ING: Establishing Standards in Russia’s Banking System

1. ING: Establishing Standards in Russia’s Banking System Russia-Netherlands Economic Forum Alexander Pisaruk General Director ING Wholesale Banking Russia November 2007

2. Russia: one of the leading emerging markets • US$1.25tr GDP as of 2007 – the second-largest after China in the EM world • further economic expansion with an average real GDP growth of likely 7% for 2007–09 • significant financial stability has been built up: • world’s third-largest FX reserves of more than US$440bn as of Nov’07 • stabilisation fund (10% of GDP) to compensate for fiscal shocks in case of an oil price collapse • BBB+ sovereign credit rating from S&P/Fitch Russia: a good mix of scale, dynamics, and wealth Source: Federal State Statistics Service, Bloomberg, ING estimates

3. Russia is a stable environment for the market RTS Index performance The flow of portfolio and direct investments into Russia EMBI+ Russia spread 2007 US$ 34bn* (US$ 16.9bn In 1H07) 2006 US$ 16.9bn Rouble vs. hard currency basket Credit Rating history (S&P) 2005 US$ 13.5bn 2004 US$ 9.8bn weaker RUB stronger RUB 2003 US$ 7.2bn Source: Federal State Statistics Service, Bloomberg, ING estimates

4. Regulatory environment: past progress and further trends General • The past and ongoing regulatory developments has made the Russian market more predictable at present • Anti-money laundering • Deposit insurance system • Capital constrains • Development of RTGS system • Currency control liberalisation Financial markets • Russian derivative market does not meet the needs of domestic economy • Some weaknesses remain in the legislative and regulatory environment for derivatives in Russia • Netting legislation is not enforced yet • More clarity with regard to accounting and taxation of transactions with derivatives • Adoption of master agreements maximally close to international standards • More clarity with regard to eligible counterparties and eligible transactions • Creation of a benchmark floating rouble curve with committed market makers Securities market • Absence of a central securities depositary • Lack of a centralized settlement and clearing infrastructure • Lack of clarity and uniformity in the legal environment • Securities lending is not legally recognized in the local market

5. ING WB’s activities to improve regulatory environment • ING is committed to contribute to further progress in the regulatory environment. The establishment ING Russia is FATF compliant Basel II compliant internally by risk models and organizational setup. • Cooperation with regulators • Participates in Basel II working groups • Receives good feedback from inspectorate on internal control • Widely responds to supervision requests about organizational setup of control functions: audit, risk management, compliance • ING is prepared to contribute more expertise to the project • Regulatory environment observations • Observed shift of the regulator’s focus to internal control framework • Appreciates increased judgment powers given to management by new regulations • Fully endorsed the establishment of dedicated inspectors of banks

6. ING WB’s activities to improve the Russian financial markets infrastructure Securities market Participation in working groups with regulators and market players: • creation of the Central Securities Depository • introduction of the Foreign Nominee concept • introduction of partial and split voting • development of new regulations on registrar activities • amendments to the Law On Securities Market • status of account owners/holders (possibility to open accounts for non-legal entities, ie pension funds and mutual investment funds) • securities lending Participation in National Securities Market Practice Group of ROSSWIFT on: • implementation of ISIN codes • usage of SWIFT for communication between market participants • adaptation of SWIFT formats to peculiarities of the Russian securities market • Financial markets • Development of derivative instruments • Introduction of international derivatives standards into the Russian legislative environment (cooperating with ISDA , ISLA and European Bank) • along with already achieved progress in the legislative and regulatory environment, ING WB is planning to broaden the set of its derivative products • already in the coming future, ING WB is planning to become a member of the derivative section of MICEX • Creation of a benchmark floating rouble curve • we have been active in supporting the benchmark status of MosPrime: • one of the first to incorporate the rate into its products • we act as a Calculation Agent in respect to the rouble bonds of EBRD with floating rates • ING WB is a member of NFEA (National Foreign Exchange Association) with the right to vote ING WB participates in working groups of NAUFOR, NFA, PARTAD, AERB, Central Bank, FSFM, Russian State Duma Banking Committee