annual report 2012 - amsterdam trade bank · 2017. 7. 19. · annual report 2012. 4. 5 general...

Annual Report 2012

Annual Report2012

5

GENERAL INFORMATION 4

REPORT OF THE SUPERVISORY BOARD 5

REPORT OF THE EXECUTIVE BOARD 7

CORPORATE GOVERNANCE 16

CONSOLIDATED FINANCIAL STATEMENTS 2012 19

Consolidated Balance Sheet as at December 31st, 2012 20

Consolidated Profit and Loss account 2012 21

Consolidated Cash flow statement 2012 22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 23 AS AT DECEMBER 31st, 2012

Financial statements 24

Accounting policies 24

Policies, risks and risk management 28

NOTES TO THE CONSOLIDATED BALANCE AND OFF-BALANCE SHEET 39

Consolidated Balance Sheet as at December 31st, 2012 40

Consolidated Off-Balance Sheet Commitments and Contingent Liabilities 51 as at December 31st, 2012

NOTES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT 2012 57

CORPORATE FINANCIAL STATEMENTS 2012 61

Corporate Balance Sheet as at December 31st, 2012 62

Corporate Profit and Loss account 2012 63

Notes to the Corporate Financial Statements as at December 31st, 2012 64

OTHER INFORMATION 66

Subsequent events 67

Appropriation of result 67

Independent auditor’s report 68

Contents

6

General Information

Profile Amsterdam Trade Bank N.V. (‘the Bank’) is an independent financial institution licensed by and under the supervision of the central bank of The Netherlands (The Dutch Central Bank; De Nederlandsche Bank N.V.).

The Bank is part of the Alfa Banking Group, which in turn is part of the Alfa Group, one of the largest Russian private financial-industrial conglomerates. The Alfa Banking Group consists of licensed banks in Russia, Ukraine, Kazakhstan, Belarus and The Netherlands and has over 600 branches. Alfa Bank Russia is the largest private commercial bank in Russia.

The main business areas of the Bank are: - Corporate banking: commercial lending to companies in the CIS-CEE countries;- Trade finance: structured trade & commodity finance for companies trading with or

from the CIS-CEE countries;- Transaction services: treasury and payments services for companies trading with and

from the CIS-CEE countries.

VisionThe vision of the Bank is to be a recognized leading bank involved in the facilitation of the major trade flows between the CIS countries and Europe/Asia.

The Bank strives for a medium-term average return on equity that is commensurate with the increased level of risk that is inherent in its geographical focus.

StrategyTo realize its vision, the Bank is building the Group’s centre of expertise for structured trade & commodity finance and it closely co-operates with its parent and sister banks within the Alfa Banking Group in terms of marketing its products. Next to that, the Bank is pursuing a focused geographical diversification strategy, so as to also cover CIS and CEE countries in which the Alfa Banking Group is not locally present.In addition to the geographies, the parent and sister banks operate in a select group of European and Asian countries outside the CIS-CEE region in which it pursues a limited diversification strategy (based upon inverse correlation, size, trade flows and maturity), predominantly Turkey and China.

Product-wise, next to the various forms of lending and trade finance, the Bank is expanding its offering of treasury products and payment services.

Funding for the activities of the Bank is sourced largely from retail savings accounts and retail time deposits in the Netherlands, Germany and Austria. Furthermore funding is coming from Corporate Client deposits and amounts borrowed from Financial Institutions. The Bank is aiming to maintain a sound diversification in its funding mix with a view to achieve a stable funding for the growth of its activities.

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Report of the Supervisory Board

We are pleased to present the financial statements of Amsterdam Trade Bank N.V. (‘the Bank’) for the year ended December 31st, 2012 as prepared by the Executive Board and adopted by ourselves. These statements have been audited by KPMG Accountants N.V..

We recommend the Shareholder to adopt the financial statements 2012 as presented and to discharge the members of the Executive Board for their management of the Bank and the members of the Supervisory Board for their oversight exercised thereon. On adoption of the profit appropriation proposed therein, an amount of EUR 2,000,000 will be declared as dividend in relation to the 2012 financial year.

We would like to express our gratitude to all our clients and business contacts for placing their trust in the Bank and its management.

The Supervisory Board met five times in the course of 2012 and is appreciative of the open dialogue with the Executive Board. The topics for discussion included, amongst others, business strategy for the forthcoming period, business development in Structured Trade & Commodity Finance, Corporate Governance, the quarterly and annual figures, budgeting, strategy, ICT project portfolio and the credit rating of the Bank that is in progress.

The Audit Committee met twice and discussed various issues related to audit, internal controls and financial reporting, reports of the internal auditor and external auditor, reports from the Executive Board and the progress in the resolution of audit issues. In 2012 the committee consisted of Mr. K.A. de Jong, Mr. R.D. James and, in the first part of the year, Mr. J. Jonach.

The Risk and Compliance Committee met four times and discussed the Bank’s risk appetite and, amongst others, various risk (reporting) related issues (also based upon the new risk dashboard) and compliance matters. On an ongoing basis during the year, the committee also took several decisions on credit proposals escalated in accordance with the Bank’s internal governance. In 2012 the committee consisted of Mr. R.D. James, Mr. F.C.W Kuijlaars (from the date of his appointment), Mr. L.N. Degle (until his resignation) and Mr. A. van ‘t Veer.

The Remuneration and Nominating Committee had two meetings and discussed, amongst others, the remuneration of the Bank’s management and staff and the compliance with rules and guidelines with respect to “beheerst beloningsbeleid”.In 2012 the committee consisted of Mr. A. van ‘t Veer, Mr. R.D. James, Mr. K.A. de Jong and Mr. F.C.W. Kuijlaars (from the date of his appointment).

We are pleased to note that the committee meetings were, in nearly all cases, attended by all members of the committees.

The Supervisory Board has been involved in the Bank’s compliance with the Banking Code. In that respect the permanent learning program, through which the expertise of the members of the Executive Board and the Supervisory Board is maintained and expanded, continued in the course of 2012 and covered the various complexities of this Code. As part of this year’s training program comparisons were made with other banks and also attention was given to (international) regulatory developments, including Recovery and Resolution Plans and FATCA. The training also aimed to further enhance the knowledge in areas as strategy and development, remuneration, attitude and culture and style of communication.

8

Report of the SupervisoryBoard

The following members entered the Supervisory Board during 2012: Mr. V. Izutin was appointed as from July 1st, 2012 and Mr. F.C.W. Kuijlaars was appointed as from November 1st, 2012. On March 1st, 2013 Mr. H.C.M. van Damme and Mr. W Devriendt joined the Supervisory Board in anticipation of the scheduled resignation of Mr. A. van ‘t Veer (June 1st, 2013) and Mr. K.A. de Jong (October 1st, 2013). We are pleased that they joined the Supervisory Board to achieve a balanced composition.

The following members of the Supervisory Board resigned: Mr. J. Jonach as from March 1st, 2012, Mr. L.N. Degle as from September 15th, 2012 and Mr. V. Izutin as from April 5th, 2013. The Bank would like to thank these members for the duties they have performed.

On November 1st, 2012 the Executive Board was strengthened with the appointment of Mr. P. Gorbatsevich, as Chief Executive Officer. Following the appointment of Mr. Gorbatsevich, the Bank is able to further execute its strategy. We would like to thank Mr. Czurda who resigned as chairman of the Executive Board in March 2012.

We wish to compliment the Executive Board and the staff for their work and dedication.

Amsterdam, June 14th, 2013

Supervisory Board:

K.A. de Jong, ChairmanH.C.M. van DammeW. DevriendtR.D. JamesF.C.W. Kuijlaars V.V. Tatarchuk

9

Report of the Executive Board

Operational review

Market developments in 2012In line with previous years, sentiment in the markets in Europe in which Amsterdam Trade Bank (‘the Bank’) operates fluctuated strongly during the year. In 2012 the overall market conditions within Europe remained severe as a consequence of the continuing debt crisis.

The Russian economy grew by 3.4% in 2012 (compared to 4.1% in 2011), and according to the World Bank it is expected to continue to grow by 3.3% in 2013 and 3.6% in 2014 as domestic demand expands.

Following a relatively positive start of the year, with a strong domestic demand as the main driver of growth, the Russian economy slowed down in the second half of 2012 due to rising inflation, weakening domestic demand and global market conditions. It is expected that domestic consumption, supported by low unemployment, will remain the main growth driver of the Russian economy, as the global economic sentiment is still negative.

The total economy of CIS countries grew by 3.7% in 2012 (compared to 4.6% in 2011), and according to the International Monetary Fund it is expected to continue to grow by 3.8% in 2013. Global uncertainty and the debt crisis in the Euro-zone, the CIS’s most important external trading partner, significantly impacted growth in 2012. Consistent with the second half of 2011, during 2012 international banks continued to withdraw their funds from high-risk countries, including the CIS countries. This resulted in relatively high yields in those countries. Given the Bank’s intimate knowledge and insights in this region, this produced new opportunities for financing activities of companies in and in relation to these countries.

Profile of the Bank per business lineThe activities of the Bank can be divided into three segments:- Corporate banking: commercial lending for companies in mainly the CIS-CEE countries

(49% of activities, as percentage of total income);- Trade finance: structured trade & commodity finance for companies trading with or

from mainly the CIS-CEE countries (29% of activities, as percentage of total income);- Transaction services: treasury and payments services for companies trading with and

from mainly the CIS-CEE countries (22% of activities, as percentage of total income).

Corporate Banking has historically been the main line of business for the Bank. The prime focus is on financing corporate clients in/from the CIS region, based on the Bank’s extensive know-how, contacts and experience in the region.More recently, some limited geographical expansion has been pursued into the CEE region. The expansion of activities in territories outside CIS/CEE has been re-evaluated and will mainly relate to structured trade & commodity finance activities.

Trade finance is the main strategic growth area of the Bank. Whereas the Bank has been active in traditional trade finance for a long time, the Bank is now actively pursuing more structured trade & commodity finance opportunities.The prime focus is on the major trade flows between the CIS countries and Europe, respectively Asia.

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Transaction services also is a strategic growth area for the Bank. Prime focus is on increasing the level of cross-sell of these products to the Bank’s corporate clients by expanding the offering of treasury and payment products.

The Bank can compete in those areas as a small niche bank that is non-bureaucratic, customer-driven, client-focused and flexible.

Key developments in 2012The Bank took a number of steps in 2012 to strengthen its position and organisation. The Bank’s profile was further strengthened by selective marketing initiatives and by building-out of the structured trade & commodity finance team.

In 2012 the Bank implemented a new treasury system to facilitate the foreseen growth of funding volumes and to further improve the control framework around treasury activities. Consequently, in 2012 the trading volumes were very limited and mainly focused on bonds. It is expected that trading volumes will increase gradually in 2013 as well as the diversity of the type of financial instruments which are entered into for trading purposes.

Key financialsTotal income decreased by 6% to EUR 62 million, while total expenses decreased by 8.9% to EUR 35 million, leading to an operational result before tax of EUR 27.0 million (2011: EUR 27.5 million).

The slight decrease of results before taxation in 2012 (EUR -/- 0.5 million) compared to 2011 is mainly caused by a decrease of the net interest margin (EUR -/- 3.8 million), results on financial transactions (EUR -/- 2.6 million) which were partly offset by an increase of net commission income (EUR 2.2 million) and other income (EUR 0.3 million). The total expenses in 2012 decreased by EUR 3.4 million to EUR 35.4 million in 2012 (2011: EUR 38.9 million). Staff expenses increased by EUR 3.2 million mainly as a result of an increase of FTEs (12 FTEs), but were offset by a decrease of EUR 5.0 million in general and administrative expenses and a decrease of value adjustments to loans and advances to customers of EUR 1.3 million.

The total assets at year-end 2012 amounted to EUR 3,798 million (2011: EUR 2,841 million). This significant increase of total assets is largely caused by an increase of cash and balances at central banks and due from banks, funded by an increase of EUR 784 million of funds entrusted. During 2012 the loan portfolio decreased to EUR 1,111 million as per year end (2011: EUR 1,320 million) mainly as a result of matured loans which were not fully offset by new loan production.The Bank’s retail funding in the Netherlands, Germany and Austria increased to EUR 1,359 million at year end (2011: EUR 1,052 million).

The movement in the value adjustments to loans and advances to customers mainly consists of additions to the loan loss provision of EUR 17 million and a release of the provision amounting to EUR 9 million. This loan loss provision is based on a careful and prudent assessment and relates to a relatively small number of clients that were negatively affected by a difficult market environment in their sector. The loan loss provision also includes a provision for incurred but not reported (IBNR) credit losses of EUR 2.4 million (2011: EUR 2.1 million). The cost to income ratio before provisions remained the same as in the prior year at 44%.Net profit after taxation came to EUR 20.7 million (2011: EUR 36.3 million). The lower amount in net profit is mainly due to a one-off tax refund in 2011 of EUR 16.5 million.


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Capital AdequacyThe Bank’s BIS ratio, calculated under Basel II regulations, increased to 21.1% at year-end 2012 (in 2011: 18.2%) evidencing additional prudential requirements more than compensated by the increase resulting from a changed mix of risk weighted assets due to a decrease of the loan portfolio of nearly EUR 209 million and an increase in low risk weighted assets (cash and balances at central banks and due from banks). The Tier 1 capital ratio stood at 15.7% at year-end (in 2011: 13.2%). Per the end of December 2012 the available Tier 1 capital amounted to EUR 262 million, while the regulatory Tier 1 and Capital requirement was EUR 133 million.

The Bank has developed its Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP) frameworks to meet Basel II – Pillar 2 requirements, under which internal capital is calculated for concentration risk, country risk, liquidity risk and interest rate risk in the banking book and its adequacy is evaluated on a regular basis under a severe but plausible stress testing scenario. Both these documents are subject to the Supervisory Review and Evaluation Process (SREP) conducted by the Dutch Central Bank. In March 2013, the Bank submitted its ICAAP and ILAAP for 2012 to the Dutch Central Bank in compliance with Basel II requirements.

On a half-year basis, the Bank participates in the Basel III monitoring exercise executed by the Dutch Central Bank. For this purpose, the Bank calculates the leverage and liquidity ratios included in the Basel III framework. Subsequently, weekly monitoring of the Banks’ capital buffers, leverage ratios, liquidity coverage ratios (LCR) and net stable funding ratios (NSFR) is conducted.

Risk management Risk management is of pre-eminent importance to the Bank. In its business the Bank incurs an increased level of inherent risk, which is inherent to the Bank’s geographical focus. The Bank uses rigorous controls and portfolio techniques to manage risks. This includes the evaluation of the potential risks and the assessment and implementation of the measures that can mitigate these risks. The Bank is exposed to various risks, mainly:• Credit risk• Country risk• Liquidity risk• Market risk• Operational risk• Reputation and Compliance risk

Risk management is embedded in the organisation. The Bank uses the ‘three lines of defence’ concept, detailed later in this report under the section dealing with Policies, risks and risk management. In 2012 the risk management organisation was further strengthened. Policies, procedures and systems met stringent requirements.

Credit risk constitutes the Bank’s most significant risk and arises mainly from trade-finance and lending business. Credit risk also represents all other forms of counterparty exposure, namely where counterparties default on their obligations to the Bank in relation to hedging and other financial activities. The Executive Board is responsible for establishing credit policies and the mechanism, organization and procedures required to analyze, manage and control credit risk. In order to identify, measure and manage risk arising from these activities, the Bank has put adequate methodologies, policies, procedures and expertise in place.


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Credit risk is managed in accordance with limits and asset quality measures which are set out in policies approved and monitored by the Executive Board. The policies place limits on One Obligor Exposure, industry sector and country of risk.

As a key area of focus, the Bank puts a high priority on establishing an internal funding and liquidity risk strategy that ensures the Bank to measure, monitor and manage its liquidity risk to be able to withstand a range of stress circumstances without endangering the continuing viability of its business.

The Bank manages the liquidity profile of its balance sheet through short-term liquidity risk management and a long-term funding strategy. Additionally, liquidity risk stress testing is an important element of liquidity risk measurement, risk evaluation and contingency funding planning for all potential contingent as well as highly improbable, but plausible stress events. The Bank uses liquidity stress tests as a management tool to identify the potential vulnerabilities and “worst case” liquidity risks of the Bank on its current cash flows, liquidity position and liquidity risk mitigants.

In 2012 the market risk management function has been further developed in anticipation of a more active role of the Bank in the field of treasury activities. The Bank uses derivative transactions to hedge most of its exposure to market risk (mainly foreign exchange and interest rate risk). For further information relating to Policies, Risk and Risk Management we refer to the relevant paragraph in the financial statements.

In the last few years the Bank reduced its exposure on Russia from above 50% to around 17% in 2011. In 2012 the relative exposure to Russia increased to 20%. The Dutch Central Bank modified core capital regulations for certain countries with effect as from July 2010. This means that additional capital requirements are imposed if exposure exceeds 5% in a number of markets. This makes it more expensive for banks to compete in those markets. The Bank’s diversification of activities into other markets is aimed at mitigating the effects of these measures. The Bank is therefore seeking to expand its activities into a limited number of selected markets including Azerbaijan, CEE (predominantly the Balkan countries), China and Turkey.

In addition, the Bank started on optimising the operational risk organisation. The Bank is exposed to certain potential losses caused by a failure in information, system processing, settlement of transactions and procedures. The Bank’s policy to control operational risk is communicated to key employees.

Compliance The Compliance Department is responsible for oversight of the corporate clients of the Bank who predominantly have a background in the CIS countries. This is of key importance, as around 100,000 retail clients in the Netherlands, Germany and Austria, entrust their savings to the Bank. These clients are covered by the Dutch Deposit Guarantee Scheme of the Dutch Central Bank for savings and deposits up to EUR 100,000.

Due to new activities in the field of treasury in 2012, the Bank is also increasingly subject to MiFID regulations. The Bank has developed internal controls and procedures to comply with these regulations and is already reflecting on the new requirements following MiFID II that will become applicable.


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The Compliance Department of the Bank operates fully independently of the parent company. The main focus of the department includes client acceptance, monitoring of client conduct, internal oversight of employees’ conduct and contacts with correspondent banks on clients and transactions.

There have not been any internal compliance incidents in the year 2012. Banking Code The Bank complies with the Banking Code. Below we summarize what the Bank has done to comply with various elements of the Banking Code. In 2012 the Bank focussed in particular on the role of the Executive Board and the Supervisory Board (Corporate Governance), the annual re-assessment of the Bank’s risk appetite, the subsequent monitoring using a risk appetite dashboard and systematic reporting of actual risks (Risk Management), Permanent Learning for all Board members and development of a new remuneration policy.

The Supervisory Board is composed in such a way that conditions are created for proper performance of duties by the Board. These conditions are complementarity, proper team spirit, independence and diversity. The Board has broad experience in the financial sector and thorough knowledge of the social functions of the Bank and of the interests of all parties involved. Three members of the Supervisory Board also have relations with the Alfa Group, the ultimate shareholder of the Bank. The other three members, including the chairman, are independent.

The members of the Executive Board share many years of experience at executive level in banking, and have a thorough knowledge of the social functions of the Bank and of the interests of all parties involved. Every member of the Executive Board has signed the moral and ethical statement.

Within the Bank there are clear rules and regulations in place which are translated into guidelines for employees. Newly hired employees of the Bank are notified of the Bank’s principles and sign a Code of Conduct. Every employee is required to comply with these principles. Pre-employment screening is performed by an external party. As from 2012 all employees (both current and new) are screened by an external party.

Reporting on the actual risks is done through a risk appetite dashboard and is assessed by the Executive Board on a quarterly basis. The Supervisory Board subsequently reviews the risk reporting. The risk policy and risk appetite dashboard are subject of periodic discussion in the Executive Board and in the Risk and Compliance committee of the Supervisory Board. Following each meeting of the Risk and Compliance Committee, the chairman of this committee reports on the considerations, recommendations and decisions to the Supervisory Board. Once a year the principles for risk-taking are jointly discussed by the Executive Board and the Supervisory Board and possibly revised. These principles have been sustained throughout 2011 and 2012.


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The Bank has an Internal Audit Department that reports directly to the Executive Board and the Audit Committee. Both the head of the internal audit department and the external auditor of the bank attend the meetings of the Audit Committee.

At least twice a year consultations take place between The Dutch Central Bank, the external auditor and the internal auditor on the audit plans and mutual risk analyses and audit findings. A remuneration policy is in place within the Bank which was fully adhered to during the annual remuneration revision of 2012.

The interests of the customers and other stakeholders have always been a priority to the Bank. As part of the implementation of the Banking Code requirements, the Bank reviewed all existing products and services and reemphasized the Bank’s responsibility for the interest of the clients with all staff members. The best interest of the client is also considered in the development of new products. The Bank has a product approval process in place.

The Bank values all feedback from its clients (positive or negative), also when this is expressed in the form of complaints, as this helps to improve services provided to them. The further development of the Bank is also based on clients recommending the Bank as a reputable, reliable and client-friendly organization. The Bank puts great importance on accurate, clear and not-misleading marketing and client communication. The web-site contains up-to-date information on products, interest rates and the Bank as a financial institution. Contact details of various specialists are available on the web-site to facilitate direct communication between clients and Bank. The Bank has a dedicated budget for continuous training of employees in delivering high quality and flexible services to ensure expectations of our clients are met in the best way possible. The Executive and Supervisory Board yearly attend training sessions as part of permanent education considering various subjects to ensure that expectations of all our stakeholders are met.A full report on the implementation of the Banking Code by the Bank is available on the web-site.

People & Operation The number of employees increased to 131 FTEs at year-end 2012, from 119 at year-end 2011.In general, job vacancies on senior management and Board level within the Bank require skills and expertise which can be fulfilled regardless of gender. The hiring process of new staff executed within the Bank follows transparent procedures considering objective criteria which are subject to the required job profile. The new employees hired during the year are generally experienced bankers with specific experience acquired at other banks.

Outlook 2013Market conditions in 2013 are expected to continue to be determined, to a significant extent, by the sovereign debt and credit crisis that has had a strong impact on the markets in CIS countries in terms of GDP growth. On the other hand, these current market conditions have given rise to significant opportunities for the Bank as many other European banks have withdrawn from these CIS markets, compared to a few years ago.

The Bank will maintain a strong focus on further strengthening cooperation with the other banks in the Alfa Banking Group in supporting large corporate clients. This is expected to further contribute to achieve the goal of raising the share of structured trade & commodity finance from 30% to 40% and of special products from around 20% to around 30%. Consequently, this is expected to result in a further increase of the number of employees.


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The required capital adequacy in view of this growth in the Bank’s risk capital, will be supported by the Shareholders.

Statement by the Executive Board (section 5.25c (2c) of the Financial Supervision Act.To our knowledge:1. The financial statements give a true and fair view of the assets, liabilities, financial

position and the profit and loss account of the Bank; and2. The annual report gives a true and fair view regarding the balance sheet as at

December 31st, 2012, the state of affairs of the Bank during the financial year, and the principal risks confronting the Bank.


Executive Board:

P. Gorbatsevich, Chief Executive Officer H.W. te Beest, Chief Financial OfficerJ.H.F. Umbgrove, Chief Risk Officer


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P. Gorbatsevich

J.H.F. Umbgrove

Executive BoardThe Executive Board is jointly responsible for the management of Amsterdam Trade Bank N.V. (‘the Bank’), each of its three members having specific areas of interest within an allocation of duties. The members of the Executive Board are appointed by the General Meeting of Shareholders upon nomination of the Supervisory Board.In accordance with best practices, the Executive Board submits the Bank’s operational and financial objectives together with the strategy to achieve stated goals to the Supervisory Board for its consideration and approval. The outlined objectives and strategy include detailed parameters to be applied in relation to the strategy, such as the company’s financial ratios and capital adequacy level.

Supervisory BoardOversight of the Executive Board and the general course of affairs of the Bank and business connected therewith is entrusted to the Supervisory Board. The Supervisory Board also assists the Executive Board by giving advice. The members of the Supervisory Board are required to act in accordance with the interests of the Bank. Pursuant to the Articles of Association, Supervisory Board members are empowered to obtain any information they deem necessary for the performance of their duties. Members of the Supervisory Board are appointed by the General Meeting of Shareholders. Each member of the Supervisory Board is expected to be capable of assessing the broad outline of overall policy, in addition to having the specific expertise required to fulfill his or her designated role.At the end of 2012 the Supervisory Board consisted of six non-executive members. Specific issues are dealt with and prepared in the Audit Committee, the Risk & Compliance Committee and the Remuneration & Nomination Committee. Members of these committees are appointed by and consist of a number of members of the Supervisory Board.

Audit CommitteeThe Audit Committee’s main task is to assist the Supervisory Board in monitoring the adequacy and integrity of the Bank’s financial statements, the auditor’s competence and independence, the performance of the internal audit function, and the audit findings on the quality and effectiveness of the system of governance, risk management and the Bank’s control procedures. The Audit Committee reports its findings to the Supervisory Board and these findings are discussed in the plenary meetings of the Supervisory Board.

Risk and Compliance CommitteeThe Risk and Compliance Committee’s main task is to assist the Supervisory Board in supervising the Bank’s risk policy, appetite for and results on market risk, credit risk, liquidity risk and operational risks and the Bank’s Code of Conduct (compliance including the Regulation on Whistleblowers and internal governance).The Risk and Compliance Committee also takes decisions on credit proposals escalated in accordance with the Bank’s internal governance rules.The Risk and Compliance Committee reports its findings to the Supervisory Board and these findings are discussed in the plenary meetings of the Supervisory Board.

Corporate Governance

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P. Gorbatsevich

H.W. te Beest

J.H.F. Umbgrove

Remuneration and Nominating CommitteeThe Remuneration and Nominating Committee’s main task is to assist the Supervisory Board in preparing and presenting proposals for the remuneration policy for Supervisory Board members, members of the Executive Board, and Senior Management. Other tasks of this Committee also consist of presenting the general principles for the remuneration policy for other staff, implementing and evaluating the agreed remuneration policies for the Supervisory Board and Executive Board, monitoring the implementation of the remuneration policy for Senior Management and other staff, presenting proposals for the remuneration evaluation of Supervisory Board members, Executive Board and Senior Management. Furthermore, the remit of the Committee is presenting proposals for the Management development policy and succession planning for (members of) the Executive Board and Supervisory Board and presenting proposals for appointment, re-appointment and dismissals to the Supervisory Board, its committees and the Executive Board.The Remuneration and Nominating Committee reports its findings to the Supervisory Board and these findings are discussed in the plenary meetings of the Supervisory Board.

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21

Consolidated Financial Statements 2012as at December 31st, 2012before appropriation of profit

22

Consolidated Balance Sheet

as at December 31st, 2012before appropriation of profit

(in euro)

2012 2011

Assets NoteCash and balances at central banks 1 473,265,766 296,471,902Due from banks 2 1,934,382,918 992,082,842Loans and advances to customers 3 1,110,836,289 1,319,752,098Interest-bearing securities 4 231,714,708 192,172,181Participating interests 5 56,174 59,034Intangible assets 6 8,750,511 3,995,784Property and equipment 7 2,336,251 1,143,454Prepayments and accrued income 8 21,362,049 32,521,217Other assets 9 15,117,071 2,560,852

Total assets 3,797,821,737 2,840,759,364 Liabilities Due to banks 10 287,258,553 110,484,958Funds entrusted 11 3,090,399,158 2,305,958,081Accruals and deferred income 12 37,023,148 26,812,660Other liabilities 13 1,400,787 37,722,394Fund for general banking risks 14 1,591,603 1,591,603Subordinated liabilities 15 90,000,000 90,000,000Shareholders’ equity: - Paid-in and called-up capital 117,343,424 117,343,424- Share premium 4,317,803 4,317,803- Retained earnings 145,598,585 109,307,526- FX translation reserve 2,153,556 927,456- Revaluation reserve 12,395 2,400- Net profit 20,722,725 36,291,059Total shareholders’ equity 16 290,148,488 268,189,668

Total liabilities and shareholders’ equity 3,797,821,737 2,840,759,364 Contingent liabilities pursuant to: Guarantees 17 51,654,397 53,564,244Irrevocable credit facilities 18 71,487,662 52,837,752

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Consolidated Profit and Loss account 2012

(in euro)

2012 2011

Income Note Interest income 19 116,460,004 97,647,587 Interest expense 20 71,260,062 48,663,848

Net interest income 45,199,942 48,983,739 Commission income 11,256,881 9,292,762 Commission expense 773,442 1,002,532

Net commission income 21 10,483,439 8,290,230 Result on financial transactions 22 5,016,724 7,627,261 Other income 23 1,708,913 1,453,480

Total income 62,409,018 66,354,710 Expense Staff expense 24 17,777,322 14,559,813General and administrative expense 25 7,935,256 12,921,259Depreciation 26 1,649,105 2,011,007Value adjustment to loans and advances to customers 27 8,074,963 9,391,433

Total expense 35,436,646 38,883,512 Result before taxation 26,972,372 27,471,198 Taxation 28 6,249,647 -8,819,861

Net profit 20,722,725 36,291,059

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Consolidated Cash flow statement 2012

(in euro)

2012 2011

Net result 20,722,725 36,291,059 Non-cash items included in profit Depreciation of intangible and fixed assets 1,649,105 2,011,007Value adjustment to loans and advances to customers 7,388,000 8,985,000Income tax expense 6,249,647 -8,819,861Amortization of premium/discount on securities 3,199,346 3,328,218Other value adjustments 1,992,633 515,301 Changes in operating assets and liabilities Due from banks -942,300,076 -107,143,268Due to banks 176,773,595 60,954,127Loans and advances to customers 201,527,809 -465,690,061Funds entrusted 784,441,077 247,273,734Increase/decrease prepayments and accrued interest income 11,159,169 2,193,552Increase/decrease other assets -18,805,870 8,185,930Increase/decrease accruals and deferred income 10,210,488 7,065,262Increase/decrease other liabilities -36,321,606 26,862,383

Cash flow from operating activities 227,886,042 -177,987,617 Investing activities Investment intangible and fixed assets -7,596,629 -3,026,705Government securities eligible for refinancing with central bank - 29,000,000Investment interest-bearing securities -145,063,285 -285,374,837Redemptions of interest-bearing securities 100,328,779 413,860,303

Cash flow from investing activities -52,331,135 154,458,761 Paid out dividend - -8,000,000

Cash flow from financing activities - -8,000,000 Net cash flow 175,554,907 -31,528,856 Exchange rate and translation differences on cash and cash equivalents 1,238,957 -746,746 Cash balance as at January 1st 296,471,902 328,747,504

Cash balance as at December 31st 473,265,766 296,471,902

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Notes to the Consolidated Financial Statements

as at December 31st, 2012

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FINANCIAL STATEMENTS

GeneralThe Bank’s financial statements have been prepared in conformity with section 14, “Provisions for banks”, of book 2, Title 9 of the Netherlands Civil Code and the guidelines of the Council for Annual Reporting (Raad voor de Jaarverslaggeving).The financial statements are presented in Euro.

The consolidated financial statements comprise Amsterdam Trade Bank N.V. (‘the Bank’), ATB Leasing LLC and Amsterdam Trade Capital Administration Corporation B.V.. ATB Leasing, with its statutory residence in Moscow, is a Russia based subsidiary. Its business is providing financial lease in Russia, for which the Bank provides the funding. Amsterdam Trade Capital Administration Corporation has its statutory residence in Amsterdam.

ACCOUNTING POLICIES

GeneralThe accounting policies set out below have been applied consistently to all periods presented in these financial statements. As of January 1st, 2012, the Dutch financial reporting standard (Dutch Accounting Standard or RJ) 290 changed with respect to foreign currency principles for foreign exchange derivatives. Hence the notional amounts of foreign exchange derivatives can no longer be considered as monetary items.Consequently, these notional amounts should be measured at ‘cost price or lower market value’. This means that the notional amounts of these contracts are no longer measured at the spot rate as per the reporting date, except if the Bank chooses to apply cost price hedge accounting and the derivatives are part of an effective hedge accounting relationship.

Assets and liabilities have been included at their nominal value, unless stated otherwise below. The revenue and expenses are allocated to the period to which they relate.

Recognition and derecognitionAn asset is disclosed in the balance sheet when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. A liability is recognised in the balance sheet when it is expected to result in an outflow from the entity of resources embodying economic benefits and the amount of the obligation can be measured with sufficient reliability.If a transaction results in a transfer of future economic benefits and or when all risks relating to assets or liabilities transfer to a third party, the asset or liability is no longer included in the balance sheet.

Income is recognised in the profit and loss account when an increase in future economic potential related to an increase in an asset or a decrease of a liability has arisen, the size of which can be measured reliably. Expenses are recognised when a decrease in the economic potential related to a decrease in an asset or an increase of a liability has arisen, the size of which can be measured with sufficient reliability.

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Impairment financial assets measured at amortised costThe Bank assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. This is assumed to be the case if there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can reliably be estimated. The Bank uses criteria to determine that there is objective evidence of impairment, or breach of contract such as default or delinquency in interest or principal payments and/or it becomes probable that the borrower will enter into bankruptcy or other financial reorganisation.If objective evidence of impairment exists, the Bank measures the loss amount as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of loss is recognised in the profit and loss account. If in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the profit and loss account.

Transactions and balances in foreign currenciesMonetary assets and liabilities denominated in foreign currencies are converted at spot rates applicable at balance sheet date. Exchange rate effects arising from the conversion of assets and liabilities are stated in the profit and loss account as ‘Result on financial transactions’. Transactions in foreign currencies are translated at the exchange rate prevailing on the transaction date.

Due from banksDue from banks comprise of loans and advances to banks, stated at amortized cost after deduction of impairment losses for doubtful debts, if necessary.

Loans and advances to customersLoans and advances to customers are measured at amortized cost less impairment charges, if necessary. The change in impairments is recognized in ’Value adjustments to loans and advances to customers’.

Interest-bearing securitiesInterest-bearing securities are debt securities held in the investment portfolio, with the general intend to hold the securities to redemption date. The investment portfolio is valued at cost including premiums and discounts less impairment charges, if necessary. Premiums and discounts are amortized over the remaining life of the securities on a straight line basis. Transaction costs related to the purchase of the securities are taken directly to income if insignificant.

Participating interestsParticipating interests in which the Bank has significant influence, but which it does not control or which are held for the sole purpose of the Bank’s activities as a bank are valued on the basis of the net asset value method.

Intangible assetsIntangible assets are stated at acquisition price less straight-line depreciation on the basis of estimated useful economic life. No residual values are taken into account.

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Intangible assets mainly comprise Software which is depreciated over a 5 years term.

At balance sheet date the Bank assesses whether there is objective evidence for an impairment of intangible assets. Intangible assets are impaired if loss event(s) occurred that had an impact on the estimated realizable value of these assets.

Property and equipmentProperty and equipment is stated at acquisition price less straight-line depreciation on the basis of estimated useful economic life. No residual values are taken into account.

Depreciation of Property and equipment is as follows:Leasehold improvement : 10 yearsComputer equipment : 5 yearsOther equipment : 5 years

At balance sheet date the Bank assesses whether there is objective evidence for an impairment of Property and equipment. Property and equipment is impaired if loss event(s) occurred that had an impact on the estimated realizable value of these assets.

Fund for general banking risks (FAR)The Bank has formed a general banking risk provision to cover general risks arising from banking activities.The tax payable or reclaimable on the movements in the general provision for banking risks is charged or added to this general provision.

DerivativesFX Derivatives are measured at spot rate. The forward points on currency swaps are amortized to the profit and loss account on a linear basis over the duration of the currency derivative. Interest rate swaps are recorded at cost. The ineffective portion of the cost price hedge accounting relationships is recorded in the profit and loss account using the lower of cost or fair value when valuing the derivative.As part of its economic hedging policy, the Bank uses derivatives such as Foreign Exchange Swaps to offset foreign exchange risks related to specific asset and liability positions and Interest Rate Swaps for hedging its interest rate risk.The Bank mainly enters into derivative transactions to mitigate risk and applies cost price hedge accounting. In line with the cost price hedge accounting model the derivatives are kept off-balance and accrued based upon the contractual terms of the contracts, generally maturing in accordance with the relating asset or liability. The associated income or expense is recorded under interest. The accrued interest receivable is stated under ‘Prepayments and accrued interest’ and for accrued interest payable under ‘Accruals and deferred income’. As from the second half of 2012 the Bank also enters into derivatives with clients and on a limited scale on derivatives for trading purposes.

Offsetting financial assets and liabilitiesFinancial assets and liabilities are offset and the net amount reported in the balance sheet where and only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Foreign currenciesItems of the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’).ATB Leasing has the rouble as functional currency as it operates in a rouble economic environment. All other companies have the Euro as their functional currency.



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Contingent assets and liabilitiesContingent assets and liabilities are included at their face value and are recorded off-balance, unless the asset is virtually certain or the liability will probably result in a cash outflow which is reliably measurable.

Determination of resultsInterest income and expense is recognised using the effective interest method. Interest income on impaired loans is recognised using the original effective interest rate.Interest and commission of which receipt is uncertain are not recorded as income.Commissions and operating expenses are recognized in the period to which they relate.

Cash flow statementThe cash flow statement has been drawn up in accordance with the indirect method, distinguishing between cash flows from operating, investing and financing activities.The accounting principles applied for the cash flow statement are in conformity with those applied for both balance sheet and profit and loss account.

Fair valueWhere the fair value of financial assets and liabilities recorded on the balance sheet cannot be derived from active markets, they are determined using valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible a degree of judgment is required in establishing the fair value. The following summarizes the major methods and assumptions used in estimating the fair values of ‘Loans and advances to customers’.

The estimated fair value of ‘Loans and advances to customers’ represents the discounted amount of estimated future cash flows of individual loans expected to be received. Expected cash flows are discounted based upon (a) the difference between initial funding rates versus the current market rates and (b) the change into the risk profile of the borrower and other market circumstances.

The carrying amount of floating rate inter-bank placements, overnight deposits and fixed deposits is deemed to be a good estimate of their value given. The fair value of the interest-bearing securities in the investment portfolio is based on the market prices as at December 31st, 2012. The fair value of derivatives is based on observable market data.

Use of estimatesThe preparation of the financial statements requires the management to form opinions and to make estimates and assumptions that influence the application of principles and the reported values of assets and liabilities and of income and expenditure. Actual results may differ from these estimates. The estimates and the underlying assumptions are constantly assessed. Revisions of estimates are recognised in the period in which the estimate is revised and in future periods for which the revision has consequences.



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Consolidation principles The consolidated financial statements include the financial data of the Bank, its group companies and other companies controlled by the Bank. Control exists when the Bank has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Group companies are participating interests in which the Bank has a direct and indirect controlling interest. In assessing whether controlling interest exists, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. In preparing the consolidated financial statements, intra-group debts, receivables and transactions are eliminated. The group companies are consolidated in full with minority interest presented within group equity separate from parent’s equity.

POLICIES, RISKS AND RISK MANAGEMENT

IntroductionThe Bank’s commercial strategy is guided by the Portfolio Management Policy and approved by the Executive Board. The Policy is updated at least annually to reflect the current strategy of the Bank, to reflect changes in the economic environment in the Bank’s core markets and to actively manage the credit portfolio and the overall risk profile.The commercial strategy is implemented through 5 business units, Corporate Banking CIS, Corporate Banking Non-CIS, Structured Trade & Commodity Finance, Financial Institutions and Treasury, each with a specific focus within the Bank’s target activities:• Geographies: CIS, CEE and a few selected other countries.• Products: Structured Trade & Commodity Finance, (Syndicated) loans,

Cash Management Services and Treasury Products.• Industries: Oil & Gas, Utilities, Petrochemicals, Retail trade, Commodity traders,

ICT trading and Transportation.

With reference to the above mentioned activities, the Bank is subject to the following typical risks: credit risk, market risk (interest rate risk and foreign currency risk), country risk and liquidity risk. The Bank is also subject to more general risks, such as operational risk, reputation risk and compliance risk. The Executive Board actively manages the Bank’s daily operations and related risks. The Supervisory Board approves the commercial strategy and the overall risk appetite of the Bank and performs oversight on the activities of the Executive Board.

The Bank follows the ‘three lines of defense’ concept. The first line is formed by the control measures that are included in the operating processes and that have to be monitored by the line managers’ internal control activities. The second line consists of the monitoring role by specialists of the Risk Management and Compliance departments, which operate independently from commercial activities. The third line is the internal audit function.



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There are six committees, supporting the Executive Board in managing the risks of the Bank:

• Credit CommitteeThe Credit Committee meetings are held weekly to advise on new credit applications and proposals and acceptance of new clients, and to monitor the credit risk, overdue positions and collateral. New credit proposals are ultimately decided by the Executive Board or, in a limited number of cases and based on an advance-determined escalation model, by the Supervisory Board.

• Asset and Liability Committee (ALCO)The ALCO meets biweekly to monitor funding interest, foreign currency and liquidity risks and solvency.

• Audit and Operational Risk CommitteeThe Audit and Operational Risk Committee meets monthly and discusses issues relating to the maintenance of an adequate operational risk management framework, assessment of the operational risk related incidents and complaints. Furthermore the committee monitors the progress in the internal control framework and the resolution of it-audit issues identified by both the internal and external auditor.

• Country Risk CommitteeThe Country Risk Committee meetings are held quarterly to advise the Executive Board on the utilization of country limits, as well as, where necessary, on the adaptation of limits. Individual transactions are allocated to specific country limits by the Credit Committee. New or increased country limits are finally decided by the Supervisory Board upon the advice of the Executive Board.

• Provisioning Committee The Provisioning Committee meets on a quarterly basis. All relevant loans are discussed and problem loans are identified. Potential problem loans are put under special monitoring for industry and company specific developments. The Provisioning Committee advises the Executive Board on loan impairments and provisions to be taken.

• Compliance CommitteeThe Compliance Committee meetings are held monthly to advise the Executive Board on client acceptance procedures (Know Your Customer), on authorization procedures, on segregation of duties and to monitor the adherence to these procedures.

Strategic risk is managed directly by the Executive Board.

The following section addresses the definition and control measures of identified risk categories.

Credit riskCredit risk is defined as the current or prospective threat to the Bank’s earnings and capital as a result of counterparty’s failure to comply with financial or other contractual obligations.

Credit risk constitutes the Bank’s most significant risk and arises mainly from the trade-finance and lending business. Credit risk also covers all other forms of counterparty exposure, namely where counterparties default on their obligations to the Bank in relation to hedging and other financial activities. The Executive Board is responsible for establishing credit policies and the mechanism, organization and procedures required to analyze, manage and control credit risk. In order to identify, measure and manage risk arising from these activities, the Bank has put adequate methodologies, policies, procedures and expertise in place.



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Credit risk is managed in accordance with limits and asset quality measures which are set out in policies approved and monitored by the Executive Board. The policies place limits on one obligor exposure, industry sector and country of risk.

At borrower level compliance with covenants and limit utilization is monitored daily. Deterioration or improvement in the credit quality of the borrower is monitored by the Commercial Departments and the Risk Management Department.

Credit risk related to Treasury activities is managed by limits, asset quality measures and criteria set out, amongst others, by the Fixed Income Investment Policy, as approved by the Supervisory Board on the advice of the Executive Board.

The creditworthiness of the borrower is captured by the borrower’s credit rating, which assesses the obligor’s probability of default (PD). For all corporate borrowers with lending facilities the credit rating is derived by means of internally developed rating models. For Financial Institutions, Sovereigns and Fixed Income exposures, credit assessment provided by one of the eligible External Credit Assessment Institutions (Moody’s, S&P and Fitch) is used. For transactional lending the Bank’s risk assessment procedures also take into consideration the risk specific to the type of credit facility or exposure. This risk is captured in the LGD (Loss Given Default) estimate, which is also a product of the internal rating models.

Although the Bank uses the standardized approach for credit risk (following the Basel II models), continuous development of internal rating methodologies as well as further integration of the Internal Rating System into the Risk Management Process (provisioning, pricing, portfolio management) are considered to be important to further strengthen the Bank’s credit risk management system.

Impairment or losses on Loans and advances to customersIn the context of the provisioning process, the Bank reviews at least quarterly all relevant loans and advances to each individual customer on the Watch List or classified as a non performing loan, in order to assess whether an allowance for impairment should be recorded in the profit and loss account or should be increased. This review is based on the identification of impairment indicators (such as for example amounts overdue or requests for restructuring) in order to assess the likelihood and magnitude of incurred losses. Proposals for impairments are discussed in the Provisioning Committee and proposed to the Executive Board. The Executive Board decides on the level of impairments. Impairments for loan losses are determined in line with the accounting rules. Impairment losses are based on discounted cash flows of the outstanding loan (including a cash flow for the collateral value based on the estimated market value, if applicable). For the loans and advances to customers that are under restructuring, the impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Such estimation is by its nature based on assumptions and actual results may differ. The gross amount of outstanding loans and advances to customers was EUR 1,111 million as at December 31st, 2012 (2011: EUR 1,320 million). The provision for loan losses amounted to EUR 45.3 million (2011: EUR 37.9 million).

Concentration riskConcentration risk is the credit risk related to the degree of diversification in the credit portfolio. The Bank takes separately into account the single name concentration, country concentration and sector concentration. In addition, the Bank has implemented a framework to measure concentration risk quantitatively and established an approach that links concentration risk levels to capital allocation



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Individual counterparty concentration is defined as the existence of exposures to individual counterparties and/or a group of connected counterparties. This type of concentration is also often referred to as ‘single name concentration’. The definition of ‘connected’ includes exposures which are connected through, for example, common ownership, management or guarantors. The Bank manages single name concentration risk and calculates internal capital for this risk under the Basel II framework.

Sector concentration is also referred to as ‘industry concentration’ and relates to the risk that sector or industry factors drive the likelihood of default for a significant number of counterparties in the portfolio. Sector concentration risk arises if the portfolio is unbalanced in exposures to certain sectors, entailing dependencies between default events.

No additional capital charge is calculated for sector concentration due to the small number of counterparties in the Bank’s loan portfolio: the individual counterparty concentration capital charge reflects sector concentration as well.

Country riskThe Country Risk Policy of the Bank defines country risk as exposure to cross-border risk, specifically convertibility and transfer risk, i.e. the risk of obligations not being repaid as a consequence of a debt moratorium or similar payment restriction.

For the purposes of its country risk assessment, the Bank considers the country of risk as the country of ultimate payment risk for the transaction. This may be the country of counterparty residence, the country of the parent company or a third country where the cash flow to repay the loan is generated from. Based upon this classification, the geographical concentration of Loans and advances to customers is as set out below:

Geographical concentration (in EUR million): 2012 % Russia 223 20.1Other CIS countries 447 40.1EMU countries 89 8.1Other European countries 123 11.1Other countries 229 20.6

Total 1,111 100.0

In line with the ‘Policy rule on the treatment of concentration risk in emerging countries’ issued by the Dutch Central Bank, the Bank recognizes its own funds should be sufficient to absorb the risks connected with material concentrations of exposure on certain risk countries.For determining material country concentration, the Bank has taken into account risk mitigating instruments which satisfy the minimum requirements regarding credit risk mitigation.

The management of geographic concentration is covered in the Bank’s Portfolio Management Policy. Historically, due to the geographical concentration of the Bank’s borrowers, development of the Bank’s credit portfolio is closely linked to economic and political developments in the CIS and CEE countries. The Bank’s current commercial strategy will gradually lead to a more diversified portfolio from a geographical point of view.



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Liquidity riskAs a key area of focus, the Bank puts a high priority on establishing an internal funding and liquidity risk strategy that ensures the Bank measures, monitors and manages its liquidity risk in order to be able to withstand a range of stress circumstances without endangering the continuing viability of its business.

The Bank manages the liquidity profile of its balance sheet through short-term liquidity risk management and a long-term funding strategy. Additionally, liquidity risk stress testing is an important element of liquidity risk measurement, risk evaluation and contingency funding planning for all potential contingent as well as highly improbable, but plausible stress events. The Bank uses liquidity stress tests as a management tool to identify the potential vulnerabilities and “worst case” liquidity risks of the Bank on its current cash flows, liquidity position and liquidity risk mitigants.

The Bank’s liquidity risk management strategy under normal and stress conditions aims at ensuring that the liquidity buffer of unencumbered and high-quality liquid assets as the main liquidity source is large enough to cover unexpected cash flow needs for the worst assumed scenario, projected over its survival horizon, without recourse to the market for renewed wholesale funding. All of the above factors should be such as to buy enough time for ALCO to either outlast the event or implement a contingency funding plan and access stand-by liquidity sources for an orderly resolution.

High quality liquid assets are the core of the buffer and constitute cash and highly liquid marketable assets. To qualify an asset as a high quality liquid asset, the Bank follows Basel III liquidity rules. Such assets include all unencumbered assets that are available to the Bank to convert into cash at any time to fill funding gaps between cash inflows and outflows during potentially detrimental liquidity situations, and are managed for use as a source of contingent funding. There are basically 4 sources of highly liquid assets on the Bank’s balance sheet: Cash; DNB and ECB Placements; 0% and 20% risk weighted Sovereign securities; and other liquid assets which are also readily convertible into cash within a relatively short period such as Non-financial corporate bonds, rated AA- or better and Covered bonds, not self-issued, rated AA- or better. With respect to Sovereign securities, the Bank did not identify impairment triggers in view of South European exposures.

A series of measures are used to monitor both the statutory and prudential liquidity requirements of the Bank on an ongoing basis including: the Liquidity Buffer Calculation and Composition, Liquidity Gap Analysis, Currency Diversification and Cash Flow Mismatches, and Regulatory Liquidity Ratios calculations.

The following table represents an overview of the mismatch in the maturities of (financial) assets and liabilities (in EUR millions).

2012 2011 Russia On demand -388 -922Between one and three months 433 567Between three months and one year 229 196Between one and three years 69 397Over three years -10 91Non maturing -333 -329



For liquidity management purposes, the Bank prepares daily cash flow projections with respect to the total cash flow available for lending based on historical data from the last two years. These projections show that current liquidity profile is sufficient to withstand stress scenarios.

Market risk Within the current trading mandates of the Bank, market risk is derived from positioning and arbitrage trading in Foreign Currency (FX), exploiting interest rate positions of swaps and futures, and arbitrage trading in interest rate products as well as hedging of a wide range of FX-spot and derivative transactions with clients and professional counterparts.

Within the market risk management framework, market risk limits, expressed in terms of Value-at-Risk (VaR) are set to prevent the accumulation of market risk beyond the market risk appetite of the Bank. The VaR limits are set, monitored and managed at trading book level (i.e. FX, Derivatives, and Fixed Income). Subsequently, they are added together to constitute the portfolio level aggregated VaR and aligned with the market risk appetite of the Bank for Treasury trading activities. These limits are complemented by additional monetary and non-monetary trading controls with the aim of preventing excessive concentrations and illiquidity of exposures.

Considering the nature and scope of the Bank’s Treasury trading activities, the Historical Simulation methodology, based on full revaluation, using a 99% confidence interval over a time horizon of one day, and using one year price history is chosen as the VaR methodology to monitor the risks associated with the trading activities within the set VaR appetite of the Bank.

The Bank is aware of the fact that such a VaR measure is not informative on the size of loss that might occur beyond that confidence level. Stressed VaR will be calculated by using historical data series comprising periods of severe market stress and through sensitivity analysis.

Daily monitoring and control processes are established to assess all end-of-day market risk exposures against limits, limit utilizations and limit breaches in accordance with the prescribed guidelines, principles and mandates set out in the Market Risk Management Policy. The daily reported information on the trading portfolio covers: VaR and other trading controls versus limits; Limit utilizations and breaches together with additional comments; explanations and actions to take where necessary; VaR figures until the lowest level; Daily VaR Changes; and Back-Testing Results.

The Risk Management Department performs independent monitoring and controlling activities in all market risk related issues and is fully responsible for the design and maintenance of procedures and measures to control market risk that has been expressed in accordance with defined risk tolerance levels. ALCO monitors market risk exposures within set trading limits.

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Foreign exchange riskThe foreign exchange risk is the current or future risk on returns and shareholders’ equity due to unfavorable foreign exchange changes. The Bank’s foreign currency position is mainly caused by:• operational activities• credit activities, and• investment activities.The foreign currency positions due to operational activities, such as money transfer are covered on a day to day basis by spot transactions. The foreign currency positions due to credit and investment activities are hedged by means of derivatives, such as swaps and forward contracts. The value of these derivatives is derived from one or more underlying assets, reference prices or indices.

Interest rate risk in the banking bookThe interest rate risk is the current or future risk on returns and shareholders’ equity due to unfavorable interest rate changes. The Bank is exposed to interest rate risk when there are differences between amounts or interest rates in the interest earning assets and interest bearing liabilities with specified re-pricing bands. To a large extent the maturities of these assets and liabilities are matched. However, where the interest rate exposures do not correspond to the maturity calendar, the interest rate risk is monitored by the ALCO within the limits set.

HedgingThe Bank has developed and implemented hedging strategies to reduce its Interest Rate (IR) Mismatch and its exposure to Foreign Currency (FX) fluctuations.

1. Interest Rate MismatchThe maturity mismatches between assets and liabilities are managed through the GAP report, which quantifies the risks in interest rate reset buckets. The impact of the market rates changes are calculated on a 100 basis points shock of parallel shifts. To hedge the mismatch (up to 100 basis points shock) the Bank uses interest rate swaps.

2. Foreign Currency hedge strategyThe Bank mainly provides lending in the following currencies, EUR, USD and RUR. In case of USD and RUR, the currency risk is hedged by using FX swaps on roll-over base till maturity of the loans.

For quantitative information on the Bank’s exposure to Interest Rate Risk and Foreign Currency, reference is made to page 52 up until 55 of the notes to the consolidated financial statements.

Operational riskThe Bank is exposed to certain potential losses caused by a failure in information, system processing, settlement of transactions and procedures. The Bank’s policy to control operational risk is communicated to key employees. Other measures that have been introduced to control operational risk include: the four-eyes principle, training, specific procedures and directives, segregation of duties, supervision and last but not least monitoring of complaints received from clients and counterparties.



Reputation and Compliance riskTo minimize reputation risk, the Bank assigns a high priority to meeting integrity compliance requirements in relation to client acceptance procedures and transparency of transactions. The Know-Your-Customer principle (KYC) is very important in this respect. Before an account is opened all new non-retail customers are scrutinized by the Compliance Officer based on an extensive checklist and analysis. Furthermore, all payments are screened daily against denied party lists, and all incoming and outgoing payments above a certain amount are reviewed monthly by the Compliance Committee for irregularities.

Basel II and Basel IIIThe Bank has implemented the Standardized Approach for credit risk capital adequacy calculation and the Basic Indicator Approach for Operational Risk capital calculation. The Bank has also developed its Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP) frameworks to meet Basel II – Pillar 2 requirements, under which internal capital is calculated for concentration risk, country risk, and interest rate risk in the banking book. Both these documents are subject to the Supervisory Review and Evaluation Process (SREP) conducted by the Dutch Central Bank. In March 2013, the Bank submitted its ICAAP and ILAAP for 2012 to the Dutch Central Bank in compliance with Basel II requirements.

On half-year basis, the Bank participates in the Basel III monitoring exercise executed by the Dutch Central Bank. For this purpose, the Bank calculates the leverage and liquidity ratios included in the Basel III framework. On the basis of these experiences, the Bank is confident that the requirements of the Basel III framework will be met.

Stress Test FrameworkThe Bank operates under biweekly liquidity stress tests and implements its contingency funding plan based on the results of these stress tests. The solvency stress testing is performed on a regular basis, with application of severe but plausible scenarios which are built into compliance with the stress testing guidelines issued by the European Banking Authority (EBA). The stress tests program ranges from simple sensitivity analysis on single portfolios to complex macro economic scenario stress testing on a firm-wide basis.

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Notes to the ConsolidatedBalance andOff-Balance Sheet

41

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Assets(in euro)

2012 20111) Cash and balances at central banks 473,265,766 296,471,902Cash and balances at central banks represent all legal tender, as well as current accounts, freely available, held at the central banks. Under Dutch law, the Bank is required to keep a certain average balance at the Dutch Central Bank, this balance is not freely available.

2012 20112) Due from banks 1,934,382,918 992,082,842Due from banks include balances on current accounts with banks, time deposits and loans to banks and can be classified as follows:

By remaining period: 2012 % 2011 %

Parent bank and related banksOn demand 11,597,423 1.7 837,647 0.7Due within one month 22,233,034 3.2 35,979,278 30.8Between one and three months 491,068,587 71.3 25,770,524 22.0Between three and six months 26,526,705 3.9 23,185,718 19.8Between six months and one year 105,257,883 15.3 1,932,143 1.7Between one and three years 4,608,463 0.7 2,201,821 1.9Between three and five years - - - - Between five and fifteen years 26,482,049 3.9 27,050,004 23.1

Total Parent bank and related banks 687,774,144 100.0 116,957,135 100.0 Other banksOn demand 147,494,199 11.8 104,498,150 11.9Due within one month 366,260,852 29.4 166,211,711 19.0Between one and three months 623,293,341 50.0 541,880,338 62.0Between three and six months 1,285,714 0.1 19,276,114 2.2Between six months and one year 10,137,728 0.8 27,302,861 3.1Between one and three years 98,136,940 7.9 6,000,000 0.7Between three and five years - - 9,956,533 1.1

Total Other banks 1,246,608,774 100.0 875,125,707 100.0

General total Due from banks 1,934,382,918 992,082,842

Geographical concentration:

Russia 495,457,823 25.6 117,990,143 11.9Other CIS countries 290,844,148 15.0 53,520,854 5.4EMU countries 939,778,450 48.7 679,708,786 68.5Other European countries 172,665,466 8.9 111,912,488 11.3Other countries 35,637,031 1.8 28,950,571 2.9

Total 1,934,382,918 100.0 992,082,842 100.0

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Assets(in euro)

Secured by pledged deposits placed at the Bank are receivables from:• Parent bank and related banks amounting to EUR 466,997,028 (2011: EUR 64,313,539);• Other banks amounting to EUR 847,158,151 (2011: EUR 548,819,625).

On demand balances with other banks comprise EUR 45,992,197 (2011: EUR 48,382,733) pledges for L/C’s, guarantees and off-balance transactions. These assets are not freely available.Reported under this heading is a net amount of EUR 10,267,350 due to payments of EUR 13,767,350 to Dutch Central Bank relating to the Bank’s share in the bankruptcy of the Dutch DSB Bank N.V. under the Dutch Deposit Guarantee Scheme. The amount has been impaired for the expected loss up to EUR 3,500,000. 2012 20113) Loans and advances to customers 1,110,836,289 1,319,752,098Loans and advances to customers can be classified as follows:


Receivables on demand 13,622,987 1.2 27,647,254 2.1Due within one month 80,430,947 7.2 119,683,589 9.1Between one and three months 245,436,874 22.1 133,280,570 10.1Between three and six months 158,617,528 14.3 240,745,997 18.2Between six months and one year 233,459,617 21.0 239,561,875 18.2Between one and three years 323,201,614 29.2 445,235,574 33.7Between three and five years 55,846,999 5.0 108,394,139 8.2Between five and ten years 219,723 0.0 5,203,100 0.4

Total 1,110,836,289 100.0 1,319,752,098 100.0

Concentration of credit risk:

Secured by moveable goods 238,152,485 21.4 238,716,388 18.1Secured by equipment 9,818,114 0.9 12,497,552 0.9Secured by deposits 180,647,732 16.3 247,907,610 18.8Secured by mortgages 106,118,033 9.6 107,597,870 8.2Secured by unlisted shares 24,494,122 2.2 61,828,580 4.7Secured by letters of comfort issued by Alfa Bank companies 24,269,890 2.2 12,047,144 0.9Secured by guarantees 224,438,400 20.2 165,392,076 12.5Various secured 33,138,346 3.0 48,324,114 3.7Various unsecured 269,759,167 24.2 425,440,764 32.2

Total 1,110,836,289 100.0 1,319,752,098 100.0

By sector and industry:

Finance 47,149,107 4.2 59,790,543 4.5Industry and construction 281,480,176 25.3 195,509,697 14.8Trading companies 72,367,622 6.5 48,385,331 3.7Transport 52,299,730 4.7 128,289,848 9.7Energy 253,255,869 22.8 407,584,808 30.9Agriculture 100,591,662 9.1 160,754,311 12.2Consumer items 129,605,358 11.7 176,636,147 13.4Others 174,086,765 15.7 142,801,413 10.8

Total 1,110,836,289 100.0 1,319,752,098 100.0

44



Assets(in euro)

Loans and advances to customers include loans amounting to EUR 31,203,809 (2011: EUR 45,367,079) for finance lease transactions of ATB Leasing. These loans have a maturity up to 6 years. Lessees are Russian railway corporations, and the collateral for these leases are Russian railway wagons (moveable goods).No loans and advances are outstanding to members of the Executive Board and Supervisory Board (2011: nil).

The value of the collateral as included in the table above is based on valuation reports received from external valuators or other sources (including warehouses and clients). The Bank requires periodic updates on these valuation reports. Due to the current volatile market conditions the value of the collateral can differ significantly from the value as stated in the latest available reports.In addition to other collateral, both personal and corporate guarantees are arranged for repayment of the underlying principal and interest amounts.

At year end EUR 9,249,659 (2011: EUR 15,126,860) of Loans and advances to customers is secured by deposits placed by the parent bank for the same period of the loans.Mortgages relate to real estate EUR 106,118,033 (2011: EUR 88,910,979).Guarantees are of both personal and corporate nature.

Geographical concentration: 2012 % 2011 %


Total 1,110,836,289 100.0 1,319,752,098 100.0

Geographical concentration Collateral: 2012 % 2011 %

Russia 104,137,816 9.4 166,232,862 12.6Other CIS countries 271,589,777 24.4 313,403,140 23.6EMU countries 188,612,934 17.0 173,680,216 13.2Other European countries - - - - Other countries 276,736,595 24.9 240,995,116 18.4Unsecured 269,759,167 24.3 425,440,764 32.2

Total 1,110,836,289 100.0 1,319,752,098 100.0

45



Assets(in euro)

2012 2011Value adjustment to loans and advances to customers 45,325,000 37,937,000

2012 2011

Balance as at January 1st 37,937,000 28,952,000Releases through P&L -8,728,910 -22,177,948Additions through P&L 16,803,000 31,785,000Utilised during the year -686,090 -622,052Write offs - -

Balance as at December 31st 45,325,000 37,937,000

As at December 31st, 2012 for 5 (2011: 6) companies, the loans have been impaired and provided for. The main additions relate to 3 exposures representing 74% of the impaired loans.

Fair value of Loans and advances to customersThe following table summarizes the carrying amount and fair value of Loans and advances to customers, not recognized on the balance sheet at their fair value.

2012 2011

Nominal value 1,110,836,289 1,319,752,098Fair value 1,091,402,301 1,378,111,366

In estimating the fair value the following major methods and assumptions were used:• Loans and advances to customers are net of impairment. The estimated fair value

represents the discounted amount of estimated future cash flows of individual loans expected to be received.

• Expected cash flows are discounted at current market rates based on the initial contract rates to determine the fair value.

• In the spread to determine the fair value, the risk profile of the outstanding loans has been taken into account.

Given the volatile economic environment the realizable value may differ significantly from the disclosed fair value in the event the loans would be sold before maturity.

2012 20114) Interest-bearing securities 231,714,708 192,172,181Interest-bearing securities represent listed fixed income securities, issued by governments EUR 106,865,034 (2011: EUR 111,036,444), financial institutions EUR 72,768,526 (2011: EUR 53,906,568), and corporates EUR 52,081,148 (2011: EUR 27,229,169). The securities are included in the investment portfolio of the Bank.

46



Assets(in euro)

Movements in the interest-bearing securities were as follows:

2012 2011

Balance as at January 1st 192,172,181 321,268,134Purchases 145,063,285 285,374,837Redemptions -97,949,903 -405,242,957Sales -2,378,876 -8,617,346Amortisation premium and discount -3,199,346 -3,341,971Revaluation securities nominated in USD/RUB -1,992,633 2,731,484




Total 231,714,708 100.0 192,172,181 100.0

The Russian and Other CIS countries securities are securities issued by governments, financial institutions and corporates. Included in EMU countries are government securities to an amount of EUR 70,771,683 (2011: EUR 95,665,407). Of these securities EUR 15,023,500 (2011: EUR 15,296,393) relate to Italian government securities, the maturity of these government securities is up to three months.The securities portfolio comprise Held to maturity EUR 53,929,676 (2011: EUR 73,432,521) and Other EUR 177,785,032 (2011: EUR 118,739,660).The Bank has the intention and ability to hold the interest-bearing securities to redemption date.


Due within one month 12,819,485 5.5 20,008,305 10.4Between one and three months 25,838,836 11.2 1,558,645 0.8Between three and six months 42,514,458 18.3 3,432,575 1.8Between six months and one year 32,357,127 14.0 17,490,070 9.1Between one and three years 80,880,391 34.9 93,011,290 48.4Between three and five years 35,802,050 15.5 55,138,066 28.7Between five and fifteen years 1,502,361 0.6 1,533,230 0.8

Total 231,714,708 100.0 192,172,181 100.0

The fair value of interest-bearing securities is EUR 234,900,002 (2011: EUR 188,694,942) at year end. The fair value is higher than the amortized costs, no impairment triggers have been noted.

47



Assets(in euro)

2012 20115) Participating interests 56,174 59,034Participating interests represent non-listed shares.

2012 2011

Balance as at January 1st 59,034 59,035Investment - - Divestment -13,400 - Revaluation of participating interests 10,540 -1

Balance as at December 31st 56,174 59,034

The balance of Participating interests as at December 31st, 2012 represents:17 (2011: 22) shares of Swift (Society for Worldwide Interbank Financial Telecommunication).

2012 20116) Intangible assets 8,750,511 3,995,784Movements in the balance sheet are as follows:

2012 2011

Balance as at January 1st 3,995,784 2,655,068 - Investment 5,784,890 874,369- Reclassification - 1,736,447- Disposals (net) - - - Depreciation -1,030,163 -1,270,100 Balance as at December 31st 8,750,511 3,995,784 Acquisition cost 10,602.539 5,219,774 Accumulated depreciation -1,852,028 -1,223,990

Intangible assets refer to capitalized software expenses. The 2012 investments relate mainly to the implemented Treasury Management System. In 2011 capitalized software expenses have been reclassified retrospectively from Property and Equipment to Intangible assets.

48



Assets(in euro)

2012 20117) Property and equipment 2,336,251 1,143,454Movements in the balance sheet are as follows:

2012 20118) Prepayments and accrued income 21,362,049 32,521,217Prepayments and accrued income can be specified as follows:

2012 2011

Interest receivable - Parent bank and related banks 795,509 499,198- Related group companies 4,194,104 1,006,118- Banks 1,270,662 533,742- Loans and advances to customers 7,243,435 8,156,122- Investments 2,415,294 2,984,366Prepayments 3,678,373 2,620,858Corporate tax 1,308,559 14,818,595Other taxes 456,113 1,902,218 Total 21,362,049 32,521,217

2012 20119) Other assets 15,117,071 2,560,852Other assets consist of Foreign Exchange derivatives used for hedging purposes. Positive revaluation was due to the depreciation of the EUR against the USD.

Leasehold Computer Other Total 2012 Total 2011 improvement equipment

Balance as at January 1st 372,791 505,554 265,109 1,143,454 1,468,472 - Investment 76,618 1,495,355 306,016 1,877,989 415,985- Reclassification 2,020 10,116 -12,136 - - - Disposals (net) - - -66,250 -66,250 -96- Depreciation -92,996 -384,563 -141,383 -618,942 -740,907

Balance as at December 31st 358,433 1,626,462 351,356 2,336,251 1,143,454 Acquisition cost 861,585 3,151,255 875,492 4,888,332 3,110,046 Accumulated depreciation -503,152 -1,524,793 -524,136 -2,552,081 -1,966,592

49



Liabilities(in euro)


Parent bank and related banksPayable on demand 33,619,948 78.4 47,015,121 75.7Due within one month - - - - Between one and three months - - - - Between three and six months - - - - Between six months and one year - - - - Between one and three years 9,249,659 21.6 - - Between three and five years - - 15,126,860 24.3Between five and ten years - - - -

Total Parent bank and related banks 42,869,607 100.0 62,141,981 100.0 Other banks Payable on demand 147,333,910 60.3 34,478,691 71.3Due within one month 2,476,290 1.0 13,864,286 28.7Between one and three months - - - - Between three and six months - - - - Between six months and one year 7,566,300 3.1 - - Between one and three years 87,012,446 35.6 - - Between three and five years - - - -

Total Other banks 244,388,946 100.0 48,342,977 100.0

Total Due to banks 287,258,553 110,484,958

2012 % 2011 %

Savings & Savings deposits 1,358,881,134 44.0 1,051,546,915 45.6Current accounts 219,394,969 7.1 508,611,735 22.1Fixed deposit accounts 284,410,926 9.2 122,966,148 5.3Deposit accounts pledged to the Bank 1,227,712,129 39.7 622,833,283 27.0

Total 3,090,399,158 100.0 2,305,958,081 100.0

2012 201110) Due to banks 287,258,553 110,484,958Due to banks represent non-subordinated amounts owed to banks and not embodied in debt securities.

2012 201111) Funds entrusted 3,090,399,158 2,305,958,081Included under Funds entrusted are non-subordinated debts.


Related partiesPayable on demand 101,915,663 7.4 406,517,367 38.7Payable within one month 101,991,172 7.4 64,780,405 6.2Between one and three months 1,116,998,896 80.8 566,848,953 54.0Between three and six months 18,714,005 1.4 11,592,859 1.1Between six months and one year 38,319,899 2.8 - - Between one and three years 2,346,973 0.2 - -

Total 1,380,286,608 100.0 1,049,739,584 100.0 Savings & savings deposits Payable on demand 625,057,133 46.0 477,536,135 45.4Payable within one month 22,099,052 1.6 14,232,007 1.4Between one and three months 51,679,960 3.8 24,242,224 2.3Between three and six months 89,513,293 6.6 71,549,498 6.8Between six months and one year 195,095,925 14.4 289,918,217 27.6Between one and three years 335,452,536 24.7 169,803,974 16.1Between three and five years 39,976,669 2.9 4,264,860 0.4Between five and ten years 6,566 0.0 - -

Total 1,358,881,134 100.0 1,051,546,915 100.0 Other customers Payable on demand 127,514,997 36.3 114,656,566 55.9Payable within one month 141,533,491 40.3 60,078,724 29.4Between one and three months 36,885,711 10.5 20,630,149 10.1Between three and six months 8,322,930 2.4 150,000 0.1Between six months and one year 33,775,431 9.6 4,096,143 2.0Between one and three years 3,198,856 0.9 5,060,000 2.5Between three and five years - - - -

Total 351,231,416 100.0 204,671,582 100.0

Total Funds entrusted 3,090,399,158 2,305,958,081

50




51




2012 201112) Accruals and deferred income 37,023,148 26,812,660

2012 2011Interest payable- Parent bank and related banks 8,270,109 7,377,527- Related group companies 2,386,299 460,583- Banks 1,044,353 574,757- Customers 2,746,422 1,394,689Corporate tax 6,989,092 4,106,696Deferred fee income 5,460,620 5,520,793Other accruals 10,126,253 7,377,615

Total 37,023,148 26,812,660

Other accruals mainly comprise salary related expenses and other expenses payable.

2012 201113) Other liabilities 1,400,787 37,722,394Other liabilities consist of FX contracts for hedging purposes. The revaluation was due to the depreciation of the EUR against the USD.

2012 201114) Fund for general banking risks 1,591,603 1,591,603No additions to or releases from the Fund have been made in 2012 and 2011.

2012 201115) Subordinated liabilities 90,000,000 90,000,000The subordinated liabilities are subordinated in respect of other current and future liabilities of the Bank. The loan matures on October 30th, 2020. The interest is fixed from October 31st, 2012 until October 31st, 2013 at 4.05286% (2011: 5.57313%). In 2012 the interest expense for the subordinated loan amounted to EUR 4,863,772.

52



Liabilities(in euro) Paid-in and called-up Share Retained Other Net capital premium earnings reserves profit Total

Balance as at December 31st, 2010 117,343,424 4,317,803 109,143,211 1,676,602 8,164,315 240,645,355Profit appropriation - - 164,315 - -164,315 - Dividend payment - - - - -8,000,000 -8,000,000FX and revaluation reserve - - - -746,746 - -746,746Net result 2011 - - - - 36,291,059 36,291,059

Balance as at December 31st, 2011 117,343,424 4,317,803 109,307,526 929,856 36,291,059 268,189,668Profit appropriation - - 36,291,059 - -36,291,059 -FX and revaluation reserve - - - 1,236,095 - 1,236,095Net result 2012 - - - - 20,722,725 20,722,725

Balance as at December 31st, 2012 117,343,424 4,317,803 145,598,585 2,165,951 20,722,725 290,148,488

Paid-in and called-up capitalAs at December 31st, 2012 all shares were held by OAO Alfa-Bank, Moscow.

The authorized capital amounts to EUR 411,719,132 (2011: EUR 411,719,132).According to the Articles of Association the shares are subdivided in 907,310 shares (each valued at EUR 453.78 at par), of which 258,591 shares have been issued and fully paid up.

Share premiumNo additional share premium was received in 2012 or 2011.

Other reservesOther reserves include a legal reserve of EUR 2,165,951 relating to the currency translation reserve of subsidiaries.

2012 201116) Shareholders’ equity 290,148,488 268,189,668Statement of changes in shareholders’ equity:

53

2012 201118) Irrevocable credit facilities 71,487,662 52,837,752Irrevocable credit facilities comprise the total amount of commitments in respect to undrawn irrevocable credit facilities.

Geographical concentration: 2012 2011

Russia 2,880,000 - Other CIS countries 11,349,450 22,639,665EMU countries 35,190,668 5,000,000Other European countries - - Other countries 22,067,544 25,198,087

71,487,662 52,837,752Secured by:

Guarantee 13,854,541 10,181,606Other (pledges) 33,295,688 9,152,850Unsecured 24,337,433 33,503,296

71,487,662 52,837,752

Consolidated Off-Balance Sheet Commitments and ContingentLiabilitiesas at December 31st, 2012

(in euro)

2012 201117) Guarantees 51,654,397 53,564,244These are irrevocable contingent liabilities pursuant to guarantees.Contingent liabilities represent Guarantees issued EUR 23,942,083 (2011: EUR 31,886,578) and Letters of credit EUR 27,712,314 (2011: EUR 21,677,666).The guarantees are secured by collateral.

Geographical concentration: 2012 2011

Russia 340,483 347,786Other CIS countries 5,986,987 8,920,473EMU countries 31,697,412 35,789,487Other European countries - - Other countries 13,629,515 8,506,498

51,654,397 53,564,244

By remaining period:

Within 1 year 43,313,190 50,472,307Between 1 and 5 years 8,341,207 3,091,937

51,654,397 53,564,244

54


(in euro)

The related accrued interest on pledged liabilities is included in the pledge agreements as security for the accrued interest on assets, but is not included in this table.

Related partiesParties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operational decisions.

For the 2012 financial statements, the Bank defines and interprets related parties as associated companies, shareholders, the Executive Board, the Supervisory Board, close family members and enterprises which are controlled by these individuals (Executive Board and Supervisory Board) through their majority shareholding or their role as chairman and/or CEO in those companies.

Transactions are at arm’s length basis and are based upon contractual arrangements and relate mainly to back-to-back loans, the funding of the Bank and pledged deposit agreements.Amounts receivable or payable to related parties and income and expenses regarding related parties are disclosed in the notes to the financial statements.

Rental commitmentsThe Bank has entered into rental agreements for its office premises and office equipment amounting to EUR 3,306,000 (2011: EUR 3,298,000).Of this amount EUR 1,099,000 is payable within 1 year and EUR 2,207,000 is payable between 1 and 5 years.

2012 2011

Liabilities Assets Liabilities Assets

Parent bank and related banks 9,249,659 466,997,028 15,126,860 64,313,539Related group companies 517,504,931 - 64,313,539 - Other banks 94,578,746 847,158,151 - 548,819,625Funds entrusted/Loans and advances to customers 702,071,502 9,249,659 549,195,363 15,502,598

Total 1,323,404,838 1,323,404,838 628,635,762 628,635,762

Liabilities pledged to the BankIn connection to the risk profile of outstanding loans and other assets, the following liabilities have been allocated to assets under pledge agreements and are no longer freely available.

55

Foreign exchange contracts

Notional amounts are the principal amounts represented by the derivatives. Positive replacement value represents the loss the Bank could incur if all counterparties would be in default at the end of 2012.The positive replacement value depends on the market conditions prevailing at balance sheet date. The Foreign Exchange Contracts are all OTC-traded (over-the-counter).


(in euro) Notional amount Market value

Year Total < 1 year 1-< 5 year Positive Negative

2012 774,525,476 774,525,476 - 14,957,145 -1,330,2062011 840,725,462 840,725,462 - 1,565,633 -37,288,498

Currency riskThe total euro equivalent of assets in foreign currency amounts to EUR 2,646 million (2011: EUR 1,814 million), while the total of the liabilities in foreign currencies amounts to EUR 1,928 million (2011: EUR 978 million).

56

EUR GAP report (in euro million) 2012 2011

Due within one month 285,0 272,3 Between one and three months 501,0 477,6 Between three and six months -2,8 -44,6 Between six months and one year -257,6 -353,8 Between one and two years -221,4 -68,8 Between two and five years -15,3 -7,9 Between five and ten years - - Non-interest bearing -323,3 -289,3

Total -34,4 -14,5 USD GAP report (in euro million) 2012 2011 Due within one month -131,5 -312,0 Between one and three months -252,6 -105,9 Between three and six months 74,6 148,6 Between six months and one year 153,9 90,0 Between one and two years 91,2 91,8 Between two and five years 95,6 109,9 Between five and ten years 1,8 2,4 Non-interest bearing -11,0 -3,2

Total 22,0 21,6


(in euro)

Interest riskThe interest rate risk is monitored by means of the GAP report prepared separately for EUR and USD (the two main currencies). The GAP-analyses measure the difference between the amount of interest-earning assets and interest-bearing liabilities (both on- and off-balance) and allocates these to different time buckets based on the instrument’s next repricing or maturity date. Within each time bucket, the Bank may have a positive, negative, or neutral gap. A positive gap indicates that the Bank is generally expected to benefit from rising interest rates because its assets are expected to reprice more quickly than its liabilities. A negative gap indicates that the bank may benefit from falling interest rates.

57


(in euro)

On weighted average the interest on the floating (receive) side is 0.357% (2011: 0.835%) and on the fixed side 2.528% (2011: 4.14%). The remaining maturity (until repricing) on the floating side is 42 (2011: 57) days and 500 (2011: 462) days on the fixed side. The Interest Rate Swap contracts are all OTC-traded (over-the-counter).

Effective interest rates as at December 31st, 2012In % per annum EUR USD RUB

Assets Due from banks 0.44 2.08 4.21 Loans and advances to customers 6.31 7.70 - Interest-bearing securities 2.63 4.76 7.88 Liabilities Due to banks 0.48 3.65 6.90 Savings & savings deposits 2.70 - - Other funds entrusted 1.29 1.28 5.21 Subordinated liabilities 4.05 - -

Effective interest rates as at December 31st, 2011In % per annum EUR USD RUB

Assets Due from banks 1.22 0.93 3.95 Loans and advances to customers 7.11 7.62 8.32 Interest-bearing securities 2.84 7.09 7.88 Liabilities Due to banks 1.03 1.95 - Savings & savings deposits 3.40 - - Other funds entrusted 0.25 0.33 3.88 Subordinated liabilities 5.57 - -

Notional amount Market value

Year Total < 1 year 1-< 5 year > 5 year Positive Negative

2012 144,014,527 62,265,199 81,749,328 - 142,176 -2,004,725 2011 145,129,299 64,593,864 80,535,435 - - -5,540,855

Interest riskThe Bank uses Interest Rate Swaps to hedge interest risk out of the credit portfolio.

Interest Rate Swaps

Legal proceduresThe Bank is involved in a limited number of court procedures. It is not possible to predict the outcome of these procedures, but it is improbable that these will have a material adverse effect on the Bank’s financial position.

Capital informationThe following required capital information applies to Amsterdam Trade Bank N.V. (based upon Basel II accord).

2012 2011

BIS ratio (under Basel II accord) 21.1% 18.2%

Total capital required (in million euro) 133 144Total capital available (in million euro) 350 327 Tier I ratio 15.7% 13.2%

In line with regulations applicable to the whole banking sector in the Netherlands, the Bank started using the Basel II principles in 2008. The ratios are calculated on the basis of IFRS accounting principles as applied by the Bank in its reporting to its parent company and deviate from the accounting principles as used in these financial statements. The difference with the biggest impact on result and equity between these accounting principles is the application of hedge accounting for the derivatives in these financial statements, whereas hedge accounting is not applied for IFRS reporting purposes. As a result the net result 2012 is higher at December 31st, 2012 under IFRS accounting principles. The Dutch Central Bank sets solvency ratios for banks in the Netherlands, also based on Basel II. In 2012 and 2011 the required solvency ratios have been met.

58

59

Notes to the ConsolidatedProfit and Loss account 2012

60


(in euro)

2012 201119) Interest income 116,460,004 97,647,587Interest iwme represents income arising from lending activities and related transactions. Interest income comprise interest from:• fixed income securities EUR 6,269,861 (2011: EUR 8,481,210);• cash and balances at central banks EUR 691,452 (2011: EUR 984,119);• parent bank and related banks EUR 19,980,297 (2011: EUR 8,364,973).



Total 116,460,004 100.0 97,647,587 100.0

2012 % 2011 %

Trade finance fees 9,157,700 81.3 7,994,257 86.0Money transfer fees 942,726 8.4 613,740 6.6Other fees 1,156,455 10.3 684,765 7.4

Commission income 11,256,881 100.0 9,292,762 100.0Commission expense 773,442 1,002,532

Total 10,483,439 8,290,230


Russia 8,382,215 11.8 8,939,933 18.4Other CIS countries 2,357,477 3.3 252,535 0.5EMU countries 47,728,528 67.0 35,916,321 73.8Other European countries 788,617 1.1 258,353 0.5Other countries 12,003,225 16.8 3,296,706 6.8

Total 71,260,062 100.0 48,663,848 100.0

2012 201120) Interest expense 71,260,062 48,663,848Interest expense represents all cost related to the borrowing of funds and related transactions.EUR 14,535,743 (2010: EUR 11,194,071) of the interest expense is attributable to the parent bank and related entities.

2012 201121) Net commission income 10,483,439 8,290,230Commission comprise income from fees received in respect of banking services supplied to third parties, insofar as they are not in the nature of interest and expenses paid in respect of fees for banking services supplied by third parties.

61


(in euro)

2012 201122) Result on financial transactions 5,016,724 7,627,261Result on financial transactions comprise:

2012 2011

Foreign exchange results on client transactions 6,767,761 2,645,514Other Foreign exchange results -1,751,037 4,981,747

Total 5,016,724 7,627,261

Included in the EUR 6.8 million foreign exchange results on client transactions is EUR 1.6 million due to a transaction with a related party at arm’s length conditions.

2012 201123) Other income 1,708,913 1,453,480Results on other income comprise mainly VAT return payments.

2012 201124) Staff expense 17,777,322 14,559,813Staff expense comprise:

- Wages and salaries 13,825,200 11,788,134- Pension cost 1,237,911 1,117,219- Other social cost 813,439 472,983- Other staff cost 1,900,772 1,181,477

Total Staff expense 17,777,322 14,559,813

Included in Staff expense is the remuneration of the Executive Board.Pension obligations are insured with an insurance company. The pension scheme is a defined-contribution plan, hence the Bank pays a certain percentage of annual gross salaries and runs no financial and actuarial risk on pension investments on behalf of staff.As at December 31st, 2012, the total number of employees expressed in full-time equivalents was 131 (2011: 119).

2012 201125) General and administrative expense 7,935,256 12,921,2593General and administrative expense comprise:

- Housing 1,324,077 1,132,676- IT / communication 3,521,564 4,833,975- Public relations 330,998 494,586- Professional services 1,258,957 2,486,744- Foreign taxes 501,713 1,421,942- Other cost 997,947 2,551,336

Total General and administrative expense 7,935,256 12,921,259

62

In 2012, Professional services contained a release of EUR 1,000,000 relating to the Bank’s share in the bankruptcy of the Dutch DSB Bank N.V. under the Dutch Deposit Guarantee Scheme.In 2011 IT systems have been impaired, resulting in a write-off of EUR 1,724,026, which is recognized under IT/ communication.In 2011, included in Other cost is an amount of EUR 868,833 regarding operational cost for foreclosed assets.

2012 201126) Depreciation 1,649,105 2,011,007Depreciation comprise the depreciation cost of Intangible assets EUR 1,030,163 (2011: EUR 1,270,100) and of Property and equipment EUR 618,942 (2011: EUR 740,907).

2012 201127) Value adjustment to loans and advances

to customers 8,074,963 9,391,433Value adjustment to loans and advances to customers relates to additions to and releases from provisions for bad debts, country risk and securities.

2012 2011

Release from provisions -8,728,910 -22,177,948Addition to provisions 16,803,000 31,785,000Other releases 873 -215,619

Total Value adjustment to loans and advances to customers 8,074,963 9,391,433

The addition in 2012 relates to 5 clients (2011: 6). The loan loss provision also includes a provision for incurred but not reported (IBNR) credit losses of EUR 2.4 million (2011: EUR 2.1 million).

2012 201128) Taxation 6,249,647 -8,819,861The statutory applicable corporate tax rate for 2012 in the Netherlands is 25% (2011: 25%) and in Russia is 20% (2011: 20%).This leads to an overall effective tax rate of 24.5% (2011: 23.8%).In 2011 the Bank agreed with the Dutch tax authorities on a combined tax deduction on taxable income, related to transfer pricing issues, amounting to EUR 60 million for the years 2007 up until 2009. This agreement had a positive impact on corporate tax of EUR 15 million.Taxes are calculated on the result before taxation, based on the applicable profit tax rate.


(in euro)

63

CorporateFinancial Statements2012

64

Corporate Balance Sheet

as at December 31st, 2012before appropriation of profit

(in euro)

2012 2011

Assets

Cash and balances at central banks 473,265,766 296,471,902Due from banks 1,923,167,474 990,833,486Loans and advances to customers 1,080,502,695 1,283,761,828Interest-bearing securities 231,714,708 192,172,181Participating interests 34,149,124 32,012,682Intangible assets 8,750,511 3,995,784Property and equipment 2,333,605 1,139,625Prepayments and accrued income 19,582,899 32,297,570Other assets 15,117,071 2,560,852

Total assets 3,788,583,853 2,835,245,910 Liabilities Due to banks 287,258,553 110,484,958Funds entrusted 3,090,399,158 2,307,120,919Accruals and deferred income 29,938,820 21,063,824Other liabilities 1,400,787 37,722,394Fund for general banking risks 1,591,603 1,591,603Subordinated liabilities 90,000,000 90,000,000Shareholders’ equity: - Paid-in and called-up capital 117,343,424 117,343,424- Share premium 4,317,803 4,317,803- Retained earnings 145,598,585 109,307,526- Revaluation reserve 12,395 2,400- Net profit 20,722,725 36,291,059Total shareholders’ equity 287,994,932 267,262,212

Total liabilities and shareholders’ equity 3,788,583,853 2,835,245,910 Contingent liabilities pursuant to: Guarantees 51,654,397 53,564,244Irrevocable credit facilities 71,487,662 52,837,752

65

Corporate Profit and Loss account 2012

(in euro) 2012 2011

Income

Interest income 110,947,820 91,937,984 Interest expense 71,260,062 48,663,848

Net interest income 39,687,758 43,274,136 Commission income 11,256,881 9,292,762 Commission expense 773,442 1,002,532

Net commission income 10,483,439 8,290,230 Result on financial transactions 7,145,791 5,117,399 Other income 1,708,913 1,453,480

Total income 59,025,901 58,135,245 Expense Staff expense 17,588,240 14,399,829General and administrative expense 7,292,250 10,497,501Depreciation 1,647,763 2,008,540Value adjustment to loans and advances to customers 8,074,963 10,823,052

Total expense 34,603,216 37,728,922 Result before taxation 24,422,685 20,406,323 Taxation 5,715,641 -10,370,504 Result subsidiaries 2,015,681 5,514,232

Net profit 20,722,725 36,291,059

66

Notes to the Corporate Financial Statements


(in euro)

FINANCIAL STATEMENTS

GeneralThe Bank’s corporate financial statements have been prepared in conformity with section 14, “Provisions for banks”, of book 2, Title 9 of the Netherlands Civil Code with the allowed application of the accounting policies (DGAAP) as also applied in the consolidated annual accounts. The principles of valuation and determination of results stated in connection with the consolidated balance sheet and consolidated profit and loss account are also applicable to the corporate balance sheet and corporate profit and loss account.

Reference to the consolidated financial statementsAs mentioned above, the accounting policies applied in the corporate annual accounts correspond with those of the consolidated annual accounts and furthermore the consolidated entities, ATB Leasing and Amsterdam Trade Capital Administration Corporation only comprise a small part of the total amounts. Accordingly the notes to the balance sheet and profit and loss account are almost similar in both the corporate annual financial statements and the consolidated annual financial statements and thus have not been presented again.

Participating interestsIn the corporate balance sheet the following participating interests are included:- SWIFT, details can be found in the Notes to the consolidated financial statements.- ATB Leasing LLC, a subsidiary for leasing activities in Moscow.

The paid-in capital of ATB Leasing amounts to EUR 28,807,976 (Russian Ruble 1,246,273,138). The Bank holds 111 (2011: 111) shares of ATB Leasing. The profit regarding 2012 and 2011 has been recorded as an addition on the participating interest in ATB Leasing.

- ATCAC (Amsterdam Trade Capital Administration Corporation B.V.). The Bank holds 4 shares (2011: 4) of ATCAC. Due to losses from 2012 and previous years, ATCAC has a negative equity, which is recorded as a deduction on the loan to ATCAC.

The shares of ATB Leasing and ATCAC represent 100% of the outstanding shares.

Statement of changes in Participating interests

2012 2011

Balance as at January 1st 32,012,682 25,812,329 Result 2,136,025 6,202,571Addition in capital -2,860 - FX translation reserve 3,277 -2,218


67

Notes to the Corporate Financial Statements


(in euro)

External auditor’s cost

2012 KPMG Accountants NV Other KPMG Total KPMG

Audit services 362,395 - 362,395Audit-related services 111,925 87,192 199,117Tax advice services - 187,366 187,366Other non-audit services - 78,540 78,540

Total 474,320 353,098 827,418

2011 KPMG Accountants NV Other KPMG Total KPMG

Audit services 327,900 93,188 421,088Audit-related services 88,400 - 88,400Tax advice services - 237,277 237,277Other non-audit services - - -

Total 416,300 330,465 746,765

Remuneration of Supervisory and Executive BoardRemuneration (including pension cost and bonuses) of the members of the Executive Board during the period amounts to EUR 1,995,291 (2011: EUR 1,860,411). Remuneration of the Supervisory Board amounts to EUR 175,000 (2011: EUR 170,417).


Executive Board: Supervisory Board:

P. Gorbatsevich, CEO K.A. de Jong, ChairmanH.W. te Beest, CFO H.C.M. van DammeJ.H.F. Umbgrove CRO W. Devriendt R.D. James F.C.W. Kuijlaars V.V. Tatarchuk

68

OtherInformation

69

OtherInformation

Subsequent eventsThere have been no significant events between the year end and the date of approval of these accounts which would require a change to or disclosure in the accounts.

Appropriation of resultPursuant to article 33, paragraph 1 of the Articles of Association, the Bank’s profit is at the disposal of the General Meeting of Shareholders.It is proposed to allocate the net profit in the following way, pay out a dividend of EUR 2,000,000 and add the remaining part of EUR 18,722,725 to Retained earnings.

Article 33 paragraph 2 of the Articles of Association states that dividends can only be made available to the extent that shareholders’ equity exceeds the amount of paid-in and called-up capital and legal reserves.

70

OtherInformation

Independent auditor’s reportTo: the Executive Board and Supervisory Board of Amsterdam Trade Bank N.V.

Report on the financial statementsWe have audited the accompanying financial statements 2012 of Amsterdam Trade Bank N.V., Amsterdam, which comprise the consolidated and corporate balance sheet as at December 31, 2012, the consolidated and corporate profit and loss account for the year then ended and the notes comprising a summary of the accounting policies and other explanatory information.

Management’s responsibilityManagement is responsible for the preparation and fair presentation of the financial statements and for the preparation of the Report of the Executive Board, both in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Furthermore, Management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Executive Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of Amsterdam Trade Bank N.V. as at December 31, 2012 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.

Report on other legal and regulatory requirementsPursuant to the legal requirements under Section 2:393 sub 5 at e and f of the Netherlands Civil Code, we have no deficiencies to report as a result of our examination whether the Report of the Executive Board, to the extent we can assess, has been prepared in accordance with part 9 of Book 2 of this Code, and if the information as required under Section 2:392 sub 1 at b - h has been annexed. Further, we report that the Report of the Executive Board, to the extent we can assess, is consistent with the financial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.

Amstelveen, June 14th, 2013

KPMG ACCOUNTANTS N.V.

N.R. Tambach RA

Amsterdam Trade Bank N.V.

Herengracht 475

1017 BS Amsterdam

The Netherlands

Phone +31 (0)20 5 209 209

Fax +31 (0)20 5 209 219

[email protected]

www.atbank.nl

Chamber of Commerce

Amsterdam 33260432

annual report 2012 - amsterdam trade bank · 2017. 7. 19. · annual report 2012. 4. 5 general...

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