MDM A+B Loan

completed

MDM Bank (MDM or the Bank) is one of Russia’s largest private universal banks ranked 11th in the country by asset size as of September 2007 and operating 172 outlets across Russia with a network of 122 sales offices in the regions (excluding Moscow and Moscow region) as of 23 March 2008. MDM Bank is the parent company and the lead operating entity of the MDM Group (the Group) accounting for 86% of the Group’s assets. The Group operates a total of two banks, one bank in the Russian Federation (MDM Bank, headquartered in Moscow) and one in Latvia (Latvian Trade Bank). The Group also owns and operates securities trading and asset management companies and a leasing company. MDM was established in 1993. Since then it evolved from being a mostly trading institution servicing its shareholders into a universal bank offering a full range of financial services to clients, including: corporate banking, retail banking, investment banking & financial markets, private banking and asset management. Importantly, the Bank has a clear business model based on financial intermediation between non-related parties (as of 31 December 2007, on and off balance sheet exposure to related parties was approximately 0.1% of total assets). In 2006 MDM Bank adopted a new strategy focused on expansion into retail and small business banking along with the development of regional branch network. This strategy was updated in 2007 for the period 2008-2012 in response to changes in the competitive landscape and global financial markets and with input from the Bank’s new strategic minority shareholders, who joined during 2007. While Corporate and Investment Banking remain the primary sources of revenue and are a core element of the Bank’s long-term business strategy, retail banking is one of the key strategic businesses for the Bank and the strongest value driver. Small business banking was launched in late 2005 and today the Bank is a top six player in the sector by loan portfolio size. In December 2007 MDM with the support from IFC launched a new energy efficiency loan product. The Bank is rated by international rating agencies, with BB rating from Standard & Poor’s, BB rating from Fitch Ratings, and Ba1/NP/D+ rating from Moody’s. The Bank is also the only Russian financial organization that has been given a public corporate governance rating by Standard & Poor’s. In February 2008 Standard & Poor’s confirmed the overall Corporate Governance Score at 6+. The rating comprises four components: - ownership structure and external influence; - shareholders’ rights and stakeholder relations; - transparency, disclosure and audit; and - board structure and effectiveness.