IMPORTANT NOTICE IMPORTANT: You must read the following before continuing: The following applies to the attached document following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the document. In accessing the attached document, you agree to be bound by the following terms and conditions, including any modifications to them, any time you receive any information from us as a result of such access. Definitions set out in this Important Notice apply only as used herein and not to the attached document following this page. THE ATTACHED DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED BELOW AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THE ATTACHED DOCUMENT MAY ONLY BE DISTRIBUTED OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT U.S. PERSONS AS DEFINED IN, AND IN RELIANCE ON, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE OR IN PART IS PROHIBITED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN AN OFFSHORE TRANSACTION TO A PERSON THAT IS NOT A U.S. PERSON IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. Confirmation of your Representation: In order to be eligible to view the attached document or make an investment decision with respect to the securities, you must be a person other than a U.S. person (within the meaning of Regulation S under the Securities Act). By accepting the e-mail and accessing the attached document, you shall be deemed to have represented to us that you are not a U.S. person and that you consent to delivery of such document by electronic transmission. The attached document may only be provided to persons in the United Kingdom in circumstances where Section 21(1) of the Financial Services and Markets Act 2000 does not apply to RSHB Capital S.A. and Russian Agricultural Bank. Accordingly, the attached document is being distributed only to and directed only at (i) persons who are outside the United Kingdom, (ii) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (the "Order"), (iii) high net worth entities and other persons falling within Article 49(2)(a) to (d) of the Order, or (iv) those persons to whom it may otherwise lawfully be distributed in accordance with the Order (all such persons together being referred to as " relevant persons"). The attached document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which the attached document relates is available only to relevant persons and will be engaged in only with relevant persons. Under no circumstances shall the attached document constitute an offer to sell or the solicitation of an offer to buy, and there shall not be a sale of the securities being offered, in any jurisdiction in which such offer, solicitation or sale would be unlawful. Recipients of the attached document who intend to subscribe for or purchase the securities described herein (the "Series 9 Notes") are reminded that any subscription or purchase may only be made on the basis of the information contained in the attached document. The attached document may only be provided to persons in the United Kingdom in circumstances where section 21(1) of the Financial Services and Markets Act 2000 does not apply to the Issuer. If a jurisdiction requires that the offering be made by a licensed broker or dealer and Citigroup Global Markets Limited (the "Lead Manager") or any affiliate of the Lead Manager is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Lead Manager or its affiliate on behalf of the Issuer in that jurisdiction. Under Russian law, the Series 9 Notes are securities of a foreign issuer. The Series 9 Notes are not eligible for initial offering and public circulation in the Russian Federation. Neither the issue of the Series 9 Notes nor a securities prospectus in respect of the Series 9 Notes has been, or is intended to be, registered with the Federal Service for Financial Markets of the Russian Federation. The information provided in the attached document is not an offer, or an invitation to make offers, to sell, exchange or otherwise transfer the Series 9 Notes in the Russian Federation or to or for the benefit of any Russian person or entity. You are reminded that the attached document has been delivered to you on the basis that you are a person into whose possession the attached document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver the attached document to any other person.
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IMPORTANT NOTICE
IMPORTANT: You must read the following before continuing: The following applies to the attached document following
this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the
document. In accessing the attached document, you agree to be bound by the following terms and conditions, including any
modifications to them, any time you receive any information from us as a result of such access. Definitions set out in this
Important Notice apply only as used herein and not to the attached document following this page.
THE ATTACHED DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED
BELOW AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THE ATTACHED DOCUMENT
MAY ONLY BE DISTRIBUTED OUTSIDE THE UNITED STATES TO PERSONS THAT ARE NOT U.S. PERSONS AS
DEFINED IN, AND IN RELIANCE ON, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE
ATTACHED DOCUMENT IN WHOLE OR IN PART IS PROHIBITED. FAILURE TO COMPLY WITH THIS
DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER
JURISDICTIONS.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY
JURISDICTION. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE
SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER
JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN AN OFFSHORE TRANSACTION TO A PERSON THAT IS NOT A U.S. PERSON IN ACCORDANCE
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT.
Confirmation of your Representation: In order to be eligible to view the attached document or make an investment decision
with respect to the securities, you must be a person other than a U.S. person (within the meaning of Regulation S under the
Securities Act). By accepting the e-mail and accessing the attached document, you shall be deemed to have represented to us
that you are not a U.S. person and that you consent to delivery of such document by electronic transmission.
The attached document may only be provided to persons in the United Kingdom in circumstances where Section 21(1) of the
Financial Services and Markets Act 2000 does not apply to RSHB Capital S.A. and Russian Agricultural Bank. Accordingly,
the attached document is being distributed only to and directed only at (i) persons who are outside the United Kingdom, (ii)
persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, (the "Order"), (iii) high net worth entities and other
persons falling within Article 49(2)(a) to (d) of the Order, or (iv) those persons to whom it may otherwise lawfully be
distributed in accordance with the Order (all such persons together being referred to as "relevant persons"). The attached
document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons.
Any investment or investment activity to which the attached document relates is available only to relevant persons and will be
engaged in only with relevant persons.
Under no circumstances shall the attached document constitute an offer to sell or the solicitation of an offer to buy, and there
shall not be a sale of the securities being offered, in any jurisdiction in which such offer, solicitation or sale would be
unlawful. Recipients of the attached document who intend to subscribe for or purchase the securities described herein (the
"Series 9 Notes") are reminded that any subscription or purchase may only be made on the basis of the information contained
in the attached document. The attached document may only be provided to persons in the United Kingdom in circumstances
where section 21(1) of the Financial Services and Markets Act 2000 does not apply to the Issuer.
If a jurisdiction requires that the offering be made by a licensed broker or dealer and Citigroup Global Markets Limited (the
"Lead Manager") or any affiliate of the Lead Manager is a licensed broker or dealer in that jurisdiction, the offering shall be
deemed to be made by the Lead Manager or its affiliate on behalf of the Issuer in that jurisdiction.
Under Russian law, the Series 9 Notes are securities of a foreign issuer. The Series 9 Notes are not eligible for initial offering
and public circulation in the Russian Federation. Neither the issue of the Series 9 Notes nor a securities prospectus in respect
of the Series 9 Notes has been, or is intended to be, registered with the Federal Service for Financial Markets of the Russian
Federation. The information provided in the attached document is not an offer, or an invitation to make offers, to sell,
exchange or otherwise transfer the Series 9 Notes in the Russian Federation or to or for the benefit of any Russian person or
entity.
You are reminded that the attached document has been delivered to you on the basis that you are a person into whose
possession the attached document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are
located and you may not, nor are you authorised to, deliver the attached document to any other person.
The attached document does not constitute, and may not be used in connection with, an offer or solicitation in any place where
offers or solicitations are not permitted by law.
The attached document has been sent to you in an electronic form. You are reminded that documents transmitted via this
medium may be altered or changed during the process of electronic transmission and consequently none of Russian
Agricultural Bank, RSHB Capital S.A., the Lead Manager nor any person who controls any of them nor any director, officer,
employee nor agent of it or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any
alterations to the document distributed to you in electronic format.
DRAWDOWN PROSPECTUS
dated 15 February 2012
prepared in connection with the
RUB 10,000,000,000 8.625 per cent. Loan Participation Notes due 2017 (the "Series 9 Notes")
Issued under the
U.S.$10,000,000,000
Programme for the Issuance of Loan Participation Notes
to be issued by, but with limited recourse to,
RSHB CAPITAL S.A.
for the purpose of financing loans to
Russian Agricultural Bank
(the "Programme")
This Drawdown Prospectus (which must be read and construed as one document in conjunction with the entirety of the base prospectus dated 17 May
2011 prepared in connection with the Programme (the "Base Prospectus") and incorporated herein by reference - see "Documents Incorporated by
Reference" beginning on page 2) (the "Drawdown Prospectus") is prepared in connection with the issue of the Series 9 Notes by RSHB Capital S.A.
(the "Issuer") under the Programme. The Series 9 Notes are being issued for the sole purpose of financing a senior loan (the "Series 9 Loan") to
Russian Agricultural Bank ("RAB"), as borrower, on the terms of an amended and restated senior facility agreement between the Issuer and RAB
dated 17 May 2011 (the "Facility Agreement") as amended and supplemented by a senior loan supplement dated 15 February 2012 (the "Series 9
Loan Supplement") in respect of the Series 9 Loan the form of which is set out herein (together with the Facility Agreement, the "Series 9 Loan
Agreement").
Subject to the provisions of an amended and restated principal trust deed dated 17 May 2011 (the "Principal Trust Deed") between the Issuer and
BNY Mellon Corporate Trustee Services Limited (the "Trustee") as amended in respect of the Series 9 Notes by a supplemental trust deed dated 17
February 2012 (together with the Principal Trust Deed, the "Series 9 Trust Deed"), the Issuer will (a) charge, in favour of the Trustee, by way of first
fixed charge as security for its payment obligations in respect of the Series 9 Notes and under the Series 9 Trust Deed, certain of its rights and
interests in respect of the Series 9 Loan Agreement; and (b) assign, in favour of the Trustee, certain of its other rights under the Series 9 Loan
Agreement but excluding any Reserved Rights (as defined in the Terms and Conditions of the Series 9 Notes – see "Terms and Conditions of the
Series 9 Notes"), in each case for the benefit of the holders of the Series 9 Notes (the "Noteholders"), all as more fully described under "Overview of
the Programme" in the Base Prospectus.
In each case where amounts of principal, interest and additional amounts (if any) are stated to be payable in respect of the Series 9 Notes, the
obligation of the Issuer to make any such payment constitutes an obligation only to account to Noteholders, on each date upon which such amounts of
principal, interest and additional amounts (if any) are due in respect of the Series 9 Notes, for an amount equivalent to all principal, interest and
additional amounts (if any) actually received from RAB by or for the account of the Issuer pursuant to the Series 9 Loan Agreement. The Issuer will
have no other financial obligation under the Series 9 Notes. Noteholders will be deemed to have accepted and agreed that they will be relying
solely on the credit and financial standing of RAB in respect of payment obligations of the Issuer under the Series 9 Notes.
The Series 9 Loan will rank pari passu in right of payment with RAB's other outstanding unsecured and unsubordinated indebtedness. Other than as
described in this Drawdown Prospectus and the Series 9 Trust Deed, Noteholders have no proprietary or other direct interest in the Issuer's rights
under or in respect of the Series 9 Loan Agreement or the Series 9 Loan. Subject to the terms of the Series 9 Trust Deed, no Noteholder will have any
rights to enforce any of the provisions in the Series 9 Loan Agreement or have direct recourse to RAB except through action by the Trustee.
This Drawdown Prospectus is to be read and construed in conjunction with the documents which are deemed to be incorporated herein by
reference (see "Documents Incorporated by Reference" beginning on page 2), including the entirety of the Base Prospectus.
AN INVESTMENT IN THE SERIES 9 NOTES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 3.
THE SERIES 9 NOTES AND THE CORRESPONDING SERIES 9 LOAN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, SUBJECT TO CERTAIN
EXCEPTIONS, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ("REGULATION S")). THE SERIES 9 NOTES
MAY ONLY BE OFFERED AND SOLD TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION
S. THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE INVESTMENT COMPANY ACT. SEE
"SUBSCRIPTION AND SALE" AND "TRANSFER RESTRICTIONS" IN THE BASE PROSPECTUS (INCORPORATED BY
REFERENCE HEREIN) FOR FURTHER DETAILS.
This Drawdown Prospectus has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/EC (the "Prospectus
Directive"). The Central Bank of Ireland only approves this Drawdown Prospectus as meeting the requirements imposed under Irish and EU law
pursuant to the Prospectus Directive. Application has been made to The Irish Stock Exchange Limited (the "Irish Stock Exchange") for the Series 9
Notes to be admitted to the Official List and trading on its regulated market (the "Main Securities Market"). The Main Securities Market is a
regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments. There
is no guarantee that a trading market in the Series 9 Notes will develop or be maintained. References to the Series 9 Notes being "listed" and all
related references shall mean that the Series 9 Notes have been admitted to trading on the Main Securities Market.
The Series 9 Notes will be offered and sold in minimum denominations of RUB 3,000,000 and integral multiples of RUB 100,000 in excess thereof.
The Series 9 Notes will initially be represented by interests in a global unrestricted Note in registered form (the "RUB Global Note Certificate")
registered in the name of the Bank of New York Depositary (Nominees) Limited and will be deposited on or around 17 February 2012 with a
common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream"). Interests in the RUB
Global Note Certificate will be shown on, and transfers effected only through, records maintained by Euroclear and/or Clearstream. Individual note
certificates ("Individual Note Certificates") in registered form will only be available in certain limited circumstances as described herein.
Lead Manager
Citigroup
- iii -
This Drawdown Prospectus (when read and construed in conjunction with the Base Prospectus and other
documents incorporated herein by reference) comprises a prospectus for the purposes of Article 5.4 of the
Prospectus Directive and for the purpose of giving information with regard to the Issuer, RAB and RAB and
its subsidiaries and associates taken as a whole (the "RAB Group") which, according to the particular nature
of the Issuer, RAB, the RAB Group, the Series 9 Notes and the Series 9 Loan, is necessary to enable
investors to make an informed assessment of the assets and liabilities, financial position, profit and losses or
prospects of the Issuer, RAB and the RAB Group.
Each of the Issuer and RAB accepts responsibility for the information contained in this Drawdown
Prospectus. To the best of the knowledge and belief of each of the Issuer and RAB (having taken all
reasonable care to ensure that such is the case) the information contained in this Drawdown Prospectus is in
accordance with the facts and does not omit anything likely to affect the import of such information.
RAB's legal name is Russian Agricultural Bank and its registered address is 3 Gagarinsky Lane, 119034
Moscow, the Russian Federation. RAB is registered under main state registration number 1027700342890.
The phone number of RAB is +7 495 662 1599.
The Issuer's legal name is RSHB Capital S.A., the address of the Issuer's registered office is 46 A, Avenue
J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg and it is registered with the Register of
Commerce and Companies of Luxembourg under number B.111.968. The phone number of the Issuer is
+352 427 1711.
Each of RAB and the Issuer has derived certain information in this Drawdown Prospectus, including certain
information concerning the Russian banking market and its competitors, which in each case may include
estimates or approximations, from publicly available information, including industry publications, market
research, press releases, filings under various securities laws and official data published by certain Russian
Government agencies, such as the Central Bank of the Russian Federation (the "CBR"), the Ministry of
Economic Development of the Russian Federation and the Russian Committee for State Statistics. Each of
RAB and the Issuer has accurately reproduced such information. As far as each of the Issuer and RAB are
aware, no facts have been omitted that would render the reproduced information inaccurate or misleading.
However, RAB and the Issuer have relied on the accuracy of such information without carrying out
independent verification and do not accept responsibility for the accuracy of such information. The official
data published by Russian federal, regional and local governments may be substantially less complete or
researched than data published by governmental agencies of member states of the Organisation for Economic
Co-Operation and Development (the "OECD"). Official statistics may be compiled on different bases than
those used in the OECD countries. Any discussion of matters relating to the Russian Federation in this
Drawdown Prospectus may, therefore, be subject to uncertainty due to concerns about the completeness or
reliability of available official and public information. See "Risk Factors – Economic Risks – RAB has not
independently verified official data from Russian Government agencies, nor has it independently verified
information regarding the banking sector" in the Base Prospectus.
To the extent that there is any inconsistency between (a) any statement in this Drawdown Prospectus and (b)
any statement in the Base Prospectus, the statement in this Drawdown Prospectus will prevail in respect of
the Series 9 Notes only.
This Drawdown Prospectus does not constitute an offer of, or an invitation by or on behalf of, the Issuer,
RAB, the Trustee or Citigroup Global Markets Limited (the "Lead Manager") to subscribe for or purchase
any of the Series 9 Notes.
- iv -
The distribution of this Drawdown Prospectus and the offer or sale of the Series 9 Notes in certain
jurisdictions may be restricted by law. Persons into whose possession this Drawdown Prospectus comes are
required by the Issuer, RAB, the RAB Group and the Lead Manager to inform themselves about and to
observe any such restrictions. Further information with regard to restrictions on offers and sales of the Series
9 Notes and the distribution of this Drawdown Prospectus is set out under "Issue Terms of the Series 9
Notes" and "Subscription and Sale".
Under Russian law, the Series 9 Notes are securities of a foreign issuer. The Series 9 Notes are not eligible
for offering and circulation in the Russian Federation unless otherwise permitted by Russian law. No sale,
exchange or transfer of the Series 9 Notes may take place in the Russian Federation or to or for the benefit of
any Russian person or entity unless otherwise permitted by Russian law. Neither the issue of the Series 9
Notes nor a securities prospectus in respect of the Series 9 Notes has been, or is intended to be, registered in
the Russian Federation. The information set forth in this Drawdown Prospectus is not an offer of, or an
invitation to make offers, sell, exchange or otherwise transfer, the Series 9 Notes in the Russian Federation
or to or for the benefit of any Russian person or entity. Information set forth in this Drawdown Prospectus is
not an advertisement of the Series 9 Notes in the Russian Federation and is not intended to create or maintain
an interest in the Issuer or the Series 9 Notes or to facilitate any sale, exchange or transfer of the Series 9
Notes in the Russian Federation or to or for the benefit of any Russian person or entity.
No person is authorised to provide any information or to make any representation not contained in this
Drawdown Prospectus and any information or representation not so contained must not be relied upon as
having been authorised by or on behalf of any of the Issuer, RAB, the RAB Group, the Trustee or the Lead
Manager. Neither the delivery of this Drawdown Prospectus nor any sale made in connection herewith shall,
under any circumstances, create any implication that there has been no change in the affairs of the Issuer,
RAB or the RAB Group since the date hereof or that there has been no adverse change (financial or
otherwise) in the condition of the Issuer, RAB or the RAB Group since the date hereof. The delivery of this
Drawdown Prospectus at any time does not imply that the information set forth in it is correct as of any time
after its date.
None of RAB's website, any website of any member of the RAB Group nor any websites referred to in this
Drawdown Prospectus form part of this Drawdown Prospectus.
The Lead Manager has not separately verified the information contained in this Drawdown Prospectus. The
Lead Manager makes no representation, express or implied, or accept any responsibility, with respect to the
accuracy or completeness of any of the information in this Drawdown Prospectus. The Lead Manager shall
not be deemed to have approved the contents of this Drawdown Prospectus nor be deemed to have made any
representation, express or implied, or accept any responsibility, with respect to the accuracy or completeness
of any of the information in this Drawdown Prospectus. In particular, this Drawdown Prospectus is not
intended, and does not, apply to any Notes issued under the Programme other than the Series 9 Notes. This
Drawdown Prospectus is not intended to provide the basis of any credit or other evaluation and should not be
considered as a recommendation by any of the Issuer, RAB, the Trustee or the Lead Manager that any
recipient of this Drawdown Prospectus or any financial statements should purchase the Series 9 Notes. Any
potential purchaser of the Series 9 Notes should determine for itself the relevance of the information
contained in this Drawdown Prospectus, read and construed in conjunction with the Base Prospectus and
other documents deemed incorporated herein by reference, and its purchase of the Series 9 Notes should be
based upon such investigation as it deems necessary. The Lead Manager has not undertaken to review the
financial condition or affairs of RAB or the Issuer while the Series 9 Notes are outstanding nor to advise any
investor or potential investor in the Series 9 Notes of any information coming to the attention of the Lead
- v -
Manager. Furthermore, none of the Issuer, RAB, the Trustee, the Lead Manager or any of their respective
representatives is making any representation to any offeree or purchaser of the Series 9 Notes regarding the
legality of an investment by such offeree or purchaser under relevant legal investment or similar laws. Any
investor should consult with its own advisers as to the legal, tax, business, financial and related aspects of
purchase of the Series 9 Notes.
Prospective purchasers must comply with all laws that apply to them in any place in which they buy, offer or
sell any Series 9 Notes or possess this Drawdown Prospectus or the Base Prospectus. Persons into whose
possession this Drawdown Prospectus or the Base Prospectus comes are required by RAB, the RAB Group,
the Issuer, the Trustee and the Lead Manager to inform themselves about and to observe such restrictions.
Any consents or approvals that are needed in order to purchase any of the Series 9 Notes must be obtained.
RAB, the RAB Group, the Issuer, the Trustee and the Lead Manager are not responsible for compliance with
these legal requirements. The appropriate characterisation of any of the Series 9 Notes under various legal
investment restrictions, and thus the ability of investors subject to these restrictions to purchase such Series 9
Notes, is subject to significant interpretative uncertainties.
This Drawdown Prospectus is only being distributed to and is only directed at (i) persons who are outside the
United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worth entities, and
other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as "relevant persons"). The Series 9 Notes are only available to,
and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Series 9 Notes will be
engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this
Drawdown Prospectus or any of its contents, or on the Base Prospectus.
This Drawdown Prospectus contains ratings of RAB, as well as ratings of securities or issuers of securities
held by RAB, that are provided by ratings agencies. A rating is not a recommendation to buy, sell or hold
securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating
agency. In general, European regulated investors are restricted from using a rating for regulatory purposes
unless such rating is issued by a credit rating agency established in the European Community and registered
under Regulation (EC) No. 1060/2009 of the European Parliament and of the Council dated 16 September
2009 on credit rating agencies (the "CRA Regulation") and such registration has not been withdrawn or
suspended, subject to transitional provisions that apply in certain circumstances whilst the registration
application is pending. Such general restriction will also apply in the case of credit ratings issued by non-EU
credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating
agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such
endorsement action or certification, as the case may be, has not been withdrawn or suspended). Fitch Ratings
CIS Limited ("Fitch") is a credit rating agency established in the European Union and is registered under
Regulation (EC) No. 1060/2009 (as amended). Moody's Investors Service Limited ("Moody's") is a credit
rating agency established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as
amended).
In connection with the issue of the Series 9 Notes, the Stabilising Manager (as defined in the Issue
Terms of the Series 9 Notes set out herein), or persons acting on behalf of the Stabilising Manager, may
over-allot the Series 9 Notes or effect transactions with a view to supporting the market price of the
Series 9 Notes at a level higher than that which might otherwise prevail. However, there is no
assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will
undertake stabilisation action. Any stabilisation action may begin on or after the date on which
- vi -
adequate public disclosure of the terms of the offer of the Series 9 Notes is made and, if begun, may be
ended at any time, but it must end no later than the earlier of 30 days after the Issue Date and 60 days
after the date of allotment of the Series 9 Notes. Any stabilisation action or over-allotment must be
conducted by the Stabilising Manager in accordance with all applicable laws and rules.
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY THE LEAD
MANAGER AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET
FORTH IN THIS DRAWDOWN PROSPECTUS, AND NOTHING CONTAINED IN THIS
DRAWDOWN PROSPECTUS IS, OR SHALL BE RELIED UPON AS, A PROMISE OR
REPRESENTATION, WHETHER AS TO THE PAST OR THE FUTURE. TO THE FULLEST
EXTENT PERMITTED BY LAW THE LEAD MANAGER DOES NOT ACCEPT ANY
RESPONSIBILITY FOR THE CONTENTS OF THIS DRAWDOWN PROSPECTUS OR FOR ANY
OTHER STATEMENT, MADE OR PURPORTED TO BE MADE BY THE LEAD MANAGER OR
ON ITS BEHALF IN CONNECTION WITH THE ISSUER, RAB OR THE RAB GROUP OR IN
CONNECTION WITH THE ISSUE AND OFFERING OF THE SERIES 9 NOTES. THE LEAD
MANAGER ACCORDINGLY DISCLAIMS ALL AND ANY LIABILITY WHETHER ARISING IN
TORT OR CONTRACT OR OTHERWISE (SAVE AS REFERRED TO ABOVE) WHICH IT
MIGHT OTHERWISE HAVE IN RESPECT OF THIS DRAWDOWN PROSPECTUS OR ANY
SUCH STATEMENT.
ANY PERSON CONTEMPLATING MAKING AN INVESTMENT IN ANY SERIES 9 NOTES
MUST MAKE ITS OWN INVESTIGATION AND ANALYSIS OF THE CREDITWORTHINESS OF
RAB, THE RAB GROUP AND THE ISSUER AND ITS OWN DETERMINATION OF THE
SUITABILITY AND RISKS OF ANY SUCH INVESTMENT, WITH PARTICULAR REFERENCE
TO ITS OWN INVESTMENT OBJECTIVES AND EXPERIENCE AND ANY OTHER FACTORS
WHICH MAY BE RELEVANT TO IT IN CONNECTION WITH SUCH INVESTMENT.
THE SERIES 9 NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S.
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN
THE UNITED STATES OR ANY OTHER U.S. REGULATORY AUTHORITY, NOR HAVE ANY
OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE
SERIES 9 NOTES OR THE ACCURACY OR THE ADEQUACY OF THIS DRAWDOWN
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN
THE UNITED STATES.
- 1 -
CONTENTS
CLAUSE PAGE
DOCUMENTS INCORPORATED BY REFERENCE.......................................................................... 2
January 2011 ................................................................................................................................. 30.63 29.67
February 2011 ............................................................................................................................... 29.80 28.94
March 2011 ................................................................................................................................... 28.90 28.16
April 2011 ..................................................................................................................................... 28.52 27.50
May 2011 ...................................................................................................................................... 28.48 27.26
June 2011 ...................................................................................................................................... 28.35 27.68
July 2011 ...................................................................................................................................... 28.38 27.44
August 2011 .................................................................................................................................. 29.45 27.52
September 2011 ............................................................................................................................ 32.46 28.89
October 2011 ................................................................................................................................ 32.68 29.90
November 2011 ............................................................................................................................ 31.58 30.10
- 12 -
December 2011 ............................................................................................................................. 32.20 30.81
January 2012 ................................................................................................................................. 31.93 30.36
Source: www.cbr.ru (CBR)
The official Rouble/U.S. Dollar exchange rate quoted by the CBR on 30 September 2011 was
31.88 Roubles per U.S.$1.00.
Rounding
Some numerical figures included in this Drawdown Prospectus have been subject to rounding
adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that preceded them. Unless otherwise specified, all
percentages have been rounded to the nearest one-tenth of one per cent.
Condensed Consolidated Interim Statement of Financial Position………………………………… ..................................1Condensed Consolidated Interim Statement of Comprehensive Income…………………………. ..................................2Condensed Consolidated Interim Statement of Changes in Equity……………………………….....................................3Condensed Consolidated Interim Statement of Cash Flows……………………………………….. ..................................4
SELECTED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 Introduction.........................................................................................................................................................52 Operating Environment of the Group..................................................................................................................53 Summary of Significant Accounting Policies.......................................................................................................64 Critical Accounting Estimates, and Judgements in Applying Accounting Policies ..............................................75 New Accounting Pronouncements......................................................................................................................86 Financial Instruments Designated at Fair Value through Profit or Loss ............................................................127 Loans and Advances to Customers..................................................................................................................138 Due to Other Banks ..........................................................................................................................................149 Other Borrowed Funds and Subordinated Debts..............................................................................................1410 (Losses net of Gains)/Gains less Losses from Non-banking Activities .............................................................1611 Significant Risk Concentrations ........................................................................................................................1712 Segment Analysis .............................................................................................................................................1813 Contingencies and Commitments.....................................................................................................................2114 Derivative Financial Instruments.......................................................................................................................2315 Related Party Transactions ..............................................................................................................................2516 Disposal of Subsidiaries and Groups Classified as Held for Sale.....................................................................2717 Events after the End of the Reporting Period ...................................................................................................28
F-3
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F-4
Note
In millions of Russian Roubles
ASSETSCash and cash equivalentsMandatory cash balances with the Central Bank of the RussianFederation
Trading securitiesRepurchase receivablesFinancial instruments designated at fair value through profit orloss 6
Derivative financial instruments 14Due from other banksLoans and advances to customers 7Investment securities available for saleInvestment securities held to maturityDeferred income tax assetIntangible assetsPremises and equipmentCurrent income tax prepaymentOther assetsAssets of disposal groups held for sale 16
TOTAL ASSETS
LIABILITIESDerivative financial instruments 14Due to other banks 8Customer accountsPromissory notes issuedOther borrowed funds 9Deferred income tax liabilityCurrent income tax liabilityOther liabilitiesSubordinated debts 9Liabilities directly associated with disposal groups held for sale 16
TOTAL LIABILITIES
EQUITYShare capitalRevaluation reserve for premisesRevaluation reserve for investment securities available for saleRetained earnings
Equity attributable to the Bank's shareholderNon-controlling interest
TOTAL EQUITY
TOTAL LIABILITIES A EQUITY
Russian Agricultural Bank GroupCondensed Consolidated Interim Statement of Financial Position
Net interest income 40 650 36 985 14 376 13 434Provision for loan impairment (17 973) (20 764) (5 287) (7 855)
Net interest income after provision for loanimpairment 22 677 16 221 9 089 5 579
Fee and commission income 3 328 2 285 1 342 859Fee and commission expense (401) (280) (170) (116)(Losses net of gains)/gains less losses arising from
trading securities (74) 739 (1) (74)(Losses net of gains)/gains less losses arising from
financial instruments designated at fair value throughprofit or loss (783) (136) (1 607) 203
Gains less losses arising from disposal of investmentsecurities available for sale 248 341 147 235
Foreign exchange translation (losses net ofgains)/gains less losses (6 102) (1 107) (16 183) 2 219
Gains less losses/(losses net of gains) from foreignexchange swaps with settlement dates of more than30 working days 4 112 450 16 249 (1 317)
(Losses net of gains)/gains less losses arising fromother derivative financial instruments (168) (186) 4 (19)
(Losses net of gains)/gains less losses arising fromdealings in foreign currencies (1 109) 195 (1 414) 103
(Provision for)/recovery of other assets impairment (70) 158 (15) (49)Gains from early redemption of other borrowed funds 15 36 21 15(Losses net of gains)/gains less losses from non-
banking activities 10 (600) 159 75 (310)Gains on disposal of subsidiaries 16 21 - - -Other operating income 214 215 29 93Administrative and other operating expenses (21 032) (16 965) (7 432) (5 565)
Other comprehensive (expense)/income:Securities available for sale:- Revaluation of securities at fair value during the period (1 459) 94 (2 068) 1- Realised revaluation reserve (at disposal) (248) (341) (147) (235)Income tax recorded directly in other comprehensive
income 341 48 443 46
Other comprehensive expense for the period, net oftax (1 366) (199) (1 772) (188)
Total comprehensive (expense)/income for theperiod (1 330) 1 484 (1 747) 1 332
Profit/(loss) is attributable to:Shareholder of the Bank 295 1 685 70 1 578Non-controlling interest (259) (2) (45) (58)
Profit for the period 36 1 683 25 1 520
Total comprehensive (expense)/income isattributable to:
Shareholder of the Bank (1 071) 1 486 (1 702) 1 390Non-controlling interest (259) (2) (45) (58)
Total comprehensive (expense)/income for theperiod (1 330) 1 484 (1 747) 1 332
F-6
Russian Agricultural Bank GroupCondensed Consolidated Interim Statement of Changes in Equity
The notes set out on pages 5 to 28 form an integral part of these condensed consolidated interim financial statements 3
In millions of Russian Roubles
Attributable to shareholder of the Bank Non-controlling
interest
Total equity
Sharecapital
Revaluationreserve for
premises
Revaluationreserve forsecurities
available forsale
Retainedearnings
Total
Balance at 1 January 2010 106 973 842 14 6 572 114 401 1 135 115 536
Total comprehensive (expense)/income for the period, net oftax - - (199) 1 685 1 486 (2) 1 484
Balance at 30 September 2010 (unaudited) 107 798 824 (185) 8 043 116 480 1 133 117 613
Balance at 1 January 2011 108 798 933 (101) 6 851 116 481 1 117 117 598
Total comprehensive expense for the period, net of tax - - (1 366) 295 (1 071) (259) (1 330)Realised revaluation reserve for premises, net of tax - (46) - 46 - - -Dividends declared - - - (253) (253) - (253)
Balance at 30 September 2011 (unaudited) 108 798 887 (1 467) 6 939 115 157 858 116 015
The dividends declared were fully paid in respective periods.
F-7
Russian Agricultural Bank GroupCondensed Consolidated Interim Statement of Cash Flows
The notes set out on pages 5 to 28 form an integral part of these condensed consolidated interim financialstatements 4
(Unaudited)
In millions of Russian Roubles
Note Nine monthsended 30
September 2011
Nine monthsended 30
September 2010
Cash flows from operating activitiesInterest received 75 221 73 061Interest paid (38 224) (36 444)Income received from trading in securities and financial instrumentsdesignated at fair value through profit or loss 362 981
Income received from foreign exchange swaps with settlement dates ofmore than 30 working days 566 7 684
Losses incurred from other derivative financial instruments (155) (250)(Losses incurred)/income received from dealings in foreign currencies (1 110) 194Fees and commissions received 3 313 2 285Fees and commissions paid (401) (280)Other operating income received 461 214Staff costs paid (12 663) (10 343)Administrative and other operating expenses paid (6 178) (4 799)Income tax paid (3 762) (1 321)
Cash flows from operating activities before changes in operatingassets and liabilities 17 430 30 982
Changes in operating assets and liabilitiesNet increase in mandatory cash balances with the Central Bank of theRussian Federation (4 132) (490)
Net decrease in trading securities and repurchase receivables 3 967 15 311Net increase in financial instruments designated at fair value throughprofit or loss (4 406) (6 055)
Net decrease/(increase) in due from other banks 1 361 (6 453)Net increase in loans and advances to customers (185 960) (98 720)Net increase in other assets (4 953) (386)Net decrease in due to other banks (15 959) (90 264)Net increase in customer accounts 215 505 112 581Net increase in promissory notes issued 6 430 1 516Net decrease in other liabilities (337) (1 078)
Net cash from/(used in) operating activities 28 946 (43 056)
Cash flows from investing activitiesAcquisition of premises and equipment (1 419) (2 012)Proceeds from disposal of premises and equipment 51 281Acquisition of intangible assets (296) (629)Acquisition of investment securities available for sale (76 891) (24 002)Proceeds from disposal of investment securities available for sale 35 823 12 600Acquisition of investment securities held to maturity (1 132) (1 195)Proceeds from redemption of investment securities held to maturity 1 554 729Cash outflow on disposal of subsidiaries, net of cash disposed of 16 (24) -Acquisition of subsidiaries net of cash acquired (17) -
Net cash used in investing activities (42 351) (14 228)
Cash flows from financing activitiesProceeds from subordinated debts 22 434 -Repayment of subordinated debts (15 748) -Proceeds from other borrowed funds 52 462 55 958Repayment of other borrowed funds (7 000) (16 017)Proceeds from sale of previously bought back other borrowed funds 794 -Buy back of other borrowed funds (102) -Issue of ordinary shares - 825Dividends paid (253) (232)Repayment of syndicated loans - (7 374)
Net cash from financing activities 52 587 33 160
Effect of exchange rate changes on cash and cash equivalents 4 072 (1 422)
Effect directly associated with disposal groups held for sale (11) -
Net increase/(decrease) in cash and cash equivalents 43 243 (25 546)Cash and cash equivalents at the beginning of the period 81 010 94 958
Cash and cash equivalents at the end of the period 124 253 69 412
F-8
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
5
1 Introduction
These condensed consolidated interim financial statements have been prepared in accordance withInternational Accounting Standard 34, Interim Financial Reporting (“IAS 34”) for the nine and threemonths ended 30 September 2011 for Open Joint Stock Company Russian Agricultural Bank (the “Bank”)and its subsidiaries (together referred to as the “Group”).
Principal activity. The Bank was incorporated and is domiciled in the Russian Federation. The Bank isan open joint-stock company limited by shares and was set up in accordance with Russian regulations.
The Bank’s only shareholder is the Government of the Russian Federation represented by the FederalAgency for Managing State Property. The Bank’s principal business activity is commercial and retailbanking operations in the Russian Federation with emphasis on lending to agricultural enterprises. Themain objectives of the Bank are:
to participate in realisation of the monetary policy of the Russian Federation in the area ofagricultural production;
to develop within the agricultural industry a national system of lending to the domestic agriculturalproducers; and
to maintain an effective and uninterrupted performance of the settlement system in the area ofagricultural production across the Russian Federation.
The Bank has operated under a full banking license issued by the Central Bank of the RussianFederation (“CBRF”) since 13 June 2000. The Bank participates in the State deposit insurance scheme,which was introduced by Federal Law #177-FZ “Deposits of individuals insurance in Russian Federation”dated 23 December 2003. The State Deposit Insurance Agency guarantees repayment of 100% ofindividual deposits up to RR 700 thousand per individual in case of the withdrawal of a licence of a bankor a CBRF imposed moratorium on payments.
The Bank has 78 (31 December 2010: 78) branches in the Russian Federation. The Bank’s registeredaddress is 119034 Russia, Moscow, Gagarinsky Pereulok, 3. The Bank’s principal place of business is119019 Russia, Moscow, Arbat, 1.
In August 2011 the Group acquired 100% of shares in Closed Joint-Stock Company «InsuranceCompany «GazGarant», which was later renamed to Closed Joint-Stock Company «RSHB-Insurance».
The number of the Group’s employees at 30 September 2011 was 35 842 (31 December 2010: 36 120).
Presentation currency. These condensed consolidated interim financial statements are presented inmillions of Russian Roubles (“RR millions”).
2 Operating Environment of the Group
The Russian Federation displays certain characteristics of an emerging market, including relatively highinflation and high interest rates. The financial situation in the Russian financial and corporate sectorssignificantly deteriorated since mid-2008. In 2010 and first half of 2011, the Russian economyexperienced a moderate recovery of economic growth. The recovery was accompanied by a gradualincrease of household incomes, lower refinancing rates, stabilisation of the exchange rate of the RussianRouble against major foreign currencies, and increased money market liquidity levels.
In the summer 2010, the Government declared a drought emergency in several Russian regions. Thisevent had significant negative consequences, including an increase in consumer prices for certain foodproducts. The Russian Government announced state support for drought-affected regions. In 2011 theharvest in Russia was significantly higher compared to the previous year harvest due to favourableweather conditions in major agricultural regions.
Borrowers of the Group were adversely affected by the financial and economic environment, which in turnhas had an impact on their ability to repay the amounts owed. Deteriorating economic conditions forborrowers were reflected in revised estimates of expected future cash flows in impairment assessments.
F-9
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
6
2 Operating Environment of the Group (Continued)
The market in Russia for many types of collateral, especially real estate, has been severely affected bythe volatile global financial markets, resulting in a low level of liquidity for certain types of assets. As aresult, the actual realisable value on future foreclosures may differ from the value ascribed in estimatingallowances for impairment at the end of the reporting period.
Under International Financial Reporting Standards (“IFRS”), impairment losses on financial assetsexpected as a result of future events, no matter how likely, cannot be recognised until such events arise.
The tax, currency and customs legislation within the Russian Federation is subject to varyinginterpretations and frequent changes. Furthermore, the need for further developments in the bankruptcylaws, the absence of formalised procedures for the registration and enforcement of collateral, and otherlegal and fiscal impediments contribute to the challenges faced by banks currently operating in theRussian Federation. The future economic direction of the Russian Federation is largely dependent uponthe effectiveness of economic, financial and monetary measures undertaken by the Government,together with tax, legal, regulatory and political developments.
Management is unable to reliably determine the effects on the Group's future financial position of anypotential further deterioration in the liquidity of the financial markets and the increased volatility in thecurrency and equity markets. Management believes it is taking all the necessary measures to support thesustainability and development of the Group’s business in the current circumstances.
3 Summary of Significant Accounting Policies
Basis of preparation. These condensed consolidated interim financial statements have been preparedin accordance with IAS 34, Interim Financial Reporting, and should be read in conjunction with theGroup’s annual consolidated financial statements for the year ended 31 December 2010, which havebeen prepared in accordance with IFRS.
The Group’s presentation currency is the national currency of the Russian Federation, Russian Roubles(“RR”).
At 30 September 2011 the principal rate of exchange used for translating foreign currency balances wasUSD 1 = RR 31.8751 (31 December 2010: USD 1 = RR 30.4769).
Changes in accounting policies. The accounting policies and methods of computation applied in thepreparation of these condensed consolidated interim financial statements are consistent with theaccounting policies applied in the preparation of the consolidated financial statements of the Group forthe year ended 31 December 2010. Certain new standards, interpretations and amendments to theexisting standards, as disclosed in the consolidated financial statements for the year ended 31 December2010, became effective for the Group from 1 January 2011. These have not significantly affected thecondensed consolidated interim financial statements of the Group.
Interim period tax measurement. The Group applied for the purposes of these condensed consolidatedinterim financial statements the income tax rate that is expected to be applied during the whole fiscalperiod, while the effects of individual transactions resulting in tax non-deductible expenditures or non-taxable income are taken into account in the period, in which they occur.
These condensed consolidated interim financial statements do not contain all the explanatory notes asrequired for a full set of financial statements, including certain disclosures introduced by IFRS 7,«Financial Instruments: Disclosures».
F-10
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
7
4 Critical Accounting Estimates, and Judgements in Applying Accounting Policies
The accounting estimates and judgments applied in the preparation of these condensed consolidatedinterim financial statements are consistent with those applied in the preparation of the annualconsolidated financial statements of the Group for the year ended 31 December 2010.
Judgements that have the most significant effect on the amounts recognised in the condensedconsolidated interim financial statements and estimates that can cause a significant adjustment to thecarrying amount of assets and liabilities within the next financial period include:
Held-to-maturity financial assets. Management applies judgement in assessing whether financialassets can be categorised as held-to-maturity, in particular its intention and ability to hold the assets tomaturity. If the Group fails to keep these investments to maturity other than in certain specificcircumstances – for example, selling an insignificant amount close to maturity – it will be required toreclassify the entire class as available-for-sale. The investments would therefore be measured at fairvalue rather than amortised cost. The fair value of held-to-maturity securities is RR 14 634 million(31 December 2010: RR 14 753 million).
Impairment losses on loans and advances. The Group regularly reviews its loan portfolios to assessimpairment. In determining whether an impairment loss should be recorded in the profit or loss, the Groupmakes judgements as to whether there is any objective data indicating that there is a measurabledecrease in the estimated future cash flows from a portfolio of loans before the decrease can beidentified with an individual loan in that portfolio. This evidence may include observable data indicatingthat there has been an adverse change in borrowers’ financial situation (assessed on the basis of internalrating system) or an adverse change in the payment status of borrowers in a group, or national or localeconomic conditions that correlate with defaults on assets in the group. Management uses estimatesbased on historical loss experience for assets with credit risk characteristics and objective evidence ofimpairment similar to those in the portfolio when scheduling its future cash flows. The methodology andassumptions used for estimating both the amount and timing of future cash flows are reviewed regularlyto reduce any differences between loss estimates and actual loss experience.
A 5% increase or decrease in actual loss given default compared to estimated loss given default usedwould result in an increase or decrease in loan impairment losses of RR 2 132 million (31 December2010: RR 1 480 million).
Fair value of derivatives. The fair values of financial derivatives that are not quoted in active marketsare determined by using valuation techniques. Where valuation techniques (for example, models) areused to determine fair values, they are validated and periodically reviewed by qualified personnelindependent of the area that created them. All models are calibrated to ensure that outputs reflect actualdata and comparative market prices. To the extent practical, models use only observable data, howeverareas such as credit risk (both own and counterparty), volatilities and correlations require management tomake estimates. Changes in assumptions about these factors could affect fair values reported in thecondensed consolidated interim financial statements.
Accounting for subordinated debt from Vnesheconombank. The Russian Government providedassistance to the Russian financial system by instructing the Russian State Corporation Bank Razvitiya iVneshneekonomicheskoy Deyatelnosti (“Vnesheconombank”) to grant subordinated debts to selectedbanks. This subordinated debt was attracted in accordance with the Federal Law #173-FZ “Onsupplementary measures to support financial system of the Russian Federation”.
In October 2008 the Group attracted a subordinated debt from Vnesheconombank in the amount ofRR 25 000 million with maturity in December 2019 and interest rate of 8.0% p.a.
Due to its unique terms and conditions, subordinated nature and absence of observable current markettransactions providing evidence of a market rate for such instruments, the debt was originally recognizedand subsequently carried on the consolidated statement of financial position at amortised cost.
Had there been evidence that the market interest rate for such loans was higher than the contractualinterest rates, the amortised contractual value of the debt would has been replaced by (i) the amortisedvalue of the loans determined based on the fair value of the debt at the date of origination and (ii) theunamortised value of the government grant embedded in such low interest debt; there would have beenno impact on the profit or loss for the period since the increased effective interest rates would have beenoffset by amortisation of the government grant.
F-11
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
8
4 Critical Accounting Estimates, and Judgements in Applying Accounting Policies(Continued)
Accounting for change of interest rate on the subordinated debt from Vnesheconombank. InJuly 2010, Federal Law #173-FZ was amended to reduce the interest rate on subordinated debt attractedby the Group from Vnesheconombank from 8.0% p.a. to 6.5% p.a. All other terms of the debt remainunchanged.
The Group accounted for such reduction in accordance with IAS 39 “Financial Instruments: Recognitionand Measurement” and tested whether the modification was substantial. As the modification was notsubstantial, the Group accounted for the change in the interest rate as a prospective adjustment of theeffective interest rate.
The alternative possible accounting treatment could have been to account for the above reduction ofinterest rate in accordance with IAS 20 “Accounting for Government Grants and Disclosure ofGovernment Assistance” and the difference between the previous and revised carrying value of the debtin the amount of RR 2 375 million would be recorded as government grant deferred income within otherliabilities and is to be amortised through interest expense until the debts’ maturity date.
5 New Accounting Pronouncements
Since the Group published its last annual consolidated financial statements, certain new standards andinterpretations have been issued which are effective for the annual accounting periods starting on or after1 January 2012 and which the Group has not early adopted:
IFRS 9, Financial Instruments Part 1: Classification and Measurement. IFRS 9, issued in November2009, replaces those parts of IAS 39 relating to the classification and measurement of financial assets.IFRS 9 was further amended in October 2010 to address the classification and measurement of financialliabilities and in December 2011 to (i) change its effective date to annual periods beginning on or after1 January 2015 and (ii) add transition disclosures. Key features of the standard are as follows:
Financial assets are required to be classified into two measurement categories: those to bemeasured subsequently at fair value, and those to be measured subsequently at amortised cost. Thedecision is to be made at initial recognition. The classification depends on the entity’s businessmodel for managing its financial instruments and the contractual cash flow characteristics of theinstrument.
An instrument is subsequently measured at amortised cost only if it is a debt instrument and both(i) the objective of the entity’s business model is to hold the asset to collect the contractual cashflows, and (ii) the asset’s contractual cash flows represent payments of principal and interest only(that is, it has only “basic loan features”). All other debt instruments are to be measured at fair valuethrough profit or loss.
All equity instruments are to be measured subsequently at fair value. Equity instruments that areheld for trading will be measured at fair value through profit or loss. For all other equity investments,an irrevocable election can be made at initial recognition, to recognise unrealised and realised fairvalue gains and losses through other comprehensive income rather than profit or loss. There is to beno recycling of fair value gains and losses to profit or loss. This election may be made on aninstrument-by-instrument basis. Dividends are to be presented in profit or loss, as long as theyrepresent a return on investment.
Most of the requirements in IAS 39 for classification and measurement of financial liabilities werecarried forward unchanged to IFRS 9. The key change is that an entity will be required to present theeffects of changes in own credit risk of financial liabilities designated at fair value through profit orloss in other comprehensive income.
While adoption of IFRS 9 is mandatory from 1 January 2015, earlier adoption is permitted. The Group isconsidering the implications of the standard, the impact on the Group and the timing of its adoption by theGroup.
F-12
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
9
5 New Accounting Pronouncements (Continued)
IFRS 10, Consolidated financial statements (issued in May 2011 and effective for annual periodsbeginning on or after 1 January 2013), replaces all of the guidance on control and consolidation inIAS 27 “Consolidated and separate financial statements” and SIC-12 “Consolidation - special purposeentities”. IFRS 10 changes the definition of control so that the same criteria are applied to all entities todetermine control. This definition is supported by extensive application guidance. The Group is currentlyassessing the impact of the standard on its financial statements.
IFRS 11, Joint arrangements, (issued in May 2011 and effective for annual periods beginning on orafter 1 January 2013), replaces IAS 31 “Interests in Joint Ventures” and SIC-13 “Jointly ControlledEntities - Non-Monetary Contributions by Ventures”. Changes in the definitions have reduced the numberof types of joint arrangements to two: joint operations and joint ventures. The existing policy choice ofproportionate consolidation for jointly controlled entities has been eliminated. Equity accounting ismandatory for participants in joint ventures. The Group is currently assessing the impact of the standardon its financial statements.
IFRS 12, Disclosure of interest in other entities, (issued in May 2011 and effective for annualperiods beginning on or after 1 January 2013), applies to entities that have an interest in a subsidiary,a joint arrangement, an associate or an unconsolidated structured entity; it replaces the disclosurerequirements currently found in IAS 28 “Investments in associates”. IFRS 12 requires entities to discloseinformation that helps financial statement readers to evaluate the nature, risks and financial effectsassociated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidatedstructured entities. To meet these objectives, the new standard requires disclosures in a number ofareas, including significant judgements and assumptions made in determining whether an entity controls,jointly controls or significantly influences its interests in other entities, extended disclosures on share ofnon-controlling interests in group activities and cash flows, summarised financial information ofsubsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidatedstructured entities. The Group is currently assessing the impact of the standard on its financialstatements.
IFRS 13, Fair value measurement, (issued in May 2011 and effective for annual periods beginningon or after 1 January 2013), aims to improve consistency and reduce complexity by providing a precisedefinition of fair value, and a single source of fair value measurement and disclosure requirements foruse across IFRSs. The Group is currently assessing the impact of the standard on its financialstatements.
IAS 27, Separate Financial Statements, (revised in May 2011 and effective for annual periodsbeginning on or after 1 January 2013), was changed and its objective is now to prescribe theaccounting and disclosure requirements for investments in subsidiaries, joint ventures andassociates when an entity prepares separate financial statements. The guidance on control andconsolidated financial statements was replaced by IFRS 10, Consolidated Financial Statements. TheGroup is currently assessing the impact of the amended standard on its financial statements.
IAS 28, Investments in Associates and Joint Ventures, (revised in May 2011 and effective forannual periods beginning on or after 1 January 2013). The amendment of IAS 28 resulted from theBoard’s project on joint ventures. When discussing that project, the Board decided to incorporate theaccounting for joint ventures using the equity method into IAS 28 because this method is applicable toboth joint ventures and associates. With this exception, other guidance remained unchanged. The Groupis currently assessing the impact of the amended standard on its financial statements.
F-13
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
10
5 New Accounting Pronouncements (Continued)
Amendment to IAS 1, Presentation of financial statements (issued in June 2011 and effective forannual periods beginning on or after 1 July 2012). The amendment requires the entities to separateitems presented in other comprehensive income into two groups, based on whether or not they may berecycled to profit or loss in the future. The amendment also changes the title for the statement ofcomprehensive income to ‘statement of profit or loss and other comprehensive income’. The Groupexpects the amended standard to change presentation of its financial statements, but have no impact onmeasurement of transactions and balances.
Amendment to IAS 19, Employee benefits (issued in June 2011 and effective for annual periodsbeginning on or after 1 January 2013). The amendment makes significant changes to the recognitionand measurement of defined benefit pension expense and termination benefits. The amendment alsochanges disclosures for all employee benefits. The Group is currently assessing the impact of thestandard on its financial statements.
Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7(issued in December 2011 and effective for annual periods beginning on or after 1 January 2013).The amendment requires disclosures that will enable users of financial statements to evaluate the effector potential effect of netting arrangements, including rights of set-off. The amendment will have an impacton disclosures but will have no effect on measurement and recognition of financial instruments.
Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 (issued in December2011 and effective for annual periods beginning on or after 1 January 2014). The amendment addedapplication guidance to IAS 32 to address inconsistencies identified in applying some of the offsettingcriteria. This includes clarifying the meaning of ‘currently has a legally enforceable right of set-off’ andthat some gross settlement systems may be considered equivalent to net settlement. The Group isconsidering the implications of the amendment, the impact on the Group and the timing of its adoption bythe Group.
Other revised standards and interpretations: The amendments to IFRS 1 “First-time adoption ofIFRS”, relating to severe hyperinflation and eliminating references to fixed dates for certain exceptionsand exemptions, will not have any impact on these financial statements. The amendment to IAS 12“Income taxes”, which introduces a rebuttable presumption that an investment property carried at fairvalue is recovered entirely through sale, will not have any impact on these financial statements. IFRIC 20,Stripping Costs in the Production Phase of a Surface Mine, which considers when and how to account forthe benefits arising from the stripping activity in mining industry, will not have any impact on thesefinancial statements.
Certain new standards and interpretations became effective for the Group from 1 January 2011:
Classification of Rights Issues – Amendment to IAS 32 (issued on 8 October 2009; effective forannual periods beginning on or after 1 February 2010). The amendment exempts certain rights issuesof shares with proceeds denominated in foreign currencies from classification as financial derivatives. Theamendment did not have an impact on these condensed consolidated interim financial statements.
IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments (effective for annual periodsbeginning on or after 1 July 2010). This IFRIC clarifies the accounting when an entity renegotiates theterms of its debt with the result that the liability is extinguished through the debtor issuing its own equityinstruments to the creditor. A gain or loss is recognised in profit or loss based on the fair value of theequity instruments compared to the carrying amount of the debt. IFRIC 19 did not have an impact onthese condensed consolidated interim financial statements.
Prepayments of a Minimum Funding Requirement – Amendment to IFRIC 14 (effective for annualperiods beginning on or after 1 January 2011). This amendment will have a limited impact as it appliesonly to companies that are required to make minimum funding contributions to a defined benefit pensionplan. It removes an unintended consequence of IFRIC 14 related to voluntary pension prepayments whenthere is a minimum funding requirement. IFRIC 14 did not have an impact on these condensedconsolidated interim financial statements.
F-14
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
11
5 New Accounting Pronouncements (Continued)
Improvements to International Financial Reporting Standards (issued in May 2010 and effectivefrom 1 January 2011). The improvements consist of a mixture of substantive changes and clarificationsin the following standards and interpretations:
IFRS 1 was amended (i) to allow previous GAAP carrying value to be used as deemed cost of anitem of property, plant and equipment or an intangible asset if that item was used in operationssubject to rate regulation, (ii) to allow an event driven revaluation to be used as deemed cost ofproperty, plant and equipment even if the revaluation occurs during a period covered by the firstIFRS financial statements and (iii) to require a first-time adopter to explain changes in accountingpolicies or in the IFRS 1 exemptions between its first IFRS interim report and its first IFRS financialstatements;
IFRS 3 was amended (i) to require measurement at fair value (unless another measurement basis isrequired by other IFRS standards) of non-controlling interest that are not present ownership interestor do not entitle the holder to a proportionate share of net assets in the event of liquidation, (ii) toprovide guidance on acquiree’s share-based payment arrangements that were not replaced or werevoluntarily replaced as a result of a business combination and (iii) to clarify that the contingentconsiderations from business combinations that occurred before the effective date of revised IFRS 3(issued in January 2008) will be accounted for in accordance with the guidance in the previousversion of IFRS 3;
IFRS 7 was amended to clarify certain disclosure requirements, in particular (i) by adding an explicitemphasis on the interaction between qualitative and quantitative disclosures about the nature andextent of financial risks, (ii) by removing the requirement to disclose carrying amount of renegotiatedfinancial assets that would otherwise be past due or impaired, (iii) by replacing the requirement todisclose fair value of collateral by a more general requirement to disclose its financial effect, and(iv) by clarifying that an entity should disclose the amount of foreclosed collateral held at thereporting date and not the amount obtained during the reporting period;
IAS 1 was amended to clarify the requirements for the presentation and content of the statement ofchanges in equity;
IAS 27 was amended by clarifying the transition rules for amendments to IAS 21, 28 and 31 made bythe revised IAS 27 (as amended in January 2008);
IAS 34 was amended to add additional examples of significant events and transactions requiringdisclosure in a condensed interim financial report, including transfers between the levels of fair valuehierarchy, changes in classification of financial assets or changes in business or economicenvironment that affect the fair values of the entity’s financial instruments; and
IFRIC 13 was amended to clarify measurement of fair value of award credits.
Unless otherwise described above, the new standards and interpretations did not significantly affect theGroup’s financial reporting.
F-15
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
12
6 Financial Instruments Designated at Fair Value through Profit or Loss
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Credit Linked Note 716 825Due from other banks with embedded derivatives 13 208 8 861
Total financial instruments designated at fair value throughprofit or loss 13 924 9 686
International credit ratings of issuers of the notes and of counterparty banks were not less than BB-(S&P) as at 30 September 2011 (31 December 2010: not less than BB- (S&P)).
Management classified financial instruments with embedded derivatives as financial instrumentsdesignated at fair value through profit or loss, although there was an option to separate the embeddedderivative and value the host contract at amortised cost.
In May 2008, the Group purchased a Credit Linked Note from an OECD bank in the nominal amount ofRR 2 500 million at the net price of 19.5% of the nominal amount with maturity in May 2023 and a zerocoupon. The Note has an embedded Credit Default Swap linked to the Bank’s own credit risk.
Due from other banks with embedded derivatives are as follows:
In March 2010, the Group placed funds with the OECD bank in the total amount of USD 200 million, withmaturity in April 2014 and interest rates of 10.0% and 10.4% p.a. The contracts have embeddedderivatives FTD (“first to default”), linked to credit events associated with quasi-sovereign issuers.
In April 2010 and August 2010, the Group placed funds with the OECD bank in the total amount ofUSD 107 million, with maturity in March 2013 and August 2015 and interest rates of 10.3% and10.1% p.a. The contracts have embedded derivatives linked to a credit risk of a quasi-sovereign issuer.
In May 2011, the Group placed funds with the OECD bank in the total amount of USD 50 million, withmaturity in May 2016, an interest rate of 0.6% p.a. The contract has an embedded option linked to theperformance of commodity index.
In June 2011, the Group placed funds with the OECD bank in the total amount of RR 3 000 million, withmaturity in December 2011 and an interest rate of 5.0% p.a. The contract has an embedded derivativelinked to a credit risk of sovereign issuers.
F-16
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
13
7 Loans and Advances to Customers
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Loans to legal entities- Loans to corporates 776 293 615 385- Lending for food interventions 33 445 44 514- Investments in agricultural cooperatives 601 655Loans to individuals 130 214 85 031
Total loans and advances to customers (before impairment) 940 553 745 585
Less: Provision for loan impairment (75 002) (57 029)
Total loans and advances to customers 865 551 688 556
Lending for food interventions is represented by loans to a company, which is 100% owned by theGovernment of the Russian Federation.
Movements in the provisions for loan impairment during nine-month period ended 30 September are asfollows:
In millions of Russian Roubles
For the nine monthsended
30 September 2011(unaudited)
For the nine monthsended
30 September 2010(unaudited)
Provision for loan impairment at 1 January 57 029 29 950Provision for loan impairment during the period 17 985 20 755Reclassification to assets of disposal groups held for sale (12) -
Provision for loan impairment at 30 September 75 002 50 705
Movements in the provisions for loan impairment during three-month period ended 30 September are asfollows:
In millions of Russian Roubles
For the threemonths ended
30 September 2011(unaudited)
For the threemonths ended
30 September 2010(unaudited)
Provision for loan impairment at 30 June 69 713 42 825Provision for loan impairment during the period 5 289 7 880
Provision for loan impairment at 30 September 75 002 50 705
Information on related party balances is disclosed in Note 15.
F-17
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
14
8 Due to Other Banks
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Borrowings from other banks with term to maturity- sale and repurchase agreements less than 30 days 4 510 12 911- less than 30 days 6 749 7 378- from 31 to 180 days 4 567 4 793- from 181 days to 1 year 10 786 4 652- from 1 year to 3 years 49 325 53 558- more than 3 years 18 638 18 192Borrowings from the CBRF with term to maturity- less than 30 days - 1 058- from 31 to 180 days - 2 795Correspondent accounts and overnight placements of other banks 238 241
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
15
9 Other Borrowed Funds and Subordinated Debts (Continued)
Other borrowed funds. As at 30 September 2011, other borrowed funds consist of US Dollars, RussianRoubles and Swiss Francs denominated Eurobonds issued by the Group through its special purposeentity, RSHB Capital S.A. as well as Russian Roubles denominated bonds issued on domestic market.
As at 31 December 2010 other borrowed funds comprise the following issues:
Currency ofdenomination
Nominalvalue, inmillions
ofcurrency
Issue date Maturity date Put option date Couponrate
Couponpayment
Yield tomaturity/
nextrepricing
date
Eurobonds issuedUS Dollars 630 16 May 2006 16 May 2013 - 7.175% 6 months 5.31%US Dollars 1 137 14 May 2007 15 May 2017 - 6.299% 6 months 6.61%Swiss Francs 150 30 April 2008 30 April 2012 - 6.263% 1 year 4.27%US Dollars- tranche A 702 29 May 2008 14 January 2014 - 7.125% 6 months 5.90%- tranche B 901 29 May 2008 29 May 2018 - 7.750% 6 months 6.85%US Dollars 1 000 11 June 2009 11 June 2014 - 9.000% 6 months 5.93%Russian Roubles 30 000 25 March 2010 25 March 2013 - 7.500% 6 months 8.78%Russian Roubles 20 000 17 March 2011 17 March 2016 - 8.700% 6 months 9.84%Russian Roubles 12 000 20 April 2011 17 March 2016 - 8.700% 6 months 9.84%
Bonds issued on domestic marketRussian Roubles 10 000 22 February 2007 9 February 2017 17 February 2014 9.250% 6 months 8.48%Russian Roubles 10 000 10 October 2007 27 September 2017 7 October 2011 11.500% 6 months 9.95%Russian Roubles 583 22 February 2008 9 February 2018 19 August 2014 7.800% 6 months 7.70%Russian Roubles 5 000 17 June 2008 5 June 2018 14 June 2013 6.850% 6 months 7.39%Russian Roubles 10 000 9 December 2008 27 November 2018 8 December 2011 13.500% 6 months 13.66%Russian Roubles 5 000 26 November 2009 14 November 2019 26 November 2012 10.100% 6 months 7.73%Russian Roubles 5 000 26 November 2009 14 November 2019 26 November 2012 10.100% 6 months 7.32%Russian Roubles 5 000 10 February 2010 29 January 2020 8 February 2013 9.000% 6 months 7.95%Russian Roubles 5 000 11 February 2010 30 January 2020 11 February 2013 9.000% 6 months 7.97%Russian Roubles 5 000 1 September 2010 28 August 2013 31 August 2012 7.200% 6 months 6.52%Russian Roubles 10 000 1 September 2010 28 August 2013 31 August 2012 7.200% 6 months 6.90%Russian Roubles 10 000 2 November 2010 29 October 2013 3 May 2012 6.600% 6 months 6.35%Russian Roubles 10 000 12 July 2011 29 June 2021 9 July 2015 7.700% 6 months 8.08%Russian Roubles 5 000 14 July 2011 1 July 2021 13 July 2015 7.700% 6 months 8.41%Russian Roubles 5 000 15 July 2011 2 July 2021 14 July 2015 7.700% 6 months 7.87%
Currency ofdenomination
Nominalvalue, inmillions
ofcurrency
Issue date Maturity date Put option date Couponrate
Couponpayment
Yield tomaturity/
nextrepricing
date
Eurobonds issuedUS Dollars 630 16 May 2006 16 May 2013 - 7.175% 6 months 4.17%US Dollars 1 127 14 May 2007 15 May 2017 - 6.299% 6 months 6.20%Swiss Francs 150 30 April 2008 30 April 2012 - 6.263% 1 year 3.50%US Dollars- tranche A 702 29 May 2008 14 January 2014 - 7.125% 6 months 4.76%- tranche B 898 29 May 2008 29 May 2018 - 7.750% 6 months 6.42%US Dollars 1 000 11 June 2009 11 June 2014 - 9.000% 6 months 5.02%Russian Roubles 29 700 25 March 2010 25 March 2013 - 7.500% 6 months 7.56%
Bonds issued on domestic marketRussian Roubles 7 000 22 February 2006 16 February 2011 - 7.850% 3 months 7.64%Russian Roubles 10 000 22 February 2007 9 February 2017 17 February 2014 9.250% 6 months 7.98%Russian Roubles 10 000 10 October 2007 27 September 2017 7 October 2011 11.500% 6 months 5.43%Russian Roubles 264 22 February 2008 9 February 2018 19 August 2014 7.800% 6 months 8.08%Russian Roubles 5 000 17 June 2008 5 June 2018 16 June 2011 6.900% 6 months 4.93%Russian Roubles 10 000 9 December 2008 27 November 2018 8 December 2011 13.500% 6 months 13.93%Russian Roubles 5 000 26 November 2009 14 November 2019 26 November 2012 10.100% 6 months 6.84%Russian Roubles 5 000 26 November 2009 14 November 2019 26 November 2012 10.100% 6 months 6.79%Russian Roubles 5 000 10 February 2010 29 January 2020 8 February 2013 9.000% 6 months 7.71%Russian Roubles 5 000 11 February 2010 30 January 2020 11 February 2013 9.000% 6 months 7.62%Russian Roubles 5 000 1 September 2010 28 August 2013 31 August 2012 7.200% 6 months 7.35%Russian Roubles 10 000 1 September 2010 28 August 2013 31 August 2012 7.200% 6 months 7.35%Russian Roubles 10 000 2 November 2010 29 October 2013 3 May 2012 6.600% 6 months 6.90%
F-19
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
16
9 Other Borrowed Funds and Subordinated Debts (Continued)
Subordinated debts. As at 30 September 2011, the Group’s subordinated debts totalledRR 57 267 million (31 December 2010: RR 46 545 million). In June 2007, the Group attracted asubordinated debt totalling USD 200 million maturing in June 2017 and bearing an interest rate of Libor+1.875%. The Group has an option to terminate this subordinated debt at the nominal value in the lastfive years before its maturity date.
In October 2008, the Group attracted from Vnesheconombank a subordinated debt totallingRR 25 000 million with maturity in December 2019 and an interest rate of 8.0% p.a. This subordinateddebt was attracted in accordance with the Federal Law #173-FZ “On supplementary measures to supportfinancial system of the Russian Federation”. In July 2010, Federal Law #173-FZ was amended to reducethe interest rate on subordinated debt attracted by the Group from Vnesheconombank from 8.0% p.a. to6.5% p.a. Refer to Note 4.
In June 2011, the Group attracted a subordinated debt totalling USD 800 million in Eurobonds issued bythe Group through its special purpose entity, RSHB Capital S.A. The Eurobonds mature in June 2021,have contractual interest rate of 6.0% p.a., and yield to the next repricing date, i.e. in June 2016 at10.04% p.a. The Group has an option to terminate this subordinated debt at the nominal value in June2016.
In September 2011, the Group executed its option to early terminate the subordinated debt attracted inSeptember 2006 in the total amount of USD 500 million.
Information on related party balances is disclosed in Note 15.
10 (Losses net of Gains)/Gains less Losses from Non-banking Activities
In millions of Russian Roubles
For the nine monthsended 30 September
2011 (unaudited)
For the nine monthsended 30 September
2010 (unaudited)
Sales of goods 5 363 2 134Cost of goods sold (5 226) (2 355)Financial result from netting receivables and payablesbefore impairment charge - 302
Impairment (charge)/recovery of trade receivables andprepayments (260) 310
Other (477) (232)
Total (losses net of gains)/gains less losses from non-banking activities (600) 159
F-20
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
17
10 (Losses net of Gains)/Gains less Losses from Non-banking Activities (Continued)
Movements in the losses net gains from non-banking activities during three-month period ended30 September are as follows:
In millions of Russian Roubles
For the three monthsended 30 September
2011 (unaudited)
For the three monthsended 30 September
2010 (unaudited)
Sales of goods 3 077 541Cost of goods sold (2 922) (534)Financial result from netting receivables and payablesbefore impairment charge - (2)
Impairment recovery of trade receivables and prepayments 146 -Other (226) (315)
Total gains less losses/(losses net of gains) from non-banking activities 75 (310)
Sales of goods mainly represent sales of grain, sugar, meat and milk products and animal feedstuff.
11 Significant Risk Concentrations
As at 30 September 2011, cash and cash equivalents and placements with other banks included thebalances with one Russian banking group and one foreign bank rated not less than BBB (S&P) in thetotal amount of RR 83 200 million, or 52% of total cash and cash equivalents and due from other banks(31 December 2010: balances with the same banks totalled RR 47 396 million, or 41% of total cash andcash equivalents and due from other banks).
As at 30 September 2011, cash and cash equivalents included the balances with the Bank of Russia inthe total amount of RR 19 081 million, or 15% of total cash and cash equivalents (31 December 2010:RR 37 361 million, or 46% of total cash and cash equivalents).
As at 30 September 2011, the Groups’ financial instruments designated at fair value through profit or lossincluded the balances with one foreign bank rated not less than BB- (S&P) in the total amount ofRR 11 093 million, or 80% of total financial instruments designated at fair value through profit or loss(31 December 2010: balances with the same bank totalled RR 6 683 million, or 69% of total financialinstruments designated at fair value through profit or loss).
As at 30 September 2011, the Group’s loan portfolio included loans issued to a state-controlled borrowerin the total amount of RR 33 445 million, or 4% of the gross loan portfolio (31 December 2010: loansissued to the same borrower in the total amount of RR 44 514 million, or 6% of the gross loan portfolio).
As at 30 September 2011, the Group had the balances due to three foreign banks with the balance above10% of the Group’s equity and the aggregate amount of RR 63 648 million, or 67% of total due to otherbanks (31 December 2010: due to the same banks with the balance above 10% of the Group's equityeach and the aggregate amount of RR 60 281 million, or 57% of total due to other banks).
As at 30 September 2011, the Group had five customers with the balance above 10% of the Group’sequity (31 December 2010: three customers). The aggregate balance of such customer accounts wasRR 272 496 million, or 45% of total customer accounts (31 December 2010: RR 60 639 million, or 16% oftotal customer accounts).
As at 30 September 2011, other assets included receivables and prepayments related to trade activity ofsubsidiaries in the total amount of RR 4 589 million (31 December 2010: RR 1 520 million).
As at 30 September 2011, other liabilities included payables related to activity of subsidiaries in the totalamount of RR 589 million (31 December 2010: RR 704 million).
As at 30 September 2011, the Group had guarantees issued to one company in the amount of RR 1 689million, or 68% of total guarantees issued (31 December 2010: no significant risk concentration).
F-21
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
18
12 Segment Analysis
Operational decision making is the responsibility of the Management Board of the Bank. TheManagement Board of the Bank reviews internal management reporting in order to assess efficiency andallocate resources.
The Management Board of the Bank performs geographic analysis of the Bank’s operations and thereforethe Bank’s regional branches have been designated as operating segments.
Taking into account the administrative-territorial division of Russia, federal districts of the RussianFederation have been designated as reportable segments, except for Krasnodar branch, which is a partof Southern federal district, however is monitored by the Management Board separately.
The Management Board of the Bank assesses efficiency of operating segments based on a financialperformance measure prepared from statutory accounting data.
The accounting policy of the operating segments is based on Russian Accounting Rules (RAR) and thusmaterially significantly differs from policies described in the summary of significant accounting policies inthese condensed consolidated interim financial statements.
F-22
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
19
12 Segment Analysis (Continued)
Segment reporting of the Group’s income and expenses for the nine months ended 30 September 2011 and for the nine months ended 30 September 2010 andsegment reporting of the Group’s assets at 30 September 2011 and 31 December 2010 are as follows:
In millions of Russian Roubles
Headoffice
Centralfederaldistrict
Far-Easternfederaldistrict
Volgafederaldistrict
North-West
federaldistrict
North-Cauca-
sianfederaldistrict
Siberianfederaldistrict
Uralfederaldistrict
Krasno-dar
branch
Sou-thern
federaldistrict
(withoutKrasno-
darbranch)
Total
For the nine months ended 30 September2011 (unaudited)
Revenue from external customers: 11 355 19 484 2 888 16 668 4 815 6 898 8 850 1 729 6 008 3 544 82 239- Income from loans and advances to customers,
due from other banks and other placed funds 10 345 18 394 2 645 15 849 4 556 6 534 8 314 1 648 5 696 3 328 77 309- Fee and commission income from credit related
For the nine months ended 30 September2010 (unaudited)
Revenue from external customers: 13 123 17 820 2 702 14 398 5 211 5 471 7 983 1 748 9 458 2 975 80 889- Income from loans and advances to customers,
due from other banks and other placed funds 12 101 16 836 2 505 13 729 4 988 5 250 7 530 1 650 8 956 2 835 76 380- Fee and commission income from credit related
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
20
12 Segment Analysis (Continued)
Segment reporting of the Group’s income and expenses for the three months ended 30 September 2011 and for the three months ended 30 September 2010 andsegment reporting of the Group’s assets at 30 September 2011 and 31 December 2010 are as follows:
In millions of Russian Roubles
Headoffice
Centralfederaldistrict
Far-Easternfederaldistrict
Volgafederaldistrict
North-West
federaldistrict
North-Cauca-
sianfederaldistrict
Siberianfederaldistrict
Uralfederaldistrict
Krasno-dar
branch
Sou-thern
federaldistrict
(withoutKrasno-
darbranch)
Total
For the three months ended 30 September2011 (unaudited)
Revenue from external customers: 3 633 7 048 996 5 819 1 756 2 562 3 410 654 2 214 1 308 29 400- Income from loans and advances to customers,
due from other banks and other placed funds 3 510 6 648 918 5 532 1 664 2 413 3 214 625 2 106 1 224 27 854- Fee and commission income from credit related
For the three months ended 30 September2010 (unaudited)
Revenue from external customers: 3 768 5 999 949 4 900 1 697 1 908 2 701 574 3 183 1 054 26 733- Income from loans and advances to customers,
due from other banks and other placed funds 3 754 5 717 872 4 741 1 630 1 841 2 575 549 3 056 999 25 734- Fee and commission income from credit related
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
21
12 Segment Analysis (Continued)
Reconciliation of reportable segment result is presented below:
(Unaudited)For the nine months ended
30 SeptemberFor the three months ended
30 SeptemberIn millions of Russian Roubles 2011 2010 2011 2010
Total profit of reportable segments (aftertax) 2 073 1 233 772 336
Adjustment of deferred tax 2 902 914 794 118Adjustments of provision for impairment (2 481) 77 (633) (1 124)Accounting for derivative financialinstruments at fair value (1 928) 358 (486) 1 693
(Losses net of gains)/gains less lossesarising from revaluation of financialinstruments designated at fair valuethrough profit or loss (783) (136) (1 607) 203
Accounting for financial assets andliabilities carried at amortised cost 1 240 (437) 172 450
Adjustment of current income taxcredit/(expense) 460 (73) 827 (83)
Expenses of non-reportable segments,including effect of consolidation* (843) (129) (3) (252)
The Group’s profit under IFRS (after tax) 36 1 683 25 1 520
* Non-reportable segments are represented by subsidiaries of the Group.
Adjustments of provision for impairment are related to the difference between the methodology applied tocalculate provisions for loan impairment under RAR used for preparation of management reporting, andthe methodology used for IFRS reporting. The provision under RAR is calculated based mainly on formalcriteria depending on the financial position of the borrower, quality of debt service and collateral, whereasthe provision under IFRS requirement is calculated based on incurred loss model.
Adjustments of derivative financial instruments to their fair value arise from the difference in theaccounting treatment of currency swaps under RAR (which are the basis for management reporting) andIFRS reporting. Under RAR gross settled swap transactions are recognised as back-to-back deposits,whereas in the IFRS financial statement such transactions are recognised at fair value.
Adjustments to financial assets and liabilities carried at amortised cost resulted from accruals of interestincome/expenses using effective interest rate method.
There is no concept of deferred tax accounting in RAR for credit organizations.
All other differences also resulted from the differences between RAR (used as the basis for managementreporting) and IFRS.
13 Contingencies and Commitments
Legal proceedings. From time to time in the normal course of business, claims against the Group arereceived. As at 30 September 2011, based on its own estimates and both internal and externalprofessional advice the Group’s management is of the opinion that no material losses will be incurred inrespect of claims and accordingly no provision for cover of such losses has been made in thesecondensed consolidated interim financial statements (31 December 2010: nil).
F-25
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
22
13 Contingencies and Commitments (Continued)
Tax contingencies. Russian tax and customs legislation which was enacted or substantively enacted atthe end of the reporting period is subject to varying interpretations when being applied to the transactionsand activities of the Group. Consequently, tax positions taken by management and the formaldocumentation supporting the tax positions may be successfully challenged by relevant authorities.Russian tax administration is gradually strengthening, including the fact that there is a higher risk ofreview of tax transactions without a clear business purpose or with tax incompliant counterparties. Fiscalperiods remain open to review by the authorities in respect of taxes for three calendar years precedingthe year of review. Under certain circumstances reviews may cover longer periods.
Russian transfer pricing legislation enacted during the current period is effective prospectively to newtransactions from 1 January 2012. It introduces significant reporting and documentation requirements.The transfer pricing legislation that is applicable to transactions on or prior to 31 December 2011,provides the possibility for tax authorities to make transfer pricing adjustments and impose additional taxliabilities in respect of all controllable transactions, provided that the transaction price differs from themarket price by more than 20%. Controllable transactions include transactions with interdependentparties, as determined under the Russian Tax Code, all cross-border transactions (irrespective of whetherperformed between related or unrelated parties), transactions where the price applied by a taxpayerdiffers by more than 20% from the price applied in similar transactions by the same taxpayer within ashort period of time, and barter transactions. Significant difficulties exist in interpreting and applying thetransfer pricing legislation in practice. Any prior existing court decisions may provide guidance, but are notlegally binding for decisions by other or higher level courts in the future.
Tax liabilities arising from transactions between companies are determined using actual transactionprices. It is possible with the evolution of the interpretation of the transfer pricing rules that such transferprices could be challenged. The impact of any such challenge cannot be reliably estimated; however, itmay be significant to the financial position and/or the overall operations of the Group.
The management of the Group believes that its interpretation of the relevant legislation is appropriate andthe Group’s tax, currency and customs positions will be sustained. Therefore, as at 30 September 2011the management has not created any provision for potential tax liabilities (31 December 2010: nil).
Capital expenditure commitments. As at 30 September 2011, the Group has contractual capitalexpenditure commitments totalling RR 189 million (31 December 2010: RR 307 million).
Operating lease commitments. Where the Group is the lessee, the future minimum lease paymentsunder non-cancellable operating leases of premises and equipment are as follows:
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Not later than 1 year 1 289 1 676Later than 1 year and not later than 5 years 2 709 3 679Later than 5 years 2 031 2 391
Total operating lease commitments 6 029 7 746
Compliance with covenants. The Group is subject to certain covenants related primarily to its borrowings.Non-compliance with such covenants may result in negative consequences for the Group including anincrease of the borrowing costs and announcement of the default. The Group’s Management believes thatthe Group is in compliance with the covenants.
F-26
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
23
13 Contingencies and Commitments (Continued)
Assets pledged and restricted. The Group had the following assets pledged and restricted:
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Under secured loans from the CBRF- loans to customers - 7 101
Under term deposits from clients- State Eurobonds 7 072 6 682
Under repo agreements- Corporate bonds 6 290 12 547- State Eurobonds - 2 658- Municipal and subfederal bonds - 35
Restricted cash 208 -
In addition, mandatory cash balances with the CBRF in the amount of RR 7 600 million(31 December 2010: RR 3 468 million) represent mandatory reserve deposits which are not available tofinance the Group’s day to day operations.
As at 30 September 2011, the Bank’s subsidiaries pledged production premises and equipment underloan agreements with other banks for the total amount of RR 1 676 million (31 December 2010:RR 1 863 million).
14 Derivative Financial Instruments
Foreign exchange derivative financial instruments entered into by the Group are generally traded in anover-the-counter market with professional market counterparties on standardised contractual terms andconditions. Derivative financial instruments have potentially favourable (assets) or unfavourable(liabilities) conditions as a result of fluctuations in market interest rates, foreign exchange rates or othervariables relative to their terms.
The aggregate fair values of derivative financial instruments may fluctuate significantly from time to time.Liquidity risk on derivative financial instruments is managed by the Group’s Treasury and the CapitalMarkets Department within powers of the departments. Management of derivative financial instrumentportfolio risks is carried out by the authorized Group’s bodies through establishing limits.
Foreign exchange swaps with original settlement dates of more than 30 working days are structured asloans issued by the Bank in US Dollars, Swiss Francs and Japanese yen to four OECD banks and oneRussian banking group with maturities from January 2012 to May 2023, and deposits in Russian Roublesreceived from the same five counterparties with the same maturities (“back to back loans”). Thesetransactions are aimed at economically hedging the currency exposure of the Group.
As at 30 September 2011, international credit ratings of these banks were not less than BB- (S&P)(31 December 2010: not less than BB- (S&P)).
Most of these agreements contain special procedures for counterparties upon the occurrence of a creditevent or an event of default (including bankruptcy, failure to pay, obligation acceleration,repudiation/moratorium or restructuring of any Bank’s obligation on its debts, falling of ratings, providingincorrect and/or misleading representation). The subjects of such events are the Group, in someinstances, the counterparty of the agreement, and/or the Russian Federation. No further mutual paymentobligation between the parties is due, if a credit event or default event happens and the Group receives aformal Event Notice from its counterparty. Other of these swaps agreements, in case of a default event,will be terminated with a mark-to-market payment.
F-27
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
24
14 Derivative Financial Instruments (Continued)
The table below reflects gross positions in derivative financial instruments before the netting of anycounterparty positions as at 30 September 2011 and covers the contracts with settlement dates after therespective end of the reporting period:
In millions of Russian Roubles
Contracts withpositive fair
value(unaudited)
Contracts withnegative fair
value(unaudited)
Total
Foreign exchange swaps with settlement dates of morethan 30 working days: fair values at the end of thereporting period, of
USD receivable on settlement (+) 119 762 9 150 128 912RR payable on settlement (-) (98 467) (9 177) (107 644)CHF receivable on settlement (+) 5 559 - 5 559RR payable on settlement (-) (3 575) - (3 575)JPY receivable on settlement (+) 3 989 - 3 989RR payable on settlement (-) (3 628) - (3 628)
Foreign exchange forwards with settlement dates of up to2 working days: fair values at the end of the reportingperiod, of
USD receivable on settlement (+) 979 161 1 140RR payable on settlement (-) (978) (161) (1 139)RR receivable on settlement (+) 6 151 14 889 21 040USD payable on settlement (-) (6 149) (14 899) (21 048)RR receivable on settlement (+) - 9 9EUR payable on settlement (-) - (9) (9)
Foreign exchange forwards with settlement dates from 2 to30 working days: fair values at the end of the reportingperiod, of
JPY receivable on settlement (+) - 36 36USD payable on settlement (-) - (36) (36)EUR receivable on settlement (+) - 650 650USD payable on settlement (-) - (656) (656)USD receivable on settlement (+) 569 - 569EUR payable on settlement (-) (564) - (564)
Foreign exchange futures with settlement dates of morethan 30 working dates: fair value at the end of thereporting period, of
USD receivable on settlement (+) 983 - 983RR payable on settlement (-) (976) - (976)
Total net fair value 23 655 (43) 23 612
F-28
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
25
14 Derivative Financial Instruments (Continued)
The table below reflects gross positions before the netting of any counterparty positions as at31 December 2010 and covers the contracts with settlement dates after the respective end of reportingperiod:
In millions of Russian Roubles
Contracts withpositive fair
value
Contracts withnegative fair
value
Total
Foreign exchange swaps with settlement dates of more than 30working days: fair values at the end of the reporting period, of
USD receivable on settlement (+) 95 172 21 373 116 545RR payable on settlement (-) (76 548) (21 883) (98 431)CHF receivable on settlement (+) 5 313 - 5 313RR payable on settlement (-) (3 824) - (3 824)JPY receivable on settlement (+) 4 364 - 4 364RR payable on settlement (-) (3 898) - (3 898)
Foreign exchange forwards with settlement dates from 2 to30 working days: fair values at the end of the reporting period, of
RR receivable on settlement (+) 31 3 954 3 985USD payable on settlement (-) (31) (3 966) (3 997)USD receivable on settlement (+) 14 257 13 430 27 687RR payable on settlement (-) (14 215) (13 449) (27 664)
Total net fair value 20 621 (541) 20 080
15 Related Party Transactions
For the purposes of these condensed consolidated interim financial statements, parties are considered tobe related if one party has the ability to control the other party, is under common control, or can exercisesignificant influence over the other party in making financial or operational decisions. The Bank’s onlyshareholder is the Government of the Russian Federation represented by the Federal Agency forManaging State Property (Refer to Note 1).
The Group early adopted amendment to IAS 24, Related Party Disclosures (issued in November 2009and effective for annual periods beginning on or after 1 January 2011) in the consolidated financialstatements for the year ended 31 December 2009.
In these condensed consolidated interim financial statements, the most significant balances (in theaggregate amount of more than RR 1 000 million) with related parties controlled by the Russian Stateand balances with related parties represented by key management and their family members aredisclosed.
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Loans and advances to customers (before impairment)State-controlled entities (contractual interest rate: 7%-12% p.a. (2010: 7%-12% p.a.)) 37 026 45 937
Key management and their family members (2010: contractual interest rate5% p.a.) - 21
Provision for loan impairment at period endState-controlled entities (57) (8)
Customer accountsState-controlled entities (contractual interest rate for term deposits: 3%-8% p.a. (2010: 1%-9% p.a.)) 274 932 89 763
Key management and their family members (contractual interest rate for termdeposits: 1%-7% p.a. (2010: 1%-7% p.a.)) 158 235
The Group has the following insignificant transactions with related parties:
interest income on cash equivalents, trading securities, due from other banks;
interest expenses on due to other banks;
results from operations with trading securities and available for sale; and
other.
Key management of the Group represents members of the Management Board of the Bank and ChiefAccountant. For the nine months ended 30 September 2011 short-term benefits of the key managementamounted to RR 84 million and for the three months then ended: RR 24 million (for the nine monthsended 30 September 2010: RR 109 million, for the three months then ended: RR 28 million).
As at 30 September 2011, investment securities available for sale and investment securities held tomaturity included securities issued by Russian Federation in the total amount of RR 22 873 million(31 December 2010: RR 15 710 million); interest income from these securities for the nine months ended30 September 2011 amounted to RR 730 million and for the three months then ended: RR 286 million(for the nine months ended 30 September 2010: RR 362 million, for the three months then ended:RR 132 million).
F-30
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
27
16 Disposal of Subsidiaries and Groups Classified as Held for Sale
a) Disposal of Subsidiaries
In June 2011 the Group completed disposal of its subsidiary Chelyabinskiy Commercial Land Bank.
In millions of Russian Roubles06 June 2011
(unaudited)
Cash and cash equivalents 250Mandatory cash balances with the Central Bank of the Russian Federation 2Intangible assets 1Premises and equipment 58Customer accounts (30)Current income tax liability (2)Other liabilities (74)
Net assets of subsidiary 205
Carrying amount of net assets disposed of 205
Total disposal consideration 226Less: cash and cash equivalents in subsidiary disposed of (250)
Cash outflow on disposal (24)
In millions of Russian Roubles Gain on disposal of subsidiary
Consideration for disposal of the subsidiary 226Carrying amount of net assets disposed of (205)
Gains on disposal of subsidiary 21
b) Groups Classified as Held for Sale
As at 30 September 2011 the Group has classified the assets and liabilities related to companies inBashkortostan and Leningrad Region as disposal groups held for sale (31 December 2010: the assetsand liabilities related to companies in Leningrad Region and Chelyabinskiy Commercial Land Bank).
Major classes of assets of disposal groups held for sale are as follows:
In millions of Russian Roubles30 September 2011
(unaudited)31 December 2010
Premises and equipment 2 715 2 122Trade receivables 1 300 364Inventory 655 125Loans and advances to customers 105 93Cash and cash equivalents 2 12Other 258 133
Total assets of disposal groups held for sale 5 035 2 849
F-31
Russian Agricultural Bank GroupSelected Notes to the Condensed Consolidated Interim Financial Statements – 30 September 2011
28
16 Disposal of Subsidiaries and Groups Classified as Held for Sale (Continued)
Major classes of liabilities directly associated with disposal groups held for sale are as follows:
In millions of Russian Roubles30 September
2011 (unaudited)31 December 2010
Trade payables 481 498Deferred income tax liability 298 309Due to other banks 102 158Customer accounts - 16Other 343 34
Total liabilities directly associated with disposal groups held forsale 1 224 1 015
17 Events after the End of the Reporting Period
In November 2011, the Group attracted RR 10 000 million through issue of bonds denominated inRussian Roubles maturing in October 2021. The first four semi-annual coupon payments due on thebonds were set at a rate of 8.75% p.a.
In November 2011, the Group attracted RR 20 000 million through issue of Eurobonds (loan participationnotes) denominated in Russian Roubles with semi-annual payment of coupon at 6M Mosprime floatinginterest rate p.a., maturing in November 2016.
In December 2011, share capital of the Bank was increased by RR 40 000 million.
In December 2011, the Group terminated the legal agreement on disposal of companies in LeningradRegion (Open Joint-Stock Company Rassvet, Open Joint-Stock Company Luzhskiy kombikormoviyzavod, Open Joint-Stock Company Luzhskiy Myasokombinat) classified as a disposal group held for sale.
F-32
RAB ISSUER
Russian Agricultural Bank RSHB Capital S.A. 3 Gagarinsky Lane 46 A, Avenue J.F. Kennedy
Moscow 119034 L-1855 Luxembourg
Russian Federation Grand Duchy of Luxembourg
THE LEAD MANAGER
Citigroup Global Markets Limited Citigroup Centre Canada Square Canary Wharf
London E14 5LB United Kingdom
LEGAL ADVISERS TO RAB
As to English law As to Russian law As to Luxembourg law