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Bank “Center-invest”: INTERNATIONAL CO-OPERATION IN THE SOUTH OF RUSSIA

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CENTER-INVEST: INTERNATIONAL CO-OPERATION 1. Rostov region and Krasnodar Krai 2. Bank “Center-Invest” 3. SMEs: International Co-operation

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ECONOMIC DATA $ billion ROSTOV REGION (RR) AND KRASNODAR KRAI (KK)

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ROSTOV REGION (RR) AND KRASNODAR KRAI (KK)

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INDUSTRIES: Agriculture Coal mining Metallurgy Machinery Production of construction materials Food processing Light industries Oil refining Resorts and tourism ROSTOV REGION (RR) AND KRASNODAR KRAI (KK)

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ROSTOV REGION (RR) AND KRASNODAR KRAI (KK) Board of directors of the EBRD on the bancs of Don river (June 2003)

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Board of directors of the EBRD in “Center-invest” (June 2003) ROSTOV REGION (RR) AND KRASNODAR KRAI (KK)

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COMMERCIAL BANK «CENTER-INVEST» Number of SMEs clients: 4 000 Loan portfolio for SMEs: $ 48 mln

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COMMERCIAL BANK «CENTER-INVEST» 39% 61% Shareholders:

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CO-OPERATION WITH IFIs COMMERCIAL BANK «CENTER-INVEST»

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"The success of reforms in Russia depends on enthusiasm of people like those of Center-invest's team" German Gref  Minister of the Russian Federation for Economic Development and Trade "Commercial Bank "Center-invest" along with its infrastructure for support of the investment decision became "the lab for economic reforms" in the South of Russia" Eugeny Yasin  Scientific Supervisor of the Higher School of Economics "The presence of the bank "Center-invest" which successfully operates according to the international standards in the region is another evidence of favorable investment climate in Rostov Region" Vladimir Chub  Governor of Rostov Region COMMERCIAL BANK «CENTER-INVEST»

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STRATEGY very wide range of services for enterprises and population according to IAS on the basis of modern banking technologies COMMERCIAL BANK «CENTER-INVEST»

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INNOVATION CONSTANCY 1992 support of the privatization program 1993 formation of the regional securities market 1994 introduction of bills of exchange circulation 1995 formation of investment projects market 1996 solution of non-payment problem 1997 development of the regional small business support program, first auditing according to IAS 1998 elaboration of new banking technologies during the crises 1999 aggressive marketing program 2000 starting cooperation with international financial institutions, Bank issued international plastic cards 2001 participation in the international programs on transfering Russian banks to IAS 2002 putting into effect the agreements with EBRD, USAID, IFC, HERMES first-rate German state insurance company COMMERCIAL BANK «CENTER-INVEST»

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SEVEN YEARS OF IAS AUDIT RAS- Russian accounting standards; IAS- International accounting standards; IAS29- International accounting standards №29 “Accounting under hyperinflationary conditions” Since 1997, PricewaterhouseCoopers has been auditing the financial statements of Center-invest Bank in accordance with IAS. COMMERCIAL BANK «CENTER-INVEST»

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SERVICES While realizing its strategy the Bank “Center-invest” provides the following services: • Services to the enterprises; • Services to the individuals; • Lending to customers; • Operations on the securities market; • Foreign trade operations; • Support of the investment process in Rostov region and in Krasnodar Krai. COMMERCIAL BANK «CENTER-INVEST»

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SERVICES TO THE ENTERPRISES • operations with IFIs according to IAS • optimization of terms and conditions for the offered services (fees, operating mode, new types of services), enlargement of the branch network • intellectual support of customers' business COMMERCIAL BANK «CENTER-INVEST» Growth of Center-Invest bank clientele

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SERVICES: LENDING TO THE CUSTOMERS COMMERCIAL BANK «CENTER-INVEST» Mln. RUR Mln. RUR Mln. RUR

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RETAIL BANKING Plastic cards settlements; Special programs for students, holders of Bank's plastic cards; Loans to purchase a vehicle - 15.5 mln RUR; Mortgage lending - 6.1 mln RUR; Safekeeping in individual deposit boxes; Annual meetings with depositors of the Bank, veterans of World War II; Lottery for depositors (prizes: TV-sets, home appliances, PCs, cars, appartments); Expansion of the units network, utility payments processing; Modernization of the operational hall for the customers. COMMERCIAL BANK «CENTER-INVEST»

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OPERATIONS ON THE SECURITIES MARKET Operations with shares and bonds Operations with drafts Investment consulting of the clients Trust management COMMERCIAL BANK «CENTER-INVEST»

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FOREIGN TRADE OPERATIONS Documentary letters of credit, bank transfers and payments for collection; Utilisation of payment and agreement guarantees; Issuing guarantees for the clients to the customs offices of the Russian Federation amounted to $25 mln.; Export-import financing (in hard currency) of the clients with the essential principle of liquid collateral; Opening and operating ruble and foreign currency nominated accounts for non-residents; Foreign currency control in accordance with Russian legislative rules; Consulting the clients – participants of the international economic activity on performing their international operations. COMMERCIAL BANK «CENTER-INVEST»

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INVESTMENT POLICY Co-operation with regional administration on the programs for small- business support and investment programs; Participation in the programs for agricultural sector financing within federal and regional programs; Financing leasing operations; Leasing portfolio as a sum of the deals’ closures on 01.06.03 was equal to 335,8 mln. RUR.; Leasing of the equipment; Consulting enterprises on making business plans and investment projects. COMMERCIAL BANK «CENTER-INVEST»

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WORKING POTENTIAL Premises The Bank “Center-invest” is a proprietor of more than 10,000 sq. m of office premises, equipped according to the requirements of the Bank of Russia. In 2002 the Bank has purchased 6 hectars of land where its offices are situated. Equipment More than 300 units of the computers, servers of data bases on the platform of SUN and INTEL, 30 terminals of SUN RAY. Software SOLARIS, LINUX, Novell 3.12, SCO, WINDOWS NT, CITRIX METAFRAME. Telecommunications More than 60 pairs of the telephone lines of the city network, telephones of JSC “Rostovenergo”, optic-fiber telecommunication lines, telephones of Global One, dedicated channel for Internet (252 Kb speed), telegraph, telex, dedicated line of the regional network for data transmission in X25 standard. All the systems have appropriate reservation and protection. COMMERCIAL BANK «CENTER-INVEST»

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LEGISLATIVE BASE General license of the Bank of Russia #2225 dated 05.02.98; Authorization of the State Customs Committee of the Russian Federation #137 dated 1.06.01 for acting as a guarantor for its customers to the customs authorities; License for being a member of International payment system EUROPAY dated 10.06.97; Certificate of trust from the Rostov department of Ministry of taxes and duties of the Russian Federation; 7 years of audit by International Accounting Standards, performed by PriceWaterhouseCoopers; Participation in the project “Assistance to the reform of accounting system in banking sector” of USAID and Bank of Russia. COMMERCIAL BANK «CENTER-INVEST»

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ACTIVITY TECHNOLOGIES Innovation constancy Increasing of efficiency and acceleration of customers' business development Development of Bank's scientific efforts COMMERCIAL BANK «CENTER-INVEST»

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BRANCHES Aksay Bataysk Novocherkassk Rostov-on-Don Taganrog Azov Semikarakorsk Krasnodar Volgodonsk Kagalynickaya Kamensk-Shakhtinskyi Konstantinovsk Krasnyi Sulin Millerovo Proletarsk Salysk Zimlyansk Chaltyry Shakhty COMMERCIAL BANK «CENTER-INVEST»

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PERSONAL INFORMATION ABOUT CEO COMMERCIAL BANK «CENTER-INVEST»

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PERSONNEL The Bank is proud for its very qualified staff (as per 1.01.2003 –494 people), including: 3 academics of science; 13 Ph.D. and Candidates of science. 82% of the specialists have high education Average age of the employees is 41. All the employees constantly increase their qualification: In 2002 64 specialists of the Bank attended more than 50 seminars and conferences, including international ones. education of new employees is held regularly in the branches and affiliates of the Bank. Further growth of the Bank “Center-invest” is based on the utilization of new technologies in each subsidiary of the Bank, increase of the employees’ qualification, competitive selection of the interns and candidates for the vacancies. COMMERCIAL BANK «CENTER-INVEST»

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MANAGEMENT Internal audit department controls all the informational chain of the data processing, prepares reports for the Board of Directors and along with the divisions of the Bank provides measures for reducing risks of banking operations. Accounting department supervises proper reflection of the banking operations in the statements. Legal department controls judicial transparency and adequacy of the signed agreements. Security department controls legacy of the clients’ and employee’s activity on the basis of analysis of the special information. Risk management committee evaluates overall risks of the proposed operations. Asset and liability management department controls liquidity level of the Bank and its divisions on short- and long term basis. Heads of the departments perform control over activity of their employees, their appropriate fulfillment of the duties and assigned tasks. Board of executives controls activity of all the divisions of the Bank on the basis of information, supplied by the heads of departments as well as collective valuation of the results of departments’ work. By the results of discussion Board of executives makes decision on stimulating the departments. COMMERCIAL BANK «CENTER-INVEST»

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BALANCE SHEET COMMERCIAL BANK «CENTER-INVEST» Mln.RUR.

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INCOME STATEMENT COMMERCIAL BANK «CENTER-INVEST» Mln.RUR.

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KEY INDICATORS COMMERCIAL BANK «CENTER-INVEST» Mln.RUR.

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SMEs: INTERNATIONAL CO-OPERATION CENTER-INVEST BANK and IFIs Southern federal district SOUTH RUSSIA’S MARKET

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International Financial Institute Large-sized projects financing Micro financing Investment for SMEs subcontracts for SMEs financing of parallel the projects partner-banks SMEs: INTERNATIONAL CO-OPERATION

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Russian SMEs European SMEs European & Russian SMEs SMEs: INTERNATIONAL CO-OPERATION

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SMEs: INTERNATIONAL CO-OPERATION

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IFC EBRD USAID HERMES WB SIMEST Commerzbank AG IMB spelliccia@usaid.gov enassim@ifc.org geigerk@ebrd.com SMEs: INTERNATIONAL CO-OPERATION