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.

Over the course of 2009, MDM Bank assets grew by 22.4%, equity � by 49.9%, net loans increased by 21.5%, �and customer accounts � by 69.1%, of which retail deposits were up three-fold, mainly due to the merger of MDM Bank and URSA Bank in August 2009. �By now, the merger is effectively complete, the remaining tasks for 2010 being IT integration and the transition to the new brand both on track to be completed in the first quarter.

In the fourth quarter of 2009, MDM Bank earned a comprehensive income of RUB 3 847 m, that is substantially higher than in the third quarter. �The comprehensive income for full year amounted to RUB 358 m even after sizable provisioning charges in the first half of the year. Net interest margin of 6.9%* and cost to income ratio at 36.8%* as of the year-end attest to the Bank�s high profitability and efficiency. Key drivers of the Bank�s income statement in the fourth quarter of 2009 were trading income of around RUB 1.2 bn and the recovery of provisions in the amount of RUB 0.8 bn. The preemptive provisioning policy of the Bank led to reversal of provisions as early as in the fourth quarter of 2009, when the recoveries already exceeded impairment charges, making a positive contribution to the bottom line.

Over the fourth quarter, MDM Bank assets grew by 7.2%, while the equity was up by 6.6% compared to the third quarter of 2009.� The conservative lending policy, principally in corporate sector, resulted in loan portfolio contraction of 6.2% in the fourth quarter. Another factor behind the loan contraction was the repossession of collateral from its non-performing borrowers leading to �the increase in assets held for sale from RUB 4.8 bn in September of 2009 to RUB 8.3 bn at the year-end.

The growth of non-performing loans slowed significantly year-on-year allowing the Bank to reduce provisioning charges in the fourth quarter. As of 31 December 2009, non-performing loans made up 17.4% of gross loans, having slightly increased by RUB 3 bn in the last quarter. The policy of restructuring of bad loans based on the assessment of business resilience led to decrease in the restructured loan portfolio by more than 30% in the second half of the year down to RUB 32.8 bn, or 11.7% of the gross loan portfolio.

In 2009, MDM Bank kept a very high liquidity position standing at 27.3% of total assets as of 31 December 2009 and capital adequacy (21.3% as of 31 December 2009), making it one of the best capitalized banks among peers. This enables the Bank to keep a high loss absorption capacity in case of potential economic distress, at the same time positioning it for rapid growth should the recovery become sustainable.

MDM Bank remains committed to the strategic objective of increasing the share of customer accounts in its funding base, focusing on retail deposits in particular. The latter rose by 18.3% in 4Q09, and by 35.6% over the course of the full year, helping improve the loans to deposits ratio from 150% at the beginning of 2009 to 122% at the year-end.

High financial soundness and measured approach risk management of the Bank were appreciated in the recent rating action by Fitch Ratings agency, which put MDM Bank rating to a Rating Watch Positive. The Bank is currently rated at Ba2/Negative by Moody�s, B+/Stable by Standard and Poor�s, and BB-/RWP by Fitch.

In 2009, MDM Bank was named the Bank of the Year in Russia by The Banker magazine, and Global Finance magazine named MDM Bank among the 2010 World's Best Emerging Market Banks in Central and Eastern Europe. The merger of MDM and URSA Bank in August 2009 was recognized as the best merger in the financial sector by the Russian Finans. magazine, while Business New Europe magazine named the Bank�s USD250m syndicated loan of October 2009 as the best capital market borrowing of 2009 in Eastern Europe.

* calculation based on aggregated financial statements of MDM Bank and URSA Bank for 2008 and 2009.

• Vladislav Khokhlov, First Deputy CEO, CFO
• John McNaughton, Co-Head of Investment Banking

For registration to the call and webcast, please go to the following link

For the dial-in you can use the numbers listed below:

The financial statements and the press release will be published on 28 April 2010. 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.

This is the seventeenth year that the magazine has selected the top banking performers in emerging markets. Global Finance editors—with input from industry analysts, corporate executives and banking consultants—selected the best emerging market bank in the overall region and in 22 countries. The criteria for choosing the winners included growth in assets, profitability, strategic relationships, customer service, competitive pricing, and innovative products.

"We remain in an unusually challenging environment for banks and their customers," says Joseph Giarraputo, the publisher of Global Finance. "More than ever, customers are demanding superior competence from their banking partners. These are the banks best providing that competence."

The list of the best banks is published in the March 2010 issue, with the full text of an exclusive survey to be published in the May 2010 issue.

Between 2003 and 2008 MDM Bank had won a variety of Global Finance awards in different categories, but the decision this year to name MDM best overall bank in CEE Emerging Markets represents the pinnacle of the Bank’s achievements in the awards.

Global Finance, founded in 1987, has a circulation of 50,000 and over 250,000 readers in almost in 163 countries. Global Finance’s audience mainly includes chairmen, presidents, CEOs, CFOs, treasurers and other senior financial officers responsible for making investment and strategic decisions at multinational companies and financial institutions.

The Rating Watch Positive reflects Fitch’s expectation that the Bank’s rating is likely to be upgraded following the MDM Bank review, to be completed within the next three months.

According to Fitch, the rating action reflects MDM Bank’s ability to access liquidity, as well to survive the current crisis without requiring emergency capital support from shareholders or the Russian authorities.

This rating action, in the view of MDM Bank’s management, reflects its strong capital and liquidity positions, and high loss absorption capacity.

�MDM Bank was the first privately-owned Russian bank to sign an international syndication since the onset of the global credit crunch. <�> for much of the year it looked as if� the country�s banks, and especially those without the government backing, would be frozen out of the international� loan markets <�> MDM managed to break the logjam with its well-supported loan,� the bne editors mentioned.�

MDM Bank signed a USD 250 mln syndicated IFC B-loan facility on 30 October 2009. The Facility was launched at the initial amount of USD 175 mln equivalent, but was subsequently increased due to oversubscription and then scaled down to the final amount of USD 250 mln equivalent.� A total of 16 banks from 10 countries joined the Facility.� MDM Bank directs� the proceeds of this syndicated loan for trade-related financing and other trade-related projects undertaken by the Bank�s customers.

The full text of the article is available at

• http://www.businessneweurope.eu/story1932/Deals_of_the_Year_2009__Riders_on_the_storm

Business new europe (bne) is a business magazine published in the UK since 2006 and the only publication covering business, finance, economics and politics in the 30 countries of Central, Eastern and Southeast Europe, the Balkans and Central Asia.

MDM Bank’s new logo will feature an image of the sun reflecting the bank’s main values: reliability and stability, openness and partnership, a warm attitude to individual and corporate clients, and the accessibility and simplicity of the bank’s services. The motto “Moy Delovoy Mir” (My Business World), the first letters of which form the name of the bank, will remain unchanged.

The rebranding process will apply to bank signage and front desks in all of the 350 offices operating under the brands of merged MDM Bank and URSA Bank in 162 cities of Russia. To support the rebrand, there are plans to launch a number of communications events, including an advertising campaign, production of new informational materials and a corporate website upgrade. Bank office personnel will also have new elements introduced to their corporate style.

“The rebrand reflects the fact that the banks not only merged but also our dedication to understanding the interests, businesses and needs of our clients,” commented Chairman of the MDM Bank Board of Directors Oleg Vyugin. “We believe this has successfully been incorporated into our new visual style.”

“Our emphasis is on the quality and mutual benefit of the banking services we provide and, more importantly, on the atmosphere of friendliness and understanding,” said MDM Bank CEO Igor Kim.

“We had a challenging task of creating a bright, simple and memorable logo which would reflect the high professional abilities, technological level and the quality of services offered by the united bank, “ says Igor Lutz, Chief Creative Officer at BBDO Russia Group. “The main idea we used as a basis to develop the MDM Bank brand is the energy of partnership – the partnership between the client and the bank opening up new possibilities and leading to new achievements. We agreed on using an image of the sun, which since ancient times has had strong associations with gold and gave the round shape to coins. Moreover, sun is also a symbol of power, energy and success. It is an exceptionally friendly sign full of warmness, optimism and positive emotions.”

MDM Bank has already started informing its clients and partners about the logo change. Further information is available at www.mdm.ru/brand.

The ICMA is a self-regulatory organisation and trade association which represents constituents and practitioners in the international capital market worldwide. The ICMA’s members are located in more than 40 countries, including all of the world’s main financial centres. The ICMA performs a crucial central role in the market by providing and enforcing a self-regulatory code of industrydriven rules and recommendations which regulate issuance, trading and settlement in international fixed income and related instruments. The ICMA liaises closely with regulatory and governmental authorities, both at the national and supranational level, to ensure that financial regulation promotes efficiency and cost effectiveness in the capital markets.

Accession to the ICMA recognises MDM Bank’s position as an important international capital market participant.