Bank Capitalization 2013 Russian Bank Capitalization Fund

1. Bank Capitalization 2013Russian Bank Capitalization Fund Galina KlimenkoPrincipal Investment Officer Europe & Central Asia Moscow July 9, 2013

2. Russian Banking Sector • The sector is highly concentrated: five government controlled banking groups hold 60% of assets, foreign banks hold 18%, and large private banking groups hold the majority of the remainder. • Competitive landscape: many Russian mid-cap banks are all pursuing similar strategies with few operational or niche market advantages. • Funding is becoming tighter: deposits are slowing, government resources are ultimately limited, and long-term financing remains unavailable on the market. Many capital market instruments (e.g. securitization, etc) are limited in use by the current legislation. • Capital requirements are increasing: CBR is emphasizing strengthening banks’ capitalization, including increased risk weights for certain retail loans, increased RR for certain project finance loans, and Basel III-like capital rules. 2

3. AMC is a capital mobilization vehicle of IFC:‘crowding in’ investment to emerging markets Investment Services Advisory Services Asset Management • Loans and intermediary services • Equity and quasi-equity • Syndications • Structured and securitized products • Risk management products • Trade finance • Subnational finance • Treasury operations • Access to finance • Corporate advice • Environmental and social sustainability • Infrastructure Advice • Investment Climate Invests third-party capital in a private equity format Allows outside investors benefit from IFC’s expertise at achieving strong equity returns as well as development impact Helps IFC fulfill its role and leverage its balance sheet by mobilizing third-party funds to increase investment

4. What is the Russian Bank Capitalization Fund? Why? • Russian banking sector is promising, but with huge capital needs • Financial sector critical to development of economy • Bring new investors to Russian banking sector and set examples Who? • Private equity fund managed by IFC Asset Management Co • Investors IFC, Ministry of Finance of RF, and VEB • Investments in bank equity; sub-debt possible but Basel III makes this instrument uncertain • Target investment sizes US$20-$100 million • Shares of 10%-30% (with some exceptions) • RBCF investing to profit – need to exit What? • Fund established June 2012; second closing June 2013 • 2 investments made (Credit Bank of Moscow, Orient Express Bank), considering further investments now • 2-4 investments per year, maximum ~10 When? How? • IFC Moscow is primary point of contact • Prepare information in advance • Present IFRS financials and investment presentation

5. RBCF Legal Structure • Limited partnership managed by IFC Asset Management • Russian Federation &VEB investments through an IFC-managed trust fund • Investors: IFC, IFC Trusts 1 & 2 • No RF & VEB involvement in management of Fund or investment decisions IFC TRUST FUND IFC managed 100% owned Manager: IFC Asset Management Company, LLC. LP 3 LP 2 Equity GP LP interest LP interest LP interest LP interest GP interest IFC Russia Bank Capitalization Fund

6. 5 The Russian banking market is highly fragmented Fragmented market:~1000 banks, led by a few State banks Lower cost efficiency in smaller banks of RBCF's target segment 27% Top 5 banks (all state) account for over half of all banking assets Cost1 / income ratio 12% % (1H 2010) 6% 51% 80% 4% 60% 3% 40% Banks 6–10 7% 74% 53% 52% Banks 11–20 10% 20% Banks 21–50 12% RBCF's target segment accounts for a quarter of all banking assets 0 25% Banks 51–100 8% Banks 1-20 Banks 21-50 Banks 51-100 Banks 101–200 5% Asset size $6Bn+ $2-6Bn $2Bn-$800M Banks 201–500 5% Banks 501-~1000 1% Growth / consolidation will help achieve minimum efficient scale and market power All banks 100% Total assets (%) Opportunity for value creation through consolidation and improved efficiency

7. Criteria for Bank Selection – Target Banks • All IFC performance standards, financial reporting, financial covenants and others are unchanged • IFC is a demanding investor and will look for partners with track record, excellent reputations and good corporate governance IFC Standards • IFC is investing its own funds and those of investors • Value proposition (expected returns to investors) are critical • How are investors (including IFC) going to profit from the investment? Investment Thesis • Meaningful role in economy (% of regional market, role in providing necessary financial services to SMEs, households, corporations) • Innovative services and products welcome Real Role in Economy • Size: Primarily top 250 banks by assets, with regional presence • Investment size: $20-100 mln, for stakes of 10% -30% (exceptions possible) • Co-investors: RBCF goal is to help attract additional foreign investment – hence structures with more investors get priority • IFC may co-invest and provide debt, risk management and other products The Numbers

8. Simplified Investment Criteria • IFRS financial statements by a high-quality auditor • Clear ownership, reputation of owners and institution critical • Quality of management • Problems: high related party, linked loans, unclear strategy Transparency • Clear answers to why invest? (ROE, NIM, COI, etc) • Profitability, stability, capital, growth, potential returns • Clear path to sale/exit in 5-10 years • What will market position be during investment period? Investment • Meaningful role in regions • Both traditional and innovative banking products (non-speculative) • Strong risk management Operations • Size: Primarily top 250 banks by assets, with regional presence • Investment size: $20-100 mln, for stakes of 10% -30% (in most cases, some exceptions) • Largest banks / foreign / government mostly excluded • Smallest banks: more likely through acquisitions Basic approach

9. Robust Sourcing Methodology Russian Banks ~ 1000 banks • Identify eligible banks • Screening for key financial indicators (e.g., minimum scale) • Excluding reputational issues • Screening for private sector (or to be privatized) • Identify commercially viable candidates • Excluding “pocket banks”, “treasury banks” or “ captive banks” • Excluding subsidiaries of international banks • Excluding banks not having basic minimum financials (IFRS requirement) Eligible Banks • ~ 300 banks • Locally owned • Privately owned • Good reputation • Non captive Target Pool • ~ 100 potential targets • Meeting minimum financial requirements • IFC already in contact with many banks on regular basis • Six banks: equity investment • 26 investee companies • + High demand from non-client banks • Identify top target banks for focused business development efforts • Specific opportunities have been identified or are likely, based on IFC’s relationship (excluding recently exited investments), ranking by capital needs, likelihood of transaction, size, and systemic importance (in particular network banks) Near-term Pipeline • 10 target banks in 10-24 months • $650M • Follow-on investments anticipated

10. RBCF able to identify opportunities and add value High growth opportunities Banking market set to out-pace GDP as penetration catches up with Western levels Attractive valuations Market valuations currently a fraction of pre-crisis levels Mid-sized banks lack funding and scale Structural underfunding of economy and banking sector, concentration of large state banks Many banks lack due to scale, credit, and transparency concerns High NPLs with low standards of professionalism Need to introduce basic banking standards (e.g., proper risk management, principles of ALM) Over-due loan levels in RBOF's target segment appear to have peaked, but are under-reported Market Fragmentation with opportunity to increase efficiency >1000 banks in total, led by a few state banks. with ~60% of banks either captive or subscale Opportunity for value creation through consolidation Key issues of Russian market How RBCF creates value Bank selection Operating phase Structured exit 1 2 5 • Target selection • Identifying banks with highest upside potential • Selecting best banks with basic risk mgmt • Strong deal flow based on IFC client base Target selection • Reputation • IFC “stamp of approval” and involvement • Enforcing international standards of Corporate Governance • Funding • Equity funding combined with range of IFC debt instruments and increased market access • Sale preparation, execution • Structured exit preparation • Attracting potential acquirers • Opening investment opportunities for foreign investors 3 • Improving bank fundamentals • Supporting active risk management and NPL recovery • Ensuring basic banking capabilities 4 • Efficiency and profitable growth • Sustained growth improving efficiency, profits and M&A opportunities

11. Target banks will be in a position to benefit from the Fund’s resources at a crucial time. Key Benefits for Investee Banks Credible Investors • Investees continue to receive the same level of services and benefits as if they were transacting directly with IFC, with added oversight from AMC staff • During times of financial crisis, foreign investments in emerging markets diminish further as portfolio investments decline rapidly • Fund will act to stabilize banks in order to speed up economic recovery and increase lending to productive sectors of local economies • By directly providing emerging market banks with much needed capital, as well as catalyzing additional capital for those banks in a time of severe crisis, the Fund will: • Support economic growth in Russian economies through financial intermediation • Be well positioned to capture upside via countercyclical investment Counter-Cyclical Strategy • Senior AMC and IFC investment professionals with extensive experience originating, executing and supervising investments in Russian commercial banks • Investment teams have the full support of IFC’s entire investment infrastructure, including dedicated portfolio, risk, corporate governance and equity sales departments Experienced Team Advisory Services • Benefit from advisory services to portfolio banks • Strengthening private sector development and improving banks’ economic and financial performance, and their social and environmental sustainability

12. AMC leverages IFC’s proven origination, execution and supervision resources while conducting rigorous independent investment evaluation approved by independent Investment Committees. Rigorous Investment Process Origination Evaluation Execution Supervision Exit Largest emerging market deal flow Deep industry/ regional knowledge Capability to develop innovative structures Dedicated teams with relevant experience Defined strategies

13. AMC enhances the time tested IFC investment process that has evolved over the past 50+ years. Proven Strategy • Deal Sourcing • IFC’s unmatched access to emerging market investment opportunities • AMC Funds enhance the IFC product offering by enabling additional/larger deals • Fund Management • Experienced operations staff with long private equity experience at leading fund managers • Use of first class third party firms for audit and ancillary back-office functions • Investment Selection • Thorough review of all eligible IFC investment proposals • Independent decision-making • Alignment with fund objectives • Clear exit strategies • Value-Add • Experienced professionals with extensive principal investment experience • Tax and legal structuring with Fund specific focus • Review and mitigation of conflicts of interest