case of a Senior Series).] [[ ] The yield is calculated at the Issue Date on the basis of the Issue Price and in respect of the Initial Interest Term (as defined in the Subordinated Loan Agreement). Calculation of the yield beyond that period is subject to the interest rate step-up mechanism at the end of such period (in the case of a Subordinated Series).] 6. OPERATIONAL INFORMATION ISIN Code (Reg S Notes): [ ] 5 If there are material interests, but they are not discussed in Subscription and Sale, insert the section name where they are discussed instead. If there are no material interests, delete the whole of paragraph

238 ISIN Code (Rule 144A Notes): Common Code (Reg S Notes): Common Code (Rule 144A Notes): Rule 144A CUSIP number: Any clearing system(s) other than Euroclear Bank SA/NV and Clearstream Banking societe anonyme [or DTC] and the relevant identification number(s): Delivery: Names and addresses of additional Paying Agent(s) (if any): [ ] [ ] [ ] [ ] [Not Applicable/give name(s) and number(s) [and addresses])] Delivery [against/free of] payment [ ] 7. [THE LOAN 6 Terms of the Loan (i) Loan: [Insert currency and amount of Loan] (ii) Date of Drawdown: [Insert Closing Date] (iii) Repayment Date: [ ] (iv) Governing Law: [ ] (v) Put Option: [Applicable/Not Applicable] (vi) [Put Settlement Date] [ ] [Insert only if Put Option is Applicable] (vii) Arrangement Fee: [ ] Interest The Loan is a [Fixed Rate][Floating Rate] Loan. Interest shall be calculated as set out below: Fixed Rate Loan Provisions [Applicable/Not Applicable] (i) Interest Commencement Date [ ] (If not applicable, delete the remaining sub paragraphs of this paragraph) (ii) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually] in arrear] (iii) Interest Payment Date(s): [ ] in each year [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of "Business Day"]/not adjusted] 6 Paragraph 7 (The Loan) to be included in the case of a Senior Series only. If the Final Terms are in respect of a Subordinated Series, delete the whole of Paragraph

239 (iv) Fixed Amount[(s)]: [ ] per [ ] in principal amount (v) Broken Amount: [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Amount [(s)] and the Interest Payment Date(s) to which they relate] (vi) Day Count Fraction: [ ] (Day count fraction should be Actual/Actual-ICMA for all fixed rate loans other than those denominated in U.S. dollars, unless specified) (vii) Determination Date(s): [ ] in each year. [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last interest period] ** Floating Rate Loan Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Interest Commencement Date [ ] (ii) Interest Period(s): [ ] (iii) Specified Interest Payment Dates: [ ] (iv) Business Day Convention: [Floating Rate Business Day Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] (v) Business Centre(s) (Clause 4.9): [ ] (vi) Manner in which the Rate(s) of Interest is/are to be determined: [Screen Rate Determination/ISDA Determination] (vii) Interest Period Date(s): [Not Applicable/specify dates] ** Only to be completed for a Loan where Day Count Fraction is Actual/Actual-ICMA

240 (viii) Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): [ ] (ix) Screen Rate Determination (sub-clause 4.3.3): - Relevant Time: [ ] - Interest Determination Date: [[ ] [TARGET] Business Days in [specify city] for [specify currency] prior to [the first day in each Interest Accrual Period/each Interest Payment Date]] - Primary Source for Floating Rate: [Specify relevant screen page and rate or "Reference Banks"] - Reference Banks (if Primary Source is "Reference Banks"): [Specify four] - Relevant Financial Centre: [The financial centre most closely connected to the Benchmark - specify if not London] - Benchmark: [LIBOR, LIBID, LIMEAN, EURIBOR] - Representative Amount: [Specify if screen or Reference Bank quotations are to be given in respect of a transaction of a specified notional amount] - Effective Date: [Specify if quotations are not to be obtained with effect from commencement of Interest Accrual Period] - Specified Duration: [Specify period for quotation if not duration of Interest Accrual Period] (x) ISDA Determination (Clause 4.3): - Floating Rate Option: [ ]

241 - Designated Maturity: [ ] - Reset Date: [ ] - ISDA Definitions: [ ] (xi) Margin(s): [+/-][ ] per cent. per annum (xii) Minimum Rate of Interest: [ ] per cent. per annum (xiii) Maximum Rate of Interest: [ ] per cent. per annum (xiv) Day Count Fraction (Clause 4.9): [ ] (xv) Rate Multiplier: [ ]

242 SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM The Global Notes Each Series of Notes will be evidenced on issue by (i) in the case of Regulation S Notes, a Regulation S Global Note deposited with, and registered in the name of a nominee for, a common depositary for Euroclear and Clearstream, Luxembourg and (ii) in the case of Rule 144A Notes, a Rule 144A Global Note deposited with a custodian for, and registered in the name of Cede & Co. as nominee of, DTC. Beneficial interests in a Regulation S Global Note may be held only through Euroclear or Clearstream, Luxembourg at any time. See "Book-Entry Procedures for the Global Notes". By acquisition of a beneficial interest in a Regulation S Global Note, the purchaser thereof will be deemed to represent, among other things, that it is not a U.S. person and that, prior to the expiration of 40 days after completion of the distribution of the Series of which such Notes are a part as determined and certified to the Principal Paying Agent by the relevant Dealer (or in the case of a Series of Notes sold to or through more than one relevant Dealer, each of such relevant Dealers as to the Notes of such Series sold by or through it, in which case the Principal Paying Agent shall notify each such relevant Dealer when all relevant Dealers have so certified (the "distribution compliance period"), it will not offer, sell, pledge or otherwise transfer such interest except to a person whom the seller reasonably believes to be a non-u.s. person in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S. See "Transfer Restrictions". Beneficial interests in a Rule 144A Global Note may only be held through DTC at any time. See "Book-Entry Procedures for the Global Notes". By acquisition of a beneficial interest in a Rule 144A Global Note, the purchaser thereof will be deemed to represent, among other things, that if it is a U.S. person (within the meaning of Regulation S), it is a QIB that is also a QP and that, if in the future it determines to transfer such beneficial interest, it will transfer such interest in accordance with the procedures and restrictions contained in the Agency Agreement. See "Transfer Restrictions". Beneficial interests in each Global Note will be subject to certain restrictions on transfer set forth therein and in the Agency Agreement, and with respect to a Rule 144A Global Note, as set forth in Rule 144A, and the Rule 144A Notes will bear the legends set forth thereon regarding such restrictions set forth under "Transfer Restrictions". A beneficial interest in a Regulation S Global Note may be transferred to a person who takes delivery in the form of an interest in a Rule 144A Global Note in denominations greater than or equal to the minimum denominations applicable to interests in a Rule 144A Global Note and only upon receipt by the Registrar of a written certification (in the form provided in the Paying Agency Agreement) to the effect that the transferor reasonably believes that the transferee is a QIB that is also a QP and that such transaction is in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. Beneficial interests in a Rule 144A Global Note may be transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note only upon receipt by the Registrar of a written certification (in the form provided in the Paying Agency Agreement) from the transferor to the effect that the transfer is being made to a non-u.s. person located outside of the United States in an offshore transaction in accordance with Regulation S. Any beneficial interest in a Regulation S Global Note that is transferred to a person who takes delivery in the form of an interest in a Rule l44a Global Note will, upon transfer, cease to be an interest in the Regulation S Global Note and become an interest in the Rule 144A Global Note, and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in the Rule 144A Global Note for as long as it remains such an interest. Any beneficial interest in a Rule 144A Global Note that is transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note will, upon transfer, cease to be an interest in the Rule 144A Global Note and become an interest in the Regulation S Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in the Regulation S Global Note for so long as it remains such an interest. No service charge will be made for any registration of transfer or exchange of Notes, but the Registrar may require payment of a sum

243 sufficient to cover any tax or other governmental charge payable in connection therewith. Except in the limited circumstances described below, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of certificated Notes in definitive form (the "Definitive Notes"). The Notes are not issuable in bearer form. Amendments to Conditions Each Global Note contains provisions that apply to the Notes that they represent, some of which modify the effect of the above Terms and Conditions of the Notes. The following is a summary of those provisions: Payments. Payments of principal and interest in respect of Notes evidenced by a Global Note will be made against presentation for endorsement by the Principal Paying Agent and, if no further payment falls to be made in respect of the relevant Notes, surrender of such Global Note to or to the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to the relevant Noteholders for such purpose. A record of each payment so made will be endorsed in the appropriate schedule to the relevant Global Note, which endorsement will be prima facie evidence that such payment has been made in respect of the relevant Notes. All payments in respect of the Notes represented by a Global Note will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday (inclusive) except 25 December and 1 January. Notices. So long as any Notes are evidenced by a Global Note and such Global Note is held by or on behalf of a clearing system, notices to the Noteholders may be given by delivery of the relevant notice to that clearing system for communication by it to entitled account holders in substitution for delivery thereof as required by the Terms and Conditions of such Notes provided that, in the case of Notes listed, traded or quoted on any listing authority, stock exchange and/or quotation system, the requirements of such listing authority, stock exchange or quotation system are complied with. Meetings. The holder of each Global Note will be treated as being one person for the purposes of any quorum requirements of, or the right to demand a poll at, a meeting of Noteholders and in any such meeting as having one vote in respect of Notes for which the relevant Global Note may be exchangeable. Trustee's Powers. In considering the interests of the Noteholders while the relevant Global Note is held on behalf of a clearing system, the Trustee, to the extent it considers it appropriate to do so in the circumstances, may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to such Global Note and may consider such interests as if such accountholders were the holders of such Global Note. Cancellation. Cancellation of any Note required by the Terms and Conditions of the Notes to be cancelled will be effected by reduction in the principal amount of the applicable Global Note. Exchange for Definitive Notes Exchange Each Global Note will be exchangeable, free of charge to the holder, in whole but not in part, for Notes in definitive, registered form if: (i) a Global Note is held by or on behalf of (A) DTC, and DTC notifies the Issuer that it is no longer willing or able to discharge properly its responsibilities as depositary with respect to the Global Note or ceases to be a "clearing agency" registered under the Exchange Act or if at any time it is no longer eligible to act as such, and the Issuer is unable to locate a

244 qualified successor within 90 days of receiving notice or becoming aware of such ineligibility on the part of DTC or (B) Euroclear or Clearstream, Luxembourg, and Euroclear or Clearstream, Luxembourg, as the case may be, is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so, by the holder giving notice to the Registrar or any Transfer Agent or (ii) if the Issuer would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations (taxation or otherwise) of any jurisdiction referred to in Condition 8 which would not be suffered were the Notes in definitive form and a notice to such effect signed by two directors of the Issuer is delivered to the Trustee, by the Issuer giving notice to the Registrar or any Transfer Agent and the Noteholders, of its intention to exchange the Global Note for Definitive Notes on or after the Exchange Date (as defined below) specified in the notice. On or after the Exchange Date, the holder of the relevant Global Note may surrender such Global Note to or to the order of the Registrar or any Transfer Agent. In exchange for the relevant Global Note, as provided in the Paying Agency Agreement, the Registrar will deliver, or procure the delivery of, an equal aggregate amount of duly executed and authenticated Definitive Notes in or substantially in the form set out in the relevant schedule to the Trust Deed. The Registrar will not register the transfer of, or exchange of interests in, a relevant Global Note for Definitive Notes for a period of 15 calendar days ending on the date for any payment of principal or interest or on the date of optional redemption in respect of the Notes. "Exchange Date" means a day falling not later than 90 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Registrar or the Transfer Agent is located. Delivery In such circumstances, the relevant Global Note shall be exchanged in full for Definitive Notes and the Issuer will, at the cost of RSB (but against such indemnity as the relevant Registrar or any relevant Transfer Agent may require in respect of any tax or other duty of whatever nature which may be levied or imposed in connection with such exchange), cause sufficient Definitive Notes to be executed and delivered to the Registrar for completion, authentication and dispatch to the relevant Noteholders. A person having an interest in a Global Note must provide the Registrar with (a) a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Notes and (b) in the case of a Rule 144A Global Note only, a fully completed, signed certification substantially to the effect that the exchanging holder is not transferring its interest at the time of such exchange or, in the case of simultaneous sale pursuant to Rule l44a, a certification that the transfer is being made in compliance with the provisions of Rule l44a to a QIB that is also a QP. Definitive Notes issued in exchange for a beneficial interest in a Rule 144A Global Note shall bear the legend applicable to transfers pursuant to Rule 144A, as set out under "Transfer Restrictions". Legends The holder of a Definitive Note may transfer the Notes evidenced thereby in whole or in part in the applicable minimum denomination by surrendering it at the specified office of the relevant Registrar or any Transfer Agent, together with the completed form of transfer thereon. Upon the transfer, exchange or replacement of a Rule 144A Note in definitive form ("Rule 144A Definitive Note") bearing the legend referred to under "Transfer Restrictions", or upon specific request for removal of the legend on a Rule 144A Definitive Note, the Issuer will deliver only Rule 144A Definitive Notes that bear such legend, or will refuse to remove such legend, as the case may be, unless there is delivered to the Issuer and the relevant Registrar such satisfactory evidence, which may include an opinion of counsel, as may reasonably be required by the Issuer that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act and the Investment Company Act

245 Book-Entry Procedures for the Global Notes For each Series of Notes evidenced by both a Regulation S Global Note and a Rule 144A Global Note custodial and depository links are to be established between DTC, Euroclear and Clearstream, Luxembourg to facilitate the initial issue of the Notes and cross-market transfers of the Notes associated with secondary market trading. See "Book Entry Ownership-Settlement and Transfer of Notes". Euroclear and Clearstream, Luxembourg Euroclear and Clearstream. Luxembourg each hold securities for their customers and facilitate the clearance and settlement of securities transactions through electronic book-entry transfer between their respective accountholders. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions which clear through or maintain a custodial relationship with an accountholder of either system. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective customers may settle trades with each other. Their customers are worldwide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Investors may hold their interests in such Global Notes directly through Euroclear or Clearstream, Luxembourg if they are accountholders ("Direct Participants") or indirectly ("Indirect Participants" and together with Direct Participants, "Participants") through organisations which are accountholders therein. DTC Depository Trust Company ("DTC") has advised the Issuer as follows: DTC is a limited purpose trust company organised under the laws of the State of New York, a "banking organisation" under the laws of the State of New York, a member of the U.S. Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its Participants and facilitate the clearance and settlement of securities transactions between Participants through electronic computerised book entry changes in accounts of its Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to DTC is available to others, such as banks, securities brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a DTC Direct Participant, either directly or indirectly. Investors may hold their interests in Rule 144A Global Notes directly through DTC if they are Direct Participants in the DTC system, or as Indirect Participants through organisations which are Direct Participants in such system. DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Direct Participants and only in respect of such portion of the aggregate principal amount of the relevant Rule 144A Global Notes as to which such Participant or Participants has or have given such direction. However, in the circumstances described under "Exchange for Definitive Notes," DTC will surrender the relevant Rule l44a Global Notes for exchange for individual Rule 144A Definitive Notes (which will bear the legend applicable to transfers pursuant to Rule 144A)

246 Book-Entry Ownership Euroclear and Clearstream, Luxembourg The Regulation S Global Note representing Regulation S Notes of any Series will have an ISIN and a Common Code and will be registered in the name of a nominee for, and deposited with a common depositary on behalf of, Euroclear and Clearstream, Luxembourg. The address of Euroclear is 1 Boulevard du Roi Albert II, B1210 Brussels, Belgium, and the address of Clearstream, Luxembourg is 42 Avenue J.F. Kennedy, L 1855, Luxembourg. DTC The Rule 144A Global Note representing interests in Rule 144A Notes of any Series will have a CUSIP number and will be deposited with a custodian for and registered in the name of Cede & Co. as nominee of, DTC. The Custodian and DTC will electronically record the principal amount of the Notes held within the DTC System. The address of DTC is 55 Water Street, New York, New York 10041, USA. Relationship of Participants with Clearing Systems Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the holder of a Note evidenced by a Global Note must look solely to Euroclear, Clearstream, Luxembourg or DTC (as the case may be) for his share of each payment made by the Issuer to the holder of such Global Note and in relation to all other rights arising under the Global Note, subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg or DTC (as the case may be). The Issuer expects that, upon receipt of any payment in respect of Notes evidenced by a Global Note, the common depositary by whom such Note is held, or nominee in whose name it is registered, will immediately credit the relevant participants' or accountholders' accounts in the relevant clearing system with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant Global Note as shown on the records of the relevant clearing system or its nominee. The Issuer also expects that payments by Direct Participants in any clearing system to owners of beneficial interests in any Global Note held through such Direct Participants in any clearing system will be governed by standing instructions and customary practices. Save as aforesaid, such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are evidenced by such Global Note and the obligations of the Issuer will be discharged by payment to the registered holder, as the case may be, of such Global Note in respect of each amount so paid. None of the Issuer, the Trustee or any Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of ownership interests in any Global Note or for maintaining, supervising or reviewing any records relating to such ownership interests. Settlement and Transfer of Notes Subject to the rules and procedures of each applicable clearing system, purchases of Notes held within a clearing system must be made by or through Direct Participants, which will receive a credit for such Notes on the clearing system's records. The ownership interest of each actual purchaser of each such Note (the "Beneficial Owner") will in turn be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from any clearing system of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which such Beneficial Owner entered into the transaction. Transfers of ownership interests in Notes held within the clearing system will be affected by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in such Notes, unless and until interests in any Global Note held within a clearing system are exchanged for Definitive Notes

247 No clearing system has knowledge of the actual Beneficial Owners of the Notes held within such clearing system and their records will reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by the clearing systems to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. The laws of some jurisdictions may require that certain persons take physical delivery in definitive form of securities. Consequently, the ability to transfer interests in a Global Note to such persons may be limited. Because DTC can only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants, the ability of a person having an interest in a Rule l44a Global Note to pledge such interest to persons or entities that do not participate in DTC, or otherwise take actions in respect of such interest, may be affected by a lack of physical certificate in respect of such interest. Trading between Euroclear and/or Clearstream, Luxembourg Participants Secondary market sales of book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and Clearstream, Luxembourg and will be settled using the procedures applicable to conventional Eurobonds. Trading between DTC Participants Secondary market sales of book-entry interests in the Notes between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement ("SDFS") system in same-day funds, if payment is effected in U.S. Dollars, or free of payment, if payment is not effected in U.S. Dollars. Where payment is not effected in U.S. Dollars, separate payment arrangements outside DTC are required to be made between the DTC participants. Trading between DTC seller and Euroclear/Clearstream, Luxembourg purchaser When book-entry interests in Notes are to be transferred from the account of a DTC participant holding a beneficial interest in a Rule 144A Global Note to the account of a Euroclear or Clearstream, Luxembourg accountholder wishing to purchase a beneficial interest in a Regulation S Global Note (subject to the certification procedures provided in the Agency Agreement), the DTC participant will deliver instructions for delivery to the relevant Euroclear or Clearstream, Luxembourg accountholder to DTC by 12 noon, New York time, on the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg participant. On the settlement date, the custodian of the Rule l44a Global Notes will instruct the Registrar to (i) decrease the amount of Notes registered in the name of Cede & Co. and evidenced by the Rule 144A Global Note of the relevant Series and (ii) increase the amount of Notes registered in the name of the nominee of the common depositary for Euroclear and Clearstream, Luxembourg and evidenced by Regulation S Global Note of the relevant Series. Book-entry interests will be delivered free of payment to Euroclear or Clearstream, Luxembourg, as the case may be, for credit to the relevant accountholder on the first business day following the settlement date

248 Trading between Euroclear/Clearstream, Luxembourg Seller and DTC Purchaser When book-entry interests in the Notes are to be transferred from the account of a Euroclear or Clearstream, Luxembourg accountholder to the account of a DTC participant wishing to purchase a beneficial interest in a Rule 144A Global Note (subject to the certification procedures provided in the Agency Agreement), the Euroclear or Clearstream, Luxembourg participant must send to Euroclear or Clearstream, Luxembourg delivery free of payment instructions by 7:45 p.m., Brussels or Luxembourg time, one business day prior to the settlement date. Euroclear or Clearstream, Luxembourg, as the case may be, will in turn transmit appropriate instructions to the common depositary for Euroclear and Clearstream, Luxembourg and the Registrar to arrange delivery to DTC participant on the settlement date. Separate payment arrangements are required to be made between DTC participant and the relevant Euroclear or Clearstream, Luxembourg accountholder, as the case may be. On the settlement date, the common depositary for Euroclear and Clearstream, Luxembourg will (a) transmit appropriate instructions to the custodian of the Rule 144 A Global Note who will in turn deliver such book-entry interests in the Notes free of payment to the relevant account of DTC participant and (b) instruct the Registrar to (i) decrease the amount of Notes registered in the name of the nominee of the common depositary for Euroclear and Clearstream, Luxembourg and evidenced by a Regulation S Global Note; and (ii) increase the amount of Notes registered in the name of Cede & Co. and evidenced by a Rule 144A Global Note. Although Euroclear, Clearstream, Luxembourg and DTC have agreed to the foregoing procedures in order to facilitate transfers of beneficial interests in Global Notes among participants and accountholders of Euroclear, Clearstream, Luxembourg and DTC, they are under no obligation to perform or continue to perform such procedure, and such procedures may be discontinued at any time. None of the Issuer, the Trustee or any Agent will have the responsibility for the performance by Euroclear, Clearstream, Luxembourg or DTC or their respective Direct or Indirect Participants of their respective obligations under the rules and procedures governing their operations. Pre-issue Trades Settlement It is expected that delivery of Notes will be made against payment therefor on the Closing Date thereof, which could be more than three business days following the date of pricing. Under Rule 15c6-1 under the Exchange Act, trades in the United States secondary market generally are required to settle within three business days (T+3), unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes in the United States on the date of pricing or the next succeeding business days until three days prior to the relevant Closing Date will be required, by virtue of the fact the Notes initially will settle beyond T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Settlement procedures in other countries will vary. Purchasers of Notes may be affected by such local settlement practices, and purchasers of Notes between the relevant date of pricing and the relevant Closing Date should consult their own advisers

249 TAXATION The following is a general description of certain tax considerations relating to the Notes. It does not purport to be a complete analysis of all tax considerations that may be relevant to each Series of the Notes or any particular Noteholder, including tax considerations that arise from rules of general application or that are generally assumed to be known to Noteholders. Prospective purchasers of any Series of the Notes should consult their own tax advisers as to which countries' tax laws could be relevant to acquiring, holding and disposing of any Series of the Notes and receiving payments of interest, principal and/or other amounts under any Series of the Notes and the consequences of such actions under the tax laws of those countries. This summary is based upon the law as in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date. Neither RSB nor the Issuer assumes any obligation to update this section after the date of this Base Prospectus for any such changes in law. The information and analysis contained within this section are limited to taxation issues, and prospective investors should not apply any information or analysis set out below to other areas, including (but not limited to) the legality of transactions involving any Series of the Notes. Russian Taxation General The following is a summary of certain Russian tax considerations relevant to the purchase, ownership and disposition of any Series of Notes as well as taxation of interest payments on any corresponding Loan. The summary is based on the laws of Russia in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date (possibly with retroactive effect). The information and analysis contained within this section are limited to taxation issues, and prospective investors should not apply any information or analysis set out below to other areas, including (but not limited to) the legality of transactions involving any Series of Notes. The summary does not seek to address the applicability of, and procedures in relation to, taxes levied by regions, municipalities or other non-federal authorities of Russia. Nor does the summary seek to address the availability of double tax treaties and the eligibility of double tax treaty relief in respect of any Series of Notes, and it should be noted that there may be practical difficulties, including satisfying certain documentation requirements, involved in claiming and obtaining such double tax treaty relief. Prospective investors should consult their own tax advisers regarding the tax consequences of investing in any Series of Notes in their own particular circumstances. No representation with respect to the Russian tax consequences of investing, owning or disposing of the Notes to any particular Noteholder is made hereby. Many aspects of Russian tax law are subject to significant uncertainty and lack interpretive guidance. Further, the substantive provisions of Russian tax law applicable to financial instruments and the interpretation and application of those provisions by the Russian tax authorities may be subject to more rapid and unpredictable change (possibly with retroactive effect) and inconsistency than in jurisdictions with more developed capital markets or more developed taxation systems. In particular, the interpretation and application of such provisions will in practice rest substantially with local tax inspectorates. In practice, interpretation by different tax inspectorates may be inconsistent or contradictory and may result in the imposition of conditions, requirements or restrictions not provided for by the existing legislation. Similarly, court rulings on tax or related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. For the purposes of this summary, a "Non-Resident Noteholder" means: an individual Noteholder actually present in Russia for an aggregate period of less than 183 calendar days (including days of arrival to Russia and including days of departure from Russia) in any period comprising 12 consecutive months. Presence in Russia for tax residency

250 purposes is not considered interrupted for an individual's short term departure (less than 6 months) from Russia for medical treatment or education. The interpretation of this definition by the Ministry of Finance of the Russian Federation states that for withholding tax purposes an individual's tax residence status should be determined on the date of income payment (based on the number of Russian days in the 12-month period preceding the date of payment). The individual's final tax liability in the Russian Federation for the reporting calendar year should be determined based on the number of days spent in Russia in such calendar year; or a legal entity or organisation, in each case not organised under Russian law, which purchases, holds and/or disposes of the Notes otherwise than through a permanent establishment in Russia (as defined by Russian tax law). A "Resident Noteholder" means any Noteholder (including any individual and any legal entity or organisation) who is not a Non-Resident Noteholder. Russian tax residency rules may be affected by an applicable double tax treaty. Based on published comment of the Russian authorities, it is anticipated that the Russian tax residency rules applicable to legal entities may change in the future. The Russian tax treatment of interest payments made by RSB to the Issuer (or to the Trustee, as the case may be) under any Loan Agreement may affect the Noteholders. See "Taxation of Interest on the Loan" below. Taxation of the Notes Non-Resident Noteholders Non-Resident Noteholders generally should not be subject to any Russian taxes in respect of payments of interest and repayments of principal on the Notes received from the Issuer. Subject to what is stated in Taxation of interest on the Loan. Non-Resident Noteholders also generally should not be subject to any Russian taxes in respect of any gains or other income realised on the Notes (including gains upon redemption, sale or other disposal of the Notes), provided that this income is not considered as being received from a source within Russia. Taxation of Non-Resident Noteholders Individuals Acquisition of the Notes Since Noteholders who are individuals and considered to be non-residents in Russia are taxable on Russian source income only, generally the acquisition of the Notes by a Non-Resident Noteholder who is an individual should not be considered as taxable income. However, if the transfer of legal title to the Notes takes place in Russia and the acquisition price is below fair market value (calculated under a specific procedure), this may constitute a taxable event pursuant to the provisions of the Russian Tax Code relating to material benefit (deemed income) received by individuals as a result of acquiring securities. In such a case deemed income may be subject to Russian personal income tax. The income to be taxed (subject to any available double tax treaty relief) will be calculated as the difference between the fair market price and the purchase price of the Notes. Sale or other disposal of the Notes In general, Non-Resident Noteholders who are individuals are subject to Russian tax on their income from a sale of Notes which takes place in Russia. The income of an individual Non-Resident Noteholder realised from a sale, exchange or disposal of Notes and received from a Russian source will generally be subject to personal income tax at the rate of 30% payable on the gain from such disposal (the gain generally being calculated as the gross proceeds from such disposal less any available cost deduction, including the original purchase price and deemed income taxed on

251 acquisition and tax paid from such deemed income, if any) subject to any available double tax treaty relief. Since the Russian Tax Code contains no definition of a sale taking place in Russia, there is an inherent risk that, given that a transaction is executed in Russia, and/or a party to the transaction is a Russian resident, the income from the sale of the Notes would be treated as received from a Russian source. In this case the tax payable from the sale of Notes and the payment procedures established for Resident Noteholders will apply (see "Resident Noteholders" above). If the disposal proceeds are paid by a tax agent (a Russian legal entity or a foreign legal entity carrying out activities in Russia through a permanent establishment which is a licenced broker, asset manager, management company or any other person that carries out operations under an agency agreement, a commission agreement or a brokerage contract), the applicable personal income tax should be withheld at source. If the tax is not withheld, a Non-Resident Noteholder, who is an individual, should file a tax return and pay tax in Russia on his/her own. The personal income tax rate (including tax withheld at source) may be reduced pursuant to a double taxation treaty between Russia and the tax jurisdiction of the Non-Resident Noteholder (see "Tax Treaty Relief" below). Taxation of Non-Resident Noteholders Legal Entities Acquisition of the Notes Acquisition of the Notes by Non-Resident Noteholders that are legal entities and organisations should not constitute a taxable event under Russian law. Consequently, the acquisition of the Notes should not trigger any Russian tax implications for Non-Resident Noteholders that are legal entities and organisations. Interest on the Notes Pursuant to the Russian Tax Code, as amended by Law No. 97-FZ, interest income received on the Notes by Non-Resident Noteholders should not be subject to Russian tax with respect to the Notes issued prior to 1 January Yet, there could be no assurance that interest income on the Notes issued after 1 January 2014 would not be subject to Russian tax at the source, If so, the applicable tax rate can be reduced if the relevant double taxation treaty between Russia and the tax jurisdiction of the Non-Resident Noteholder can be applied (see the "Double Tax Treaty Relief" below). Potential purchasers of the Notes issued after 1 January 2014 are advised to consult their tax advisors regarding tax rates for income on Notes and the application of relevant double taxation treaties. Sale or other disposal of the Notes Income received by Non-Resident Noteholders that are legal entities from the sale or redemption of Notes should not be subject to Russian tax. However, if a Non-Resident Noteholder sells the Notes issued after 1 January 2014 and receives sales or other disposal proceeds from a source within Russia, there could be no assurance that the portion of the sales or other disposal proceeds, if any, attributable to accrued interest would not be subject to Russian withholding tax, even if the sale or other disposal results in a loss. In this case, while some Non-Resident Noteholders that are legal entities might be eligible for an exemption from or a reduction in Russian withholding tax based on provisions of the applicable double tax treaties relating to interest income (subject to compliance with the treaty clearance formalities by these Noteholders), there is also no assurance that such exemption or reduction will be available to them in practice, whilst obtaining a refund of Russian income tax withheld at source can be extremely difficult, if not impossible. That said, it cannot be predicted with absolute certainty whether or not the Russian entities remitting sales or disposal proceeds to Non-Resident Noteholders that are legal entities will be willing

252 to follow this approach in practice. Redemption of the Notes Non-Resident Noteholders that are legal entities generally should not be subject to any Russian taxes in respect of repayment of principal on the Notes received from the Issuer. Double Tax Treaty Relief Where proceeds from the disposal of the Notes are received from a Russian source, in order for the Non Resident Noteholders, whether an individual, legal entity or organisation, provided it is the beneficial recipient, to receive the benefits of an applicable double tax treaty, documentary evidence is required to confirm the applicability of the double tax treaty for which benefits are claimed. Currently a Non-Resident Noteholder that is a legal entity will need to provide the payer of income which is regarded a tax agent with a certificate of tax residence issued by the competent tax authority of the relevant treaty country in advance of payment of income. However, the payer of income in practice may request additional documents confirming the entitlement and eligibility of such Non- Resident Noteholder to the benefits of the relevant double tax treaty in relation to income concerned. The certificate should confirm that the respective Non-Resident Noteholder is the tax resident of the relevant double tax treaty country (specifically for the purposes of the applicable double tax treaty). This certificate generally should be apostilled or legalised and needs to be renewed on an annual basis. A notarised Russian translation of the certificate will have to be provided to the person which is regarded a tax agent. Non-Resident Noteholders that are legal entities or organisations should consult their own tax advisers with respect to the possibilities to enjoy any double tax treaty relief and the relevant Russian procedures. Under Russian domestic tax legislation in order to enjoy benefits of the respective double tax treaty a Non-Resident Noteholder who is an individual will have to provide the Russian tax authorities with (i) a tax residency certificate, issued by the competent authorities of his/her country of tax residence and (ii) a confirmation from the relevant foreign tax authorities on income received and the tax paid by that Non-Resident Noteholder outside Russia in relation to income with respect to which the respective double tax treaty benefits are claimed until 31 December of the year following the reporting year. Such requirements in practice may be imposed even if they directly contradict provisions of the applicable double tax treaty. In practice, these requirements may mean that a Non-Resident Noteholder who is an individual would not be able to rely on any double tax treaty until he or she pays the tax with respect to that income in the jurisdiction of his or her tax residency and may not be able to obtain the advance treaty relief in relation to income derived by them from Russian sources, as it is very unlikely that the supporting documentation required for the treaty relief purposes would be provided to the Russian tax authorities and, consequently, the approval from the latter could be obtained, before the receipt of income by a Non-Resident Noteholder occurs. Non-Resident Noteholders should consult their own tax advisors with respect to possible tax treaty relief and procedures for obtaining such relief with respect to any Russian taxes imposed in respect of interest income on the Notes or any income received in connection with the acquisition, sale or other disposal of the Notes. Refund of Tax Withheld If Russian withholding tax applicable to income derived from Russian sources by a Non-Resident Noteholder that is a legal entity, for which double tax treaty relief is available, was withheld at source, a refund of the tax that was excessively withheld at source is possible by filing a claim with the Russian tax authorities within three years following the year in which the tax was withheld. If Russian personal income tax on income derived from Russian sources by a Non-Resident Noteholder who is an individual for whom double tax treaty relief is available was withheld at source a refund of tax which was excessively withheld is possible by filing a claim with the Russian tax

253 authorities within one year following the year in which the tax was withheld. Although the Russian Tax Code arguably contains an exhaustive list of documents and information which have to be provided by the Non-Resident Noteholder to the Russian tax authorities for the tax refund purposes, the Russian tax authorities may, in practice, require a wide variety of documentation confirming the right of a Non-Resident Noteholder to obtain tax relief available under the applicable double tax treaty. Such documentation may not be explicitly required by the Russian Tax Code and may to a large extent depend on the position of local representatives of the tax inspectorates. In practice a Non-Resident Noteholder when seeking a refund of Russian taxes excessively withheld at source may face similar difficulties as when trying to obtain advance tax relief under the applicable double tax treaties, as discussed above. Obtaining a refund of Russian income taxes which were excessively withheld at source is likely therefore to be a time consuming process requiring many efforts and no assurance can be given that such refund will be granted to the Non-Resident Noteholders in practice. The Non-Resident Noteholders should consult their own tax advisors regarding procedures required to be fulfilled in order to obtain refund of Russian income taxes, which were excessively withheld at source. Taxation of Interest on the Loan Under the Russian Tax Code interest payments by a Russian legal entity to a non-resident legal entity made under loan agreements are generally subject to Russian withholding income tax at the rate of 20 per cent, unless such withholding is reduced or eliminated pursuant to an applicable double tax treaty. Calculation and withholding of the tax is performed by an entity which is paying out the income to the recipient. We believe that for the payments due from the Bank under the Loan Agreement including, inter alia, interest payments the Bank should be considered as the tax agent. However, under the provisions of the Tax Code introduced by the Law No. 97-FZ, interest income payable by Russian organizations on debt obligations that originate from issuance of tradable securities by foreign organizations (as defined be the Tax Code) shall not be subject to withholding of the tax by the tax agent, if the foreign organization (such as the Issuer) that is the issuer of the securities is resident in a jurisdiction that has an effective double tax treaty with Russia. Tradable securities mentioned above are defined in the law as securities and other debt obligations listed on a recognized stock exchange and (or) settled through recognized depository-clearing organizations. The list of such recognized institutions should be further approved by the Ministry of Finance. Upon agreement of the list any depository-clearing organization should be considered as recognized. Debt obligations of Russian organizations shall be treated as originating from the issuance of tradable securities by the foreign issuer if a direct link to such issuance is contained in the loan agreement between the issuer and the Russian organization or if such a link is contained in terms of issuance or in a related prospectus, or can be confirmed by actual cash flows at the time of the placement of the securities. For the withholding tax exemption envisaged by the newly adopted law to apply, the Issuer will have to submit to the Bank a confirmation of its tax residence ( Certificate ) signed (or certified) by (or on behalf of) a competent body of Luxembourg prior to making an affected payment. This Certificate should be legalized through an apostil by a competent authority and be furnished with a notarized Russian translation. The Certificate should be submitted each calendar year, in each case prior to when the first applicable payment of such calendar year is made irrespective of the number and regularity of such payments

254 In the absence of the proper Certificate having been submitted as outlined above, the applicable rate of withholding tax on any interest payments would be 20% under Russian tax legislation. Once the Certificate has subsequently been provided, the tax may be refunded to the Issuer from the tax authorities; however, obtaining such a refund can be extremely difficult, or impossible in practice. The mentioned exemption applies starting from 1 January 2007 to the tradable securities issued until 1 January Income under the tradable securities issued before 1 January 2014, but with a maturity exceeding that date should be subject to the exemption. RBS believes that based on the above summarized provisions of the Tax Code the mentioned withholding tax exemption shall apply to the issuance of the Notes, which shall effectively exempt from withholding taxation in Russia interest income payable by the Bank to the Issuer and ultimately to the Noteholders connected with the issuance of the Notes. If interest under the relevant Loan becomes payable to the Trustee pursuant to the Trust Deed, any benefit of the Russia-Luxembourg Tax Convention will cease and payments of interest may be subject to Russian withholding tax at a rate of 20 per cent. (or, potentially, at a rate of 30 per cent. in respect to Non-Resident Noteholders who are individuals) or such other rate as may be in force at the time of payment. It is not expected that the Trustee will, or will be able to, claim a withholding tax exemption under any double tax treaty under such circumstances. In such cases, Noteholders may seek a reduction or refund of withholding tax under double taxation treaties entered into between their countries of residence and Russia, where such treaties exist and to the extent they are applicable. There is no assurance that treaty relief will be available. Please see Risk Factors Risks Related to the Notes and the Trading Market RSB's payments under Loans may be subject to Russian withholding tax. If payments under any Loan are subject to any Russian withholding tax (as a result of which the Issuer would reduce payments under the corresponding Series of Notes, as the case may be, by the amount of such withholding), RSB is obliged (subject to certain conditions) to increase payments as may be necessary so that the net payments received by the Issuer and Noteholders will be equal to the amounts they would have received in the absence of such withholding (the "Additional Amounts"). It should be noted, however, that the tax gross-up provisions may not be enforceable under Russian law. In the event that RSB fails to make increased payments, such failure would constitute an Event of Default pursuant to the relevant Loan Agreement. If RSB is obliged to increase payments, it may (without premium or penalty), subject to certain conditions, prepay such Loan in full. In such case, all outstanding Notes of the corresponding Series would each be redeemable at par together with accrued and unpaid interest and Additional Amounts, if any, to the date of redemption. Value Added Tax Russian VAT is not applied to the rendering of financial services involving the provision of a loan in monetary form. Therefore, no VAT will be payable in Russia in respect of interest and principal payments under each Loan. EU Savings Directive on the Taxation of Savings Income in the Form of Interest Payments (Directive 2003/48/EC) (the "Savings Directive") Under the Savings Directive, each Member State of the European Union ("Member State") is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a paying agent within the meaning of the Savings Directive (the "Paying Agent") to an individual resident or certain types of entities called "residual entities", within the meaning of Article 4.2 of the Savings Directive (the "Residual Entities") established in that other Member State (or certain dependent or associated territories). However, for a transitional period, Austria and Luxembourg were permitted to apply an optional information reporting system whereby if a beneficial owner, within the meaning of the Savings Directive, does not comply with one of the procedures for information reporting, the relevant Member State will levy a withholding tax on

255 payments to such beneficial owner. The withholding tax system applies for a transitional period during which the rate of withholding is 35 per cent. as from 1 July 2011 and will apply until the end of the transitional period. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-eu countries to the exchange of information relating to such payments. A number of non-eu countries (Switzerland, Andorra, Liechtenstein, Monaco and San Marino) have agreed to adopt similar measures (either provision of information or transitional withholding) relating to payments made by a Paying Agent within its jurisdiction to, or collected by such a Paying Agent for, an individual resident or a Residual Entity established in a Member State. In addition, Luxembourg has entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories (Jersey, Guernsey, Isle of Man, Montserrat, British Virgin Islands, the former Netherlands Antilles, Turks and Caicos Islands, Anguilla, Cayman Islands and Aruba) in relation to payments made by a Paying Agent in a Member State to, or collected by such a paying agent for, an individual resident or a Residual Entity established in one of those territories. On 13 November 2008, the European Commission published a proposal for amendments to the Savings Directive, which included a number of suggested changes. The aim of this proposal is to reinforce the scope and the perimeter of application of the Savings Directive. The European Parliament approved an amended version of this proposal on 24 April If implemented, the proposed amendments would, inter alia, (i) extend the scope of the Savings Directive to payments made through certain intermediate structures (whether or not established in an EU Member State) for the ultimate benefit of EU resident individuals, and (ii) provide for a wider definition of interest subject to the Savings Directive. Noteholders should consult their own tax advisers regarding the implications of the Savings Directive in their particular circumstances. Luxembourg Taxation Withholding tax All payments of interest and principal by the Issuer in the context of the holding, disposal, redemption or repurchase of the Notes can be made free and clear of any withholding or deduction for or on account of any taxes of whatsoever nature imposed, levied, withheld, or assessed by Luxembourg or any political subdivision or taxing authority thereof or therein, in accordance with applicable Luxembourg law, subject to exceptions in the following regulations: (i) the application of the laws dated 21 June 2005 implementing the Savings Directive and several agreements concluded with certain dependent or associated territories, providing for the possible application of a withholding tax (35 per cent. as from 1 July 2011) on interest paid to certain non-luxembourg resident investors (individuals and certain types of entities called "Residual Entities") in the event of the Issuer appointing a paying agent in Luxembourg within the meaning of the above-mentioned directive or agreements; and (ii) the application of the law of 23 December 2005 which introduced a 10 per cent. withholding tax on interest paid by a Luxembourg paying agent on savings income as regards Luxembourg resident individuals. The law of 23 December 2005 introduced a withholding tax of 10 per cent. on interest derived from certain transferable securities and paid to Luxembourg resident individuals through a paying agent located in Luxembourg. Such withholding tax will be in full discharge of income tax if the beneficial owner is an individual acting in the course of the management of his/her private wealth. This withholding tax also applies on accrued interest received upon sale, redemption or repurchase of the Notes. Pursuant to the law of 23 December 2005 as amended by the law of 17 July 2008, Luxembourg resident individuals can opt to self-declare and pay a 10 per cent. tax on interest payments made by

256 paying agents located in a Member State of the European Union other than Luxembourg, a Member State of the European Economic Area or in a State or territory which has concluded an agreement directly relating to the Savings Directive on the taxation of savings income. This 10 per cent. tax is final when Luxembourg resident individuals are acting in the context of the management of their private wealth. Responsibility for the withholding of tax in the application of the above-mentioned Luxembourg laws of 21 June 2005 and 23 December 2005 (and the agreements concluded by the State of Luxembourg with several dependent or associated territories) is assumed by the Luxembourg paying agent within the meaning of these laws and not by the Issuer. Taxes on income and capital gains A holder of a Note who derives income from such Note or who realises a gain on the disposal or redemption thereof will not be subject to Luxembourg taxation on such income or capital gains (subject to the application of the Savings Directive and the Luxembourg law of 23 December 2005 which introduced a 10 per cent. final withholding tax on savings income as regards Luxembourg-resident individuals and the agreements concluded by the State of Luxembourg with several dependent or associated territories) unless: (i) (ii) such holder is, or is deemed to be, resident in Luxembourg for Luxembourg tax purposes (or for the purposes of the relevant provisions); or such income or gain is attributable to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg. Net wealth tax Luxembourg resident individuals holders As regards to individuals, the Luxembourg law of 23 December 2005 abrogated the net wealth tax starting with the year Luxembourg resident companies holders Luxembourg net wealth tax will not be levied on a holder of a Note unless: (i) (ii) such holder is, or is deemed to be, a Luxembourg fully taxable resident company for the purpose of the relevant provisions; or such Note is attributable to an enterprise or part thereof which is carried on by a non-resident company through a permanent establishment or a permanent representative in Luxembourg. Inheritance and gift tax Where the Notes are transferred for no consideration: (i) (ii) no Luxembourg inheritance tax is levied on the transfer of the Notes upon death of a holder of a Note in cases where the deceased holder was not a resident of Luxembourg for inheritance tax purposes. Luxembourg gift tax will be levied on the transfer of a Note by a way of a gift by the Noteholder if this gift is registered in Luxembourg (e.g., if it is made pursuant to a notarial deed signed before a Luxembourg notary). Value Added Tax There is no Luxembourg VAT payable in respect of payments in consideration for the issue of the Notes or in respect of the payment of interest or principal under the Notes or the transfer of a Note

257 Luxembourg VAT may, however, be payable in respect of fees charged for certain services rendered to the Issuer, if for Luxembourg VAT purposes such services are rendered, or are deemed to be rendered, in Luxembourg and an exemption from VAT does not apply with respect to such services. Other taxes and duties There is no Luxembourg registration tax, capital tax, stamp duty or any other similar tax or duty (other than nominal court fees and contributions for the registration with the Chamber of Commerce) payable in Luxembourg in respect of or in connection with the execution, delivery and enforcement by legal proceedings (including any foreign judgement in the courts of Luxembourg) of the Notes except that in the case of court proceedings in a Luxembourg court or the presentation of the documents relative to the Notes issue to an "autorité constituée," such a court or "autorité constituée" may require registration thereof, in which case the documents will be subject to registration duties depending on the nature of the documents (in particular, a loan will be subject to an ad valorem registration duty of 0.24 per cent. calculated on the amounts mentioned therein whilst the Notes would be subject to a fixed EUR 12 duty). Residence A holder of a Note will not become resident, or deemed to be resident, in Luxembourg by reason only of the holding of such Note or the execution, performance, delivery and/or enforcement of that or any other Note. U.S. Taxation THE DISCUSSION OF U.S. TAX MATTERS SET FORTH IN THIS BASE PROSPECTUS WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THIS OFFERING AND WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING TAX-RELATED PENALTIES UNDER U.S. FEDERAL, STATE OR LOCAL TAX LAW. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER. The following is a summary of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes by a U.S. Holder (as defined below). This summary does not address the U.S. federal income tax consequences of every type of Note which may be issued under the Programme, and the relevant Final Terms may contain additional or modified disclosure concerning the material U.S. federal income tax consequences relevant to such type of Note as appropriate. This summary deals only with purchasers of Notes that are U.S. Holders and that will hold the Notes as capital assets (generally, property held for investment). The discussion does not cover all aspects of U.S. federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of Notes by particular investors, and does not address state, local, non-u.s. or other tax laws. This summary does not discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, investors liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organisations, dealers in securities or currencies, investors that will hold the Notes as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. Dollar). Moreover, the summary deals only with senior unsubordinated Series of Notes with a term of 30 years or less and denominated in a single currency (which is not a hyperinflationary currency). The U.S. federal income tax consequences of owning other types of Notes will be discussed in the applicable Final Terms. As used herein, the term "U.S. Holder" means a beneficial owner of Notes that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organised under the laws of the United States or any State thereof, (iii) an estate the income of

258 which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. The U.S. federal income tax treatment of a partner in a partnership that holds Notes will depend on the status of the partner and the activities of the partnership. Prospective purchasers that are partnerships should consult their tax adviser concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of Notes by the partnership. The summary is based on the tax laws of the United States including the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect. The summary of U.S. Federal income tax consequences set out below is for general information only. Prospective purchasers should consult their tax advisers as to the particular tax consequences to the m of owning the notes, including the applicability and effect of state, local, foreign and other tax laws and possible changes in tax law. U.S. Federal Income Tax Characterisation of the Notes The characterisation of a Series or Tranche of Notes may be uncertain and will depend on the terms of those Notes. The determination of whether an obligation represents debt, equity, or some other instrument or interest is based on all the relevant facts and circumstances. There may be no statutory, judicial or administrative authority directly addressing the characterisation of some of the types of Notes that are anticipated to be issued under the Programme or of instruments similar to the Notes. Depending on the terms of a particular Series or Tranche of Notes, the Notes may not be characterised as debt for U.S. federal income tax purposes despite the form of the Notes as debt instruments. For example, Notes of a Series or Tranche may be characterised as equity, or as representing an undivided proportionate ownership interest in the assets of, and share of the liabilities of the Issuer. If the Notes were treated as equity interests in the Issuer, U.S. Holders may be treated as owning interests in a passive foreign investment company (or "PFIC"), which could have materially adverse tax consequences for a U.S. Holder. Additional alternative characterisations may also be possible. Further possible characterisations, if applicable, may be discussed in the relevant Final Terms or any Prospectus or series prospectus. Prospective investors should seek advice from their own tax advisers as to the consequences to them of alternative characterisations of the Notes and the possibility that the Notes will be classified as equity interest in a PFIC and the consequences of owning an equity interest in a PFIC. No rulings will be sought from the Internal Revenue Service (the "IRS") regarding the characterisation of any of the Notes issued hereunder for U.S. federal income tax purposes. Each holder should consult its own tax adviser about the proper characterisation of the Notes for U.S. federal income tax purposes and consequences to the holder of acquiring, owning or disposing of the Notes. The following summary applies to Notes that are properly treated as debt for U.S. federal income tax purposes. Payments of Interest General Interest on a Note, whether payable in U.S. Dollars or a currency, composite currency or basket of currencies other than U.S. Dollars (a "foreign currency"), other than interest on a "Discount Note" that is not "qualified stated interest" (each as defined below under "Original Issue Discount-General"), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on the holder's method of accounting for tax purposes. Interest paid by the Issuer on the Notes and

259 original issue discount ("OID"), if any, accrued with respect to the Notes (as described below under "Original Issue Discount") generally will constitute income from sources outside the United States. Prospective purchasers should consult their tax advisers concerning the applicability of the foreign tax credit and source of income rules to income attributable to the Notes. Original Issue Discount General The following is a summary of the principal U.S. federal income tax consequences of the ownership of Notes issued with OID. The following summary does not discuss Notes that are characterised as contingent payment debt instruments for U.S. federal income tax purposes. In the event the Issuer issues contingent payment debt instruments the applicable Final Terms may describe the material U.S. federal income tax consequences thereof. A Note, other than a Note with a term of one year or less (a "Short-Term Note"), will be treated as issued with OID (a "Discount Note") if the excess of the Note's "stated redemption price at maturity" over its issue price is equal to or more than a de minimis amount (0.25 per cent. of the Note's stated redemption price at maturity multiplied by the number of complete years to its maturity). An obligation that provides for the payment of amounts other than qualified stated interest before maturity (an "instalment obligation") will be treated as a Discount Note if the excess of the Note's stated redemption price at maturity over its issue price is equal to or greater than 0.25 per cent. of the Note's stated redemption price at maturity multiplied by the weighted average maturity of the Note. A Note's weighted average maturity is the sum of the following amounts determined for each payment on a Note (other than a payment of qualified stated interest): (i) the number of complete years from the issue date until the payment is made multiplied by (ii) a fraction, the numerator of which is the amount of the payment and the denominator of which is the Note's stated redemption price at maturity. Generally, the issue price of a Note will be the first price at which a substantial amount of Notes included in the issue of which the Note is a part is sold to persons other than bond houses, brokers, or similar persons or organisations acting in the capacity of underwriters, placement agents, or wholesalers. The stated redemption price at maturity of a Note is the total of all payments provided by the Note that are not payments of "qualified stated interest." A qualified stated interest payment is generally any one of a series of stated interest payments on a Note that are unconditionally payable at least annually at a single fixed rate (with certain exceptions for lower rates paid during some periods), or a variable rate (in the circumstances described below under "Variable Interest Rate Notes"), applied to the outstanding principal amount of the Note. Solely for the purposes of determining whether a Note has OID, the Issuer will be deemed to exercise any call option that has the effect of decreasing the yield on the Note, and the U.S. Holder will be deemed to exercise any put option that has the effect of increasing the yield on the Note. U.S. Holders of Discount Notes must include OID in income calculated on a constant-yield method before the receipt of cash attributable to the income, and generally will have to include in income increasingly greater amounts of OID over the life of the Discount Notes. The amount of OID includible in income by a U.S. Holder of a Discount Note is the sum of the daily portions of OID with respect to the Discount Note for each day during the taxable year or portion of the taxable year on which the U.S. Holder holds the Discount Note. The daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Note may be of any length selected by the U.S. Holder and may vary in length over the term of the Note as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Note occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Note's adjusted issue price at the beginning of the accrual period and the Discount Note's yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (b) the sum of the payments of qualified stated interest on the Note allocable to the accrual period. The "adjusted issue price" of a Discount Note at the beginning of any accrual period is the issue price of the Note increased by (x) the

260 amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Note that were not qualified stated interest payments. Acquisition Premium A U.S. Holder that purchases a Discount Note for an amount less than or equal to the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, but in excess of its adjusted issue price (any such excess being "acquisition premium") and that does not make the election described below under "Election to Treat All Interest as Original Issue Discount", is permitted to reduce the daily portions of OID by a fraction, the numerator of which is the excess of the U.S. Holder's adjusted basis in the Note immediately after its purchase over the Note's adjusted issue price, and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, over the Note's adjusted issue price. Short-Term Notes In general, an individual or other cash basis U.S. Holder of a Short-Term Note is not required to accrue OID (as specially defined below for the purposes of this paragraph) for U.S. federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis U.S. Holders and certain other U.S. Holders are required to accrue OID on Short-Term Notes on a straight-line basis or, if the U.S. Holder so elects, under the constant-yield method (based on daily compounding). In the case of a U.S. Holder not required and not electing to include OID in income currently, any gain realised on the sale or retirement of the Short-Term Note will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant-yield method) through the date of sale or retirement. U.S. Holders who are not required and do not elect to accrue OID on Short-Term Notes will be required to defer deductions for interest on borrowings allocable to Short-Term Notes in an amount not exceeding the deferred income until the deferred income is realised. For purposes of determining the amount of OID subject to these rules, all interest payments on a Short-Term Note are included in the Short-Term Note's stated redemption price at maturity. A U.S. Holder may elect to determine OID on a Short-Term Note as if the Short-Term Note had been originally issued to the U.S. Holder at the U.S. Holder's purchase price for the Short-Term Note. This election will apply to all obligations with a maturity of one year or less acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the IRS. Market Discount A Note, other than a Short-Term Note, generally will be treated as purchased at a market discount (a "Market Discount Note") if the Note's stated redemption price at maturity or, in the case of a Discount Note, the Note's "revised issue price", exceeds the amount for which the U.S. Holder purchased the Note by at least 0.25 per cent. of the Note's stated redemption price at maturity or revised issue price, respectively, multiplied by the number of complete years to the Note's maturity (or, in the case of a Note that is an installment obligation, the Note's weighted average maturity). If this excess is not sufficient to cause the Note to be a Market Discount Note, then the excess constitutes "de minimis market discount". For this purpose, the "revised issue price" of a Note generally equals its issue price, increased by the amount of any OID that has accrued on the Note and decreased by the amount of any payments previously made on the Note that were not qualified stated interest payments. Under current law, any gain recognised on the maturity or disposition of a Market Discount Note (including any payment on a Note that is not qualified stated interest) will be treated as ordinary income to the extent that the gain does not exceed the accrued market discount on the Note. Alternatively, a U.S. Holder of a Market Discount Note may elect to include market discount in income currently over the life of the Note. This election will apply to all debt instruments with market discount acquired by the electing U.S. Holder on or after the first day of the first taxable year to which

261 the election applies. This election may not be revoked without the consent of the IRS. A U.S. Holder of a Market Discount Note that does not elect to include market discount in income currently will generally be required to defer deductions for interest on borrowings incurred to purchase or carry a Market Discount Note that is in excess of the interest and OID on the Note includible in the U.S. Holder's income, to the extent that this excess interest expense does not exceed the portion of the market discount allocable to the days on which the Market Discount Note was held by the U.S. Holder. Under current law, market discount will accrue on a straight-line basis unless the U.S. Holder elects to accrue the market discount on a constant-yield method. This election applies only to the Market Discount Note with respect to which it is made and is irrevocable. Variable Interest Rate Notes Notes that provide for interest at variable rates ("Variable Interest Rate Notes") generally will bear interest at a "qualified floating rate" and thus will be treated as "variable rate debt instruments" under Treasury regulations governing accrual of OID. A Variable Interest Rate Note will qualify as a "variable rate debt instrument" if (a) its issue price does not exceed the total noncontingent principal payments due under the Variable Interest Rate Note by more than a specified de minimis amount, (b) it provides for stated interest, paid or compounded at least annually, at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate, and (c) it does not provide for any principal payments that are contingent (other than as described in (a) above). A "qualified floating rate" is any variable rate where variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Interest Rate Note is denominated. A fixed multiple of a qualified floating rate will constitute a qualified floating rate only if the multiple is greater than 0.65 but not more than A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Interest Rate Note (e.g., two or more qualified floating rates with values within 25 basis points of each other as determined on the Variable Interest Rate Note's issue date) will be treated as a single qualified floating rate. Notwithstanding the foregoing, a variable rate that would otherwise constitute a qualified floating rate but which is subject to one or more restrictions such as a maximum numerical limitation (i.e. a cap) or a minimum numerical limitation (i.e., a floor) may, under certain circumstances, fail to be treated as a qualified floating rate. An "objective rate" is a rate that is not itself a qualified floating rate but which is determined using a single fixed formula and which is based on objective financial or economic information (e.g. one or more qualified floating rates or the yield of actively traded personal property). A rate will not qualify as an objective rate if it is based on information that is within the control of the Issuer (or a related party) or that is unique to the circumstances of the Issuer (or a related party), such as dividends, profits or the value of the Issuer's stock (although a rate does not fail to be an objective rate merely because it is based on the credit quality of the Issuer). Other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Variable Interest Rate Note will not constitute an objective rate if it is reasonably expected that the average value of the rate during the first half of the Variable Interest Rate Note's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Interest Rate Note's term. A "qualified inverse floating rate" is any objective rate where the rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate. If a Variable Interest Rate Note provides for stated interest at a fixed rate for an initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period and if the variable rate on the Variable Interest Rate Note's issue date is intended to

262 approximate the fixed rate (e.g., the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be. A qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a "current value" of that rate. A "current value" of a rate is the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day. If a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a "variable rate debt instrument", then any stated interest on the Note which is unconditionally payable in cash or property (other than debt instruments of the Issuer) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a "variable rate debt instrument" will generally not be treated as having been issued with OID unless the Variable Interest Rate Note is issued at a "true" discount (i.e. at a price below the Note's stated principal amount) in excess of a specified de minimis amount. OID on a Variable Interest Rate Note arising from "true" discount is allocated to an accrual period using the constant yield method described above by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In general, any other Variable Interest Rate Note that qualifies as a "variable rate debt instrument" will be converted into an "equivalent" fixed rate debt instrument for purposes of determining the amount and accrual of OID and qualified stated interest on the Variable Interest Rate Note. Such a Variable Interest Rate Note must be converted into an "equivalent" fixed rate debt instrument by substituting any qualified floating rate or qualified inverse floating rate provided for under the terms of the Variable Interest Rate Note with a fixed rate equal to the value of the qualified floating rate or qualified inverse floating rate, as the case may be, as of the Variable Interest Rate Note's issue date. Any objective rate (other than a qualified inverse floating rate) provided for under the terms of the Variable Interest Rate Note is converted into a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In the case of a Variable Interest Rate Note that qualifies as a "variable rate debt instrument" and provides for stated interest at a fixed rate in addition to either one or more qualified floating rates or a qualified inverse floating rate, the fixed rate is initially converted into a qualified floating rate (or a qualified inverse floating rate, if the Variable Interest Rate Note provides for a qualified inverse floating rate). Under these circumstances, the qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the Variable Interest Rate Note as of the Variable Interest Rate Note's issue date is approximately the same as the fair market value of an otherwise identical debt instrument that provides for either the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Subsequent to converting the fixed rate into either a qualified floating rate or a qualified inverse floating rate, the Variable Interest Rate Note is converted into an "equivalent" fixed rate debt instrument in the manner described above. Once the Variable Interest Rate Note is converted into an "equivalent" fixed rate debt instrument pursuant to the foregoing rules, the amount of OID and qualified stated interest, if any, are determined for the "equivalent" fixed rate debt instrument by applying the general OID rules to the "equivalent" fixed rate debt instrument and a U.S. Holder of the Variable Interest Rate Note will account for the OID and qualified stated interest as if the U.S. Holder held the "equivalent" fixed rate debt instrument. In each accrual period, appropriate adjustments will be made to the amount of qualified stated interest or OID assumed to have been accrued or paid with respect to the "equivalent" fixed rate debt instrument in the event that these amounts differ from the actual amount of interest accrued or paid on the Variable Interest Rate Note during the accrual period

263 If a Variable Interest Rate Note, such as a Note the payments on which are determined by reference to an index, does not qualify as a "variable rate debt instrument", then the Variable Interest Rate Note will be treated as a contingent payment debt obligation. The proper U.S. federal income tax treatment of Variable Interest Rate Notes that are treated as contingent payment debt obligations will be more fully described in the applicable Final Terms. Notes Purchased at a Premium A U.S. Holder that purchases a Note for an amount in excess of its principal amount, or for a Discount Note, its stated redemption price at maturity, may elect to treat the excess as "amortisable bond premium", in which case the amount required to be included in the U.S. Holder's income each year with respect to interest on the Note will be reduced by the amount of amortisable bond premium allocable (based on the Note's yield to maturity) to that year. Any election to amortise bond premium will apply to all bonds (other than bonds the interest on which is excludable from gross income for U.S. federal income tax purposes) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of the IRS. See "Original Issue Discount-Election to Treat All Interest as Original Issue Discount". Election to Treat All Interest as Original Issue Discount A U.S. Holder may elect to include in gross income all interest that accrues on a Note using the constant-yield method described above under "Original Issue Discount-General," with certain modifications. For purposes of this election, interest includes stated interest, OID, de minimis OID, market discount, de minimis market discount and unstated interest, as adjusted by any amortisable bond premium (described above under "Notes Purchased at a Premium") or acquisition premium. This election will generally apply only to the Note with respect to which it is made and may not be revoked without the consent of the IRS. If the election to apply the constant-yield method to all interest on a Note is made with respect to a Market Discount Note, the electing U.S. Holder will be treated as having made the election discussed above under "Market Discount" to include market discount in income currently over the life of all debt instruments with market discount held or thereafter acquired by the U.S. Holder. U.S. Holders should consult their tax advisers concerning the propriety and consequences of this election. Purchase, Sale and Retirement of Notes A U.S. Holder's tax basis in a Note will generally be its cost, increased by the amount of any OID or market discount included in the U.S. Holder's income with respect to the Note and the amount, if any, of income attributable to de minimis OID and de minimis market discount included in the U.S. Holder's income with respect to the Note, and reduced by (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortisable bond premium applied to reduce interest on the Note. A U.S. Holder will generally recognise gain or loss on the sale or retirement of a Note equal to the difference between the amount realised on the sale or retirement and the tax basis of the Note. The amount realised does not include the amount attributable to accrued but unpaid interest, which will be taxable as interest income to the extent not previously included in income. Except to the extent described above under "Original Issue Discount- Market Discount" or "Original Issue Discount-Short Term Notes" or attributable to changes in exchange rates (as discussed below), gain or loss recognised on the sale or retirement of a Note will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder's holding period in the Notes exceeds one year. The ability of U.S. Holders to use capital losses is subject to limitations. Gain or loss realised by a U.S. Holder on the sale or retirement of a Note generally will be U.S. source. Therefore, a U.S. Holder may have insufficient foreign source income to utilise foreign tax credits attributable to any Russian tax imposed on a sale or disposition. Prospective purchasers should consult their tax advisers as to the availability of and limitations on any foreign tax credit attributable

264 to this Russian tax. U.S. Holders should consult their tax advisers concerning the U.S. federal income tax consequences to them of a change in obligor with respect to the Notes. Foreign Currency Notes Interest If an interest payment is denominated in, or determined by reference to, a foreign currency, the amount of income recognised by a cash basis U.S. Holder will be the U.S. Dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. Dollars. An accrual basis U.S. Holder may determine the amount of income recognised with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year). Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year). Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. Dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the IRS. Upon receipt of an interest payment (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Note) denominated in, or determined by reference to, a foreign currency, the U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars. OID OID for each accrual period on a Discount Note that is denominated in, or determined by reference to, a foreign currency, will be determined in the foreign currency and then translated into U.S. Dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder, as described above. Upon receipt of an amount attributable to OID (whether in connection with a payment on the Note or a sale or disposition of the Note), a U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars. Market Discount Market discount on a Note that is denominated in, or determined by reference to, a foreign currency, will be accrued in the foreign currency. If the U.S. Holder elects to include market discount in income currently, the accrued market discount will be translated into U.S. Dollars at the average exchange rate for the accrual period (or portion thereof within the U.S. Holder's taxable year). Upon the receipt of an amount attributable to accrued market discount, the U.S. Holder may recognise U.S. source exchange gain or loss (which will be taxable as ordinary income or loss) determined in the same manner as for accrued interest or OID. A U.S. Holder that does not elect to include market discount in

265 income currently will recognise, upon the disposition or maturity of the Note, the U.S. Dollar value of the amount accrued, calculated at the spot rate on that date, and no part of this accrued market discount will be treated as exchange gain or loss. Bond Premium Bond premium (including acquisition premium) on a Note that is denominated in, or determined by reference to, a foreign currency, will be computed in units of the foreign currency, and any such bond premium that is taken into account currently will reduce interest income in units of the foreign currency. On the date bond premium offsets interest income, a U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the amount offset multiplied by the difference between the spot rate in effect on the date of the offset, and the spot rate in effect on the date the Notes were acquired by the U.S. Holder. A U.S. Holder that does not elect to take bond premium (other than acquisition premium) into account currently will recognise a market loss when the Note matures. Sale or Retirement As discussed above under "Purchase, Sale and Retirement of Notes", a U.S. Holder will generally recognise gain or loss on the sale or retirement of a Note equal to the difference between the amount realised on the sale or retirement and its tax basis in the Note. A U.S. Holder's tax basis in a Note that is denominated in a foreign currency will be determined by reference to the U.S. Dollar cost of the Note. The U.S. Dollar cost of a Note purchased with foreign currency will generally be the U.S. Dollar value of the purchase price on the date of purchase, or the settlement date for the purchase, in the case of Notes traded on an established securities market, as defined in the applicable Treasury Regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). The amount realised on a sale or retirement for an amount in foreign currency will be the U.S. Dollar value of this amount on the date of sale or retirement, or the settlement date for the sale, in the case of Notes traded on an established securities market, as defined in the applicable Treasury Regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). Such an election by an accrual basis U.S. Holder must be applied consistently from year to year and cannot be revoked without the consent of the IRS. A U.S. Holder will recognise U.S. source exchange rate gain or loss (taxable as ordinary income or loss) on the sale or retirement of a Note equal to the difference, if any, between the U.S. Dollar values of the U.S. Holder's purchase price for the Note (or, if less, the principal amount of the Note) (i) on the date of sale or retirement and (ii) the date on which the U.S. Holder acquired the Note. Any such exchange rate gain or loss will be realised only to the extent of total gain or loss realised on the sale or retirement (including any exchange gain or loss with respect to the receipt of accrued but unpaid interest). Disposition of Foreign Currency Foreign currency received as interest on a Note or on the sale or retirement of a Note will have a tax basis equal to its U.S. Dollar value at the time the foreign currency is received. Foreign currency that is purchased will generally have a tax basis equal to the U.S. Dollar value of the foreign currency on the date of purchase. Any gain or loss recognised on a sale or other disposition of a foreign currency (including its use to purchase Notes or upon exchange for U.S. Dollars) will be U.S. source ordinary income or loss. Backup Withholding and Information Reporting Payments of principal, interest and accrued OID on, and the proceeds of sale or other disposition of Notes, as well as dividends and other proceeds with respect to Shares, by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under

266 applicable regulations. Backup withholding may apply to these payments and to accruals of OID if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its U.S. federal income tax returns. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder's U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS. Reportable Transactions A U.S. taxpayer that participates in a "reportable transaction" will be required to disclose its participation to the IRS. Under the relevant rules, if the Notes are denominated in a foreign currency, a U.S. Holder may be required to treat a foreign currency exchange loss from the Notes as a reportable transaction if this loss exceeds the relevant threshold in the regulations (US$50,000 in a single taxable year, if the U.S. Holder is an individual or trust, or higher amounts for other non-individual U.S. Holders), and to disclose its investment by filing Form 8886 with the IRS. A penalty in the amount of US$10,000 in the case of a natural person and US$50,000 in all other cases is generally imposed on any taxpayer that fails to timely file an information return with the IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective purchasers are urged to consult their tax advisers regarding the application of these rules. U.S. Holders should consult their own tax advisers regarding any reporting obligations they may have as a result of their acquisition, ownership or disposition of Notes. Failure to comply with certain reporting obligations could result in the imposition of substantial penalties

267 CERTAIN ERISA CONSIDERATIONS The U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") imposes fiduciary standards and certain other requirements on employee benefit plans subject thereto, including collective investment funds, separate accounts, and other entities or accounts whose underlying assets are treated as assets of such plans pursuant to the U.S. Department of Labor "plan assets" regulation, 29 CFR Section , as modified by Section 3(42) of ERISA (the "Plan Assets Regulation") (collectively, "ERISA Plans") and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA s general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plan s investments be made in accordance with the documents governing the Plan. The prudence of a particular investment will be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan s particular circumstances and all of the facts and circumstances of the investment including, but not limited to, the matters discussed in "Risk Factors" and the fact that in the future there may be no market in which the fiduciary will be able to sell or otherwise dispose of the Notes. In addition, Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code (together with ERISA Plans, "Plans")) and certain persons (referred to as "parties in interest" or "disqualified persons") having certain relationships to such Plans, unless a statutory or administrative exemption applies to the transaction. In particular, a sale or exchange of property or an extension of credit between a Plan and a "party in interest" or "disqualified person" may constitute a prohibited transaction. It is possible that the Notes, even if regarded as equity for purposes of the Plan Assets Regulations (as discussed below) would nevertheless be regarded as debt for purposes of the prohibited transaction rules of Section 406 of ERISA and Section 4975 of the Code. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes or other liabilities under ERISA and the Code. The Issuer or the Trustee, directly or through affiliates, may be considered a party in interest or disqualified person with respect to many Plans. Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if the Notes are acquired by a Plan with respect to which the Issuer or the Trustee or any of their respective affiliates is a party in interest or a disqualified person, unless the Notes are acquired pursuant to and in accordance with an applicable exemption. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may apply depending in part on the type of Plan fiduciary making the decision to acquire a Note and the circumstances under which that decision is made. Included among these exemptions are Prohibited Transaction Class Exemption ("PTCE") (relating to investments by bank collective investment funds), PTCE (relating to transactions effected by a "qualified professional asset manager"), PTCE 90-1 (relating to investments by insurance company pooled separate accounts), PTCE (relating to investments by insurance company general accounts) and PTCE (relating to transactions determined by an in-house asset manager). In addition, ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code provide a limited exemption for the purchase and sale of securities and related lending transactions, provided that neither the issuer of the securities nor any of its affiliates have or exercise any discretionary authority or control or render any investment advice with respect to the assets of any Plan involved in the transaction, and provided further that the Plan pays no more than "adequate consideration" (within the meaning of ERISA Section 408(b)(17) and Section 4975(f)(10) of the Code) in connection with the transaction (the "service provider exemption"). There can be no assurance that any of these exemptions or any other exemption will be available with respect to any particular transaction involving the Notes. Under a "look-through rule" set forth in the Plan Assets Regulations, if a Plan invests in an "equity interest" of an entity and no other exception applies, the Plan's assets include both the equity interest and an undivided interest in each of the entity's underlying assets. This rule will only apply where equity participation in an entity by benefit plan investors is "significant". Equity participation by

268 benefit plan investors is significant if 25 per cent. or more of the value of any class of equity interest in the entity is held by benefit plan investors. An equity interest does not include debt (as determined by applicable local law) which does not have substantial equity features. The term "benefit plan investor" includes (a) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to Title I, Subtitle B, Part 4 of ERISA, (b) a plan as defined in and subject to Section 4975 of the Code or (c) an entity whose underlying assets include, or are deemed for purposes of ERISA or the Code to include, "plan assets" by reason of any such employee benefit plan's or plan's investment in the entity. Where the value of an interest in an entity relates solely to identified property of the entity, that property is treated as the sole property of a separate entity. Governmental plans, certain church plans, non-u.s. plans, and other plans, while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Sectuib 40 of ERISA or Section 4975 of the Code, may nevertheless be subject to federal, state, local, non-u.s, or other laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing Notes. Because the Notes do not represent an interest in any property of the Issuer other than the relevant Loan, they may be regarded for ERISA purposes as equity interests in a separate entity whose sole asset is the relevant Loan. Further, the Issuer will not be able to monitor the Noteholders' possible status as benefit plan investors. Accordingly, the Notes should not be acquired by any benefit plan investor or any governmental, church or non-u.s. Plans which are subject to any federal, state, local or non-u.s. or other laws or regulations that are substantively similar to the prohibited transaction provisions of Section 406 of ERISA or Section 4975 of the Code. BY ITS PURCHASE AND HOLDING OF A NOTE OR ANY INTEREST THEREIN, THE PURCHASER AND/OR HOLDER THEREOF AND EACH TRANSFEREE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED AT THE TIME OF ITS PURCHASE AND THROUGHOUT THE PERIOD THAT IT HOLDS SUCH NOTE OR INTEREST THEREIN, THAT (1) IT IS NOT AND WILL NOT BE (I) A BENEFIT PLAN INVESTOR (AS DEFINED IN 29 CFR SECTION (F), AS MODIFIED BY SECTION 36(2) OF ERISA OR (II) A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY AND/OR THE PROHIBITED TRANSACTION PROVISIONS OF THE ERISA AND/OR SECTION 4975 OF THE CODE ("SIMILAR LAW") AND/OR LAWS OR REGULATIONS THAT PROVIDE THAT THE ASSETS OF THE ISSUER COULD BE DEEMED TO INCLUDE "PLAN ASSETS" OF SUCH PLAN UNDER SECTION 3(42) OF ERISA, 29 CFR. SECTION OR OTHERWISE, UNLESS SUCH ACQUISITION BY A SIMILAR LAW PLAN DOES NOT AND WILL NOT RESULT IN A NON EXEMPT VIOLATION OF ANY SIMILAR LAWS AND WILL NOT SUBJECT THE ISSUER TO ANY LAWS, RULES OR REGULATIONS APPLICABLE TO SUCH PLAN SOLELY AS A RESULT OF THE INVESTMENT IN THE ISSUER BY SUCH PLAN; AND (2) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY NOTE OR INTEREST THEREIN TO ANY PERSON WITHOUT FIRST OBTAINING THE SAME FOREGOING REPRESENTATIONS, WARRANTIES AND COVENANTS FROM THAT PERSON. Any Plan fiduciary that proposes to cause a Plan to purchase Notes should consult with its counsel regarding the applicability of the fiduciary responsibility provisions under ERISA and the prohibited transaction provisions under Section 406 of ERISA and Section 4975 of the Code to such an investment, and to confirm that such investment will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA or the Code. THE SALE OF NOTES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY THE ISSUER THAT SUCH AN INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH AN INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN

269 SUBSCRIPTION AND SALE Summary of Dealer Agreement Subject to the terms and on the conditions contained in an Amended and Restated Dealer Agreement dated 26 September 2012 (the "Dealer Agreement") between the Issuer, RSB, the Permanent Dealers and the Arrangers, the Notes will be offered from time to time by the Issuer to the Permanent Dealers or such other Dealers as may be appointed from time to time in respect of any Series of Notes pursuant to the Dealer Agreement. Any agreement for the sale of Notes will, inter alia, make provision for the form and terms and conditions of the relevant Notes, whether the placement of the Notes is underwritten or sold on an agency basis only, the price at which such Notes will be purchased by the Dealers and the commissions or other agreed deductibles (if any) which are payable or allowable by the Issuer in respect of such purchase and the form of any indemnity to the Dealers against certain liabilities in connection with the offer and sale of the relevant Notes. The Notes may be resold at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Dealer Agreement also provides for Notes to be issued in syndicated Series that may be jointly and severally underwritten by two or more Dealers. Each of the Issuer and RSB has agreed to indemnify the Dealers against certain losses, as set out in the Dealer Agreement. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe for the Notes in certain circumstances prior to payment for such Notes being made to the Issuer. Selling Restrictions United States The Notes and the corresponding Loans have not been and will not be registered under the Securities Act or the securities laws of any State or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Each Dealer has agreed that it will not offer or sell the Notes of a Series (i) as part of their distribution at any time and (ii) otherwise until 40 days after the completion of the distribution of the Series of which such Notes are a part, as determined and certified by the relevant Dealer (or, in the case of a sale of a Series of Notes through more than one Dealer by the Lead Manager on behalf of the relevant Dealers) only in accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act, and, at or prior to confirmation of a sale of Notes (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. In addition, until 40 days after the commencement of the offering of each Series of Notes, an offer or sale of Notes of such Series within the United States by a dealer that is participating in the offering may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A. Each Dealer has represented and agreed that neither it nor any of its affiliates (as defined in Rule 501 (b) of Regulation D), nor any person acting on its or their behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer and sale of the Notes in the United States. Each Dealer has represented that it has not entered and agrees that it will not enter into any contractual arrangement with any distributor with respect to the distribution or delivery of Notes, except with its affiliates or with the prior written consent of the Issuer and RSB

270 Terms used in the preceding five paragraphs have the meanings given to them by Regulation S under the Securities Act. Notes offered and sold outside the United States may be sold in reliance on Regulation S. The Dealer Agreement provides that the Dealer(s) may directly or through their respective U.S. registered broker-dealer affiliates arrange for the offer and resale of Notes within the United States only to persons whom they reasonably believe are QIBs and who are QPs who can represent that (a) they are QPs who are QIBs within the meaning of Rule 144A, (b) they are not broker-dealers who own and invest on a discretionary basis less than U.S.$25 million in securities of unaffiliated issuers, (c) they are not a participant-directed employee plan, such as a plan under subsection 401 (k) of the U.S Internal Revenue Code, (d) they are acting for their own account, or the account of one or more QIBs each of which is a QP, (e) they are not formed for the purpose of investing in the Issuer or the Notes, (f) each account for which they are purchasing will hold and transfer at least U.S.$200,000 in principal amount of Notes at any time, (g) they understand that the Issuer may receive a list of participants holding positions in its securities from one or more book-entry depositories; and (h) they will provide notice of the transfer restrictions set forth in this base prospectus to any subsequent transferees. This Base Prospectus has been prepared by the Issuer and RSB for use in connection with the offer and sale of the Notes outside the United States and the resale of the Notes in the United States and for the listing of Notes on the Irish Stock Exchange. The Issuer and the Dealers reserve the right to reject any offer to purchase the Notes, in whole or in part, for any reason. This Base Prospectus does not constitute an offer to any person in the United States or to any U.S. person other than any QIB who is also a QP and to whom an offer has been made directly by one of the Dealers or its U.S. registered broker-dealer affiliates. Distribution of this Base Prospectus by any non-u.s. person outside the United States or by any QIB that is a QP within the United States to any U.S. person or to any other person within the United States, other than to a QIB that is a QP and to those persons, if any, retained to advise such non-u.s. person or such QIB that is a QP with respect thereto, is unauthorised and any disclosure without the prior written consent of the Issuer of any of its contents to any such U.S. person or other person within the United States, other than any QIB that is a QP and those persons, if any, retained to advise such non-u.s. person or QIB that is a QP, is prohibited. Italy The offering of the Notes has not been registered with the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian securities legislation and, accordingly, each Dealer has represented and agreed that it has not offered, sold or distributed, and will not offer, sell or distribute any Notes or any copy of the Final Terms and/or the Base Prospectus or any other offer document in the Republic of Italy ("Italy") in an offer to the public of financial products under the meaning of Article 1, paragraph 1, letter t) of Legislative Decree No. 58 of 24 February 1998 (the "Consolidated Financial Services Act"), unless an exemption applies. Accordingly, the Notes shall only be offered, sold or delivered in Italy: (a) (b) to qualified investors (investitori qualificati), pursuant to Article 100 of the Consolidated Financial Services Act and Article 2.1(e) (i) to (iii) of the Prospectus Directive; or in any other circumstances where an express exemption from compliance with the restrictions on offers to the public applies, as provided under the Consolidated Financial Services Act or CONSOB Regulation No of 14 May 1999, as amended. Moreover, and subject to the foregoing, any offer, sale or delivery of the Notes or distribution of copies of the Final Terms or the Base Prospectus or any other document relating to the Notes in Italy under (a) or (b) above must be: (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Consolidated Financial Services Act, Legislative Decree No. 385 of 1 September 1993 (the "Banking Act"), CONSOB Regulation No of 29 October 2007, all as amended;

271 (ii) (iii) in compliance with Article 129 of the Banking Act and the implementing guidelines, pursuant to which the Bank of Italy may request information on the offering or issue of securities in Italy; and in compliance with any other applicable laws and regulations, including any limitation or requirement which may be imposed from time to time, inter alia, by CONSOB or the Bank of Italy. Any investor purchasing the Notes in this offering is solely responsible for ensuring that any offer or resale of the Notes it purchases in this offering occurs in compliance with applicable laws and regulations. United Kingdom Each Dealer has represented and agreed that: (a) (b) (c) in relation to any Notes which have a maturity of less than one year, (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business; and (b) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of section 19 of the FSMA by the Issuer; it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to such Notes in, from or otherwise involving the United Kingdom. Russia Each Dealer has represented and agreed that it has not offered or sold or otherwise transferred, and will not offer or sell or otherwise transfer as part of their initial distribution or at any time thereafter, any Notes to or for the benefit of any persons (including legal entities) resident, incorporated, established or having their usual residence in Russia, or to any person located within the territory of Russia unless and to the extent otherwise permitted under Russian law. Hong Kong Each Dealer has represented and agreed it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to any Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance

272 Singapore Each Dealer has acknowledged that the Base Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented and agreed that it has not offered or sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, the Base Prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"); (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) (b) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (i) (ii) (iii) (iv) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; where no consideration is or will be given for the transfer; where the transfer is by operation of law; or as specified in Section 276(7) of the SFA. General No action has been taken or will be taken in any jurisdiction by the Issuer, RSB, the Arrangers or any of the Dealers that would, or is intended to, permit a public offer of the Notes or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Each Dealer has undertaken to the Issuer and RSB that it will (to the best of its knowledge and belief) comply with all applicable laws and regulations in each country or jurisdiction in which it purchases, offers, sells or delivers Notes or has in its possession or distributes such offering material, in all cases at its own expense. These selling restrictions may be modified by the agreement of the Issuer, RSB and the Dealers. Any such modification will be set out in the Final Terms issued in respect of the issue of Notes to which it relates or in a supplement to this Base Prospectus. Certain of the Arrangers, the Dealers and their respective affiliates have engaged in transactions with RSB and other members of the Group (including, in some cases, credit agreements and credit lines) in the ordinary course of their banking business and certain of the Arrangers and the Dealers have

273 performed various investment banking, financial advisory, and other services for RSB and other members of the Group, for which they received customary fees, and certain of the Arrangers, the Dealers and their respective affiliates may provide such services in the future

274 TRANSFER RESTRICTIONS Because of the following restrictions, you are advised to consult legal counsel prior to making any offer, resale or other transfer offered hereby. Rule 144A Notes Each purchaser of a beneficial interest in a Rule 144A Global Note, by accepting delivery of this Base Prospectus and the interest in such Rule 144A Global Note, will be deemed to have represented, agreed and acknowledged that: (1) If it is a U.S. person within the meaning of Regulation S it is (a) a QIB that is also a QP, (b) not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25 million in securities of unaffiliated issuers, (c) not a participant-directed employee plan, such as a 401 (k) plan, (d) acquiring such Notes for its own account, or for the account of one or more QIBs each of which is also a QP, (e) not formed for the purpose of investing in the Notes or the Issuer, and (f) aware, and each beneficial owner of such Notes has been advised, that the seller of such Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. (2) It is (a) purchasing not less than U.S.$200,000 principal amount of such Notes and (b) will provide notice of the transfer restrictions set forth herein to any subsequent transferees. In addition, it understands that the Issuer may receive a list of participants holding positions in the Issuer's securities from one or more book entry depositories. (3) It understands that the Rule 144A Notes have not been and will not be registered under the Securities Act and may not be offered, sold, pledged or otherwise transferred except (a) in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believe is a QIB and that is also a QP purchasing for its own account or for the account of one or more QIBs, each of which is also a QP or (b) to a non-u.s. person within the meaning of Regulation S in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States. (4) It understands that the Issuer has the power to compel any beneficial owner of Rule 144A Notes that is a U.S. person and is not a QIB and a QP to sell its interest in the Rule l44a Notes, or may sell such interest on behalf of such owner. The Issuer has the right to refuse to honour the transfer of an interest in the Rule 144A Notes to a U.S. person who is not a QIB and a QP. (5) It understands and acknowledges that its purchase and holding of such Notes constitutes a representation and agreement by it that at the time of its purchase and throughout the period in which it holds such Notes or any interest therein (a) it is not and will not be a Benefit Plan Investor (as defined in the Plan Assets Regulation), (b) if it is a governmental, church or non-u.s. plan that is subject to any federal, state, local or non-u.s. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or any entity whose assets are treated as assets of any such plan, the purchase and holding of the Notes or any interest therein (x) must not violate any statute, regulation, administrative decision, policy or any other legal authority applicable to such plan, and (y) must not subject the Issuer to any such statute, regulation, administrative decision, policy or other legal authority, and (c) it must not sell or otherwise transfer any such Note or interest to any person without first obtaining these same foregoing deemed representations, warranties and agreements. "Benefit Plan Investors" include (1) any employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to Part 4 of Subtitle B of Title I of ERISA, (2) any plan to which Section 4975 of the Code applies, including, without limitation, individual retirement accounts and Keogh plans (each of (1) and (2) a "Plan"), and (3) any entity whose underlying assets include, or are deemed for purposes of ERISA or the Code to include, plan assets by reason of a Plan s investment in the entity pursuant to the Plan Assets Regulation (including, for this purpose, the

275 general account of an insurance company, any of the underlying assets of which constitute "plan assets" under section 401(c) of ERISA, or a wholly-owned subsidiary thereof). (6) It understands that the Rule 144A Global Note and any Rule 144A Definitive Notes issued in respect thereof, unless otherwise agreed between the Issuer and the Trustee in accordance with applicable law, will bear a legend to the following effect: THIS NOTE AND THE LOAN IN RESPECT HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A "QIB") THAT IS A QUALIFIED PURCHASER ("QP") WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT") PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS EACH OF WHICH IS A QP WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, AND IN AN AMOUNT FOR EACH ACCOUNT OF NOT LESS THAN U.S.$200,000 PRINCIPAL AMOUNT OF NOTES OR (2) IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT ("REGULATION S") IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES IN RESPECT HEREOF OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE OR EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER OF THIS NOTE, THE TRUSTEE OR ANY INTERMEDIARY. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF ANY EXEMPTION UNDER THE SECURITIES ACT FOR RESALES OF THIS NOTE OR ANY INTEREST HEREIN. IF THE BENEFICIAL OWNER HEREOF IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S, SUCH BENEFICIAL OWNER REPRESENTS THAT (1) IT IS A QIB THAT IS ALSO A QP; (2) IT IS NOT A BROKER-DEALER WHICH OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN U.S. $25,000,000 IN SECURITIES OF UNAFFILIATED ISSUERS; (3) IT IS NOT A PARTICIPANT-DIRECTED EMPLOYEE PLAN, SUCH AS A 401(k) PLAN; (4) IT IS HOLDING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS, EACH OF WHICH IS A QP; (5) IT WAS NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER OR THIS NOTE; (6) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN ITS SECURITIES FROM ONE OR MORE BOOK-ENTRY DEPOSITARIES AND (7) IT WILL PROVIDE NOTICE OF THE FOREGOING TRANSFER RESTRICTIONS TO ITS SUBSEQUENT TRANSFEREES

276 THE BENEFICIAL OWNER HEREOF HEREBY ACKNOWLEDGES THAT IF AT ANY TIME WHILE IT HOLDS AN INTEREST IN THIS NOTE IT IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S THAT IS NOT A QIB AND A QP, THE ISSUER MAY (A) COMPEL IT TO SELL ITS INTEREST IN THIS NOTE TO A PERSON WHO IS (I) A U.S. PERSON WHO IS A QIB AND A QP AND THAT IS, IN EACH CASE, OTHERWISE QUALIFIED TO PURCHASE THIS NOTE IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OR (II) NOT A U.S. PERSON IN AN OFFSHORE TRANSACTION PURSUANT TO REGULATION S OR (B) COMPEL THE BENEFICIAL OWNER TO SELL ITS INTEREST IN THIS NOTE TO THE ISSUER OR AN AFFILIATE OF THE ISSUER OR TRANSFER ITS INTEREST IN THIS NOTE TO A PERSON DESIGNATED BY OR ACCEPTABLE TO THE ISSUER OR (C) SELL SUCH INTEREST ON BEHALF OF SUCH OWNER, IN THE CASE OF (B) AND (C), AT A PRICE EQUAL TO THE LESSER OF (X) THE PURCHASE PRICE THEREFOR PAID BY THE BENEFICIAL OWNER, (Y) 100 PER CENT. OF THE PRINCIPAL AMOUNT THEREOF OR (Z) THE FAIR MARKET VALUE THEREOF. THE ISSUER HAS THE RIGHT TO REFUSE TO HONOUR A TRANSFER OF AN INTEREST IN THIS NOTE TO A U.S. PERSON WHO IS NOT A QIB AND A QP. THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT. EACH BENEFICIAL OWNER HEREOF OR OF ANY INTEREST HEREIN, AND EACH FIDUCIARY ACTING ON BEHALF OF THE BENEFICIAL OWNER (BOTH IN ITS INDIVIDUAL AND CORPORATE CAPACITY), REPRESENTS AND WARRANTS THAT FOR SO LONG AS IT HOLDS THIS NOTE OR ANY INTEREST HEREIN (1) IT IS NOT AND WILL NOT BE, OR WILL NOT BE ACTING ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN AS DESCRIBED IN SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA") THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) A PLAN TO WHICH SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, APPLIES OR (C) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE, OR ARE DEEMED FOR PURPOSES OF ERISA OR THE PLAN TO INCLUDE, "PLAN ASSETS" UNDER 29 C.F.R. SECTION , AS MODIFIED BY SECTION 3(42) OF ERISA, BY REASON OF AN INVESTMENT IN THE ENTITY BY A PERSON DESCRIBED IN (A) OR (B) ABOVE OR OTHERWISE (EACH, A "BENEFIT PLAN INVESTOR"), (2) IF IT IS A GOVERNMENTAL (AS DEFINED IN SECTION 3(32) OF ERISA), CHURCH OR NON-U.S. PLAN, THE PURCHASE AND HOLDING OF THIS NOTE OR ANY INTEREST HEREIN DOES NOT VIOLATE ANY STATUTE, REGULATION, ADMINISTRATIVE DECISION, POLICY OR ANY OTHER LEGAL AUTHORITY APPLICABLE TO SUCH GOVERNMENTAL, CHURCH OR NON-U.S. PLAN AND (3) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY NOTE OR INTEREST HEREIN TO ANY PERSON WITHOUT FIRST OBTAINING THE SAME FOREGOING REPRESENTATIONS, WARRANTIES AND COVENANTS FROM THAT PERSON. NO PURCHASE BY OR TRANSFER TO A BENEFIT PLAN INVESTOR OF THIS RULE 144A GLOBAL NOTE, OR ANY INTEREST HEREIN, WILL BE EFFECTIVE, AND NEITHER THE ISSUER NOR THE TRUSTEE WILL RECOGNISE ANY SUCH ACQUISITION OR TRANSFER. IN THE EVENT THAT THE ISSUER DETERMINES THAT THIS RULE 144A GLOBAL NOTE, OR ANY INTEREST HEREIN, IS HELD BY A BENEFIT PLAN INVESTOR, THE ISSUER MAY CAUSE A SALE OR TRANSFER IN THE MANNER DESCRIBED IN THE PROSPECTUS. THE ISSUER MAY COMPEL EACH BENEFICIAL OWNER OF THIS NOTE THAT IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S TO CERTIFY PERIODICALLY THAT SUCH OWNER IS A QIB AND A QP AND NOT A BENEFIT

277 PLAN INVESTOR. (7) It acknowledges that the Issuer, RSB, the Registrar, the Dealers and their respective affiliates, and others, will rely upon the truth and accuracy of the above acknowledgements, representations and agreements and agrees that, if any of the acknowledgements, representations or agreements deemed to have been made by it by its purchase of Rule 144A Notes is no longer accurate, it shall promptly notify the Issuer, RSB and the applicable Dealer(s). If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the above acknowledgements, representations and agreements on behalf of each account. (8) It understands that Rule l44a Notes of a Series will be represented by interests in one or more Rule 144A Global Notes. Before any interest in a Rule l44a Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Regulation S Notes Each purchaser of a beneficial interest in the Regulation S Notes, by accepting delivery of this Base Prospectus and the Regulation S Notes, will be deemed to have represented, agreed and acknowledged that: (1) It is, or at the time Regulation S Notes are purchased it will be, the beneficial owner of such Regulation S Notes and (a) it is not a U.S. person and it is located outside the United States (within the meaning of Regulation S) and (b) it is not an affiliate of the Issuer, RSB or a person acting on behalf of the Issuer, RSB or such an affiliate. (2) It understands that the Regulation S Notes have not been and will not be registered under the Securities Act and, prior to the expiration of the applicable distribution compliance period for such Notes, it will not offer, sell, pledge or otherwise transfer such Notes except in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, in each case in accordance with any applicable securities laws of any State of the United States. (3) It understands that Regulation S Notes of a Series will be evidenced by a Regulation S Global Note. Before any interest in a Regulation S Global Note may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in a Rule 144A Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws. (4) It understands and acknowledges that its purchase and holding of such Notes constitutes a representation and agreement by it that at the time of its purchase and throughout the period it holds such Notes or any interest therein (a) it is not and will not be a Benefit Plan Investor (as defined in the Plan Assets Regulation), (b) if it is a governmental, church or non-u.s. plan that is subject to any federal, state, local or non-u.s. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or any entity whose assets are treated as assets of any such plan, the purchase and holding of the Notes or any interest therein (x) must not violate any statute, regulation, administrative decision, policy or any other legal authority applicable to such plan, and (y) must not subject the Issuer to any such statute, regulation, administrative decision, policy or other legal authority, and (c) it must not sell or otherwise transfer any such Note or interest to any person without first obtaining these same foregoing deemed representations, warranties and agreements. "Benefit Plan Investors"

278 include, or are deemed for purposes of ERISA or the Code to include, (1) any employee benefit plan (as defined in Section 3(3) of ERISA), that is subject to Part 4 of Subtitle B of Title I of ERISA, (2) any plan to which Section 4975 of the Code applies, including, without limitation, individual retirement accounts and Keogh plans (each of (1) and (2) a "Plan"), and (3) any entity whose underlying assets include plan assets by reason of a Plan s investment in the entity pursuant to the Plan Assets Regulation (including, for this purpose, the general account of an insurance company, any of the underlying assets of which constitute "plan assets" under section 401(c) of ERISA, or a wholly-owned subsidiary thereof). (5) It acknowledges that the Issuer, RSB, the Registrar, the Dealer(s) and their respective affiliates, and others, will rely upon the truth and accuracy of the above acknowledgements, representations and agreements and agrees that, if any of the acknowledgements, representations or agreements deemed to have been made by it by its purchase of Regulation S Notes is no longer accurate, it shall promptly notify the Issuer, RSB and the applicable Dealer(s). If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the above acknowledgements, representations and agreements on behalf of each account

279 GENERAL INFORMATION 1. The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg and DTC. The Common Code and the International Securities Identification Number (ISIN) and (where applicable) the CUSIP number and the identification number for any other relevant clearing system for each Series of Notes will be set out in the relevant Final Terms. 2. Transactions will normally be effected for delivery on the third working day after the day of the transaction. However, Notes may be issued pursuant to the Programme which will not be listed on any stock exchange. Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for the Issuer in relation to the Notes and is not itself seeking admission of the Notes to the Official List or to trading on the regulated market of the Irish Stock Exchange for the purposes of the Prospectus Directive. 3. RSB and the Issuer have obtained or will obtain all necessary consents, approvals and authorisations in Russia and Luxembourg in connection with any Loan, and the issue and performance of the corresponding Series of Notes. The Issuer's board of directors approved the Programme's establishment on 5 April 2005, its first update on 21 September 2005, its second update on 21 April 2006, its third update on 11 June 2007, its fourth update on 24 July 2008, its fifth update on 16 May 2012 and its sixth update on 20 September No consents, approvals or orders of any regulatory authorities are required by the Issuer under the laws of the Grand Duchy of Luxembourg for the maintenance of the Loan and for the issue of the corresponding Series of Notes. 5. There has been no significant change in the financial position or trading position of RSB or the Group since 30 June There has been no significant change in the financial position or trading position of the Issuer since 31 December There has been no material adverse change in the prospects of RSB or the Group since 31 December There has been no material adverse change in the prospects of the Issuer since 31 December There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which RSB is aware) which may have or have had during the 12 months prior to the date of this Base Prospectus a significant effect on the consolidated financial position or profitability of RSB or the Group. 10. There are no and have not been any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) which may have or have had since incorporation, a significant effect on the financial position or profitability of the Issuer. 11. The Group s consolidated financial statements as of and for the years ended 31 December 2011, 2010 and 2009 have been audited by ZAO PricewaterhouseCoopers Audit ("PwC"), independent auditors, as stated in their reports appearing herein. PwC s registered address is 10 Butyrsky Val, Moscow , Russia With respect to the Group s unaudited interim condensed consolidated financial information as of and for the six months ended 30 June 2012 included in this Base Prospectus, PwC reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated 30 August 2012 appearing herein states that they did not audit and they do not express an opinion on that unaudited

280 interim condensed consolidated financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PwC is a corporate member of the Russian Chamber of Auditors (Auditorskaya Palata Rossii). 12. The Issuer's financial statements as of and for the years ended 31 December 2011, 2010 and 2009 have been audited by its external and independent auditor FPS Audit S.à r.l. (formerly Fiduciaire Patrick Sganzerla S.à r.l.), whose registered office is at 46, boulevard Grande Duchesse Charlotte, L 1330 Luxembourg, Grand Duchy of Luxembourg, as stated in their reports. 13. For the life of this document, copies (and certified English translations where documents at issue are not in English) of the following documents may be inspected at the offices of the Principal Paying Agent in London during usual business hours on any weekday (Saturdays and public holidays excepted) and free of charge: (a) (b) (c) a copy of this Base Prospectus along with any supplement to this Base Prospectus; the Articles of Incorporation of the Issuer; the charter of RSB; (d) the Group's audited consolidated financial statements as at and for the years ended 31 December 2011, 2010 and 2009, together with PwC's audit reports thereon; (e) (f) the Group s interim reviewed financial statements as at and for the six months ended 30 June 2012 and 2011; and the Dealer Agreement, the Facility Agreement, the Trust Deed and the Agency Agreement. 14. Copies of the following documents are available for inspection at the office of the Luxembourg Paying Agent and at the registered office of the Issuer during usual business hours or any week day (Saturdays and Bank holidays excepted) and free of charge: (a) (b) (c) (d) a copy of this Base Prospectus along with any supplement to this Base Prospectus; the Articles of the Issuer; the Issuer's audited financial statements as at and for the years ended 31 December 2011 and 2010, together with audit reports thereon; and the Dealer Agreement, the Facility Agreement, the Trust Deed and the Agency Agreement. 15. Deutsche Bank Trust Company Americas will act as Registrar in relation to the Rule 144A Notes and Deutsche Bank Luxembourg S.A. will act as Registrar in relation to the Regulation S Notes. A register of the Notes will be kept at the Issuer's registered office. In case of inconsistency between the register of the Notes kept by either of the Registrars and the one kept by the Issuer at its registered office, the register kept by the Issuer at its registered office shall prevail

281 OVERVIEW OF THE BANKING SECTOR AND BANKING REGULATION IN RUSSIA Overview of the Russian Federation and Key Macroeconomic Indicators According to the IMF, in 2011 Russia was the 9 th largest economy in the world and the largest economy in Central and Eastern Europe as well as the CIS with a GDP of U.S.$1,850 billion. It also has some of the highest growth rates among top 12 global economies, with an average annual real GDP growth rate of 5.3 per cent. in , exceeded only by China (10.2 per cent.) and India (7.3 per cent.). At the same time, while, according to the IMF, Russia's GDP per capita for 2011 of U.S.$12,993 was roughly on par with that of Brazil (U.S.$12,789) and more than double that of China, it still lags significantly behind those of Western European countries. The following table contains certain key Russian macroeconomic data for the periods indicated: For the year ended December 31 (1) Nominal GDP (billions of roubles)... 33,248 41,277 38,809 45,173 54,586 Real GDP index (%) (2003 prices=100%) Real GDP growth/(decline) (%, year-on-year) (7.8) Nominal GDP per capita (roubles) , , , , ,342 Real GDP per capita index (%) (2003 prices=100%) Real GDP per capita growth/(decline) (%, (7.8) period-on-period)... GDP deflator (%, period-on-period) Inflation, (%, year-on-year) Total population, millions (end of period) (1) Certain data presented in this table differ from previously published data due to regular revisions by Rosstat. Figures in this table are current as of March 31, Source: Rosstat. Russia's economic performance improved between 2000 and 2011, despite the economic crisis between 2008 and According to Rosstat and the Ministry of Finance, GDP increased almost eight-fold from RUB7,306 billion in 2000 to RUB54,586 billion in 2011; the CPI dropped from 20.2 per cent. to 6.1 per cent.; and government debt as a share of GDP decreased from 62 per cent. to 9 per cent. during the same period. Growth in GDP was driven to a large extent by rising exports of goods (which increased from U.S.$105 billion in 2000 to U.S.$522 billion in 2011), an increase in labour productivity due to rise in capital investments from US$ 36.3 billion in 2000 to US$388.3 billion in 2010, as well as domestic personal consumption, which increased more than eight-fold during the same period and, in turn, laid a strong foundation for growth in the banking sector (all data according to Rosstat). Similar trends continued in the three months ended April 1, 2012: the GDP went up by 4.9 per cent. year-on-year, the inflation decreased to 3.9 per cent. year-on-year, while the population increased to million. These growth and stability trends that started in 2000 led to an improvement of Russia's sovereign credit ratings, which attained investment grade levels in Fitch/Moody's/S&P rating agencies have since further increased Russia's ratings from a low of "CCC"/"B3"/"CCC" in 1999 to "BBB"/"Baa1"/"BBB" in 2010, and the ratings have remained the same since 2010 with a "stable" outlook. The European debt crisis so far has had limited impact on the Russian economy, primarily because it has not led to significant declines in the prices of Russia's key exports, mainly natural resource commodities, including oil & gas, as well as due to Russia's relatively healthy fiscal finances including low debt-to-gdp ratio, small budget deficit, as well as high level of international reserves. At the same time, should the ongoing crisis lead to a meaningfully worsening global macroeconomic situation and/or impact commodity prices and global trade flows, Russia's overall economic and financial position could also be negatively affected. Compared with the other BRIC nations, Russia is uniquely positioned in terms of its endowment with rich natural resources. According to the BP Statistical Review of World Energy, per capita quantities of oil and gas reserves in 2010 were substantially higher than those of India, China and Brazil. Strong natural resource exports and the government revenue they help generate have strengthened Russia's position relative to other large global economies in terms of international trade, international currency

282 reserves and fiscal position. In 2011, Russia had an export surplus of 12.4 per cent. of GDP according to Rosstat, and the second highest current account balance among G8 countries, equal to 5.5 per cent. of GDP according to the IMF. Strong exports helped Russia to accumulate substantial international monetary reserves, which amounted to U.S.$499 billion as of December 31, 2011 and were the second largest among G8 countries (behind only Japan with U.S.$1,210 billion, according to the World Bank). Income from taxation of oil and gas exports and production also enabled Russia's government to build up substantial sovereign wealth funds. In 2004, to smooth out the impact of volatility in global natural resource prices on exports and government revenue, as well as to control inflation by absorbing excess liquidity, the Russian government set up the Stabilisation Fund that accumulated oil and gas taxation revenues generated above specific oil price cut-off levels. In 2008, Russia split the Stabilisation Fund into two sovereign wealth funds: the Reserve Fund, with approximately U.S.$59.87 billion in assets under management as of August 1, 2012, and the National Welfare Fund, with approximately U.S.$85.21 billion assets under management as of August 1, 2012 (according to the Ministry of Finance). Russia's fiscal finances in 2011 were healthier than those of many other major world economies, if measured by a budget surplus of 1.6 per cent. and the lowest ratio of external government debt to GDP among all BRIC and G8 countries of 9.6 per cent. according to the IMF. In addition to its vast natural resources, Russia has a well-educated population, with a World Bank expert education score of 7.5 as of 2009 (the highest among BRIC countries), which is a positive both in terms of availability of a high quality workforce and domestic demand for more complex products, such as financial services. Another positive for Russia's economy and domestic demand has been the recent decrease of the unemployment rate (in accordance with the ILO definition of unemployment, as a percentage share of the economically active population) from 9.1 per cent. in the first quarter of 2009 to 5.4 per cent. in the six months ended July 1, 2012, according to Rosstat. Like other countries, Russia was adversely affected by the downturn in the global economy in 2008 and In the aftermath of the global financial crisis, Russia's GDP fell by 7.8 per cent. in 2009 compared to 2008 according to Rosstat. The Russian economy was particularly affected by significant decreases in the prices of crude oil, gas and other commodity exports in the second half of 2008 and the first half of 2009, which, in turn, had a significant impact on internal consumption. Since then, Russia's GDP, along with commodity prices, has recovered, growing by 4.3 per cent. in 2010 in real terms and a further 4.3 per cent. in Despite the financial crisis in 2008 and 2009 and the substantial decline in GDP, banking sector lending in Russia demonstrated only a minor drop of just over 2 per cent. in 2009 according to the CBR. As Russia's economy recovered and interest rates started declining, banking sector loans grew by 13.1 per cent. in 2010 and 28.7 per cent. in Deposits in Russia grew by 16.9 per cent. and 23.1 per cent. in 2009 and 2010 respectively, and 23.5 per cent. in 2011, according to the CBR. In the three months ended April 1, 2012, loans increased by 1.7 per cent. compared to 2011, while deposits contracted by 2.4 per cent., leading to an increase in loans to deposit ratio from 94 per cent. at 2011 year end to 98 per cent. at the end of the first quarter of As of July 1, 2012, banking assets accounted for 81.1 per cent. of Russia's GDP in 2011 according to the CBR and Rosstat data. History and Development of the Russian Banking Sector Before the reforms carried out in 1987 and 1988, the Soviet banking system consisted of (i) the State Bank of the USSR, or Gosbank, which functioned as the central bank and as a commercial bank simultaneously, (ii) Stroibank of the USSR, which primarily serviced payments for capital expenditures on construction and infrastructure projects, and (iii) Vneshtorgbank of the USSR, which serviced foreign trade by Soviet entities. Gosbank operated a network of savings cash offices located throughout the country, having a monopoly on retail banking services, mainly deposit taking and processing of utility payments. In 1988, as part of the liberalisation reforms of the Russian economy, five specialised state-owned banks were established in addition to Gosbank to service specific industries, including farming

283 (Agroprombank), housing and social development (Zhilsotsbank), foreign economic activity (Vnesheconombank of the USSR) and manufacturing and construction (Promstroybank). As part of this reform, state-run savings cash offices throughout the USSR were reorganised into Sberbank of the USSR, which continued to service the retail banking needs of the Soviet population. In 1988 and 1989, further reform of the banking sector saw the emergence of newly formed private commercial banks. In 1991, three of the specialised state-owned banks became joint-stock companies. Some regional branches of these specialised state banks became independent from their head offices through management buy-outs. Furthermore, after the collapse of the Soviet Union in December 1991, the CBR assumed all of Gosbank's central bank functions in Russia, and Gosbank was liquidated one month later. During the rapid growth of the banking system from 1991 to 1998, the number of commercial banks in Russia increased from approximately 350 in 1990 to more than 1,600 in 1998, some of the largest of which grew together with the large financial-industrial groups formed during the same period. In 1998, the Russian financial markets went through a crisis caused in part by the financial crisis in Asia that began in 1997, plus the subsequent decline in demand and prices of crude oil and nonferrous metals. As a result of the crisis, the Russian government had to default on its sovereign debt and the CBR announced a devaluation of the rouble, the imposition of a repayment moratorium on certain loans to foreigners, as well as the compulsory restructuring of approximately U.S.$40 billion in short-term treasury instruments. During this period, many banks were reorganised, went bankrupt or were eventually placed under the administration of the Agency for the Restructuring of Credit Organisations ("ARCO"), a state corporation established in 1999 to restructure defaulting banks and protect their creditors. In October 2003, the last credit organisation exited ARCO's administration, and subsequently ARCO was liquidated, with its assets being transferred to the newly established State Corporation Agency for Deposits Insurance (the "Deposits Insurance Agency"). Federal Law No. 177-FZ "On the Insurance of Retail Deposits in the Banks of the Russian Federation" of December 23, 2003 (the "Retail Deposit Insurance Law") introduced a government guarantee for retail deposits at participating banks of up to RUB100,000. This threshold was later increased to RUB190,000 (from August 2006), RUB400,000 (from March 2007) and RUB700,000 (from October 2008). In 2003 and 2004, as a result of various market rumours and, in some cases, regulatory and liquidity problems, several privately-owned Russian banks experienced liquidity problems and were unable to attract funds on the interbank market or from their own client base. At the same time, such banks faced large withdrawals of deposits by both retail and corporate customers. Several of these privately-owned Russian banks collapsed, ceased trading or were forced to reduce their operations significantly. Several steps were taken to help the sector overcome the turmoil, including reduction of the rate of mandatory reserves that banks keep with the CBR and the introduction of legislation to compensate retail customers of insolvent banks not participating in the retail deposit insurance system. Between 2005 and 2008, the Russian banking sector experienced rapid growth, with total lending increasing by approximately 131 per cent. during this period according to the CBR. The same period was characterised by high level of activity both in the capital markets and in M&A. Sberbank and VTB, the two largest Russian banks, conducted large equity offerings in Additionally, a number of significant acquisitions by foreign banks took place, including: OTP Bank's acquisition of more than 90 per cent. of the shares in Investsberbank in 2006; Raiffeisen's acquisition of Impexbank in 2006; KBC Bank N.V.'s acquisition of Absolut Bank in 2007; Société Générale's acquisition of a majority stake in Rosbank in ; and

284 Bank of Cyprus' acquisition of a majority stake in Uniastrum bank in After this period of recovery and expansion, the Russian banking sector was affected by the global financial crisis resulting in a reduced number of credit organisations due to the revocation of licences by the CBR and in some cases bankruptcy of those that did not have sufficient liquidity. According to the CBR, as of August 1, 2012, there were 965 credit organisations licensed in Russia, compared to 1,136 as of January 1, In December 2011, the Russian President signed legislation raising minimum capital requirements for Russian banks to RUB300 million by 2015, which could further increase the consolidation process in the medium and long term. In the second half of 2008, the Russian government and the CBR took measures to support the Russian financial sector, as well as agriculture and production in the midst of the financial crisis. Under the Financial System Support Law, the government was to provide up to RUB910 billion in subordinated loans to private and state-owned banks, while the CBR established a new facility to provide uncollateralised lending to any Russian bank with a positive rating (as determined by the Board of the CBR). See "Banking Regulation in Russia." The government continued to implement intensive anti-crisis measures in 2009 and The government increased the guaranteed retail deposit amount up to RUB700,000 per customer for all deposits at a certain bank, and the CBR exercised its authority to guarantee interbank lending transactions for state-owned banks until December 31, On April 5, 2011, the Russian government and the CBR adopted the "Strategy for the Development of the Russian Banking Sector until 2015" (the "Banking Sector Development Strategy"). Its key goal is to improve the banking sector in Russia through expanded product ranges, better quality service, use of modern technologies and greater long-term effectiveness and stability. According to this strategy, the Russian government and the CBR will take steps to improve the legal environment, enhance banking regulation, develop banking infrastructure, increase the quality of corporate governance and risk management in credit organisations, and secure financial stability. Although the CBR took some initial steps for the implementation of Basel II in Russia, it has not yet provided any detailed roadmap or timeline for the process. The CBR recommended that elements of Basel II be incorporated in the CBR statutory reporting forms, but the CBR does not yet require full-scope Basel II based reporting. In the long term, Basel III rules are also expected to be gradually introduced in Russia. New regulatory capital requirements are expected to come into effect between 2013 and 2015, and be followed by a new Basel III-based leverage ratio (i.e. the ratio of capital to total assets and off-balance sheet items without taking into account risk exposure) requirement from January 1, Additionally, new liquidity and funding requirements will be gradually implemented between 2012 and See " Russian Banking Regulation Basel Implementation in Russia." Following the adoption of the Banking Sector Development Strategy, the CBR pursued its intention to increase the banks' capital cushion for certain types of risky operations. As such, it increased risk weighting for a number of asset categories which became effective from July 1, 2012, and will impact the regulatory capital adequacy requirements for Russian banks. On October 28, 2011, the CBR approved the "Guidelines for the Uniform State Monetary Policy in 2012 and for 2013 and 2014" (the "Monetary Policy for "). This policy sets forth a relatively conservative approach to state budgeting, with the focus of the CBR's supervision powers on risk management in the banking sector, particularly taking into account various risk profiles and prevention of risk concentration. The Monetary Policy for also provides for development of the system of supervision by the CBR over systemically important credit organisations, as well as streamlining of legislation on banking mergers and acquisitions. Role of the Financial Services Sector in the Russian Economy As the share of the Russian financial services sector in GDP grew over the last decade, from 2 per cent. in 2001 to 4.5 per cent. in 2010 before declining to 4.1 per cent. in 2011 according to Rosstat, its role in the Russian economy became increasingly important. As of July 1, 2012, banking assets accounted

285 for 81.1 per cent. of Russia's 2011 GDP as compared to 60.6 per cent. as of January 1, 2007 according to the CBR. However, there is significant scope for further development of the banking industry. In 2010, total outstanding corporate loans in Russia equalled 32 per cent. of GDP, far below many Western European economies (where corporate loans averaged 91 per cent. of GDP in the EU countries), and below certain other CEE countries (e.g., the Baltic states and Bulgaria), according to the European Banking Federation. To date, retail banking in Russia remains in the relatively early stages of development. According to the CBR, retail lending represents only 23.2 per cent. of total lending in Russia as of December 31, Russia's ratio of total banking assets to GDP of 76.6 per cent. in 2011 according to the CBR, was well below not only developed markets (average of 328 per cent. for USA, UK, Italy, France, Germany, Austria), but also other BRIC countries (average of 134 per cent. ex. Russia), according to Business Monitor International as of At the same time, Russia's average annual banking sector profit between 2007 and 2011 (where profitability is calculated by multiplying average RoAA, as sourced from the IMF, by average banking sector assets from , as sourced from Business Monitor International) was comparable to Italy and Germany and about twice as high as that for Turkey and Japan, according to Business Monitor International and the IMF. The Russian banking sector experienced a sustained period of high growth between 2005 and 2008, as demonstrated by a total deposit and loan CAGR of 38.9 per cent. and 46.5 per cent., respectively. Deposit growth in 2009, however, slowed to 16.9 per cent., while loans (excluding loans to credit organisation) declined by 2.4 per cent., primarily due to the impact of the global financial crisis. As recovery took shape in 2010, deposit and loan growth equalled 23.1 per cent. and 13.1 per cent., respectively. In 2011, total deposits and loans went up by approximately 24 per cent. and 28 per cent. respectively. In the three months ended April 1, 2012, however, deposits decreased by 2.4 per cent. and loans increased marginally by 1.7 per cent. Banking sector growth was particularly substantial in the retail segment, between 2005 and 2008, as demonstrated by the fact that retail loans increased at a 50.5 per cent. CAGR and retail lending as a percentage of GDP increased from 5.5 per cent. in 2005 to 9.6 per cent. in 2008 (data according to the CBR). In 2009, retail loans declined by 11 per cent. but then again increased in 2010 by 14.3 per cent. Nonetheless, despite this 2010 recovery, retail lending as a percentage of GDP has declined from 9.6 per cent. in 2008 to 9.1 per cent. in 2010, before increasing again to 10.2 per cent. in 2011 and 12.8 per cent. as of July 1, 2012 (based on 2011 GDP), according to the CBR. Corporate lending demonstrated similar trends, increasing at a CAGR of 45.3 per cent. between 2005 and 2008 and increasing as a share of GDP from 19.4 per cent. in 2005 to 30.8 per cent. in Between 2008 and 2010 growth trends slowed significantly to an approximate 6.4 per cent. CAGR, further increasing as a share of GDP to 32.3 per cent. in Growth picked up in 2011 with retail loans increasing by 35.4 per cent. and corporate loans increasing by 26.4 per cent. for the year. Growth has stalled in the three months ended July 1, 2012, with retail lending increasing by 18.3 per cent. and corporate lending increasing by 6.15 per cent. Between 2006 and 2011, total loans in Russia grew at a CAGR of 21 per cent., compared to 24 per cent. in China, 18 per cent. in India and 28 per cent. in Brazil according to the Economist Intelligence Unit (EIU). Given Russia's low banking sector penetration, despite the potential slowdown in the global economic growth driven by the European and global debt crisis, the Russian banking sector could be expected to continue demonstrating positive trends, as the potential decline in macro-related growth could be to a certain extent offset by increasing penetration of domestic banking services. The following table sets forth certain information regarding the Russian banking sector for the periods indicated

286 As of 30 June As of 31 December Total assets/liabilities (not including capital) (in trillions of RUB) Total assets/liabilities (percentage of GDP) Own funds (capital) (in trillions of RUB) Loans to customers over total assets (%) including loans to credit organisations (%) Deposits from individuals over total liabilities (%) Number of operating credit organisations ,012 1,058 Assets of the five largest credit organisations over total assets (%) Credit organisations located in Moscow and the Moscow region (%) Number of profitable credit organisations (including zero profit) Source: The CBR. The following table sets out certain information on corporate and retail lending and deposits for the periods indicated. (Trillions of RUB, except for percentages) CAGR Corporate lending % % of GDP... 19% 22% 29% 31% 33% 32% 34% Retail lending % % of GDP... 5% 8% 9% 10% 9% 9% 10% Total lending % % of GDP... 25% 29% 38% 40% 42% 41% 44% Corporate deposits % % of GDP... 12% 15% 20% 20% 24% 24% 25% Retail deposits % % of GDP... 13% 14% 16% 14% 19% 22% 22% Total deposits % % of GDP... 25% 29% 36% 34% 43% 46% 47% Source: The CBR. Overall, the performance of Russian banks remains positive and has shown improvement as the sector has recovered from the global financial crisis. According to the latest CBR statistics, total RAS pre-tax profits for the sector were RUB1,018 billion in 2011, implying an annualised pre-tax RoAE of 20.5 per cent. This demonstrates 48 per cent. growth over RAS pre-tax profits in 2010 of RUB688 billion, implying a pre-tax RoAE for the full year of 14.8 per cent. In the six months ended July 1, 2012, the banking system recorded net income of RUB507 billion (according to the preliminary data released by the CBR), leading to the annualised pre-tax RoAE of 24.1 per cent. Higher profitability has been partly driven by improving asset quality and lower provisioning levels, as the share of overdue loans has declined from 5.5 per cent. as of December 31, 2010 to 3.9 per cent. as of December 31, 2011 and increased slightly to 4 per cent. as of July 1, The overall capital adequacy ratio for the sector was 13.8 per cent. as of July 1, 2012, demonstrating decrease from 14.7 per cent. as of December 31, 2011 but more significant drop compared to a ratio of 18.1 per cent. as of December 31, Geographically, Russia's banking sector and financial services infrastructure remain concentrated around a few large economic centres primarily in the Western part of the country, especially Moscow. Approximately 52.2 per cent. of Russia's banks are headquartered in Moscow and the surrounding region and have limited national presence, according to the CBR. Only a small number of banks in Russia have a broad presence across the country, including Sberbank, VTB, Russian Agricultural Bank and Rosbank (which is part of the Société Générale Group)

287 Competitive Landscape The Russian banking sector is highly fragmented as measured by the number of participants. According to the CBR, as of July 1, 2012, there were 965 operating credit organisations in Russia. At the same time, according to the CBR as of July 1, 2012, the top five credit organisations operating in Russia account for RUB22.2 trillion total assets, comprising approximately 50.4 per cent. of the total assets in the Russian banking sector. Market share by total assets of those state-controlled or affiliated banks among the top ten banks by total assets increased from 44.8 per cent. in 2007 to 54.2 per cent. as of April 1, The top four banks in Russia in terms of ranking by size of assets are state-controlled or affiliated. Total Assets (1) As of March 31, 2012 As of December 31, 2007 In billions of RUB Market Share, % In billions of RUB Market Share, % Q 2012 Market Share Change Sberbank... 11, , % VTB Group... 6, , % Gazprombank... 2, % Russian Agricultural Bank. 1, % Alfa Bank (0.2%) Unicredit Bank % Rosbank (0.9%) NOMOS Bank % Raiffeisen (0.7%) Promsvyazbank (0.1%) Total top ten... 27, , % Total Market... 41,533 20,125 Source: The CBR (1) Banks ranked by total assets as of March 31, VTB Group includes VTB 24, VTB North-West, Transcreditbank and Bank of Moscow; Rosbank includes Delta Credit, BSGV and Rusfinansbank; NOMOS Bank includes Khanti-Mansivsk Bank. Russian banks can be categorised into four major groups: (i) state-controlled or state-affiliated, (ii) large private banks, (iii) foreign-owned banks and (iv) other smaller banks. State-Controlled or Affiliated Banks As of March 31, 2012, those state-controlled or affiliated banks that are among the top ten banks in Russia by assets held 54.2 per cent. of the sector's assets and continue to play a leading role in the sector. Among them, Sberbank with approximately 28.1 per cent. market share by total assets and VTB (including Bank of Moscow and Transcreditbank) with approximately 16.7 per cent. market share by total assets, are the largest. Large Private Russian Banks Those large privately-owned banks among the top 30 Russian banks by total assets include Alfa Bank, NOMOS Bank, Promsvyazbank, Uralsib, RSB and MDM. They typically function as universal commercial banks servicing corporate and retail customers. Several privately-owned banks such as Bank Saint-Petersburg, Bank Vozrozhdenie and NOMOS Bank have publicly traded shares

288 Foreign Banks Foreign banks are prohibited by Russian law from directly conducting banking operations in Russia, but can do so via a Russian-incorporated subsidiary and are subject to applicable requirements of Russian law. Although certain foreign-owned banks focus primarily on servicing multinational corporations operating in Russia or cash settlement operations for non-residents, many foreign-owned banks, such as UniCredit Bank, Raiffeisenbank and Rosbank (majority owned by Société Générale) have increased their presence in Russia in the last ten years and offer a full range of services to both retail and corporate clients. However, the presence of foreign-controlled banks in Russia is rather limited, with the foreign-controlled banks among the top ten banks by assets accounting for 5.5 per cent. of the total assets in the banking sector as of April 1, 2012 based on CBR data. According to the CBR, as of July 1, 2012, 41 credit organisations controlled by foreign groups holding more than 50 per cent. of their shares were operating in Russia, while number of fully owned subsidiaries of foreign banks amounted to 76. Other Smaller Banks Other Russian banks are primarily locally owned and normally focus on certain regions or product segments. Compared to the top 20 Russian banks by total assets, these smaller banks are in some cases characterised by lower levels of corporate governance and risk management, as well as lower transparency of operations. Taking into account that the number of credit organisations in Russia has been steadily decreasing over the past several years, as well as tightening regulatory requirements, there is a chance that these smaller private banks could be the subject of future merger and acquisition activity in the banking sector. Overview of Key Trends in the Russian Banking Sector Market Consolidation Over the past several years, the banking sector in Russia has gone through certain consolidation. According to the CBR, the total number of credit institutions with active banking license decreased from 1,311 in 2000 to 955 by the end of the six months ended July 1, 2012, driven primarily by domestic consolidation through acquisitions or some banks ceasing operations and losing banking license due to the global financial crisis. The top ten banks have been active in domestic consolidation through strategic acquisitions. As a result, concentration has increased among the top ten banks: their share accounted for 56.8 per cent. of total assets in 2007 as compared to 65.3 per cent. of total assets as of April 1, 2012, according to the CBR. Recent most notable transactions in the Russian banking sector include (a) Société Générale's consolidation of its holdings in Rosbank, Delta Credit, Rusfinance and Bank Societe Generale Vostok ("BSGV"). In June 2011 the Société Générale Group announced the completion of the merger of BSGV and Rosbank. This was the final step in Société Générale's process of consolidating its Russian assets, which consisted of three stages: (i) a capital increase of Rosbank in the second half of 2010; (ii) the consolidation of 100 per cent. owned subsidiaries Delta Credit and Rusfinanbank; and (iii) a merger of BSGV and Rosbank. According to BSGV, upon the merger, the combined entity was among the top five banks in terms of loans with a network of approximately 700 branches in 340 Russian cities. (b) NOMOS Bank's acquisition of Khanty-Mansiysk Bank ("KhMB"). In December 2010, NOMOS Bank completed the acquisition of a 51.3 per cent. stake in KhMB, a regional Siberian financial institution, for RUB12.1 billion. The combined entity had approximately 280 outlets and assets of approximately RUB448.9 billion. KhMB also added approximately 820,000 retail clients to the consolidated banks' client base

289 (c) (d) (e) The merger of URSA Bank into MDM Bank, establishing a strong private bank by combining the two bank's complementary strengths in retail and corporate banking, as well as Eastern and Western Russia geographical coverage, respectively. VTB's acquisition of TranscreditBank and Bank of Moscow. On July 15, 2011, VTB announced that it signed a purchase agreement to acquire TransCreditBank from Russian Railways. The actual acquisition is expected to take place in two stages (29.4 per cent., followed by further 25 per cent. plus one share between July 1, 2012 and December 31, 2013). In 2011, VTB also acquired a 46.5 per cent. stake in Bank of Moscow from the Moscow city government and further increased its stake to 94.8 per cent. as of December Both acquisitions increased VTB's market share by total assets to nearly 17.9 per cent. as of January 1, 2012 according to the CBR. Sberbank's acquisition of Troika Dialog, the oldest private investment bank in Russia, completed in January 2012, which has contributed to strengthening Sberbank's presence in the investment banking sector. Russian Banking Sector Increases its Presence on Capital Markets During the past several years Russian banks have been expanding to international capital markets, attracting financing through IPOs and follow-on offerings. Key equity capital markets transactions conducted since 2007 include: (i) (ii) (iii) In March 2007, Sberbank sold RUB230.2 billion of shares in a secondary offering on MICEX and RTS. In May 2007 Russia's second largest bank by assets, VTB, raised approximately U.S.$8 billion through a placement of a 22.5 per cent. stake in an IPO. In February 2011, the Russian government received a further U.S.$3.3 billion from the sale of a 10 per cent. stake in VTB. In April 2011, NOMOS Bank completed its IPO, raising approximately U.S.$718 million at U.S.$35 a share. In addition to equity transactions, Russian banks have also been successful in tapping international debt markets. Total volume of issued debt (taking into account public Eurobond issuances only) increased from U.S.$148.9 million in 2000 to U.S.$14.1 billion in 2010, before dropping to US$6.1 billion in 2011 according to Dealogic. In 2010 alone, VTB, Bank of Moscow, Russian Agricultural Bank and Alfa Bank issued approximately U.S.$3.6 billion in the international bond markets according to the Financial Times. In 2011, the main transactions included a U.S.$1 billion issue by Sberbank in June, a U.S.$1 billion issue by Alfa Bank in April and a U.S.$0.8 million issue by Russian Agricultural Bank in May. After the capital markets started recovering in 2012, top Russian banks quickly returned to the market. In March 2012, Sberbank issued CHF410 million of Eurobonds following other issues of U.S.$1.0 billion and U.S.$0.75 billion in January-February 2012; and in the same month VEB issued U.S.$750 million. This was followed, among others, by a US$1.5 billion issue by VTB and a US$500 million issue by NOMOS Bank in April 2012, while Gazprombank issued US$1.0 billion in Eurobonds over April-May 2012, further evidencing market demand for Russian debt. Access to capital markets provides Russian banks with opportunities to find optimal funding strategy, supporting further banking sector growth. Due to the ongoing European crisis, which in turn impacted both credit and equity markets, Russian banks and corporations, similarly to their global peers, were constrained in their ability to attract financing at required levels. In October 2011, repo volumes with the CBR hit high levels for the last two years, exceeding RUB500 billion, while Mosprime rates increased by 100 to 200 basis points. As a result, Russian banks generally began increasing the rates on retail deposits to maintain their liquidity positions. In the six months ended July 1, 2012, the repo market continued to remain active with an average market size increasing from RUB billion

290 during the month to RUB billion at the end of each month, during periods of active repayments banks were required to make. In May 2012, the CBR published results of the stress-tests. According to the results, under a pessimistic economic scenario, the Russian banking sector could record losses of approximately RUB1.4 trillion (equivalent to 27 per cent. of total banking sector capital) and under an extreme economic scenario RUB2.0 trillion (37 per cent. of total capital) at the end of Russian Banking Regulation Banking in Russia is governed by the CBR Law, the Banking Law, CBR regulations, as well as certain other laws and regulations, some of which are described in this section. While the CBR is the primary regulator of the banking sector, other governmental authorities also have regulatory and supervisory functions over banks in Russia. For example, the FSFM issues licences to banks to act as broker-dealers or to provide custodian and other securities market services. Tax authorities supervise tax assessments of banks. Regulation of Licensing The Central Bank of Russia According to the Banking Law, a licence must be obtained from the CBR in order for any organisation to engage in "banking operations", as such term is defined in the Banking Law. Applicants must be incorporated in Russia. A bank can be organised in the form of a joint-stock company, a limited liability company or a company with additional liability, although, in practice, the latter form is not used. The CBR approves the registration and issues licences to banks and non-banking credit organisations (the "NCOs") in accordance with the procedures set forth in the Banking Law and CBR Regulation No. 135-I of April 2, 2010, as amended. An application for the state registration of a new credit organisation needs to be accompanied by a charter, a feasibility report regarding future business activity of the credit organisation, information on the qualifications of the applicant's management team and certain other information and documents. A credit organisation's application for a CBR licence may be rejected if, among other reasons, the proposed candidates for the executive and chief accountant positions do not meet certain eligibility requirements, the financial condition of the founders of a credit organisation is unsatisfactory, the submitted documents do not comply with the requirements set forth in the Banking Law and the CBR regulations or a candidate for a position of a member of the credit organisation's supervisory board has a business reputation inconsistent with the eligibility requirements. The CBR continues to supervise the nomination of candidates to the key executive positions at a credit organisation throughout its existence, as such candidacies are subject to its prior approval before they are elected or appointed to the respective position. A newly-formed bank may seek a licence authorising it to perform banking operations (other than acceptance of retail deposits and cash collection and cash servicing of customers) in either both Roubles and foreign currencies or in Roubles only, as well as a licence authorising it to take deposits in the form of, and conduct related operations with, precious metals. Subject to compliance with applicable requirements, the CBR may extend an existing bank's capacity to carry out banking operations by issuance of: (1) a licence authorising it to carry out banking operations in both Roubles and foreign currencies except for acceptance of retail deposits, and/or (2) a licence authorising it to take deposits in the form of, and place, precious metals, and/or (3) a licence authorising it to accept retail deposits in Roubles only, and/or (4) a licence authorising it to accept retail deposits in both Roubles and foreign currencies, and/or (5) a general licence authorising it to perform all banking operations except for taking deposits in the form of, and placement of, precious metals, and/or (6) a licence authorising it to carry out banking operations in both Roubles and foreign currencies except for acceptance of retail deposits and cash collection and cash servicing of customers, and/or (7) a licence authorising it to provide cash collection and cash services for its customers. Additional requirements have been introduced for obtaining a licence for taking deposits from individuals. The licence could be granted to (a) a bank existing for more than two years from the date

291 of its registration, or (b) a newly established bank (or to a bank existing for less than two years from the date of its registration), provided that: (i) the charter capital of the newly established bank or the regulatory capital of the existing bank is not less than RUB3,600 million, and (ii) the bank complies/has complied with the CBR requirement to disclose information regarding persons having significant influence over decisions of its management bodies. Currently, there are three types of NCOs: (i) settlement NCOs, (ii) deposit and credit NCOs, and (iii) payment transfer NCOs and, accordingly, three types of licences issued to such credit organisations. A settlement NCO may seek a licence authorising it to: (a) open and maintain bank accounts of legal entities, (b) handle funds transfers for legal entities, (c) provide cash collection and cash services for legal entities and (in certain cases) individuals, (d) sell and purchase foreign currency, and (e) transfer funds without opening of bank accounts, including electronic funds (except for mail orders). A deposit and credit NCO may obtain a licence authorising it to: (a) attract term deposits from legal entities, (b) place them in its own name and in its own account, (c) sell and purchase foreign currency in non-cash form, and (d) provide bank guarantees. A payment transfer NCO may seek a licence authorising it to conduct the following banking operations in connection with funds transfers without opening of bank accounts, including electronic funds transfers: (a) open and maintain bank accounts of legal entities, (b) handle funds transfers for legal entities, (c) provide cash collection and cash services for legal entities and individuals, and (d) transfer funds without opening of bank accounts, including electronic funds (except for mail orders). The Federal Service for Financial Markets The FSFM issues licences to Russian credit organisations to perform the following professional functions on the Russian securities markets (subject to certain limitations regarding combining the below functions): (1) broker, (2) dealer, (3) securities manager, (4) custodian, (5) clearing organisation, (6) registrar and (7) arranger of trade in the securities market. The licensing procedures are established in FSFM Regulation No /PZ-N of July 20, 2010, as amended. A credit organisation can also act as a central counterparty clearing house once duly accredited by the FSFM under a procedure to be agreed with the CBR. However, such credit organisation cannot take retail deposits. In addition, the FSFM has the right to conduct audits of credit organisations from time to time to check their compliance with the requirements of applicable securities market laws and regulations. The FSFM is responsible for setting up certain additional reporting requirements for licensed credit organisations and has a right to monitor their operations. Regulation of Acquisitions The Central Bank of Russia According to the Banking Law, the CBR must be notified of an acquisition of more than 1 per cent. of the shares/participation interests in a credit organisation by any individual or legal entity, or a group of individuals and/or legal entities (irrespective of whether they are residents or non-residents of Russia), and it must give prior consent to an acquisition (including acquisitions on the secondary market and indirect acquisitions) of more than 20 per cent. of the shares/participation interests in a credit organisation. In accordance with CBR Regulation No. 130-I of February 21, 2007, as amended, prior consent of the CBR is required for an acquisition/transfer into trust management of more than 20 per cent. of the shares of a credit organisation established as a joint-stock company and any subsequent increases of ownership/trust holding above thresholds of 25 per cent., 50 per cent. and 75 per cent. of shares or 100 per cent. of the shares. An applicant for the CBR consent must demonstrate a satisfactory financial condition and sufficient own funds (if an individual) or net assets (if a legal entity). The CBR approval is valid for one year from the date of issuance, and the applicant may acquire any amount of shares in a credit organisation within the threshold and total acquisition price stipulated in such CBR approval

292 The Federal Antimonopoly Service The FAS controls mergers of credit organisations and acquisitions of shares and assets of credit organisations, as well as acquisitions of rights allowing the acquirer to determine the terms of commercial activity or exercise the powers of the executive body of such credit organisations. In accordance with Federal Law No. 135-FZ "On Protection of Competition" of July 26, 2006, as amended (the "Antimonopoly Law") and Government Regulation No. 335 of May 30, 2007, as amended, prior consent of the FAS is required for, among others, the following actions in respect of certain credit organisations of significant size: acquisition of more than 25 per cent. of the voting shares of a credit organisation established as a joint-stock company and any subsequent increases of ownership above thresholds of 50 per cent. and 75 per cent. of the voting shares; acquisition of more than 10 per cent. of assets of a credit organisation determined as per the most recent RAS balance sheet; acquisition of rights to determine the terms of commercial activity of a credit organisation or to exercise the powers of its executive body; and merger of credit organisations, if the aggregate value of such credit organisations' assets as per the most recent RAS balance sheets exceeds RUB22 billion. Regulation of Expansion Abroad The Banking Law authorises Russian credit organisations to incorporate subsidiaries and to open branches outside of Russia with the prior approval of the CBR, if, among other requirements, the credit organisation holds a general banking licence. The opening of a representative office of a Russian credit organisation abroad requires a notification to the CBR. Regulation of Capital Overview Russian regulation of capital is generally based on Basel I (the 1988 Basel Capital Accord). It is, however, less sophisticated in certain respects. CBR Regulation No. 215-P of February 10, 2003, as amended ("Regulation No. 215-P") distinguishes between core capital and supplementary capital (together, "own funds" or "regulatory capital"). Regulation No. 215-P generally requires that the supplementary capital ("Tier 2" capital) constitute no more than 100 per cent. of the core capital ("Tier 1" capital). The minimum own funds requirement for banks is generally RUB300 million on an ongoing basis. However, if, as of January 1, 2007, the own funds of an existing bank were lower than RUB180 million, the bank may continue its operations, provided that they do not decrease further below that level. However, the own funds of such bank must be increased to not less than RUB180 million by January 1, 2012 and not less than RUB300 million by January 1, The regulatory capital requirement of RUB900 million has recently been introduced for obtaining a general banking licence. If a bank's own funds fall below its charter capital, it is required to adjust its own funds (or, if impossible, its charter capital, within applicable limits) in accordance with the procedures set by CBR Regulation No U of March 24, 2003, as amended

293 Subordinated Debt Supplemental (Tier 2) Capital Subordinated debt (in the form of loans, deposits or notes) is included in the supplemental capital ("Tier 2") if the following criteria are satisfied: its term should be not less than five years; it should include a provision prohibiting, without the consent of the CBR: (i) early redemption of the debt or any of its part, or early repayment of any interest, and (ii) early termination and/or amendment of the loan agreement (Regulation No. 215-P allows certain variations to redemption terms; however, in such case an actual redemption is subject to the CBR's consent); terms of the debt, as of the date of the loan agreement (or its amendment) or placement of notes, should not materially differ from those prevailing in the market for similar debt; the agreement should specifically provide for the lowest priority ranking of claims of the creditor in the event of the borrower's bankruptcy; the debt should be unsecured; and individuals cannot be party to the agreement. The qualification of a subordinated debt as part of the supplemental Tier 2 capital is subject the CBR's consent. The borrower may initiate the approval procedure before the funds are disbursed or a subordinated loan is signed by submitting the loan agreement or its draft for consideration by the CBR. As a result of its review, the CBR's territorial branch may respond with comments or may issue its preliminary conclusion and consent to the inclusion of a subordinated debt into the supplemental Tier 2 capital once the funds have been actually disbursed. Subordinated debt is included into the supplemental Tier 2 capital from the date following the date of the CBR's consent, but in any event not before the bank actually receives the funds. Regulation No. 215-P provides that, generally, subordinated debt may not exceed 50 per cent. of a credit organisation's core capital. However, if a credit organisation has subordinated debt outstanding for ten or more years, such subordinated debt, together with any other subordinated debt outstanding, less the subordinated debt counted as core capital ("Tier 1"), may comprise up to 100 per cent. of the credit organisation's core capital, provided that its underlying agreement allows the CBR to suspend the repayment of the principal and/or interest if such payment may necessitate bankruptcy prevention measures in relation to such credit organisation. According to Regulation No. 215-P, during the last five years of the life of a subordinated loan, it is counted towards the capital on an amortised basis, while prior to that the full principal amount of the subordinated loan counts. The amortised value is counted quarterly in accordance with the following formula: C O = D, where 20 O D C is the amortised value of the subordinated loan; is, generally, the full amount of the subordinated loan extended to the bank; is the number of complete quarters (January 1 March 31, April 1 June 30, etc., calculated backwards from the date of repayment) remaining until the repayment of the subordinated loan (C < 20). Special amortisation rules apply to subordinated debt providing for the borrower's right to prepay a

294 subordinated loan (such right in any case may not be exercised earlier than five years from the date when the subordinated debt was included in the supplemental Tier 2 capital). If, in accordance with interest step up provisions, interest increase does not exceed 150bps (1/100 per cent.), subordinated debt shall be amortised from the date of its scheduled maturity. In other cases, subordinated debt shall be amortised from the date of when a right to prepay a subordinated loan may potentially be exercised. Subordinated Debt Core (Tier 1) Capital Subordinated debt may also be included in the core Tier 1 capital of a credit organisation, if it satisfies the following terms (the "Subordinated Debt with Additional Terms") in addition to the above-listed criteria of subordinated debt: its term is not less than 30 years; the loan restricts capitalisation and reimbursement of unpaid interest, if the credit organisation's obligations to pay accrued interest are fully or partially terminated upon the introduction of certain bankruptcy prevention measures against the borrower; upon the introduction of bankruptcy prevention measures against a credit organisation as a result of certain losses, the credit organisation must first cover those losses from sources of its core Tier 1 capital other than the Subordinated Debt with Additional Terms, whereas the remainder of such losses shall be covered through the termination of the obligation to repay the principal amount of such long-term subordinated debt in whole or in part; the credit organisation may not chose to repay the subordinated debt in the first 10 years, if it is included into the credit organisation's core Tier 1 capital; and the CBR has a right to suspend principal and/or interest repayments under the loan agreement, if such payments may result in bankruptcy prevention measures. The Subordinated Debt with Additional Terms must not comprise more than 15 per cent. of the credit organisation's core Tier 1 capital. Basel Implementation in Russia Over the recent years, the CBR in cooperation with Russian banks has started preparing the implementation of international approaches to capital adequacy of credit organisations under the "International Convergence of Capital Measurement and Capital Standards: a Revised Framework" ("Basel II"), as issued by the Basel Committee on Banking Supervision. Generally, the standardised approach for measuring credit risks of Basel II as set forth in Pillar 1 "Minimum Capital Requirements", is being applied in Russia. As part of introducing Pillar 2 "Supervisory Review Process", on June 29, 2011, the CBR issued Letter No. 96-T "On Methodical Recommendations for Credit Organisations on Arranging Internal Procedures for Capital Adequacy Assessment" (the "Methodical Recommendations"). Under the Methodical Recommendations, internal procedures for capital adequacy assessment should comprise the process of assessment by a credit organisation of adequacy of its own capital, i.e. its internal capital to cover accepted and potential risks, as well as form part of such credit organisation's corporate culture. The Methodical Recommendations present the Basel II Pillar 2 requirements to credit organisation and propose recommendations for credit organisations to elaborate and use the respective internal procedures set therein. According to the Methodical Recommendations, the CBR believes that Basel II Pillar 2 will be gradually implemented within a minimum of five years. According to the Banking Sector Development Strategy, the main goals of the new stage of development of the Russian banking sector include: improvement of the quality of the banking

295 business by expanding the range of banking products and services, improving methods of their provision, using modern technologies and ensuring long-term effectiveness and stability of the banking business. The Banking Sector Development Strategy contemplates that the Russian Government and the CBR will take measures in order to: improve the legal environment, build banking infrastructure, increase quality of corporate governance and risk management in credit organisations, develop banking regulation and banking supervision, and ensure financial stability. Under the Banking Sector Development Strategy, the implementation of Basel II in Russia may begin approximately in The Banking Sector Development Strategy also contemplates introduction in Russia of the "International Regulatory Framework for Banks" (Basel III) that is expected to be applied as follows: (i) requirements for capital between 2013 and 2015, (ii) capital conservation buffer within , (iii) leverage ratio starting from January 1, 2018, (iv) liquidity coverage ratio commencing from January 1, 2015, and (v) net stable funding ratio starting from January 1, Regulation of Mandatory Economic Ratios The CBR mandatory economic ratios applicable to banks are established under CBR Regulation No. 110-I "On the Mandatory Economic Ratios of Banks" dated January 16, 2004, as amended. The system of mandatory economic ratios, which must be observed by banks on a daily basis and regularly reported to the CBR, is set forth below. All ratios described below are calculated on the basis of RAS. Mandatory Economic Ratios Capital adequacy ratio (N1) Instant liquidity ratio (N2) Description This ratio is intended to manage (limit) the risk of a bank's insolvency and sets requirements for the minimum size of the bank's own funds (regulatory capital) necessary to cover credit, operational and market risks. It is formulated as a ratio of a bank's own funds (regulatory capital) to its risk-weighted assets. The risk-weighted assets are calculated under a formula that aggregates different categories of the bank's assets multiplied by certain coefficients of risk, reserves created for possible losses of those assets, credit risk on credit-related commitments, credit risk on forward transactions and derivatives, operational risk, as well as market risks, in each case separating systemic and idiosyncratic factors. This ratio is intended to manage (limit) the bank's liquidity risk within one operational day. It is formulated as the minimum ratio of a bank's highly liquid assets to its liabilities payable on demand. CBR Mandatory Economic Ratio Requirements Minimum 10 per cent. Minimum 15 per cent

296 Mandatory Economic Ratios Current liquidity ratio (N3) Long-term liquidity ratio (N4) Maximum exposure to a single borrower or a group of related borrowers (N6) Description This ratio is intended to manage (limit) the bank's liquidity risk within 30 calendar days. It is formulated as the minimum ratio of a bank's liquid assets to its liabilities payable on demand and liabilities with maturity of up to 30 calendar days. This ratio is intended to manage (limit) the bank's liquidity risk arising from investing of funds into long-term assets. It is formulated as the maximum ratio of the bank's credit claims maturing in more than one calendar year to the sum of its own funds (regulatory capital) and liabilities maturing in more than one calendar year. This ratio is intended to manage (limit) the credit exposure of a bank to one borrower or a group of related borrowers (defined as persons who, in particular, are in parent-subsidiary relations with respect to each other; are affiliates due to one person holding more than 20 per cent. of the voting share capital of the other; belong to the same banking group or banking holding; are close relatives; or can directly or indirectly significantly influence the decisions of the borrower). It is set as the maximum ratio of the aggregate amount of the bank's credit claims to a single borrower or a group of related borrowers to the bank's own funds (regulatory capital). With the aim to implement the recommendations of the Basel Committee on Banking Supervision and IFRS, on September 10, 2004, the CBR issued Letter No. 106-T, which recommends that Russian banks set additional criteria of "related borrowers" in their lending policies and implement an exposure limit for "economically related" CBR Mandatory Economic Ratio Requirements Minimum 50 per cent. Maximum 120 per cent. Maximum 25 per cent

297 Mandatory Economic Ratios Description CBR Mandatory Economic Ratio Requirements borrowers. Maximum amount of major credit risks (N7) Maximum amount of loans, bank guarantees and sureties extended by the bank to its participants (shareholders) (N9.1) Aggregate amount of exposure to the bank's insiders (N10.1) Ratio for the use of the bank's own funds (regulatory capital) to acquire shares (participation interests) in other legal entities (N12) This ratio is intended to manage (limit) the aggregate amount of a bank's major credit risks (defined as the sum of loans to, and guarantees or sureties in respect of, one client that exceeds 5 per cent. of a bank's own funds (regulatory capital). It is set as the maximum ratio of the aggregate amount of major credit risks to the bank's own funds (regulatory capital). This ratio is intended to manage (limit) a bank's credit exposure to its participants (shareholders). It is set as the maximum ratio of the amount of loans, bank guarantees and sureties extended by the bank to its participants (shareholders) to the bank's own funds (regulatory capital). This ratio is intended to manage (limit) the aggregate credit exposure of a bank to its insiders (defined as individuals capable of influencing credit decisions). It is set as the maximum ratio of the aggregate amount of the bank's credit claims to its insiders to the bank's own funds (regulatory capital). This ratio is intended to manage (limit) the aggregate risk of a bank's investments in shares (participation interests) of other legal entities. It is set as the maximum ratio of the bank's investments in shares (participation interests) of other legal entities to its own funds (regulatory capital). Maximum 800 per cent. Maximum 50 per cent. Maximum 3 per cent. Maximum 25 per cent. CBR Regulation No. 112-I of March 31, 2004, as amended, outlines additional mandatory economic ratios for credit organisations that issue mortgage-backed bonds

298 Regulation of Liquidity Support According to the CBR Law, the CBR is authorised to provide loans to and take deposits from credit organisations that meet certain requirements with respect to, among other things, financial stability and absence of overdue liabilities to the CBR. Loans provided by the CBR are required either to be secured by gold, a pledge of certain securities or receivables (loan portfolios) approved by the CBR or backed with suretyships of companies approved by the CBR. However, from October 2008, following the liquidity crisis in the Russian financial system, the CBR started to provide unsecured loans based on the respective amendment to the CBR Law. According to the implementing regulations, unsecured loans with a term of up to one year can be provided only to banks having a credit rating not lower than "B-" from Fitch or Standard & Poor's, "B3" from Moody's or other ratings from Russian rating agencies, as approved by the Board of Directors of the CBR from time to time, and comply with certain requirements. As of the date of this Drawdown Prospectus, interest rates on secured loans offered by the CBR range from 0 per cent. for intra-day loans to 8 per cent. for overnight loans and from 7.75 per cent. to 8 per cent. for loans having maturity between 181 and 365 days. Unsecured loans from the CBR usually bear higher interest rates than secured ones; such interest rates depend on banks' liquidity demands and are set on the basis of auctions organised by the CBR. According to the CBR, it suspended providing unsecured loans to credit organisations starting from January 1, 2011, but retains the ability to resume unsecured lending, should such need arise. CBR conducts other types of auctions with the purpose of taking deposits from financial organisations and utilising excess liquidity in the banking system. Such deposits can be attracted either at a fixed rate determined prior to the auction or at a fixed rate set during the auction. Depending on the type of a deposit offered, the CBR establishes specific requirements as to the request form and the deposit amount as well as its term and interest rate, pursuant to CBR Regulation No. 203-P of November 5, 2002, as amended. Regulation of Mandatory Reserves In order to regulate the overall liquidity in the Russian banking sector, loan losses and market risks, the CBR requires banks to form mandatory reserve deposits and keep them at designated non-interest bearing accounts with the CBR. Particular reserve requirements are set by the Board of Directors of the CBR from time to time. According to CBR Directive No U of March 25, 2011, banks are generally required to post mandatory reserves equal to 5.5 per cent. of funds due to non-resident legal entities in Roubles and foreign currency and 4.0 per cent. of funds due otherwise. Banks with good reserves and credit history are offered a mechanism that allows calculation of mandatory reserves in accordance with certain averages. Banks are obliged to calculate mandatory reserves in accordance with CBR Regulation No. 342-P of August 7, 2009, as amended, report those to the CBR or its regional units on a monthly basis and promptly place additional reserves with the CBR, if required. The CBR and its regional units have a right to conduct unscheduled audits of credit organisations to check their compliance with the reserves requirements, to collect the non-reserved amounts from the banks' correspondent accounts with the CBR, as well as to impose fines for failure to comply with the reserve requirements. Regulation of Loss Provisioning Russian credit organisations are required to calculate and establish their provisions for impairment losses for loan (and certain other loan-type indebtedness) in accordance with CBR Regulation No. 254-P of March 26, 2004, as amended. This Regulation requires credit organisations to rank their loans (except for groups of loans that possess similar credit risk characteristics which are assessed on a collective basis) under one of the following five categories, which mean the following: quality I category (standard loans) the absence of credit risk; quality II category (non-standard loans) moderate credit risk; quality III category (doubtful loans) considerable credit risk; quality IV category (problem loans) high credit risk; quality V category (bad loans) no probability that the loan will be repaid. The allocation of the loan into a particular category is based on the "professional judgement", which is a special procedure set out in CBR Regulation No. 254-P. The following operations of a credit organisation are, among others, subject to the impairment losses provisioning:

299 all loans; deposits made by a credit organisation, including interbank credits (deposits and loans); other deposited funds, including rights to reclaim debt securities, shares, promissory notes and precious metals provided under loan agreements; discounted promissory notes; sums paid by a credit organisation to beneficiaries under bank guarantees which were not collected from the principal; monetary claims of a credit organisation under factoring transactions; claims of a credit organisation under rights assigned to it under various transactions. Only loans classified as category I loans (standard loans) do not need to be provisioned. Category II through V loans entail the following provisions, respectively: (i) 1 per cent. to 20 per cent.; (ii) 21 per cent. to 50 per cent.; (iii) 51 per cent. to 100 per cent.; and (iv) 100 per cent. Effective from July 1, 2007, provisions in relation to retail loans are subject to special rules, which, inter alia, establish lower provision rates for portfolios of retail loans. Provisions for loan losses are calculated on a periodical basis in Roubles under RAS, and are only used to cover losses relating to the principal amount of the relevant debt and exclude the relevant interest and discount. In addition to the foregoing, banks are also required to create provisions for potential losses other than loan losses, which may include losses from investments in securities, funds held in correspondent accounts of other banks, credit-related commitments, interest revenues on loans provided, contingent liabilities and other transactions carrying credit risk. CBR Regulation No. 283-P of March 20, 2006, as amended, requires banks to classify such assets and operations into one of the five risk groups under the following criteria: (i) no real or potential threat of loss; (ii) moderate potential threat of loss; (iii) serious potential or moderate real threat of loss; (iv) simultaneous potential and moderate real threat of loss or significant real threat of partial loss; and (v) value of the particular type of asset or operation will be fully lost. Banks are then required to provide provisions for each type of an asset or operation in the amounts corresponding to the amounts of possible losses, but within the following limits established by the CBR for each risk group specified above, respectively: (i) 0 per cent.; (ii) 1 per cent. to 20 per cent.; (iii) 21 per cent. to 50 per cent.; (iv) 51 per cent. to 100 per cent.; and (v) 100 per cent. Banks must report the amounts of created non-loan provisions to the CBR on a monthly basis. The CBR and its regional units are responsible for monitoring compliance with these requirements. Pursuant to CBR Directive No U of June 22, 2005, mandatory provisions for potential losses must also be created for various operations with residents of certain off-shore jurisdictions in the amounts between 0 per cent. and 50 per cent., depending on the jurisdiction involved. Regulation of Currency Exposure CBR Regulation No. 124-I of July 15, 2005, as amended, establishes rules regarding the exposure of banks to foreign currency and precious metals (collectively, "currency exposure"). The currency exposure is calculated with respect to net amounts of RAS balance sheet positions, spot market positions, forward positions, option positions and positions under guarantees, suretyships and letters of credit. An open currency position is calculated as the sum of all such net amounts. The currency exposure is calculated for each currency and each precious metal, and then recalculated into Roubles using the official exchange rates and the CBR's prices for precious metals. At the end of each operational day, the total amount of all open currency positions must not exceed 20 per cent. of the bank's regulatory capital. At the same time, at the end of each operational day, any long or short open currency position, as well as the balance in Roubles (subject to certain adjustments), must not exceed 10 per cent. of the bank's regulatory capital. Furthermore, banks are required to periodically report to the CBR regarding their open currency positions. Regulation of Reporting Starting from January 1, 2008, credit organisations are required to perform accounting of all their operations in accordance with CBR Regulation No. 302-P of March 26, 2007, as amended, which aims to approximate RAS accounting to IFRS. Under CBR Directive No U of November 12, 2009, as amended, routine reporting is performed by credit organisations on a daily, five-day, ten-day, monthly, quarterly semi-annually and annually basis; certain reporting is non-periodical basis

300 Specific monthly reporting requirements apply to credit organisations in liquidation pursuant to CBR Directive No U of July 14, Under the Banking Law, banking groups (i.e., groups of credit organisations in which one credit organisation, directly or indirectly, exercises substantial influence on other credit organisations within the group) and banking holdings (i.e., groups of legal entities in which one entity, which is not a credit organisation, exercises substantial influence on a credit organisation within the group) must regularly submit consolidated financial statements and calculations of mandatory ratios on a consolidated basis to the CBR. Under CBR Directive No U of January 20, 2009, all credit organisations must publish annually and quarterly in mass media their RAS financial statements, which include balance sheet, income statement, calculations of mandatory ratios, report on the level of the regulatory capital and certain other information. Pursuant to CBR Directive No U of December 25, 2003, starting from January 1, 2004, credit organisations are also required to prepare financial statements in accordance with IFRS for the period from January 1 to December 31 of each year and submit them to the CBR prior to July 1 of the following year. Starting from the 2012 financial year, the requirement for credit organisations, to prepare annual consolidated financial statements under IFRS, have them audited and reported to the CBR is set forth under Federal Law No. 208-FZ, dated July 27, 2010 "On Consolidated Financial Statements". Federal Law No. 208-FZ also provides that interim consolidated financial statements shall also be reported to the CBR. The CBR issued recommendations as to how to prepare IFRS financial statements in its Letter No. 169-T of November 24, 2011 which contains pro-forma IFRS financial statements and examples of typical adjustments to RAS accounts for the purpose of their transformation into IFRS financial statements. Annual financial statements of credit organisations prepared under RAS and IFRS are subject to an audit by a licensed auditor in Russia. Regulation of Retail Banking According to the Deposit Insurance Law, a credit organisation is eligible to participate in the retail deposit insurance system, if it meets the following requirements: (i) the bank's financial statements and reporting are considered true and accurate by the CBR; (ii) the bank is in compliance with the CBR mandatory ratios (e.g. capital adequacy, liquidity, etc.); (iii) the financial stability of the bank is deemed sufficient by the CBR on the basis of such criteria as sufficiency and quality of the bank's regulatory capital and assets, profitability and liquidity, as well as compliance with the CBR requirements for transparency of its ownership structure, risk management system and internal controls; and (iv) the CBR is not conducting any enforcement actions against the bank and no grounds for such enforcement actions are revealed following the CBR's inspection of the bank. The Deposit Insurance Law established the Deposit Insurance Agency (the "DIA"), which is in charge of, among other matters, collecting insurance premiums, managing the funds in the mandatory insurance pool, setting insurance premiums and monitoring insurance payments, as well as recording claims of depositors against failed banks and payment of deposit compensation. All banks admitted to the deposit insurance system are recorded in the special register maintained by the DIA. Under the Deposit Insurance Law, the protection for each client is limited and banks are required to make quarterly contributions into a deposit insurance fund. The basis of the deposit insurance premium is the quarterly average of daily balances of retail deposits insured under the Deposit Insurance Law. Standard insurance premiums cannot exceed 0.15 per cent. of the premium base (the currently applicable insurance premium was established on September 25, 2008 as equal to 0.1 per cent. of the premium base). In certain circumstances, the insurance premium can be increased up to 0.3 per cent. of the premium base, but for not more than two quarters per every 18 months. When the size of the insurance fund reaches 5 per cent. of the total retail deposits of all Russian banks, all new insurance premium contributions should not exceed 0.05 per cent. of the premium base, and when the size of the insurance fund exceeds 10 per cent. of all Russian banks' retail deposits, no contributions

301 will need to be made. They must be resumed, however, once the insurance fund falls below the 10 per cent. threshold. According to the Deposit Insurance Law, a compensation is generally paid in full in relation to all deposits made by a retail customer, but, in any case, the amount of the compensation may not exceed RUB700,000 to a particular depositor on the account of all deposits opened at the respective bank. Compensation from the deposit insurance fund is payable to a depositor, if a bank's licence has been revoked or if the CBR has imposed a moratorium on payments. In response to the turmoil that the Russian banking sector experienced from April through July 2004, Federal Law No. 96-FZ of July 29, 2004 "On Reimbursements by the Bank of Russia of Individual Deposits Held in Bankrupt Banks Not Participating in the Mandatory Individual Deposit Insurance System for Russian Banks", as amended (the "Uninsured Deposits Law") was adopted. The Uninsured Deposits Law established a protection system for retail clients of banks not participating in the retail deposit insurance system. The Uninsured Deposits Law contemplates, among other matters, that the CBR will make payments to the individual depositors of bankrupt Russian banks even if such banks have not been admitted to the retail deposit insurance system prior to their bankruptcy. Under the Uninsured Deposits Law, the reimbursement is paid in full in relation to all eligible deposits but, in any case, is capped by RUB700,000 per depositor. Having made the payment to retail depositors, the CBR assumes his/her rights against the bank, receiving the rights to claim relevant payments among first priority claims. Financial Consumer Protection Russian laws provide that financial relationships between banks and retail customers, including relationships in connection with bank deposits, loans, maintenance of bank accounts and debt collection shall be regulated by Law of the Russian Federation No "On Protection of Consumer Rights", dated February 7, 1992, as amended (the "Consumer Protection Law"). Pursuant to the Consumer Protection Law, a retail customer dealing with a bank benefits from special rights, e.g. in case of litigation, an individual has a right to bring a suit against a bank at the place of his/her residence rather than at the bank's venue or a right to compensation of moral harm, and does not need to pay a state duty when filing a claim. Russian court practice contributes to a certain extent to consumer rights protection. The guidelines issued by the Supreme Arbitration Court of the Russian Federation in September 2011 stated that banks are prohibited from including any provisions in standard loan agreements that may prevent individuals from prepayment of a loan or may impose additional commissions in connection therewith. In addition, a financial ombudsman, created as a non-governmental independent body at the Association of Regional Banks of Russia to consider and resolve consumer disputes with banks, has been acting in Russia since October If the total value of a dispute does not exceed a set maximum amount, retail bank customers may turn to the financial ombudsman at the pre-trial stage in order to settle any existing controversies or disputes with banks without resort to court. However, decisions passed by the financial ombudsman are of recommendatory, rather than binding, nature. There have been some legislative initiatives recently to introduce binding dispute settlement procedures with the participation of a financial ombudsman. Regulation of Insolvency Pursuant to Federal Law No. 40-FZ of February 25, 1999 "On Insolvency (Bankruptcy) of Credit Organisations", as amended (the "Bank Insolvency Law"), bankruptcy proceedings may not be initiated against a credit organisation before its licence is revoked. Petition to the CBR for Licence Revocation Under the Bank Insolvency Law, if a credit organisation cannot satisfy its creditors' claims and/or make mandatory payments to the budget, within 14 days of those becoming due, and/or the value of its assets is insufficient to satisfy the creditors' claims and/or make mandatory payments to the budget, the

302 following persons may petition the CBR to revoke the credit organisation's banking licence, subject to certain procedural and evidentiary rules (the respective filing being a "Licence Revocation Petition"): the credit organisation itself; its creditors; and authorised governmental authorities. If the CBR fails to respond to the Licence Revocation Petition within two months after its filing or denies the revocation of the credit organisation's banking license, the respective petitioners can petition a court to declare the credit organisation insolvent (the respective filing being an "Insolvency Petition"). If an Insolvency Petition is filed with a court, while the banking licence of the allegedly insolvent credit organisation has not yet been revoked, the court must adjourn its consideration of the Insolvency Petition and request the CBR to opine on whether there are grounds for revocation of the credit organisation's banking licence or, as the case may be, to provide the CBR order by which the credit organisation's licence has been revoked. If the CBR issues a negative opinion or fails to respond within one month, the Insolvency Petition must be dismissed. In the latter case, the CBR becomes liable for any losses a creditor incurs as a result of the non-revocation of the banking licence or, as the case may be, as a result of a failure by the CBR to take insolvency preventive measures in respect of such credit organisation. Under the Banking Law, the CBR must revoke the banking licence of a credit organisation, if: the credit organisation's regulatory capital adequacy ratio falls below 2 per cent. (See " Regulation of Mandatory Economic Ratios"); the credit organisation fails to adjust its regulatory capital and its charter capital according to the CBR requirements within 45 days of the respective CBR order; the credit organisation fails to satisfy monetary claims of its creditors and/or make mandatory payments to the budget (e.g. taxes), in the aggregate amount of at least RUB100,000, within 14 days of their maturity; or certain other circumstances set by the Banking Law occur. Under the Banking Law, the CBR has discretion to revoke the banking licence of a credit organisation, if: the information upon which the banking licence was issued was false; the credit organisation reports materially false information; the credit organisation delays a submission of its monthly reporting to the CBR by more than 15 days; the credit organisation conducts at least one operation deemed "banking operation" under the Banking Law without an appropriate license; the credit organisation's activities do not comply with the Banking Law or other laws and regulations governing the banking sector (including certain requirements of the Money Laundering Law, as defined below), such that during one year the CBR has imposed corrective measures upon the credit organisation more than once; the credit organisation wilfully and more than once, during one year, has failed to execute court decisions prescribing it to debit funds from its clients' accounts;

303 the credit organisation fails to timely submit to the CBR updated information for inclusion in the state register of legal entities more than once; or certain other circumstances set by the Banking Law occur. Consequences of the CBR Decision to Revoke a Banking License If, in response to a Licence Revocation Petition, the CBR revokes the credit organisation's banking licence, any of the following entities can file an Insolvency Petition, subject to certain procedural and evidentiary rules: the credit organisation itself; its creditors; authorised governmental authorities; and the CBR. Upon revocation of the credit organisation's banking licence, the CBR must appoint an interim administration for the credit organisation (if the CBR has not appointed such interim administration earlier, e.g., under certain circumstances set forth in the Bank Insolvency Law indicating the deteriorating financial condition of the credit organisation). The powers of the interim administration last until the appointment of a receiver. See " Appointment and Powers of a Receiver". Within two months after an Insolvency Petition is filed, the court should take a decision on the insolvency of the credit organisation and, if applicable, the opening of a receivership. As of the date of this Base Prospectus, a nationwide newspaper "Kommersant" and a local periodical are expected to publish information on the court's decision that declared the credit organisation insolvent. Such publications must set forth, among other things, the time frame for filing and satisfaction of creditors' claims. Appointment and Powers of a Receiver Once a court declares a credit organisation insolvent: if the credit organisation did not hold a retail banking licence, the court appoints a CBR-accredited receiver; or if the credit organisation held a retail banking licence, the DIA acts as a receiver. Upon the appointment, the receiver assumes all the management and liquidation of the credit organisation's operations. The receiver's appointment is initially for one year, but may be extended for a further six-month period. The receiver's authority includes: analysis of the credit organisation's financial standing; valuation of its assets; identification of its creditors and providing them with a notice of the credit organisation's insolvency; identification of debtors and demanding performance of their obligations to the estate of the insolvent credit organisation; and other powers, as set forth under the Bank Insolvency Law. The receiver reports to a meeting of creditors and to the CBR, subject to the court supervision

304 Invalidation of Transactions and Refusal to Perform Obligations Under the Bank Insolvency Law, upon the receiver's petition, the court may invalidate, among others, the following transactions of an insolvent credit organisation (subject to certain exceptions set by the Bank Insolvency Law for specific types of transactions, such as transactions made in the ordinary course of business or at a stock exchange): made within one year prior to the appointment of the interim administration, if the consideration received under such transaction is deemed "unequal", i.e., if the price and/or other terms of such transaction were significantly less favourable to the credit organisation than those of a similar transaction made under comparable circumstances; or made within three years before the appointment of the interim administration, if the credit organisation made the transaction with the intent of prejudicing property interests of creditors, provided that the transaction caused damage and the counterparty was aware of such intent of the credit organisation; or if the transaction leads or may lead to preferential satisfaction of one creditor's claims over other creditor's claims and was (i) made within one month prior to the appointment of the interim administration, or after the appointment of the interim administration; or (ii) made within six months prior to the appointment of the interim administration where the counterparty was aware (or should have been aware) that the credit organisation could be insolvent when the transaction was made or if such transaction aimed at creating preferences for a particular creditor or impaired or could impair otherwise existing priority of claims. In addition, under the Bank Insolvency Law, the receiver may generally refuse to perform any transaction that results in losses to the credit organisation, where a similar transaction entered into under comparable circumstances would not ordinarily result in such losses. Priority of Claims Under the Bank Insolvency Law and the Bankruptcy Law, the claims of creditors of a credit organisation that participates in the deposit insurance system generally rank in the following order of priority: current claims which have emerged, as a rule, during the insolvency proceedings, including insolvency administration and salary costs, salaries, utilities bills, legal expenses, ongoing taxes and other payments; first priority claims, including: claims in tort for damages to an individual's person, as well as moral harm; claims of retail depositors and individuals holding current accounts (except for individual entrepreneurs, attorneys, notary public and other persons who opened accounts for professional purposes); claims of the DIA in respect of deposits and current accounts assigned to it pursuant to the Deposit Insurance Law; claims of the CBR relating to payments made by the CBR to retail depositors of insolvent credit organisations not participating in the retail deposit insurance system; second priority claims include claims under employment contracts and other social benefits and authorship copyright claims;

305 third priority claims include claims secured by a pledge of the credit organisation's assets (any residual claims of secured creditors that remain unsatisfied after the sale of such collateral rank pari passu with claims of unsecured creditors (e.g. forth priority claims), as well as certain claims of retail depositors that do not constitute first priority claims; fourth priority claims are claims of all other creditors (including tax authorities), except for claims of subordinated creditors; and fifth priority claims are claims of subordinated creditors. Claims of each category of creditors must be satisfied in full before proceeding to claims of the successive category. However, current claims must be satisfied from the estate without regard to the above priorities at any point of the bankruptcy proceedings. Completion of Insolvency Proceedings Upon the collection of debts and satisfaction of claims, to the extent possible, the receiver submits a report to the court. The court, in turn, decides on continuing or closing the insolvency proceedings. Voluntary Liquidation To voluntarily liquidate a Russian bank, its shareholders after approving the relevant decision must apply to the CBR to have the banking licence cancelled. The CBR will conduct various checks and review the bank's operations after which it can decide to cancel the licence. Upon its cancellation the liquidation should be carried out under the general Russian corporate liquidation rules subject to certain specifics set under CBR regulations. If the CBR finds grounds to revoke the banking licence while reviewing the shareholders' application to voluntarily cancel a banking licence, the CBR will instead put the bank into involuntary insolvency procedures, which will include appointing a receiver. See " Regulation of Insolvency". Rights of the CBR under the Financial System Support Law and the CBR Law Since October 2008, a set of federal laws and regulations was adopted to support the liquidity of the Russian banking sector, restore investor confidence and support mid-term economic growth of the Russian economy by facilitating credit across the Russian banking sector. The Financial System Support Law introduced the framework principles to support the financial system of the Russian Federation and provided for specific measures and actions to be taken by the CBR and Vnesheconombank. RSB has received a subordinated loan from Vnesheconombank in accordance with the Financial System Support Law. Under the Financial System Support Law, Vnesheconombank and the CBR provided up to RUB910 billion in subordinated loans to state-owned and private banks under certain conditions. Such influx into the banking capital in the form of long-term subordinated loans (with a maturity of up to December 31, 2019) was one of the key economic initiatives implemented to restore confidence in the Russian banking sector. Sberbank received RUB500 billion, VTB received RUB200 billion and Russian Agricultural Bank received RUR25 billion as part of the initiative. The remaining RUB185 billion were set to be distributed via Vnesheconombank among privately-owned Russian banks subject to certain conditions. Federal Law No. 317-FZ "On Amending Articles 46 and 76 of the Federal Law On the Central Bank of Russian Federation (Bank of Russia)", dated December 30, 2008, vested the CBR with the right to appoint its authorised representatives to the credit organisations, which have received any foreign currency loans and/or subordinated loans pursuant to the Financial System Support Law, as well as certain other types of loans from the CBR. Since RSB received such loans, the respective authorised representative to RSB was appointed in accordance with the Directive No U of February 9, 2009, providing for, among other matters, the powers of such authorised representatives. An

306 authorised representative can participate without vote in the meetings of the management bodies, where the agenda relates to lending and/or management of assets and liabilities of such credit organisations. An authorised representative can request information on transactions or operations that, among others, (i) relate to any disposal of real estate of such credit organisations, (ii) relate to any disposal of other property of such credit organisation, if its book value exceeds 1 per cent. of such credit organisation's assets, (iii) relate to performance of any obligations, if their book value exceeds 1 per cent. of such credit organisation's liabilities, (iv) relate to any transfer of funds to foreign banks, if their amount exceeds 1 per cent. of such credit organisation's assets, or (v) are made with an interested party, affiliate, or an entity with respect to which such credit organisation is an interested party, if the amount of such transaction or operation exceeds 0.5 per cent. of book value of such credit organisation's assets (liabilities). According to CBR Directive No U of February 9, 2009, as amended, since RSB obtains from time to time secured loans from the CBR and/or Vnesheconombank, an authorised representative of these institutions can also request (i) information on assets securing such loan, (ii) security agreements securing such loan (if any), (iii) extracts provided by the depositary or registrar confirming the registration of pledge on the securities that service as collateral for the loan, and (iv) copies of pledge instructions (where the loan is secured by a pledge of receivables under loan agreements, which are, in their turn, are secured by a pledge of certain securities). If a credit organisation fails to provide an authorised representative with the required information or provides misleading information, the CBR is entitled to (i) require such credit organisation to cure the respective violation, (ii) collect a fine from such credit organisation in the amount not exceeding 0.1 per cent. of the minimum charter capital for banks (currently, RUB300,000), or (iii) restrict conducting certain banking operations by such credit organisation for up to six months. In addition, the CBR may demand such credit organisation to fulfil its agreement made within the framework of the Financial System Support Law. If a credit organisation fails to comply with a CBR order issued in response to the above violation within the term prescribed by the CBR or such violation created a real threat to the interests of such credit organisation's creditors (depositors), the CBR is authorised to impose a fine in the amount not exceeding 1 per cent. of its paid charter capital (but not exceeding 1 per cent. of the minimum charter capital, currently, RUB3 million), restrict certain banking operations for up to one year, and implement certain other measures. In addition, if during one year the CBR has repeatedly applied any of the above measures to a credit organisation due to its non-compliance with federal laws regulating banking activity or CBR regulations, the CBR is entitled to cancel the banking licence of such credit organisation. Regulation of Credit Histories In December 2004, Federal Law No. 218-FZ "On Credit Histories" was adopted. This law, as amended, provides for the establishment of "credit bureaus" that will maintain a database of retail borrowers' credit histories. The law requires all credit organisations, starting from September 1, 2005, to provide at least one credit bureau with the credit histories of all borrowers that have consented to the distribution of their credit histories. The borrower's credit history consists of both public and confidential portions and must include, among other matters, information on the borrower's outstanding debt and interest on it, the terms of repayment and any legal proceedings involving the borrower in respect of loans and financings. The borrower's credit history may be distributed to a third party with the borrower's prior consent, which remains valid for one month after it has been granted. The general catalogue of credit histories is maintained by the CBR and includes cover pages of all credit histories and information about the credit bureau that maintains each credit history. The credit bureaus are supervised by the FSFM. As of July 2, 2012, the FSFM has registered 26 credit bureaus. Regulation of Currency Control Notwithstanding significant liberalisation of the Russian currency control regime in the last decade,

307 Federal Law No. 173-FZ "On Currency Regulation and Currency Control" dated December 10, 2003 (as amended) (the "Currency Law") continues to impose some limitations on currency operations. In particular, foreign currency operations between Russian residents are generally prohibited (except for certain specified operations, including foreign currency transactions between Russian authorised banks listed in CBR Directive No U of April 28, 2004). Moreover, certain limitations not applicable to credit organisations apply to the credit organisations' clients, such as the requirement to notify the Russian tax authorities of an opening of a bank account abroad. Finally, credit organisations are required to perform the functions of currency control agents, i.e., supervise compliance by residents and non-residents, as such terms are defined in the Currency Law, with the restrictions imposed by currency laws and regulations, including the requirements imposed on residents to maintain transaction passports for certain cross-border transactions and repatriate, subject to certain exceptions, export-related earnings to Russia. Regulation of Anti-Money Laundering and Terrorist Financing In August 2001, Federal Law No. 115-FZ "On Combating the Legalisation (Laundering) of Income Obtained by Criminal Means and Terrorist Financing" (the "Money Laundering Law") was adopted to comply with the requirements of the Financial Action Task Force on Money Laundering ("FATF"). The Money Laundering Law came into effect on February 1, 2002 and was subsequently amended multiple times. Credit organisations are required to comply with the provisions of the Money Laundering Law relating to, among other things, the development of appropriate internal standards and procedures, client, its representative and ultimate beneficiary identification, control over client operations and reporting of suspicious operations performed by clients. One of the main obligations of banks under the Money Laundering Law is the control function that involves the identification of banks' clients, their representatives and ultimate beneficiaries, gathering and recording of information with respect to client operations subject to control and reporting of such operations to the Federal Service for Financial Monitoring, the anti-money laundering authority in Russia. The Money Laundering Law requires that banks control any operation with funds or other property if the amount of such operation is equal to or exceeds RUB600,000 (or its equivalent in foreign currencies), where such operation involve any of the following: certain cash transactions, transactions where at least one of the counter-parties is resident, or has a bank account, in a country that does not comply with the recommendations of the FATF (a country list corresponds to the "black list" issued by the FATF), certain operations with bank accounts/deposits, and certain transactions with moveable assets, including transactions involving precious stones, precious metals and other property. Banks also must control any operation with real estate where the ownership to such real estate is transferred, if the amount of such operation is equal to or exceeds RUB3 million (or its equivalent in foreign currencies). In addition, banks are required to control any operation involving individuals or organisations that are known to be involved in extremist or terrorist activities and legal entity controlled by them or their agents. If bank officers suspect that an operation is conducted in order to legalise any funds received as a result of illegal activity or to finance terrorist activities, the bank is required to report such operations to the Federal Service for Financial Monitoring whether or not such operation qualifies as subject to control. Banks are not allowed to inform clients that transactions are being reported to the Federal Service for Financial Monitoring, as well as of any other measures that have been undertaken to prevent money laundering (except for a notice regarding suspension of a banking operation, refusal to perform the client's instruction, and certain other information). Certain transactions conducted by individuals are exempt from the identification requirements under the Money Laundering Law, in particular, foreign exchange operations not exceeding RUB15,000. On November 21, 2011, amendments to the Money Laundering Law came into force, requiring that credit organisations develop and adopt new internal control regulations based on the requirements set out by CBR Regulation No. 375-P, effective from April 29, 2012, within one year from such latter date. The Regulation extends criteria for identifying suspicious operations, in particular, introducing separate characteristics for operations that may be deemed directed at terrorist financing or tax evasion, and requires that credit organisations establish procedures for their identification. Before these

308 amendments, credit organisations developed internal control regulations based on the CBR recommendations and were required to get the approval of the CBR and, if they are professional securities market participants, of the FSFM. The amendments have removed a sometimes bureaucratic approval procedure. On the other hand, banks will no longer benefit from a "safety net" of the CBR's sign-off on their internal control regulations, which increases the risk of related investigations and claims by the CBR and the likelihood of future controversies with the regulator, as well as subjects the banks' responsible employees to a heightened risk of liability for technical non-compliance of the internal control regulations and the CBR requirements. The Insider Dealing Law Federal Law No. 224-FZ "On Combating the Unlawful Use of Insider Information and Market Manipulation and Introducing Amendments to Certain Legislative Acts of the Russian Federation" (the "Insider Dealing Law") generally came into force on July 31, 2011, save for the regulation of criminal liability for unlawful use of insider information and revocation of a banking license due to multiple instances of non-compliance with the Insider Dealing Law during one year. The Insider Dealing Law enumerates categories of persons that can be considered insiders, including, among others, issuers and management companies, as well as professional market participants (including brokers and dealers) and other persons who transact on behalf of their clients with financial instruments, foreign currency and/or goods, and have received insider information from such clients. Under the Insider Dealing Law, any person who illegally uses insider information and publishes misleading information may be held liable for misuse of information and/or market manipulation. Furthermore, insiders must comply with certain new disclosure requirements, including keeping the insiders list and sending notices of transactions by the insiders to the FSFM and the relevant legal entities. In implementing the Insider Dealing Law and pursuant to CBR Regulation No U of October 31, 2011, the CBR began to disclose certain facts relating to Russian banks on its website, including: (1) the status and results of its inspections, (2) licence revocations, (3) cases of imposing an administrative liability upon a credit organisation and/or its CEO, (4) an invalidation of the CBR's approval for taking retail deposits and opening and maintaining bank accounts for individuals, and (5) stages of issuance of securities by banks. Given that the Insider Dealing Law is relatively new and sometimes allows for various interpretations, its application is not yet settled. The National Payment System Law Federal Law No. 161-FZ "On the National Payment System" (the "National Payment System Law") that was adopted on June 27, 2011, generally came into force on September 29, This law provides for legal and organisational principles of the national payment system, establishes the procedure for rendering of payment services, including making transfer of monetary funds, use of electronic means of payment, as well as sets forth requirements for organisation and operation of payment systems and the procedure for monitoring and supervision over the national payment system. This law provides that only credit institutions may carry out transfers of electronic monetary funds. Credit institutions may enter into agreements with other organisations, under which the latter may render to the credit institutions operational and clearing services for the transfer of electronic monetary funds. Under this law, the CBR is vested with additional functions of monitoring and supervision over the national payment system. The Central Depositary Law Federal Law No. 414-FZ "On the Central Depositary" (the "Central Depositary Law"), which generally comes into force on January 1, 2012, provides legal framework for establishment, and operational conditions, of the central depositary, in particular, setting out rights and obligations of the central depositor, requirements to its activities and specifics of the state control and supervision over its activities. The Central Depositary Law aims at improving effectiveness and competitiveness of Russian stock market, including, expediting and facilitating securities trade settlements and mitigating the risks associated therewith. Under this law, the central depositary is defined as a depositary that is a NCO, to which the status of the central depositary has been assigned. Only a joint-stock company

309 registered in Russia can be the central depositary. Pursuant to the Central Depositary Law, the central depositary (within one year from the date of assignment of its status) shall take all necessary steps in order to open its nominal holder accounts, in particular, in all securities registers of issuers obliged to disclose information in accordance with the Securities Market Law. Also, the Central Depositary Law prohibits persons maintaining securities registers from opening, and depositing securities to, other nominal holder accounts from the opening date of a nominal holder account of the central depositary. No Russian depositary has been assigned the status of the central depositary so far. Accession of Russia to the WTO On December 16, 2011, Russia signed the Protocol on its accession to the WTO. The ratification procedures were completed on July, , and the accession to the WTO will become effective for Russia on August 22, Upon accession, Russia would become subject to the WTO regime. However, in relation to its banking sector, Russia made a reservation that it would review market access requirements for the establishment of branches of foreign banks and securities firms in the context of future negotiations on the accession of Russia to the OECD or within the framework of the next round of the WTO multilateral trade negotiations. Currently, the CBR allows foreign banks either (i) to incorporate a subsidiary bank in Russia regulated by the CBR or (ii) to maintain a representative office in Russia. A subsidiary of a foreign bank is an entity operational within the scope of its banking license, which must comply with Russian laws and CBR regulations (including on mandatory CBR ratios), while activities of a representative office are limited to facilitating banking operations and representing interests of its foreign parent. At present, a foreign bank may set up a subsidiary or representative office in Russia, subject to obtaining the CBR approval and provided that, among other matters, the parent bank has a good reputation and is in good financial standing in its home country. The accession of Russia to the WTO is also expected to necessitate unification of requirements applicable to private banks, banks under state control and foreign-controlled banks, including, among other things, abolishing some Russian law provisions that may be deemed discriminatory against foreign-owned banks in favour of banks controlled by Russian nationals or the state. At the same time, Russia managed to keep a limit on an overall amount of foreign investments into the banking sector of Russia post-accession, which shall not exceed 50 per cent. of the total equity capital of all credit organisations registered in Russia. If the threshold is exceeded, the CBR will have a right (i) not to authorize new foreign investments in the banking sector, and/or (ii) to impose a temporary ban on disposal of banks' equity capital to foreign investors, including, inter alia, through an increase of equity capital at the account of a foreign investor

310 INDEX TO FINANCIAL STATEMENTS Page Unaudited Consolidated Condensed Interim Financial Information of the Group as of F-2 and for the six months ended 30 June Report on Review of Consolidated Condensed Interim Financial Information... F-4 Consolidated Condensed Interim Statement of Financial Position... F-5 Consolidated Condensed Interim Statement of Comprehensive Income... F-6 Consolidated Condensed Interim Statement of Changes in Equity... F-7 Consolidated Condensed Interim Statement of Cash Flows... F-8 Notes to the Consolidated Condensed Interim Financial Information... F-9 Consolidated Financial Statements of the Group as of and for the year ended F December Independent Auditor's Report... F-42 Consolidated Statement of Financial Position... F-43 Consolidated Statement of Comprehensive Income... F-44 Consolidated Statement of Changes in Equity... F-45 Consolidated Statement of Cash Flows... F-46 Notes to the Consolidated Financial Statements... F-47 Consolidated Financial Statements of the Group as of and for the year ended F December Independent Auditor's Report... F-99 Consolidated Statement of Financial Position... F-100 Consolidated Statement of Comprehensive Income... F-101 Consolidated Statement of Changes in Equity... F-102 Consolidated Statement of Cash Flows... F-103 Notes to the Consolidated Financial Statements... F-104 F-1

311 F - 2

312 F - 3

313 F - 4

314 F - 5

315 F - 6

316 F - 7

317 F - 8

318 F - 9

319 F - 10

320 F - 11

321 F - 12

322 F - 13

323 F - 14

324 F - 15

325 F - 16

326 F - 17

327 F - 18

328 F - 19

329 F - 20

330 F - 21

331 F - 22

332 F - 23

333 F - 24

334 F - 25

335 F - 26

336 F - 27

337 F - 28

338 F - 29

339 F - 30

340 F - 31

341 F - 32

342 F - 33

343 F - 34

344 F - 35

345 F - 36

346 F - 37

347 F - 38

348 F - 39

349 F - 40

350 F - 41

351 F - 42

352 F - 43

353 F - 44

354 F - 45

355 F - 46

356 F - 47

357 F - 48

358 F - 49

359 F - 50

360 F - 51

361 F - 52

362 F - 53

363 F - 54

364 F - 55

365 F - 56

366 F - 57

367 F - 58

368 F - 59

369 F - 60

370 F - 61

371 F - 62

372 F - 63

373 F - 64

374 F - 65

375 F - 66

376 F - 67

377 F - 68

378 F - 69

379 F - 70

380 F - 71

381 F - 72

382 F - 73

383 F - 74

384 F - 75

385 F - 76

386 F - 77

387 F - 78

388 F - 79

389 F - 80

390 F - 81

391 F - 82

392 F - 83

393 F - 84

394 F - 85

395 F - 86

396 F - 87

397 F - 88

398 F - 89

399 F - 90

400 F - 91

401 F - 92

402 F - 93

403 F - 94

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405 F - 96

406 F - 97

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409 F - 100

410 F - 101

411 F - 102

412 F - 103

413 F - 104

414 F - 105

415 F - 106

416 F - 107

417 F - 108

418 F - 109

419 F - 110

420 F - 111

421 F - 112

422 F - 113

423 F - 114

424 F - 115

425 F - 116

426 F - 117

427 F - 118

428 F - 119

429 F - 120

430 F - 121

431 F - 122

432 F - 123

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434 F - 125

435 F - 126

436 F - 127

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438 F - 129

439 F - 130

440 F - 131

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453 F - 144

454 F - 145

455 F - 146

456 F - 147

457 F - 148

458 F - 149

459 F - 150

460 F - 151

461 F - 152

462 F - 153