The new composition of the Management Board is as follows:

• Sergey Timofeyev, Chairman, Chief Executive Officer;
• Tatiana Pupkova, Deputy General Director, Chief Operations Officer;
• Vadim Sorokin, Deputy General Director, Chief Financial Officer;
• Konstantin Leonov, Head of Direct Investment Management;
• Kirill Nikulin, Head of the Urals Territorial Bank;
• Oleg Novolodkskiy, Chief Risk Officer;
• Konstantin Rogov, Head of Treasury;
• Nikita Riauzov, Head of Corporate Investment Banking.

Alexey Sannikov, the Head of MDM Bank’s Siberian Territorial Bank, was recommended to be included into the Management Board.

Dmitry Yurin will be acting Head of the European Territorial Bank.

The main goal set for the Management Board is to implement the previously approved strategy. All Management Board members are existing MDM Bank employees.

Oleg Viyugin, the Chairman of the Board of Directors, said of the decision: “MDM Bank has now successfully completed post-merger integration process. The primary target for the new CEO and Management Board is to implement the Bank’s previously approved 5-year development strategy”.

This is IBA’s first three-year syndicated loan, successfully extending the bank's tenor profile. The loan was arranged by Credit Suisse International, the Coordinating Mandated Lead Arranger, together with Mandated Lead Arrangers MDM Bank OJSC, J.P. Morgan PLC, and JSC Halyk Bank.

IBA, based in Baku, is the largest bank of the Republic of Azerbaijan, holding 43.5% of the country’s banking sector assets as of December 31, 2009, and operating 37 branches throughout the country.  Established in 1990 as the successor to the Azerbaijani branch of the USSR’s Vnesheconombank (VEB), IBA is 50.2% owned by the Ministry of Finance of Azerbaijan.

IBA is rated BBB- by Fitch Ratings and Ba2 by Moody’s Investors Service.

Vadim Sorokin, the MDM Bank CFO, noted: “The high level of confidence of investors in the bonds is justified by the Bank’s definitive development strategy, its stable financial performance, high level of capitalization and conservative approach to liquidity management – which allowed the Bank to successfully weather the financial crisis, without applying for support to the State or shareholders.”

The large number of investors participating in the secondary placement will ensure that the issue will be highly liquid going forward.  Furthermore, the 8th series has already been entered into the Central Bank of Russia’s Lombard List, which will allow investors to immediately utilize the full spectrum of funding instruments.
The funds raised through the placement will be used for the further expansion of the Bank’s customer lending, both in the corporate and retail segments, including financing clients’ development by means of offering more prolonged resources.

According to Moody’s, the rating action reflects MDM Bank’s strengthened liquidity profile and high capitalization level, as well as the successful completion of the merger of ex-MDM Bank and URSA Bank. The rating agency said that the merged bank preserved and improved its corporate profile and financial fundamentals. MDM Bank’s market franchise and brand recognition, in addition to its corporate governance and risk management practices, generally benefited from the merger.

This rating action, in the view of MDM Bank management, also reflects the high loss absorption and strong revenue-generating capacity that enabled MDM Bank to be the only major Russian bank not to rely on either the government or shareholders for capital support during the crisis.

For eight years, Mr. Timofeyev has held senior positions at MDM Bank, and has experience in all aspects of the Bank’s business.  He has headed MDM Bank’s operations in the Russian Far East and later in the Urals region.

Outgoing General Director Igor Kim remarked: “The process of integrating the two banks has been successfully completed, and therefore that part of my work at MDM Bank has been fulfilled.  I believe that transferring power to a new man who will take responsibility for developing the Bank in the coming years is the right decision. I would like to offer him my personal best wishes, and professionally I am sure he will go on to great achievements in the post of CEO and Chairman of the Management Board of MDM Bank.”

Oleg Vyugin, the Chairman of MDM Bank’s Board of Directors, said: “In Sergey Timofeyev we have a specialist who possesses comprehensive practical professional experience at MDM Bank, who has achieved outstanding operating results and who has received high recognition on the part of our clients.  The Board of Directors has taken the route of consolidation in supporting his candidacy as a specialist capable of ensuring the dynamic development of the Bank, and has shown its confidence in him by approving a five-year contract for the position of General Director and Management Board Chairman.”

Sergey Timofeyev

Born in Vladivostok in 1965.

Mr. Timofeyev graduated from the Pacific State University of Economics with a major in Finance and Credit, and from the Primorsky Institute of Professional Development specializing in Government and Municipal Management.

He started his career in banking at The Far Eastern Bank in 1994.

From October 1996 until July 2001, Sergey was Head of the Client Relationship division and sat on the management board of The Primorie Commercial Bank.

In August 2001, Sergey joined MDM Bank as head of its Vladivostok branch. In 2008, he managed the Urals territorial bank in Ekaterinburg.

Prior to becoming General Director of MDM Bank, he sat on the Board of OJSC Energy Systems of the East and was Deputy General Director for economics at OJSC The Far-Eastern Energy Management Company.

Key performance indicators:

• Due to efficient preparation for the financial crisis, MDM Bank has become the only bank of the largest Russian banks which did not utilize any additional capital support from shareholders or the state. At the same time, MDM Bank maintained one of the highest liquidity and capital adequacy ratios among leading Russian banks.
• The Bank’s Tier 1 capital adequacy ratio stood at 18.8%, which was the best result among top Russian banks.
• The Net Interest Margin remained stable at 6.6% amid the decrease of interest rates across the economy.
• Retail deposits grew at a pace (13.8% YTD) exceeding the market average.
• The loan to deposit ratio declined to 105.3% (compared to 121.6% at YE 2009).
• Liquidity was preserved at a comfortable level of over 25% of assets, notwithstanding the repayment of wholesale borrowings exceeding RUB 20 bln in 1Q 2010.
• A conservative approach to cost management provided for a reduction of administrative costs by almost 20% compared to 4Q 2009.
• The amount of non-performing loans (NPL), categorized as loans 90 days or more overdue, remained at the level of YE 2009, in rouble terms.  The percentage of NPLs in the total loan portfolio increased insignificantly to 19.2%, which is primarily explained by the contraction of the loan portfolio. Meanwhile, the bank enhanced its loss absorption capacity to above 30% of the loan portfolio, which is approximately double the current level. 
• The amount of restructured loans in 1Q 2010 decreased 11.6% to RUB 29 bln, which attests to the success of the Bank’s decision to restructure based on the borrower’s business viability assessment and improving the quality of collateral.

MDM Bank will release its interim consolidated financial statements per international financial reporting standards for the three-month period ended 31 March 2010 on Friday, 25 June 2010 by posting them on its website, followed by a conference call with Bank management at 5 p.m. Moscow time (2 p.m. London time, 9 a.m. New York time).

The Bank will be represented on the call by:

• Vadim Sorokin, CFO
• John McNaughton, Co-Head of Investment Banking

To receive instructions for dial-in and webcast, please go to the following link.

The financial statements and the press release will be published on 25 June 2010. T

The results presentation will be made available prior to the call on MDM Bank’s website, at the following links:

• Financial statements
• Press release
• Presentation

The call will be held in English. A recording and transcript of the call will be made available on the MDM Bank website.

The rating actions reflect MDM Bank’s ability to access liquidity, the fact it was able to survive the major asset quality stress posed by the crisis without requiring emergency capital support, and the Bank’s currently substantial loss absorption capacity.

On the upgrades, Fitch said: "MDM's strong capitalization meant that the bank could have absorbed 29% credit losses at end-Q110 before its regulatory capital would have fallen to the minimum allowed 10%. In addition, MDM's shareholders have stated their readiness to inject USD500m, if needed, to maintain the regulatory capital adequacy ratio at 12%. In Fitch's view, MDM's liquidity is ample, with cash and unpledged liquid securities accounting for approximately 16% of assets at end-Q110, and managed conservatively. MDM has strong corporate governance for a Russian bank and low related party lending, which are also credit positive."

MDM Bank CFO Vadim Sorokin added, “MDM Bank has always maintained conservatively high levels of tier one equity capital and liquid assets. We are pleased with Fitch Rating’s decision to upgrade MDM Bank’s ratings, as this is a sign that our cautious approach to capital and liquidity management has successfully brought us through the worst of the financial crisis. It is also a signal that the risks associated with our merger with URSA Bank last year are behind us. We believe that the new strategy adopted by MDM Bank will create an even stronger and more secure bank as we progress our business further.”

On behalf of the Russian Embassy, a welcoming speech was given by Consul Ambassador Evgeny Tomikhin. The MDM Bank delegation was headed by the Deputy CEO, Vadim Sorokin.
The decision to open the representative office was a logical step in MDM’s successfully developing co-operation with Chinese financial institutions.  The application to open a representative office had been approved by the China Banking Regulatory Commission after detailed consideration.

By opening a representative office in Beijing, MDM Bank gains the opportunity to offer exclusive products and quality services to its clients, as well as to help stimulate interbank and financial co-operation in the region.
The representative office will be tasked with further developing relations with clients who are increasingly involved in trade and investment projects with China, primarily with regards to client needs for account settlement operations and lending. The agreements between MDM Bank and Chinese financial institutions allow for the provision of trade and project financing services, as well as dollar and Yuan account settlements.  MDM Bank is also prepared to render versatile consulting services on co-operation with China.

Another important task of the representative office is the development and study of the local financial market.  The representative office serves as a link between MDM Bank and Chinese investors and bankers. The development dynamics of the Chinese economy and financial sector testifies to the prospects of this project.