bank of russia annual report 2007 (english) · federal budget expenditure in 2007 ... (bank of...

T H E C E N T R A L B A N K O F T H E R U S S I A N F E D E R A T I O N

R E P O R TA N N U A L 2 0 0 7

Approved by the Bank of Russia Board of Directors on May 13, 2008

© T H E C E N T R A L B A N K O F T H E R U S S I A N F E D E R A T I O N , 2 0 0 8

Introduction ......................................................................................... 8

I. The economic and financial situation in Russia .............................................. 11

I.1. The economic situation in Russia ..................................................................... 12

I.2. Government finance and domestic government debt ............................................. 16

I.3. The financial sector ....................................................................................... 191.3.1. Credit institutions ............................................................................... 221.3.2. Other financial institutions ................................................................... 301.3.3. Financial markets ............................................................................... 32

I.4. Balance of payments and foreign debt ............................................................... 411.4.1. Balance of payments ............................................................................ 411.4.2. Foreign debt ...................................................................................... 45

I.5. The world economy and international markets ................................................... 47

II. Bank of Russia activities ........................................................................ 51

II.1. Monetary policy ........................................................................................... 52II.1.1. Monetary policy objectives and results ..................................................... 52II.1.2. Monetary authority indicators and monetary policy instruments ................... 58II.1.3. Exchange rate policy ............................................................................ 64

II.2. Reserve management .................................................................................... 66

II.3. Banking regulation and supervision .................................................................. 71II.3.1. Registration and licensing of banking activities .......................................... 71II.3.2. Off�site supervision ............................................................................. 75II.3.3. Inspection of credit institutions .............................................................. 78II.3.4. Bank bankruptcy (insolvency) prevention and withdrawal

of insolvent credit institutions from the banking services market ................... 81II.3.5. Household deposit insurance ................................................................. 83II.3.6. Central Catalogue of Credit Histories ...................................................... 84

II.4. The Russian payment system .......................................................................... 85II.4.1. The state of the Russian payment system ................................................. 85II.4.2. Development and upgrading of the Bank of Russia payment system ............... 87II.4.3. Bank of Russia payment system infrastructure development ........................ 89

II.5. Bank of Russia activities aimed at countering the legalisation (laundering)of criminally obtained incomes and the financing of terrorism ................................ 90

II.6. Foreign exchange regulation and foreign exchange control .................................... 91

II.7. Bank of Russia activities relating to government finance ....................................... 93

II.8. Cash circulation management .......................................................................... 95

II.9. Bank of Russia activities aimed at upgrading accounting and reporting .................... 98

II.10. International cooperation ............................................................................. 100II.10.1. Cooperation between the Bank of Russia and international financial

and economic organisations ................................................................. 100II.10.2. Cooperation between the Bank of Russia and foreign countries,

and their central (national) banks ........................................................ 103

Contents

II.11. Upgrading Bank of Russia system and enhancing its efficiency ............................. 105II.11.1. Bank of Russia organisational structure and measures taken to improve it .... 105II.11.2. Staffing and personnel training ............................................................ 106II.11.3. Bank of Russia information and telecommunications system development ..... 109II.11.4. Bank of Russia activities aimed at upgrading banking legislation.

Managing suits and claims at Bank of Russia institutions ........................... 110II.11.5. Bank of Russia internal audit .............................................................. 113II.11.6. Bank of Russia stakeholdings in the capital of Russian and foreign

credit institutions and other organisations .............................................. 114

III. Bank of Russia annual financial statements as of January 1, 2008 ...................... 117

Introduction .............................................................................................. 118

Annual balance sheet as of January 1, 2008 ..................................................... 119

Profit and loss account................................................................................. 120

Capital, funds and profit allocation ................................................................. 121

Notes to Annual Financial Statements as of January 1, 2008 ............................... 1231. Accounting and financial reporting principles .......................................... 1232. Impact of economic conditions on Bank of Russia financial statements ......... 1283. Precious metals ................................................................................ 1304. Funds placed with non�residents and securities issued by non�residents ........ 1305. Loans and deposits ............................................................................ 1316. Securities ........................................................................................ 1327. Other assets ..................................................................................... 1358. Cash in circulation ............................................................................ 1379. Funds in accounts with the Bank of Russia ............................................. 137

10. Float .............................................................................................. 13811. Other liabilities ................................................................................ 13912. Reporting year profit ......................................................................... 13913. Interest income................................................................................. 14014. Income from securities trading ............................................................. 14115. Income from operations with precious metals .......................................... 14116. Other income ................................................................................... 14217. Interest expenses .............................................................................. 14218. Expenses on securities trading ............................................................. 14319. Cash turnover management expenses .................................................... 14320. Expenses on operations with precious metals .......................................... 14321. Net expenses on provisions/income from the recovery of provisions ............. 14422. Expenses on negative revaluation of foreign currency ............................... 14523. Other operating expenses ................................................................... 14524. Personnel costs ................................................................................. 14625. Off�balance sheet claims and obligations accounts .................................... 14626. Effect of global financial market turmoil on Bank of Russia management

of foreign exchange reserves ................................................................ 14727. Post�accounting date events ................................................................ 148

Statement of profit and its allocation .............................................................. 149

Statement of Bank of Russia reserves and funds ................................................ 150

Statement of Bank of Russia management of securities and stakeholdingsin the capital of companies constituting Bank of Russia property .......................... 152

Statement of Bank of Russia personnel costs .................................................... 155

Statement of capital investment budget performance.......................................... 156

Auditor’s Report ................................................................................ 158

IV. Addenda .......................................................................................... 163

IV.1. Principal measures taken by the Bank of Russia to implementthe single state monetary policy in 2007 .......................................................... 164

IV.2. Principal measures to upgrade banking regulation and supervision in 2007 ............ 170

IV.3. Statistical tables ......................................................................................... 182

1. Consumer prices, core inflation and administered service prices ..................................... 13

2. GDP consumption ................................................................................................ 14

3. Merchandise trade and price of oil ............................................................................ 14

4. Federal budget expenditure in 2007 ......................................................................... 17

5. Federal budget expenditure .................................................................................... 18

6. Balances of federal budget accounts opened with the Bank of Russia ............................... 18

7. Interest rates on ruble loans.................................................................................... 20

8. Interest margin on bank lending and deposit operations with non�financial customerswith different terms in 2006—2007 ......................................................................... 20

9. Key banking sector indicators .................................................................................. 23

10. Banking sector liability structure ............................................................................. 24

11. Banking sector asset structure ................................................................................. 25

12. Capital adequacy .................................................................................................. 28

13. Overdue debt on loans, deposits and other placements .................................................. 28

14. Interest rates on interbank ruble loans ...................................................................... 32

15. Official dollar/ruble and euro/ruble exchange rates in 2007 .......................................... 33

16. OFZ secondary market turnover and yield in 2007 ...................................................... 34

17. Non�coupon OFZ yield curve .................................................................................. 35

18. MICEX Stock Exchange equities trade in 2007 ........................................................... 37

19. Corporate bond secondary trade in 2007 ................................................................... 37

20. Forward contract exchange trade turnovers in 2007 .................................................... 39

21. Russia’s major balance of payments components and international reserves ...................... 42

22. Russia’s foreign debt (US$, billion) ......................................................................... 45

23. Russia’s foreign debt (as % of GDP) ........................................................................ 46

24. Growth in output of goods and services in the world and in individual countries ................ 48

25. Growth in exchange rates of individual currencies against the US dollar in 2007 ............... 49

26. Monetisation of the economy (according to monetary aggregate M2) .............................. 53

27. Monetary aggregates ............................................................................................. 53

28. Ruble�denominated deposits of households and non�financial and financial enterprises other than credit institutions .................................................................................. 54

29. Bank of Russia key interest rates and overnight MIACR ............................................... 55

30. Interest rates on ruble loans to non�financial enterprises .............................................. 56

31. Loans to non�financial enterprises and households in rubles and foreign currency .............. 56

32. Exchange rate and sources of money supply in 2006—2007 .......................................... 59

List of Charts

33. Exchange rate, aggregate reserves and net foreign assets of credit institutionsin 2006—2007 .................................................................................................... 60

34. Aggregate banking sector reserves and Bank of Russia operations to refinancecredit institutions in 2006—2007 ............................................................................ 62

35. Bank of Russia interventions on domestic forex market and bi�currency basketruble value in 2007 ............................................................................................... 64

36. Real ruble exchange rate in 2006—2007 ................................................................... 65

37. Factors of change in Bank of Russia foreign exchange reserves in 2007 ............................ 67

38. Bank of Russia foreign exchange reserves by instrument in 2007 .................................... 67

39. Bank of Russia foreign exchange reserves by country in 2007 ........................................ 68

40. Bank of Russia foreign exchange reserves by currency in 2007 ....................................... 68

41. Bank of Russia foreign exchange reserves by credit rating in 2007 .................................. 69

42. Number of registered operating credit institutions and banking licences granted to them ..... 72

43. Number of branches of operating credit institutions by region ........................................ 72

44. Number of operating credit institutions and their registered authorised capital .................. 73

45. Number of operating credit institutions by authorised capital ......................................... 74

46. Scheduled and unscheduled inspections ..................................................................... 79

47. Thematic and comprehensive inspections ................................................................... 79

48. Inspections per credit institution .............................................................................. 80

49. Cash in circulation in 2007 ..................................................................................... 96

50. Detection of counterfeit Bank of Russia notes and coins in 2002—2007 .......................... 96

51. Detection of counterfeit Bank of Russia notes and coins by Federal District in 2007 ........... 97

52. Detection of counterfeit foreign banknotes in 2002—2007 ............................................ 97

53. Number of Bank of Russia employees by division as of January 1, 2008 ......................... 105

54. Age structure of Bank of Russia executives and specialists ........................................... 107

55. Ratio of executives and specialists with higher education ............................................ 107

56. Centralised training of Bank of Russia personnel in 2007 ............................................ 108

57. Subjects of Bank of Russia personnel advanced training and retraining by contractin 2007 ............................................................................................................ 108

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF THE RUSSIAN FEDERATION

First Deputy ChairmanA.V. Ulyukaev

Deputy ChairmanK.N. Korishchenko

First Deputy ChairmanG.I. Luntovsky

Deputy ChairmanV.N. Melnikov

Chief Accountant —Director of the Accounting

and ReportingDepartment

L.I. Gudenko

Head of St.PetersburgMain Territorial Branch

N.A. Savinskaya

Chairman of the Central Bankof the Russian Federation

S.M. Ignatiev

First Deputy ChairmanG.G. Melikyan

Director,General Economic

DepartmentN.Y. Ivanova

Head of the MoscowMain Territorial Branch

K.B. Shor

Director,Banking Regulation andSupervision Department

A.Y. Simanovsky

Director,Credit Institutions

Licensing and FinancialRehabilitation Department

M.I. Sukhov

8

B A N K O F R U S S I A 2 0 0 7 A N N U A L R E P O R T

INTRODUCTION

ompiled pursuant to the Federal Law onthe Central Bank of the Russian Federa�tion (Bank of Russia), the Bank of Russia

Annual Report reflects the results of the workdone by the Bank of Russia in 2007 to ensure thestability of the ruble, improve and strengthen thecountry’s banking system and upgrade and en�sure the effectiveness of the payment system. ThisReport contains information for a wide range ofeconomic agents on the results of the Bank ofRussia’s work in 2007 and includes Bank of Rus�sia annual financial statements, the auditor’s re�port and the report by the Audit Chamber of theRussian Federation.

In 2007, Russia’s gross domestic product con�tinued to grow faster than the world economy.There was a rise in employment and real moneyincome kept growing at rapid rates. Fixed capitalinvestment increased significantly.

During the year under review the Russianeconomy was affected by both a favourable pricesituation for Russian exports and instability onworld financial markets, caused by the US mort�gage crisis, which created confusion in the direc�tion of capital flows.

Rapid economic growth was due to the expan�sion of demand for domestic products, while theexternal factors stimulated growth in exports. Atthe same time, demand for imports increased sig�nificantly due to growth in revenues in theeconomy. As a result, the current account sur�plus contracted, but, despite the withdrawal offunds from Russian assets by foreign investors inthe third quarter, net capital inflow into the pri�

vate sector increased considerably and far sur�passed the projected amounts and proceeds fromcurrent operations.

Using the managed floating exchange rate re�gime, the Bank of Russia cushioned fluctuationsin the exchange rate of the ruble, restraining thepace of its appreciation. Bank of Russia interven�tions on the domestic foreign exchange market ledto further significant growth in international re�serves and this strengthened the financial posi�tion of the country but made it more difficult toimplement a monetary policy aimed at reducinginflation.

As foreign currency flowed into the country,the monetary policy and the Russian FederationStabilisation Fund helped control the excessmoney supply created by currency interventions.Nevertheless, although M2 growth slowed downin the second half of 2007, it remained high lastyear and exceeded the projected increase in moneydemand. This process showed that growing moneysupply created a risk for price stability not onlyin the year under review, but also in the mediumterm.

As budget expenditure rose, consumer de�mand continued to increase. As before, labourproductivity grew more slowly than real wagesand this also created the risk of higher inflation.The problem was compounded by the fact thatfood prices were rising on the world market andinflation was accelerating in the countries trad�ing with Russia. As a result, consumer pricegrowth grew in 2007 and full�year inflationreached 11.9%.

C

9

I N T R O D U C T I O N

In 2007, the banking sector continued to dem�onstrate dynamic growth and its functional rolein the economy has increased. This was the re�sult of the measures taken by the Bank of Russiato strengthen the banking sector’s capital base,improve the quality of banking risk managementand upgrade the deposit insurance system.

The concentration of banking capital allowedthe banking sector to meet to a fuller extent thedemand for banking services and made Russiancredit institutions more competitive. The grow�ing presence of credit institutions with foreigninterest on the Russian banking services marketgave additional impetus to competition in thebanking sector.

The world liquidity crisis became a serious testfor the Russian banks. The shortage of funds onworld financial markets in the second half of 2007stimulated the Bank of Russia to maintain thebanking sector’s current liquidity by refinancingRussian banks. As a result, by most of the keyindicators the Russian banking sector’s perfor�mance in 2007 was better than in 2006 and bysome indicators it was just slightly worse than inthe previous year.

The problems of the world financial marketscompelled the Bank of Russia to pay more atten�tion to the assessment of liquidity of credit insti�tutions, the performance of banks oriented to ex�ternal borrowings and the effectiveness of the li�quidity risk management system. It also took aseries of measures to reduce to a minimum theadverse impact of the crisis on the value of its for�eign exchange reserves.

The efforts made by the Bank of Russia to im�prove the institutional structure of the bankingsector served the purpose of making it easier forcredit institutions to set up new internal divisionsand branches, encouraging the development of newbanking services, ensuring transparency of theownership structure of credit institutions and pro�tecting the market against violators of bankinglaws. These measures led to a growth in the rangeof banking services, which became more accessibleand affordable, and the further organisational andfinancial rehabilitation of the banking sector.

The upgrading of the payment system in 2007made banking services more effective and the pay�ment services provided by the banking system lesscostly and more affordable, and stimulated the useof new, advanced methods of effecting non�cashretail payments. To implement the Russian Bank�ing Sector Development Strategy until 2008, theBank of Russia in the second half of 2007 put intooperation a real�time banking electronic speedpayment system (BESP).

To make its activities transparent, the Bankof Russia in 2007 continued to publish analyticalmaterials and statistical data in the Bank of Rus�

sia Bulletin and the Bulletin of Banking Statis�

tics and post them on its website. In 2007, theBank of Russia launched two new specialised pub�lications, Bank of Russia Currency Reserve Man�

agement and Payment and Settlement Systems

and created on its website a section titled BESP

System. In addition, the Bank of Russia createdan Extranet portal for contact with credit insti�tutions.

ITHE ECONOMIC AND

FINANCIAL SITUATION

IN RUSSIA


12

1 Foreign debt to GDP.

I.1. THE ECONOMIC SITUATION IN RUSSIA

2007, the Russian economy developed ina situation of favourable prices of Rus�sian exports on world markets and rapid

growth in domestic demand. The growth of grossdomestic product (GDP) and fixed capital invest�ment accelerated, real disposable money incomecontinued to increase, unemployment declinedand a federal budget surplus remained.

The balance of payments was stable. Capitalflow to the private sector and growth in foreignexchange reserves reached the highest levels since1992. At the same time, the current account sur�plus went down year on year.

Russia’s foreign debt continued to decreasedue to both scheduled and ahead�of�schedule pay�ments. Russia continued to repay its debt to theParis Club of creditor nations, but the debt bur�den1 on the country’s economy increased due to agrowth in private sector debt.

In 2007, rapid growth in aggregate demand,especially due to massive inflow of foreign capi�tal, significantly increased the risk of higher in�flation.

Consumer price inflation increased by2.9 percentage points, as compared with 2006,and stood at 11.9% (December on December).The target set for 2007 inflation was surpassed.Core inflation stood at 11% as against 7.8% in2006. Significant growth in food prices (to 15.6%

as against 8.7% in 2006) made a substantial con�tribution to the acceleration of price growth. Foodprices rose in many countries in 2007.

Non�food prices increased by 6.5% in 2007,exceeding the previous year’s growth by half apercentage point. Prices of construction materi�als went up by 16.2% (as against 11.5% in 2006).

Growth in the prices of paid services providedto the public slowed down slightly: in 2006 ser�vice prices grew by 13.9%, whereas in 2007 theyincreased by 13.3%. Growth in administered ser�vice prices slowed down by an estimated 0.1 per�centage points. The most significant slowing ofgrowth was registered in rent and public utilityprices (to 14% from 17.9% in 2006).

Industrial producer prices rose by 25.1% in2007 (as against 10.4% in 2006). The accelera�tion of growth in industrial producer prices wasdue to a 52.3% increase in producer prices in themining sector (as against a 1.6% growth in2006). Producer prices in the production, trans�mission and distribution of electricity grew by15.0% (as against 9.8% in 2006).

In the manufacturing sector price growth ac�celerated to 17.9% as against 13.3% in 2006. Thebiggest increase in producer prices was registeredin the production of coke (88% as against a fallof 4.7% in 2006) and petroleum products (42.2%as against 3.1% a year earlier).

In

I . 1 . T H E E C O N O M I C S I T U A T I O N I N R U S S I A

13

CONSUMER PRICES, CORE INFLATION AND ADMINISTERED SERVICE PRICES*

(growth as % of corresponding month of previous year)

20

18

14

10

6

20072006

20

18

14

16

12

16

12

10

8 8

6

Core inflation Consumer prices Administered prices

* Bank of Russia estimate.

As the number of gainfully employed citi�zens continued to grow in 2007, the number ofunemployed continued to go down. The totalnumber of jobless, calculated according to a meth�odology developed by the International LabourOrganisation (ILO), stood at 6.1% of the eco�nomically active population (as against 7.2% in2006).

GDP increased by 8.1% in 2007 (as against7.4% in 2006). The most rapid rates of outputgrowth were registered in construction, commu�nications and retail and wholesale trade. Growthin industrial output remained unchanged from2006 at 6.3%.

The positive net financial result in theeconomy1 increased by 17.7% in 2007 year onyear and reached 5,726.3 billion rubles. Theshare of loss�making enterprises contracted by6.3 percentage points to 23.4% of total enter�prises. The rate of return on goods, produce, workand services sold2 rose slightly in 2007 (to 12.5%as against 12.3% in 2006).

Economic growth was due to the rapid expan�sion of investor and consumer demand. Growthin expenditures on household sector final con�sumption accelerated to 12.8% in 2007 from11.2% in 2006.

Real disposable money income increased by10.7% in 2007 (as against 13.5% in 2006). Therewas a rise in wages and salaries and governmentexpenditures on social security. Growth in incomeswas accompanied by a rapid expansion of consumerlending. As interest rates on deposits were too lowto stimulate savings, the share of household spend�ing on goods and services increased.

The acceleration of growth in government ex�penditures on final consumption (from 2.5% in2006 to 5.0% in 2007) stimulated a more rapidincrease in domestic demand.

Gross capital formation increased by 22.6%in 2007 (as against 18.3% in 2006). The biggestfixed capital investments were made in trans�portation and the fuel and energy sector.

In 2007, as in the previous year, fixed capitalinvestments were financed mainly by borrowedfunds. Bank loans accounted for 9.4% of the in�vestment financing.

As imports grew considerably faster than ex�ports, net exports of goods and services decreasedby 28.1% in 2007.

Positive trends continued in foreign trade in2007. As the terms of Russia’s trade with othercountries improved, the terms of trade index roseby 3% (as against 11% a year earlier).

1 Excluding small businesses, banks, insurance companies and budget�financed organisations.2 Profit (loss) from sales to proceeds from sale of goods, produce, work and services.

Chart 1


14

GDP CONSUMPTION

(as % of previous year)

30

—20

—302005 2006 2007

20

—10

10

0

30

—20

—30

20

—10

10

0

Net exports

Gross capital formation

Final consumption

GDP

MERCHANDISE TRADE*

AND PRICE OF OIL

400

350

250

150

50

02001 2002 2003 2004 2005 2006 2007

80

70

50

30

300

200

100

60

40

20

10

0

Price of Urals crude, $/barrel

Exports, billion US dollars

Imports, billion US dollars

Exports, imports Price of oil

* According to balance of payments data.

Growth in export prices slowed down in 2007.There was also a slowing of growth in Russian ex�port volumes. Exports of natural gas decreased ascompared with the previous year. The value of oilexports in 2007 grew faster than overall exports,whereas the value of petroleum products and natu�ral gas exports increased more slowly than exportsin general. Growth in other exports accelerated and

their growth rates were higher than those of themajor energy exports (oil, petroleum products andnatural gas). The share of the major energy prod�ucts in the commodity structure of exports con�tracted as the share of natural gas shrank, whilethe share of oil expanded.

Import growth continued to accelerate in2007, mostly due to the expansion of import

Chart 2

Chart 3

I . 1 . T H E E C O N O M I C S I T U A T I O N I N R U S S I A

15

volumes. As a result of the rise in world foodand raw material prices, growth in importprices also accelerated, although the expansionof import volumes continued at rapid rates. Thevalue of imports of investment goods continuedto increase faster than the value of consumer

goods imports. At the same time, imports ofnon�food consumer goods grew almost as fastas imports of investment goods. The share ofmachinery, equipment and transport vehiclescontinued to expand in the commodity struc�ture of imports.


16

I.2. GOVERNMENT FINANCE

AND DOMESTIC GOVERNMENT DEBT

he budget policy in 2007 was aimed atmaintaining a well�balanced budget systemand accumulating additional revenues

from the severance tax and oil export duties inthe Stabilisation Fund of the Russian Federation(hereafter Stabilisation Fund) for the purpose ofensuring macroeconomic stability and the effec�tiveness of budget expenditures.

Several factors contributed to the stability ofgovernment finance. Faster�than�expectedgrowth in export and import volumes broughtadditional revenues to the federal budget. Theacceleration of GDP growth was another contrib�uting factor.

According to the Federal Treasury’s prelimi�nary report, federal budget revenue in 2007 ag�gregated 7,779.1 billion rubles, or 104.5% of therevenue approved by the 2007 Federal BudgetLaw. Relative to GDP, federal budget revenuestood at 23.6% as against 23.4% in 2006.

Federal budget expenditure aggregated5,983.0 billion rubles, or 91.6% of the expendi�ture approved by the 2007 Federal Budget Lawand 18.1% of GDP (as against 15.9% in 2006).Of these, non�interest expenditures equalled5,840.0 billion rubles, or 91.5% of the non�in�terest expenditures approved by this Law and17.7% of GDP (as against 15.3% in 2006).

The federal budget surplus stood at 1,796.1 bil�lion rubles, or 196.8% of the surplus approvedby the 2007 Federal Budget Law and 5.4% ofGDP.

The excess of the average price of Urals crudeover the benchmark price and the price assumedfor the calculation of federal budget revenue indi�cators for 2007 allowed the Russian Governmentto increase the Stabilisation Fund, the balances ofwhich in foreign currency accounts opened withthe Bank of Russia grew by 1,502.2 billion rublesover the year and as of January 1, 2008,amounted to 3,849.1 billion rubles.

The balances of federal budget accountsopened with the Bank of Russia, includingStabilisation Fund accounts, and the balances ofregional government and federal government ex�tra�budgetary fund accounts increased by morethan 50% in 2007 and as of January 1, 2008,stood at 5,119.5 billion rubles, 324.2 billionrubles and 203.6 billion rubles, respectively.

Pursuant to Russian Federation GovernmentResolution No. 229, dated April 21, 2006, ‘Onthe Procedure for Managing the StabilisationFund of the Russian Federation,’ in 2007 theMinistry of Finance continued to use money fromthe Stabilisation Fund to acquire US dollars, eu�ros and British pounds and place them into the

T

I . 2 . G O V E R N M E N T F I N A N C E A N D D O M E S T I C G O V E R N M E N T D E B T

17

Stabilisation Fund foreign currency accountsopened for the Federal Treasury with the Bankof Russia. As of January 1, 2008, there were nobalances in the Stabilisation Fund ruble accountopened with the Bank of Russia.

According to the Federal Treasury’s pre�liminary data, consolidated federal budget rev�enue for 2007 aggregated 13,250.7 billionrubles, or 40.2% of GDP, expenditure stoodat 11,245.8 billion rubles, or 34.1% of GDP, andthe surplus equalled 2,004.9 billion rubles, or6.1% of GDP. Regional consolidated budget rev�enue and expenditure stood at 4,841.8 billionrubles and 4,803.3 billion rubles, respectively,and the surplus equalled 38.5 billion rubles(14.7%, 14.6% and 0.1% of GDP, respectively).

According to the Federal Treasury’s prelimi�nary data, revenues and expenditures of the Pen�sion Fund of the Russian Federation in 2007stood at 1,946.6 billion rubles and 1,786.5 bil�lion rubles, respectively, showing a surplus of160.1 billion rubles; revenues and expenditures ofthe Social Insurance Fund of the Russian Federa�tion stood at 167.7 billion rubles and 162.0 billionrubles, respectively, the surplus equalling 5.7 bil�lion rubles; revenues and expenditures of the Fed�eral Compulsory Medical Insurance Fund stood at157.8 billion rubles and 158.2 billion rubles, re�spectively, showing a deficit of 400 million rubles.

According to the Finance Ministry’s prelimi�nary data, Russia’s domestic government debt in2007 increased by 236.3 billion rubles, or 22.2%,and totalled 1,301.1 billion rubles, whereas theupper limit set by the 2007 Federal Budget Lawwas 1,363.3 billion rubles. The estimated ratio ofdomestic government debt to GDP stood at 3.9%as of January 1, 2008, which represents a decreaseof 0.1 percentage points from January 1, 2007.

As for the structure of the domestic govern�ment debt, government securities, valued at1,248.8 billion rubles, accounted for 96.0% as ofJanuary 1, 2008, an increase of 220.8 billionrubles, or 21.5% over the year; government guar�antees, valued at 46.7 billion rubles, accountedfor 3.6%, an increase of 15.5 billion rubles, or49.6%; other federal government debt obliga�tions, valued at 5.6 billion rubles, accounted for0.4%, unchanged from 2006.

As for the structure of the domestic govern�ment debt expressed in government securities,

97.6

1.3

FEDERAL BUDGET EXPENDITURE

IN 2007 (%)

Domestic government debt service

expenditures

Government foreign debt service

expenditures

Non�interest expenditures

1.1

debt depreciation federal loan bonds (OFZ) ac�counted for 64.7% (807.6 billion rubles), per�manent coupon�income federal loan bonds —23.1% (288.4 billion rubles), government sav�ings bonds — for 8.1% (101.4 billion rubles) andfixed coupon�income federal loan bonds — 4.1%(51.4 billion rubles).

The value of outstanding government securi�ties traded on the organised securities market in�creased by 171.8 billion rubles, or 19.6%, overthe year and as of January 1, 2008, it amountedto 1,047.4 billion rubles, or 80.5% of the totaldomestic government debt, as against 82.2% asof January 1, 2007.

The share of the Finance Ministry’s debt tothe Bank of Russia in 2007 contracted by 3.0 per�centage points to 20.1% of total domestic govern�ment debt.

The Finance Ministry’s ruble�denominateddebt to the Bank of Russia, calculated at thenominal value of government securities, rose by15.4 billion rubles, or 6.3% over the year andreached 260.9 billion rubles, taking into accountthe government securities acquired by the Bankof Russia through repo operations; exclusive ofthese operations, it increased by 35.5 billionrubles, or 16.2%, to 255.1 billion rubles.

Chart 4


18

1,000

900

500

200

100I II III IV V VI VII VIII IX X XI XII

1,000

900

500

700

300

700

800

400

800

400

600 600

300

200

100

FEDERAL BUDGET EXPENDITURE

(billion rubles)

2006 2007

6,000

5,000

3,000

1,000

01.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12

6,000

5,000

3,000

4,000

2,000

4,000

2,000

1,000

0

BALANCES OF FEDERAL BUDGET ACCOUNTS OPENED WITH THE BANK OF RUSSIA

(billion rubles)

2006 2007 2008

Most of the Finance Ministry’s debt to the Bankof Russia, including federal government securitiesacquired through repo transactions, is representedby federal loan bonds with a coupon income of 0%to 1.57% p.a. (evaluated at 200.9 billion rubles,they account for 77% of the debt) and federal loanbonds with a coupon income of 5.8% to 9% p.a.(these are evaluated at 60.0 billion rubles andaccount for 23% of the debt). Of these, federalloan bonds with a nominal value of 254.3 billionrubles have maturities from 9 to 29 years and6.6 billion rubles of federal loan bonds mature inone year to five years.

The Finance Ministry’s foreign currency�de�nominated debt to the Bank of Russia, whichunder federal law is included in Russia’s foreigndebt, stood as of January 1, 2008, at 132.2 bil�lion rubles at the nominal value of foreign cur�rency�denominated federal government securi�ties, which represents an increase of 25.3 bil�lion rubles, or 23.6%, over the year, taking intoaccount the government securities acquired bythe Bank of Russia through repo operations; ex�clusive of these operations, this debt grew by20.3 billion rubles, or 19.0%, to 127.2 billionrubles.

Chart 5

Chart 6

I . 3 . T H E F I N A N C I A L S E C T O R

19

1 Russian government bond gross yield to redemption (RGBY) is the federal loan bond yield indicator compiled by

the Moscow Interbank Currency Exchange.

I.3. THE FINANCIAL SECTOR

the end of 2007 the Russian systemof financial intermediation com�prised 1,136 operating credit insti�

tutions, 857 registered insurance companies,252 non�governmental pension funds and1,024 unit investment funds. Credit institutionsremained the most important type of financial en�terprise: in 2007 their equity capital increased to8.1% of GDP as against 6.3% in 2006. Net as�sets of unit investment funds grew to 2.3% ofGDP (as against 1.6% a year earlier), whereasnon�governmental pension funds saw their ownproperty contract to 1.8% of GDP (from 1.9% in2006) and the authorised capital of insurancecompanies decreased to 0.5% of GDP (as against0.6% a year earlier).

The rates of growth in the major segments ofthe market changed in 2007. Unlike the situa�tion in 2006, when rapid growth in stock marketcapitalisation largely affected the overall dynam�ics of the Russian financial market, in 2007 themost dynamic segment was bank lending to thenon�financial enterprise and household sectors.Capitalisation of the stock market grew somewhatfaster than GDP. Bank loans to non�financialenterprises increased by more than 50% to 27.4%of GDP as of January 1, 2008. As before, the pri�vate corporate bond segment expanded more rap�idly than the government bond segment.

The liquidity crisis on the world financial mar�ket affected the situation on the Russian finan�cial market in the second half of 2007. In Augustand September the reduction of aggregate bank�ing sector reserves was accompanied by signifi�cant growth in money market rates and volatilityand the ruble value of the Bank of Russia bi�cur�rency basket also became more volatile. The capi�tal market demonstrated a sharp fall in primarycorporate and regional bond placements; stockprices went down and the yield of debt securitiesincreased on the secondary market. The difficultsituation in most sectors of the Russian financialmarket continued into October and Novemberand only by the end of the year things began toreturn to normal (money market rates started tofall and stock prices began to rise). It was the re�sult of the measures taken by the Bank of Russiato expand the refinancing of credit institutions andthe seasonal increase in the flow of budget fundsto the banking system.

Price indicators in the main sectors of the fi�nancial market had different dynamics. The gov�ernment bond market yield fluctuated within anarrow flat range almost throughout the entireyear, except September, when it surged due toan abrupt fall in demand on the OFZ market. Theaverage annual gross yield to redemption1 of Rus�sian government bonds rose to 6.5% p.a. in 2007

At


20

INTEREST RATES ON RUBLE LOANS (% p.a.)

22

14

8

20072006

22

16

12

16

20

12

10

14

20

18 18

10

8

Long�term loans to households (with maturities of 1 year to 3 years)

Short�term loans to households (with maturities of up to 1 year)

Long�term loans to non�financial enterprises (with maturities of 1 year to 3 years)

Short�term loans to non�financial enterprises (with maturities of up to 1 year)

INTEREST MARGIN ON BANK LENDING AND DEPOSIT OPERATIONS

WITH NON�FINANCIAL CUSTOMERS WITH DIFFERENT TERMS IN 2006—2007

(annual average, percentage points)

7.0

6.5

4.5

5.5

6.0

4.0

3.5

7.0

6.5

4.5

5.5

5.0 5.0

6.0

4.0

3.5Up to 1 month 3—6 months1—3 months 6—12 months 1—3 years

2006 2007

as against 6.6% p.a. in 2006. The corporate bondmarket registered a fall in yields in the period fromJanuary to July, but in August and Septemberyields soared and their average annual level in�creased as a result. The average yield on corpo�rate bonds on the secondary market rose to 7.7%p.a. in 2007 as against 7.6% in 2006, accordingto news agency Cbonds.ru. There was a sharpslowing of growth in Russian stock prices in 2007.As rates rose on the interbank loan market in

August—November 2007 due to the increasedcost of external funding, the average interest rateon overnight interbank ruble loans went up to4.4% p.a. in 2007 from 3.4% p.a. in 2006.

The cost of funds raised by the banking sectorfrom the household and corporate sector changedas follows: the average interest rate on depositswith maturities of up to one year differed slightlyfrom 2006, the average interest rate on house�hold ruble�denominated time deposits and depos�

Chart 7

Chart 8


21

its with maturities of more than one year in�creased from 5.9% to 7.3% p.a. and the averageinterest rate on corporate ruble deposits rose from5.0% to 7.5% p.a.

The level of interest rates on ruble loans tonon�financial enterprises in 2007 was lower thanin 2006. The average monthly rate on short�term ruble loans to non�financial enterprisesvaried between 9.2% and 10.8% p.a. during2007 and the rate on long�term loans rangedfrom 10.8% to 12.2% p.a. Interest rates on bankloans extended to households in rubles contin�ued to decline in 2007 but to a lesser extent thanin 2006. The most significant fall (by 1.8 per�

centage points to 14.5% p.a.) was registered inthe interest rate on 1� to 3�month loans to house�holds. As was the case in 2006, the interest rateon 6� to 12�month loans to households was thehighest at 20.1% p.a.

The overall level of the interest margin in bankoperations with non�financial customers declinedas compared with 2006. The average interestmargin in major operations with non�financialcustomers was 4—5 percentage points, depend�ing on maturity. As before, the interest margin inoperations with households was higher than inoperations with non�financial enterprises. Inter�est rates continued to differ by region.


22

1 Pursuant to Bank of Russia Regulation No. 302�P, dated March 26, 2007, ‘On the Accounting Rules in Credit

Institutions Incorporated in the Russian Federation,’ banking sector assets as of January 1, 2008, were recalcu�

lated and stood at 20,125.1 billion rubles.2 Including unincorporated entrepreneurs unless indicated otherwise.3 Credit institutions with a 50%�plus foreign stake in authorised capital.

1.3.1. CREDIT INSTITUTIONS

2007, the Russian banking sector re�tained its dynamics, despite the turmoilon world financial markets in the sec�

ond half of the year. As the external borrowingconditions became tougher, the expansion of theresource base of some credit institutions sloweddown and the cost of refinancing obligations andmaintaining liquidity increased. Nevertheless,Russia successfully coped with the consequencesof turbulence on world financial markets, whileits banking sector demonstrated resistance to ex�ternal adversities.

Banking sector assets increased by 44.1% to20,241.1 billion rubles1 in 2007, demonstratingthe same growth as in 2006. The expansion oflending to non�financial enterprises (by 51.6%)and households2 (by 57.0%) had a significant ef�fect on asset dynamics in 2007. Assets to GDPincreased from 52.2% to 61.4%.

Equity capital increased by 57.8% (as against36.3% in 2006). As of January 1, 2008, almost64% of Russian credit institutions had a capitalof more than 5 million euros (about 57% of creditinstitutions as of January 1, 2007). Capital toGDP increased from 6.3% to 8.1%.

In 2007, competition continued to increase inall major segments of the banking services mar�ket, particularly on the retail banking market.More and more banks actively increased lendingto households. In 2007, the number of banks inwhich loans to households exceeded 20% of as�sets (the banking sector average ratio was 16.0%as of January 1, 2008) increased from 295 to 324.

Competition increased rapidly on the house�hold deposit market as reflected in the reductionof Sberbank’s share of this market from 53.3%to 51.4% (by 1.9 percentage points as against1.1 percentage points in 2006).

Foreign capital continued to expand its pres�ence on the Russian banking services market. Thenumber of foreign�controlled credit institutions3

reached 86 as of January 1, 2008 (as against 65as of January 1, 2007). Of these, 15 are amongthe 50 credit institutions operating in Russia withthe greatest assets. The share of foreign�controlledbanks expanded from 12.1% to 17.2% in bank�ing sector assets and from 12.7% to 15.7% inbanking sector equity capital in the period underreview.

The presence of foreign�controlled banks isbecoming increasingly noticeable on the retailbanking services market: household deposits inthese banks and loans they extend to individu�als are growing faster than in the banking sec�tor as a whole. The share of these banks on thehousehold lending market in 2007 expandedfrom 14.0% to 18.8% and on the household de�posit market — from 6.2% to 8.9%. Foreign�controlled banks are rapidly increasing lendingto the non�financial corporate sector: in 2007their share of aggregate banking sector loans tonon�financial enterprises grew from 10.0% to15.6%.

Increased competition in the banking sectorstimulates the expansion of banking services andproducts to the regions, which now have a widerchoice of banking services due to the expansionby credit institutions of their regional branch net�works.

While at the beginning of 2007 there were14 credit institutions, branches and additional of�fices per 100,000 of population in Russia, as ofJanuary 1, 2008, there were 17 (inclusive of in�ternal divisions of credit institutions, this num�ber increased from 22 to 25). This growth wasregistered in all federal districts.

BANKING SECTOR LIABILITY STRUCTURE. De�spite the crisis on world financial markets, Rus�sian credit institutions continued to strengthentheir resource base, while structural changes oc�curred in banking sector liabilities.

In


23

KEY BANKING SECTOR INDICATORS

(as % of GDP)

65

60

35

301.01.2001 1.01.2002 1.01.20041.01.2003 1.01.2005 1.01.2006 1.01.2007 1.01.2008

8.3

7.5

50

40

6.1

55 6.8

45 5.4

4.7

4.0

3.3

Assets (liabilities) Capital

Aggregate banking sector assets (liabilities)

Banking sector capital (equity)

The balances of customer accounts1 increasedby 42.3% in 2007 and reached 12,053.1 billionrubles, but their share in banking sector liabili�ties somewhat reduced from 60.3% to 59.5%.

As the overall economic situation remainedgood, the principal source of expansion of the re�source base of credit institutions in 2007, as in2006, was funds raised from enterprises2, whichincreased by 48.1% (as against 54.8% in 2006).Their share in aggregate banking sector liabili�ties grew from 32.5% to 33.4%. Funds raisedfrom enterprises accounted for 35.5% of overallgrowth in banking sector liabilities.

Corporate deposits increased at the most rapidrate in 2007: their growth stood at 67.5% (asagainst 64.8% in 2006) and their share increasedfrom 11.0% to 12.8% of aggregate banking sec�tor liabilities.

Growth in household deposits, which hadreached 5,136.8 billion rubles by the end of 2007,slowed down to 35.4% from 37.7% in 2006. Theshare of this source of funds also contractedslightly, from 27.0% to 25.4% of aggregate bank�ing sector liabilities. At the same time, household

deposits remained the most steadily growingsource of resources for banks. The slight fall inthe rate of growth in these deposits was due tothe increased public attention to alternative in�vestments, such as unit investment funds (PIFs)and Sberbank and VTB Bank shares. Ruble de�posits have become somewhat less attractive as ameans of protecting household savings againstaccelerating inflation.

Beginning from 2004, household ruble depos�its have been growing considerably faster than for�eign currency deposits. In 2007, ruble deposits in�creased by 41.3%, whereas foreign currency de�posits3 grew by 13.5% (51.9% and 2.4% in 2006,respectively). These figures show that in recentyears people have preferred to keep their savingsin the national currency. In 2007, the share ofruble deposits expanded from 83.4% to 87.0% oftotal household deposits. Household deposits withterms longer than one year increased by 39.0% in2007 and their share grew from 61.0% to 62.6%of total household deposits with banks.

Funds raised by credit institutions by issuingdebt obligations increased by 15.5% in 2007 (as

1 Balances of corporate accounts, including all�level budget funds and extra�budgetary funds, household funds

and float relating to factoring and forfeiting operations and funds written off from customer accounts but not passed

through a credit institution’s correspondent account.2 Except resident credit institutions and non�resident banks. The main component of this aggregate, the funds

raised from enterprises, comprises two major items, the balances of settlement and other accounts and corporate

deposits.3 In dollar terms.

Chart 9


24

2.6

26.5

As of January 1, 2007 As of January 1, 2008

BANKING SECTOR LIABILITY STRUCTURE (%)

7.2

6.1

12.7

7.1

27.0

9.7

Funds raised from non�resident enterprises

Funds raised from resident enterprises

Resident and non�resident household deposits

Other liabilities

Debt obligations issued

Loans, deposits and other funds raised from non�resident banks

Loans, deposits and other funds raised from resident credit institutions

Bank accounts

Bank funds and profits

1.13.3

27.3

5.8

6.2

13.9

6.6

25.4

10.6

1.0

against 35.9% in 2006) and totalled 1,176.1 bil�lion rubles, accounting for 5.8% of banking sec�tor liabilities. Promissory notes continue to ac�count for most of the debt obligations issued bybanks, although their share reduced significantly(from 77.6% as of January 1, 2007, to 69.9% asof January 1, 2008). The value of bonds and sav�ings certificates issued by banks increased con�siderably (by 70% and 40%, respectively). How�ever, their aggregate share in banking sector li�abilities has remained small (1.3% as of January1, 2007, and 1.5% as of January 1, 2008).

The issue of bank bonds on the domestic fi�nancial market is still contained by high issueand placement costs and the deterioration of thesituation on the debt market as a result of in�stability on world financial markets in the sec�ond half of 2007. On the other hand, the in�

clusion of bank bonds in the Bank of RussiaLombard List has provided an additional impe�tus for issuers.

Funds raised by credit institutions from theBank of Russia accounted for about 0.1% of bank�ing sector liabilities at the beginning of 2007 and0.2% at the end. However, in some periods theshare of these funds expanded significantly: to0.6% as of September 1, 2007, 1.1% as of No�vember 1, 2007, and 1.2% as of December 1,20071. This was the result of the significant in�crease in liquidity provided by the Bank of Rus�sia (see II.1.2).

BANKING SECTOR ASSET STRUCTURE. Credit in�stitutions’ active operations in 2007 werecharacterised, above all, by further growth inloans to non�financial enterprises and households.

1 Taking into account repo transactions.

Chart 10


25

2.6

2.8

As of January 1, 2008As of January 1, 2007

BANKING SECTOR ASSET STRUCTURE (%)

40.3

14.7

14.0

6.8

Loans and other funds placed with non�resident corporate entities, except banks

Loans extended to financial enterprises, except banks

Loans extended to resident and non�resident individuals

Loans and other funds placed with resident non�financial enterprises

Loans, deposits and other funds placed with non�resident banks

Loans, deposits and other funds placed with resident banks

Other assets

Fixed and intangible assets

Securities

Correspondent accounts with credit institutions

Accounts with the Bank of Russia

Money, precious metals and gemstones

1.7 2.5

2.0

42.1

4.5

2.5

16.0

2.6

12.6

6.42.61.7

4.6

2.1

2.8

4.24.7

2.8

These accounted for 68.7% of growth in bankingsector assets in 2007. Total loans to this categoryof borrowers increased by 53.0% in 2007 andreached 12,288 billion rubles as of January 1,2008, and their share in banking sector assetsgrew from 57.2% to 60.7%. Relative to GDP,the value of these bank loans increased from29.9% to 37.3%.

Loans to non�financial enterprises grew by51.6% (as against 39.6% in 2006) and reached9,046.2 billion rubles as of January 1, 2008, andtheir share in banking sector assets increased from42.5% to 44.7%. Most of these loans (73.6%)were extended in rubles. The improved financialsituation of non�financial enterprises stimulatedgrowth in loans to this sector. Lending volumesexpanded particularly in sectors characterised byhigh investor activity, such as construction (by85.1%), agriculture, hunting and forestry (by

56.4%) and transportation and communications(by 50.8%).

The share of long�term loans (with terms overone year) expanded to 51.6% of total loans toresident non�financial enterprises (as against45.9% by the beginning of 2007) and almost 66%of these loans were extended in rubles.

As before, lending to households increased atrapid rates (by 57.0% in 2007 as against 75.1%in 2006). Over the year the share of loans tohouseholds in total bank loans expanded from21.9% to 22.7% and in aggregate banking sectorassets from 14.7% to 16.0%. Most of the loans tohouseholds (87.3%) were extended in rubles. Atthe same time, housing mortgage loans expandedfast. Debt on housing mortgage loans increasedby a factor of 2.6. The share of housing mortgageloans in total household loans grew from 12.5%to 20.6%, but their share in banking sector as�

Chart 11


26

sets remained quite small (3.0% as of January 1,2008).

There was a rise in credit institutions’ activ�ity on the securities market in 2007: bank finan�cial investments increased by 30.2% (as against27.4% in 2006) and reached 2,554.7 billionrubles, but their share in banking sector assetswent down from 14.0% to 12.6%. Lower ratesof growth in financial investments amid the ex�pansion of aggregate banking sector assets weredue to the increased volatility of the Russian stockmarket, caused by the liquidity crisis on the worldfinancial market. As a result, in the third quarterof 2007 bank financial investments declined,mostly due to the reduction of debt obligationportfolios prompted by the need to create a ‘li�quidity cushion.’

It should be noted that different banks reacteddifferently to the changed market conditions. Thelarger banks that had no problem with liquidityused the situation to strengthen their leading po�sitions on the loan market: the share of the topfive banks in terms of assets in total loans to non�financial enterprises grew from 46.1% to 50.3%in the second half of 2007.

Price fluctuations on the stock market did notaffect the dynamics of bank investments in shares.In 2007, growth in bank investments in shares(by 61.0%) was 1.8 times higher than in 2006and exceeded growth in investments in all othersecurities. The share of stocks in the securitiesportfolios went up from 19.9% to 24.6%. Theshare of debt obligations reduced from 68.4% to65.5% and that of discounted promissory notes —from 11.7% to 9.8% in 2007.

Unlike the situation in 2006, in 2007 the shareof investments in resident corporate debt obliga�tions (bonds) in total investments in debt obliga�tions went down by 4.3% to 384.9 billion rublesand their share in total investments in debt obli�gations shrank from 30.0% to 23.0% and in bank�ing sector assets — from 2.9% to 1.9%.

In the meantime, investments in resident bankdebt obligations grew at high rates (by 159.8%)and their share in total investments in debt obli�gations reached 7.6% as of January 1, 2008. In�vestments in federal government debt obligationsincreased by 8.0% and reached 580.3 billion

rubles, but their share went down from 40.1% to34.7% of total debt obligations and from 3.8% to2.9% in aggregate banking sector assets.

INTERBANK CREDIT CLAIMS AND OBLIGATIONS.The crisis on international financial markets se�riously affected Russian interbank market dynam�ics in 2007. The second half of the year saw a risein interest rates. At the same time, the trend to�wards growth in interbank loans taken1 contin�ued in 2007. Last year they increased by 62.2%(as against 59.3% in 2006) to 2,807.4 billionrubles and their share in banking sector liabili�ties grew from 12.3% as of January 1, 2007, to13.9% as of January 1, 2008. The balances offunds raised on the domestic interbank market in2007 grew by 83.5% and their share in bankingsector liabilities increased from 2.6% to 3.3%.

The possibility of borrowing from non�resi�dents by Russian banks was affected by the glo�bal reassessment by foreign investors of financialmarket risks in the second half of 2007, whichresulted in growth (by 150—200 basis points)in borrowing costs alongside a reduction by for�eign creditors of loan limits on most of their Rus�sian counterparties. The value of obligations onloans received from non�resident banks in 2007increased by 56.5% (as against 74.1% in 2006).The share of loans from non�resident banks intotal interbank loans taken over the year wentdown from 78.9% to 76.1% and as of January 1,2008, this source of funds accounted for 10.6%of banking sector liabilities (as against 9.7% asof January 1, 2007). Loans taken from non�resi�dent banks by foreign�controlled banks increasedby 117.4% in 2007, whereas loans taken fromnon�resident banks by banks controlled by Rus�sian capital grew by 34.7%.

Claims on interbank loans extended in 2007increased in value by 36.9% (as against 55.0%in 2006) and reached 1,418.1 billion rubles,whereas their share in banking sector assetswent down from 7.4% to 7.0%. Unlike the situ�ation in 2006, in 2007 the most rapid growthwas typical of funds placed on the domestic in�terbank market (52.6%); as a result, their sharein banking sector assets expanded from 2.6% to2.8%. Loans placed with non�resident banks

1 Loans, deposits and other funds raised on the interbank market (including precious metals).


27

increased by 28.2% in 2007, whereas their sharein banking sector assets went down from 4.7%to 4.2%.

The ratio between the excess of loans obtainedfrom non�resident banks over loans extended tothese banks in 2007 and banking sector liabilitiesincreased from 5.0% as of January 1, 2007, to6.3% as of January 1, 2008.

FINANCIAL SITUATION OF CREDIT INSTITU�TIONS. Banking sector profit increased by 36.7%in 2007 (as against 41.8% in 2006). Profit madeby credit institutions in 2007 grew to 508.0 bil�lion rubles and, inclusive of the financial resultsof prior years, it reached 627.0 billion rubles (asagainst 371.5 billion rubles and 444.7 billionrubles in 2006, respectively).

The share of profit�making credit institutionsexpanded from 98.4% to 98.9% of the total num�ber of operating credit institutions, while thenumber of loss�making credit institutions fell from18 to 11, or from 1.5% to 1.0% of the total. In2007, operating credit institutions incurred a to�tal loss of 900 million rubles (as against 800 mil�lion rubles in 2006).

The rate of return on banking sector assets in2007 stood at 3.0% and the rate of return on capi�tal — at 22.7% (as against 3.2% and 26.3% in2006, respectively)1. The slowdown in thegrowth in profit and profitability of credit insti�tutions is, to some extent, the result of overcom�ing the liquidity shortage in the banking sector inAugust—November 2007. In addition, the reduc�tion of the rate of return on capital is attributableto the significant growth in capital in the first halfof 2007.

The banking sector income structure waslargely determined by the further expansion ofcredit investments and growth in commission re�ceived from banking operations. Net interest in�come remains the main component of bankingsector net income2: in 2007 it accounted for60.1% of net income (as against 59.9% in2006).

The second most important element of net in�come is net commission income. Its share has notchanged significantly either: 27.6% in 2006 and27.3% in 2007. At the same time, growth in netcommission income slowed down and becamecomparable with growth in net interest income(in 2006 net commission income grew almosttwice as fast as interest income) and one of thereasons for this was the tightening of supervisionover lending to households.

The share of net income from securities trad�ing and revaluation went down to 10.1% of totalincome in 2007 from 11.3% in 2006, largely dueto the fact that in the third quarter of 2007 banksrestructured their assets, reducing financial in�vestments with the objective of maintaininggrowth in loans, the principal source of incomefrom banking operations.

The share of banking sector net income fromoperations with foreign currency and foreign cur�rency valuables, including the exchange rate dif�ferences, went down to 3.9% of net income in2007 from 4.5% in 2006.

Maintenance and administrative expenses ofcredit institutions increased by 41.2% in 2007 (asagainst 37.5% in 2006) and their share in netincome expanded to 46.8% (as against 45.4% in2006). This growth was partly the result of theexpansion of the banking business.

The analysis of the banking sector’s key finan�cial performance indicators shows that the bank�ing sector remained quite stable in 2007. Theshare of financially sound credit institutions ex�panded over the year from 94.7% to 96.3% oftotal credit institutions. It is important to notethat the share of financially sound credit institu�tions in aggregate banking sector assets in 2007remained very large — 99.6%.

The equity capital of operating credit institu�tions aggregated 2,671.5 billion rubles as of Janu�ary 1, 2008. The principal source of banking sec�tor capitalisation in 2007 was paid�up authorisedcapital and issue proceeds. These increased by645.9 billion rubles (62% of aggregate equity capi�

1 The rate of return on assets is calculated as the ratio of the full�year financial result before taxation to bank assets,

while the rate of return on capital is calculated as the ratio of the full�year financial result before taxation to bank

capital. Assets and capital are calculated as the annual (chronological) averages for the period under review.2 Net income is the financial result before making (recovering) provisions and exclusive of maintenance and ad�

ministrative expenses. It is calculated in accordance with the Profit and Loss Statement of Credit Institutions (form

code 0409102).


28

CAPITAL ADEQUACY

2,800

2,600

1,400

1,2001.01.2006 1.04.2006 1.10.20061.07.2006 1.04.20071.01.2007 1.07.2007 1.10.2007 1.01.2008

16.9

16.6

2,200

1,800

16.0

15.4

2,400 16.3

2,000

1,600

15.7

15.1

14.8

14.5

Billion rubles %

Equity capital adequacy ratio, %

Banking sector equity capital, billion rubles

OVERDUE DEBT ON LOANS, DEPOSITS

AND OTHER PLACEMENTS

15,000

6,000

12,000

3,000

01.01.20031.01.2001 1.01.2002 1.01.2004 1.01.20081.01.20071.01.20061.01.2005

3.0

1.8

9,000 2.2

2.6

1.4

1.0

Overdue debt as % of total loans, deposits and other placements

Total loans, deposits and other placements, billion rubles

Billion rubles %

1 Here and below capital growth factor ratios are calculated in their sum total, that is, exclusive of capital loss factor

ratios.

tal growth1). It should be noted that growth in theauthorised capital and issue proceeds of Sberbankand VTB Bank, which was largely the result oftheir IPOs, accounted for two�thirds of the growthin the authorised capital and issue proceeds of theentire banking sector. The second most importantsource was the increase by 294.9 billion rubles, or28.3% of aggregate equity capital growth, of profitand funds created from profit.

As a result of accelerated growth in equitycapital relative to risk�weighted assets, the av�erage banking sector capital adequacy ratio rosefrom 14.9% to 15.5% in 2007. It should beemphasised that the high rates of capitalisationhave been achieved because the Bank of Russiais watching closely the quality of bank capitaland taking resolute actions to prevent capitalpadding.

Chart 12

Chart 13


29

1 Banking sector liquid assets include cash, precious metals and gemstones, balances of correspondent nostro

accounts and balances of correspondent and deposit accounts with the Bank of Russia.2 Here and below average liquidity risk ratios are calculated as the chronological average for the corresponding

period.3 The credit risk share in the denominator of the formula used to calculate the N1 ratio.

BANKING SECTOR RISKS. Instability on interna�tional financial markets in the second half of 2007demonstrated the need for the whole world, in�cluding Russia, to take a more conservative ap�proach to risk evaluation by both bankers andregulators. Net capital outflow from Russia inAugust and September 2007 provoked a sharprise in demand for ruble liquidity by Russianbanks and a corresponding increase in interbankrates. It showed how important liquidity riskmanagement was. Overall, the average level ofbanking sector liquidity in 2007 was higher thanin 2006: the value of the most liquid assets1 in20072 reached 1,477.9 billion rubles (as against977.3 billion rubles in 2006), which represents8.8% of the average value of banking sector as�sets (8.5% in 2006). However, there were sev�eral periods in 2007 when liquidity dynamics weredifferent. Special mention should be made of theperiod from August to November, when the av�erage monthly value of liquid assets declined sig�nificantly (the November average stood at1,284.6 billion rubles, or 6.9% of assets), con�firming the importance of liquidity risk manage�ment.

As for credit and market risk, the expansionof the banking business in 2007 did not causethem to grow to an extent as would not allowthe banks to cover them adequately by capitaland reserves.

Credit risk, which predominated in terms ofquantity when capital adequacy was determined(credit risk accounted for 94.4% of aggregate

risk3 as of January 1, 2008), increased by 50.5%in the period under review (as against 46.1% in2006).

Judging by credit institutions’ reports, theoverdue debt dynamics of the corporate portfoliodiffered from those of the retail portfolio. As loansto non�financial enterprises grew more than twiceas fast as overdue debt, the latter’s share reducedfrom 1.1% to 0.9%. Conversely, the share of over�due debt on loans to individuals expanded from2.6% to 3.1%.

The share of market risk in aggregate bankingsector risks in 2007 remained small (5.6%). It isinterest rate risk that accounts for the largestshare of market risk (62.8%) as banks are ac�tively engaged in securities trading.

The assessments of stability of the Russianbanking sector in 2007 made using the stress test�ing methods, showed that capital can absorb lossescalculated in the stress tests. At the same time,the tests showed that the Russian banking sectorvulnerability to the major types of risk had in�creased.

The continued dynamic growth of the bank�ing sector, especially the lending operations con�ducted by Russian banks, should be judged in thecontext of changed external conditions, particu�larly the global reassessment of financial risk.Therefore, the gradual shift by some banks fromthe strategies effective in the period of credit ex�pansion to more conservative policies, in the sec�ond half of 2007 was quite logical and conduciveto the betterment of risk management.


30

1.3.2. OTHER FINANCIAL INSTITUTIONS

NSURANCE COMPANIES. As of January 1,2008, 857 insurance companies were on theSingle State Register of Insurers (as against

918 insurance companies as of January 1, 2007).The main reasons for the fall in the number ofinsurance companies were the revocation by theFederal Insurance Supervision Service (FISS) oflicences from insurers that failed to comply withthe minimum authorised capital requirements andthe increase in the number of mergers and acqui�sitions, including those that involved non�resi�dents. The aggregate authorised capital of insur�ance companies expanded by 2.9% in 2007 (asagainst 9.5% in 2006) and reached 157.9 billionrubles. The share of foreign capital more thandoubled and stood at 9.9%.

According to the FISS, 819 insurance compa�nies that have presented their reports received776.0 billion rubles in insurance premiums in2007, an increase of 27.1% on 2006. They paid481.9 billion rubles in indemnities, which repre�sents an increase of 36.6%. Both premiums andindemnities in 2007 grew faster than in 2006.

Growth in voluntary insurance premiums ac�celerated to 20.7% in 2007 from 15.5% in 2006,but the trend towards a reduction of their sharein total premiums continued (55.2% as of Janu�ary 1, 2007, and 52.5% as of January 1, 2008).The value of life insurance premiums increased(by 42.0%) for the first time since 2003. Thiswas largely the result of the completion of theFISS’s efforts to clear this segment of the insur�ance market from tax evasion schemes. As be�fore, property insurance accounted for the larg�est part of voluntary insurance premiums(67.3%).

Growth in compulsory insurance premiumswas almost unchanged from 2006 at 34.9%. Asusual, compulsory medical insurance accountedfor the bulk of their total value (78.6%). Growthin compulsory third�party liability car insurancepremiums slowed down 1.3 times compared with2006 (to 13.5% for 2007), and their share in

total compulsory insurance premiums went downfrom 23.4% to 19.7%.

In the first nine months of 2007, the share ofreinsurers in total insurance company assets re�duced to 10% with resident reinsurers account�ing for 60%.

The ratio of insurance indemnities to insur�ance premiums continued to increase in 2007 andreached 62.1% as of January 1, 2008, as against57.8% as of January 1, 2007. It grew particu�larly (by 5.0 percentage points to 33.3%) in prop�erty insurance.

According to reports presented by insurancecompanies to the Bank of Russia, the insurers’principal investments remained securities (42.0%as of October 1, 2007) and bank deposits(22.0%). In the first nine months of 2007, in�surers’ investments in the banking sector in�creased by 24%, whereas their investments in thenon�financial enterprise sector decreased by 15%.

UNIT INVESTMENT FUNDS (PIFs). PIF growthdynamics in 2007 was mostly affected by thesomewhat less favourable situation on the Rus�sian stock market as compared to 2006. Morethan 60% of growth in the net asset value (NAV)occurred in the first half of 2007 and the averageannual rate of return of most PIFs was lower thanin 2006. Net inflow of shareholder funds exceededthe 2006 level more than two�fold, but unlike thesituation in 2006, closed�end PIFs accounted foralmost its entire value.

The number of PIFs in 2007 rose by 383 toreach 1,0241 as of January 1, 2008. The biggestincrease was registered in the number of closed�end PIFs — by 197. The growth of the share ofthese funds in total PIFs to 43.4% is attributableto a high demand for their services, especially onthe real estate market. Open�end PIFs accountedfor 46.8% and interval PIFs — for 9.8%.

The total value of unit investment fund netassets reached 745.1 billion rubles, but in 2007it grew more slowly than in 2006. Growth in the

I

1 Unless indicated otherwise, the assessment of PIF dynamics is based on statistical data compiled by news agency

Cbonds.ru.


31

1 According to data compiled by the National Managers’ League.

NAV of open�end PIFs slowed down to 49.4% in2007 and for the first time in years the NAV ofinterval PIFs decreased (by 28.0%). Closed�endPIFs showed the most rapid rates of growth: theirNAV increased by 110.0% and they accounted for91.4% of growth in aggregate NAV. As a result,the share of the NAV of closed�end PIFs expandedto 76.0% of aggregate NAV.

As in 2006, the reduction of the share of eq�uity funds in the NAV structure in 2007 is mainlyattributable to more rapid growth in the NAV ofmixed investment funds and, particularly realestate funds, than the NAV of equity funds. Therapid growth of real estate funds (their NAV in�creased by 161.2% in 2007), though more mod�erate than in 2006, is due, as before, to the at�tractiveness of real estate as a profitable savingsinstrument.

The number of PIF management companiesrose by 78 in 2007 as against 51 in 2006 andreached 256. The number of closed�end PIF man�agement companies increased particularly (by60% to 177)1. One of the measures taken by man�agement companies to make PIFs more attractivewas to turn some interval PIFs into open�endPIFs, which are more efficient in conductingtransactions with units.

NON�GOVERNMENTAL PENSION FUNDS (NPFs).According to preliminary data released by theFederal Financial Markets Service (FFMS), thenumber of operating NPFs fell by 37 in 2007 andas of January 1, 2008, stood at 252. The totalvalue of the reporting NPFs’ own property in�creased by 17.1% in 2007 and reached 602.8 bil�lion rubles. Pension reserves expanded by 16.7%to 472.8 billion rubles, while the value of prop�

erty necessary to ensure the authorised activitiesincreased by 5.5% to 96.4 billion rubles. Theseare the worst performance indicators for the NPFsin recent years.

The number of NPF members increased to6.8 million in 2007, while the number of peoplewho received their pension in NPFs rose to1,026,200. The average non�government pensiongrew by 13.2% to 1,124.1 rubles a month, but itremained almost three times smaller than the gov�ernment pension.

The value of accumulated pension funds trans�ferred to NPFs from the compulsory pension in�surance system reached 26.5 billion rubles as ofJanuary 1, 2008, an increase of 170% on the be�ginning of 2007. According to the Russian Pen�sion Fund, in 2007 NPFs concluded nearly 1.5 mil�lion pension management agreements, which rep�resent an increase of 80% on 2006 and a recordnumber for the entire period of NPFs’ presence onthe compulsory pension insurance market.

The share of investments in stocks and corpo�rate bonds in the NPF investment portfolio in2007 went down from 70.6% to 42.2% and in�vestments in promissory notes shrank from 8.3%to 3.7%. NPF investments in government andmunicipal securities accounted for 5.4% of theNPF aggregate investment portfolio and bankdeposits accounted for 8.4%. Taking advantageof the new pension reserve placement rulesadopted in 2007, NPFs expanded the share oftheir investments in PIFs from 1.9% to 4.2%.Virtually all NPF pension reserve investment op�erations were conducted with residents in theRussian currency. Investments in foreign govern�ment and corporate securities accounted for0.01% as of January 1, 2008.


32

T

1.3.3. FINANCIAL MARKETS

Chart 14

INTERBANK CREDIT MARKET

otal interbank loans placed by Russianbanks by the end of 2007 exceeded by36.9% the amount placed at the beginning

of the year. Most of these loans were placed withnon�resident banks, but the share of Russianbanks grew slightly. There was also an increasein the share of loans extended in rubles.

Credit risk in operations on the interbankcredit market remained low in 2007 due to thesound financial position of the principal marketparticipants. For most of the year overdue debtaccounted for no more than 0.1% of total inter�bank loans extended by Russian banks.

The structure of the interbank credit marketby maturity remained virtually unchanged in2007. Transactions with terms of up to one monthcontinued to predominate on the market, ac�counting for more than 50% of total interbankloans placed.

The average monthly interest rates on over�night ruble loans in 2007 varied between 3.2%and 6.2% p.a. (as against 2.1—6.3% p.a. in2006). In January—July the overnight ruble in�terbank interest rates were low (3.2—4.8% p.a.)

but as the situation on the world money marketdeteriorated, they rose to 5.2—6.2% p.a. in Au�gust—November. Only in December interbankrates started to fall.

Interbank rate volatility remained moderatein 2007. Intramonth rate recurrence was ob�served throughout the year, but the local ratehighs caused by a demand for rubles required bybanks and their clients to effect compulsory pay�ments in 2007 were somewhat lower than in2006.

The foreign exchange segment of the Russianinterbank credit market in 2007 remained closelytied to the world money market. For most of theyear, interest rates on the dollar and euro inter�bank loans placed by Russian banks were close toworld money market rates on instruments withcomparable maturity and denominated in thesame currency.

In 2007, Russian banks remained net borrow�ers on the world financial market. The balance offunds raised by Russian banks from non�residentbanks and funds placed with non�resident banksincreased by more than 80% year on year.

INTEREST RATES ON INTERBANK RUBLE LOANS (% p.a.)

7

6

4

2

20072006

7

6

4

5

3

5

3

2

Overnight 2—7 days


33

FOREIGN EXCHANGE MARKET

he exchange rate of the ruble against theworld’s major currencies in 2007 was de�termined by the exchange rate trends on

the international market, the state of the bal�ance of payments and the policy pursued by theBank of Russia on the domestic foreign exchangemarket.

In 2007, the official rate of the US dollaragainst the ruble fell by 6.8% and as of January 1,2008, it was 24.5462 rubles to the dollar. Theofficial euro/ruble exchange rate gained 3.6%standing at 35.9332 rubles to the euro as of Janu�ary 1, 2008.

The expansion of export/import operationsand operations with capital and financial instru�ments predetermined high activity on the domes�tic forex market. As a result, the average daily

turnover of interbank spot transactions in all cur�rency pairs grew by 80% in 2007 year on year,from $42.0 billion to $74.7 billion.

Ruble/dollar transactions prevailed in thecurrency structure of the interbank spot mar�ket, accounting for 52% of its total turnover.The average daily volume of transactions withthis currency pair in 2007 increased by 45% yearon year and reached $38.8 billion. The averagedaily turnover of interbank spot dollar�versus�all�currencies transactions expanded by 74% to$70.6 billion.

As market participants’ interest in the singleEuropean currency increased, euro trade turn�overs expanded. Euro/dollar transactions ac�counted for most of this growth: their sharereached 90.4% of total euro trades in 2007,

T

Chart 15

* Since each transaction involves two currencies, the sum of the shares of all currencies equals 200%.

SNOITAREPONOISREVNOCKNABRETNITOPSFOERUTCURTSYCNERRUC SNOITAREPONOISREVNOCKNABRETNITOPSFOERUTCURTSYCNERRUC SNOITAREPONOISREVNOCKNABRETNITOPSFOERUTCURTSYCNERRUC SNOITAREPONOISREVNOCKNABRETNITOPSFOERUTCURTSYCNERRUC SNOITAREPONOISREVNOCKNABRETNITOPSFOERUTCURTSYCNERRUC

*)%(7002NI *)%(7002NI *)%(7002NI *)%(7002NI *)%(7002NI

rallodSU 59

elburnaissuR 45

oruE 23

gnilretsdnuoP 9

neY 7

cnarfssiwS 1

rehtO 2

OFFICIAL DOLLAR/RUBLE AND EURO/RUBLE EXCHANGE RATES IN 2007

(rubles per unit of foreign currency)

27.0

26.5

25.5

24.5

24.0I II III IV V VI VII VIII IX X XI XII

Euro/ruble rateDollar/ruble rate

36.4

36.0

35.2

25.0 34.8

34.4

34.0

26.0 35.6

US dollar rate Euro rate


34

whereas euro/ruble transactions accounted foronly 5.3% of the total euro trade turnover. Over�all, the average daily interbank spot euro tradeturnover in 2007 increased 2.1 times to $24.1billion. Growth in euro trade turnover was ac�companied by a growth in trade in other curren�cies, such as the Japanese yen, the British poundand the Swiss franc.

There was a rise in exchange traders’ activityin 2007. Aggregate ruble/dollar trade turnoverat the Unified Trading Session of Interbank Cur�rency Exchanges (UTS) grew by 53.8% in 2007,as compared to 2006, and reached $1,445.6 bil�lion. It should be noted that ruble/dollar tradesfor ‘tomorrow’ settlements accounted for most ofthe turnover (42.4%). Ruble/dollar trades for

‘today’ settlements accounted for 17.3% of ag�gregate UTS trade turnover and US dollar swapsaccounted for 40.3%.

Total ruble/euro trade turnover increased2.4 times and reached 30.2 billion euros asagainst 12.7 billion euros in 2006. Euro swapsaccounted for most of the trade turnover(46.4%). Ruble/euro trades for ‘today’ and ‘to�morrow’ settlements accounted for 27.2% and26.4% of aggregate UTS ruble/euro trade turn�over, respectively.

As in 2006, spot trades accounted for most ofthe transactions on the interbank forex market(about 97%). The average daily interbank fu�tures currency trade turnover grew by 58% in2007 and reached $2.2 billion.

GOVERNMENT SECURITIES MARKET

EDERAL LOAN BONDS. The federal loanbond (OFZ) market in 2007 demon�strated a growth in secondary trade turn�

over, which increased 2.8 times to 1,501.1 bil�lion rubles at market value as against 536.4 bil�lion rubles in 2006. The value of exchange tradesincreased by 45.7% to 491.9 billion rubles,whereas off�board trades grew 5.1 times to1,009.1 billion rubles. Trades on the secondarymarket peaked in September and October(765.0 billion rubles).

As in the previous years, the Ministry of Fi�nance in 2007 implemented a debt policy aimedat extending the OFZ market duration and in�creasing the volume of trade in the basic issues,which serve as indicators for the cost of raisingfunds for major terms. In 2007, the FinanceMinistry held 25 OFZ auctions at which only ba�sic issues were placed: permanent coupon�incomefederal loan bonds (two issues) and debt depre�ciation federal loan bonds (three issues). A totalof 252.0 billion rubles were raised as against

F

OFZ SECONDARY MARKET TURNOVER AND YIELD

IN 2007

30

10

5


20

7.0

6.6

6.5

6.4

6.8

25

15

6.9

6.7

Transaction volume Gross yield

Gross yield, % p.a.

Transaction volume at market value, billion rubles

Chart 16


35

NON�COUPON OFZ YIELD CURVE (% p.a.)

7.0

6.8

6.2

5.82 6 10 14 16

Term to redemption, years

18 20 22 24 26 28 301 5 9 134 8 123 7 11 15 17 19 21 23 25 27 29

December 28, 2007December 28, 2006

7.0

6.8

6.2

6.0 6.0

5.8

6.6 6.6

6.4 6.4

190.7 billion rubles in 2006 and 138.5 billionrubles were paid to bondholders in coupon incomeand principal. As a result, the nominal value ofoutstanding government bonds on the marketgrew from 875.6 billion rubles to 1,047.4 billionrubles and the market portfolio duration increasedby 111 days to 2,105 days (5.8 years).

Despite the growth in market turnovers, mar�ket liquidity remained low. The average dailyturnover ratio of the secondary exchange marketstood at 0.19% at par as against 0.16% in 2006.

In 2007, as in 2006, most of the OFZ holderswere ‘passive’ market participants who stuck tothe ‘buy and hold’ strategy. The non�residentOFZ portfolio contracted by half and stood at0.8% of total OFZ issues.

OFZ yield dynamics in 2007 were basically thesame as in 2006. The gross yield of federal gov�ernment securities ranged from 6.42% to 6.93%p.a. and had no clear trend towards growth ordecline. The surge in September was caused by amajor fall in demand on the OFZ market due to ashortage of spare ruble funds. As a result, in 2007OFZ gross yield gained 6 basis points and stoodat 6.5% p.a.

The period under review saw a slight el�evation of the short� and long�term segmentsof the non�coupon OFZ market yield curve (by3—10 basis points). In the medium�term seg�ment the non�coupon yield curve dropped by1—10 basis points.

REGIONAL GOVERNMENT BONDS. The nominalvalue of the initial placement of regional bondson the Stock Exchange of the Moscow InterbankCurrency Exchange (MICEX), the principal trad�ing floor for sub�federal and municipal bonds,decreased from 47.8 billion rubles in 2006 to40.7 billion rubles in 2007. The auction yield ofregional bond issues ranged from 7.1% to 9.3%p.a. in 2007 (in 2006 it ranged between 6.0%and 8.3% p.a.). The value of sub�federal and mu�nicipal bonds placed on the over�the�counter mar�ket increased from 14.0 billion rubles in 2006 to14.9 billion rubles in 2007, according to newsagency Cbonds.ru. The largest bond placementsin 2007 were made by the Moscow, Irkutsk andSamara Regions (16.0 billion rubles, 6.0 billionrubles and 5.0 billion rubles, respectively).

The aggregate turnover of secondary exchangetrade in regional bonds in 2007 declined slightlydue to the reduction of trade turnover on theMICEX Stock Exchange and the Russian Trad�ing System (RTS). On the MICEX Stock Ex�change secondary trade in regional bonds wentdown from 536.9 billion rubles in 2006 to527.6 billion rubles in 2007. Bonds issued by theMoscow government and the government of theMoscow Region accounted for the largest part ofaggregate secondary trade turnover (59.5%) onthis trading floor. Bonds issued by the govern�ments of the Samara and Irkutsk Regions as wellas the Republic of Sakha (Yakutia) and Yaroslavl

Chart 17


36

Region accounted for significant amounts of bondtrade.

Regional bonds were traded only occasionallyon the RTS in 2007. As a result, their secondarytrade turnover on this trading floor contracteddramatically, from 3.9 billion rubles in 2006 to500 million in 2007.

The St Petersburg Currency Exchange(SPCEX) registered a 13.1% rise in regional bondsecondary trade turnover in 2007, which aggre�gated 5.4 billion rubles. As before, the major in�strument of secondary trade was bonds issued bythe St Petersburg government.

According to news agency Cbonds.ru, the yieldof regional bonds issued by the leading secondarymarket participants varied between 6.6% and7.4% p.a. in 2007 (as against 6.5—7.4% p.a. in2006), whereas its average annual value re�mained unchanged from 2006 at 6.9% p.a.

RUSSIAN GOVERNMENT FOREIGN CURRENCY�DENOMINATED DEBT OBLIGATIONS. The Russiangovernment’s bonded debt denominated in for�eign currency in 2007 was represented byeurobonds, series V and VII internal government

foreign�currency loan bonds (OVGVZ) and1999 government foreign�currency loan bonds(OGVZ). According to Finance Ministry data,the total nominal value of these bonds stood at$36.8 billion as of January 1, 2007, and at$33.1 billion as of January 1, 2008.

In March and September 2007 the Russiangovernment repaid part of the principal debt onits eurobonds maturing in 2010 and 2030. InJune 2007, it redeemed the eurobonds the Rus�sian government issued in 1997 and in Novem�ber it redeemed the OGVZ bonds issued in 1999.Coupon income on all foreign currency�denomi�nated bond issues was paid fully and on sched�ule and in 2007 coupon income payments to�talled $6.6 billion.

In 2007, Russian investors continued to tradeRussian eurobonds on the organised domesticmarket. The actual�price value of eurobond tradesfor ruble settlements increased 2.7 times year onyear and reached 93.2 million rubles on MICEX.Eurobond trades for dollar settlements on theMICEX Stock Exchange in 2007 went down by63% year on year and stood at $8.6 million atactual price.

CORPORATE SECURITIES MARKET

rowth in the main segments of the Rus�sian corporate securities market1 sloweddown significantly in 2007. As before,most of the exchange trades in shares

were conducted on the MICEX Stock Exchangeand St Petersburg Stock Exchange and on theRTS, while the ruble�denominated corporatebonds were mostly traded on the MICEX StockExchange, on the RTS and on the SPCEX.

The number of IPOs by Russian companieson leading Russian and foreign exchanges in�creased in 2007. Rates of growth in the majorRussian stock market price indicators sloweddown significantly compared with 2006. FromJanuary to the middle of September 2007,Russia’s key stock indices fluctuated widely with�out setting any particular trend and in the subse�quent months Russian stock prices rose signifi�cantly. In December the MICEX and RTS stock

indices hit their historical highs. As a result, in2007 the MICEX index gained 12% and the RTSindex 19% (as against 68% and 71% in 2006).

Market capitalisation slowed down in 2007.RTS stock market capitalisation increased by 38%year on year (as against 190% in 2006) andreached $1,328.8 billion (32.6 trillion rubles).

MICEX Stock Exchange equities secondarytrade volume expanded by 38% year on year (asagainst 240% in 2006) and reached 15.3 trillionrubles. Transactions with shares issued by fuel,power and metallurgy companies and credit in�stitutions accounted for most of the exchangetransactions.

Growth slowed down in the volume of out�standing corporate bonds on the ruble corporatebond market in 2007 due to the fall in issuingactivity in August—December and the increasein the value of bond redemptions. The value of

G

1 Including securities issued by non�financial enterprises and financial institutions.


37

1,600

1,400

1,200


1,950

1,800

1,700

1,500

1,300

1,100

1,900

1,000

1,850

1,750

1,650

1,600

MICEX STOCK EXCHANGE EQUITIES TRADE

IN 2007Volume Index

MICEX Stock Exchange trade volume, billion rubles Average MICEX Index

300

260

180

140


8.2

8.0

220 7.8

7.6

7.4

7.2

CORPORATE BOND SECONDARY TRADE

IN 2007Volume Yield

MICEX Stock Exchange trade volume, billion rubles Corporate bond yield*, % p.a.

* According to data compiled by news agency Cbonds.ru.

Chart 18

Chart 19

corporate bond placements on the MICEX StockExchange in 2007 decreased by 1.8% year on yearand stood at 456.0 billion rubles (in 2006 it in�creased 80%).

MICEX Stock Exchange corporate bond sec�ondary trade turnover grew by 51% in 2007 yearon year and aggregated 2,729.7 billion rubles (in2006 it doubled). Debt securities issued by creditinstitutions and finance, oil, gas, power, railwayand communications and telecommunicationscompanies predominated in the structure ofMICEX Stock Exchange secondary trade.

Corporate bond yields demonstrated dif�ferent dynamics during 2007. In January—July the average monthly yield of liquid cor�porate bonds on the secondary market fellfrom 7.7% to 7.2% p.a., whereas in August—September it rose to 8.1% p.a. and in the sub�sequent months of 2007 it fluctuated close tothis level.

The promissory note market in 2007 contin�ued to register a reduction in volumes of banktransactions with promissory notes issued by non�financial enterprises.


38

1 Region Group of Companies is a leading operator of the Russian promissory note market and organiser of public

promissory note programmes, which regularly calculates and publishes promissory note market price indicators.

According to data compiled by Region Groupof Companies1, the yield of ruble�denominatedpromissory notes tended to rise in January—July2007 and in the period from August through themiddle of November promissory note yieldssoared. However, by the end of the year the yieldson most issues had dropped. The average annualyield on 1�, 3�, 6� and 12�month promissory notesin 2007 rose by 0.9—1.1 percentage points yearon year and reached 8.1%, 8.5%, 8.8% and 9.1%p.a., respectively.

According to credit institutions’ reports, theaverage interest rate on ruble�denominated prom�issory notes discounted by banks in 2007 edgeddown by 0.1 percentage points to 10.0% p.a. Theaverage annual maturity of the ruble promissorynotes discounted by banks in 2007 increased toover seven months.

BANK SECURITIES. The nominal value of bankshare and bond issues registered in 2007 increasedby 45.1% year on year, from 344.7 billion rublesto 500.3 billion rubles, while the number of is�sues rose by 14.3%.

The total value of share issues registered in2007 fell to 201.7 billion rubles from 231.9 bil�lion rubles in 2006. The value of share issueslaunched to increase authorised capital decreasedfrom 176.4 billion rubles in 2006 to 126.9 billionrubles last year. The value of share issues placedin the course of setting up new credit institutionsor reorganising existing ones increased from1.7 billion rubles in 2006 to 6.2 billion rubles in2007. The value of the share issues registered forthe purpose of dilution, consolidation and con�version rose from 53.7 billion rubles in 2006 to68.6 billion rubles in 2007.

Share issues registered with the objective ofincreasing authorised capital accounted for 92.6%of all registered share issues in 2007 (as against94.2% in 2006). Share issues registered in thecourse of setting up new credit institutions orreorganising existing ones in 2007 accounted for4.7% of all share issues as against 2.9% in 2006.Share issues registered for the purpose of dilu�tion and conversion accounted for 2.7% of allshare issues (as against 2.9% in 2006).

In 2007, Sberbank and VTB Bank registeredthe results of a public placement of the largestshare issues. According to its share issue report,Sberbank placed 230.2 billion rubles worth ofordinary registered uncertified shares at the of�fered price. VTB Bank placed 206.3 billion rublesworth of ordinary registered uncertified shares atthe offered price. As a result, the Sberbank andVTB Bank share placements accounted for 44.6%of the growth in aggregate banking sector equitycapital in 2007.

The value of bond issues registered in 2007increased to 298.6 billion rubles as against112.8 billion rubles in 2006. It should be notedthat because of the market situation, only 33.3%of the total value of bank bond issues registeredin 2007 were placed, which amounted to 99.5 bil�lion rubles at par.

During most of 2007, bank share price dynam�ics differed by issuer, but in August there was afall in the prices of all banking sector equities. Asa result, in 2007 the price of Sberbank ordinaryshares rose by 13% (in 2006 it grew 140%),whereas VTB Bank share prices fell by 14%.

The number of credit institutions whose shareswere traded on the Russian exchange market con�tinued to increase in 2007 and the volume of tradein these papers expanded significantly. The shareof banking sector equities in the total secondarytrade stock turnover on the MICEX Stock Ex�change and St Petersburg Stock Exchange and onthe RTS more than doubled as compared with2006 and reached 13%. The share of bank bondsin the total turnover of corporate bond exchangesecondary trade on the MICEX Stock Exchange,SPCEX and RTS increased to 19%.

To raise short� and medium�term funds, creditinstitutions issued their own promissory notes.Russia’s top 30 banks accounted for more thanhalf of the total value of promissory notes issuedby banks. In January—September 2007, thevalue of promissory notes placed by these banksdeclined, causing a fall in the total value of bankpromissory notes issued in that period. In Octo�ber—December the value of bank promissory noteplacements increased. The value of promissorynotes and bank acceptances issued by credit in�


39

stitutions in 2007 increased by 4.0% to 822.2 bil�lion rubles and their average annual value ex�ceeded the 2006 average by 5.7%.

The average annual interest rate on the ruble�denominated bank promissory notes sold to cor�porate entities in 2007 increased by 0.2 percent�age points year on year, to 7.6% p.a. The aver�age annual maturity period of the ruble�denomi�

nated bank promissory notes sold to corporateentities exceeded seven months in 2007.

In 2007, the Bank of Russia registered 25 cer�tificate of deposit terms of issue and trade and ninesavings certificate terms of issue. As in 2006,credit institutions incorporated in Moscow andthe Moscow Region accounted for the bulk of theissue (98.0 billion rubles).

1 RTS futures and options market.

1,600

1,400

800

400


1,600

1,400

1,200 1,200

800

400

1,000

600

200

1,000

600

200

0

FORWARD CONTRACT EXCHANGE TRADE TURNOVERS IN 2007

(billion rubles)*

Futures Options

* Source: FORTS, MICEX, MICEX Stock Exchange, SPCEX and St Petersburg Stock Exchange.

Chart 20

FINANCIAL DERIVATIVES MARKET

he aggregate futures and options exchangetrade turnover increased by 170% in 2007year on year and stood at 9,734.8 billion

rubles.The expansion of trade on the Russian forward

market was due to the amendments made to Ar�ticle 1062 of Part 2 of the Civil Code of the Rus�sian Federation, which guaranteed legal protec�tion for settlement (non�deliverable) contractsthat were previously treated by Russian law asbets. In addition, demand for exchange deriva�tives as risk�hedging instruments rose in the sec�ond half of 2007 as financial market participantsgrew increasingly uncertain about future prices.

The expansion of forward exchange marketturnovers in 2007 was accompanied by growth

in the value of open positions on forward instru�ments on the principal trading floors. The ag�gregate value of open positions on forward ex�change contracts in the FORTS1 system in 2007increased by 70% and on MICEX and the MICEXStock Exchange — by a factor of 3.4, as com�pared with 2006.

The range of forward exchange contracts ex�panded significantly in 2007 as 28 new futuresand options were introduced in FORTS and onthe MICEX and the MICEX Stock Exchange.

In 2007, the volume of futures trade withdelivery terms longer than three months ex�panded significantly, a process that may reflectthe increased use of exchange derivatives forhedging risks.

T


40

As for the futures market, most of trade wasconducted on its stock segment (contracts forstock indices, stocks and bonds) and currencysegment. There was an expansion of the com�modities and interest rate futures segments, withthe latter demonstrating in 2007 the biggestgrowth in futures trade turnover (it quadrupledcompared with 2006).

It should be noted that the Russian exchangederivatives market in 2007 demonstrated a morerapid development of the options market than the

futures market. Conducted in the FORTS system,options trade increased 4.2 times, whereas trade infutures contracts on Russian exchanges increased2.5 times. The stock segment (options for RTS in�dex futures contracts and Russian stocks) was themost developed one on both the options and futuresmarkets. Options for dollar/ruble exchange ratefutures and gold futures were also traded.

The most liquid contracts on the exchangederivatives market in 2007 were the RTS indexfutures and options.

I . 4 . B A L A N C E O F P A Y M E N T S A N D F O R E I G N D E B T

41

I.4. BALANCE OF PAYMENTS AND FOREIGN DEBT

1.4.1. BALANCE OF PAYMENTS

As in the previous years, Russia had astrong balance of payments in 2007due to the favourable external eco�

nomic conditions and massive foreign capital in�flow into the private sector.

The Russian government has fulfilled all itsexternal financial obligations and continued to ac�cumulate international reserves.

CURRENT ACCOUNT

The current account surplus decreased by 17.0%in 2007 as compared with 2006 and equalled$78.3 billion. It was a result of the reduction ofthe foreign trade surplus, caused by an acceler�ated growth of imports.

Exports of goods increased by 17.1% to$355.5 billion. Export volumes expanded by4.6% as average prices grew by 12.0%.

As in 2006, the principal exports werecrude oil, petroleum products and natural gas.Their value increased by 14.6% and reached$218.6 billion and their share in total exportsremained large — 61.5% (as against 62.8% in2006).

Due to a high demand in the world exports ofmetals and metal products increased by 21.1%,from $41.1 billion to $49.8 billion. Ferrous metalexports are valued at $25.3 billion and non�fer�rous metal exports — at $24.5 billion.

Exports of food products and raw materialsfor their production increased rapidly (1.6 times),mainly due to the rise in the value of wheat ex�ports.

The European Union accounted for 55.8% ofRussian exports and Asia�Pacific Economic Co�operation (APEC) member countries — 12.0%.Russia’s leading trading partners were, as before,the Netherlands (12.1% of Russian exports),Italy (7.8%) and Germany (7.5%). There wasa rapid growth of Russian exports to the Repub�lic of Korea (an increase of 120% in 2007) andJapan (70%).

Imports of goods increased by 36.0% com�pared with 2006 and reached $223.4 billion.Thanks to a rapid growth in domestic demand,import volumes expanded by 24.9%. The pricefactor was less important: import prices rose by8.9% on average.

Imports of most commodities increased but thebiggest growth was registered in the import ofmachinery, equipment and transport vehicles(51.0% of aggregate imports), chemicals and re�lated products and foodstuffs and raw materialsfor their production (13.8% each). Compared to2006, the value of imports of these products in�creased by 54.9%, 26.2% and 27.6%, respec�tively.

The APEC’s share in Russian imports ex�panded to 31.8%. The share of the European


42

RUSSIA’S MAJOR BALANCE OF PAYMENTS COMPONENTS AND INTERNATIONAL RESERVES

(US$, billion)

500

200

0

—1002003 2004 2005 2006 2007

400

100

300

500

200

0

—100

400

100

300

Russia’s international reserves**Current account Capital and financial account*

* Net of the change in reserves.

** As of end of year.

Chart 21

Union remained virtually unchanged from 2006at 43.7%, despite the latter’s enlargement. As forindividual countries, the leaders were Germany(13.3%), China (12.2%) and Ukraine (6.7%).

The deficit of foreign trade in services in2007 increased by 44.4% year on year and stoodat $19.8 billion. The main reason for growth wasa significant excess of imports over exports in the‘travel’ item.

Exports of services increased by 26.5% to$39.3 billion, mainly due to growth in the valueof transportation services (21.2% of exportgrowth), travel�related services (24.0%) andother business services (29.8%) provided to non�residents.

The most rapid growth was registered in ex�ports of financial services, which almost doubled,and computer and information services, whichincreased 1.7 times.

Imports of services increased by 32.0% yearon year to $59.2 billion. Most of this growth wasdue to the expansion of travel�related imports(28.0% of import growth), other business ser�vices (21.7%) and transportation services(18.3%). These imports accounted for 73.1% oftotal imports and their value grew to $43.3 bil�lion. The highest rates of growth (60%) wereregistered in imports of financial, computer andinformation services.

The deficit of the compensation of employ�ees balance increased by 80%, from $4.4 billionin 2006 to $7.9 billion in 2007. Compensationpaid to non�residents ($9.9 billion) was 4.9 timesthe compensation received by Russian residentsabroad ($2.0 billion). This difference was largelythe result of labour migration figures: the num�ber of foreign workers employed in the Russianeconomy far surpassed the number of Russianresidents who sought temporary employmentabroad.

The deficit of the balance of investment in�come contracted by 10.8%, from $25.2 billion in2006 to $22.5 billion in 2007. Total accrued in�come receivable amounted to $44.8 billion andpayable — to $67.3 billion.

The surplus of the balance of investment in�come of general government and monetary au�thorities doubled as compared to 2006 reaching$16.0 billion. Just as in the previous year, themajor contributing factors were a reduction offoreign debt and a significant expansion of inter�national reserves.

Private sector foreign debt service expendi�tures exceeded incomes from foreign assets by$38.5 billion, but in 2007 the deficit of the bal�ance increased far more slowly than in 2006.

The deficit of the balance of current trans�fers increased 2.3 times to $3.5 billion (it was


43

$1.5 billion in 2006). Transfers received stoodat $8.4 billion and transfers paid — at $11.9 bil�lion. Most of the transfers were various taxpayments and remittances related to migrantworkers.

CAPITAL AND FINANCIAL ACCOUNT

CAPITAL ACCOUNT. In 2007, Russia registered adeficit of $10.2 billion in the balance of capitaltransfers (there was a surplus of $200 million in2006). The balance of capital transfers in 2007was determined by government sector transac�tions connected with the settlement of the debtdeveloping countries owed the former SovietUnion. Accounted for as part of the capital trans�fers paid, debt remission of this kind equalled$9.7 billion.

FINANCIAL ACCOUNT. The favourable balance ofthe financial account (net of reserves) increasedto $94.5 billion in 2007 from $5.4 billion in 2006.

The international investment position of thegeneral government and monetary authoritieswas virtually unchanged. Massive inflow of for�eign capital into the private sector led to an al�most 100% increase in its net foreign liabilities.

The Russian economy’s financial obligationsto non�residents grew by $199.6 billion in 2007(as against $70.5 billion in 2006). Foreign di�rect investments increased by $52.5 billion,portfolio investments by $12.7 billion and otherinvestments by $136.8 billion. Debt obligationson financial derivatives decreased by $2.4 bil�lion.

General government foreign liabilities wentdown by $7.6 billion. Obligations in the form ofoutstanding debt securities declined by $3.9 bil�lion, foreign loans by $2.8 billion and other li�abilities by $900 million. In 2007, the RussianGovernment paid $8.9 billion in foreign debt andforeign debt service.

The government debt service ratio (the ratioof total payments to exports of goods and services)decreased from 9.8% in 2006 to 2.3% in 2007,while relative to consolidated budget revenue to�tal payments fell from 8.4% to 1.7%.

Growth in the monetary authorities’ foreignliabilities, mostly cash rubles held by non�resi�dents, stood at $900 million.

Foreign capital inflow to the private sectordoubled in 2007 as compared to 2006 and reachedan estimated $206.2 billion.

Banking sector obligations to non�residents in�creased by $70.9 billion (as against $51.2 billionin 2006). Of these, obligations on other invest�ments accounted for $51.8 billion and obligationson foreign loans — for $39.4 billion. Foreign di�rect investment increased by $7.4 billion and port�folio investment grew by $14.1 billion. Obligationson financial derivatives decreased by $2.4 billion.

Other sectors also actively raised fundsfrom external sources: these are estimated at$135.4 billion, an increase of 150% on 2006.Foreign capital inflow in the form of direct in�vestments increased by 50% to $45.1 billion,whereas growth in non�resident portfolio in�vestments slowed down to $2.6 billion. Foreignloans, mostly long�term, grew 5.2 times to$88.2 billion.

Resident foreign assets, net of the official for�eign exchange reserves, increased by $105.1 bil�lion in 2007 (as against $65.1 billion in 2006).Direct investments abroad grew by $45.7 billion,portfolio investments by $7.0 billion and otherinvestments by $55.2 billion. Foreign assets inthe form of financial derivatives decreased by$2.8 billion.

Foreign claims by the general governmentand monetary authorities decreased by $6.8 bil�lion, mostly due to the reduction of overdue debtof foreign countries on loans from the formerSoviet Union.

Growth in private sector foreign assets is esti�mated at $111.9 billion (as against $71.2 billionin 2006). Bank claims on non�residents increasedby $25.0 billion, of which bank claims on loans,current accounts and deposits grew by $21.8 bil�lion. By January 1, 2008, banking sector foreignassets had reached $96.7 billion and obligationsto non�residents — $210.8 billion. The share ofshort�term financial instruments contracted sig�nificantly. The banking sector’s negative net in�ternational investment position in 2007 increasedby 90% to $114.1 billion.

Overall, other sectors’ foreign assets increasedby $86.9 billion, while the value of foreign cash inthe non�banking sector decreased by $15.7 billion.

The unprecedented inflow of foreign capitalinto the private sector caused the favourable bal�


44

ance of cross�border private capital flows to ex�pand 1.9 times as compared to 2006 and in theyear under review it reached $81.2 billion.

INTERNATIONAL RESERVES

In 2007, Russia’s international reserves grew by$172.7 billion and reached $476.4 billion as of

January 1, 2008. Their foreign currency com�ponent expanded by $168.8 billion (net of theexchange rate revaluation, it increased by$148.9 billion) and stood at $464.4 billion. Thevalue of monetary gold increased by $3.8 billionto $12.0 billion. By international standards Rus�sia has enough reserves to ensure stability of itsbalance of payments in the medium term.


45

1 Taking into account exchange rate and market revaluation.

1.4.2. FOREIGN DEBT

ussia’s foreign debt (debt to non�residents) increased by 50% in 2007and as of January 1, 2008, stood at

$459.6 billion1.Private sector borrowings predominated: com�

pared to the beginning of 2007, debt obligationsof the banking and other sectors increased from$261.9 billion to $413.2 billion and their sharein total foreign debt expanded from 84.3% to89.9%. General government and monetary au�thorities foreign debt decreased from $48.6 bil�lion to $46.4 billion and its share contracted from15.7% to 10.1% of total foreign debt.

As of January 1, 2008, obligations classifiedas ‘new Russian debt’ accounted for 80.2% oftotal federal government debt. The debt assumedby Russia as the successor to the former USSRaccounted for 19.8%.

In 2007, new Russian debt went down by $5.1billion to $28.7 billion. The debt component thatdecreased the most was foreign currency�denomi�nated securities. Its reduction was the result ofmajor payments connected with the redemption

of eurobonds placed in 1997 and partial redemp�tion of eurobonds issued in the course of restruc�turing the debt to the London Club of commercialbank creditors. As of January 1, 2008, foreigncurrency�denominated securities accounted for$21.3 billion, or 74.2%, of new Russian debt,loans from international financial organisa�tions — for $5.0 billion, or 17.4%, debt on otherloans — $1.7 billion, or 6.0%, and other debts —$700 million, or 2.4%.

Debt of the former Soviet Union went downfrom $9.4 billion to $7.1 billion. After August2007 when Russia had paid most of its debt tothe Paris Club of creditor nations, its debt tothese countries amounted to no more than$100 million, or less than 1.0% of the formerSoviet Union’s debt. Russia’s debt to formerSoviet�bloc countries accounted for $1.5 billion,or 21.2%, debt obligations to non�residents inthe form of OVGVZ bonds — for $2.0 billion,or 28.3%, and other debts, including debt tothe official creditors — for $3.5 billion, or49.5%.

R

RUSSIA’S FOREIGN DEBT

(US$, billion)

500

250

100

50

01.01.20031.01.2001 1.01.2002 1.01.2004 1.01.20081.01.20071.01.20061.01.2005

500

250

100

450

150

450

350 350

400 400

300 300

150

200 200

50

0

Other sectors (net of capital stakeholdings)

Banks (net of capital stakeholdings)

Monetary authorities

General government

Chart 22


46

RUSSIA’S FOREIGN DEBT

(as % of GDP)

70

50

20

10

01.01.20031.01.2001 1.01.2002 1.01.2004 1.01.20081.01.20071.01.20061.01.2005

70

50

20

30

60 60

30

40 40

10

0

Other sectors (net of capital stakeholdings)

Banks (net of capital stakeholdings)

Monetary authorities

General government

Banking sector foreign debt increased 1.6 ti�mes in 2007 and reached $163.7 billion and itsshare in foreign debt of all sectors of the economyexpanded from 32.6% to 35.6%.

Growth in other sectors’ debt was the biggestat $88.9 billion. The need to finance the purchaseof large amounts of assets played a major role inthe expansion of external borrowings. By Janu�ary 1, 2008, this debt had reached $249.6 billionand accounted for 54.3% of the economy’s ag�gregate foreign debt.

As of the beginning of 2008, long�term for�eign debt amounted to $354.4 billion, or 77.1%of total foreign debt, and short�term foreign debtequalled $105.3 billion, or 22.9% of the total.It should be noted that 80.2% of the economy’sforeign debt ($368.4 billion) was denominatedin foreign currency.

Relative to GDP, Russia’s foreign debt stoodat 35.5% in 2007 (as against 31.3% in 2006)and general government foreign debt accountedfor 2.9% (as against 4.5% a year earlier).

Chart 23

I . 5 . T H E W O R L D E C O N O M Y A N D I N T E R N A T I O N A L M A R K E T S

47

T

I.5. THE WORLD ECONOMY AND

INTERNATIONAL MARKETS

he external conditions for the Russianeconomy in 2007 were characterised by in�creased risks due to the acceleration of

imported inflation and turmoil on global finan�cial markets.

The world rates of inflation increased in 2007.Inflation also grew in the leading exporters ofgoods to Russia (from 3.5% in December 2006to an estimated 5.9% in December 2007). Infla�tion accelerated as growth in energy prices re�sumed. The increased world demand for foodstuffsand their undersupply connected with relativelypoor grain harvests, the reduction of subsidies foragriculture and exports and the use of agriculturalraw materials in the production of fuel led to sig�nificant growth in food prices. This particularlyaffected inflation in the countries where foodstuffsaccount for a large share in the consumer goodsbasket, including China and the former Sovietrepublics.

Growth in the world output of goods and ser�vices in 2007 is estimated by the IMF at 4.9%(as against 5.0% in 2006). Economic growthslowed down in the countries that are the majorimporters of goods from Russia (it is estimatedat 4.6% as against 5.0% in 2006). The worldeconomic slowdown was largely due to the re�duction or slowing of growth in housing con�struction, especially in the United States, Japan,Germany and some other countries. Exportgrowth had a major role to play in the accelera�

tion of growth in China’s GDP, but Chinese im�ports also grew rapidly due to the expansion ofdomestic consumption.

The situation on the world oil market waslargely affected by growth in consumption, espe�cially in Asian countries. Oil and petroleum prod�uct prices showed an upward trend but until themiddle of the year they were lower than in themiddle of 2006. In the second half of 2007,growth in natural gas prices resumed but it wasnot until the fourth quarter of the year that theyrose above the level registered before the pricefall in late 2006 and the first half of 2007.

The international trade situation of Russiaevolved under the impact of uneven intrayearenergy price dynamics. Oil and petroleum prod�uct exports from Russia to the European Unionand China in 2007 increased in value far less thanin 2006. Growth in the value of Russian exportsto Belarus was mainly due to the rise in energyprices. The share of Russian exports in the struc�ture of commodity imports of Ukraine andKazakhstan contracted as these countries increas�ingly sought after products with a high valueadded, including investment goods.

Terms of trade for oil�exporting countries con�tinued to improve in 2007 for the fifth consecu�tive year, but the improvement was less pro�nounced than in the previous four years. Othercountries saw their terms of trade change slightlyfor the worse as compared with 2006. The aver�


48

GROWTH IN OUTPUT OF GOODS AND SERVICES IN THE WORLD

AND IN INDIVIDUAL COUNTRIES (%)*

10 1220 64 8

* Based on official statistics published by corresponding countries, Eurostat and IMF.

2006 2007

World economy (IMF estimates)

China

Russia

EU (27 countries)

UK

Eurozone (13 countries)

Germany

France

Italy

USA

Canada

JapanChart 24

1 OECD estimates. Export market growth in a country is an aggregated indicator of the increase in imports of goods

in the countries that are this country’s trading partners, weighted by their unit weights in the geographical structure

of exports from this country.

age weighted rates of growth in the level of im�port prices (in the currencies of the importingcountries) in the member countries of theOrganisation for Economic Development and Co�operation (OECD) in 2007 were the lowest infour years. There was also a slowing of growth inexport prices. Import and export prices in thisgroup of countries grew almost at the same rates.

The IMF estimates growth in internationaltrade in goods and services in 2007 at 6.8% (asagainst 9.2% in 2006). The United States regis�tered a reduction in its trade deficit for the firsttime since 2001, which was due to the slowing ofgrowth in the price of imported primary commodi�ties and materials, including energy products, andinvestment goods. Eurozone import dynamicswere basically the same. China’s foreign tradeturnover continued to expand and growth in Chi�nese exports to the countries of Europe and Asiaaccelerated, whereas growth in exports to theUnited States slowed down. Import growth in theoil�exporting emerging markets accelerated yearon year and far surpassed growth in exports.

Export markets for the European emergingmarket economies, including Turkey, and the newindustrial countries of Asia and the leading mem�bers of the Association of South East Asian Na�tions (ASEAN)1 expanded most rapidly in 2007.

China’s export market grew at rates close to theaverage rate of growth in the export markets ofthe OECD member countries. Exports from coun�tries other than the OECD members accountedfor more than 35% of total world exports of goodsand services. Export and import operations by thedeveloping countries of Asia made the biggest con�tribution to the expansion of world trade in 2007.

According to the IMF, gold and foreign ex�change reserves of the world’s nations, calculatedin SDR (Special Drawing Rights) terms, in�creased by 19.7% in 2007. The emerging mar�kets increased their reserves by 27.1% and theyaccounted for more than 75% of the world’s ag�gregate reserves. China’s gold and foreign ex�change reserves rose to more than $1.5 trillion.Russia ranks third in terms of gold and foreignexchange reserves after China and Japan.

The international currency market in 2007saw the US dollar fall against the euro and othercurrencies, including the currencies of most ofRussia’s trading partners. The dollar depreciatedthe most against the Turkish lira, the Brazilianreal, the Polish zloty and the Czech and Slovakkoruna and the least against the Japanese yen andthe British pound. In May 2007, China let theyuan fluctuate against the US dollar within awider intraday exchange rate band.

I . 5 . T H E W O R L D E C O N O M Y A N D I N T E R N A T I O N A L M A R K E T S

49

GROWTH IN EXCHANGE RATES OF INDIVIDUAL CURRENCIES AGAINST THE US DOLLAR

IN 2007 (December 2007 as % of December 2006)*

—2 20 6 10 14 18 20 22

* (—) signifies appreciation of the dollar, (+) — its depreciation.

4 8 12 16

Republic of Korea won

Belarusian ruble

Ukrainian hryvnia

British pound

Japanese yen

Swedish krona

Kazakhstan tenge

Swiss franc

Chinese yuan

Russian ruble

Romanian leu

Israeli shekel

Euro

Bulgarian lev

Estonian kroon

Lithuanian lit

Hungarian forint

Indian rupee

Slovak koruna

Czech koruna

Polish zloty

Brazilian real

Turkish lira Chart 25

Conditions conducive to flow of capital to theemerging markets remained in the first half of2007. Specifically, the net issue of debt securitieson the international capital market by private fi�nancial and non�financial corporations in Russia,the United Arab Emirates, India, South Korea,South Africa, Kazakhstan, China and some othercountries increased. However, the risk reassess�ment by investors in the second half of the yearmade the international capital market inaccessibleto many borrowers, including residents of theemerging market countries.

The situation on world financial markets in2007 was characterised by an escalation of risksand increased volatility of interest rates, exchangerates and share prices. It was an aftermath of themortgage crisis in the United States. Mortgage loanrisk had increased by the beginning of 2007 as aresult of the rise in US interest rates in the periodfrom the middle of 2004 to the middle of 2006and the subsequent fall in investor activity in hous�ing construction and the real estate price down�turn. Growth in non�payments adversely impactedmortgage credit institutions.

The increased mortgage credit risk under�mined confidence in mortgage�related assets

created by securitisation and this led to thedowngrading of credit ratings of these assets andthe reduction of liquidity in the correspondingsegments of the financial market. Misgivingsabout some assets eventually turned into a glo�bal problem of declining trust in counterparties,which in the latter half of the year led to a short�age of supply on the money markets of manycountries and forced their central banks to takeemergency measures to boost liquidity. Suchmeasures were taken by the US Federal Reserve,the European Central Bank (ECB) and the mon�etary authorities of Canada, Britain, Japan andsome other countries.

The actions taken by the central banks (pro�viding liquidity to the banking sector, the reduc�tion of the Federal Reserve benchmark interestrate, the long�term refinancing operations con�ducted by the ECB and the Bank of England andso forth) helped restore relative stability on themarkets by the middle of September. However,volatility increased again in the fourth quarter inthe wake of reports about losses incurred by fi�nancial institutions in connection with mortgage�backed securities trading and the continued down�grading of financial asset credit ratings. These


50

developments again compelled the US FederalReserve, the ECB and the central banks of Brit�ain, Switzerland and Canada to take liquidity�regulating measures at the end of the year.

The crisis provoked a rise in demand for high�security assets. The spread between yields on thelowest credit risk securities (government bonds)and yields on less secure assets widened. Fears ofnegative macroeconomic consequences of the cri�sis and its effect on the financial performance ofcorporations increased price volatility on stockmarkets. The number of corporate mergers andacquisitions declined. The crisis caused a sharpdepreciation of the US dollar in the second half of2007.

The monetary policy of foreign countries de�pended on their economic situation, the situationon the financial markets and the nature and levelof risk. It was seriously affected by the conse�quences of the US mortgage crisis. From Septem�ber to December 2007, the US Federal Reservecut the benchmark federal funds rate (the rateon the shortest�term loans on the interbankmoney market) from 5.25% to 4.25% p.a. Thecut was aimed at stabilising the financial sectorand the macroeconomic situation. The ECB raisedthe refinance rate from 3.5% to 4.0% p.a. in thefirst half of 2007, while the Bank of England atthe end of the year switched from raising interestrates to cutting them.

Denmark, Sweden, Switzerland, Poland, theCzech Republic, Japan, South Korea and Indiaraised interest rates in 2007 to contain inflation.The People’s Bank of China repeatedly raised thebenchmark rates on the yuan�denominated depos�its and loans and the required reserve ratios forcredit institutions. At the same time, some coun�tries whose monetary policy succeeded in curb�ing inflation, such as Hungary, Slovakia, Turkey,Indonesia, Thailand and the Philippines, cut theirinterest rates.

The changes that took place in the globaleconomy and on financial markets in 2007 havecreated less stable external conditions for theRussian economy than they were in the previousyears. They also created preconditions for a fur�ther slowing of economic growth in the world,including Russia’s trading partners, and a reduc�tion in global demand for industrial products andraw materials. This is a consequence of the nega�tive effect of the real estate market situation andthe increased credit risks on domestic demanddynamics in foreign countries. Instability on worldfinancial markets and the possibility of decline inexternal financing increase the risk for countrieswhere previously growth in domestic loans wasaccompanied by an expansion of banking sectorinternational obligations. There remains the riskof inflation connected with a growth in the pricesof energy and agricultural products.

IIBANK OF RUSSIA

ACTIVITIES

52


II.1. MONETARY POLICY

T

1 The sharp rise in prices on the housing market in the second half of 2006 and early 2007 may serve as an indica�

tion of growth in asset prices.

II.1.1. MONETARY POLICY OBJECTIVES AND RESULTS

he monetary policy pursued by the Bankof Russia in 2007 was aimed at consis�tently reducing the rate of inflation and

maintaining the stability of the national cur�rency, which was necessary to create conditionsconducive to sustainable economic growth. TheGuidelines for the Single State Monetary Policyin 2007 set the target for consumer price infla�tion at 6.5—8.0% (December on December).Core inflation that corresponded to this targetwas projected at 5.5—7.0%. At the same time,the social and economic development forecast ofthe Russian Federation for 2007 set GDP growthat 5.0—6.6%.

In reality, GDP growth in 2007 stood at 8.1%,consumer prices rose by 11.9% and core inflationran at 11.0%.

External factors, such as significant growth infood prices on foreign markets, had a major ef�fect on inflation in the year under review. In ad�dition, money supply that year grew faster thanexpected due to massive capital inflow in the firsthalf of the year and the expansion of the refinanc�ing of Russian banks in the second half due to li�quidity problems created by the crisis on worldfinancial markets.

In 2007, the Bank of Russia continued tomaintain the managed floating exchange rate re�gime. While restricting the ruble exchange ratevolatility, it did not resist the evolving trend to�wards the ruble’s appreciation but merely con�trolled the pace of this appreciation in order tomaintain a balance between inflation dynamicsand the existing rate of economic growth.

Demand for the national currency grew atrapid rates in 2007. One key factor determiningmoney demand and its dynamics was, as before,the acceleration of growth in domestic demand(estimates show that in 2007 it was the fastest inrecent years). Other major factors of money de�mand were growth in asset prices1 and ruble ex�change rate dynamics. In 2007, the velocity ofmoney, calculated by the monetary aggregate M2,decreased by 18.8% on an average annual basis,that is, far more than in 2006 (13.2%). The rateof monetisation of the economy, measured by themonetary aggregate M2, increased from 26.1%to 32.2%.

The monetary authorities regulated moneysupply in 2007 amid massive inflow/outflow ofcapital and it was affected, to a great extent, bythe actions taken by the Bank of Russia within

I I . 1 . M O N E T A R Y P O L I C Y

53

MONETISATION OF THE ECONOMY

(according to monetary aggregate M2, %)

32

26

18

16

14

2002 2003 2007200620052004

32

26

18

20

30 30

24 24

28 28

20

22 22

16

14

MONETARY AGGREGATES

(as % of corresponding date of previous year)

65

50

30

25

20

2002 2003 2007200620052004

65

50

30

35

60 60

45 45

55 55

35

40 40

25

20

M2

M0

Money supply in the monetary survey definition*

* Money supply in the monetary survey definition includes monetary aggregate M2 and foreign currency deposits.

the established exchange rate regime. To controlthe inflationary effect of the excess money sup�ply, the Bank of Russia and the Russian Govern�ment took steps to absorb liquidity, of which alarge part was sterilised, as in the previous threeyears, by the Stabilisation Fund. At the same time,the deterioration of borrowing terms on foreignmarkets in the second half of 2007 caused a sharprise in banking sector demand for Bank of Russiarefinancing operations, which increased signifi�cantly in volume.

Bank of Russia currency interventions on thedomestic forex market reached the highest levelin the second quarter of the year under review.As a result, monetary aggregate M2 annualisedgrowth reached almost 60% by June 1, 2007.In August and September the Bank of Russia reg�istered private sector net capital outflow andtherefore significantly scaled down its currencyinterventions. As a result, the annualised rateof M2 growth declined since August and as ofJanuary 1, 2008, it stood at 47.5% (as against

Chart 26

Chart 27

54


RUBLE�DENOMINATED DEPOSITS OF HOUSEHOLDS AND NON�FINANCIAL

AND FINANCIAL ENTERPRISES OTHER THAN CREDIT INSTITUTIONS

(as % of corresponding date of previous year)

100

70

30

20

10

2002 2003 2007200620052004

100

70

30

40

90 90

60 60

80 80

40

50 50

20

10

Household deposits

Deposits of non�financial and financial enterprises other than credit institutions

48.8% a year earlier). However, it was higherthan the projected increase in money demand.

Cash in circulation and demand deposits madethe biggest contribution to M2 growth in 2007.For most of the year under review their overallgrowth was considerably faster than a year ear�lier. Demand deposits, which are created mainlyfrom the funds of non�financial and financial cor�porations other than credit institutions, contin�ued to demonstrate particularly fast growth.

Growth in cash in the year under review waslargely due to the continued increase in house�hold income and the reduction of household de�mand for foreign currency. Net sales of foreigncash to households through the exchange officesfell by half in 2007 as compared with 2006. Ac�cording to balance of payments data, foreign cur�rency outside the banking sector decreased by$15.7 billion in 2007 (as against $10.2 billion in2006). At the same time, M0 growth sloweddown to 32.9% (as against 38.6% in 2006) andthe share of cash in M2 contracted to 27.9% asagainst 31.0% a year earlier.

The trend towards continuous annual growthin ruble�denominated time deposits, most ofwhich (68—80%) are household deposits, beganto change in 2007. In the previous two yearsgrowth in these deposits constantly accelerated,expanding the share of ruble�denominated time

deposits in household money income consump�tion. In 2007, however, this growth started toslow down and stood at 39.9% as against 48.8%a year earlier. One reason for this was the trans�fer of funds from ruble deposits to foreign currencydeposits, and the acceleration by several times ofgrowth in household foreign currency deposits in2007 as compared with 2006 bears this out. Thereduction throughout 2007 of interest rates on one�year�plus ruble deposits, which in recent years haveaccounted for the largest share of household de�posits, was a contributing factor. Moreover, theacceleration of inflation in the second half of 2007,which made household savings less attractive,caused the growth in household ruble�denominateddeposits to slow down.

At the same time, in 2007, as in the previousthree years, time deposits of non�financial and fi�nancial corporations other than credit institutionsincreased at rapid rates. As a result, the share oftime deposits in the monetary aggregate M2 ex�panded from 37.7% to 39.9%.

The dynamics of the aggregate value of for�eign currency deposits did not demonstrate anysustained trends in 2007, but their overall growthaccelerated compared with 2006. Nevertheless,foreign currency deposits in money supply thatcomprises these deposits went down from 11.4%to 9.3%.

Chart 28


55

15

020072005 2006

15

10

5 5

10

0

* MIACR is the average weighted interest rate on overnight interbank ruble�denominated loans on the Moscow market.

BANK OF RUSSIA KEY INTEREST RATES AND OVERNIGHT MIACR*

(% p.a.)

Minimum overnight repo auction rate

Bank of Russia overnight credit rate

Average weighted Bank of Russia bond (OBR) auction rate

MIACR on overnight ruble loans

Deposit rate (‘tom�next,’ ‘spot�next’ and ‘call’)

The principal source of growth in money sup�ply in 2007 was, as before, the expansion of netforeign assets of the monetary authorities andbank claims on the non�financial corporations.However, growth in net foreign assets of the mon�etary authorities slowed down and stood at 46.2%as against 52.4% in 2006, whereas growth inclaims on the non�financial corporations acceler�ated to 50.4% (as against 47.2% in 2006). Thecontinued increase in general government depos�its with the Bank of Russia restrained money sup�ply growth. At the same time, the rate of theirgrowth slowed down significantly in the year un�der review and stood at 53.8% as against 71.8%in 2006.

To control money supply growth, the Bank ofRussia changed interest rates on its operations,thus managing banking sector liquidity. Tosterilise excess liquidity created by massive cur�rency inflow to the domestic forex market, inJanuary—August 2007 the Bank of Russia raisedits fixed deposit interest rate and as a result, thelower limit of the Bank of Russia interest rateband rose to 2.75% p.a. The upper limit of theband, set by the overnight rate, was lowered to10.0% p.a. with the objective of gradually nar�

rowing this band. In August—December, whendemand for refinancing increased, the Bank ofRussia cut the currency swap rate and took a se�ries of measures to provide more liquidity to creditinstitutions.

As a result of the liquidity regulation measurestaken by the Bank of Russia in August—Decem�ber 2007, MIACR dropped from 5.8% p.a. inAugust—November (occasionally it surged to8—10% p.a.) to 4.4% p.a. in December. At theend of the year there was a fall in interest rateson longer�term interbank loans as well.

The situation on the interbank credit marketin August—December 2007 affected other inter�est rates. Least of all it influenced household de�posit rates. In 2007, interest rates fell on ruble�denominated household deposits with termslonger than one year. Specifically, the interest rateon deposits with maturities from one year to threeyears in 2007 declined from 9.3% p.a. in Janu�ary to 7.5% p.a. in December. Interest rates onhousehold ruble deposits with maturities of up toone year, except demand deposits, also decreaseduntil October. However, in September—Decem�ber the rise of the general level of interest rateswas followed by a certain increase in interest rates

Chart 29

56


INTEREST RATES ON RUBLE LOANS TO NON�FINANCIAL ENTERPRISES

(% p.a.)

14

9

20072006

14

10

12

10

12

11

13

11

13

9

Interest rate on loans extended to non�financial enterprises for a term longer than one year

Interest rate on loans extended to non�financial enterprises for a term of up to one year

LOANS TO NON�FINANCIAL ENTERPRISES AND HOUSEHOLDS

IN RUBLES AND FOREIGN CURRENCY

(growth as % of corresponding date of previous year)

140

60

40

20

2003 2007200620052004

140

60

80

120 120

80

100 100

40

20

Loans to households

Loans to non�financial enterprises

Total

on some short�term household deposits. For ex�ample, the rate on the three� to six�month rubledeposits rose from 6.8% p.a. in August to 7.6%p.a. in December, while the rate on householdruble deposits with maturities shorter than oneyear, except demand deposits, increased from7.0% p.a. to 7.3% p.a.

Average interest rates on loans to non�finan�cial enterprises continued to fall in the first half

of 2007. In the first seven months, the interestrate on ruble loans to non�financial enterpriseswith terms of up to one year declined from 10.0%p.a. in January to 9.2% p.a. in July and the one�year�plus deposit rate went down from 12.1% to11.1% p.a. However, in the period from Augustthrough December, when there was a shortageof liquidity on the money market, the rate on loansextended to non�financial enterprises for a term

Chart 30

Chart 31


57

of up to one year rose to 10.8% p.a. Long�termcredit rates (over one year) also increased (to11.5% p.a.).

Growth in total loans extended in rubles andforeign currency had been accelerating since thesecond half of 2006. This was particularly obviousin the dynamics of loans to non�financial enter�prises, which account for the largest share of loans.Growth in loans to non�financial enterprises ac�celerated significantly (to 51.6% in 2007 as against39.6% a year earlier) due to the rise in economicactivity, including investor activity. In the secondhalf of 2007, conditions for borrowing somewhatdeteriorated as interest rates grew on the domes�

tic and international credit market, the latter re�maining a major source of funds for Russian com�panies. However, these changes had no markedeffect on lending to the non�financial enterprisesector in the second half of the year under review.

In 2007, as in the previous years, growth inloans extended to households was faster thangrowth in loans extended to non�financial enter�prises. In the past four years loans extended tohouseholds in rubles and foreign currency grewby an average 81.5% a year, but in the secondhalf of 2006 their growth began to slow down andin 2007 it stood at 57.0% as against 75.1% a yearearlier.

58


1 The broad monetary base comprises cash issued by the Bank of Russia, including cash balances in banks’ tills,

funds in credit institutions’ required reserve accounts with the Bank of Russia, credit institutions’ correspondent

and deposit accounts with the Bank of Russia, credit institutions’ investments in Bank of Russia bonds, reserves for

foreign exchange operations deposited with the Bank of Russia and other Bank of Russia obligations on ruble

operations with credit institutions.2 The balances of general government accounts with the Bank of Russia include the balances of funds of the federal

government, consolidated budgets of the constituent territories of the Russian Federation and government extra�

budgetary funds in accounts with the Bank of Russia.3 Aggregate banking sector reserves comprise cash balances in credit institutions’ tills, credit institutions’ required

reserve accounts with the Bank of Russia, funds in credit institutions’ correspondent and deposit accounts with the

II.1.2. MONETARY AUTHORITY INDICATORS

AND MONETARY POLICY INSTRUMENTS

xternal shocks impacted monetary indica�tor dynamics in 2007. In that situation theBank of Russia regulated money supply so

as to ensure that it matched the dynamics ofmoney demand and cushioned banking sector li�quidity fluctuations. To solve these tasks the Bankof Russia used its monetary policy instrumentsand made them more accessible to credit institu�tions.

The dependence of money supply on privatesector capital flows noted above led in 2007 to agrowth in the banking sector liquidity volatilityand a need for the monetary authorities to takeeffective measures to stabilise the situation.

In the first half of 2007, which accounted forover 80% of the year’s total net capital flow tothe private sector, the Bank of Russia activelyused mechanisms to absorb excess banking sectorliquidity, such as deposit operations and Bank ofRussia bond (OBR) operations, to eliminate im�balances on the money market. In the second halfof the year, it cooperated with the Governmentin carrying out measures that allowed it to quicklyprovide liquidity to the banking sector and im�prove the system of refinancing banks.

The aggregate effect of all these factors wasreflected in the dynamics of money supply by themonetary authorities.

The expansion of the broad monetary base1,which characterises the level of money supply bythe monetary authorities, slowed down to 33.7%in 2007 from 41.5% in 2006. This was a result ofthe 10.7% reduction in the rate of broad moneysupply growth in the third quarter when bankshad a shortage of liquidity. In the second and

fourth quarters of the year the monetary baseexpanded rapidly due to massive interventionsconducted by the Bank of Russia on the domesticforex market.

As Russia had a strong balance of payments,the main source of growth in the monetary basewas the expansion of the country’s internationalreserves, which in 2007 reached $172.7 billionat the current cross rates of foreign currenciesagainst the US dollar. This represents an increaseof more than 40% on 2006 growth. Net domesticassets of the monetary authorities decreased by2,848 billion rubles in 2007 (over 78% of thevalue of Bank of Russia interventions on the do�mestic forex market). The main reason for thecontraction of net domestic assets of the monetaryauthorities was, as before, the increase in thebalances of general government accounts with theBank of Russia2, which stood at 1,802.4 billionrubles in 2007 (about 50% of the value of Bankof Russia interventions).

The Stabilisation Fund mechanism continuedto play a major role in absorbing excess liquidityamid massive inflow of foreign currency to thedomestic market (in 2007 Stabilisation Fund ac�counts grew by 1,502 billion rubles and aggre�gated 3,849 billion rubles). It should be notedhere that in November and December 2007 bud�get spending affected to some extent the liquiditylevel in the economy as the balances of all catego�ries of budget accounts with the Bank of Russiacontracted. Part of these funds went to capitalisethe government development institutions.

Aggregate banking sector reserves3 increasedby 35.4% in 2007 (as against 47.8% in 2006).

E


59

Bank of Russia, credit institutions’ investments in Bank of Russia bonds, and reserves for foreign exchange opera�

tions deposited with the Bank of Russia.

EXCHANGE RATE AND SOURCES OF MONEY SUPPLY IN 2006—2007

(quarterly change, billion rubles)

2,000

1,600

0

1,200

800

—400

—800

28.0

27.5

27.0

26.5

400 26.0

24.5

20072006

I II III IV I II III IV

Official ruble/dollar exchange rate as of end of period (right�hand scale)

Change in aggregate banking sector reserves**

Change in gross loans to banks and Bank of Russia purchases of government securities

Change in money supply due to Bank of Russia currency purchases on domestic forex market

Change in balances of general government accounts with the Bank of Russia*

* Including early foreign debt payments and transfers of funds to government corporations. (—) signifies increase, (+) signifies decrease.

** (—) signifies increase, (+) signifies decrease.

25.5

25.0

Intrayear aggregate banking sector reserve fluc�tuations corresponded to the dynamics of the mon�etary base but had a wider range: in the thirdquarter they went down by 35.3%, whereas inthe second and fourth quarters they grew signifi�cantly (by 43.7% and 32.6%, respectively).

To regulate money supply, in 2007 the Bankof Russia not only sterilised excess liquidity, butalso supplied credit institutions with money,utilising both open market operations and stand�ing facilities. It used monetary policy instrumentsto reduce the inflationary pressure amid an un�precedented inflow of foreign capital and mitigatethe negative effects of the international liquiditycrisis on the domestic money market. Conse�quently, to balance out the situation, the Bank ofRussia in some periods had to provide liquidityand in others — to sterilise it.

Given the Russian interbank market beingsomewhat underdeveloped and segmented, therewere times when credit institutions simulta�neously needed both refinancing and liquidityabsorption instruments.

In the first half of 2007, when the liquiditylevel was high, the Bank of Russia pursued amonetary policy aimed at minimising the infla�tionary consequences of money supply growth.It cut the refinance rate and raised interest rateson the liquidity absorption instruments and thusnarrowed the interest rate band for Bank of Rus�sia operations from 8.75 percentage points to7.50 percentage points, while interbank marketinterest rates on overnight ruble loans ranged be�tween 2% and 7.45% p.a.

Deposit and OBR operations were the mon�etary policy mechanisms that allowed the Bankof Russia to absorb excess banking sector liquid�ity. It used them most actively in January—Julywhen massive capital inflow and record foreigncurrency purchases by the Bank of Russia on thedomestic forex market created a large excess ofbanking sector liquidity. The average daily Bankof Russia debt on these operations increased2.2 times in 2007 as compared to 2006 (from288 billion rubles to 638 billion rubles). At thesame time, the average daily amount of free bank�

Chart 32

60


EXCHANGE RATE, AGGREGATE RESERVES AND NET FOREIGN ASSETS

OF CREDIT INSTITUTIONS IN 2006—2007

2,500

2,000

0

—1,500

—2,500

20072006

29.0

28.5

26.5

1,000

—1,000

27.5

1,500

—500

28.0

26.0

500 27.0

25.5

25.0

—2,000 24.5

24.0

Banking sector aggregate reserves, billion rubles

Banking sector net foreign assets, billion rubles

Official ruble/dollar exchange rate

Assets, reserves Exchange rate

Chart 33

ing sector liquidity, which, apart from the above,included the balances of credit institutions’ ac�counts with the Bank of Russia, reached 1,133 bil�lion rubles in 2007, an increase of more than 70%on 2006.

The Bank of Russia conducted deposit opera�tions weekly at 4�week and 3�month deposit auc�tions and daily at fixed interest rates on standard‘tom�next,’ ‘spot�next,’ ‘call,’ ‘1�week’ and‘spot�week’ terms. The total value of deposittransactions executed by the Bank of Russia in2007 increased almost 4.6 times compared to2006 and equalled 45,096 billion rubles, whileits maximum debt on deposit operations reached1,298 billion rubles as against 375 billion rublesin 2006. Fixed�rate ‘tom�next’ deposits ac�counted for 73.0% of total funds raised. Most ofthe deposit operations were accessible through theReuters Dealing system (98.0% of total opera�tions in 2007 as against 95.0% in 2006).

The Bank of Russia Board of Directors in 2007doubled the fixed rates on deposit operations con�ducted with credit institutions on standard terms.Over the year these rates increased from 2.25%to 2.75% p.a. on overnight and call deposits andfrom 2.75% to 3.25% p.a. on 1�week deposits.While raising the fixed interest rates, the Bankof Russia revised interest rates on deposit opera�tions conducted at auctions. The average

weighted deposit interest rates stood at 3.02%p.a. in 2007 (as against 2.41% p.a. in 2006).The average weighted 4�week and 3�month de�posit auction rate stood at 4.33% p.a. (as against4.06% p.a. in 2006).

The Bank of Russia in 2007 conducted opera�tions with its own bonds on the primary market(by auction) and on the secondary market. Dur�ing the year it placed new OBR issues at auctionson standard terms (buy�back through an embed�ded put option or redemption in six months’ time)and according to uniform schedule (in the middleof the last month of each quarter) with subsequentregular additional placements at weekly auctions.

Each quarterly OBR bond placement in 2007was accompanied by a Bank of Russia offer to buyback an outstanding issue if market participantsused the funds they raised to buy new bonds. Thisarrangement enabled market participants to ex�change an OBR issue that was losing its liquidityfor a more liquid one.

To reduce the risk of a massive inflow of short�term capital at OBR auctions, the Bank of Rus�sia set interest rates based on the level of interestrates on the domestic and international interbankmarkets. The OBR average weighted yield in2007 stood at 4.9% p.a.

The average daily nominal value of outstand�ing Bank of Russia bonds in 2007 increased to


61

about 220 billion rubles as against 142 billionrubles in 2006. By August the OBR market vol�ume had reached an all�time record high of over380 billion rubles at par.

Total Bank of Russia bond sales in 2007reached 662.1 billion rubles at market price, ofwhich 660.0 billion rubles worth of bonds weresold by auction. A part of Bank of Russia bonds,worth 101.3 billion rubles, were acquired bymarket participants by exchanging outstandingbonds on the days the new bond issues were puton auction. Most of the OBR placements(539.0 billion rubles) were made in the first halfof the year.

As the Finance Ministry scaled down federalloan bond (OFZ) placements on the primarymarket, in the fourth quarter of 2007 the Bankof Russia sold 13.6 billion rubles worth of OFZbonds from its own portfolio to meet dormantinvestors’ demand.

As the conditions in which Russian credit in�stitutions operated changed dramatically in thesecond half of 2007, demand for Bank of Russiarefinancing instruments soared. To meet theirdemand for rubles, credit institutions could userepo operations, intraday, overnight andLombard loans, currency swap transactions withthe Bank of Russia and certain other operations.

Repo operations were the major market in�strument in terms of the amount of liquidity sup�plied to the banking sector in 2007. At the sametime, in January—July when there was a lot ofidle funds in the banking sector, interest rates onthis instrument were mostly higher than themoney market rates and there was little demandfor this instrument. However, in the second halfof the year, when banking sector liquidity con�tracted under the effect of the external shock,demand for repos rose sharply.

From the latter half of August repo operationswere held each business day. Market participants’demand focused on overnight repo auctions, withthe average weighted interest rate ranging from6.03% to 6.70% p.a.

Total funds raised through auction�basedrepos in 2007 almost quadrupled compared to2006 and reached 7,731 billion rubles.

As the situation on the money market deterio�rated in the third quarter of 2007, the Bank ofRussia decided to expand the refinancing of the

banking sector and for this purpose reduced dis�counts on the prices of securities involved in repooperations and raised the limit on the repo op�erations it conducted and the limit on net growthin the nominal value of its portfolio.

In late November 2007, in addition to repoauctions the Bank of Russia began to conductfixed�rate overnight and 1�week repos at the rateof 8.0% p.a. and 7.0% p.a., respectively. Thetotal value of these operations equalled 6.6 bil�lion rubles.

To enable market participants to conduct repotransactions with foreign securities, the Bank ofRussia worked out rules and procedures for con�ducting over�the�counter repo operations.

To obtain refinancing, banks in 2007 couldtake not only intraday, overnight and Lombardloans against the collateral (blocking) of securi�ties on the Bank of Russia Lombard List, but alsoloans against the collateral of promissory notes,claims under corporate loan agreements or bankguarantees. The most sought�after loans wereintraday loans, which increased in value by al�most 20% year on year and reached 13,500 bil�lion rubles.

Overnight loans, extended by the Bank ofRussia at the refinance rate, grew in value2.8 times and totalled 133.3 billion rubles.

Lombard loans increased in value almost fourtimes as compared to 2006 and totalled 24.2 bil�lion rubles.

In 2007, credit institutions began to executeLombard loan transactions (at a fixed interestrate and by auction) through the Moscow Inter�bank Currency Exchange Electronic Trade Sys�tem, which allows banks to conduct from a singleworkplace the entire range of operations con�ducted by the Bank of Russia as part of its mon�etary policy (loans, deposits and repos).

On November 28, 2007, the Bank of Russiaintroduced a new bank refinancing instrument,the Bank of Russia Lombard loan extended at a

fixed interest rate for one calendar day (the in�terest rate was set at 8.0% p.a.).

Earlier, on October 11, 2007, the Bank ofRussia Board of Directors ruled that the fixed in�terest rate on 7�day Lombard loans would be re�duced from 10.0% to 8.0% p.a. if two Lombardauctions have been declared invalid or if it is usedin currency swaps.

62


The average weighted Lombard credit rate fellin 2007 by 0.18 percentage points year on yearto 7.0% p.a.

In the fourth quarter of 2007 for the first timecredit institutions began to take Bank of Russialoans against the collateral of promissory notes,claims under corporate loan agreements andbank guarantees. The Bank of Russia started toconduct these operations on October 9 and as ofJanuary 1, 2008, their value reached 32.8 bil�lion rubles. The average weighted interest rateon these loans stood at 7.72% p.a.

The Bank of Russia in 2007 stepped up its ef�forts to expand the range of assets (securities)included in the Bank of Russia Lombard List,which may be used by credit institutions as col�lateral in conducting operations to raise fundsfrom the Bank of Russia.

To give credit institutions broader opportuni�ties for obtaining liquidity, the Bank of RussiaBoard of Directors in August 2007 decided to lower

the minimum international rating for the issuer(issue) of corporate and sub�federal bonds thatmay be put on the Bank of Russia Lombard Listfrom BB in the Standard & Poor’s or Fitch Rat�ings classification or Ba2 in the Moody’s InvestorsService classification to B+ (Standard & Poor’s orFitch Ratings) or B1 (Moody’s Investors Service).

At the same time, the Bank of Russia Board of Di�rectors lowered the requirements for the interna�tional rating of organisations whose obligations areaccepted as security for Bank of Russia loans, andfor credit institutions whose guarantees are ac�cepted as security for Bank of Russia loans.

In the course of 2007, 97 sub�federal and resi�dent corporate bond issues and 24 securities is�sues issued by non�resident corporate entitiesoutside Russia were placed on the Bank of RussiaLombard List.

In 2007, the Bank of Russia raised its adjust�

ment ratios, which now range from 0.75 (for sub�federal and resident corporate bonds with inter�national ratings B+ in the classification of Stan�dard & Poor’s and Fitch Ratings or B1 in the clas�sification of Moody’s Investors Service) to 0.99(for Bank of Russia bonds).

On December 28, 2007, the Bank of Russiaput into effect a regulation that set up a new pro�cedure for extending Bank of Russia loans tocredit institutions against the collateral of non�market assets (promissory notes and claims un�der loan agreements), such as intraday loans,overnight loans and fixed�rate loans for up to30 calendar days.

In August—November, when demand forrubles soared, the Bank of Russia conducted

350

—5020072006

2,800

1,600

100 1,300

300

50

2,500

250 2,200

1,000

200

0 700

150

1,900

400

* Total value of repo and currency swap operations, Lombard, overnight and other loans extended by the Bank of Russia and total government securities purchases.

AGGREGATE BANKING SECTOR RESERVES AND BANK OF RUSSIA OPERATIONS

TO REFINANCE CREDIT INSTITUTIONS IN 2006—2007

(billion rubles)Refinancing operations Aggregate banking sector reserves

Aggregate banking sector reserves

Refinancing operations*

Chart 34


63

currency swap transactions as an additional in�strument to supply banks with liquidity. The to�tal value of ruble liquidity provided by the Bankof Russia through the ruble/dollar and ruble/euroswaps in the period under review stood at194.8 billion rubles. The increase in demand forthese operations was largely due to a reductionin October 2007 of the interest rate on themfrom 10.0% to 8.0% p.a.

From the middle of August, when an acuteshortage of liquidity broke out, Bank of Russiabond buyout operations provided an additionalchannel of liquidity supply. In 2007, the Bank ofRussia bought out on the secondary market (notcounting the buyouts by offer or in connectionwith the execution of the put option and the ex�change of outstanding bond issues for new ones)232.3 billion rubles worth of OBR bonds, ofwhich 231.8 billion rubles worth of bonds werebought out in the second half of the year.

The Bank of Russia occasionally used opera�tions to buy and sell securities from its ownportfolio as an additional means of regulating li�quidity. In September 2007, it bought 51.1 bil�lion rubles worth of federal loan bonds (OFZ) onthe open market and in October it bought 51.0 bil�lion rubles worth of Russian eurobonds.

As short�term capital flowed into Russia inquantity in the first half of 2007, the Bank ofRussia decided to raise from July 1 the requiredreserve ratios to 4.5% for obligations to non�resi�dent banks in rubles and foreign currency andother bank obligations in rubles and foreign cur�

rency and to 4.0% for bank ruble obligations toindividuals.

As banking sector liquidity went down signifi�cantly in the third quarter of 2007, the Bank ofRussia lowered for three months (beginning Oc�tober 11) the required reserve ratios for bankruble obligations to individuals from 4.0% to3.0% and for ruble and foreign currency obliga�tions to non�resident banks and other bank obli�gations in rubles and foreign currency from 4.5%to 3.5%. At the same time, it allowed credit in�stitutions that intended to recalculate their re�quired reserves on the basis of the new standardsto conduct an extraordinary regulation on Octo�ber 11—15, 2007.

In addition, on November 1 the Bank of Rus�sia raised from 0.3 to 0.4 the averaging ratio forthe calculation of the average amount of requiredreserves.

The number of credit institutions that usedtheir right to average their required reservesgrew from 726 as of January 1, 2007, to 767as of January 1, 2008 (from 61.0% to 67.0%of total credit institutions), while the part ofthe required reserves that credit institutionskept in correspondent accounts (sub�accounts)with the Bank of Russia grew from 43.2 bil�lion rubles in December 2006 to 124.1 billionrubles in December 2007. Most of the creditinstitutions that applied for the right to aver�age their required reserves were then using thehighest averaging ratio established by the Bankof Russia1.

1 For credit institutions it was 0.3 until November 1, 2007, and 0.4 afterwards; for non�bank settlement credit

institutions and the Organised Securities Market Settlements Centre it was 1.0.

64


FII.1.3. EXCHANGE RATE POLICY

ollowing the Guidelines for the Single Sta�

te Monetary Policy in 2007, the Bank ofRussia in 2007 continued to maintain the

managed floating exchange rate regime.It used the ruble value of the bi�currency bas�

ket, comprised of US dollars and euros, as theoperational target for its exchange rate policy.This allowed the Bank of Russia to flexibly andsensibly respond to the euro/dollar fluctuationsand cushion fluctuations in the nominal effec�tive rate of the ruble. In February 2007, it re�vised the structure of the bi�currency basket, in�creasing the share of the euro (from 0.4 euros to0.45 euros).

As in 2006, during most of 2007 supply ex�ceeded demand on the domestic forex market.

In the first half of 2007, the reduction of thecurrent account surplus (to $38.8 billion from$54.6 billion in the first half of 2006), caused byimport growth, was offset by massive private capi�tal inflow. Net private sector capital inflowreached $66.4 billion in the first and second quar�

ters of 2007 (as against $42.0 billion in the en�tire year 2006), mostly due to the IPOs placedby the top two Russian issuers, Sberbank andVTB Bank, and major property auctions. In thatsituation, Bank of Russia net foreign currencypurchases reached a record high of $96.2 billionin the period from January to June 2007.

The second half of 2007 was full of develop�ments that influenced significantly the world andnational financial systems. The crisis in the high�risk sub�prime loan sector of the US mortgagemarket and the ensuing risk reassessment by theleading financial market participants led to a con�traction of liquidity on world financial marketsand capital outflow from emerging markets. Thedollar sharply fell in value, while the price of oiland other major exchange commodities, such asgold, platinum and other, surged.

To reduce the risk of inflation amid persistentgrowth in export prices and massive inflow of for�eign currency, at the beginning of the second halfof 2007 the Bank of Russia twice (in July and

BANK OF RUSSIA INTERVENTIONS ON DOMESTIC FOREX MARKET

AND BI�CURRENCY BASKET RUBLE VALUE

IN 2007

30.00

29.70

29.65

29.60I II III IV V VI VII VIII IX X XI XII

29.80

10

—2

—4

—6

2

29.90

29.75

6

29.95 8

29.85 4

0

Bi�currency basket value Currency interventions

Bi�currency basket value after 8.02.2007 (0.55 dollars + 0.45 euros,

calculated at official rates of exchange), rubles

Bi�currency basket value before 8.02.2007 (0.6 dollars + 0.4 euros,

calculated at official rates of exchange), rubles

Bank of Russia currency interventions, billion US dollars

Chart 35


65

REAL RUBLE EXCHANGE RATE IN 2006—2007

(growth as % of December of previous year)

18

16

12

8

4

0

20072006

18

16

12

8

4

14

10

6

2

14

10

6

2

0

Real ruble/euro rate Real ruble/dollar rate Real effective ruble rate

early August) scaled down its support for the bi�currency basket. Nevertheless, in the middle ofAugust, as foreign investors withdrew from Rus�sian assets while residents hoarded foreign cur�rency to service foreign debt, demand for foreigncurrency on the domestic market increased manytimes over and exceeded supply and the currentmarket value of the bi�currency basket reachedthe upper limit of fluctuations of the ruble valueof the currency basket, used by the Bank of Rus�sia as the operational target. To prevent theruble’s abrupt depreciation against the majorworld currencies, during that period the Bank ofRussia sold $3.14 billion in foreign currency onthe domestic market.

In late August and September demandmatched supply on the domestic forex market,whereas in the fourth quarter, when private capi�tal inflow resumed ($23.5 billion in October—December) and the banking sector experienced ashortage of liquidity, foreign currency supply ex�ceeded demand and the Bank of Russia was buy�ing up foreign currency.

As a result, in the year under review aggre�gate Bank of Russia net foreign currency pur�chases increased by 21.0% year on year reaching$142.3 billion.

Due to massive foreign currency inflowthrough capital and foreign trade operations reg�istered for most of the year, Russia’s gold and for�eign exchange reserves increased by $172.7 bil�lion, or 56.8% and as of January 1, 2008, reached$476.4 billion.

The nominal effective rate of the ruble againstforeign currencies in 2007 fell by 0.9%, whereasthe nominal rate of the ruble against the US dol�lar rose by 6.7% and against the euro it declinedby 2.7%.

In 2007, the real rate of the ruble gained lessthan in 2006. The real effective rate rose by5.1%, remaining within the exchange rate bandprojected in the social and economic develop�ment scenarios of the Monetary Policy Guide�

lines for 2007. The real rate of the ruble gained15.0% against the US dollar and 5.8% againstthe euro.

Chart 36

66


II.2. RESERVE MANAGEMENT

W hen managing its foreign exchangereserves1, the Bank of Russia soughtto ensure their safety, liquidity and

profitability.Safety of the foreign exchange reserves is en�

sured by using a comprehensive risk managementsystem, based exclusively on the application ofhigh�security financial market instruments, im�posing stringent requirements on the foreigncounterparties of the Bank of Russia and settingrisk limits on each of them depending on theirsolvency, and conducting operations under agree�ments with foreign counterparties that protect theinterests of the Bank of Russia.

To ensure in the most effective way the safety,liquidity and profitability of foreign exchange re�serves, they are divided into the transaction port�folio and the investment portfolio. The transac�tion portfolio comprises short�term money mar�ket instruments, such as the balances of corre�spondent accounts, deposits, repos and short�termdiscount securities. The management of this port�folio ensures the necessary level of low�risk short�term foreign exchange assets. Funds in the invest�ment portfolio are invested in long�term and, con�sequently, riskier and, as a rule, more profitableinternational capital market instruments. There�

fore, the management of the investment portfo�lio is aimed at receiving additional profitabilitywithout violating the established safety and liquid�ity requirements. To increase profitability and,at the same time, maintain the necessary level ofsafety and liquidity, the Bank of Russia makesinvestment decisions bearing in mind the currentstate of the international currency and financialmarket and forecasts for their future dynamics.

The main factor of growth in foreign exchangereserves in 2007 was the purchase by the Bankof Russia of foreign currency on the domestic forexmarket. Other contributing factors were the pro�ceeds from operations with Bank of Russia for�eign exchange assets and precious metals and thechange in the exchange rates of other reserve cur�rencies against the US dollar.

The transaction portfolio of foreign exchangereserves in 2007 expanded from $213.1 billion to$281.2 billion. To make more income from for�eign exchange reserve placements, the Bank ofRussia used part of the reserves to buy bonds de�nominated in US dollars, euros and British pounds(about $33.3 billion, 34 billion euros and 3.8 bil�lion pounds). As a result, the share of the Bankof Russia foreign exchange reserve transactionportfolio in total foreign exchange reserves went

1 Denominated in reserve currencies Bank of Russia claims on foreign counterparties and Bank of Russia�owned

securities, except reserve currency�denominated foreign securities purchased by the Bank of Russia with an obli�

gation to resell (reverse repo).

I I . 2 . R E S E R V E M A N A G E M E N T

67

FACTORS OF CHANGE IN BANK OF RUSSIA FOREIGN EXCHANGE RESERVES IN 2007

(US$, billion)

120 18080 1600—20 40 100 14020 60

169.8

—0.1

—9.7

20.2

17.1

142.3Operations on domestic forex market

Change in exchange rates of reserve currencies

Change in asset value

Payments on instructionfrom Bank of Russia customers

Other draw�downs/receipts

Change in reserves (total)

BANK OF RUSSIA

FOREIGN EXCHANGE RESERVES

BY INSTRUMENT IN 2007 (%)

Securities with maturity longer than 1 year

Securities with maturity shorter than 1 year

Repos with maturity of up to 6 months

Foreign currency deposits with maturity

of up to 6 months and balances of accounts

39.0

24.5

15.6

20.9

down from 73.0% to 61.0%. The total value ofthe foreign exchange reserve investment portfo�lio increased from $78.4 billion to $180.1 billionin 2007 and its share in the total value of thetransaction and investment portfolios grew from27.0% to 39.0%.

As of January 1, 2008, Bank of Russia for�eign exchange reserves were invested in the fol�lowing classes of instruments1: deposits and bal�ances of correspondent accounts (24.5%), repotransactions (15.6%) and foreign securities(59.9%). (Foreign securities are mostly govern�ment coupon bonds of the United States, Ger�many, Britain, France, the Netherlands, Austria,Belgium, Spain, Finland and Ireland and discountand coupon securities issued by agencies of thesecountries).

The geographical structure of Bank of Russiaforeign exchange reserves as of January 1, 2008,was as follows: the United States accounted for37.3% of assets, Germany — for 14.6%, Brit�ain — for 12.7%, France — for 9.7%, Switzer�land — for 7.1% and other countries — for18.6%. This structure is based on the residenceof the head offices of the banking groups that arecounterparties of the Bank of Russia in moneymarket operations (balances of correspondentaccounts, deposits and repos) and the issuers ofthe securities in the Bank of Russia foreign ex�change reserve portfolios.

The management of foreign exchange reservesentails undertaking financial risks by the Bank ofRussia, especially market (currency and interestrate) risk and credit risk. Risk management inoperations with foreign exchange reserves in�

1 Based on management reports on the market value of assets in the Bank of Russia foreign exchange reserve

portfolios (net of gold).

Chart 37

Chart 38

68


1 Funds raised in repo operations with foreign counterparties are not included in foreign exchange reserves.

BANK OF RUSSIA FOREIGN EXCHANGE RESERVES BY COUNTRY IN 2007

(as % of market value of reserves)

0 5 15 3510 25 3020 40

0.3

0.6

0.7

1.0

1.3

1.4

1.8

2.0

3.6

5.8

7.1

9.7

12.7

14.6

37.3

Other

Austria

International organisations

Japan

Canada

Spain

Ireland

Denmark

Belgium

The Netherlands

Switzerland

France

UK

Germany

USA

BANK OF RUSSIA


BY CURRENCY IN 2007 (%)

YenPound sterling

EuroUS dollar

47.0

0.8

9.8

42.4

cludes procedures for identifying and assessingrisks, setting limits on them and monitoring com�pliance with these limits.

In 2007, Bank of Russia foreign exchange re�serve assets were denominated in US dollars, eu�ros, British pounds and Japanese yen (hereinaf�

ter referred to as “reserve currencies”). In theperiod under review the Bank of Russia also hadobligations expressed in reserve currencies (bal�ances of customer accounts, including FederalTreasury accounts with the Bank of Russia, andfunds raised from repos with foreign counterpar�ties1).

The difference between Bank of Russia assetsin reserve currencies and Bank of Russia obliga�tions in these currencies represents net foreignexchange reserves, whose currency structure isthe source of currency risk. The level of currencyrisk assumed by the Bank of Russia is limited bythe standard currency structure of Bank of Rus�sia foreign exchange reserves, which sets the tar�get ratios of the reserve currencies in net foreignexchange reserves and the permissible deviations.Since foreign exchange reserves are measured inUS dollars, currency risk in the management offoreign exchange reserves signifies the possibilityof a fall in the value of foreign exchange reservesdue to the deviation of the actual currency struc�ture from the standard one, caused byunfavourable fluctuations in the exchange ratesof reserve currencies against the US dollar.

The standard currency structure of Bank ofRussia foreign exchange reserves has changed in

Chart 39

Chart 40

I I . 2 . R E S E R V E M A N A G E M E N T

69

the year under review as follows: the standardshare of the Japanese yen was expanded at theexpense of the share of the US dollar.

In 2007, the Bank of Russia conducted con�version transactions with the US dollar, the euro,the pound sterling and the yen on the interna�tional currency market. Massive US dollar pur�chases on the domestic forex market and thechanged amount and structure of Bank of Russiaforeign currency obligations (Federal Treasuryaccounts1) compelled the Bank of Russia to mostlysell dollars for other reserve currencies in orderto bring their share in net foreign exchange as�sets up to standard.

Credit risk was controlled by the limits set onthe Bank of Russia counterparties and the re�quirements for the credit quality of the issuers ofsecurities included in Bank of Russia foreign ex�change reserves. The lowest permissible long�term credit rating of Bank of Russia counterpar�ties and debtors in operations with Bank of Rus�sia foreign exchange reserves was set at A in theclassification of Fitch Ratings and Standard &Poor’s rating agencies (or A2 in the classificationof Moody’s Investors Service). The lowest per�missible securities or securities issuer rating wasset at AA– in the classification of Fitch Ratingsand Standard & Poor’s (or Aa3 in the classifica�tion of Moody’s Investors Service). Deals thatinvolved the management of foreign exchangereserves were struck with foreign counterpartiesincluded in the corresponding list within the creditrisk limits established for them.

The structure of assets in the Bank of Russiaforeign exchange reserve portfolios by credit rat�ing as of January 1, 2008, was as follows: AAA�rated assets accounted for 58.7%, AA�rated as�sets — for 33.9%, and A�rated assets — for 7.4%.This structure is based on data on long�term creditratings assigned by Fitch Ratings, Standard &Poor’s and Moody’s Investors Service to the headoffices of the banking groups that are thecounterparties of the Bank of Russia in moneymarket operations (balances of correspondentaccounts, deposits and repos) and the issuers ofthe securities in the Bank of Russia foreign ex�

change reserve portfolios. When the counterpartyor issuer ratings of these agencies differed, thelowest rating was accepted. The asset structureby rating is represented by major rating catego�ries AAA, AA and A without a breakdown of therating scale within each category2.

To assess the interest rate risk and the rateof return of the portfolios of actual assets, theBank of Russia used standard portfolios createdunder the procedure established by Bank of Rus�sia internal documents. The standard foreign ex�change reserve investment portfolio was rebal�anced on a monthly basis and the standard trans�action portfolio — on a weekly basis. The stan�dard portfolio represented a set of instruments(index) formed by assigning to each instrumentthat met the requirements established by Bankof Russia internal documents a certain weight(share) in the portfolio. The weight of an in�strument in the standard portfolio was deter�mined on the basis of the depth of the marketfor that instrument.

Effective duration was an indicator used toassess the level of interest rate risk, which signi�fies financial loss due to the change in interestrates on each reserve currency. To control inter�

1 Foreign exchange purchases by the Federal Treasury with money from the Stabilisation Fund.2 Additionally to compare long�term credit ratings within each rating category, ‘+’ or ‘—‘ are added to Stan�

dard & Poor’s and Fitch Ratings figures and the digits 1, 2 and 3 are added to Moody’s Investors Service ratings.

33.9

58.7

BANK OF RUSSIA


BY CREDIT RATING IN 2007 (%)

“AAA”“AA”“A”

7.4

Chart 41

70


est rate risk, the Bank of Russia set limits on thedeviation of the effective duration of the actualforeign exchange reserve portfolios from the ef�fective duration of the standard portfolios.

The rate of return and effective duration ofthe actual portfolios and the corresponding stan�dard portfolios were evaluated daily. The rate ofreturn took into account both realised income andthe change in the value of the assets that form theportfolios1. The rate of return was evaluated foreach currency part of the transaction and invest�ment portfolios.

The rates of return on the Bank of Russia for�eign exchange reserve portfolios in 2007, calcu�lated on the accrual basis2, are shown in Addenda,Section IV, IV.3. Statistical tables.

The US mortgage crisis that broke out in 2007,had affected virtually all major financial marketsby the end of the year and the Bank of Russia hadto take a series of measures to reduce to a mini�mum the adverse after�effects of the crisis on thevalue of its foreign exchange reserves. Specifically,it reduced the share of assets rated below AA;

tightened requirements for counterparties anddeposit terms, and further limited the volumes ofoperations with foreign counterparties. As inves�tor confidence in non�government securities de�clined, the Bank of Russia reduced the share ofthese securities in its foreign exchange reservesin favour of shorter�term instruments and gov�ernment bonds and imposed additional restric�tions on the volume of investments in non�gov�ernment securities.

Bank of Russia gold assets are managed sepa�rately from its foreign exchange reserve portfo�lios. During 2007 the Bank of Russia expandedits monetary gold assets by 47.46 tonnes, an in�crease of 12.9% on the beginning of the year.

The Bank of Russia continued to place gold itkept in accounts in foreign credit institutions onshort�term deposits with prime banks. In the pe�riod from January to August 2007, it placed goldfor terms of up to six months. In the subsequentmonths, when the crisis on world financial mar�kets came to a head, it started to place gold forshorter periods.

1 Relative indicator of percentage change in the value of the asset portfolio during one business day. The daily

portfolio rate of return was calculated according to the formula:

MV1—MV

0±CF

R = _____________

, whereMV

0

R is the portfolio rate of return in one day;

MV1 is the portfolio’s market value as of the end of the current day;

MV0 is the portfolio’s market value as of the end of the previous day;

CF is the cash flows (money transfers) to or from the portfolio during the current day.2 The aggregate rate of return of the portfolios is calculated using the linked index method. The rate of return for the

period was calculated using the formula:

R = (1+R1)*(1+R

2)*…*(1+R

n)—1, where

R1 is the day’s rate of return.

I I . 3 . B A N K I N G R E G U L A T I O N A N D S U P E R V I S I O N

71

II.3. BANKING REGULATION AND SUPERVISION

he activities of the Bank of Russia in thefield of banking regulation and supervi�sion, conducted pursuant to the Federal

Law on the Central Bank of the Russian Fed�eration (Bank of Russia), in 2007 were aimedat maintaining stability of the Russian bankingsystem and protecting the interests of depositorsand creditors. The Bank of Russia continued tocarry out measures designed to improve bank�ing supervision in line with the Russian Bank�ing Sector Development Strategy until 2008 and

in compliance with internationally acceptedstandards.

In 2007, it issued regulations and instructionsaimed at upgrading Bank of Russia key policiesin banking regulation and supervision, includingthe state registration of credit institutions, the li�censing of banking operations, risk assessment,management and control, off�site supervision,inspection, financial rehabilitation and liquida�tion of credit institutions and the prevention ofmoney laundering and terrorist financing.

T

II.3.1. REGISTRATION AND LICENSING OF BANKING ACTIVITIES

uring the year under review, the Bankof Russia registered new credit institu�tions, issued banking licences, evalu�

ated the financial situation of the founders (mem�bers) of credit institutions, sought to create con�ditions conducive to banking capital consolidationand took action to ensure that credit institutionshave a transparent ownership structure.

At the same time, the Bank of Russia upgradedmethodologies to create favourable conditions forbanking sector capitalisation, introduce newbanking services and make it easier for the divi�

sions and branches of credit institutions to beginconducting banking operations.

The number of operating credit institutionslicensed to conduct banking operations decreasedby 53 in 2007 as compared with 2006 (takinginto account bank reorganisation) and as of Janu�ary 1, 2008, it stood at 1,136. The number of reg�istered credit institutions fell by 49, or 3.6%, andas of January 1, 2008, stood at 1,296 (in 2006,the number of registered credit institutionsdropped by 64, or 4.5%, and as of January 1,2007, equalled 1,345).

D

72


NUMBER OF REGISTERED OPERATING CREDIT INSTITUTIONS

AND BANKING LICENCES GRANTED TO THEM

1,800

900

300

01.01.2005 1.01.2006 1.01.20081.01.2007

1,800

900

600 600

1,200 1,200

1,500 1,500

300

0

Total registered credit institutions

Number of operating credit institutions

Credit institutions licensed to take household deposits

Credit institutions with forex licences

Credit institutions with general licences

Credit institutions licensed to conduct operations with precious metals

1,516

1,165

839

311

1,409

1,045

301

1,296

906

754

300

1,345

921

1,2991,253

1,136

1,189

803

287

182 184 199192

827

NUMBER OF BRANCHES OF OPERATING CREDIT INSTITUTIONS BY REGION

600 800500 7001000 300200 400

1.01.2005 1.01.2006 1.01.2007 1.01.2008

Central Federal District

North�Western Federal District

Southern Federal District

Volga Federal District

Urals Federal District

Siberian Federal District

Far Eastern Federal District

Twelve new credit institutions (eight banksand four non�bank credit institutions) were reg�istered during the year under review. Of these,six banks are controlled by foreign capital. Forcomparison, in 2006 seven credit institutionswere registered, including five banks (three ofthem controlled by foreign capital).

Forty�one credit institutions, or 3.6% of totaloperating credit institutions, expanded the range

of their activities by obtaining additional licencesin 2007 (48 credit institutions, or 4% of the to�tal, in 2006).

In 2007, the Bank of Russia issued 17 generallicences, 12 licences to conduct foreign currencyoperations and 10 licences to attract funds on de�posit and to place precious metals. It granted theright to attract household deposits to six banks,of which four received this right for the first time

Chart 42

Chart 43


73

NUMBER OF OPERATING CREDIT INSTITUTIONS

AND THEIR REGISTERED AUTHORISED CAPITAL

1,325

1,175

1,1251.01.2005 1.01.2006 1.01.20081.01.2007

750

1,225 550

1,275 650

450

350

1,136380.468

1,189

1,253

731.736

1,299

566.513

444.377

Number of operating credit institutions

Registered authorised capital of operating credit institutions, billion rubles

Number of operating credit institutions Authorised capital

and two that had refused to participate in thehousehold deposit insurance system after the Fed�eral Law on Insurance of Household Deposits inRussian Banks came into effect. Eleven credit in�stitutions in 2007 were denied additional licencesto expand the range of their operations for non�compliance with the requirements of federal leg�islation and Bank of Russia regulations (13 creditinstitutions in 2006).

As of January 1, 2008, 906 out of 1,136 oper�ating credit institutions were licensed to takehousehold deposits, 754 credit institutions hadlicences to conduct operations in rubles and for�eign currency, 300 credit institutions had gen�eral licences and 199 credit institutions had li�cences to deposit and place precious metals orpermission to conduct operations with preciousmetals.

The consolidation of the banking businesscontinued in 2007: eight credit institutionsmerged with three credit institutions. In addi�tion, seven credit institutions changed their formof incorporation and legal status as they turnedfrom limited liability companies into joint�stockcompanies.

As of January 1, 2008, the number of branchesof operating credit institutions reached 3,455 (asagainst 3,281 a year earlier), of which 169were branches of wholly foreign�owned banks(90 a year earlier). The number of branches of

credit institutions differs by region: there are758 branches, or 21.9% of the total, in the Cen�tral Federal District, 746, or 21.6%, in the VolgaFederal District and 202, or 5.8%, in the FarEastern Federal District.

There is a trend for credit institutions tooptimise their regional networks. The number ofadditional offices increased by 26.5% to 18,979as of January 1, 2008, and the number of cashand credit offices rose by 54.9% to 1,543. At thesame time, the number of cash departments out�side cash settlement centres declined from 15,885to 14,689. Many credit institutions and theirbranches opened new divisions established underBank of Russia regulations, such as operationsoffices and mobile cash points. As of January 1,2008, there were 497 operations offices and51 mobile cash points. The total number of inter�nal divisions of credit institutions and theirbranches increased by 3,871 and as of January 1,2008, reached 35,759 as against 31,888 as ofJanuary 1, 2007. The number of internal divi�sions of credit institutions and their branches per100,000 population rose from 22 in 2006 to 25in 2007.

Measures taken by members (shareholders)to increase the capitalisation of their credit insti�tutions led to the expansion of the aggregateauthorised capital of operating credit institutions,which increased by 165.2 billion rubles compared

Chart 44

74


NUMBER OF OPERATING CREDIT INSTITUTIONS BY AUTHORISED CAPITAL

(% share of total operating credit institutions)

30

20

15

5

0

Up to 3 mln rubles

3 to 10 mln rubles

10 to 30 mln rubles

30 to 60 mln rubles

60 to 150 mln rubles

150 to 300 mln rubles

Over 300 mln rubles

30

20

25 25

15

5

10 10

0

1.01.2005 1.01.2006 1.01.2007 1.01.2008

15.3

19.0

3.6 3.3

5.6

7.3

5.4

10.2

14.1

10.6

17.9

14.2

17.318.2

16.2

18.3

21.8

14.7

22.4

26.6

18.0

4.5

8.5

16.4 16.3

19.4

16.918.1

Chart 45

to 2006 and reached 731.7 billion rubles.Sberbank and VTB Bank IPOs accounted for13.9% of the growth in banking sector authorisedcapital, which amounts to 22.9 billion rubles. Thenumber of credit institutions with a registeredauthorised capital of more than 175 million rubles(5 million euros) rose to 470 as of January 1,2008, or 41.4% of total operating credit institu�tions. The number of credit institutions with anauthorised capital of more than 300 million rublesstood at 302 as of January 1, 2008, or 26.6% oftotal operating credit institutions (as against 266,or 22.4%, as of January 1, 2007, and 243, or19.4% as of January 1, 2006) and the number ofcredit institutions with an authorised capital of150 million rubles to 300 million rubles stood at248, or 21.8% (as against 217, or 18.3%, as ofJanuary 1, 2007, and 204, or 16.3%, as of Janu�ary 1, 2006).

Compared to 2006, the number of operatingcredit institutions with an authorised capital ofless than 150 million rubles fell by 120 to 586 (as

against 706 as of January 1, 2007, and 806 as ofJanuary 1, 2006).

The year under review saw a rise in the shareof non�residents in the Russian banking system.Total foreign investment in the banking sectorreached 183.5 billion rubles. In 2007, it increasedby 93.4 billion rubles, or doubled, mostly due tothe increase by operating credit institutions oftheir authorised capital with non�resident funds.The non�resident share of the aggregate registeredauthorised capital of Russian credit institutionsincreased from 15.9% as of January 1, 2007, to25.1% as of January 1, 2008. Exclusive of theshare of non�residents under material influenceof Russian Federation residents, the non�residentshare of the aggregate registered authorised capi�tal of credit institutions grew over that periodfrom 14.9% to 22.8%.

Credit institutions with foreign interest arelocated in 40 Russian regions, 124 of them, or61.4% of the total, in Moscow and the MoscowRegion, and 16 in St Petersburg.


75

II.3.2. OFF�SITE SUPERVISION

the field of off�site supervision the Bankof Russia in 2007 focused on the preven�tion of problems in credit institutions on

early stages (early warning system), with risk�based supervision being one of the methods ofachieving this goal.

The Bank of Russia used the early warning sys�tem when it conducted its monthly monitoring ofthe banks participating in the deposit insurancesystem to make sure that they complied with therequirements of Federal Law No. 177�FZ, datedDecember 23, 2003, ‘On Insurance of HouseholdDeposits in Russian Banks.’ Whenever banksfailed to comply with the deposit insurance sys�tem requirements, the Bank of Russia examinedthe reasons for non�compliance and the remedialmeasures taken.

Taking into consideration the situation on in�ternational financial markets in the second halfof 2007, the Bank of Russia paid increased at�tention to the liquidity situation in credit institu�tions and made sure that they had an adequateliquidity risk management system. Its regionalbranches, which exercise immediate supervisionover credit institutions, constantly monitored thestate of liquidity in credit institutions, includingtheir correspondent accounts opened with theBank of Russia. They watched particularly closelythe banks that borrowed heavily on the Russianinterbank market and abroad. In October 2007,the Bank of Russia made known to its regionalbranches information on the advanced methodsof organising effective liquidity risk managementand control in credit institutions.

Taking into consideration the rapid expan�sion of consumer lending, the Bank of Russia at�tached priority to off�site supervision of creditinstitutions in this sphere of activity. Realisingthat in some regions there was a sustained trendtowards growth in overdue debt on consumerloans, the Bank of Russia tightened control overthe creation by banks of portfolios of homoge�neous loans extended to households and the lossprovisioning for these loans. Specifically, it madesure that banks only included in the portfolio ofhomogeneous loans those in regard of which the

In borrower has been informed about their effec�tive interest rate, as required by Bank of RussiaOrdinance No. 1759�U, dated December 12,2006, ‘On Amending Bank of Russia RegulationNo. 254�P, Dated March 26, 2004, on the Pro�cedure for Making Provisions by Credit Institu�tions for Possible Losses on Loans, Loan andSimilar Debts.’

When implementing off�site supervision ofcredit institutions, the Bank of Russia consideredall information the supervisory authority hadabout them, including customer complaints, mostof which were connected with consumer lending.With regard to banks that accounted for a largenumber of complaints, supervisory decisions weretaken which included working meetings, some�times with the participation of the complainants.Among the main causes of disputes and conflictsare the desire by banks to make maximum profitin minimum time in this segment of the market;the lack of legal and financial expertise amongborrowers and loopholes in legislation on con�sumer lending. In 2007, the Bank of Russia wasactively involved in upgrading the legal frame�work of consumer lending. In addition, it hasplanned a series of measures aimed at arrangingcloser supervisory cooperation with credit insti�tutions and improving the general public’s finan�cial literacy.

The shortcomings and violations of the lawdiscovered in the work of credit institutions andthe necessary remedial measures were promptlydiscussed with their managers and owners. Pre�ventive measures continued to prevail in super�visory decisions taken in 2007.

The Bank of Russia in 2007 continued effortsto detect credit institutions that used inappropri�ate assets to create equity capital. It examined389 credit institutions for this purpose, of which12 were found guilty of this malpractice. TheBank of Russia met the request of five credit in�stitutions to repeal the equity capital readjustmentrequirements it had imposed on them earlier, andsuspended the enforcement of OrdinanceNo. 1656�U, dated February 6, 2006, with re�gard to two credit institutions after they had cov�

76


ered the risks they had assumed when using in�appropriate assets as a source of equity capital.

In 2007, the Bank of Russia implemented con�solidated supervision of banking (consolidated)groups, analysing on a regular basis the consoli�dated statements submitted by parent credit in�stitutions and other information, including in�spection results. It paid special attention to theassessment of the completeness of the determina�tion of the consolidation perimeter, the correct�ness of reporting and the financial situation of thegroup, including the observance of prudentialstandards. When it discovered violations of bank�ing legislation and Bank of Russia regulations bythe parent credit institutions of the groups, it tookpreventive measures (sending information inwriting) or forced measures (mostly fines).

In 2007, the Bank of Russia analysed state�ments compiled by credit institutions and bank�ing groups under the International Financial Re�porting Standards (IFRS statements) for 2006.IFRS statements for 2006 were presented to theBank of Russia by 1,155 credit institutions and175 banking groups (out of 1,189 credit institu�tions and 212 banking groups) and nine bankinggroups that recognised themselves as such accord�ing to the IFRS. The overwhelming majority ofthe IFRS statements presented by credit institu�tions and banking groups to the Bank of Russiahad been vetted by auditors. The so�called modi�fied auditor’s report, that is, the auditor’s reportthat contains additional information for users,was presented with regard to statements by13 credit institutions, which accounted for 3.0%of aggregate banking sector assets, and two bank�ing groups, which accounted for 5.4% of aggre�gate banking group assets.

Unconsolidated IFRS statements were dis�closed by 510 credit institutions (44% of totalcredit institutions that presented IFRS state�ments), of which 489 credit institutions, or 42%,disclosed them by posting them on their websites.In some cases, IFRS statements were publishedby the mass media. Consolidated IFRS statementswere disclosed by 102 banking groups (56% oftotal groups that presented IFRS consolidatedstatements) on the websites of their parent creditinstitutions and one group published its IFRS con�solidated statement in Bukhgaltersky balans

(Balance Sheet) journal.

The Bank of Russia analysed IFRS statementsby comparing indicators and data on credit insti�tutions and banking groups in their IFRS state�ments and statements compiled according to Rus�sian accounting rules with the objective of detect�ing discrepancies and establishing their causes.This analysis showed that there were minor dif�ferences between data on assets, liabilities, eq�uity capital and financial results reported by creditinstitutions and banking groups under IFRS andunder Russian accounting rules.

In the course of upgrading the regular moni�toring of banking risks as a major element of risk�based supervision, in 2007 the Bank of Russiaworked out principles for monitoring market risksand capital adequacy. Its banking risk monitor�ing system comprised five sub�systems: liquiditymonitoring, non�financial enterprise sector loanmonitoring, household loan monitoring, capitaladequacy monitoring and market risk monitor�ing. The purpose of the regular monitoring wasto prevent negative trends in the banking sectorand to identify banks that may provoke the de�velopment of such trends. Credit institutionswhere monitoring results revealed negative trendswere further examined for the purpose of super�visory response.

The monitoring of non�financial enterprises bythe Bank of Russia in 2007 was necessary for in�formational and analytical support of the func�tioning of supervisory divisions, primarily in Bankof Russia regional branches. Thus, the assessmentof the circumstances capable of affecting the fi�nancial stability of the banks included an analy�sis of the economic conditions of the non�finan�cial enterprises that are counterparties of the su�pervised bank and their production and financialperformance. In addition, supervisors examinedthe quality of the methodologies used by the su�pervised credit institution to evaluate the finan�cial situation of its borrowers.

The Bank of Russia attached great importanceto the transparency of individual credit institu�tions and the banking sector as a whole. In 2007,it issued the annual Banking Supervision Reportand continued to post an online version of themonthly Russian Banking Sector Review.

As of January 1, 2008, over 84% of total op�erating credit institutions disclosed informationabout their activities on the Bank of Russia


77

website, an increase of 14% on 2006. As of thebeginning of 2008, 698 credit institutions, ormore than 61% of the total, agreed to discloseinformation in compliance with Bank of RussiaLetter No. 165�T, dated December 21, 2006, ‘OnDisclosure of Information by Credit Institutions,’that is, agreed to disclose all data required in forms0409101 and 0409102.

In response to repeated requests from repre�sentatives of the banking community, the Bankof Russia in 2007 opened an Extranet portal tocommunicate with credit institutions, based onthe automated electronic communication systemin the Bank of Russia Moscow branch. In addi�tion to inquiries by credit institutions, audit firmsand other companies and official answers andclarifications, the Bank of Russia posts the for�mat and control rules for the collection of reportsfrom credit institutions, versions of the computersoftware for the collection of reports from credit

institutions and other information. As of the be�ginning of 2008, more than 2,500 users such ascredit institutions and their branches and special�ists with Bank of Russia regional branches werelinked up to the Bank of Russia Extranet portal,among them all the credit institutions based inMoscow and the Moscow Region and 167 regionalcredit institutions.

To provide effective information support forits divisions, expedite and improve decision�making and optimise the sharing of informationin the course of collecting, consolidating andanalysing bank statements and other informa�tion on credit institutions, the Bank of Russia in2007 worked to develop a Single Bank of RussiaBanking Sector Regulation and DevelopmentInformation System. This work will continue in2008 and when it is completed, Bank of Russiasupervisors will have a single information sys�tem at their disposal.

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MII.3.3. INSPECTION OF CREDIT INSTITUTIONS

ost of the inspections of credit institu�tions and their branches in 2007 wereconducted according to schedule. In�

spections of credit institutions and their branchesfocused on banking operations that involved highrisk, such as loans to households. In addition, in�spectors detected violations of the Federal Lawon Countering the Legalisation (Laundering) ofCriminally Obtained Incomes and the Financingof Terrorism and identified banks with liquidityproblems. Inspection assignments included ques�tions that enabled inspectors to assess the actualrisk levels in these areas of banking and, conse�quently, assess the financial soundness of creditinstitutions and their branches.

A total of 1,742 inspections of credit institu�tions and branches of credit institutions were con�ducted by Bank of Russia authorised representa�tives in 2007.

Of these, 393 (22.6%) were comprehensiveinspections and 1,349 (77.4%) — thematic in�spections. At the same time, 97 comprehensiveinspections and 520 thematic inspections wereconducted in the branches of credit institutions(87 of these, all of them thematic, were conductedin Sberbank branches).

The Bank of Russia inspected 866 credit in�stitutions (72.8% of the total as of January 1,2007) and 609 branches of credit institutions(18.6% of the total as of January 1, 2007), in�cluding 84 Sberbank branches (9.8% of totalSberbank branches in operation as of January 1,2007).

The trend towards a reduction in the numberof inspections per credit institution, which beganseveral years ago, continued in the year underreview, which was reflected in the decrease of thetotal number of inspections and the change in theratio between scheduled and unscheduled inspec�tions in favour of the former. In line with theGeneral Plan of Comprehensive and ThematicInspections of Credit Institutions and theirBranches for 2007, the Bank of Russia conducted1,322 scheduled inspections (76% of total inspec�tions), of which 726 inspections were conductedin credit institutions, 511 in the branches of credit

institutions and 85 in Sberbank branches. In2007, the Bank of Russia conducted 173 sched�uled interregional inspections of credit institutionsand their branches.

Pursuant to Article 32 of the Federal Law onInsurance of Household Deposits in RussianBanks, the Bank of Russia conducted with theparticipation of the Deposit Insurance Agency 131scheduled inspections of banks participating in thedeposit insurance system (14.2% of total banksthat participated in this system as of January 1,2007).

In 2007, the Bank of Russia conducted 420 un�scheduled inspections (24% of total inspections),of which one inspection was conducted with theparticipation of the Deposit Insurance Agency.

At the decision of its management the Bank ofRussia conducted 109 unscheduled inspections,or 26% of the total number. The purpose of mostof these inspections was to verify compliance withthe Federal Law on Countering the Legalisation(Laundering) of Criminally Obtained Incomesand the Financing of Terrorism, and Bank ofRussia regulations on cash and currency exchangeoperations. Special attention was paid to the de�tection and prevention of dubious operations.

Most of the unscheduled inspections (311, or74% of the total) were conducted by the decisionof the management of regional branches of theBank of Russia. Virtually all of them (307) wereconducted after credit institutions had increasedtheir authorised capital by more than 20% orwhen credit institutions requested permission toexpand the range of their operations. Four inspec�tions were conducted in connection with theimplementation of bankruptcy�prevention mea�sures.

In the course of inspections held in 2007 theBank of Russia detected 17,969 infractions com�mitted by credit institutions and their branches.

Most of the violations (4,376, or 24.4% of thetotal) were connected with non�compliance withthe requirements of the Federal Law on Coun�tering the Legalisation (Laundering) of Crimi�nally Obtained Incomes and the Financing of Ter�rorism. Many violations were detected in credit


79

SCHEDULED AND UNSCHEDULED INSPECTIONS

1,600

1,200

800

400

2002004 2005 2006 2007

0.9

0.7

0.5

1,400

1,000

600

0.8

0.6

0.4

0.3

0.2

Ratio between scheduled and unscheduled inspections

Number of scheduled inspections

Number of unscheduled inspections

Number Ratio

THEMATIC AND COMPREHENSIVE INSPECTIONS

2,400

1,800

900

300

02004 2005 2006 2007

7.0

6.0

1,500 5.5

4.5

2,100

1,200

600

6.5

5.0

4.0

3.5

3.0

Ratio between thematic and comprehensive inspections

Number of thematic inspections

Number of comprehensive inspections

Number Ratio

operations (3,469, or 19.3%), bookkeeping(1,698, or 9.4%) and accounting and reporting(1,425, or 7.9%). There were 1,244 violationsof cash operations rules (7% of the total) and1,024 violations of currency legislation (5.7%).Compared to 2006, the number and structure ofviolations remained virtually unchanged.

The Bank of Russia Main Inspectorate forCredit Institutions in 2007 constantly carried outmeasures to improve the quality of inspection,making special emphasis on the need to enhancethe effectiveness and quality of preparations for

inspections, to improve inspection methodologiesand to tighten control over the quality of inspec�tion reports.

When preparing inspections, special attentionwas paid to cooperation with off�site supervisiondivisions and to functional interaction betweenthe heads of the working groups and the curatorsof credit institutions.

To improve the quality of inspections and tooptimise and rationalise the inspectors’ work, theBank of Russia began to develop and introducebank inspection flow charts, which represent an

Chart 46

Chart 47

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INSPECTIONS PER CREDIT INSTITUTION

2,000

1,400

500

2002004 2005 2006 2007

2.0

1.8

1,100 1.7

1.5

1,700

800

1.9

1.6

1.4

Total inspections per operating credit institution (as of beginning of period) (right�hand scale)

Number of inspections conducted in credit institutions (their head offices) (left�hand scale)

Number of inspections of branches of credit institutions (left�hand scale)

algorithm of the inspector’s actions, from theanalysis of a credit institution’s statements tocompiling the inspector’s report.

The Bank of Russia continued the practice ofhearing reports by its regional branches on inspec�tion and in the course of these hearings in 2007the Bank of Russia analysed 56 reports on inspec�tions conducted by eight Bank of Russia regionalbranches located in the Central Federal District,North�Western Federal District, Southern Fed�eral District, Urals Federal District and SiberianFederal District. Thirty�nine expert reports werepresented to the management of the Bank of Rus�sia Main Inspectorate for Credit Institutions.

In the year under review, the Bank of Russiacontinued to take measures to enhance the effi�ciency of the interregional inspectorates of its

Main Inspectorate for Credit Institutions. Empha�sis was made on coordinating the efforts of theinspection divisions of Bank of Russia regionalbranches and providing them with methodologi�cal support. Specialists with the interregionalinspectorates took part in 81 inspections andanalysed 948 inspection reports, sending to theregional branches their comments on 220 of them.

To improve inspection regulations and meth�odologies, the Bank of Russia in 2007 issued meth�odological recommendations on the inspection ofthe bank risk management system, credibility ofaccounting and reporting and compliance with therequired reserve ratios. To streamline the processof recording inspection results, it drafted method�ological recommendations on the sample structureand content of an inspection report.

Chart 48


81

In

II.3.4. BANK BANKRUPTCY (INSOLVENCY) PREVENTION

AND WITHDRAWAL OF INSOLVENT CREDIT INSTITUTIONS

FROM THE BANKING SERVICES MARKET

2007, Bank of Russia regional branchescontrolled the activities of credit insti�tutions liable to insolvency (bank�

ruptcy) prevention procedures under Article 4 ofthe Federal Law on Insolvency (Bankruptcy) ofCredit Institutions.

In 2007, the Bank of Russia ordered 10 creditinstitutions to undergo financial rehabilitation(seven credit institutions fulfilled the order ontime, whereas three failed to do so and subse�quently had their banking licences revoked).

During the year under review the Bank ofRussia oversaw the activities of 62 provisional ad�ministrations of credit institutions. It appointed50 provisional administrations to run credit in�stitutions and dismissed 53 provisional adminis�trations, 41 of them in connection with arbitra�tion court rulings on compulsory liquidation andthe appointment of a liquidator and 12 — in con�nection with arbitration court rulings to declarecredit institutions insolvent (bankrupt) and ap�point receivers. Representatives of the DepositInsurance Agency participated in 41 provisionaladministrations of credit institutions in 2007.

Pursuant to Article 74 of the Federal Law onthe Central Bank of the Russian Federation (Bankof Russia) and Articles 20 and 23 of the FederalLaw on Banks and Banking Activities, the Bankof Russia issued orders to revoke (cancel) bank�ing licences from 54 credit institutions, of whichfive credit institutions had their licences cancelled.Most of the licences (43) were revoked (can�celled) from credit institutions incorporated inMoscow and the Moscow Region. Forty�fourbanks (51 in 2006) had their licences revoked in2007 for repeated violations within one year ofthe provisions of Articles 6 and 7 (excluding clause3 of Article 7) of the Federal Law on Counteringthe Legalisation (Laundering) of Criminally Ob�tained Incomes and the Financing of Terrorism.Two credit institutions (the same number as in2006) had their licences revoked for failure to

meet their pecuniary obligations to creditors and(or) effect compulsory payments.

As of January 1, 2008, 157 credit institutionswere subject to liquidation that had their licencesrevoked (cancelled) and for which the Bank ofRussia had not received liquidation registrationcertificates from the registration authority. Liq�uidation procedures were implemented in 150 ofthem and as for the remaining seven credit insti�tutions, by the reporting date no court rulings hadbeen made on them after the revocation of theirlicences. Most of the liquidated credit institutions(78) were declared bankrupt and bankruptcyproceedings were initiated (23 of them were de�clared bankrupt with bankruptcy proceedings ini�tiated in 2007); 64 credit institutions were to beliquidated by arbitration court rulings (43 creditinstitutions in 2007); eight credit institutionswere liquidated on a voluntary basis by decisionof their founders (members) (of these, five creditinstitutions were liquidated in 2007).

Pursuant to clause 2 of Article 50.11 of theFederal Law on Insolvency (Bankruptcy) ofCredit Institutions and Article 23.2 of the Fed�eral Law on Banks and Banking Activities, rep�resentatives of the Deposit Insurance Agency asof January 1, 2008, implemented liquidation pro�cedures in 119 credit institutions; in 29 of themliquidation procedures were completed in 2007and arbitration courts pronounced the relevantrulings.

In 2007, the Bank of Russia registered the liq�uidation of 61 credit institutions, of which33 credit institutions were liquidated by ruling ofthe arbitration court on the completion of bank�ruptcy proceedings, one credit institution was liq�uidated by its founders (members) and creditorsthrough out�of�court bankruptcy proceedings,23 credit institutions were liquidated by court rul�ing for reasons other than bankruptcy and fourcredit institutions were liquidated by theirfounders (members) on a voluntary basis.

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Twenty�eight arbitration managers were ac�credited with the Bank of Russia in 2007 as thereceivers of bankrupt credit institutions and 13of them had their accreditation extended. TheBank of Russia extended the terms of 14 arbitra�tion managers’ (liquidators’) certificates issuedbefore the coming into force of Federal LawNo. 121�FZ, dated August 20, 2004, ‘On Amend�ing the Federal Law on Insolvency (Bankruptcy)of Credit Institutions and Invalidating CertainLaws and Provisions of Laws of the Russian Fed�eration,’ and refused to extend two certificates.As of January 1, 2008, 26 arbitration managerswere accredited with the Bank of Russia and threecredit institution arbitration managers’ (liquida�tors’) certificates were in force.

In 2007, the Bank of Russia conducted 14 in�spections of receivers (liquidators), including

nine inspections of Deposit Insurance Agencyrepresentatives. After the inspections, receivers(liquidators) were ordered to take remedial ac�tions.

Pursuant to the Federal Law on Bank of Rus�sia Payments on Household Deposits with Bank�rupt Banks Uncovered by the Compulsory De�posit Insurance System, the Bank of RussiaBoard of Directors in 2007 took decisions to ef�fect payments to 528 depositors of three bank�rupt banks to the total amount of 40.9 millionrubles. In addition, 1.5 million rubles were al�located as payment to 35 depositors of six bankson which the decisions to effect Bank of Russiapayments were taken in 2005 and 2006. In ac�cordance with these decisions, the Bank of Rus�sia in 2007 paid 590 depositors of these banks atotal of 42.7 million rubles.


83

II.3.5. HOUSEHOLD DEPOSIT INSURANCE

ursuant to the Federal Law on Insuranceof Household Deposits in Russian Banks,the Bank of Russia in 2007 oversaw

banks to make sure that they comply with thedeposit insurance system requirements.

As of January 1, 2008, 934 banks participatedin the compulsory deposit insurance system, in�cluding banks that had their banking licences re�voked (cancelled) earlier.

New banks continued to join the deposit in�surance system in 2007: seven banks that hadapplied for permission to expand the range of theiroperations were granted the licence to take house�hold deposits.

Insured events occurred in 15 banks�mem�bers of the deposit insurance system in 2007:13 of them had their banking licences revokedand two banks had their licences cancelled asthey decided to liquidate themselves voluntar�ily. In all the insured events connected with therevocation of licences the Bank of Russia�ap�pointed provisional administrations sent regis�ters of obligations to depositors to the DepositInsurance Agency within the 7�day period estab�lished by the Federal Law on Insurance ofHousehold Deposits in Russian Banks and this

allowed the Agency to start making insurancepayments to depositors on time.

Pursuant to Article 48 of the Federal Law onInsurance of Household Deposits in RussianBanks, the Bank of Russia Banking SupervisionCommittee in 2007 prohibited seven banks�mem�bers of the deposit insurance system from takinghousehold deposits and opening personal accountsbecause of their failure to comply with the depositinsurance system requirements.

In compliance with the Federal Law on Insur�ance of Household Deposits in Russian Banks andagreements signed in 2007, the Bank of Russia andthe Deposit Insurance Agency coordinated their ac�tivities and shared information on issues relating tothe deposit insurance system, such as the participa�tion of banks in this system, the payment of insur�ance premiums and compensation for deposits, in�spections of the participating banks by the Bank ofRussia and the sanctions used against them.

A law was passed in 2007 that increased themaximum insurance compensation for householdbank deposits to 400,000 rubles and increasedcommensurately Bank of Russia payments to de�positors of bankrupt banks that are not membersof the deposit insurance system.

P

84


TII.3.6. CENTRAL CATALOGUE OF CREDIT HISTORIES

he Central Catalogue of Credit Histories(CCCH) was set up in 2005 under the Fed�eral Law on Credit Histories. It compiles,

stores and reports upon request from credit his�tory makers and users in what credit bureaus whichcredit history is kept. Requests are processed au�tomatically round the clock seven days a week.

Twenty�one credit bureaus from among thoseput on the state register of credit bureaus wereconnected to the automated Central Catalogue ofCredit Histories in early 2007 and by the end ofthe year the number of credit bureaus linked upto the system had reached 27.

As of the beginning of 2007, the CCCH accu�mulated and made available to credit history mak�ers and users information on more than 14 mil�lion credit history titles, which increased to20 million titles in May, and to over 35 million

titles by the end of the year, a growth of 150%compared to 2006. The credit history titles ofprivate individuals accounted for more than99.6% of total credit history titles as of January 1,2008. Credit histories are compiled with regardto residents registered in all regions of the coun�try and there is no high concentration of credithistory titles in any one region: 10 regions accountfor 35% and 20 regions for less than 60% of thetitles kept in the CCCH.

During 2007 the CCCH received and processedover 275,000 requests from credit history mak�ers and users, an increase of 50% on 2006. Theseincluded more than 215,000 requests for infor�mation on credit bureaus where credit historieswere kept and 60,000 requests connected withthe compiling, changing and cancellation of credithistory maker codes.

I I . 4 . T H E R U S S I A N P A Y M E N T S Y S T E M

85

II.4. THE RUSSIAN PAYMENT SYSTEM

1 The banking system is the central element of the national payment system. Apart from the Bank of Russia and

credit institutions, Russia’s Federal Postal Service and other economic agents also provide payment services.2 Bank of Russia institutions, credit institutions and their branches, additional offices, operations offices, cash and

credit offices and cash operations departments outside cash settlement centres.3 Transaction accounts are accounts of households and corporate entities which can be used to effect payments.

II.4.1. THE STATE OF THE RUSSIAN PAYMENT SYSTEM

he main feature of the development of theRussian payment system in 2007 was in�creased accessibility of payment services

provided by the banking system1. The number ofbanking institutions that provide payment ser�vices2 increased by 10.2% over the year andreached 41,000. The number of additional officesof credit institutions and branches of credit insti�tutions rose particularly fast as banks sought toprovide payment and other banking services atminimum cost. Over the year, the number of ad�ditional offices of credit institutions and branchesof credit institutions grew by 26.5% to nearly19,000.

Payment services have become more accessibledue to an increase in the number of accounts thatcan be used in effecting payments. As of Janu�ary 1, 2007, credit institutions serviced 369.1 mil�lion household transaction3 accounts and trans�action accounts of corporate entities other thancredit institutions, whereas by January 1, 2008,the number of such accounts had increased by14.2% and reached 421.7 million. At the end of

2007, there were on average three transactionbank accounts per person (as against 2.6 accountsin 2006).

Due to advanced technology, more and morebank customers use online banking services. Aspayment services are now well within the reachof consumers, they have improved in qualityand become less costly and more affordable. Thenumber of accounts that individual customerscan manage by cellphone increased by 120%and reached 1.3 million in 2007. Internet bank�ing was also expanding fast: the number of ac�counts that bank customers could managethrough the Internet increased by 48.2% to3.3 million.

Rapid economic growth was accompanied bythe expansion of demand for payment services.The number of non�cash payments effected bythe Russian banking system in rubles increasedby 46.8% over the year and their value grewby 67.3%. The Russian banking system effected9.9 million payment transactions to the amountof 3.0 trillion rubles a day on average.

T

86


The private payment systems in 2007 effected6.5 million payments to the amount of 1.2 tril�lion rubles a day on average. Payments effectedthrough credit institutions’ correspondent ac�counts opened in other credit institutions or theirbranches accounted for 5.3% of the total numberand 12.3% of the total value of all payments inthe private payment systems. Settlements be�tween the divisions of one credit institution ac�counted for 23.8% of the total number and 34.0%of the total value of payments in the private pay�ment systems. Most of the payments effected inthe private payment systems are payments withinone division of a credit institution or a branch ofa credit institution. In 2007, they accounted for70.9% of the total number and 53.7% of the to�tal value of all payments effected through the pri�vate payment systems in rubles.

Settlements on the securities market were ef�fected by non�bank credit institutions, such as theMICEX Clearing House and RTS Clearing House.Compared with 2006, the value of settlementseffected by the MICEX Clearing House for gov�ernment securities market, corporate securitiesmarket and forward (standard) contracts mar�ket commitments, calculated on a net basis, in�creased by 33.8% in 2007.

Payment orders were the most common in�strument of non�cash payments in the Russianbanking system in 2007, just as in the previousyears. A total of 1.1 billion transactions to theamount of 510.9 trillion rubles were conductedlast year using payment orders. Over the yearthese payments increased by 10.8% in numberand by 45.4% in value. Payment requests andcollection orders increased significantly in 2007.The number of payments effected using these in�struments grew 1.9 times to 80.5 million, whiletheir value increased 2.5 times to 6.6 trillionrubles. Cheques and letters of credit made up asmall part of payments effected in 2007.

Cash continued to predominate as a paymentinstrument in retail payments. However, non�cash retail payments increasingly gained accep�tance on the market. Money transfers increasedby an estimated 60—80% in 2007 as the numberof migrant workers continued to grow: the num�

ber of money transfers made by credit institutionsat the instruction of private individuals withoutopening a bank account reached 721 million andtheir value stood at 2,149.9 billion rubles. Alongwith money transfers made through credit insti�tutions (bank transfers), an increased number ofmoney remittances were effected through non�bank institutions, such as Russia’s Federal PostalService, whose services were in particularly highdemand in the regions where there were notenough banks.

The bank card market continued to expand ata steady pace. Over the year the number of bankcards increased by 38.4% and reached 103.5 mil�lion. Such rapid growth was largely due to theimplementation of the so�called pay�roll projects,when companies pay wages to their employees bytransferring them to their bank cards. In addition,the past few years have seen continuous growth inthe number of credit cards as a result of the expan�sion of consumer lending: in 2007 the number ofcredit cards grew by 58.0% and reached 8.9 mil�lion. The expansion of bank card operations is alsodue to the changes in payment techniques con�nected with the expansion of the range of bankingservices that are accessed by using the computersystems installed in credit institutions: repaymentof bank loans and interest on them, card�to�cardtransfers, the payment of mobile phone fees, rentand utility charges, and so forth.

The new advanced methods of effecting non�cash retail payments on household bank accountsby orders sent to credit institutions through theInternet or by mobile phone continued to gain everwider acceptance in 2007. The value of such pay�ments in 2007 stood at 285.2 billion rubles(9,261,100 transactions) and 1.4 billion rubles(2,466,400 transactions), respectively. At thesame time, more and more Internet and mobilephone payments are effected by Internet provid�ers and mobile phone operators and organisationsother than credit institutions. The payment ser�vices they offer quickly became popular withhouseholds and began to rival with the servicesprovided by credit institutions, because theytake little time to order and are easily acces�sible and cheap.


87

1 These include payments effected between credit institutions and their branches through the Bank of Russia pay�

ment system, payments effected by non�bank settlement credit institutions, payments passed through the corre�

spondent accounts of credit institutions opened in other credit institutions and payments between the divisions of

one credit institution.2 Main cash settlement centres, cash settlement centres, operations departments and sections.

II.4.2. DEVELOPMENT AND UPGRADING OF THE BANK OF RUSSIA

PAYMENT SYSTEM

he Bank of Russia payment system effected833.9 million payments to the amount of445.8 trillion rubles in 2007. These pay�

ments accounted for 59.7% of the total value ofpayments effected by the Russian payment sys�tem (as against 59.9% in 2006).

The number of payments made through theBank of Russia payment system in 2007 increasedby 19.8% year on year and their value grew by66.8%. Most of the increase was due to paymentseffected by credit institutions and their branches.It is the result of high demand for the services pro�vided by the Bank of Russia payment system as alow�risk and high�quality interbank money trans�fer system, the expansion of the customer base ofcredit institutions and their branches and the risein the business activity of economic agents.

The Bank of Russia payment system accountedfor 59.6% of the total number and 71.9% of thetotal value of interbank payments made in Rus�sia in 20071.

Payments effected by credit institutions andtheir branches in 2007 accounted for 83.7% oftotal payments made through the Bank of Russiapayment system and 80.3% of their value (asagainst 82.0% and 84.6% in 2006).

The average daily number of payments roseby 17.9% over the year to 3.3 million, while theaverage amount of payments increased by 40.0%year on year and reached 534,600 rubles (asagainst 383,900 rubles in 2006). The value ofpayments effected through the Bank of Russiapayment system relative to Russia’s GDP grewfrom 10.0 in 2006 to 13.5 in 2007.

The participants in the Bank of Russia pay�ment system as of January 1, 2008, were 1,136 cre�dit institutions (as against 1,189 credit institu�tions as of January 1, 2007) and 2,285 branches

of credit institutions (as against 2,062 as of Janu�ary 1, 2007) and they had 3,421 correspondentaccounts (sub�accounts) opened for them(a growth of 5.0% during the year under review).

The number of customers other than creditinstitutions serviced by the Bank of Russia, whichaccounted for 16.2% of the number and 8.7% ofthe value of payments effected through the Bankof Russia payment system in 2007, decreased overthe year under review from 36,401 to 29,324,or by 19.4% (as against 18.7% in 2006). As inthe previous years, the reduction in the numberof these customers was due to the implementa�tion of Article 215.1 of the Budget Code of theRussian Federation, which regulates the trans�fer of the cash execution of the federal, regionaland municipal budgets to the Federal Treasury.

The Bank of Russia continued to optimise thenetwork of its cash settlement centres. In line withthe decisions taken by its Board of Directors andin response to proposals from its regional branches,the Bank of Russia closed 141 cash settlement cen�tres that failed to meet Bank of Russia criteria. Asa result, the network of Bank of Russia settlementdivisions2 contracted by 15.3% compared to 2006and comprised 782 units.

The overwhelming majority of payments in theBank of Russia payment system (99.7%) weremade electronically.

The increase in the number of Bank of Russiacustomer credit institutions and their branchesthat participated in the exchange of electronicdocuments with the Bank of Russia to 97.0% ofthe total as of January 1, 2008 (as against 96.4%as of January 1, 2007), was due to the develop�ment of electronic technology. As a result, theshare of payments transmitted to the Bank ofRussia payment system through communication

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88


channels increased to 97.8% of total payments asagainst 97.7% in 2006.

The average monthly accessibility ratio of theBank of Russia payment system, a major efficiencyperformance indicator for this system, in 2007ranged between 99.02% and 99.89% as regardsthe receipt by the Bank of Russia of electronicsettlement documents from its customers, andbetween 99.95% and 100% as regards the receiptof paper documents.

Average settlement times for all settlementtechniques used were 0.64 days on theintraregional level and 1.01 days on the interre�gional level. The reduction in average settlementtimes became possible due to the reduction in av�erage times for settlements made electronically.

In compliance with federal law, the Bank ofRussia conducted all budget operations free ofcharge. The ratio between the operations con�ducted by the Bank of Russia free and for pay in2007 remained virtually unchanged at 52.1% and47.9% (as against 53.7% and 46.3% in 2006).

The Bank of Russia made great efforts to im�prove the methodologies and the provision of in�formation relating to the payment systems in linewith the action plan drawn up for the implemen�tation of the Guidelines for the Single State Mon�

etary Policy in 2007 and the Banking Sector De�velopment Strategy.

For this purpose, it drafted a set of documentsthat would allow it to regulate and monitor pri�vate payment systems. It continued to upgradethe regulation of cash and non�cash settlements.

The Bank of Russia attaches great importanceto measures aimed at improving informationanalysis related to payment and settlement sys�tems and making its activities in this field moretransparent.

For this purpose, it launched a specialised pub�lication Payment and Settlement Systems, whichis designed to summarise and promote best inter�national and national practice. The two issuesthat came out in 2007 and dealt with the key as�

pects of the development of the national paymentsystems were posted on the Bank of Russiawebsite and thus became available to a wide rangeof people.

To implement the Banking Sector Develop�ment Strategy, which envisages the developmentof a real time gross settlement system by the Bankof Russia, the Bank of Russia carried out mea�sures that would ensure the implementation ofthis task within the established time frame.

It carried out work to create a regulatoryframework that would preclude legal risk and in�volve Bank of Russia institutions and credit in�stitutions and their branches in the Banking Elec�tronic Speed Payment (BESP) system. The Bankof Russia drafted rules and regulations for thissystem, describing its designation, and establishedthe procedure for effecting payments and settle�ments in the BESP system by its members andfor managing participation in the system and theconditions of keeping the BESP directory. It alsoelaborated the BESP operation rules and the pro�cedure for monitoring the system.

In July 2007, the system was put into opera�tion and in December BESP participants beganto effect payments through it. In 2007, BESP sys�tem participants were 98 Bank of Russia institu�tions, including 47 main cash settlement centres,44 cash settlement centres, the Bank of RussiaFirst Operations Department (OPERU�1), theoperations department, and five divisions of theBank of Russia Moscow branch as special settlingparticipants and 17 credit institutions andbranches of credit institutions. The BESP systemallowed the Bank of Russia to continue the tran�sition to a centralised Bank of Russia paymentsystem.

To inform potential participants about theBank of Russia customers that have been acceptedinto the BESP system and the rules and regula�tions on the system and the amendments made tothem, the Bank of Russia has created a BESP sys�tem section on its website.


89

II.4.3. BANK OF RUSSIA PAYMENT SYSTEM INFRASTRUCTURE

DEVELOPMENT

the period under review the Bank ofRussia completed the transfer of pay�ment data processing from 74 IT depart�

ments of its regional branches to two new high�performance IT centres, called Collective DataProcessing Centres (CDPC). Each CDPC pro�cesses data from 37 Bank of Russia regionalbranches. The CDPC have a mutual data backupfacility and a single system for the delivery of pay�ment messages.

The establishment of the CDPC, a centralisedtelecommunications infrastructure for them andthe necessary engineering equipment and auto�mated facilities for their operation allowed theBank of Russia to create the Collective Data Pro�cessing System (CDPS). To enhance the reliabil�ity of this system, the Bank of Russia in 2007 car�ried out measures to raise the level of mutual databackup of the CDPC and their telecommunica�tions facilities and data exchange channels andincrease the throughput of the single telecommu�

In nications banking network. It continued to builda centralised CDPS control system.

To upgrade the CDPS, the Bank of RussiaBoard of Directors decided to transfer the pro�cessing of payment data for Moscow and the Mos�cow Region to a separate CDPC, and work to es�tablish it began in the second half of 2007.

In the period under review, the Bank of Rus�sia carried out measures to modernise the elec�tronic settlement system. Specifically, it contin�ued to upgrade the architecture of the StandardComputer Workstations of the Operations Ac�counting System RABIS�2 and RABIS�NP for thepurpose of their further standardisation and thetransfer of all regional branches to a single settle�ment system. The Bank of Russia has completedthe transfer of its Standard Computer Worksta�tions of the Operations Accounting System touniform electronic banking message formats forexchange with credit institutions and other Bankof Russia customers.

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II.5. BANK OF RUSSIA ACTIVITIES AIMED

AT COUNTERING THE LEGALISATION

(LAUNDERING) OF CRIMINALLY OBTAINED

INCOMES AND THE FINANCING OF TERRORISM

2007, the Bank of Russia continued toperform the functions assigned to it bythe Federal Law on Countering the

Legalisation (Laundering) of Criminally ObtainedIncomes and the Financing of Terrorism (here�inafter referred to as Federal Law No. 115�FZ).

To provide methodological support to creditinstitutions in meeting the requirements of theanti�money laundering/terrorist financing(AML/FT) laws, the Bank of Russia in 2007 is�sued recommendations on how banks should ser�vice their customers who access their bank ac�counts electronically, including Internet banking,and explained the specific procedure for provid�ing banking services to non�resident corporateclients who are not Russian taxpayers.

To fulfil its supervisory functions, in 2007 inthe course of conducting inspections of 751 creditinstitutions and/or their branches the Bank ofRussia verified their compliance with AML/FTlaws.

The most typical shortcomings discovered inthe course of the inspections were non�compli�ance with the following requirements of FederalLaw No. 115�FZ and Bank of Russia regulations:identifying customers and beneficiaries and docu�menting and reporting to the authorised agencywithin the established time period information on

operations with money and other property sub�ject to mandatory control.

Taking into consideration all the violationsdisclosed in the course of inspections, includingnon�compliance with the requirements of FederalLaw No. 115�FZ, the Bank of Russia took the fol�lowing actions against credit institutions: preven�tive measures — making the shortcomings discov�ered in the work of a credit institution known toits management (392 cases); forced measures —ordering credit institutions to take remedial ac�tion (344 cases); fines were imposed in 252 cases;41 credit institutions were restricted in or pro�hibited from conducting certain banking opera�tions; and 44 credit institutions had their licencesrevoked.

According to the schedule of mutual assess�ments of the Financial Action Task Force(FATF), a FATF mission visited Russia from Sep�tember 24 to October 1 and from November 11 to25, 2007, within the framework of the thirdround of the mutual assessment of the RussianAML/FT system. Experts of the Council of Eu�rope Select Committee of Experts on the Evalua�tion of Anti�Money Laundering Measures(MONEYVAL), and the Eurasian Group on com�batting money laundering and financing of ter�rorism (EAG) took part in the FATF missions.

In

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II.6. FOREIGN EXCHANGE REGULATION

AND FOREIGN EXCHANGE CONTROL

he amendments to Federal Law No. 173�FZ,drafted with the participation of the Bankof Russia and designed to settle the proce�

dure for conducting certain types of foreign ex�change operations by residents came into force in2007.

To ensure equal competitive conditions for theRussian carriers in international traffic, FederalLaw No. 267�FZ, dated December 30, 2006, ‘OnAmending the Federal Law on Foreign ExchangeRegulation and Foreign Exchange Control,’which came into effect on December 31, 2006,finalised the procedure for conducting foreignexchange operations connected with settlements,including cash settlements, for the servicing ofaircraft and river and sea�going vessels, includ�ing the payment of air navigation, airport, portand other compulsory duties connected with theiroperation and also under agreements on the trans�portation of passengers and cargoes by privateindividuals for their personal needs.

In addition, the Law established cases in whichforeign currency earnings of resident transportcompanies may not be repatriated to their ac�counts in the authorised banks and may be usedin netting counterclaims on obligations to non�residents who provide services to such residentsabroad or as payment to cover the expenses thatresident transport companies may incur outsideRussia.

Federal Law No. 127�FZ, dated July 5, 2007,‘On Amending the Federal Law on Foreign Ex�change Regulation and Foreign Exchange Con�

T trol,’ granted resident individuals the right totransfer without any restrictions foreign currencyfrom their accounts in the authorised banks to theaccounts opened in authorised banks or banksoutside Russia by other resident individuals whoare their spouses or next of kin.

Federal Law No. 242�FZ, dated October 30,2007, ‘On Amending Article 12 of the FederalLaw on Foreign Exchange Regulation and For�eign Exchange Control,’ lifted the requirementto report the movement of funds in accounts (de�posits) in banks outside Russia by individuals,diplomatic missions, consular offices and otherofficial representatives of the Russian Federationoutside the Russian Federation and also by per�manent representatives of the Russian Federationin interstate or intergovernmental organisations.

Pursuant to Russian Federation GovernmentResolution No. 80, dated February 7, 2007, ‘Onthe Procedure for Presenting Documents and In�formation Necessary for the Performance of Ex�ercising its Functions by Foreign Exchange Con�trol Bodies and Agents to the Foreign ExchangeControl Body Authorised by the Government ofthe Russian Federation,’ and to fulfil the powersgranted to it by Sections 9 and 10 of Article 23 ofFederal Law No. 173�FZ, the Bank of Russia is�sued Regulation No. 308�P, dated July 20, 2007,‘On the Procedure for Transferring Informationby Authorised Banks about Violations of ForeignExchange Laws of the Russian Federation andRegulations of Foreign Exchange Regulation Au�thorities by Persons Conducting Foreign Ex�

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change Operations’ (hereinafter referred to asBank of Russia Regulation No. 308�P).

Bank of Russia Regulation No. 308�P estab�lished requirements for the transmission proce�dure and format of electronic reports theauthorised banks or their branches must send toBank of Russia regional branches that supervisethem concerning violations of the foreign ex�change control laws of the Russian Federation andregulations of the foreign exchange regulationauthorities, committed by their clients and de�tected in the course of implementing their func�tions of foreign exchange control agents. To en�sure the subsequent transfer of this informationto the foreign exchange control authority that hasthe power to use sanctions against persons whocommit such violations, the Bank of Russia andthe Federal Financial and Budget SupervisionService on August 15, 2007, signed an agreementon cooperation in the field of information on is�sues related to foreign exchange control.

In addition, to ensure the adequate use by for�eign exchange control authorities of correctivemeasures for violations of federal foreign exchangecontrol laws and regulations of the foreign ex�change regulation authorities, the Bank of Rus�sia issued Ordinance No. 1950�U, dated Decem�ber 10, 2007, ‘On Forms of Accounting for For�eign Exchange Operations Conducted by Resi�dents Other than Credit Institutions and CurrencyExchanges,’ which listed the documents that rep�resent the forms of accounting for foreign ex�change operations conducted by the residents in�dicated above.

Thus, in 2007 Russia had virtually completedthe creation of the regulatory framework for theeffective operation of the foreign exchange con�trol system in Russia.

To alleviate the administrative burden on theauthorised banks and their clients and simplifysome foreign exchange control procedures, theBank of Russia issued Ordinance No. 1869�U,dated July 20, 2007, ‘On Amending Bank of Rus�sia Instruction No. 117�I, Dated June 15, 2004,on the Procedure for Presenting Documents andInformation by Residents and Non�residents tothe Authorised Banks in Conducting Foreign Ex�

change Operations and the Procedure for Ac�counting for Foreign Exchange Operations andFilling in Transaction Passports,’ lifted the re�quirement to re�draft the transaction passportsopened earlier in case of a change in the name ofthe authorised bank unconnected with itsreorganisation or a change in the name of theauthorised bank in connection with itsreorganisation in the form of transformation(change of legal status).

The continued rise in the real effective rate ofthe ruble against foreign currencies in 2007 wasaccompanied by significant changes on the domes�tic forex market. The de�dollarisation of the Rus�sian economy accelerated and the weakening ofthe dollar on international markets furtherstrengthened public preference for the cash euro.

In 2007, the authorised banks brought in$12.8 billion in foreign exchange, just 1.3% morethan in 2006. The share of the US dollar in totalforeign exchange brought into this country con�tracted from 46.7% in 2006 to 29.6% in 2007.The amount of foreign currency taken out of Rus�sia by the authorised banks increased by 60% yearon year and reached $20.6 billion. As in 2006,the US dollar accounted for about 98% of the to�tal amount of foreign currency taken out of thiscountry.

As a result, the foreign currency inflow�out�flow balance stood at –$7.8 billion in 2007 asagainst –$0.1 billion in 2006.

The acceleration of the de�dollarisation pro�cess was also confirmed by the dynamics of nethousehold demand for foreign currency (the dif�ference between the amount of foreign currencysold to individuals and withdrawn from their for�eign currency accounts and the amount of for�eign currency bought from individuals and placedon their accounts). Net demand in 2007 stoodat –$4.4 billion as against $2.4 billion in 2006.For the first time since observations began in 1996household supply exceeded demand on the do�mestic forex market in 2007. The situation withthe US dollar was different from the situationwith the euro. Net demand for cash dollars stoodat –$12.4 billion, whereas net demand for casheuros reached $7.9 billion.

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II.7. BANK OF RUSSIA ACTIVITIES RELATING

TO GOVERNMENT FINANCE

To implement Article 215.1 of the BudgetCode of the Russian Federation, theBank of Russia and its regional branches

assisted Federal Treasury bodies in switching overto cash execution of regional and municipal bud�gets, coordinated their activities and shared in�formation with Federal Treasury bodies in thisarea, and examined the budget accounts Bank ofRussia institutions and credit institutions openedfor budget�financed organisations and financialauthorities.

As a result, the total number of Bank of Rus�sia customers other than credit institutions de�clined by 7,100 and as of January 1, 2008, stoodat 29,300, of which the number of Federal Trea�sury bodies fell by 200 to 1,000 and the regionaland local budget�executing bodies — by 800 to2,200, respectively.

The total number of accounts opened in Bankof Russia institutions for enterprises other thancredit institutions in 2007 decreased by 3,300 toabout 80,000. At the same time, the number ofaccounts opened for Federal Treasury bodies in�creased over the year by 4,000 to 37,000, as Fed�eral Treasury bodies opened accounts to recordcash payments and earnings from profit�makingactivities received by enterprises financed fromthe local budgets.

As the Federal Treasury continued tocentralise budget accounts at the level of regional

Federal Treasury divisions, the ratio betweenaccounts opened in the Bank of Russia main cashsettlement centres and cash settlement centreschanged. As of January 1, 2008, Bank of Russiacustomers other than credit institutions had53.0% of total accounts opened for them in theBank of Russia main cash settlement centres and47.0% in the Bank of Russia cash settlement cen�tres, whereas a year earlier the ratio was 46.0%to 54.0%, respectively. The number and volumeof operations conducted by Federal Treasury bod�ies through the Bank of Russia payment systemincreased by 25.6% and 17.1% over the year,respectively, and stood at 152.4 million opera�tions and 41.0 trillion rubles.

In 2007, the Bank of Russia continued to up�grade regulations on the servicing of budget ac�counts by Bank of Russia institutions and, in casesstipulated by the law, by credit institutions, on themanagement of some federal budget revenues bythe Bank of Russia, on the procedure for makingdeclaration payments by individuals, on the pro�cedure for opening and maintaining the accountsof election commissions in connection with parlia�mentary and presidential elections and on the tight�ening of control over the correctness and timeli�ness of reports and information presented to theFederal Treasury and the Ministry of Finance.

By January 1, 2008, all Russian regions andmunicipalities had switched over to cash execu�

94


tion of budgets by Federal Treasury bodies, whichhad 84 regional budget accounts and 23,100 lo�cal budget accounts opened for them in rubleswith Bank of Russia institutions and credit insti�tutions.

To implement Federal Law No. 67�FZ, datedJune 12, 2002, ‘On Major Guarantees of the Elec�toral Rights and the Right to Participate in Ref�erenda of the Citizens of the Russian Federation,’the Bank of Russia in 2007 opened accounts forregional and municipal election commissions. Asof January 1, 2008, the election commissions had1,625 accounts opened for them.

All Federal Treasury departments that haveaccounts in Bank of Russia institutions and par�ticipate in electronic settlements in compliancewith Bank of Russia regulations as of January 1,2008, exchanged electronic documents with Bankof Russia institutions. To improve the manage�

ment of federal budget funds kept in the singleaccount, the Bank of Russia helped the FederalTreasury and its regional divisions to prepare forparticipation in the banking electronic speed pay�ment system.

To ensure the implementation of the provisionsof the Budget Code of the Russian Federation inthe context of the creation of a Reserve Fund anda National Welfare Fund, the Bank of Russiadrafted in collaboration with the Ministry of Fi�nance and the Federal Treasury the necessaryregulations and bank account agreements for theaccounts opened with the Bank of Russia to recordthese funds.

The Bank of Russia drafted agreements oncooperation with Federal Treasury regional divi�sions in managing certain kinds of budget rev�enues, a reporting form and a forecast for Bankof Russia�managed federal budget revenues.

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1 Coins shown in pieces do not include coins made of precious metals.

T

II.8. CASH CIRCULATION MANAGEMENT

he effective organisation of cash in circula�tion and cash flow control remain priori�ties of the Bank of Russia. In 2007, the

Bank of Russia took measures to ensure the sta�bility of the national currency and uninterruptedprovision of the payment turnover with banknotesand coins.

In the period under review, the Russianeconomy needed more cash than before due togrowth in the production of goods and services,cash income, retail trade turnover, the consumerprice index and exchange rate dynamics.

As of January 1, 2008, there were 4,124.3 bil�lion rubles of Bank of Russia notes and coins incirculation, of which 4,103.8 billion rubles werein banknotes (6.7 billion sheets) and 20.5 bil�lion rubles in coins (35.2 billion pieces1), includ�ing coins made of precious metals. In the totalamount of cash, banknotes accounted for 99.5%and coins — 0.5%, and in the total number ofbanknotes and coins, banknotes accounted for16.0% and coins — for 84.0%.

According to balance sheet data, the numberof Bank of Russia notes and coins, including coinsmade of precious metals, in 2007 increased by1,057.9 billion rubles, or 34.5%, of which thenumber of notes rose by 1,054.0 billion rubles(600 million sheets) and coins — by 3.9 billionrubles (5.0 billion pieces).

The biggest growth in the amount of cash,which, according to balance sheet data, stood at475.1 billion rubles, was registered, as before, inDecember due to the early payment of wages andsalaries, pensions and allowances that were dueon January 1 to 8, 2008.

As for the note structure of cash in circula�tion, the share of 5,000�ruble notes increased al�most 4.5 times in the period under review and asof January 1, 2008, stood at 21%. Meanwhile,the share of 1,000�ruble notes in 2007 went downfrom 69.5% to 60.2%, 500�ruble notes — from21.0% to 15.1%, 100�ruble notes — from 3.5%to 2.7% and 50�ruble notes — from 1.0% to0.7%. The share of small�denominationbanknotes (10 rubles and 5 rubles) remainedunchanged from the previous year at 0.3%.

The Bank of Russia monitored cash turnoverand studied its structure and analysed the notestructure of cash in circulation and in Bank ofRussia reserves and made sure that it matchedthe needs of payment turnover.

As Bank of Russia reserves were replenishedon time and in necessary quantities, banknotes andcoins were accumulated in amounts that fully metthe needs of the economic agents and populationin cash. There were no delays in cash shipmentsby Bank of Russia institutions through the fault ofthe Bank of Russia in the period under review.

96


4,200

3,400

3,200

3,000

2,800

4,200

3,800 3,800

4,000 4,000

3,400

3,600 3,600

3,200

3,000

2,800

CASH IN CIRCULATION IN 2007

(billion rubles)

1.01.2007 1.01.2008

1.02.2007

1.03.2007

1.04.2007

1.05.2007

1.06.2007

1.07.2007

1.08.2007

1.09.2007

1.10.2007

1.11.2007

1.12.2007

3,066.4

2,831.0 2,888.82,949.0

3,083.9

3,117.0

3,261.23,327.5

3,419.93,477.1

3,520.0

3,649.2

4,124.3

DETECTION OF COUNTERFEIT

BANK OF RUSSIA NOTES AND COINS

IN 2002—2007 (pieces)

120,000

80,000

60,000

40,000

100,000

20,000

02002 2003 2004 2005 2006 2007

109,105

15,149

54,556

16,558 14,790

105,885

In 2007, the Bank of Russia took steps to up�grade its regulatory documents relating to cashissue operations, cash storing, transporting andcollecting, and organising cash circulation.

As of January 1, 2008, Bank of Russia insti�tutions provided cash services to 7,037 credit in�stitutions and their divisions and 129,568 enter�prises other than credit institutions. The numberof customers serviced by Bank of Russia institu�tions decreased in 2007 as the Bank of Russiaoptimised the network of its institutions that pro�vide cash services and transferred their clients tocredit institutions to receive cash services.

In 2007, the Bank of Russia continued to equipits regional branches with new technical facili�ties to process, store and move cash, replacingobsolete and worn�out equipment.

To improve the note processing technique,in 2007 the Bank of Russia put into operationon the basis of new counting and sorting equip�ment a number of computer�based systems thatautomatically and continuously countbanknotes. These systems allowed the Bank ofRussia to almost double labour productivity incash processing.

Acting on the instruction by the RussianPresident to make banking services accessibleto the public and improve the general financialliteracy, the Bank of Russia in 2007 organisedand conducted a large�scale campaign to explainto the public the signs of solvency and the rulesfor exchanging damaged Bank of Russia notesand coins.

In the period under review, Bank of Russiainstitutions conducted 1.4 million expert exami�nations of Bank of Russia notes and coins, includ�ing 640,000 examinations of suspect notes andcoins and 760,000 control examinations of thecorrectness of the exchange of notes and coins.According to data received from Bank of Russiaregional branches, 109,105 counterfeit Bank ofRussia notes and coins were detected, withdrawnfrom circulation and passed on to the InteriorMinistry bodies in 2007.

Most of the counterfeit Bank of Russia notesand coins handed over to the Interior Ministrybodies (100, 635) were 1,000�ruble notes. Therewere 3,862 counterfeit 500�ruble notes and3,144 counterfeit 100�ruble notes. Counterfeit50�ruble and 10�ruble notes totalled 1,007. There

Chart 49

Chart 50

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DETECTION OF COUNTERFEIT BANK OF RUSSIA NOTES AND COINS

BY FEDERAL DISTRICT IN 2007 (pieces)

60,000 70,00050,00010,0000 30,00020,000 40,000

2,752

4,991

3,566

10,110

6,082

17,880

63,724Central Federal District

North�Western Federal District

Southern Federal District

Volga Federal District

Urals Federal District

Siberian Federal District

Far Eastern Federal District

DETECTION OF COUNTERFEIT

FOREIGN BANKNOTES IN 2002—2007

(pieces)

13,000

11,000

10,000

12,000

9,0002002 2003 2004 2005 2006 2007

9,112

12,086

11,595

9,401

11,344

11,800

were 15 counterfeit 5,000�ruble notes. Two noteswere forged by altering out�of�use notes. As forcounterfeit coins, there were 439 forged 5�rublecoins and one 2�ruble coin.

In 2007, as in 2004—2006, most of thecounterfeit notes and coins were detected in theCentral, North�Western and Volga Federal Dis�tricts.

Counterfeit Bank of Russia notes and coinsdetected in credit institutions accounted for57.7% of total forgeries detected. The remaining42.3% of counterfeit notes and coins were de�tected in Bank of Russia institutions.

In 2007, Bank of Russia institutions and creditinstitutions detected and handed over to the In�terior Ministry bodies 9,112 counterfeit foreignbanknotes.

The Bank of Russia in 2007 issued 47 types ofcommemorative coins, of which seven are made

of gold, 31 — silver and nine — of a non�ferrousmetal, and continued to issue the investment goldcoin George the Victor.

Chart 51

Chart 52

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II.9. BANK OF RUSSIA ACTIVITIES AIMED

AT UPGRADING ACCOUNTING AND REPORTING

2007, the Bank of Russia carried outmeasures to upgrade accounting rulesand practices, encourage the use of in�

ternational accounting and financial reportingstandards and improve the quality of informationcompiled in accounting and reporting in the Rus�sian banking system.

Having conducted a comparative analysis ofthe completeness of the use of international prin�ciples and standards in the accounting regulationsin the Russian banking system, the Bank of Rus�sia replaced the cash method of profit and lossaccounting by the accrual method and made somealterations in the procedure for evaluating andaccounting for securities at fair value, which re�quire reflecting profit and loss from their revalu�ation, depending on the class of securities, inprofit or loss and capital accounts.

These fundamental changes required a revi�sion of the Chart of Accounts and changes andamendments in the principles and qualitativecharacteristics of accounting in the Russian bank�ing system. In 2007, the Bank of Russia issuedAccounting Rules for Credit Institutions, madechanges in the effective Bank of Russia Account�ing Rules and revised and amended some of itsregulations on accounting.

It issued methodological recommendations andinstructions on how credit institutions and theBank of Russia should account for repo transac�

In tions with securities in accordance with their eco�nomic interpretation as credit operations.

The Bank of Russia made changes to the ac�counting rules for credit institutions after havingdiscussed them with the banking community.

Having introduced these changes and analysedits correspondence with credit institutions, theBank of Russia picked out the most typical ques�tions and regularly posted answers to them on itswebsite.

To standardise the forms of documents used byit, in 2007 the Bank of Russia compiled and ap�proved a catalogue of document forms to be usedin accounting for operations conducted by the Bankof Russia with financial and other assets.

In the course of developing a real time grosssettlement system, the Bank of Russia worked outand approved a procedure for accounting by Bankof Russia divisions for the payments effectedthrough the Bank of Russia BESP system.

The Bank of Russia continues to harmonisethe Russian accounting practices with the inter�national accounting principles in accordancewith a plan that provides for making changes tosome rules and regulations, such as the proce�dure for accounting intangible assets, deriva�tives, loss from asset depreciation and real es�tate transactions.

In 2007, the Bank of Russia continued toimplement the TACIS project for conversion of

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the banking sector to International Financial Re�porting Standards (IFRS) and the use of prin�ciples of international accounting standards forcompiling IFRS statements in the banking sector.Within the framework of this project, the Bankof Russia carried out the following measuresaimed at harmonising Russian practices with in�ternational standards:— analysed the provisions of the federal laws con�

cerning the authority of the Bank of Russia toestablish IFRS accounting and financial re�porting rules for credit institutions;

— implemented IFRS training programmes forBank of Russia specialists, employees of creditinstitutions, independent auditors, account�ing instructors and researchers of higher edu�cation establishments;

— studied the experience of using IFRS in Euro�pean Union member countries;

— held a conference for credit institutions andBank of Russia specialists on the procedure forapplying IFRS 7 and Regulation 302�P bycredit institutions.To help credit institutions which compile fi�

nancial statements according to IFRS, the Bankof Russia prepared and presented to banking as�sociations, credit institutions and audit firms fordiscussion a draft of the new Methodological Rec�ommendations on the Procedure for Compilingand Presenting Financial Statements by Credit

Institutions, which comply with the effective in�ternational financial reporting standards andtheir interpretation and are compulsory for creditinstitutions with regard to full�year periods fromJanuary 1, 2007.

Bank of Russia financial statements for 2006were compiled according to IFRS and confirmedby an external auditor. To improve financial re�porting, the Bank of Russia amended its Regula�tion No. 278, dated October 27, 2005, ‘On theCompiling of Bank of Russia Financial StatementsAccording to IFRS,’ revised and approved theBank of Russia Group’s accounting policy for thepurpose of compiling financial statements accord�ing to IFRS for 2007 and the subsequent years.The Regulation and accounting policy take intoaccount the amendments to the effective stan�dards and the new standard and interpretationrequirements that came into effect on January 1,2007.

During 2007 the Bank of Russia received fromthe International Accounting Standards Board(IASB) and studied the drafts of new IFRS andthe changes made to the IFRS adopted earlier andmade its comments on them. It maintained con�tact with the London�based IASB to ascertain thespecific use of the effective IFRS by central (na�tional) banks, including the procedure for ac�counting for securities and precious metal reservesand their revaluation.

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II.10. INTERNATIONAL COOPERATION

II.10.1. COOPERATION BETWEEN THE BANK OF RUSSIA

AND INTERNATIONAL FINANCIAL AND ECONOMIC ORGANISATIONS

In 2007, the Bank of Russia took part inmore than 120 meetings of internationalfinancial and economic organisations.

It participated in IMF and World Bank meet�ings, which discussed, among other things, theworld economic outlook, ways to eliminate glo�bal imbalances, reform of the Bretton�Woods in�stitutions and measures to improve internationalaid to low�income countries and to prevent cri�ses. The Bank of Russia took part in the annualconsultations under Article IV of the IMF Articlesof Agreement and the joint IMF�World Bank mis�sion for the Financial Sector AssessmentProgramme (FSAP). At the FSAP meetings par�ticipants discussed the Bank of Russia monetarypolicy in the context of the situation on the do�mestic and international financial markets and thechanged level of liquidity of Russian credit insti�tutions, the development of the interbank loanmarket and the role the Bank of Russia had toplay in this process, as well as ways of upgradingthe instruments of monetary regulation. TheBank of Russia in 2007 continued consultationswith the IMF mission on issues relating to Russia’stransition to inflation targeting.

In compliance with the IMF Special Data Dis�semination Standard (SDDS), the Bank of Rus�sia ensured that data on the external and finan�cial sector were presented to the National Coor�dinator, the Ministry of Finance, for further post�ing on the National Summary Data Page. In com�pliance with the recommendations of the SDDSmanual for aligned countries and users, approvedby the IMF in 2007, the Bank of Russia began toquarterly update metadata in the categories ofdata disseminated according to the SDDS.

The Bank of Russia provided monetary statis�tics for the IMF publication called International

Financial Statistics, and in September 2007 theIMF began to publish in the quarterly supplementRussia’s monetary statistics in an enlarged for�mat according to the IMF Monetary and Finan�cial Statistics Manual issued in 2000.

To comply with international statistical stan�dards, the Bank of Russia in 2007 started to pub�lish the quarterly Financial Sector Review, whichassesses the performance of the banking system,insurance companies and non�governmental pen�sion funds. To fulfil the task of creating aggre�gate financial flows in the Russian economy, the

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Bank of Russia in 2007 received an IMF techni�cal mission on the expansion of the coverage ofthe financial sector of the economy for the com�piling of the Survey of Other FinancialOrganisations.

In 2007, the IMF and the World Bank as�sessed compliance of banking regulation and su�pervision in Russia with the Basel Committee’sCore Principles for Effective Banking Supervisionwithin the framework of the 2003 FSAP DataUpdate. The parties discussed the key issues ofbanking regulation and supervision and measurestaken with regard to the 2003 FSAP. Having con�sidered the problem of banking sector stability,which includes the use of the stress testingmethod, IMF and World Bank experts prepareda draft report Assessment of Compliance with theBasel Core Principles for Effective Banking Su�pervision (Russia, October 2007), which is to befinally agreed with the Bank of Russia in 2008.

The Bank of Russia was involved in the evalu�ation of the investment projects for the Russianbanking sector prepared by the International Fi�nance Corporation and the European Bank forReconstruction and Development.

The Bank of Russia participated in centralbankers’ meetings at the Bank for InternationalSettlements (BIS), which discussed centralbank statistics, the role played by central banksin managing sovereign wealth funds, measures toregulate volatile capital flows, currency interven�tions, risk management and the activities of theBasel Committee on Banking Supervision.

In 2007, cooperation between the Bank ofRussia and the BIS was aimed at expanding therange of indicators presented to the BISDatabank, notably, organising regular presen�tation to the BIS Databank of data on indica�tors published by the Bank of Russia as refer�ence material for the bulletin Russian Payment

Systems (Red Book) and updating more fre�quently the BIS Databank information fund(twice a week) regarding Bank of Russia dailyupdated indicators.

On the initiative of the Irving Fisher Commit�tee and under the aegis of the BIS, the Bank ofRussia in 2007 took part in a poll of central banksconducted for the purpose of compiling a surveyof the methods and principles of making statisti�cal observations by central banks to compile sta�

tistical data. Bank of Russia specialists partici�pated in the meeting of the Statistics Institute,which discussed a wide range of statistical prob�lems of interest for central banks.

The Bank of Russia also took part in BIS stud�ies within the framework of an informal infor�mation exchange system on central bank gover�nance, especially in the context of monetary policyissues.

It participated in the work of the Basel Com�mittee working groups (the International Liai�son Group and its sub�group on capital) and itsregional group (Banking Supervision Group forCentral and Eastern Europe).

In 2007, the Bank of Russia took part inseminars conducted by the BIS Financial Sta�bility Institute and the Basel Committee onBanking Supervision on the implementation ofthe International Convergence of Capital Mea�

surement and Capital Standards. A Revised

Framework (Basel II), on risk management,corporate governance and internal controls.

The Bank of Russia participated in the meet�ings of the International Investment Bank andthe International Bank for Economic Coopera�tion, which discussed ways to reform these banks.It also took part in international consultations onRussia’s entry into the Asian Development Bankand the Inter�American Development Bank andparticipated in drafting proposals for the devel�opment of cooperation with member countries ofthe Islamic Conference Organisation in the fieldof banking.

The Bank of Russia participated in three meet�ings of the Group of Eight finance ministers andcentral bank governors, who discussed, amongother things, bond market development in emerg�ing market countries, multilateral trade negotia�tions, the activities of sovereign wealth funds,effective finance management in African coun�tries, energy security and combatting climatechange, and money laundering and terrorist fi�nancing. The Bank of Russia had prepared mate�rials for a report on the bond market situation inRussia at the Group of Eight high�level seminaron Bond Market Development in Emerging Mar�ket Economies.

Within the framework of the Group of 20,the Bank of Russia took part in the meeting offinance ministers and central bankers in Cape

102


Town and two meetings of their deputies, one inPretoria and the other in Durban, which adopteda new reform programme for the G�20 membercountries and reiterated their obligation to con�tinue working towards the reform of the IMF andthe World Bank. The meetings also supportedparticipation on a voluntary basis in the Extrac�tive Industries Transparency Initiative and ex�pressed their interest in exchanging experiencein managing sovereign wealth funds. In the courseof preparations for these meetings, Bank of Rus�sia representatives were involved in the work ofseveral G�20 seminars: Reform of the Bretton�Woods Institutions; Commodity Market Cyclesand Financial Stability; and Fiscal Policy. In col�laboration with the Ministry of Finance, the Bankof Russia prepared materials at the requests ofthe G�20 History Study Group.

Taking into consideration that Russia wasnominated chairman of the Asia�Pacific Eco�nomic Cooperation (APEC) Forum for 2012,the Bank of Russia intensified its contacts withForum participants. Its representatives took partin all the major events of the annual APEC Fi�nance Ministers’ Process, including the meetingof deputy finance ministers and central bank gov�ernors, the meeting of APEC finance ministers,the meetings of senior financial officials and thefirst forum of representatives of the APEC coun�tries’ public and private sectors on bond marketdevelopment and seminars on financial sector re�form, risk management in commercial banks andthe development of the pension and insuranceannuity markets in APEC countries. The Bank ofRussia made its contribution to the drafting ofRussia’s reports for the APEC on private capitalmarket development and integration and fiscaltransparency and stability of the APEC membercountries.

The Council of the Organisation for Eco�nomic Cooperation and Development (OECD)in May 2007 passed a decision to begin negotia�tions with Russia on OECD membership. Whilethis decision was being prepared, a group of Rus�sian experts, including Bank of Russia represen�tatives, held consultations with the heads of theOECD’s major committees. During the year un�der review, the Bank of Russia had its represen�

tatives attending meetings of the OECD commit�tee on financial markets, which discussed the con�sequences of the mortgage crisis on the world fi�nancial market, the activities of hedge funds andthe international principles of regulating finan�cial markets. The Bank of Russia sent to theOECD data required by the list of indicators es�tablished for non�aligned countries for publica�tion in the OECD statistical bulletin Main Eco�

nomic Indicators.

Within the framework of cooperation with theEuropean Union, the Bank of Russia and theMinistry of Finance, the Ministry of Economic De�velopment and Trade and the Federal FinancialMarkets Service signed a Memorandum on theRussia�EU Dialogue on Financial and Macroeco�nomic Policy. The Dialogue Leaders discussed attheir meeting liquidity management models andkey issues of banking regulation and supervisionin Russia and the EU countries.

The Bank of Russia continued to maintain tieswith the Black Sea Economic CooperationOrganisation by participating in its workinggroup on banking and finance, which in 2007focused on the search for new forms of coopera�tion between member countries in banking andfinance and sharing expertise in financial sectordevelopment.

The 21st session of the Foreign InvestmentAdvisory Council in Russia (FIAC) was heldin Moscow in 2007 with the participation of theBank of Russia. Within its framework, the work�ing group on banking sector and financial mar�ket development in Russia held a meeting at theBank of Russia, at which Russian and foreignparticipants discussed Russian banking sectorstability, the sharing of information betweencredit institutions�members of banking groupsand bank holding companies, derivatives regu�lation, pension reform and ways to upgrade col�lateral legislation and accelerate the adoption oflaws that have already been drafted in this field,Internet banking and other issues. After themeeting, its participants sent their recommen�dations to the FIAC. In 2007, the Bank of Rus�sia took part in five other meetings of the work�ing group, which discussed the above questionsin detail.

I I . 1 0 . I N T E R N A T I O N A L C O O P E R A T I O N

103

II.10.2. COOPERATION BETWEEN THE BANK OF RUSSIA

AND FOREIGN COUNTRIES, AND THEIR CENTRAL (NATIONAL) BANKS

2007, the Bank of Russia continued tobroaden cooperation with foreign coun�tries and their central (national) banks.

One of its priorities was to actively participatein the Interbank Currency Council of the Cen�tral Bank of the Russian Federation and theNational Bank of the Republic of Belarus(ICC). In 2007, the ICC focused on ways to fur�ther harmonise and standardise the legal andregulatory frameworks of the central banks of thetwo countries and arrange cooperation betweentheir internal divisions. At its meeting, the ICCdiscussed, among other things, economic devel�opment problems, the implementation of the mon�etary policy guidelines of the two countries, thedynamics of international reserves and foreigncurrency liquidity, the establishment of commonprocedures for conducting banking operations,accounting and reporting in the banking systemsof the two countries according to InternationalFinancial Reporting Standards.

On May 26, 2007, the Bank of Russia and theNational Bank of Belarus signed a Supplemen�tary Agreement to the Correspondent AccountAgreement to create conditions for the practicaluse of the SWIFT system in conducting opera�tions in Russian rubles through the correspondentaccount opened for the National Bank of Belaruswith the Bank of Russia.

The Bank of Russia cooperated closely withthe integration bodies of the Eurasian EconomicCommunity (EurAsEC) and was actively involvedin the work of the EurAsEC Council of Central(National) Bank Governors (the Council heldtwo meetings in 2007). The main objective of thiswork was to carry out measures envisaged by theConcept of Monetary Cooperation betweenEurAsEC Member States.

Specifically, the parties signed an Agreementon information cooperation and sharing experi�ence in combatting counterfeiting; approved theProgramme of international mobile exhibitions ofeffective national currencies in the EurAsECmember countries for 2007—2012 and an Inter�

national Programme for the issue and sale ofEurAsEC collection coins made of precious met�als in 2008—2012.

Progress has been made in implementing theagreement on cooperation in organising an inte�grated currency market of the EurAsEC memberstates for the purpose of ensuring that banks in�corporated in the EurAsEC countries have accessto the Russian forex market on the same legalterms and conditions as are granted to the Rus�sian commercial banks.

The parties analysed measures aimed at up�grading and liberalising the financial and currencymarkets of the EurAsEC member countries, tak�ing into consideration their national economic pe�culiarities. They approved recommendations forthe development of the structure of financial andcurrency markets of the EurAsEC states.

Progress has been made in cooperation intraining personnel of the EurAsEC central (na�tional) banks. The parties approved a programmeof advanced training of EurAsEC central (na�tional) bank personnel for 2008 and decided tohold an annual international banking conferenceon security ‘Building a Comprehensive SecuritySystem in the Field of Credit and Finance.’

The Bank of Russia took part in the work ofthe CIS Interstate Monetary Committee, whichfocused on the implementation of the concept ofcooperation and coordination of efforts by the CISmember states in the monetary field, which aimsat upgrading the settlements procedure in foreigntrade, analysing the level of development of thecurrency markets, creating a mechanism to de�termine mutual exchange rates of the nationalcurrencies, facilitating mutual access by CIS banksto the national currency markets and liberalisingforeign exchange regulation and control.

In 2007, the Bank of Russia continued to as�sist the development of the Interstate Bank, es�tablished by 10 CIS countries. At its meetings heldin 2007, the Interstate Bank Board discussedways of turning the bank into a CIS investmentinstitution in the interests of economic integra�

In

104


tion of the member states and approved theMemorandum of Credit Activities of the InterstateBank and a package of documents on holding anopen tender to select the audit firm to conductthe compulsory annual auditing of the InterstateBank.

The Bank of Russia continued to cooperatewith the CIS central (national) banks in sharinginformation, training specialists and organisingbanking supervision.

The intergovernmental commissions formedby Russia with Austria, Argentina, Venezuela,Vietnam, India, China, Kazakhstan, Uzbekistan,South Africa and some other countries carriedthrough a lot of work in 2007.

Regular meetings were held by Bank of Rus�sia specialised structures for interbank coopera�tion with Vietnam, China, India, Uzbekistan andKazakhstan.

Representatives of the central and commer�cial banks of Russia and India held a seminar onmonetary and foreign exchange policy and in�ternational settlements. The Bank of Russia andthe National Bank of Austria conducted a semi�nar on credit risk mitigation and consolidatedsupervision.

The fourth joint high�level Bank of Russia�Eurosystem seminar was held to discuss monetarypolicy issues and the importance of EU expansionfor Russia.

The Banks/Financial Services Sub�group ofthe Russian�German Working Group on Strate�

gic Cooperation in the Economy and Finance heldtwo meetings on issues relating to services mar�ket development and regulation.

The Bank of Russia held consultations withthe Bank of Spain, and a Russian�Spanish meet�ing of bank representatives was held under theaegis of the two banks to discuss prospects for bi�lateral trade and economic cooperation and therole banks can play in promoting this cooperation.

The Bank of Russia held consultations withthe Central Bank of Venezuela on issues relatingto interbank cooperation and banking supervisionand signed a Memorandum of Understanding withthe Superintendence of Banks and Other Finan�cial Institutions of Venezuela.

The Bank of Russia also signed Memorandaof Understanding on banking supervision with theCentral Bank of Montenegro and the CentralBank of Cyprus, a Memorandum with the Finan�cial Supervisory Authority of Finland and asupplement to it on cooperation in supervising theSampo Banking group and its subsidiary ZAODanske Bank, a closed�end joint�stock company,in Russia.

Meetings with representatives of the banking(financial) supervisory authorities of Germany,China, Britain, the Netherlands, Finland, Aus�tria, Hungary and Estonia were held at the Bankof Russia.

In 2007, the Bank of Russia signed a Memo�randum of Understanding and Cooperation withthe Central Bank of Nicaragua.

I I . 1 1 . U P G R A D I N G B A N K O F R U S S I A S Y S T E M A N D E N H A N C I N G I T S E F F I C I E N C Y

105

II.11. UPGRADING BANK OF RUSSIA SYSTEM

AND ENHANCING ITS EFFICIENCY

II.11.1. BANK OF RUSSIA ORGANISATIONAL STRUCTURE

AND MEASURES TAKEN TO IMPROVE IT

of the beginning of 2008, theBank of Russia structure com�prised the head office, 79 re�

gional branches, 782 settlement network divi�sions, the First Operations Department, theInterregional Security Centre, the Central De�pository, field institutions, four IT divisions andauxiliary divisions.

In 2007, the Bank of Russia continued to im�prove its structure and reduce the number of di�visions within it — work it has been doing for thepast few years.

Staff reduction measures affected, aboveall, the staff of the regional branches andmain cash settlement centres. As a result, bythe end of 2007 the number of employees ofthese Bank of Russia divisions had decreasedby 2,390.

In the course of optimising its settlement net�work, which the Bank of Russia has been doingsince 2003, it cut its staff by 2,006 in 2007. Atthe end of the year the number of cash settlementcentres stood at 699 as against 1,008 at the be�ginning of the implementation of the measures toshut them down.

The Bank of Russia continued to improve thestructure of its Central Depository and as a re�sult, its staff was cut by 486, or 8.6%.

As a result of the optimisation of the staff ofits auxiliary divisions, the Bank of Russia reducedit by 162.

The downsizing measures carried out in 2007allowed the Bank of Russia to relocate personnel(11.9% of redundancies) and thus put in opera�tion the BESP system and improve the staffing ofthe IT and supervision divisions.

Overall, in 2007 the Bank of Russia cut itsstaff by 4,443, or 5.7%, to 72,942.As

4.42

NUMBER OF BANK OF RUSSIA EMPLOYEES

BY DIVISION AS OF JANUARY 1, 2008 (%)

35.76

31.89

Structural divisions within regional branches

(main cash settlement centre, cash settlement

centres, cash centres and divisions and the

Operations Department of the Moscow Branch)

Regional branches

Social amenities divisions

Divisions providing logistic support

for the Head Office and Bank of Russia divisions

based in Moscow and Moscow Region

Training centres

IT divisions

First Operations Department

Field institutions

Central Depository

Head Office

0.32

3.38

11.71

0.23

3.096.87

2.32

Chart 53

106


II.11.2. STAFFING AND PERSONNEL TRAINING

he highest priorities for the Bank of Russiain managing human resources in 2007 wereto optimise the structure and number of

staff, dismiss workers and employees of the liqui�dated cash settlement centres in compliance withthe requirements of labour legislation, improvethe system of bonuses and non�pecuniary incen�tives, develop methodologies of effectively assess�ing and rewarding employee performance, rais�ing the level of expertise and managerial compe�tence of specialists and executives and upgradingthe programmes for training employees for execu�tive positions.

As of January 1, 2008, the number of Bank ofRussia executive and specialist positions de�creased by 3.4% and 94.5% of them were filled.More than half of Bank of Russia employees areaged between 30 and 50 (62.2%) and haveworked in the Bank of Russia system for three to15 years (58.4%).

For the first time in eight years the trend hasbeen reversed towards the reduction of the shareof executives and specialists under 30 (it has ex�panded by 0.1% year on year) and the expansionof the share of executives and specialists of re�tirement age (it has contracted by 0.8% year onyear), due to an increase in the social benefitsguaranteed to individual categories of employees.At the same time, the share of employees who haveworked in the Bank of Russia system for morethan 15 years has increased by 3.7% to 33.6%.

The past few years have seen a trend towardsgrowth in the number of Bank of Russia execu�tives and specialists with a higher education:973 Bank of Russia employees graduated from in�stitutions of higher learning and 2,875 employ�ees continued their education in 2007.

Bank of Russia regional branches made an ef�fort to select and train employees for top mana�gerial positions: the share of people promoted tothese positions from this group of employees hasexpanded by 3.4% to 74.5%.

Personnel assessment was more actively prac�ticed in the period under review. It was conductedin 74 regional branches and involved 86.6% ofexecutives and specialists whose efficiency, quali�

T fication and managerial competence were evalu�ated, and more than 40,000 executive decisionswere taken on assessment results.

The structural reforms conducted in the Bankof Russia set higher qualification requirements forpersonnel. Of special importance in this sense isthe task of creating organisational and manage�rial conditions that would make personnel morecontent and better motivated for efficient perfor�mance, capable of integrating knowledge fromdifferent fields and quickly adapting themselvesto the changing conditions and more stringentrequirements.

Continuous professional advancement of Bankof Russia employees was a major element of thepersonnel policy in the Bank of Russia in 2007.It is based on the intracorporate system of supple�mentary job training. More than 27,000 Bank ofRussia employees have received advanced train�ing in various forms at more than 2,000 coursesand seminars organised within the Bank of Rus�sia system.

Bank of Russia specialists attended 155 semi�nars on various aspects of banking, 75 brief ad�vanced training courses and more than 60 train�ing sessions on management. About 250 trainingsessions and seminars were devoted to advancedinformation technology and improving computerskills.

To meet the needs of its personnel in supple�mentary education and advanced training, theBank of Russia signed contracts with institutionsof higher learning and certified training centresin compliance with Bank of Russia RegulationNo. 292�P, dated August 17, 2006, ‘On the Pro�cedure for Selecting Counterparties when Con�cluding Agreements by the Central Bank of theRussian Federation (Bank of Russia)’. In 2007,the Bank of Russia entered into over 100 agree�ments for the provision of centralised trainingservices for more than 15,000 of its employees.

It continued to actively use the scientific andeducational potential of Russian institutions ofhigher learning and advanced foreign expertisein implementing a series of large�scale educationalprojects.


107

AGE STRUCTURE OF BANK OF RUSSIA

EXECUTIVES AND SPECIALISTS (%)

100

80

40

60

20

02003 2004 20072005 2006

Under 30 30 to 50 years old Over 50

RATIO OF EXECUTIVES AND SPECIALISTS

WITH HIGHER EDUCATION

(as % of total executives and specialists)

78

76

72

74

70

682003 2004 20072005

78.0

69.3

72.2

75.4

2006

73.6

Since 2003, 953 Bank of Russia supervisorshave taken job retraining courses and advancedtraining at the Russian Government Academy ofNational Economy, the State University HigherSchool of Economics and the Russian GovernmentFinancial Academy (some of them received anMBA). Of these, 176 supervisors received thistraining in 2007. By the end of 2007, almost onein seven graduates of these programmes receivedan MBA (147 people).

In 2007, the Bank of Russia continued to pro�vide training to executives of its regional branchesand employees placed on the list for promotion tothese positions under the job retrainingprogramme Top Manager of a Bank (with ele�ments of online training) and by the end of theyear the total number of graduates reached 79.

The Bank of Russia continued to implementits long�term programme for an in�depth studyby its employees of IFRS. In 2007, the first stageof the 2007—2008 programme was completed.It covered 350 Bank of Russia employees, ofwhom 76% worked at Bank of Russia regionalbranches.

The Bank of Russia educational establish�ments — banking schools (colleges) — make asignificant contribution to raising the qualifica�tion level of Bank of Russia employees. 92.5% oftheir teaching staff are top�notch specialists and9.2% are holders of university degrees.

Bank of Russia banking schools (colleges) inKazan, Moscow, Omsk, Orel, St Petersburg andKhabarovsk conducted over 400 courses and

seminars in 2007, or 23% of total courses andseminars organised under the supplementary jobtraining programmes, which accounted for 29%of all Bank of Russia executives and specialiststrained under these programmes.

To improve professional competence of its per�sonnel, the Bank of Russia actively cooperatedwith the Bundesbank, Banque de France andBank of England, the Luxembourg�based Finan�cial Technology Transfer Agency and the Inter�national Monetary Fund, whose experts took partin more than 80% of all international trainingcourses and seminars. In all, over 800 Bank ofRussia employees were involved in 176 interna�tional training courses and seminars and 30% ofthem were sent to study abroad in 2007.

In 2007, the Bank of Russia continued to pro�vide training and job retraining for specialists ofits regional branches in combatting money laun�dering and terrorist financing. Fifteen courses andseminars that involved nearly 500 executives andspecialists of Bank of Russia regional brancheswere held in 2007 under the Bank of Russia Per�sonnel Job Training Programme with the partici�pation of experts from the Bank of Russia, theInterior Ministry and the Federal Financial Moni�toring Service (Rosfinmonitoring).

In 2007, the Bank of Russia launched the in�structional component of a TACIS project —banking sector conversion to International Finan�cial Reporting Standards (IFRS), which is pro�jected for 2006—2009. Seventeen courses andseminars that involved 337 employees of the ac�

Charts 54, 55

108


CENTRALISED TRAINING

OF BANK OF RUSSIA PERSONNEL

IN 2007 (as % of total trainees)

Supplementary job training programmes

IFRS

Foreign language studies

Information technology

International courses and seminars

12

79

2 2

5

350

SUBJECTS OF BANK OF RUSSIA

PERSONNEL ADVANCED TRAINING

AND RETRAINING BY CONTRACT IN 2007

(number of trainees)

3,962

Other subjects

Managerial training

Head Office staff training in major areas

of the banking business

Maintenance and operation

of cash processing equipment

Supplementary job training

(under agreements with banking schools)

IFRS programmes

Job retraining, MBA (supervisors)

Security and protection of information

Information technology

140

7,866

569

884

176

910

211

counting and reporting and supervision depart�ments were held within the framework of thisproject.

In addition, the Bank of Russia organised inits regional branches and training centres the in�struction of more than 600 specialists of creditinstitutions and university lecturers.

It continued to promote professional contactswith the EurAsEC central (national) banks underthe Agreement on Cooperation in Personnel Train�ing for the EurAsEC Central (National) Banks,signed in Minsk on March 12, 2004. About 100

Bank of Russia employees took part in seminarsand internships in Russia and the CIS countries.

Charts 56, 57


109

II.11.3. BANK OF RUSSIA INFORMATION AND TELECOMMUNICATIONS

SYSTEM DEVELOPMENT

he Bank of Russia information and telecom�munications system (ITS) is the basic in�frastructure that ensures information sup�

ply for all Bank of Russia activities. The Bank ofRussia in 2007 continued to upgrade it.

Specifically, it continued to develop a SingleInformation System for Banking Sector Regula�tion and Development, put into operation itsMoscow segment and began to create a corporatedata bank.

To create conditions for the pooling of elec�tronic information resources and provide onlineaccess to corporate data and various supplements,the Bank of Russia updated its Corporate IntranetPortal, creating its regional segments in 14 Bankof Russia branches. The number of Bank of Rus�sia Corporate Intranet Portal users reached al�most 16,000 in the period under review.

To improve the performance of the CentralCatalogue of Credit Histories, the Bank of Russiaupgraded the software of this automated data pro�cessing system.

It put into operation Version 2.0 of the Auto�mated Cash Issue and Valuables Accounting Sys�tem, which guarantees a high degree of informa�

tion security and reliability at the level of collec�tive data processing centres as well as Bank ofRussia regional branches.

To enhance the effectiveness of monitoring andcontrol of the ITS resources and services, theBank of Russia upgraded its Integrated Telecom�munications and Information Resources Manage�ment System and improved the performance ofthe control system for the unified electronic settle�ments transport sub�system.

It continued to expand and modernise theSingle Banking Telecommunications Network andits elements, the Bank of Russia Satellite Com�munications Control System and the Single Mo�bile Radio Communications System.

In the course of implementing the electronicmail service modernisation programme, the Bankof Russia installed segments of its Unified Cata�logue System in 29 of its regional branches.

It constantly made efforts to standardise thesystemic and applied software used in the Bankof Russia, expand and modernise the local IT net�works and structured cable systems and developand update the infrastructure of the Bank of Rus�sia ITS.

T

110


II.11.4. BANK OF RUSSIA ACTIVITIES AIMED AT UPGRADING

BANKING LEGISLATION. MANAGING SUITS AND CLAIMS

AT BANK OF RUSSIA INSTITUTIONS

ANK OF RUSSIA ACTIVITIES AIMED ATUPGRADING BANKING LEGISLATION

In 2007, Russia passed a number of impor�tant laws aimed directly at improving legislationon banking activities and activities relating tobanking.

Federal Law No. 82�FZ, dated May 17,2007, ‘On the Development Bank,’ establishedthe Bank for Development and External EconomicActivities (Vneshekonombank), a government�owned financial development institution and cor�poration.

Vneshekonombank is the reorganised Bank forExternal Economic Activities of the USSR and thenew law defines the legal status and purposes anddescribes the reorganisation and liquidation pro�cedures of the new bank.

The passing of this law required amendmentsto other federal laws and resulted in the adoptionof Federal Law No. 83�FZ, dated May 17,2007, ‘On Amending Certain Laws of the Rus�sian Federation in Connection with the Passageof the Federal Law on the Development Bank.’Specifically, amendments were made to the Fed�eral Law on Banks and Banking Activities, whichgranted Vneshekonombank the right to conductbanking operations in compliance with the Fed�eral Law on the Development Bank, and the Bankof Russia — the right to establish specific account�ing rules for Vneshekonombank.

Federal Law No. 248�FZ, dated Novem�ber 2, 2007, ‘On Amending Article 29 of theFederal Law on Banks and Banking Activities,’stipulated that a bank cannot unilaterally changethe term of the bank deposit agreement that stipu�lates that the depositor should be paid the depositback upon the expiry of a specified term or at theonset of the circumstances described in the agree�ment, or reduce the interest rate or increase orestablish commission for operations, except incases stipulated by the federal law.

B The amendments made by Federal LawNo. 325�FZ, dated December 4, 2007, ‘OnAmending Article 36 of the Federal Law onBanks and Banking Activities,’ stipulated thata newly registered bank or a bank registered lessthan two years ago may be licensed to take house�hold deposits (1) if the authorised capital of thenewly registered bank or equity capital of the op�erating bank is no less than the ruble equivalentof 100 million euros and (2) if the bank complieswith the Bank of Russia requirement to discloseinformation about the persons who exert, directlyor indirectly, material influence on the decisionstaken by the bank’s management.

Article 26 of the Federal Law on Banks andBanking Activities was amended twice in 2007.

Federal Law No. 214�FZ, dated July 24,2007, ‘On Amending Certain Laws of the Rus�sian Federation in Connection with the Adop�tion of the Federal Law on Amending the Codeof Criminal Procedure of the Russian Federa�tion and the Federal Law on the Prosecutor’sOffice of the Russian Federation,’ amended itto stipulate that statements of operations and ac�counts of corporate entities and unincorporatedentrepreneurs and statements of household ac�counts and deposits should be presented by thecredit institution to the investigating authoritiesin the cases they are investigating with the ap�proval of the chief investigator rather than theprosecutor, as was the case before the law wasamended.

In addition, Article 27 of the Federal Law onBanks and Banking Activities was amended tostipulate that money and other valuables in cor�porate and household accounts and deposits or inthe safe�keeping of a credit institution can onlybe arrested by decision of an investigating author�ity if there is a court ruling to this effect.

The second time Article 26 of the Federal Lawon Banks and Banking Activities was amended inconnection with the passage of Federal Law


111

No. 225�FZ, dated October 2, 2007, ‘OnAmending Certain Laws of the Russian Fed�eration,’ which, in turn, was passed in connec�tion with the adoption of a new version of theFederal Law on Court Enforcement Action.

This law extended the list of persons whomcredit institutions should issue statements of op�erations and accounts of corporate entities andunincorporated entrepreneurs and statements ofhousehold accounts and deposits.

The new version of Federal Law No. 229�FZ,dated October 2, 2007, ‘On Court EnforcementAction,’ has resolved the problems that banksfaced when fulfilling the writs of execution.

Thanks to Federal Law No. 34�FZ, datedMarch 13, 2007, ‘On Amending Article 11 ofthe Federal Law on Insurance of HouseholdDeposits in Russian Banks and Article 6 of theFederal Law on Bank of Russia Payments onHousehold Deposits with Bankrupt Banks Un�covered by the Compulsory Deposit InsuranceSystem,’ the aggregate insurance indemnity onhousehold bank accounts in 2007 was raised from190,000 rubles to 400,000 rubles. The increaseapplies to deposits both in banks that participatein the compulsory deposit insurance system andin banks that do not participate in this system.

Consumer lending is important for the devel�opment of the banking services market and theeconomy as a whole. This segment of the bankingservices market has been growing very fast latelyand this calls for upgrading the relevant legal acts.Several laws have been drafted in this area but onlyone of them was passed in 2007. It is Federal LawNo. 234�FZ, dated October 25, 2007, ‘OnAmending the Russian Federation Law on theProtection of Consumer Rights and Part 2 of theCivil Code of the Russian Federation’.

The amendments stipulate, among otherthings, that information on goods (work or ser�vices) should contain the price of the goods (workor services) in rubles and the conditions of theirpurchase (payment) and in case of extending aloan, the amount of the loan, the total value ofthe loan the consumer has to pay and the loanpayment schedule.

Federal Law No. 51�FZ, dated April 12,2007, ‘On Amending Article 7 of the FederalLaw on Countering the Legalisation (Launder�ing) of Criminally Obtained Incomes and the

Financing of Terrorism,’ established the newduty of the Bank of Russia to agree with the Fed�eral Financial Monitoring Service(Rosfinmonitoring) recommendations for creditinstitutions on the procedure for developing in�ternal control rules and establishing qualificationrequirements for executives responsible for theobservance of the internal control rules andprogrammes; as well as requirements for person�nel training and instruction, customer and ben�eficiary identification and the procedure for pre�senting information to the authorised agency bycredit institutions.

To harmonise its federal legislation with in�ternational anti�corruption obligations and up�grade the legal mechanism for combatting moneylaundering and terrorist financing, Russia passedFederal Law No. 275�FZ, dated November28, 2007, ‘On Amending Article 5 and Article7 of the Federal Law on Countering theLegalisation (Laundering) of Criminally Ob�tained Incomes and the Financing of Terror�ism. Specifically, Article 7 was amended to in�clude clause 3.1, which set the requirements fornon�cash settlements and money transfers madewithout opening an account in Russia and fromRussia to be accompanied at all stages by infor�mation about payers and their account number(if they have one) by including this informationin the settlement document or otherwise.

Federal Law No. 127�FZ, dated July 5,2007, ‘On Amending the Federal Law on For�eign Exchange Regulation and Foreign Ex�change Control,’ extended the list of permittedforeign exchange transactions between residents.Resident individuals can now transfer funds fromtheir accounts opened in authorised banks to theaccounts of other resident individuals who aretheir spouses or close relations (relatives in di�rect ascending and descending order (parents andchildren and grandparents and grandchildren),brothers and sisters and half�brothers and half�sisters (who have a common father or a commonmother) and the adoptive parents and adoptedchildren), opened in authorised banks or banksoutside Russia.

In addition, this Federal Law added to thedocuments involved in foreign exchange opera�tions and the opening and maintaining of ac�counts, indicated in Part 4 of Article 23, the docu�

112


ments confirming that the individuals are spousesor close relatives, including documents issued byregistration authorities (marriage certificate orbirth certificate) and effective court rulings es�tablishing family or kin relations, adoption andfatherhood, passport entries on children and thespouse and other documents established by Rus�sian legislation.

In 2007, the Bank of Russia took an activepart in the drafting of federal laws and conceptsof draft federal laws.

Bank of Russia legislative activity in 2007looked as follows.

In the period from January 1 to December 31,2007, it issued 193 regulatory documents: threeinstructions, 15 regulations and 175 ordinances.

Of the 193 regulatory documents issued by theBank of Russia, 91 (two instructions, 12 regula�tions and 77 ordinances) have been registered bythe Ministry of Justice.

In addition, in the period under review theBank of Russia sent 228 letters to its regionalbranches.

MANAGING SUITS AND CLAIMS

AT BANK OF RUSSIA INSTITUTIONS

A total of 549 property claims and suits to theamount of 54.91 million rubles were filed againstBank of Russia regional branches in 2007, ofwhich 123 claims and suits to the amount of833,730 rubles have been satisfied. These figuresshow that most of the claims and suits were le�gally untenable.

Sixty�five suits that arose from labour disputeswere filed against the Bank of Russia in 2007.

In four cases credit institutions challenged incourt Bank of Russia sanctions against them butnone of the claims has been satisfied.

At the same time, Bank of Russia regionalbranches filed claims and suits against credit in�stitutions in the course of supervising them. Theyfiled 649 claims to the amount of 28.17 millionrubles and 60 suits to the amount of 132.69 mil�lion rubles, of which 700 claims and suits to theamount of 107.12 million rubles had been satis�fied by the end of the period under review.


113

II.11.5. BANK OF RUSSIA INTERNAL AUDIT

he Bank of Russia Chief Auditor’s Serviceconducted its activities in line with theplans approved in accordance with the es�

tablished procedure. In 2007, it inspected 2,066Bank of Russia divisions, of which 416 were au�dited in the course of comprehensive inspectionsand 1,650 in the course of thematic inspections.

In 2007, the Bank of Russia Chief Auditor’sService focused on the verification of the imple�mentation by Bank of Russia divisions of thefunctions assigned to them and the assessmentof the adequacy of the internal control systemsof the audited divisions to the scale and natureof their work.

It regularly verified Bank of Russia compliancewith the requirements set by the Core Principlesof Managing Bank of Russia Foreign ExchangeReserves, Investment Directives for Bank of Rus�sia Transaction and Investment Foreign ExchangeReserve Portfolios and other Bank of Russia regu�lations for operations with foreign exchange as�sets. The Bank of Russia Chief Auditor’s Servicealso verified compliance with the established re�quirements for operations with precious metalsand the implementation of the functions assignedto the Bank of Russia in the field of banking regu�lation and supervision.

In 2007, the Bank of Russia Chief Auditor’sService approved methodological recommenda�tions for examination of the internal control ofoperations conducted with valuables using thetelevision surveillance system; the implementa�tion of intraregional electronic payments; the ob�servance of labour laws; the security facilities; theproperty management; the insurance of transportvehicles, drivers and passengers; the collectivedata processing centres; the IT capital expensebudget; the refinancing operations and the rec�

T reation and health centres. It updated recommen�dations for the verification of the budget of ex�penditures on the maintenance of Bank of Russiadivisions and on the construction and repair ofbuildings and facilities and the handling of prob�lem credit institutions and credit institutions thathad their banking licences revoked.

The internal audit procedures covered all themain areas of Bank of Russia activity and guar�anteed Bank of Russia management independentinformation on the implementation by Bank ofRussia divisions of the functions assigned to themfor taking managerial decisions. The results of theinternal audit lead to the conclusion that the ac�tivities of the Bank of Russia conformed in all theirmaterial aspects to federal legislation and Bankof Russia standards and regulations, while theinternal control system was on the whole ad�equate to the risks assumed.

Audits and inspections conducted in 2007 re�vealed shortcomings in various areas of activityof Bank of Russia divisions: cash issue, access andsecurity precautions and procedures, technicalstrength of cash units, spending budget alloca�tions, construction, capital repair and mainte�nance, personnel management, information tech�nology and security and supervision of credit in�stitutions.

The examination of audit and inspection re�sults led to sanctions against executives respon�sible for violations and shortcomings detected, andthe severity of these sanctions depended on thegravity of the violations and shortcomings.

Pursuant to Article 13 and Article 95 of theFederal Law on the Central Bank of the RussianFederation (Bank of Russia), the National Bank�ing Board in November 2007 heard the report bythe Bank of Russia Chief Auditor.

114


II.11.6. BANK OF RUSSIA STAKEHOLDINGS IN THE CAPITAL

OF RUSSIAN AND FOREIGN CREDIT INSTITUTIONS

AND OTHER ORGANISATIONS

ursuant to Article 8 of the Federal Lawon the Central Bank of the Russian Fed�eration (Bank of Russia), the Bank of

Russia in 2007 participated in the capital of theSavings Bank (Sberbank), an open joint�stockcompany, and the capital of the following resi�dent organisations that support the activities ofthe Bank of Russia: the Moscow Interbank Cur�rency Exchange (MICEX), a closed�end joint�stock company, the St Petersburg Currency Ex�change (SPCEX), a closed�end joint�stock com�pany, and the National Depository Centre(NDC), a non�profit partnership. The Bank ofRussia managed and controlled these residentorganisations through its representatives in theirmanagement and control bodies, which enabledit to influence decisions aimed at implementingthe monetary policy and improving the financialmarket infrastructure.

The Bank of Russia stakeholding inSberbank’s authorised capital went down from60.57% to 57.58% in 2007 as the Bank of Rus�sia acquired fewer Sberbank ordinary shares ofan additional issue than was necessary to keep itsstake unchanged. The decision on the acquisitionby the Bank of Russia of 892,601 Sberbank ordi�nary shares in compliance with the requirementsof Article 8 and Article 13 of the Federal Law onthe Central Bank of the Russian Federation (Bankof Russia) was taken by the National BankingBoard and approved by the Government of theRussian Federation. The change in the Bank ofRussia stake in the authorised capital of Sberbankhas not affected the number of government rep�resentatives in the Bank of Russia quota inSberbank’s Supervisory Board.

The decision on the additional issue and thesubsequent dilution of shares, taken bySberbank’s Supervisory Board, allowed Sberbankto maintain its capital adequacy at a level thatcorresponded to the expansion of its active op�erations and to increase the liquidity of its shares.

P As a result, Sberbank’s authorised capital grewto 67.76 billion rubles.

Sberbank’s activities in 2007 were regulatedby decisions of its Supervisory Board, which tookinto consideration the economy’s needs to extendloans to households and enterprises. To improvethe quality of the services it provided to its corpo�rate customers, who had business ties with CIScountries, Sberbank’s Supervisory Board in 2007took the decision to acquire the Ukraine�basedNRB Bank, a closed�end joint�stock company.

The dividends paid to the Bank of Russia in2007 from the profit made by Sberbank in 2006totalled 4.6 billion rubles, an increase of 50%on the dividends received for 2005. Accordingto preliminary data, Sberbank’s profit for 2007increased by 40% year on year and reached160.2 billion rubles.

Its stakeholdings in the capital of MICEX,SPCEX and the NDC in 2007 enabled the Bankof Russia to control operations on the domesticforex market and federal government debt mar�ket and use the exchange infrastructure to con�duct monetary policy operations.

The Bank of Russia stake in the capital ofMICEX expanded from 28.76% to 29.79% in2007 as a result of a reduction of MICEXauthorised capital due to the redemption of 4,000MICEX ordinary shares owned by the exchange.

In 2007, the Bank of Russia was paid 50.1 mil�lion rubles as dividends from MICEX profit for2006.

The Bank of Russia stake in the capital ofSPCEX in 2007 remained unchanged from 2006at 8.9%. The SPCEX Board in 2007 continuedto provide traders with more opportunities to con�duct transactions with various financial instru�ments within its own trading system and in col�laboration with the MICEX trading system. Theaggregate turnover of SPCEX trade in foreigncurrency, securities and PIF units in 2007 in�creased 2.3 times to 11.1 trillion rubles. In 2007,


115

by decision of the shareholders’ meeting the en�tire net profit of 79.9 million rubles received bySPCEX for 2006 went to the exchange’s funds.

The Bank of Russia stake in the authorisedcapital of the NDC in 2007 remained unchangedfrom 2006 at 49%. In 2007, the NDC in collabo�ration with MICEX and the MICEX ClearingHouse helped the Bank of Russia conduct over�the�counter repo operations with corporateeurobonds. The NDC accepted for servicing 73 is�sues of corporate eurobonds of top foreign issu�ers, which were recorded in the NDC account inClearstream Banking and included issues on theBank of Russia Lombard List. The total value ofsecurities in the custody accounts opened in theNDC increased by 31.0% in 2007. The NDCBoard of Directors in 2007 was taking steps totransform the partnership into a joint�stock com�pany and evaluate its property. The signing by

the Russian President in 2007 of the Federal Lawon Amending Article 7 and Article 11 of the Fed�eral Law on Securities Market created conditionsfor the transformation of clearing depositariesfrom non�profit partnerships into joint�stock com�panies and provided the necessary legislative ba�sis for the conversion of the NDC into a joint�stockcompany.

Pursuant to Article 9 of the Federal Law onthe Central Bank of the Russian Federation (Bankof Russia), the Bank of Russia in 2007 also par�ticipated in the capital and activities of interna�tional organisations, such as the Basel�based Bankfor International Settlements (0.59% ofauthorised capital), the Moscow�based InterstateBank (50.0% of authorised capital) and the Bel�gium�based Society for Worldwide Interbank Fi�nancial Telecommunications, or S.W.I.F.T.(0.006% of authorised capital).

IIIBANK OF RUSSIA ANNUAL

FINANCIAL STATEMENTS

AS OF JANUARY 1, 2008

118


INTRODUCTION

T he annual financial statements reflect theoperations conducted by the Bank of Rus�sia to fulfil its principal purposes and func�

tions stipulated by Federal Law No. 86�FZ, datedJuly 10, 2002, ‘On the Central Bank of the Rus�sian Federation (Bank of Russia)’.

The annual financial statements as of Janu�ary 1, 2008, presented below (hereinafter re�ferred to as the financial statements) comprise:● the Annual Balance Sheet;● the Profit and Loss Account;● the Statement of Profit and its Allocation;● the Statement of Bank of Russia Reserves and

Funds;● the Statement of Bank of Russia Management

of Securities and Stakeholdings in the Capitalof Companies Constituting Bank of RussiaProperty;

● the Statement of Bank of Russia PersonnelCosts;

● the Statement of Capital Investment BudgetPerformance.The principal objectives of the Bank of Russia

are:● to protect the ruble and ensure its stability;

● to upgrade and strengthen the Russian bank�ing system;

● to ensure the effective and uninterrupted func�tioning of the payment system.In 2007, the Bank of Russia implemented the

managed floating exchange rate policy, which wasaimed at cushioning the sharp exchange rate fluc�tuations caused by the liquidity crisis and the de�preciation of the US dollar on the world market,bearing in mind the need to control inflation.

The Russian banking sector in 2007 contin�ued to demonstrate favourable developmenttrends and rapid growth in assets, while theBank of Russia continued to upgrade the legalframework of banking regulation with the ob�jective of harmonising it with internationallyaccepted practices and improve risk assessmentpolicies in banking.

The Bank of Russia continued to upgrade itspayment system to ensure its effective and unin�terrupted functioning amid the use of the collec�tive payment information processing systems. InDecember 2007, payments began to be effectedthrough the Bank of Russia real time gross settle�ment system, or BESP.

119

I I I . B A N K O F R U S S I A A N N U A L F I N A N C I A L S T A T E M E N T S A S O F J A N U A R Y 1 , 2 0 0 8

ANNUAL BALANCE SHEET AS OF JANUARY 1, 2008

(million rubles)

Note 2007 2006

ASSETS

1. Precious metals 3 346,523 64,303

2. Funds placed with non�residentsand securities issued by non�residents 4 11,511,619 7,744,466

3. Loans and deposits 5 37,109 7,514

4. Securities, of which: 6 441,948 279,789

4.1. Russian government securities 352,772 272,614

5. Other assets, of which: 7 99,482 107,795

5.1. Fixed assets 62,617 60,659

5.2. Profit tax advance payments 113 63

Total assets 12,436,681 8,203,867

LIABILITIES

1. Cash in circulation 8 4,124,302 3,066,355

2. Funds in accounts with Bank of Russia, of which: 9 7,608,963 4,787,552

2.1. Russian government funds 5,119,493 3,317, 090

2.2. Funds of resident credit institutions 1,298,842 959,115

3. Float 10 20,847 31,014

4. Other liabilities 11 195,953 195,593

5. Capital, of which: 462,051 84,156

5.1. Authorised capital 3,000 3,000

5.2. Reserves and funds 459,051 81,156

6. Reporting year profit 12 24,565 39,197

Total liabilities 12,436,681 8,203,867

Bank of Russia Chairman S.M. Ignatiev

Bank of Russia Chief Accountant L.I. Gudenko

May 13, 2008

120


PROFIT AND LOSS ACCOUNT

(million rubles)

Note 2007 2006

INCOME

Interest income 13 392,588 200,643

Income form securities trading 14 104,067 57,722

Income from operations with precious metals 15 357 6,314

Income from stakeholdings in credit and other institutions 4,653 3,005

Net income form recovery of provisions 21 — 1,357

Other income 16 3,259 4,137

Total income 504,924 273,178

EXPENSES

Intrest expenses 17 174,967 39,090

Expenses on securities trading 18 37,040 16,724

Cash turnover management expenses 19 13,579 9,273

Expenses on operations with precious metals 20 1,351 104

Net expenses on provisions 21 2,570 —

Expenses on negative revaluation of foreign currency 22 165,740 88,624

Other operating expenses 23 40,292 42,732

Personnel costs 24 44,820 37,434

Total expenses 480,359 233,981

Financial result: profit 12 24,565 39,197

121

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122


Starting from January 1, 2007, precious metals and unallocated metal accounts and deposits innon�resident credit institutions are accounted for at discount price and revalued in conformity withBank of Russia standards and regulations. The Bank of Russia calculates discount prices on the basisof current fixed prices of precious metals on the London Metal Exchange reduced by the discountequalling the average cost of delivery of each precious metal to the international market. These costsare the expenses involved in the customs clearing, transportation and insurance of precious metals.The fixed prices of precious metals, denominated in the US dollar, are recalculated into rubles atthe official dollar/ruble exchange rate effective as of the day following the day the discount priceswere fixed. The unrealised differences that arise from the revaluation of the precious metal bal�ances due to the change in the discount prices of precious metals are recorded to the balance sheetaccount Accrued revaluation of precious metals as part of capital and as of January 1, 2008, theyamounted to 359,731 million rubles (Notes 1(c) and 3).

Taxes and duties paid after the final settlement for the reporting tax period from profit for 2007,the transfer to the federal budget and allocation of actual profit for 2007 that remained after thepayment of taxes and duties under the Tax Code of the Russian Federation and transfers made to thefederal budget under Article 26 of the Federal Law on the Central Bank of the Russian Federation(Bank of Russia) are shown in Bank of Russia accounting records in 2008 (Note 27, Statement ofProfit and its Allocation).

123


NOTES TO ANNUAL FINANCIAL STATEMENTS AS OF JANUARY 1, 2008

1. ACCOUNTING AND FINANCIAL REPORTING PRINCIPLES

The Bank of Russia accounting and financial reporting practices conform to the Federal Law onthe Central Bank of the Russian Federation (Bank of Russia), Federal Law on Accounting, Bank ofRussia Regulation No. 66�P, dated January 1, 2006, ‘On Accounting Rules in the Central Bank ofthe Russian Federation (Bank of Russia) (hereinafter referred to as Regulation No. 66�P) and otherBank of Russia regulations issued in pursuance of these federal laws.

(a) Accounting principles

Accounting is based on the principle of recording balance sheet items at their initial cost at the timeassets are acquired or circumstances arise. The principles of revaluing individual items of assets andliabilities are described below.

(b) Financial reporting framework

These financial statements have been compiled on the basis of balance sheet data provided by theBank of Russia, its regional branches and other divisions incorporated in the Bank of Russia as a legalentity.

These financial statements have been compiled exclusive of the financial statements of credit andother institutions in and outside Russia in which the Bank of Russia holds a stake and/or which theBank of Russia controls. Under Russian law the Bank of Russia is not required to compile a consoli�dated financial statement that would include the financial statements of credit and other institutionsin which it holds a stake and/or which it controls.

These financial statements have been compiled in the currency of the Russian Federation, theRussian ruble (hereinafter referred to as the ruble), in millions of rubles, abbreviated as Rbs m.

Data in the Table Capital, funds and profit allocation and the Statement of the Bank of RussiaReserves and Funds have been adjusted for the purpose of compiling Bank of Russia annual financialstatements that would take into account the events that have occurred after the reporting date, in�cluding the payment in 2008 of taxes and duties as a result of the final settlement from Bank of Russiaprofit for 2007; the transfer to the federal budget of 50% of actual profit for the year remaining afterthe payment of taxes and duties pursuant to the Tax Code of the Russian Federation; and the alloca�tion to the Bank of Russia reserves and funds of profit retained by the Bank of Russia (Note 27,Statement of Profit and its Allocation).

Figures in brackets denote negative values.

(c) Precious metals

Precious metals are accounted for at the discount price and revalued as the discount prices ofprecious metals are set in conformity with Bank of Russia standards and regulations. The Bank ofRussia calculates discount prices on the basis of current fixed prices of precious metals on the LondonMetal Exchange reduced by the discount equalling the average cost of delivery of each precious metalto the international market. These costs are the expenses involved in the customs clearing, transpor�tation and insurance of precious metals. The fixed prices of precious metals, denominated in the USdollar, are recalculated into rubles at the official dollar/ruble exchange rate effective as of the dayfollowing the day the discount prices were fixed.

The unrealised differences that arise from the revaluation of the precious metal balances dueto the change in the discount prices of precious metals are recorded to the balance sheet accountAccrued revaluation of precious metals as part of capital and are not included in the profit andloss account.

124


Should the negative unrealised difference exceed the positive unrealised difference in the result forthe year, the excess is compensated for from the unrealised differences accumulated earlier and re�corded in the balance sheet account Accrued revaluation of precious metals as part of capital. If thereis no balance in the balance sheet account Accrued revaluation of precious metals or it is not enough,the negative unrealised differences are fully (or in the amount of the excess of the credit balance of thebalance sheet account Accrued revaluation of precious metals) recorded to the Bank of Russia oper�ating expenses for the corresponding reporting year by a decision of the Bank of Russia Board ofDirectors.

The realised differences, income or expenses that arise when operations with precious metals areconducted at a price that differs from the discount price of the precious metal, are calculated sepa�rately for each operation. The realised difference is the difference between the actual value of the dealand the value based on the discount price of the corresponding precious metal. The realised differ�ences in operations with precious metals are determined as of the date of the transfer of title for theprecious metal as a result of the transaction. Positive realised differences are accounted for as incomefrom operations with precious metals, whereas negative realised differences are recorded to expenseson operations with precious metals.

Precious metals placed on deposits or unallocated metal accounts in non�resident credit institu�tions are accounted for at the discount price and recorded to Funds placed with non�residents and

securities issued by non�residents.

Bank of Russia claims and obligations in respect to the delivery of precious metals under forwardcontracts are recorded in off�balance sheet accounts from the transaction date to the settlement dateand revalued daily at the discount price.

(d) Foreign currency assets and liabilities

Foreign currency assets and liabilities are accounted for in rubles at the official rates of exchangeof the ruble against foreign currencies set by the Bank of Russia (hereinafter referred to as the officialexchange rates) as of the balance sheet compilation date. Foreign currency assets and liabilities arerevalued daily at the official exchange rates. Income and expenses relating to Bank of Russia foreignexchange operations are accounted for in the balance sheet in rubles at the official exchange rates asof the date income is received or expenses are incurred.

Unrealised exchange rate differences that arise due to the revaluation of the balances in debit andcredit balance sheet accounts are accounted for as Accrued exchange rate differences as part of capi�tal and are not included in the profit and loss account.

Should the accrued negative unrealised exchange rate differences exceed the accrued positiveunrealised exchange rate differences during the year, the excess is compensated for from previouslyaccrued net positive exchange rate differences accounted for as Accrued exchange rate differences aspart of capital. If there is no balance in the balance sheet account Accrued exchange rate differences

or the balance is not enough, the negative unrealised exchange rate differences are fully (or in theamount of the excess of the credit balance of the balance sheet account Accrued exchange rate differ�

ences) recorded to Bank of Russia expenses for the corresponding reporting year by a decision of theBank of Russia Board of Directors.

Realised exchange rate differences that arise in foreign exchange transactions conducted at a ratethat differs from the official exchange rates are calculated separately for each transaction and re�corded to Bank of Russia income or expenses. Net positive realised exchange rate differences arerecorded as part of other income, while net negative realised exchange rate differences are recordedas part of other operating expenses.

Bank of Russia claims and obligations under foreign exchange purchase and sale forward con�tracts are recorded in off�balance sheet accounts from the transaction date to the settlement date andrevalued at the official exchange rates.

125


The official exchange rates used in recalculating foreign currency assets and liabilities on Decem�ber 31, 2007, stood at 24.5462 rubles to the US dollar (in 2006, 26.3311 rubles to the US dollar)and 35.9332 rubles to the euro (in 2006, 34.6965 rubles to the euro).

(e) Securities

The Bank of Russia accounts for investments in Russian government securities using the followingaccounting principles:● the ruble�denominated government securities in the trading book are revalued at close of trades if

their market prices are quoted, or accounted for at their acquisition price if their market prices arenot quoted (the trading book is defined in Note 6 to these financial statements) net of depreciationprovisions;

● the ruble�denominated government securities in the investment portfolio are accounted for at theiracquisition (restructuring) price (the investment portfolio is defined in Note 6 to these financialstatements);

● Russian government internal and external foreign currency�denominated loan bonds in the in�vestment portfolio are accounted for at acquisition price, while bonds in the trading book arerevalued at close of trades.Repo transactions with government securities conducted with residents are accounted for in the

Bank of Russia balance sheet as securities purchase and sale operations. Government securities ac�quired in repos with residents are accounted for in the Bank of Russia balance sheet at acquisitionprice during the repo transaction period and written off from the Bank of Russia balance sheet whenresold. Bank of Russia claims for the delivery of money in the reverse part of repos and obligations tosell government securities in the reverse part of repos with residents are recorded in off�balance sheetaccounts from the transaction date to the execution date.

Debt obligations of other issuers, acquired in repo transactions with residents, are accounted foraccording to the same procedure as government securities acquired in repo transactions.

In addition, the following accounting principles are used in respect to other securities:● foreign issuers’ securities are accounted for at acquisition price;● foreign issuers’ securities received by the Bank of Russia in repo transactions with non�residents

are recorded in off�balance sheet accounts as securities received as collateral for repo transactions.The delivery of funds in repo transactions with non�residents is accounted for in the Bank of Rus�sia balance sheet as placements made against the collateral of securities. Income from placementsin repo transactions is recorded to interest income;

● foreign issuers’ securities transferred by the Bank of Russia as collateral in repo transactions withnon�residents continue to be accounted for as part of foreign issuers’ securities in the Bank ofRussia balance sheet. The raising of funds in repo transactions with non�residents is accounted forin the Bank of Russia balance sheet as operations to raise funds against the collateral of securities.In addition, securities transferred by the Bank of Russia as collateral in repo transactions withnon�residents are recorded in off�balance sheet accounts as securities transferred by the Bank ofRussia as collateral. Expenses involved in raising funds in repo transactions are recorded to inter�est expenses;

● income and expenses from the sale and redemption of foreign issuers’ securities are accounted foras part of income and expenses relating to securities trading;

● credit institutions’ promissory notes are accounted for at acquisition price net of the provisionsmade for them.

(f) Bank of Russia bonds

Bank of Russia bonds (OBR) are accounted for at their nominal value. The difference betweenthe nominal value and actual selling (redemption) price of Bank of Russia bonds is accounted asdeferred income or expenses relating to securities in Other liabilities or Other assets. When bonds are

126


bought out and redeemed, deferred income and expenses are netted and the result is recorded to Bankof Russia income or expense accounts.

(g) Investment

Bank of Russia investments in the authorised capital of credit and other institutions in and outsideRussia are accounted for at acquisition price.

(h) Loans to credit institutions

Loans to credit institutions are recorded to the principal debt net of depreciation provisions.

(i) Bank of Russia loss provisions

To cover risk (loss) when conducting operations under the applicable laws of the Russian Federa�tion, the Bank of Russia makes provisions for possible losses on loans extended to credit institutions,for the depreciation of investments in securities and for other active operations it conducts. Bank ofRussia asset risks for which provisions are made are assessed by determining the probability of afailure by the Bank of Russia to recover the funds invested in assets and the amount of Bank of Russiaprobable losses according to the provisioning procedure approved by the National Banking Board.Bank of Russia provisions are created by a decision of the Bank of Russia Board of Directors andrecorded to Bank of Russia expenses. When the amount of provisions is reduced due to repayment ofloans, deposits, promissory notes and other debt and disposal of other assets, as well as the improve�ment of the quality of assets and the reduction of the risk of possible losses on Bank of Russia assets,the corresponding part of the provisions is recovered to Bank of Russia income.

Provisions for operations conducted with resident credit institutions and other resident borrowersin rubles are made by the Bank of Russia when these operations create the risk of possible losses(credit risk) due to non�fulfilment (inadequate fulfilment) by borrowers of their obligations on Bankof Russia loans in accordance with the terms and conditions of the agreement or other relevant docu�ments that confirm the extension of Bank of Russia loans, other Bank of Russia ruble�denominatedclaims, non�payment of a promissory note and (or) non�fulfilment of obligations by a person whosedue fulfilment of obligations is guaranteed by the obligation (contingent obligations) assumed by theBank of Russia.

Provisions for government securities trading are made gradually, through the end of 2007, whenthe risk of possible losses from the depreciation of securities arises, and may reach up to 20% of theestimated value that represents the excess of the balance sheet value of the bonds over their possibleselling price.

Provisions for foreign exchange transactions are created by the Bank of Russia when there is a riskof possible losses from these transactions due to non�fulfilment by counterparties of their contractobligations to the Bank of Russia and (or) the devaluation of Bank of Russia assets and (or) non�fulfilment of obligations by a person whose duly fulfilment of obligations is guaranteed by the obliga�tion (contingent obligations) assumed by the Bank of Russia.

Provisions for Bank of Russia compensation payments for household deposits in bankrupt banksoutside the compulsory deposit insurance system are made to the amount of the funds transferred bythe Bank of Russia to the agent bank to effect Bank of Russia compensation payments and also to theamount of the bankrupt bank’s debt to the Bank of Russia on obligations that arose in connectionwith the transfer of funds to the bankrupt bank’s depositors by the Bank of Russia.

Bank of Russia assets for which provisions are made are accounted for in the balance sheet net ofthe amount of the provisions made.

(j) Fixed assets

Fixed assets are accounted for at residual value, i.e., at acquisition price inclusive of revaluationand exclusive of accrued depreciation.

127


Bank of Russia fixed assets have been revalued in compliance with Russian Government resolu�tions. The latest revaluation was made as of January 1, 1997.

Fixed assets acquired and put into operation before January 1, 2002, are depreciated at the offi�cial rates of depreciation set by USSR Council of Ministers Resolution No. 1072, dated October 22,1990, ‘On Standard Rates of Depreciation Charges for the Complete Restoration of Fixed Assets ofthe National Economy of the USSR’:

%

Buildings and other facilities 1.0—15

Equipment (including computers, furniture, transport vehicles, etc.) 2—20

Fixed assets put into operation from January 1, 2002, are depreciated at the rates set by Bank ofRussia Order No. OD�512, dated July 16, 2007, ‘On the Approval of the List of Bank of RussiaDepreciated Fixed Assets Disaggregated into Depreciation Groups with the Indication of the Service�ability Periods, and the Regulation on the Procedure for Using the List of Bank of Russia DepreciatedFixed Assets Disaggregated into Depreciation Groups with the Indication of the Serviceability Peri�ods’ (taking into consideration the amendments made by Bank of Russia Order No. OD�945, datedDecember 25, 2007), issued pursuant to Russian Federation Government Resolutions No. 1, datedJanuary 1, 2002, ‘On the Classification of Fixed Assets Included in Depreciation Groups’ (revised byRussian Federation Government Resolutions No. 415 of July 9, 2003, No. 476 of August 8, 2003,and No. 697 of November 16, 2006).

%

Buildings and other facilities 1.1—14

Equipment (including computers, furniture, transport vehicles, etc.) 2—67

(k) Cash in circulation

The Bank of Russia is the sole issuer of cash and organiser of cash circulation. The banknotes andcoins put into circulation are accounted for in the balance sheet at nominal value.

(l) Funds in accounts with the Bank of Russia

Funds in accounts with the Bank of Russia comprise federal government funds, credit institutions’funds in correspondent accounts, credit institutions’ required reserves deposited with the Bank ofRussia, credit institutions’ deposit accounts with the Bank of Russia and regional and local govern�ment budget funds and government extra�budgetary funds. Funds in accounts with the Bank of Rus�sia are accounted for in the balance sheet at nominal value.

(m) Float

As of the end of the year float includes the balances of funds connected with the completion ofsettlement operations with electronic and letter of advice settlement accounts, and the balances offunds resulting from operations between Bank of Russia institutions connected with the transfer ofpayments of Bank of Russia institutions and the customers they serve. Float is accounted for in thebalance sheet at nominal value.

(n) Capital

Bank of Russia capital comprises:— authorised capital. Under Article 10 of the Federal Law on the Central Bank of the Russian Fed�

eration (Bank of Russia), the Bank of Russia has an authorised capital of 3 billion rubles;

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— various reserves and funds created to enable the Bank of Russia to fulfil the functions assigned toit by the Federal Law on the Central Bank of the Russian Federation (Bank of Russia). Informa�tion on the sources and use of the reserves and funds is contained in the Statement of Bank ofRussia Reserves and Funds as part of these Annual Financial Statements as of January 1, 2008.

(o) Reporting year profit

Reporting year profit, accounted for in the Bank of Russia balance sheet, is the financial result ofthe Bank of Russia performance during the reporting year.

After the Bank of Russia Annual Financial Statements are approved by the Board of Directors, theBank of Russia transfers to the federal budget 50% of its actual full�year profit that remains after thepayment of taxes and duties under the Tax Code of the Russian Federation. The remaining profit ofthe Bank of Russia is transferred by its Board of Directors to various reserves and funds (Note 27,Statement of Profit and its Allocation, Table Capital, funds and profit allocation).

(p) Recognition of Bank of Russia income and expenses

Income and expenses are accounted for in the profit and loss account on a cash basis, i.e., afterincome has been actually received and expenses have been actually incurred.

(q) Financial result

The financial result, i.e., profit or loss, is the difference between total income received and totalexpenses incurred in core and non�core operations conducted by the Bank of Russia during the re�porting year.

(r) Taxation of the Bank of Russia

The Bank of Russia pays taxes and duties under the Tax Code of the Russian Federation. TheBank of Russia has worked out and approved an accounting policy for the purposes of taxation, whichformulates the tax accounting principles and methods and the rules and procedures for the creation ofthe tax base for the calculation of taxes and duties paid by the Bank of Russia.

(s) Transfer of profit to the Federal Budget

Under Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), after the approval by the Bank of Russia Board of Directors of the Bank of Russia AnnualFinancial Statements, the Bank of Russia transfers to the federal budget 50% of its actual full�yearprofit remaining after the payment of taxes and duties under the Tax Code of the Russian Federation.

2. IMPACT OF ECONOMIC CONDITIONS ON BANK OF RUSSIA FINANCIAL STATEMENTS

The internal and external economic factors and the general economic policy pursued in 2007 af�fected the nature and scale of operations the Bank of Russia conducted when fulfilling the functionsassigned to it. This was reflected in the Bank of Russia’s consolidated annual balance sheet and finan�cial performance.

As foreign trade conditions continued to improve in 2007, Russia registered a large trade andcurrent account surplus. In addition, the capital and financial account increased significantly in thefirst half of the year under review due to massive capital inflow. In that situation, the steps taken bythe Bank of Russia to maintain the managed floating exchange rate largely determined money supplydynamics.

To mitigate the adverse impact of excessive growth in money supply, caused by currency interven�tions, on inflation in the economy, the Bank of Russia and the Russian Government absorbed excessliquidity, mostly through the Stabilisation Fund, as was the case in the previous three years. The

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budget surplus and the expansion of the Stabilisation Fund led to a growth in funds in governmentaccounts with the Bank of Russia. Bank deposits with the Bank of Russia also grew significantly andtheir share in Bank of Russia balance sheet liabilities increased by more than 50% over the year.

Instability on global financial markets made it increasingly difficult for Russian banks and corpo�rations to borrow abroad and this led to massive net capital outflow from the private sector in Augustand September 2007 and, consequently, the scaling down of Bank of Russia interventions on thedomestic forex market in that period.

Over the year, Bank of Russia funds placed with non�residents and invested in foreign securitiesincreased significantly and their share in Bank of Russia balance sheet assets contracted slightly.

As the borrowing conditions on foreign markets deteriorated, banking sector demand for Bank ofRussia refinancing rose sharply. In that situation, the Bank of Russia jointly with the Governmentcarried out a series of measures that ensured the rapid refinancing of banks, improved the refinancingsystem and encouraged credit institutions to improve the management of their liquidity. In August�December 2007, the Bank of Russia considerably increased the amount of liquidity it provided tobanks, purchased OBR on the secondary market and bought from credit institutions governmentsecurities to increase its own portfolio. These operations led to an increase in the balances of fundsaccounted for as Federal government debt obligations in the Bank of Russia balance sheet.

In November 2007, the Bank of Russia broadened the range of refinancing instruments as it beganto conduct fixed�rate overnight and 7�day repo operations and extend fixed�rate overnight Lombardloans. In addition, to increase the refinancing of banks, it lowered the international issuer (issue)rating requirements for the bonds on the Lombard List and added to it securities issued by non�resi�dent corporations. It also cut interest rates on some of its operations, increased the adjustment ratiosused in calculating the value of securities accepted as collateral for Bank of Russia loans and reducedthe discounts on securities used in repo transactions with the Bank of Russia. This led to a significantgrowth in Bank of Russia credit claims on credit institutions.

The balances of credit institutions’ correspondent accounts with the Bank of Russia increased in2007, although their share in Bank of Russia balance sheet liabilities went down year on year.

During the year under review credit institutions received additional funds as the Bank of Russiatemporarily lowered by one percentage point the required reserve ratios and, at the same time, raisedthe required reserve averaging ratio. This measure offset, to some extent, the rise in the requiredreserve ratios made in the middle of 2007 to contain inflation, and did not change significantly thisitem of the Bank of Russia balance sheet.

The continued growth in household money income and further de�dollarisation stimulated de�mand for cash rubles and led to growth in balances of Cash in circulation in the Bank of Russiabalance sheet in 2007. At the same time, the share of cash in Bank of Russia balance sheet liabilitiescontracted year on year.

The Bank of Russia financial result for 2007 was largely affected by the continued rapid growth ingold and foreign exchange reserves, the further appreciation of the ruble and the banking sector li�quidity regulation measures implemented by the Bank of Russia as part of the monetary policy. In thissituation, growth in income from the placement of gold and foreign exchange reserves was accompa�nied by a significant increase in the unrealised negative exchange rate differences from the revalua�tion of Bank of Russia foreign currency assets and liabilities, which were completely recovered byBank of Russia expenses due to the lack of accrued exchange rate differences. These factors and theincreased expenses involved in the use of the monetary regulation instruments by the Bank of Russiacaused Bank of Russia profit to decrease as compared with the previous year.

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3. PRECIOUS METALS

(million rubles)

2007 2006

Precious metals 346,523 64,303

Total 346,523 64,303

The increase under this item is largely due to the revaluation of precious metals at discount pricesafter January 1, 2007, and the purchase of gold from Russian credit institutions under general agree�ments.

4. FUNDS PLACED WITH NON�RESIDENTS AND SECURITIES ISSUED BY NON�RESIDENTS

(million rubles)

2007 2006

Foreign securities 6,684,818 2,823,900

Balances in correspondent accounts and deposits placedwith non�resident banks 2,887,937 2,813,502

Funds placed with non�residents under repo transactions 1,938,864 2,107,064

Total 11,511,619 7,744,466

Foreign securities are mostly US treasuries and government debt obligations of Germany, France,Britain, Sweden, Belgium, the Netherlands, Austria, Spain, Finland and Ireland, securities of extra�budgetary funds and federal government agencies of these countries and international financialorganisations and covered securities of German credit institutions. Growth under this item was dueto an increase in investments in foreign securities, caused by the expansion of foreign exchange re�serves.

As of January 1, 2008, 37.03% of the total of Foreign securities (35.65% in 2006) were Bank ofRussia investments in securities of the US mortgage agencies Federal Home Loan Banks, FederalNational Mortgage Association and Federal Home Loan Mortgage Corporation to the amount of2,475,194 million rubles (1,006,731 million rubles in 2006), of which 83.94% had a maturity pe�riod of less than one year as of the reporting date. These agencies have the highest long�term AAAcredit rating and their coupon bonds the Bank of Russia had in its portfolio as of the reporting datealso had the highest AAA rating.

The increase in Balances in correspondent accounts and deposits placed with non�resident banks

is largely due to growth in gold and foreign exchange reserves.The decrease in Funds placed with non�residents under repo transactions is due to the reduction

in total funds provided by the Bank of Russia through opened securities purchase transactions withan obligation to resell.

As of January 1, 2008, Funds placed with non�residents under repo transactions included173,960 million rubles (78,481 million rubles in 2006) in balances of Bank of Russia placementswith non�residents, as a result of which the Bank of Russia received from the latter foreign securitiesas collateral for these repo operations and at the same time raised funds from the same non�residentson the same terms and transferred to them other foreign securities from its portfolio as collateral for

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the funds raised. The nominal value of the foreign securities transferred by the Bank of Russia to non�residents in these repo transactions stood at 167,369 million rubles as of January 1, 2008 (78,345 mil�lion rubles in 2006) and it is accounted for in off�balance sheet accounts for securities transferred ascollateral for the loans taken (Note 25), while the corresponding balances of funds raised from non�residents through these repo transactions are accounted for as Non�resident bank funds raised through

repo transactions (Note 9). Average non�resident debt to the Bank of Russia and Bank of Russiadebt to non�residents in these repo transactions in 2007 stood at 220,898 million rubles (256,839 mil�lion rubles in 2006). This debt has been calculated as the sum of the products of the funds received ineach transaction multiplied by the duration of the transaction in calendar days during the reportingyear and divided by the number of calendar days in the reporting year. The part of the carry�overtransactions conducted in the reporting year was also included in the calculations. In 2007, the Bankof Russia placed (raised) funds through these repo transactions totalling 4,040,954 million rubles(3,836,766 million rubles in 2006). Income received by the Bank of Russia from placements madewith non�residents through these repo transactions totalled 10,918 million rubles in 2007 (12,611 mil�lion rubles in 2006) and they were recorded to Interest income from foreign currency loans and

deposits (Note 13). Bank of Russia expenses involved in raising funds from non�residents throughthese repo transactions amounted to 10,401 million rubles in 2007 (12,391 million rubles in 2006)and they were accounted for as Interest expenses on funds raised on international markets against

the collateral of foreign currency�denominated securities (Note 17).

5. LOANS AND DEPOSITS

(million rubles)

2007 2006

Loans extended to resident banks (in rubles) 34,031 624

Loans and deposits with resident banks (in foreign currency) 442 14,271

Other 3,596 3,687

Provisions (960) (11,068)

Total 37,109 7,514

Growth in Loans extended to resident banks (in rubles) is due to a significant rise in bankingsector demand for Bank of Russia Lombard loans and, beginning from October 2007, for loans se�cured by promissory notes, rights of claim under corporate loan agreements or bank guarantees, onwhich debt stood at 32,535 million rubles as of January 1, 2008.

The decrease in Loans and deposits in resident banks (in foreign currency) is due to the settle�ment or partial repayment by credit institutions of their debt to the Bank of Russia and the change inthe official rate of the ruble against foreign currencies. A provision of 442 million rubles (10,322 mil�lion rubles in 2006) was created for this debt owed by credit institutions.

Provisions totalling 518 million rubles (746 million rubles in 2006) have been created for debt onloans extended to resident banks (in rubles), other loans and deposits.

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6. SECURITIES

(million rubles)

2007 2006

Russian government debt obligations

Federal loan bonds (OFZ), 241,440 191,905

of which:

— trading book 235,595 44,363

— bonds acquired under repo transactions 5,845 26,001

— investment portfolio — 121,541

Russian government internal and externalforeign currency�denominated loan bonds, 124,069 80,709

of which:

— investment portfolio 67,673 79,706

— trading book 50,874 1,003

— bonds acquired under repo transactions 5,522 —

Provisions (12,737) —

Subtotal 352,772 272,614

Shares issued by credit and other institutions(Bank of Russia stakeholdings) 85,370 5,997

Other issuers’ debt obligations 3,806 1,178

Bank promissory notes acquired by the Bank of Russia 27 27

Provisions (27) (27)

Total 441,948 279,789

Securities in the Bank of Russia trading book are securities which the Bank of Russia intends totrade on the securities market.

Securities in the Bank of Russia investment portfolio are securities which the Bank of Russiaintends to keep for an indefinite period of time.

Federal loan bonds (OFZ)

The Bank of Russia OFZ portfolio is the result of the 2003—2005 restructuring of governmentsecurities under the federal budget laws for the corresponding financial year and OFZ purchase andsale on the domestic securities market. The characteristics of the securities received as a result of therestructuring comply with the requirements of federal laws and the agreements between the FinanceMinistry and the Bank of Russia.

As of January 1, 2008, the OFZ portfolio consists of the trading book and the securities acquiredwith an obligation to resell (repo transactions).

In 2007, the Bank of Russia transferred to the trading book from the investment portfolio OFZbonds with a coupon income of 0% to 1.566%, a maturity from 2019 to 2029 and a total balancesheet value of 121,541 million rubles, for their subsequent exchange for Finance Ministry marketablesecurities and for trading on the open market.

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The Table below shows the structure of the OFZ trading book by coupon income and maturity asof January 1, 2008.

(million rubles)

OFZ type 2007 2006

0% coupon�income debt depreciation OFZ

due in 2019—2028 154,099 24,335

1.566% coupon�income debt depreciation OFZ

due in 2029 23,873 —


due in 2018 19,798 19,851


due in 2036 15,460 —


due in 2012—2021 15,089 —


due in 2016 4,278 —

6.1% premanent coupon�income OFZ

due in 2012 2,998 177

Total 235,595 44,363

The change in the balance sheet value of OFZ in the trading book is due to the transfer of govern�ment securities from the investment portfolio to the trading book, the purchase of OFZ with a couponincome of 6.1% to 9% p.a. and due in the period from 2012 to 2036, the sale of OFZ on the securitiesmarket and the revaluation of the trading book at market price. A provision will be made for unlistedbonds in the trading book if their balance sheet value exceeds their possible selling price.

As of January 1, 2008, the trading book comprised OFZ bonds due from 2012 to 2036. Most ofthem (65%) mature in 2019—2028 and have 0% coupon income.

As of January 1, 2007, the trading book comprised OFZ bonds due from 2012 to 2025 and most ofthem (62%) are due in 2019—2025 and have 0% coupon income.

As of January 1, 2008, the balance sheet value of OFZ bonds acquired by the Bank of Russia throughrepo transactions with residents with an obligation to resell stood at 5,845 million rubles. These bondsare securities due in the period from 2008 to 2021 and have a coupon income of 0% to 9% p.a.

As of January 1, 2007, the balance sheet value of OFZ acquired by the Bank of Russia throughrepo transactions with an obligation to resell stood at 26,001 million rubles. These bonds were secu�rities due in 2008—2036 and with a coupon income of 0% to 10% p.a.

Bank of Russia claims for the delivery of funds in the reverse part of repo transactions with resi�dents and obligations to sell OFZ bonds in the reverse part of repo transactions with residents arerecorded in off�balance sheet accounts and shown in Note 25.

Russian government internal and external foreign currency�denominated loan bonds

Russian government external foreign currency�denominated loan bonds (Russian eurobonds) areUS dollar�denominated government securities issued by the Finance Ministry and traded on the inter�national market. They mature in the period from 2010 to 2030 and have a coupon income of 7.5% to12.75% p.a.

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Russian government internal foreign currency�denominated loan bonds are US dollar�denomi�nated government securities issued by the Finance Ministry, due in the period from 2008 to 2011with a coupon income of 3% p.a.

The change in the balance sheet value of Russian government internal and external foreign cur�

rency�denominated loan bonds is due to purchase by the Bank of Russia of Russian eurobonds for itstrading book, the redemption of the 1999 government foreign currency loan bonds (OGVZ), and theredemption of Russian eurobonds in the investment portfolio and the US dollar depreciation againstthe ruble.

As of January 1, 2008, the balance sheet value of Russian eurobonds acquired by the Bank ofRussia under repo transactions with an obligation to resell stood at 5,522 million rubles. These bondsmature in 2030 and have a coupon income of 7.5% p.a.

Bank of Russia claims for the delivery of funds in the reverse part of repo transactions with resi�dents and obligations to sell Russian eurobonds in the reverse part of repo transactions with residentsare recorded in off�balance sheet accounts and shown in Note 25.

Provisions

For some OFZ issues transferred from the investment portfolio to the trading book provision wasmade by the Bank of Russia of 12,737 million rubles (no such provision was made in 2006). It ac�counts for 20% of the excess of the balance sheet value of the bonds over their possible selling price inaccordance with the Bank of Russia provisioning procedure (Note 21).

Shares issued by credit and other institutions (Bank of Russia stakeholdings)

The structure of Bank of Russia investments in shares of credit and other institutions is shownbelow.

(million rubles)

7002 6002

emanynapmoC emanynapmoC emanynapmoC emanynapmoC emanynapmoC

tnemtsevnI tnemtsevnI tnemtsevnI tnemtsevnI tnemtsevnI

tnuoma tnuoma tnuoma tnuoma tnuoma

noitisiuqcata( noitisiuqcata( noitisiuqcata( noitisiuqcata( noitisiuqcata(

)ecirp )ecirp )ecirp )ecirp )ecirp

erahs% erahs% erahs% erahs% erahs%

desirohtuani desirohtuani desirohtuani desirohtuani desirohtuani


)rapta( )rapta( )rapta( )rapta( )rapta(

tnemtsevnI tnemtsevnI tnemtsevnI tnemtsevnI tnemtsevnI

tnuoma tnuoma tnuoma tnuoma tnuoma

noitisiuqcata( noitisiuqcata( noitisiuqcata( noitisiuqcata( noitisiuqcata(

)ecirp )ecirp )ecirp )ecirp )ecirp

erahs% erahs% erahs% erahs% erahs%

desirohtuani desirohtuani desirohtuani desirohtuani desirohtuani


)rapta( )rapta( )rapta( )rapta( )rapta(

knabrebS 400,48 85.75 365,4 75.06,stnemeltteSlanoitanretnIrofknaB

lesaB 260,1 95.0 031,1 95.0

egnahcxEycnerruCknabretnIwocsoM 003 97.92 003 67.82

egnahcxEycnerruCgrubsretePtS 3 09.8 3 09.8

knabretnIediwdlroWrofyteicoSsnoitacinummoceleTlaicnaniF

muigleB,).T.F.I.W.S( 975.0 600.0 955.0 600.0

latoT 073,58 — 799,5 —

The increase in Shares issued by credit and other institutions (Bank of Russia stakeholdings) isdue to the acquisition by the Bank of Russia of 892,601 Sberbank ordinary shares in the course of theplacement of an additional issue by Sberbank in 2007 for the purpose of augmenting its capital to alevel that would match the rate of expansion of its active operations. It should be noted, however,that as the Bank of Russia did not purchase enough shares to keep its stakeholding in Sberbank un�changed, the Bank of Russia stake in Sberbank’s authorised capital contracted from 60.57% to 57.58%in the year under review.

The expansion of the Bank of Russia stake in the authorised capital of MICEX was due to a reduc�tion of the exchange capital as a result of the redemption of the shares owned by MICEX. At the sametime, the Bank of Russia investment in the authorised capital of the exchange remained unchanged.

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Debt obligations of other issuers

As of January 1, 2008, through repo transactions with residents with an obligation to resell theBank of Russia acquired securities issued by regional governments and other Russian issuers and bythe European Bank for Reconstruction and Development, with a total balance sheet value of 3,806million rubles, a maturity from 2008 to 2017 and coupon income of 0% to 13.80% p.a.

As of January 1, 2007, through repo transactions with residents with an obligation to resell theBank of Russia acquired securities issued by regional governments and other Russian issuers with atotal balance sheet value of 1,178 million rubles, a maturity from 2008 to 2015 and coupon income of8.22% to 11% p.a.

Bank of Russia claims for the delivery of funds in the reverse part of repo transactions with resi�dents and obligations to sell debt securities of other issuers in the reverse part of repo transactionswith residents are recorded in off�balance sheet accounts and shown in Note 25.

Provisions for bank promissory notes acquired by the Bank of Russia

This item shows the provisions of 27 million rubles made for promissory notes of credit institutionsacquired by the Bank of Russia in 2001 under the terms and conditions of the amicable settlement(the amount is unchanged from 2006).

7. OTHER ASSETS

(million rubles)

2007 2006

Fixed assets (at residual value)

Buildings and other facilities 33,144 31,640

Equipment (including computers, IT and data processing systems,furniture, transport vehicles, etc.) 29,473 29,019

Subtotal fixed assets 62,617 60,659

Bank of Russia interest claims 19,148 29,521

Till cash 5,838 4,409

Incomplete construction projects 5,270 5,135

Deferred expenses on securities 2,564 3,604

Settlements with CIS and Baltic banks 1,446 1,446

Bank of Russia funds transferred to agent banks for paymentsto depositors of bankrupt banks 863 855

Settlements with suppliers, contractors and buyers 573 886

Profit tax advance payments 113 63

Bank of Russia correspondent accounts 19 208

Other 3,749 3,793

Provisions (2,718) (2,784)

Subtotal other assets 36,865 47,136

Total 99,482 107,795

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The table below shows the movement of fixed assets:(million rubles)

2007 2006

Fixed asset value net of accrued depreciation

Balance as of January 1 96,937 88,525

Receipt 10,743 9,456

Retirement (1,913) (1,044)

Balance as of end of year 105,767 96,937

Accrued depreciation

Balance as of January 1 36,278 29,104

Depreciation deductions due to expenses (Note 23) 8,491 8,071

Depreciation deductions due to other sources 1 3

Accrued depreciation for retired fixed assets (1,620) (900)

Balance as of end of year 43,150 36,278

Fixed asset residual value as of end of year 62,617 60,659

Fixed assets structure and value net of accrued depreciation:(million rubles)

2007 2006

Buildings and other facilities 37,926 35,895

Computers, office equipment and furniture 32,721 29,053

Equipment 14,866 13,887

IT and data processing systems 14,841 13,363

Transport vehicles 2,476 2,229

Intangible assets 1,322 1,056

Other 1,615 1,454

Total 105,767 96,937

The increase in Buildings and other facilities is largely due to the reconstruction and constructionof Bank of Russia office buildings.

The increase in Computers, office equipment and furniture is due to the purchase of informa�tion technology and systems and devices designed to automate the storage and processing of data inthe Bank of Russia payment, accounting and information analysis systems, facilities designed toprotect banking information and security facilities and modernisation of Bank of Russia operationssupport systems.

The increase in Equipment is due to the purchase of equipment to develop and upgrade fail�proofelectric power supply systems and mechanise cash processing, cash machines and other equipment.

The increase in IT and data processing systems is largely due to the purchase of telecommunica�tions and network equipment and modernisation and installation of additional IT systems to replaceobsolete equipment.

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The increase in Transport vehicles is mostly due to the purchase of special�purpose transport ve�hicles to carry cash.

The increase in Intangible assets is due to the purchase of software products with Bank of Russiaexclusive title.

The increase in Other is primarily due to the purchase of production equipment and householdgoods.

The decrease in Bank of Russia interest claims is largely due to the acceleration of maturity ofBank of Russia deposits.

The increase in the balance of incomplete construction is mainly due to the development and up�grading of information analysis systems and banking information protection and security systems.

Deferred expenses on securities reflect deferred expenses, which are the difference between thenominal value and the actual selling price of OBR.

Provisions were made for:— debt under the 1992—1993 agreements with CIS and Baltic states in the amount of 1,446 million

rubles (unchanged from 2006);— funds transferred to agent banks to effect compensation payments to depositors of bankrupt banks

in the amount of 863 million rubles (855 million rubles in 2006);— other assets in the amount of 409 million rubles (483 million rubles in 2006).

8. CASH IN CIRCULATION

Growth in cash in circulation is due to the expansion of cash turnover.

9. FUNDS IN ACCOUNTS WITH THE BANK OF RUSSIA

(million rubles)

2007 2006

Federal government funds, 5,119,493 3,317,090

of which:

— Stabilisation Fund 3,849,111 2,346,922

Credit institutions’ funds in correspondent accounts 806,954 639,953

Regional and local budget funds 324,166 211,649

Deposits taken by the Bank of Russia from credit institutions 270,268 98,091

Required reserves deposited with the Bank of Russia 221,620 221,071

Non�resident bank funds raised through repo transactions 173,960 78,481

Other 692,502 221,217

Total 7,608,963 4,787,552

Significant growth in the balance of Federal government funds is due to the increase in federalbudget revenue, including the expansion of the Stabilisation Fund. Russian Government ResolutionNo. 229, dated April 21, 2006, ‘On the Procedure for Managing the Stabilisation Fund of the Rus�sian Federation,’ stipulates that the Ministry of Finance manages the Stabilisation Fund by usingmoney from the Fund to acquire US dollars, euros and British pounds and placing them in accountsopened with the Bank of Russia, and acquiring foreign government debt obligations (Note 17).

138


Deposits taken by the Bank of Russia from credit institutions include the balances of funds raisedfrom resident credit institutions in rubles. The increase in these funds is due to the expansion ofbanking sector deposit operations and the raising of Bank of Russia deposit interest rates.

Non�resident bank funds raised through repo transactions are the balances of Bank of Russia op�erations conducted to raise funds from non�residents against the collateral of foreign securities in theBank of Russia portfolio while simultaneously placing funds with the same non�residents on the sameterms against the collateral of other foreign securities received from them. The corresponding fundsplaced by the Bank of Russia with non�residents in these transactions are included in Funds placed

with non�residents under repo transactions and as of January 1, 2008, they amounted to 173,960 mil�lion rubles (78,481 million rubles in 2006) (Note 4). The nominal value of these securities stood at167,369 million rubles (78,345 million rubles in 2006) and it is recorded in off�balance sheet ac�counts that record securities transferred as collateral for loans (Note 25). Average non�resident debtto the Bank of Russia and average Bank of Russia debt to non�residents relating to these repos in2007 stood at 220,898 million rubles (256,839 million rubles in 2006). This average debt is calcu�lated as the sum of the products of the funds received in each transaction multiplied by the duration ofthe transaction in calendar days during the reporting year divided by the number of calendar days inthe reporting year. The parts of the carry�over transactions that occurred in the reporting year werealso included in the calculation. The amount of the funds raised (placed) through these repo transac�tions in 2007 totalled 4,040,954 million rubles (3,836,766 million rubles in 2006). Bank of Russiaexpenses on raising funds from non�residents through these repo transactions amounted to 10,401 mil�lion rubles (12,391 million rubles in 2006) and they were included in Interest expenses on funds

raised against the collateral of foreign currency�denominated securities (Note 17). The correspond�ing income received by the Bank of Russia from placements made with non�residents through theserepo transactions amounted to 10,918 million rubles in 2007 (12,611 million rubles in 2006) andthey were included in Interest income from foreign currency loans and deposits (Note 13).

The increase in the balance of Non�resident bank funds raised through repo transactions is due togrowth in funds raised by the Bank of Russia in open securities sales with an obligation to repurchase.

Other include the balances of accounts of government extra�budgetary funds and other Bank ofRussia customers. Their growth is mainly due to the increased balances in the accounts of federalgovernment�owned non�profit organisations, such as the Russian Nanotechnology Corporation andthe Municipal Services Reform Fund, and the accounts of the Pension Fund, the Social InsuranceFund and regional compulsory medical insurance funds.

Pursuant to Article 23 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), the Bank of Russia conducts operations with federal budget funds, government extra�bud�getary funds and regional and local budget funds without charging commission.

10. FLOAT

The decrease in Float was due to a reduction in the value of interregional electronic payments,which had been completed by the Bank of Russia in the first working days of January 2008.

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11. OTHER LIABILITIES

(million rubles)

2007 2006

Bank of Russia bonds 102,941 103,734

Supplementary pension provisions for Bank of Russia employees 62,125 51,660

Deferred income from lending operations 19,172 29,551

Deferred income from securities 8,611 8,670

Other 3,104 1,978

Total 195,953 195,593

The balance of Bank of Russia bonds (OBR) is the nominal value of OBR placed by the Bank ofRussia on the domestic securities market.

Under the Federal Law on the Central Bank of the Russian Federation (Bank of Russia) the Bankof Russia has the right to set up a supplementary pension fund for its employees. Payments under theBank of Russia pension plan are regulated by Bank of Russia instructions, which take into accountthe fact that Bank of Russia employees are not covered by the guarantees which civil servants areentitled to and that these are the internationally accepted practices of central banks. The amount offunds allocated for supplementary pension payments to Bank of Russia employees is determined onthe basis of the actuarial evaluation conducted by a certified actuary. As of January 1, 2008, the Bankof Russia increased the funds intended for supplementary pension payments by 7,038 million rublesfrom the provision made for obligations to participants in the Bank of Russia Pension Plan in 2007and recorded to Bank of Russia expenses (Note 21), and an additional amount of 3,740 million rublesrecorded to Bank of Russia expenses (Note 23).

Deferred income from lending operations is mostly interest the Bank of Russia is to receive for itsplacements with non�residents, which is not yet due as of the reporting date. The decrease in De�

ferred income from lending operations is mostly due to the acceleration of maturity of the depositsplaced by the Bank of Russia. Bank of Russia interest claims are recorded as Other assets (Note 7).

Deferred income from securities mostly comprises deferred income from government securitiesand the Finance Ministry’s other debts restructured under the 1999—2001 federal budget laws andfurther restructured under the 2003—2005 federal budget laws.

Other mostly reflects the funds deposited by credit institutions to receive cash and accrued intereston the sale of securities to non�resident banks with an obligation to repurchase.

12. REPORTING YEAR PROFIT

Reporting year profit is a balance sheet item that shows the Bank of Russia’s financial result for2007.

The allocation of actual profit for the reporting year that remains after taxes and duties have beenpaid under the Tax Code of the Russian Federation and transfers to the federal budget have beenmade under Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), is shown in the Bank of Russia accounting records in 2008 (Note 27 and the Statement ofProfit and its Allocation).

140


The main factors that affected the Bank of Russia financial result in 2007 are as follows:— the increase in interest income, mostly due to growth in gold and foreign exchange reserves

(Note 13);— the increase in income from securities trading, which is also due to growth in gold and foreign

exchange reserves and connected with the revaluation of government securities in the tradingbook and purchase and sale of securities (Note 14);

— Bank of Russia interest expenses recorded to the balances of the Stabilisation Fund foreign cur�rency accounts (Note 17);

— Bank of Russia expenses on reimbursement of the negative unrealised exchange rate differencesfrom the revaluation of Bank of Russia foreign currency assets and liabilities by decision of theBank of Russia Board of Directors, caused mostly by the fall of the official exchange rate of thedollar against the ruble in 2007 (Note 22).

13. INTEREST INCOME

(million rubles)

2007 2006

Interest income from foreign currency loans and deposits 262,318 147,734

Interest income from securities 127,869 52,728

Interest income from ruble loans extended to credit institutions 343 31

Other 2,058 150

Total 392,588 200,643

Interest income from foreign currency loans and deposits mostly reflects interest received fromBank of Russia placements with non�resident banks, including interest received from placing fundsthrough repo transactions with foreign securities, which amounted to 124,044 million rubles(69,614 million rubles in 2006). This item also includes interest income received by the Bank ofRussia from placements made with non�residents through repo transactions, in which the Bank ofRussia received from non�residents foreign securities as collateral for its placements and simulta�neously raised funds from the same non�residents on the same terms and transferred to them otherforeign securities from its portfolio as collateral for the funds raised (Notes 4, 9 and 17). In 2007, thisincome totalled 10,918 million rubles (12,611 million rubles in 2006). This item also comprises in�terest income from precious metal deposits to the amount of 774 million rubles (356 million rubles in2006).

Interest income from securities includes interest received from foreign issuers’ debt obligationsacquired in the course of managing foreign exchange reserves, federal government debt obligationsand debt obligations of other issuers acquired through repo transactions with residents.

The increase in interest income from foreign currency loans and deposits and securities is due to agrowth in Bank of Russia gold and foreign exchange reserves (Note 4).

The increase in interest income from ruble loans extended to credit institutions is due to a growthin Bank of Russia loans to the banking sector in the reporting year, including loans covered by prom�issory notes, claims under loan agreements with enterprises and bank guarantees.

Other mostly includes interest income from accounts opened with non�resident banks.

141


14. INCOME FROM SECURITIES TRADING

(million rubles)

2007 2006

Income from operations with foreign securities 62,938 48,455

Income from operations with Russian debt obligations 41,129 9,267

Total 104,067 57,722

Income from operations with foreign securities comprises income received from the sale and re�demption of foreign securities.

Income from operations with Russian debt obligations includes income from the sale of federalloan bonds by the Bank of Russia on the domestic securities market and the positive revaluation ofgovernment securities in the trading book due to the increase in their market value, and also incomefrom repo transactions with Russian securities and sums previously accounted for as deferred incomeand now recorded to income. The increase in income recorded under this item is mainly due to therevaluation of government securities in the Bank of Russia trading book.

15. INCOME FROM OPERATIONS WITH PRECIOUS METALS

(million rubles)

2007 2006

Income from operations with precious metals 357 6,314

Total 357 6,314

Income from operations with precious metals includes income from the purchase and sale of pre�cious metals on the domestic and foreign markets. The decrease in income recorded under this itemwas due to the contraction of the difference between the selling price and discount price of preciousmetals as of the transaction date, which resulted from the fact that on January 1, 2007, the Bank ofRussia began to revalue the precious metal balances at discount prices and record the revaluationresults to capital accounts (Statement of Bank of Russia reserves and funds, Table Capital, funds

and profit allocation).

142


16. OTHER INCOME

(million rubles)

2007 2006

Payment for settlement services provided by the Bank of Russia 1,764 1,403

Income from sale of coins made of precious metals 482 1,891

Income of past years discovered in reporting year 138 181

Fines and penalties received 26 27

Reimbursement of telegraph and other expenses by customers 11 11

Other 838 624

Total 3,259 4,137

Income from sale of coins made of precious metals reflects income from the sale on the domesticand international market of Russian coins made of precious metals. The decrease under this item wasdue to an increase in the price of precious metals delivered to the mints as feedstock on commission forthe production of coins and, consequently, contained in the coins produced, because on January 1,2007, the Bank of Russia began to revalue the precious metal balances at discount prices and recordthe revaluation results to capital accounts (Statement of Bank of Russia reserves and funds, TableCapital, funds and profit allocation).

17. INTEREST EXPENSES

(million rubles)

2007 2006

Interest expenses on Stabilisation Fund balances 151,893 22,988

Interest expenses on deposits taken from banks on domestic market 12,615 3,464

Interest expenses on funds raised on international marketsagainst the collateral of foreign currency�denominated securities 10,403 12,391

Other 56 247

Total 174,967 39,090

Interest expenses on the Stabilisation Fund are due to the payment by the Bank of Russia of inter�est accrued on the balances of the Stabilisation Fund foreign currency accounts. Russian FederationGovernment Resolution No. 229, dated April 21, 2006, ‘On the Procedure for Managing theStabilisation Fund of the Russian Federation,’ stipulated that the Ministry of Finance should managethe Stabilisation Fund by using money from the Fund to acquire foreign exchange in US dollars, eurosand British pounds and place it in accounts opened with the Bank of Russia, and by acquiring foreigngovernment debt obligations (Note 9).

The increase in Interest expenses on Stabilisation Fund balances is due to a growth in balances ofStabilisation Fund accounts and an increase in the market value of securities included in indices usedfor calculation of interest expenses on the Stabilisation Fund.

143


The increase in interest expenses on deposits taken from credit institutions is due to the expansionof deposit operations and the rise in the Bank of Russia deposit interest rates on the domestic market,including auction deposit interest rates.

Interest expenses on funds raised on international markets against the collateral of foreign cur�

rency�denominated securities are interest paid by the Bank of Russia for raising non�resident fundsthrough transactions in which the Bank of Russia transferred foreign securities from its portfolio tonon�residents as collateral for the funds raised, and simultaneously placed funds with the same non�residents on the same terms, and received from them other foreign securities as collateral for thefunds placed (Note 9). The decrease under this item is due to the reduction of interest rates on the USmoney market and the contraction of the average annual volume of operations.

18. EXPENSES ON SECURITIES TRADING

(million rubles)

2007 2006

Expenses on operations with Russian debt obligations 21,802 11,970

Expenses on operations with foreign securities 15,238 4,754

Total 37,040 16,724

Expenses on operations with Russian debt obligations include expenses involved in the sale offederal loan bonds (OFZ) by the Bank of Russia on the domestic securities market and the negativerevaluation of government securities in the trading book connected with the fall in their market value,and also expenses involved in OBR placements (sales) with an obligation to repurchase on the basisof the Bank of Russia irrevocable public offer and placements (sales) without the obligation to repur�chase, which totalled 19,557 million rubles in 2007 (10,770 million rubles in 2006).

Expenses on operations with foreign securities comprise Bank of Russia expenses involved in thesale of foreign securities and the redemption of securities by foreign issuers. The increase under thisitem is due to the expansion of foreign exchange reserve operations.

19. CASH TURNOVER MANAGEMENT EXPENSES

This balance sheet item includes expenses involved in the manufacture and destruction of banknotesand coins, their protection against counterfeiting and the purchase and delivery of packaging materi�als and accessories necessary for the processing of cash.

Growth under this item is due to the growth in the production of banknotes and coins and the risein the cost of their production.

20. EXPENSES ON OPERATIONS WITH PRECIOUS METALS

(million rubles)

2007 2006

Expenses on operations with precious metals 1,351 104

Total 1,351 104

144


This item includes the expenses on transportation, insurance and customs clearance of preciousmetals taken out of Russia and the realised differences that arose from buying (selling) precious met�als on the domestic and foreign markets at prices higher (lower) than the Bank of Russia discountprices.

The increase under this item is due to the rise in the price of precious metals resulting from the factthat on January 1, 2007, the Bank of Russia began to revalue the precious metal balances at discountprices and record the revaluation results to capital accounts (Statement of Bank of Russia reservesand funds, Table Capital, funds and profit allocation).

21. NET EXPENSES ON PROVISIONS/INCOME FROM THE RECOVERY OF PROVISIONS

(million rubles)

2007 2006

Increase in provisions for securities 12,737 —

Increase in provisions for foreign exchange operations (10,103) (1,926)

Decrease in provisions for promissory notes acquired fromcredit institutions and for credit institutions’ debt on other operations (74) (79)

Increase in provisions for Bank of Russia compensation paymentsto depositors of bankrupt banks 13 363

Decrease (increase) in provisions for other active operations (3) 285

Total 2,570 (1,357)

The increase in provisions for securities is due to the creation of provisions for individual federalloan bond issues in the Bank of Russia trading book. The provision was created according to the Bankof Russia provisioning procedure at 20% of the excess of the balance sheet value of the bonds overtheir possible selling price (Note 6).

In 2007, the Bank of Russia made a provision of 7,038 million rubles (no such provision was madein 2006) to secure its pension obligations as of December 31, 2007, according to the indicative fore�cast made by a certified actuary as part of the actuarial valuation report for 2006. In line with thedecision of its Board of Directors, the Bank of Russia used the provision to increase its supplementarypension fund (Note 11). For the purposes of these financial statements, provision expenses have beenadjusted for this sum and shown in Note 23 Other operating expenses.

The decrease in provisions the Bank of Russia created earlier for foreign exchange operations isdue to the settlement or partial repayment of debt to the Bank of Russia owed by credit institutionsand the change in the official exchange rate of the ruble against foreign currencies.

The decrease in provisions for promissory notes acquired from credit institutions and for creditinstitutions’ debt on other operations is due to the repayment of debt to the Bank of Russia by creditinstitutions under the promissory note assignment agreements.

Provisions for Bank of Russia compensation payments to depositors of bankrupt banks were madepursuant to the Federal Law on Bank of Russia Payments on Household Deposits with BankruptBanks Uncovered by the Compulsory Deposit Insurance System, Bank of Russia provisioning regula�tions and Bank of Russia Board of Directors’ decisions.

145


22. EXPENSES ON NEGATIVE REVALUATION OF FOREIGN CURRENCY

(million rubles)

2007 2006

Expenses on negative revaluation of foreign currency 165,740 88,624

Total 165,740 88,624

The accrued negative unrealised exchange rate differences in 2007 aggregated 165,740 millionrubles and by decision of the Bank of Russia Board of Directors they were reimbursed and recorded toBank of Russia expenses.

In 2006, the negative unrealised exchange rate differences aggregated 214,414 million rubles andthey were reimbursed at the expense of the previously accrued exchange rate differences of 125,790 mil�lion rubles recorded to Capital, while the remaining 88,624 million rubles were recorded to Bank ofRussia expenses.

23. OTHER OPERATING EXPENSES

(million rubles)

2007 2006

Expenses on replenishment of supplementary pension funds 10,778 16,588

Depreciation deductions (Note 7) 8,491 8,071

Security expenses 2,891 2,679

Expenses on IT maintenance 2,869 2,490

Repair expenses 2,663 2,528

Expenses on delivery of bank documents and valuables 2,116 1,888

Expenses on maintenance of buildings 1,674 1,502

Taxes and duties paid 1,432 1,354

Postage, telegraph and telephone expenses and expenseson renting communication lines and channels 1,065 1,111

Net realised exchange rate differences 704 52

Expenses on foreign exchange operations 191 91

Other 5,418 4,378

Total 40,292 42,732

Additional funds were allocated to supplementary pension funds for Bank of Russia employees onthe basis of the actuarial valuation report on the Bank of Russia pension obligations as of December31, 2007, and pension expenses for 2007, made by an outside certified actuary. As of January 1,2008, the Bank of Russia added to its supplementary pension funds a provision of 7,038 millionrubles made in 2007 from Bank of Russia expenses to secure its obligations to the participants in theBank of Russia Pension Plan and 3,740 million rubles in Bank of Russia expenses (Notes 11 and 21).For the purposes of these financial statements, the expenses on the provision for the Bank of Russia

146


pension obligations as of December 31, 2007, according to the indicative forecast made by a certifiedactuary as part of the actuarial valuation report for 2006, are shown in this Note as Expenses on

replenishment of supplementary pension funds.

Net realised exchange rate differences mainly reflect the expenses involved in the purchase andsale of foreign currency by the Bank of Russia through transactions conducted on the domestic mar�ket as part of the monetary policy. Net negative realised exchange rate differences resulted fromexchange rate fluctuations on world financial markets.

24. PERSONNEL COSTS

For explanation, see the Statement of Bank of Russia Personnel Costs.

25. OFF�BALANCE SHEET CLAIMS AND OBLIGATIONS ACCOUNTS

Claims and obligations on forward operations recorded in off�balance sheet accounts comprise:

(million rubles)

7002 6002

smialC smialC smialC smialC smialC snoitagilbO snoitagilbO snoitagilbO snoitagilbO snoitagilbO smialC smialC smialC smialC smialC snoitagilbO snoitagilbO snoitagilbO snoitagilbO snoitagilbO

ycnerrucngieroffoyreviledrofsmialCsnoitcasnarttopsni 984,31 — — —

ycnerrucngierofreviledotsnoitagilbOsnoitcasnarttopsni — )434,31( — —

ycnerrucngieroffoyreviledrofsmialC 274,8 — 273,81 —

ycnerrucngierofreviledotsnoitagilbO — )096,5( — )523,51(

slatemsuoicerpreviledotsnoitagilbO — )645,2( — )520,3(

seitirucesfoyreviledrofsmialC — — 470,301 —

sdnufelburreviledotsnoitagilbO — — — )432,401(

trapesrevernisdnuffoyreviledrofsmialCsnoitcasnartoperfo 722,51 — 617,72 —

trapesreverniseitirucesllesotsnoitagilbOsnoitcasnartoperfo — )226,51( — )414,82(

secnereffidetaregnahcxedesilaernU 401 — 638,1 —

latoT 292,73 )292,73( 899,051 )899,051(

The increase in Claims for delivery of foreign currency in spot transactions and Obligations to

deliver foreign currency in spot transactions is due to the conclusion of conversion spot transactionson the international financial market.

The decrease in Claims for delivery of foreign currency, Obligations to deliver foreign currency

and Obligations to deliver precious metals is due to the reduction in the volume of conversion forwardtransactions on the international financial market and precious metal forward transactions (options).

The decrease in Claims for delivery of securities and Obligations to deliver ruble funds is due to areduction in OBR sales with an obligation to repurchase and the absence of OBR placements with anobligation to repurchase at the end of the reporting year.

147


The decrease in Claims for delivery of funds in reverse part of repo transactions and Obligations

to sell securities in reverse part of repo transactions is due to the reduction in repo transaction vol�umes (the purchase of Russian and other debt instruments with an obligation to resell) on the domes�tic securities market at the end of the year.

Other claims and obligations recorded in off�balance sheet accounts comprise:(million rubles)

2007 2006

Securities accepted as collateral for loans extended 1,907,531 2,091,168

Securities transferred as collateral for loans received 171,085 78,345

Guarantees and sureties received by the Bank of Russia 25,441 7,686

Open credit lines 319 319

Unused credit lines — 1

Securities accepted as collateral for the loans extended are mostly foreign securities received bythe Bank of Russia through repo transactions with non�residents and recorded in off�balance sheetaccounts at their nominal value. The corresponding funds placed with non�residents in repo transac�tions are shown in Note 4. The decrease is due to a reduction in the overall volume of foreign securi�ties received by the Bank of Russia in open securities purchase transactions with an obligation toresell conducted on international financial markets.

Securities transferred as collateral for loans received are foreign securities transferred by the Bankof Russia in repo transactions with non�residents and recorded in off�balance sheet accounts at theirnominal value.

Guarantees and sureties received by the Bank of Russia are the surety agreements accepted assecurity for the loans extended.

At the request of the supervisory authorities of the United Kingdom and Singapore, the Bank ofRussia in 2005 confirmed for three years the validity of the letters of comfort (guarantees) issued tothem earlier in respect to the London�based Moscow Narodny Bank (VTB Bank Europe).

26. EFFECT OF GLOBAL FINANCIAL MARKET TURMOIL ON BANK OF RUSSIA

MANAGEMENT OF FOREIGN EXCHANGE RESERVES

The US mortgage market turmoil in 2007 increased the credit risks involved in the management offoreign exchange reserves by the Bank of Russia. To control the credit risks involved in investingforeign exchange reserves and bearing in mind the evolving situation, the Bank of Russia took thefollowing measures:— lowered credit limits for Bank of Russia counterparties in operations on foreign markets;— reduced the number of Bank of Russia counterparties in deposit operations on foreign markets;— reduced maximum deposit maturity periods;— reduced the maximum share of deposits in Bank of Russia reserves;— reduced investments in securities of individual US federal mortgage agencies;— shortened the list of US federal mortgage securities that may be included in reserves to a specified

term to redemption.Consequently, during the reporting year the Bank of Russia took steps to reduce to a minimum the

adverse impact of world capital market instability on the value of its foreign exchange reserves andkeep them safe, liquid and profitable.

148


27. POST�ACCOUNTING DATE EVENTS

The taxes and duties paid from profit for 2007 upon the final settlement for the accounting taxperiod, the transfer to the federal budget and allocation of the actual profit for 2007 that remainedafter the payment of taxes and duties under the Tax Code of the Russian Federation, and the transfersto the federal budget under Article 26 of the Federal Law on the Central Bank of the Russian Federa�tion (Bank of Russia) are recorded in the Bank of Russia accounting records in 2008.

Taxes and duties paid from Bank of Russia profit for 2007 on March 27, 2008, upon the finalsettlement totalled 2 million rubles (Statement of Profit and its Allocation, Table Capital, funds and

profit allocation).Pursuant to Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank of

Russia), the Bank of Russia transferred 12,225 million rubles to the federal budget (Statement ofProfit and its Allocation, Table Capital, funds and profit allocation).

From the profit retained by the Bank of Russia, the Bank of Russia Board of Directors decided totransfer 11,736 million rubles to the Reserve Fund and 489 million rubles to the Social Fund (State�ment of Profit and its Allocation, Statement of Bank of Russia Reserves and Funds, Table Capital,

funds and profit allocation).The amendments made to Regulation No. 66�P, approved by the Bank of Russia Board of Direc�

tors and endorsed by the National Banking Board, which came into force on January 1, 2008, changedthe Bank of Russia accounting policy in respect to the evaluation of and accounting for securities andaccounting for income and expenses.

Due to the evaluation by the Bank of Russia of some OFZ issues in its trading book at current(fair) value, 12,737 million rubles of provisions were recovered to income on March 31, 2008. Thesesecurities were classified as available for sale and the year�end result of their positive revaluation is tobe recorded to Bank of Russia capital, whereas the result of their negative revaluation is to be re�corded to Bank of Russia expenses.

In compliance with Russian Government resolutions, the Bank of Russia executed bank accountagreements with the Federal Treasury, whereby the Bank of Russia opened foreign currency ac�counts for the Reserve Fund and the National Welfare Fund, to which the balances of the StabilisationFund accounts were transferred on January 30, 2008. The Stabilisation Fund accounts were closedon February 4, 2008.

149


STATEMENT OF PROFIT AND ITS ALLOCATION

(million rubles)

2007 2006

1. Actual profit for the year 24,565 39,1972. Taxes and duties paid from Bank of Russia profit under

the Tax Code of the Russian Federation, total: 115 70of which:— as advance payments in the reporting year 113 63— upon the final settlement for the reporting year* 2 7

3. Profit after payment of taxes and duties underthe Tax Code of the Russian Federation 24,450 39,127

4. To be transferred to federal budget under Article 26of the Federal Law on the Central Bankof the Russian Federation (Bank of Russia)* 12,225 19,564

5. Retained profit, total* 12,225 19,563of which:— transferred to Reserve Fund 11,736 18,780— transferred to Social Fund 489 783

Under Article 11 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), Bank of Russia profit for the year is determined as the difference between total income frombanking operations and transactions conducted under Article 46 of this Federal Law and the expensesinvolved in the fulfilment by the Bank of Russia of the functions assigned to it by Article 4 of the samelaw.

The Bank of Russia financial result for 2007 was mostly due to the continued rapid expansion ofgold and foreign exchange reserves, the further strengthening of the ruble and the banking sectorliquidity regulation operations conducted by the Bank of Russia as part of the monetary policy. In thissituation, growth in income from gold and foreign exchange reserve placements was accompanied bya significant increase in the negative unrealised exchange rate differences from the revaluation ofBank of Russia foreign currency assets and liabilities, which were reimbursed entirely from Bank ofRussia expenses due to the lack of accrued exchange rate differences. These factors and the increasedexpenses involved in operations conducted by the Bank of Russia using the instruments of monetaryregulation, caused the reduction of Bank of Russia profit for the year as compared with Bank ofRussia profit for the previous reporting year.

Bank of Russia profit for the year is allocated in line with the procedure established by Article 26of the Federal Law on the Central Bank of the Russian Federation (Bank of Russia), which stipulatesthat after the Bank of Russia annual financial statements are approved by the Bank of Russia Boardof Directors, the Bank of Russia transfers to the federal budget 50% of its actual profit for the yearthat remains after the payment of taxes and duties under the Tax Code of the Russian Federation.Bank of Russia retained profit is transferred by its Board of Directors to various reserves and funds.

* Taxes and duties paid from reporting year profit under the Tax Code of the Russian Federation upon the final

settlement for the accounting tax period and the allocation of actual profit for the year that remains after the pay�

ment of taxes and duties under the Tax Code of the Russian Federation are accounted for in the Bank of Russia

balance sheet in the current year (Note 27 Post�accounting date events).

150


STATEMENT OF BANK OF RUSSIA RESERVES AND FUNDS

(million rubles)

evreseR

dnuf

laicoS

dnuf

deurccA

suoicerp

latem

noitaulaver

htworG

ytreporpni

retfaeulav

noitaulaver

rehtO

sdnuf latoT

gninnigebfosaecnalaBevisulcniraeygnitroperehtfo

noitacollaoteuddeviecersdnuffognidecerpraeyehtroftiforpfo

raeygnitropereht 651,88 305,4 — 569,7 59 917,001

sdnufotderrefsnarTsecruosrehtomorf 137,953 3 437,953

desusdnufdnasevreseR )683,1( )61( )204,1(

ehtfogninnigebfosaecnalaBraeygnitroperehtgniwollofraey 651,88 711,3 137,953 569,7 28 150,954

raeygnitropermorfderrefsnarT*tiforp 637,11 984 — — — 522,21

deviecersdnuffoevisulcnilatoTraeygnitroperfonoitacollaoteud

tiforp 298,99 606,3 137,953 569,7 28 672,174

* The allocation of actual profit for the year retained after the payment of taxes and duties under the Tax Code of

the Russian Federation and the transfers to the federal budget under Article 26 of the Federal Law on the Central

Bank of the Russian Federation (Bank of Russia) are recorded in the Bank of Russia accounting records in the

current year (Note 27 Post�accounting date events).

Pursuant to Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), after the approval of its annual financial statements by the Board of Directors the Bank ofRussia transfers to reserves and various funds profit that remains at its disposal after the payment oftaxes and duties under the Tax Code of the Russian Federation. The procedure for allocating Bank ofRussia retained profit is established by the Bank of Russia Regulation on the Procedure for AllocatingProfit Retained by the Bank of Russia, approved by the National Banking Board on April 9, 2003.

Pursuant to the Bank of Russia Regulation on the Procedure for Creating and Using the Bank ofRussia Reserve Fund, the Bank of Russia forms the reserve fund with the objective of ensuring stabil�ity for the implementation of the functions assigned to it by law. The reserve fund is formed fromBank of Russia profit. By decision of the Bank of Russia Board of Directors, the Bank of Russia mayalso transfer to the reserve fund money from other funds and reserves that are part of Bank of Russiaequity capital.

In line with the procedure for allocating profit retained by the Bank of Russia and the decision ofthe Bank of Russia Board of Directors, 11,736 million rubles were allocated to the reserve fund fromBank of Russia retained profit for 2007 (18,780 million rubles in 2006).

The social fund was set up to provide for the social needs of Bank of Russia employees and, in somecases, pensioners registered with the Bank of Russia.

Money from the Bank of Russia social fund, which is formed from Bank of Russia retained profit,goes mainly to make one�off payments to Bank of Russia employees to meet their social needs.

The procedure for creating and spending the social fund is established by the Bank of Russia Regu�lation on the Creation and Use of the Social Fund of the Central Bank of the Russian Federation.

151


In line with the procedure for allocating Bank of Russia retained profit and the decision of theBank of Russia Board of Directors, 489 million rubles, or 4% of Bank of Russia retained profit for2007, were transferred to the social fund in 2007 (783 million rubles in 2006).

According to the decision of the Bank of Russia Board of Directors, starting from January 1, 2007,precious metals are accounted for at discount price and revalued as the discount prices of preciousmetals are set. The excess of the positive unrealised differences over the negative unrealised differ�ences in 2007 created an accrued precious metal revaluation of 359,731 million rubles, which wasrecorded to the balance sheet account Accrued precious metal revaluation as part of Bank of Russiacapital.

The fixed asset revaluation fund is the increase in the value of property due to the revaluation offixed assets conducted in compliance with the Russian Government resolution in 1992, 1994, 1995,1996 and 1998.

152


STATEMENT OF BANK OF RUSSIA MANAGEMENT OF SECURITIES

AND STAKEHOLDINGS IN THE CAPITAL OF COMPANIES

CONSTITUTING BANK OF RUSSIA PROPERTY

BANK OF RUSSIA INVESTMENTS IN DEBT OBLIGATIONS AND PROMISSORY NOTES

(million rubles)

2007 2006

Foreign issuers’ foreign currency debt obligations,of which:

USA and Canada debt obligations 3,634,160 1,550,267

— denominated in US dollars 3,630,562 1,546,769

— denominated in euros 3,598 3,498

EU debt obligations 2,970,215 1,242,092

— denominated in US dollars 63,552 30,237

— denominated in euros 2,344,150 826,088

— denominated in British pounds 562,513 385,767

Debt obligations issued by international organisations 80,443 31,541


— denominated in euros 49,764 21,938

Subtotal 6,684,818 2,823,900

Russian debt obligations and foreign debt obligations issuedin Russia, of which:

Federal government debt obligations 365,509 272,614

— denominated in rubles 241,440 191,905


Other Russian debt obligations 2,345 1,178

— denominated in rubles 2,345 1,178

Foreign debt obligations issued in Russia 1,461 —

— denominated in rubles 1,461 —

Credit institutions’ promissory notes 27 27

Subtotal 369,342 273,819

Total 7,054,160 3,097,719

Foreign securities are mostly US treasuries and government debt obligations issued by Germany,France, Britain, Sweden, Belgium, the Netherlands, Austria, Spain, Finland and Ireland, debt secu�rities issued by extra�budgetary funds and federal agencies of these countries and international finan�cial organisations and covered securities of German credit institutions.

153


Growth under this item was due to the increase in investments in foreign securities as a result ofthe expansion of foreign exchange reserves.

In 2007, the Bank of Russia continued to actively use market instruments of monetary regulation.Depending on the monetary situation on the domestic market, it either sterilised excess liquidity orsupplied liquidity to credit institutions, using for this purpose government securities, Bank of Russiabonds and debt obligations of other issuers on the securities market. Specifically, the Bank of Russia— bought government bonds for its trading book;— sold government bonds from its trading book without an obligation to repurchase;— bought securities with an obligation to resell for a term of 1 day and 7 days (repo operations);— bought and sold Bank of Russia bonds placed with an obligation to repurchase by Bank of Russia

public irrevocable offer and placed without an obligation to repurchase.Federal government debt obligations denominated in rubles are represented by federal loan bonds

(OFZ).The Russian government debt obligations denominated in US dollars are the internal and external

foreign currency loan bonds.The principal factor of growth in the balance recorded under this item is the purchase of Russian

government external foreign currency loan bonds on the domestic securities market and through repotransactions with residents with an obligation to resell.

Debt obligations recorded as Other Russian debt obligations are ruble�denominated bonds issuedby regional governments and other Russian issuers and acquired by the Bank of Russia through repotransactions with residents with an obligation to resell.

Foreign debt obligations issued in Russia are bonds issued by the European Bank for Reconstruc�tion and Development and acquired by the Bank of Russia through repo transactions with residentswith an obligation to resell.

154


BANK OF RUSSIA INVESTMENTS IN THE AUTHORISED CAPITAL

OF BANKS AND OTHER ORGANISATIONS

(million rubles)

20072007200720072007 20062006200620062006

% share% share% share% share% share % share% share% share% share% share

in authorisedin authorisedin authorisedin authorisedin authorised in authorisedin authorisedin authorisedin authorisedin authorised

Balance sheetBalance sheetBalance sheetBalance sheetBalance sheet capitalcapitalcapitalcapitalcapital Balance sheetBalance sheetBalance sheetBalance sheetBalance sheet capitalcapitalcapitalcapitalcapital

TitleTitleTitleTitleTitle valuevaluevaluevaluevalue (at par)(at par)(at par)(at par)(at par) valuevaluevaluevaluevalue (at par)(at par)(at par)(at par)(at par)

Investments in resident shares, 84,307 4,866of which:

Sberbank 84,004 57.58 4,563 60.57

Moscow Interbank Currency Exchange(MICEX) 300 29.79 300 28.76

St Petersburg Currency Exchange(SPCEX) 3 8.90 3 8.90

Investments in non�resident shares, 1,063 1,131of which:

Bank for International Settlements, Basel 1,062 0.59 1,130 0.59

Society for Worldwide Interbank FinancialTelecommunications (S.W.I.F.T), Belgium 0.579 0.006 0.559 0.006

Other investments in resident capital, 25 25of which:

National Depository Centre (NDC),a Moscow�based non�profit partnership 25 49.00 25 49.00

Other investments, 10 10of which:

Interstate Bank 10 50.00 10 50.00

The reduction of the Bank of Russia stake in the authorised capital of Sberbank is due to theacquisition by the Bank of Russia of Sberbank ordinary shares of an additional issue in the amountthat was not enough to keep the Bank of Russia stake in Sberbank unchanged.

The expansion of the Bank of Russia stake in the authorised capital of MICEX is due to a reductionin the capital of the exchange as a result of the redemption of shares owned by MICEX.

155


STATEMENT OF BANK OF RUSSIA PERSONNEL COSTS

(million rubles)

Items of expenditure 2006 2007

Remuneration 35,437 29,732

Salary and other benefit accruals 5,835 5,344

Other benefits 3,548 2,358

Total Bank of Russia personnel costs 44,820 37,434

Bank of Russia personnel costs in 2007 increased by 7,386 million rubles, or 19.7% year on year;of this, remuneration increased by 5,705 million rubles, or 19.2%, salary accruals — by 491 millionrubles, or 9.2%, and other employee benefits — by 1,190 million rubles, or 50.5%.

Remuneration expenses comprise: wages and salaries, seniority bonuses, hardship bonus paymentsto employees working in the Extreme North and similar regions under the applicable legislation, otherbonus payments established by Bank of Russia regulations, annual paid leaves and study leaves, monthlybonus payments, year�end bonus payments and other benefits.

Other benefits provided to Bank of Russia employees under the applicable legislation are as fol�lows: holiday and one�off emergency allowances, compensation of holiday travel expenses to employ�ees working in the Extreme North and similar regions and non�working members of their families;compensation of travel expenses to employees working in the Extreme North and similar regions andmembers of their families moving for permanent residence elsewhere upon the expiry of their labourcontract or due to retirement; benefits for employees living or working in regions affected by theChernobyl nuclear power plant disaster; benefits for employees taking leave to care after a child untilthe age of three, and allowances for temporary disability due to disease or injury paid during the firsttwo days of disability.

The number of Bank of Russia employees decreased by 4,443, or 5.7%, in 2007 and as of January1, 2008, it stood at 72,942. The staff cutback is chiefly due to the implementation of measures tooptimise the Bank of Russia structure, including the closure of 140 cash settlement centres.

The average monthly income of a Bank of Russia employee in 2007 was 44,441 rubles (35,459rubles in 2006).

The average unified social tax rate was 16.3% in 2007 (17.8% in 2006). Deductions to the SocialInsurance Fund for compulsory social insurance against employment injury and occupational diseasewere made at the established rate of 0.2%.

156


STATEMENT OF CAPITAL INVESTMENT BUDGET PERFORMANCE

(million rubles)

Actual ActualApproved amount amount

Capital investment for 2007 in 2007 in 2006

Capital investment 13,982 10,632 10,416

Capital investment in fixed assets, 11,981 10,301 10,048of which:

— capital investment in information technology 5,922 5,187 4,708

— capital investment in construction (reconstruction)and maintenance of Bank of Russia facilities(except cash turnover management) 3,293 2,990 3,314

— capital investment relating to cash turnovermanagement 1,645 1,056 1,015

— capital investment relating to securityand protection of Bank of Russia facilities 1,121 1,068 1,011

Capital investment in intangible assets 416 331 368

Centralised capital investment reserve 1,585 — —

Other capital expenses 519 385 594

Total capital expenses 14,501 11,017 11,010

Capital investment in information technology and construction (reconstruction) and maintenanceof Bank of Russia facilities account for the largest part of Bank of Russia capital investment (48.8%and 28.1%, respectively). Capital investment related to cash turnover management and capital in�vestment related to security and the protection of Bank of Russia facilities account for 10.0% each,and capital investment in intangible assets — for 3.1%.

Capital investment in information technology in 2007 increased by 479 million rubles, or 10.2%,year on year and went to finance the maintenance of accounting operations systems; the transfer ofBank of Russia regional branches to the collective data processing system; the upgrading of collectivedata processing centres; the development of the automated banking electronic speed payment system;security and information safety; the replacement of obsolete computer and office equipment and themaintenance and modernisation of the Bank of Russia technical infrastructure.

Capital investment in construction (reconstruction) and maintenance of Bank of Russia facilities,excluding cash turnover management, comprises expenditures on the construction (reconstruction)of office buildings and other structures and the purchase of large�size appliances, equipment, furni�ture and transport vehicles. Compared to 2006, these expenses decreased by 324 million rubles, or9.8%.

In 2007, the Bank of Russia financed 119 construction (reconstruction) projects, of which24 projects were continued from the previous years, 47 were launched anew and 48 were in theblueprint stage.

Large�size appliances, equipment and furniture were purchased to fit out capital repair projects,replace expired�date equipment, appliances and furniture and install air conditioning and fire extin�guishing systems in the offices equipped with information and telecommunications systems.

157


Capital investment related to cash turnover management in 2007 increased by 41 million rubles,or 4.0%, and comprised expenses on the construction and reconstruction of money vaults and cashcentres (10 projects in all, of which four were continued from the previous years, two were launchedfrom scratch and four were in the blueprint stage), the replacement of obsolete banknote countingand sorting machines, the purchase of facilities and equipment to automate cash operations and equipvaluables vaults with standard demountable equipment and special�purpose transport vehicles, andthe construction of special�purpose railway cars to carry reserves.

Capital investment related to security and the protection of Bank of Russia facilities increased by57 million rubles, or 5.6%, in 2007 year on year, and went to replace expired�date fire alarm devicesand to develop new security and surveillance systems.

Capital investment in intangible assets decreased by 37 million rubles, or 10.1%, in 2007, as com�pared to 2006, and was used to buy and develop new software products for IT systems and to providesecurity and safety of information that constitutes the intellectual property of the Bank of Russia.

Other capital expenses account for expenses to purchase software products (and the rights to usethem) unrelated to intangible assets to support Bank of Russia activities and licences, certificates andpermits with terms longer than one year.

158


The company is an authorised user of PricewaterhouseCoopers name and trademark.

Closed Joint�Stock CompanyPricewaterhouseCoopers Audit(ZAO PvK Audit)115054, Moscow,Kosmodamianskaya Embk. 52, Bld. 5Telephone +7 (495) 967 6000,Fax +7 (495) 967 6001

AUDITOR’S REPORT

on the Bank of Russia Annual Financial Statements as of January 1, 2008

To the Management of the Central Bank of the Russian Federation:

1. We have audited the attached Annual Financial Statements of the Central Bank of the RussianFederation (hereinafter referred to as the Bank of Russia) for the period from January 1, 2007,through December 31, 2007. Pursuant to Article 25 of Federal Law No. 86�FZ, dated July 10,2002, ‘On the Central Bank of the Russian Federation (Bank of Russia),’ the Bank of RussiaAnnual Financial Statements denote: the annual balance sheet, profit and loss account, includingthe statement of profit and its allocation, the statement of Bank of Russia reserves and funds, thestatement of Bank of Russia management of securities and stakeholdings in the capital of compa�nies constituting Bank of Russia property, the statement of Bank of Russia personnel costs and thestatement of capital investment budget performance (hereinafter all these statements are referredto as the Annual Financial Statements). The Annual Financial Statements have been prepared byBank of Russia management on the basis of the accounting reports compiled in compliance withthe requirements of Russian Federation legislation and Bank of Russia regulations. The AnnualFinancial Statements prepared on this basis differ significantly from the financial statements com�piled according to International Financial Reporting Standards, especially in respect to the evalu�ation of assets and capital and recognition of liabilities.

2. Responsibility for compiling and presenting the Annual Financial Statements is borne by Bank ofRussia management. Our duty is to express our opinion, based on the audit we have conducted,regarding the credibility of these Annual Financial Statements in all material respects and compli�ance of the accounting procedure with the requirements of Russian Federation legislation andBank of Russia regulations in all material respects for the purposes of compiling the Annual Finan�cial Statements.

159

A U D I T O R ’ S R E P O R T

3. We have conducted this audit in compliance with:

● the Federal Law on Auditing;

● the Federal Law on the Central Bank of the Russian Federation (Bank of Russia);

● the Federal Audit Rules (Standards);

● Bank of Russia regulations;

● international audit standards.

We planned and conducted our audit in compliance with the requirements of Russian legislationso as to be able to state with a fair degree of certainty that the Annual Financial Statements do notcontain any material distortions. Pursuant to Russian legislation, our audit has been conducted ona selective basis and included an examination by testing proof that confirmed the numerical indi�cators and disclosure of information in the Annual Financial Statements about business activitiesof the Bank of Russia, an assessment of compliance with the accounting principles and rules usedin preparing the Annual Financial Statements, an examination of the major estimated indicatorsreceived by Bank of Russia management in the course of compiling the Annual Financial State�ments, and also an assessment of the general presentation of the Annual Financial Statements. Webelieve that allowing for the limitation placed on the scope of our work, described in paragraph 4below, the audit we have conducted in compliance with the requirements of Russian Federationlegislation gives us sufficient reason to express our opinion regarding the credibility of the AnnualFinancial Statements in all material respects and the compliance of the accounting procedure withthe requirements of Russian Federation legislation and Bank of Russia regulations in all materialrespects for the purposes of compiling the Annual Financial Statements.

4. The scope of our work and the auditor’s report were limited in respect to some balance sheetaccounts and operations and profit and loss account, access to which was restricted by the provi�sions of Russian Federation Law No. 5485�1, dated July 21, 1993, ‘On State Secrecy’ (with sub�sequent amendments). Under Article 25 of the Federal Law on the Central Bank of the RussianFederation (Bank of Russia), the credibility of data cited below, which are included in the bal�ance sheet and profit and loss account as part of the Bank of Russia Annual Financial Statementsas of January 1, 2008, was confirmed by the Audit Chamber of the Russian Federation in itsStatement of April 29, 2008, on the Results of the Examination of the Accounts and Operations ofthe Central Bank of the Russian Federation for 2007 Covered by Russian Federation Law No. 5485�1, Dated July 21, 1993, ‘On State Secrecy’.

These accounts and operations within the Bank of Russia Annual Financial Statements as of Janu�ary 1, 2008, comprise:

● assets totalling 88,920 million rubles;

● liabilities totalling 1,307 million rubles;

● income totalling 668 million rubles;

● expenses totalling 15,564 million rubles; and

● precious metal revaluation (positive differences) totalling 71,978 million rubles.

160


5. We believe that, leaving aside any adjustments that might have been necessary if there were nolimitations to the scope of our work indicated above in paragraph 4 of this auditor’s report, theseBank of Russia Annual Financial Statements as of January 1, 2008, reflect truly and fairly in allmaterial respects the financial situation of the Bank of Russia as of January 1, 2008, and thefinancial results of its activity for the period from January 1, 2007, through December 31, 2007,pursuant to the Federal Law on the Central Bank of the Russian Federation (Bank of Russia), theFederal Law on Accounting and Regulation No. 66�P, dated January 1, 2006, on AccountingRules of the Central Bank of the Russian Federation (Bank of Russia).

May 13, 2008

Director of Closed Joint�Stock CompanyPricewaterhouseCoopers Audit Y.V. Filippova

Auditor T.A. Klyuchkina(Certificate of Competence No. K 008368issued on November 12, 2003, for an indefinite term)

161

A U D I T O R ’ S R E P O R T

STATEMENT

on the Results of the Examination of the Accounts and Operations of the Central Bank

of the Russian Federation for 2007 Covered by the Russian Federation State Secrecy Law

The Audit Chamber of the Russian Federation has examined the accounts and operations of the

Central Bank of the Russian Federation for 2007 covered by the Russian Federation State Secrecy

Law in line with the work schedule of the Audit Chamber of the Russian Federation for 2008 and

pursuant to Article 25 of the Federal Law on the Central Bank of the Russian Federation (Bank of

Russia).

Responsibility for compiling and presenting the annual financial statements and accounting re�

ports is borne by the management of the Central Bank of the Russian Federation. The duty of the

Audit Chamber of the Russian Federation is to draw up a statement upon the examination of the

accounts and operations of the Central Bank of the Russian Federation covered by the Russian

Federation State Secrecy Law on the credibility in all material respects of these statements and the

compliance of the accounting procedure with Russian Federation legislation on the basis of this

examination.

Responsibility for including information in the category of data covered by the Russian Federation

State Secrecy Law and for dividing the authority of the Audit Chamber of the Russian Federation and

the Bank of Russia Auditor of the Bank of Russia Annual Financial Statements for 2007 is borne by

the management of the Central Bank of the Russian Federation.

The Audit Chamber of the Russian Federation conducted the examination of accounts and opera�

tions of the Central Bank of the Russian Federation for 2007 covered by the Russian Federation State

Secrecy Law so as to become sufficiently convinced that the Bank of Russia consolidated annual bal�

ance sheet (in respect to sub�accounts and off�balance sheet accounts) as of January 1, 2008, con�

solidated profit and loss account for 2007 and statements that are part of the Bank of Russia Annual

T H E A U D I T C H A M B E R O F T H E R U S S I A N F E D E R A T I O N119992, Moscow, GSP�2, Zubovskaya St 2 Tel: 986�05�09, fax: 986�09�52

April 29, 2008 No. 06�83/06�03

S.M. Ignаtiev,

Chairman,Central Bank of theRussian Federation

162


Financial Statements for 2007 (in respect to the data that falls within the Audit Chamber compe�

tence) do not contain any significant errors and duly reflect in all material respects Bank of Russia

assets and liabilities as of January 1, 2008, Bank of Russia income and expenses for 2007 in compli�

ance with the Bank of Russia accounting policy.

Having examined the accounts and operations of the Central Bank of the Russian Federation for

2007 covered by the Russian Federation State Secrecy Law, the Audit Chamber of the Russian Fed�

eration confirms (in respect to the data that falls within its competence) the following:

the Bank of Russia annual balance sheet as of January 1, 2008 (balance sheet assets totalling

88,920 million rubles and balance sheet liabilities totalling 1,307 million rubles), profit and loss

accounts for 2007 (income totalling 668 million rubles and expenses totalling 15,564 million rubles)

and other statements included in the Bank of Russia Annual Financial Statements for 2007;

the precious metal revaluation (positive differences) for the reporting year totalling 71,978 mil�

lion rubles as of January 1, 2008;

the consolidated annual balance sheet as of January 1, 2008 (in respect to sub�accounts and off�

balance sheet accounts) and consolidated profit and loss account for 2007;

information on total Bank of Russia notes and coins of the 1997 issue (with the exception of coins

containing precious metals and issued to mark anniversaries and other occasions) which should be in

circulation as of January 1, 2008.

According to the accounting data of the Central Bank of the Russian Federation, a total of

4,124,236.3 million rubles of Bank of Russia notes and coins of the 1997 issue should be in circula�

tion as of January 1, 2008 (with the exception of coins containing precious metals and issued to mark

anniversaries and other occasions).

In the period from January 1, 2007, through December 31, 2007, the Bank of Russia put into

circulation banknotes and coins (with the exception of coins containing precious metals and issued to

mark anniversaries and other occasions) totalling 5,513,563.8 million rubles’ worth and withdrew

from circulation Bank of Russia notes and coins (with the exception of coins containing precious

metals and issued to mark anniversaries and other occasions) totalling 4,455,638.3 million rubles’

worth.

Consequently, in the period under review the amount of Bank of Russia notes and coins (with the

exception of coins containing precious metals and issued to mark anniversaries and other occasions)

in circulation increased by 1,057,925.5 million rubles.

This Statement of the Audit Chamber of the Russian Federation on the results of the examination

of accounts and operations of the Central Bank of the Russian Federation for 2007 covered by the

Russian Federation State Secrecy Law has been approved by the Collegium of the Audit Chamber of

the Russian Federation (Protocol No. 17K (594) of April 25, 2008).

Auditor of the Audit Chamber

of the Russian Federation V.P. Goreglyad

IVADDENDA

164


IV.1. PRINCIPAL MEASURES TAKEN BY THE BANK OF RUSSIA

TO IMPLEMENT THE SINGLE STATE MONETARY POLICY IN 2007

MONETARY POLICY INSTRUMENTS AND MEASURES

EQUIRED RESERVES. For the purpose ofimproving the legal basis for regulatingthe required reserves and in connection

with the Bank of Russia decisions to change thereserve requirements for credit institutions, theBank of Russia issued the following documents:— Ordinance No. 1826�U, dated May 14, 2007,

‘On Setting Bank of Russia Required ReserveRatios (Reserve Requirements)’;

— Ordinance No. 1827�U, dated May 14, 2007,‘On Amending Bank of Russia RegulationNo. 255�P, Dated March 29, 2004, on theRequired Reserves of Credit Institutions’;

— Ordinance No. 1891�U, dated October 10,2007, ‘On Setting Bank of Russia RequiredReserve Ratios (Reserve Requirements)’;

— Ordinance No. 1951�U, dated December 17,2007,’On Amending Bank of Russia Regula�tion No. 255�P, Dated March 29, 2004, onthe Required Reserves of Credit Institutions’.

INTEREST RATES. As of the beginning of 2007,the Bank of Russia refinance rate on overnightloans was 11.0% p.a. The Bank of Russia Boardof Directors cut this rate to 10.5% p.a. effectivefrom January 29, 2007, and to 10.0% p.a. effec�tive from June 19, 2007 (Bank of Russia Ordi�nance No. 1788�U, dated January 26, 2007, andOrdinance No. 1839�U, dated June 18, 2007).

The Bank of Russia Board of Directors set thefollowing maximum deposit auction cut�off rates:— 9.0% p.a. on 4�week deposits;— 10.0% p.a. on 3�month deposits.

The minimum 2�week Lombard loan auction

cut�off rate was set at 7% p.a.The minimum repo auction cut�off rates were

set at:— 6.0% p.a. for 1 day;— 6.5% p.a. for 1 week;— 9.0% p.a. for 3 months.

To expand the refinancing of the banking sys�tem, on November 28, 2007, the Bank of Russiabegan to extend 1�day Lombard loans at a fixedinterest rate of 8.0% p.a. and to conduct repotransactions at the following fixed interest rates:— 8.0% p.a. for 1 day;— 7.0% p.a. for 1 week.

To contain growth in money supply, especiallyhigh in the first half of 2007, by more activelyusing liquidity absorption instruments, the Bankof Russia raised fixed deposit interest rates onoperations conducted with credit institutions onstandard terms (on April 2 and August 14, 2007).During the year these rates on deposits taken forone business day (tom�next and spot�next depos�its) and demand deposits were raised from 2.25%to 2.75% p.a. and 1�week and spot�week depos�its from 2.75% to 3.25% p.a. The averageweighted interest rates on 4�week and 3�monthdeposit operations conducted by the Bank of Rus�sia by auction also increased as compared with2006.

To narrow the range of fluctuations in short�term market rates, on October 11, 2007, the Bankof Russia cut the interest rates on 7�day Lombardloans and currency swaps from 10% to 8% p.a.

R

165

IV .1 . PRINCIPAL MEASURES TAKEN BY THE BANK OF RUSSIA TO IMPLEMENT THE SINGLE STATE MONETARY POLICY IN 2007

REFINANCING OF CREDIT INSTITUTIONS. To up�grade the refinancing procedures and give creditinstitutions broader opportunities to receive li�quidity, the Bank of Russia in 2007 drafted andenforced the following regulatory documents:— Regulation No. 312�P, dated November 12,

2007, ‘On the Procedure for Extending As�set�Backed Loans to Credit Institutions by theBank of Russia’;

— Ordinance No. 1904�U, dated November 12,2007, ‘On Bank of Russia Requirements forthe Accounting Indicators and Other Data onCompanies Due on Promissory Notes (LoanAgreements) Provided by Credit Institutionsas Security for Bank of Russia Loans’;

— Ordinance No. 1882�U, dated August 31,2007, and Ordinance No. 1892�U, dated Oc�tober 10, 2007, ‘On Amending Bank of Rus�sia Ordinance No. 1601�U, Dated August 5,2005, on the Terms and Conditions for Ex�tending by the Bank of Russia to Credit Insti�tutions Loans against the Collateral of Prom�issory Notes, Rights of Claim under CorporateLoan Agreements and Bank Guarantees’;

— Ordinance No. 1883�U, dated August 31,2007, and Ordinance No. 1897�U, dated No�vember 2, 2007, ‘On Amending Bank of Rus�sia Ordinance No. 1482�U, Dated July 28,2004, on the Securities Included in the Bankof Russia Lombard List’;

— Bank of Russia Orders No. OD�48, datedJanuary 29, 2007, No. OD�275, dated Ap�ril 12, 2007, No. OD�392, dated May 30,2007, No. OD�535, dated July 25, 2007,No. OD�619, dated August 24, 2007,No. OD�712, dated October 5, 2007, andNo. OD�935, dated December 21, 2007,‘On the Bank of Russia Adjustment Ratios’;

— Bank of Russia Letters No. 8�T, dated Janu�ary 29, 2007, No. 49�T, dated April 12, 2007,No. 80�T, dated June 8, 2007, No. 131�T,dated August 22, 2007, No. 145�T, dated Sep�tember 13, 2007, No. 159�T, dated Octo�ber 1, 2007, No. 175�T, dated November 13,2007, and No. 185�T, dated November 29,2007, ‘On Placing Securities on the Bank ofRussia Lombard List’;

— Bank of Russia Letter No. 109�T, dated July18, 2007, ‘On the Removal of Securities fromthe Bank of Russia Lombard List’;

— Bank of Russia Order No. OD�963, datedDecember 29, 2007, ‘On the Approval of theForm of Agreement on Over�the�CounterRepo Operations on the Domestic Over�the�Counter Market of the Russian Federation’,and Bank of Russia Order No. OD�962, datedDecember 29, 2007, ‘On the Bank of RussiaRepo Operations with Credit Institutions onthe Domestic Over�the�Counter Market’.

DEPOSIT OPERATIONS. To improve the regula�tion of the deposit operations it conducted withresident credit institutions in rubles, the Bank ofRussia issued the following documents:— Ordinance No. 1813�U, dated March 30,

2007, ‘On Setting Fixed Interest Rates onDeposit Operations’;

— Ordinance No. 1870�U, dated July 23, 2007,‘On Amending Bank of Russia RegulationNo. 203�P, Dated November 5, 2002, on theProcedure for Conducting Deposit Operationswith Credit Institutions in Rubles by the Cen�tral Bank of the Russian Federation’;

— Ordinance No. 1875�U, dated August 13,2007, ‘On Setting Fixed Interest Rates onDeposit Operations’;

— Letter No. 100�T, dated July 6, 2007, ‘OnAppointing Bank of Russia Regional Branchesand Organised Securities Market ClearingCentres as Assignees’;

— Letter No. 101�T, dated July 6, 2007, ‘OnSecuring Deposit Transactions Conductedthrough the MICEX Electronic Trading Sys�tem in Connection with the Change in theComposition of the Organised Securities Mar�ket Clearing Centre Assignees’;

— Letter No. 05�13�4/2875, dated July 6, 2007,‘On the Form of the Supplementary Agree�ment to the Agreement on the Fulfilment bythe Organised Securities Market ClearingCentre of the Functions of the Assignee forSettlements in Deposit Transactions Con�cluded through the MICEX Electronic Trad�ing System’;

— Letter No. 121�T, dated August 8, 2007, ‘Onthe Form of the Supplementary Agreement tothe General Deposit Agreement’;

— Letter No. 122�T, dated August 8, 2007, ‘OnBringing the Effective General Deposit Agree�ments and General Agreements in Compliance

166


with Bank of Russia Regulation No. 203�P,Dated November 5, 2002, as Amended’.

IMPROVING FINANCIAL MARKET PERFORMANCE.In the course of enhancing the effectiveness of theRussian financial market infrastructure and up�grading financial market instruments, the Bank ofRussia participated in the drafting of federal laws‘On Exchanges and Organised Trading’, On Clear�ing Practices’, ‘On the Peculiarities of Securingthe Fulfilment of Financial Obligations’, ‘On theCentral Depository’ and ‘On Amendments to theFederal Law on the Securities Market’.

In collaboration with other government agen�cies the Bank of Russia took an active part in up�grading the legal regulation of the Russian finan�cial market. As a result, in 2007 Article 1062 ofthe Civil Code of the Russian Federation wasamended to extend court protection to transac�tions with the financial derivatives; the terms ‘so�phisticated investor’ and ‘unsophisticated inves�tor’ were introduced into Russian law and thespecific features of the regulation of securitiesplacement and trading among sophisticated inves�tors, including information disclosure, were es�tablished.

RELATIONS WITH THE FEDERAL BUDGET AND GOVERNMENT NON�BUDGETARY FUNDS

implement Federal Law No. 63�FZ,dated April 26, 2007, ‘On Amendingthe Budget Code of the Russian Federa�

tion in Respect to the Regulation of the BudgetProcess and Bringing Certain Laws of the Rus�sian Federation in Compliance with the BudgetLaw of the Russian Federation’, and pursuant tothe 2007 Federal Budget Law, in 2007 the Bankof Russia issued:— Ordinance No. 1900�U, dated November 7,

2007, ‘On the Peculiarities of the Mainte�nance of the Federal Treasury Accounts inthe Event of the Transfer of the Right to theCash Execution of Regional and MunicipalBudgets to Regional Executive Power Struc�tures’;

— Letter No. 188�T, dated November 30, 2007,‘On the Conditions Included in the Supple�mentary Agreements to the Bank AccountAgreements Executed by the Bank of Russiawith Regional Federal Treasury Departmentsin the Event of a Transfer to the FinancialAuthority of the Right to the Cash Executionof the Budget of the Region and the Budgetsof the Municipalities within this Region’;

— Letter No. 189�T, dated December 3, 2007,‘On Agreements on the Exchange of ElectronicMessages in the Course of Effecting Settle�ments through the Bank of Russia SettlementNetwork in Case of Operations Conducted bythe Regional Executive Power Body with the

To Federal Treasury Accounts to Record Regionaland Local Budget Funds’;

— Letters No. 08�22�2/1589, dated April 20,2007, and No. 08�22�2/3109, dated June 23,2007, which require Bank of Russia regionalbranches to present data on the state of the re�gional and local budget accounts opened in Bankof Russia institutions and credit institutions. Theresults of the study have been reported to theMinistry of Finance and the Federal Treasury;

— Ordinance No. 1829�U, dated May 18, 2007,‘On Presenting Information about AccountsOpened for Federal Agencies, Financial Authori�ties and Recipients of Budget Funds in Bank ofRussia Institutions and Credit Institutions andfor Regional Federal Treasury Bodies’;

— Letter No. 19�T, dated February 20, 2007, onopening accounts for regional financial au�thorities in Bank of Russia institutions torecord the funds budget�financed institutionsreceive on a temporary basis;

— Russian Federation Ministry of Finance andBank of Russia Regulation No. 115n,No. 314�P, dated November 26, 2007, ‘Onthe Procedure for Completing Operations with2007 Federal Budget Accounts Opened inBank of Russia Settlement Divisions andCredit Institutions and their Branches’.In addition, the Bank of Russia approved the

following documents issued by the Finance Min�istry in connection with the establishment of the

167


Reserve Fund and the National Welfare Fund andthe closure of the Stabilisation Fund:— Finance Ministry Order No. 5, dated January

16, 2008, ‘On the Approval of the List of For�eign Government Agencies Whose Debt Obli�gations the Reserve Fund Can Invest In’;

— Finance Ministry Order No. 5n, dated Janu�ary 15, 2008, ‘On the Approval of the Proce�dure for Calculating and Entering to AccountsInterest on the Funds Placed on Reserve FundAccounts’;

— Finance Ministry Order No. 22, dated Janu�ary 24, 2008, ‘On the Approval of the List ofForeign Government Agencies Whose DebtObligations the National Welfare Fund CanInvest In’;

— Finance Ministry Order No. 12n, dated Janu�ary 24, 2008, ‘On the Approval of the Proce�dure for Calculating and Entering to AccountsInterest on the Funds Placed on NationalWelfare Fund Accounts’.In connection with the coming into force of

Federal Law No. 269�FZ, dated December 30,2006, ‘On the Simplified Personal Income Decla�ration Procedure,’ the Bank of Russia jointly withthe Finance Ministry and the Federal Treasury sentto the establishments accountable to them LetterNos. 03�04�08/01/7, 42�7.1�15/5.2�69 and20�T, dated February 20, 2007, ‘On the Procedurefor Implementing Certain Provisions of Federal LawNo. 269�FZ, Dated December 30, 2006, on theSimplified Personal Income Declaration Proce�dure,’ which clarified the procedure for effectingincome declaration payments by individuals.

To regulate the management of some types ofbudget revenues by the Bank of Russia, it issuedthe following documents:— Ordinance No. 1851�U, dated July 3, 2007,

‘On Amending Bank of Russia RegulationNo. 300�P, Dated December 25, 2006, on theProcedure for Managing Certain Types of Bud�get Revenues by the Bank of Russia’;

— Letter No. 129�T, dated August 17, 2007, onthe procedure for filling in the Manager’s No�tice to specify the type and source of certainbudget revenues managed by the Bank ofRussia;

— Letter No. 61�T, dated May 3, 2007, ‘OnImplementing Measures to Identify Unidenti�fied Budget Revenues’;

— Letter No. 68�T, dated May 10, 2007, onsending to the Federal Treasury regional de�partments Bank of Russia RegulationNo. 300�P, dated December 25, 2006, andBank of Russia Order No. OD�122, datedMarch 21, 2006, as amended;

— Joint Federal Treasury and Bank of RussiaLetter Nos. 42�7.1�15/5.2�73 and 21�T,dated February 22, 2007, which provided theFederal Treasury regional departments andBank of Russia regional branches with asample agreement on cooperation between theFederal Treasury regional departments andthe Bank of Russia, designed to facilitate themanagement of certain types of budget rev�enues by the Bank of Russia;

— Letter No. 17�T, dated February 16, 2007,‘On Cooperation with the Federal Treasuryin Managing Budget Revenues’;

— Directive No. R�566, dated July 13, 2007,‘On Forecasting Certain Types of Federal Bud�get Revenues Managed by the Central Bankof the Russian Federation’;

— Ordinance No. 1845�U, dated June 27, 2007,‘On Amending Bank of Russia OrdinanceNo. 1398�U, Dated March 22, 2004, on theList, Forms, Rules and Procedure for Compil�ing and Presenting Statements by Bank ofRussia Divisions to the Central Bank of theRussian Federation’, which introduced re�porting form 0409930 Report on federal

budget revenues managed by the Bank of

Russia, effective from July 1, 2007. Begin�ning from August 1, 2007, this reporting formis sent monthly to the Audit Chamber of theRussian Federation and quarterly to the Fed�eral Treasury.To implement Federal Law No. 67�FZ,

dated June 12, 2002, ‘On the Main Guaran�tees of the Electoral Rights and the Right ofRussian Federation Citizens to Participate in aReferendum’ (as amended), the Bank of Rus�sia approved the following regulations issuedby the Central Election Commission of the Rus�sian Federation:— the procedure for opening, maintaining and

closing special election accounts for the pur�pose of creating the election funds of politicalparties and their regional branches in thecourse of conducting campaigns to elect depu�

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ties to the State Duma of the Federal Assem�bly of the Russian Federation, approved byCentral Election Commission ResolutionNo. 4/25�5, dated April 18, 2007;

— the procedure for opening, maintaining andclosing special election accounts for the pur�pose of creating the election funds of candi�dates in the course of conducting campaignsto elect the President of the Russian Federa�tion, approved by Central Election Commis�sion Resolution No. 6/52�5, dated May 3,2007;

— the instruction on the procedure for openingand maintaining accounts and for accountingfor and transferring funds allocated from thefederal budget of the Central Election Commis�sion to other election commissions or referen�dum commissions, approved by Central Elec�tion Commission Resolution No. 26/196�5,dated August 21, 2007.The regulations issued by the Central Election

Commission have been sent to Bank of Russia re�gional branches.

Bank of Russia Letter No. 154�T, dated Sep�tember 28, 2007, instructed Bank of Russia re�gional branches to open accounts for the elec�tion commissions in line with the established pro�cedure to ensure that they conduct operationswith the federal budget funds allocated to themfor the preparation and holding of the electionsof deputies to the State Duma of the FederalAssembly of the Russian Federation of the fifthconvocation and the President of the RussianFederation, and dispatch specialists upon requestfrom regional election commissions to work as

members of the audit services attached to thecorresponding commissions.

Pursuant to the Federal Law on the 2007Budget of the Federal Compulsory Medical Insur�ance Fund and Russian Federation Governmentresolutions on the improvement of medical ser�vices provided to the public, the Bank of Russiasent the following instructions to its regionalbranches:— Letter No. 43�T, dated April 5, 2007, ‘On

Accounting for the Subsidies and Funds Pro�vided from the Federal Compulsory MedicalInsurance Fund to its Regional Branches andHealthcare Institutions for the SupplementaryMedical Examination of the Population andthe Provision of First Aid Services’;

— Letter No. 83�T, dated June 15, 2007, ‘OnAccounting for the Transfers from the FederalCompulsory Medical Insurance Fund toHealthcare Institutions for the Implementa�tion of the Government Assignment to Pro�vide Supplementary Medical Aid in 2007’;

— Letter No. 153�T, dated September 28, 2007,‘On Accounting for the Transfers Made fromthe Federal Budget in 2007 to the RegionalBranches of the Federal Compulsory MedicalInsurance Fund for the Medical Examinationof Orphaned Children and Children Left with�out Parental Care at In�patient Clinics andBoarding Schools’;

— Letter No. 08�22�2/2579, dated June 21, 2007,‘On Accounting for Funds Transferred in 2007to Finance the Implementation of the PilotHealthcare Improvement Project in the Con�stituent Territories of the Russian Federation’.

FOREIGN EXCHANGE REGULATION AND FOREIGN EXCHANGE CONTROL

xercising the powers given to it by Fed�eral Law No. 173�FZ, dated December 10,2003, ‘On Foreign Exchange Regulation

and Foreign Exchange Control,’ the Bank ofRussia in 2007 continued to ensure that theauthorised banks properly control the foreign ex�change operations conducted by their customers.

To this end, the Bank of Russia issued the fol�lowing regulatory documents:

E — Ordinance No. 1868�U, dated July 20, 2007,‘On the Presentation to the Authorised Banksby Resident Individuals of Documents Relat�ing to the Conduct of Individual Foreign Ex�change Operations’, which contained an ex�haustive list of documents that confirm kinrelations between people conducting foreignexchange operations related to foreign cur�rency transfers by resident individuals from

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their accounts in the authorised banks to theaccounts of other resident individuals, spousesor close relatives, opened in authorised banksor banks outside Russia;

— Ordinance No. 1869�U, dated July 20, 2007,‘On Amending Bank of Russia InstructionNo. 117�I, Dated June 15, 2004, on the Pro�cedure for Presenting Documents and Infor�mation by Residents and Non�residents toAuthorised Banks when Conducting ForeignExchange Operations and the Procedure forAccounting for Foreign Exchange Operationsand Filling in Operation IDs by AuthorisedBanks’ which cancelled the requirement torenew operation IDs opened earlier with anauthorised bank in case of a change in thename of the authorised bank unrelated to itsreorganisation and a change in the name ofthe authorised bank connected with itsreorganisation in the form of transformation(change in the organisational structure andlegal status of the bank);

— Regulation No. 308�P, dated July 20, 2007,‘On the Procedure for Passing on Informationby the Authorised Banks on Violations of Fed�eral Foreign Exchange Legislation and ForeignExchange Regulation Authorities’ Rules andProcedures by Individuals Conducting ForeignExchange Operations’ which set the procedurefor transmitting electronic messages to the for�eign exchange control authority and estab�lished the formats of these messages transmit�ted by authorised banks in the course of per�

forming their functions of foreign controlagents regarding the violations by their cus�tomers of federal foreign exchange laws andforeign exchange regulation authorities’ rulesand procedures;

— Ordinance No. 1950�U, dated December 10,2007, ‘On the Accounting Procedure for theForeign Exchange Operations Conducted byResidents Other Than Credit Institutions andCurrency Exchanges’ which listed documentsthat constitute foreign exchange operationaccounting forms for residents other thancredit institutions and currency exchanges.To provide methodological assistance to its

regional branches in preparing and conductinginspections of authorised banks, the Bank of Rus�sia issued Letter No. 67�T, dated May 10, 2007,‘On Methodological Recommendations on Inspec�tions Conducted for the Purpose of Verifying Com�pliance by Authorised Banks and their Brancheswith the Procedure for Opening, Closing andManaging Exchange Offices and the Procedurefor Conducting Individual Banking Operationsand other Transactions with Private IndividualsInvolving Foreign Currency and the Russian Fed�eration Currency and Cheques, Including Trav�ellers’ Cheques, Whose Nominal Value is Ex�pressed in Foreign Currency’. This document alsocontains recommendations on the verification ofcompliance of foreign currency and cheque op�erations with the laws on the prevention of moneylaundering and terrorist financing, especially inrespect to customer identification.

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IV.2. PRINCIPAL MEASURES TO UPGRADE BANKING REGULATION

AND SUPERVISION IN 2007

he Bank of Russia implemented principalmeasures to upgrade banking regulationand supervision in 2007 in line with the

Guidelines for the Single State Monetary Policyin 2007, the Action Plan for the Russian Fed�eration Medium�term Social and Economic De�velopment Programme (2006—2008) in thefield of banking, the Prioritised Action Plan forthe Implementation of the Russian Banking Sec�tor Development Strategy until 2008 and theRussian Federation Government LawmakingPlan until 2008.

T The prime objective of the Bank of Russia ac�tions aimed at upgrading banking regulation andsupervision was to encourage substantive risk�based policies. For this purpose, the Bank of Rus�sia took steps to further improve the regulatoryframework of decision�making relating to the stateregistration of credit institutions, the licensing ofbanking activities, the evaluation of banking riskmanagement and control, off�site supervision,inspection, financial rehabilitation and liquida�tion of credit institutions and the prevention ofmoney laundering and terrorist financing.

LICENSING OF THE ACTIVITIES OF CREDIT INSTITUTIONS

2007, the Bank of Russia continued tooptimise the procedure for registeringcredit institutions and licensing banking

activities. It amended its Instruction No. 109�I,dated January 14, 2004, ‘On the Bank of RussiaDecision�Making Procedure Relating to the StateRegistration of Credit Institutions and Licensingof Banking Operations’ (hereinafter referred toas Bank of Russia Instruction No. 109�I) toachieve the following objectives.

To encourage the expansion of banking ser�vices and make them more accessible to the pub�lic and businesses in all regions and to expand theretail banking networks of credit institutions andtheir branches, the Bank of Russia allowed creditinstitutions to open a new kind of internal divi�sion, the operations office. It also provided for thepossibility of changing the status of a branch of acredit institution for that of an internal divisionin the course of optimising the regional network.In this case, the branch of a credit institution con�verted into its internal division may keep itsbranch correspondent sub�account for up to180 calendar days from the moment the creditinstitution notified the Bank of Russia regionalbranch about the conversion. At the request of

credit institutions, in late 2007 the Bank of Rus�sia extended this time period to 360 calendar days(Bank of Russia Ordinances No. 1794�U, datedFebruary 21, 2007, and No. 1933�U, dated No�vember 27, 2007).

To facilitate the capitalisation of credit insti�tutions, the Bank of Russia by its InstructionNo. 109�I extended the list of non�pecuniaryproperties that may be contributed to a creditinstitution’s authorised capital by adding ATMsand terminals used by credit institutions in con�ducting cash operations. It also specified the listof documents a credit institution is required tosubmit to a Bank of Russia regional branch whenselling additional shares to a wide range ofacquirers. At the same time, the Bank of Russiaset up a procedure for obtaining permission frombank managers for making public their full namesand job titles in the Bank of Russia Bulletin andon the Bank of Russia official website. It removedthe requirement for holding a joint shareholders’meeting of the credit institutions that are to bemerged into a joint�stock company due to the re�moval of this requirement from the Federal Lawon Joint�Stock Companies (Bank of Russia Ordi�nance No. 1828�U, dated May 14, 2007).

In

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I V . 2 . P R I N C I P A L M E A S U R E S T O U P G R A D E B A N K I N G R E G U L A T I O N A N D S U P E R V I S I O N I N 2 0 0 7

Bank of Russia Instruction No. 130�I, datedFebruary 21, 2007, ‘On the Procedure for Ob�taining Bank of Russia Preliminary Consent tothe Acquisition and (or) Receipt in Trust ofShares (Stakes) in a Credit Institution’ (herein�after referred to as Instruction No. 130�I) sim�plified the procedure for obtaining Bank of Rus�sia preliminary consent to the acquisition and (or)receipt in trust by a person or group of persons ofmore than 20% of shares (stakes) in a credit in�stitution. Specifically, Instruction No. 130�I seta limit on the amount of shares (stakes) acquiredin a credit institution which, if exceeded, requirespreliminary consent of the Bank of Russia; speci�fied the cases in which Bank of Russia prelimi�nary consent is considered received, and spelledout the specific procedure for obtaining Bank ofRussia preliminary consent when shares in acredit institution are acquired in trades organisedby a stock exchange or another trade organiseron the securities market or by auction when theprice of the shares is established as a result ofpublic offering.

In connection with the changes made in Ar�ticle 61 of the Federal Law on the Central Bankof the Russian Federation (Bank of Russia) andArticle 11 of the Federal Law on Banks and Bank�ing Activities, the Bank of Russia issued Ordi�nance No. 1810�U, dated March 28, 2007, ‘OnAmending Bank of Russia Instruction No. 128�I,Dated March 10, 2006, on the Rules of Issue andRegistration of Securities by Credit Institutionsin the Russian Federation’ which set the require�ment that the Bank of Russia should be notifiedabout the acquisition and (or) receipt in trustby a person or group of persons of more than 1%of shares in a credit institution (Bank of RussiaOrdinance No. 1828�U, dated May 14, 2007,made similar changes to Bank of Russia Instruc�tion No. 109�I). In addition, the Bank of Rus�sia specified the time period during which acredit institution may place additional shares andsecurities convertible into shares with individu�als who have no pre�emptive right, and estab�lished the procedure for presenting for state reg�istration a report on the results of the securitiesissue (additional issue) and abstracts of sharepurchasers’ personal accounts confirming thereceipt of investors’ funds in rubles and (or) for�eign currency.

Bank of Russia Regulation No. 307�P, datedJuly 20, 2007, ‘On the Procedure for Recordingand Presenting Data on Persons Affiliated withCredit Institutions’ issued in connection with thecoming into force of the Federal Law on the Pro�tection of Competition to replace Bank of RussiaRegulation No. 227�P, dated May 14, 2003, ‘Onthe Procedure for Keeping and Providing Infor�mation on Persons Affiliated with Credit Institu�tions’ settled problems involved in the applica�tion of the new procedures for creating groups ofpersons for the purpose of defining a group of per�sons to which a credit institution belongs anddrawing up a list of persons affiliated with a creditinstitution.

Bank of Russia Ordinance No. 1790�U, datedJanuary 26, 2007, ‘On Invalidating Certain Pro�visions of Bank of Russia Regulation No. 437,Dated April 23, 1997, ‘On the Specifics of theRegistration of Credit Institutions with ForeignInvestments and on the Procedure for ObtainingBank of Russia Preliminary Permission to In�crease the Authorised Capital of a RegisteredCredit Institution by Non�resident Funds’ issuedin connection with amendments made to Ar�ticle 18 of the Federal Law on Banks and Bank�ing Activities, lifted the requirement to obtainBank of Russia preliminary permission to in�crease the authorised capital of a credit institu�tion by non�resident funds and cancelled the pro�vision that stipulated that the minimumauthorised capital of a new subsidiary openedby a foreign bank should be determined by Bankof Russia regulations. Thus, the Bank of Russiaestablished equal conditions for the acquisitionof shares (stakes) in a credit institution by resi�dents and non�residents for the purpose of in�creasing its authorised capital.

To speed up the process of putting into opera�tion of new internal divisions of credit institutions,the Bank of Russia issued Ordinance No. 1863�U,dated July 11, 2007, ‘On Amending Bank of Rus�sia Regulation No. 271�P, Dated June 9, 2005,on Consideration of the Documents Submitted toa Bank of Russia Regional Branch for Taking aDecision on the State Registration of Credit In�stitutions, Issuing Banking Licences and Compil�ing Databases on Credit Institutions and theirDivisions’ which repealed the provisions that re�quired the examination of vaults and cash depart�

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ments of internal divisions for the purpose of veri�fying their compliance with the Bank of Russiarequirements when Bank of Russia regionalbranches took decisions on the opening of new orrelocation of existing internal divisions. Bank ofRussia Ordinance No. 1754�U, dated Decem�ber 11, 2006, ‘On Amending Bank of Russia In�struction No. 109�I, Dated January 14, 2004, onthe Bank of Russia Decision�making ProcedureRelating to the State Registration of Credit Insti�tutions and Licensing of Banking Operations’which came into force on January 1, 2007, madethis examination a part of ongoing supervisionconducted after the internal division has alreadybecome operational.

Bank of Russia Ordinance No. 1807�U, datedMarch 27, 2007, ‘On the Bank of Russia Deci�sion�making Procedure in Respect to State Reg�istration of Changes Made to the Founding Docu�ments of a Bank and the Issue of Banking Licencesin Connection with the Receipt of the Bank’sRequest to Change its Status to That of a Non�bank Credit Institution’ established the procedurefor changing a bank’s status to that of a non�bankcredit institution in case of the bank’s voluntarydecision to do so and also in compliance with therequirements of Article 20 of the Federal Law onBanks and Banking Activities. The Ordinance alsostipulated that the change of a bank’s status tothat of a non�bank credit institution is only pos�sible if the bank is not liable to the revocation ofthe banking licence (for the purpose of imple�

menting bankruptcy�prevention measures) and ifthere is no evidence that the bank will not be ableto observe the prudential standards after its sta�tus has been changed.

Bank of Russia Ordinance No. 1818�U, datedApril 23, 2007, ‘On Amending Bank of RussiaRegulation No. 230�P, Dated June 4, 2003, onthe Reorganisation of Credit Institutions in theForm of Merger and Acquisition’ removed therequirement for credit institutions that had beenestablished as joint�stock companies and werenow being merged, to hold a joint shareholders’meeting. It also stipulated that the merger or ac�quisition agreement and the protocol of the share�holders’ meeting of each credit institution beingreorganised should contain provisions (decisions)required by the Federal Law on Joint�Stock Com�panies and the Federal Law on Limited LiabilityCompanies.

In connection with the coming into effect onJanuary 1, 2008, of Federal Law No. 231�FZ,dated December 18, 2006, ‘On Putting into Ef�fect Part Four of the Civil Code of the RussianFederation’ which required changing Article 7and Article 10 of the Federal Law on Banks andBanking Activities for the purpose of specifyingthe contents of the full and abridged title of acredit institution, the Bank of Russia amended19 ordinances (Bank of Russia OrdinancesNos. 1919�U—1930�U, dated November 26,2007, and Nos. 1932�U—1938�U, dated Novem�ber 27, 2007).

MEASURES TO UPGRADE THE METHODOLOGIES OF ASSESSING,

MANAGING AND SUPERVISING BANKING RISKS

implement the provisions of FederalLaw No. 247�FZ, dated December 29,2006, ‘On Amending Article 50.36 and

Article 50.39 of the Federal Law on Insolvency(Bankruptcy) of Credit Institutions and Article 72of the Federal Law on the Central Bank of theRussian Federation (Bank of Russia), the Bankof Russia issued Ordinance No. 1793�U, datedFebruary 20, 2007, ‘On Amending Bank of Rus�sia Regulation No. 215�P, Dated February 10,2003, on the Methodology for Determining the

Equity Capital of a Credit Institution’, which speci�fied and expanded the range of subordinated in�struments included in the equity capital calcula�tion. These amendments comply with internationalbanking and supervisory practices and facilitate thecapitalisation of the Russian banking sector.

To upgrade the methodology for calculatingthe required ratios by credit institutions and toimprove supervision of their observance, the Bankof Russia in 2007 introduced the followingchanges:

To

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● for the purpose of upgrading the required eq�uity capital adequacy ratio (N1):— Bank of Russia Ordinance No. 1838�U,

dated June 14, 2007, ‘On Amending Bankof Russia Instruction No. 110�I, DatedJanuary 16, 2004, on Banks’ RequiredRatios’ classified credit institutions’ invest�ments in federal government debt obliga�tions as risk�free assets (Asset Group 1);

— Bank of Russia Ordinance No. 1905�U,dated November 13, 2007, ‘On AmendingBank of Russia Instruction No. 110�I,Dated January 16, 2004, on Banks’ Re�quired Ratios’ stipulated that a reducedrisk ratio of 20% should be applied to loanclaims secured by the collateral of Bank ofRussia bonds (Asset Group 3);

— Bank of Russia Ordinance No. 1831�U,dated June 1, 2007, ‘On Amending Bankof Russia Instruction No. 112�I, DatedMarch 31, 2004, on the Required Ratiosfor Credit Institutions Issuing Mortgage�Backed Bonds’ established for credit insti�tutions issuing mortgage�backed bonds thesame equity capital adequacy ratio (N1)as for banks (previously it was 14%):

— 10% for banks with an equity capital of noless than the ruble equivalent of 5 millioneuros;

— 11% for banks with an equity capital ofless than the ruble equivalent of 5 millioneuros.

This change became possible due to the amend�ment made to Federal Law No. 152�FZ, datedNovember 11, 2003, ‘On Mortgage Securities’which stipulated that if the issuer of mortgage�backed bonds is declared insolvent (bankrupt),mortgage should be excluded from its propertythat constitutes bankruptcy assets. This amend�ment solved the problem of providing additionalprotection to investors and precluded the use ofan indirect means of protecting investors such astightening the financial soundness requirementsfor banks that issue mortgage�backed securities.● for the purpose of upgrading the methods of

evaluating and controlling bank liquidity(instant liquidity ratio N2 and current li�quidity ratio N3) and determining maximumrisk per borrower or group of related bor�rowers (N6 ratio):

— Bank of Russia Ordinance No. 1838�U,dated June 14, 2007, ‘On Amending Bankof Russia Instruction No. 110�I, DatedJanuary 16, 2004, on Banks’ RequiredRatios’ specified the assets that are classi�fied as highly liquid and liquid and addedto these assets the debt obligations of theWorld Bank Group (International Bankfor Reconstruction and Development andInternational Finance Corporation) andthe European Bank for Reconstruction andDevelopment, securities on the Bank ofRussia Lombard List and loans in the port�folio of homogeneous loans with a reserveof no more than 20%;

— Bank of Russia Ordinance No. 1905�U,dated November 13, 2007, ‘On AmendingBank of Russia Instruction No. 110�I,Dated January 16, 2004, on Banks’ Re�quired Ratios’ removed from the obliga�tions included in the calculation of instantand current liquidity ratios bank obliga�tions to the Bank of Russia and (or)counterparty banks secured by the collat�eral of highly liquid and liquid securities,and specified the policies on including repotransactions with highly liquid and liquidsecurities in the calculation of the liquid�ity ratios. This Ordinance also stipulatedthat the N6 ratio should not be calculatedfor credit institutions that are members ofa banking group that incorporates thecreditor bank.

In connection with the introduction of a newaccounting procedure by Bank of Russia Regula�tion No. 302�P, dated March 26, 2007, ‘On theAccounting Rules in the Credit Institutions Incor�porated in the Russian Federation’ (hereinafterreferred to as Regulation No. 302�P), includingthe introduction from January 1, 2008, of theaccrual method of income and expense account�ing, the Bank of Russia made the followingamendments to its documents regulating credit,market and currency risks and to the calculationof the equity capital of credit institutions:— Bank of Russia Regulation No. 313�P, dated

November 14, 2007, ‘On the Procedure forCalculating Market Risk by Credit Institu�tions’ established in connection with the in�troduction of the new accounting rules for se�

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curities and forward transactions, the proce�dure for calculating market risk in respect tothe financial instruments that have a current(fair) value, financial instruments denomi�nated in a foreign currency and (or) a pre�cious metal and forward transactions (futurescontracts);

— Bank of Russia Ordinance No. 1837�U, datedJune 14, 2007, ‘On Amending Bank of Rus�sia Resolution No. 283�P, Dated March 20,2006, on the Loss Provisioning Procedure forCredit Institutions’ set up the procedure formaking loss provisions for claims on interestincome from loans, which the bank consid�ers definite. In addition, it specified the pro�visioning procedure for forward transactions,whereby no loss provisions are made for theforward transactions concluded on organisedtrading floors or for over�the�counter for�ward transactions in which counterpartieseffect/receive intermediate payments (varia�tion margin);

— Bank of Russia Ordinance No. 1832�U, datedJune 1, 2007, ‘On Amending Bank of RussiaInstruction No. 124�I, Dated July 15, 2005,on Setting Limits on Open Currency Positions,the Methodology for Calculating them and theSpecifics of Supervision over Compliance withthem by Credit Institutions’ specified the pro�

cedure for calculating the open currency posi�tions in regard to ruble positions, which de�pend on foreign currency exchange rate fluc�tuations and changes in the discount prices ofprecious metals. In addition, it clarified theprocedure for calculating currency risk in re�spect to the off�balance sheet instrumentswhen the pledge accepted as collateral for thefunds placed is included in the calculation ofthe open currency positions;

— Bank of Russia Ordinance No. 1940�U, datedNovember 28, 2007, ‘On Amending Bank ofRussia Regulation No. 215�P, Dated Febru�ary 10, 2003, on the Methodology for Deter�mining the Equity Capital of Credit Institu�tions’ reinstated the principle of including inthe equity capital calculation the results of therevaluation of securities, which was used be�fore Bank of Russia Regulation No. 302�Pcame into effect. Specifically, the positive re�sults of the revaluation of securities at theircurrent (fair) value, included in the sum totalof the sources of capital, and the negative ones,which reduce the sum total of the sources ofcapital, are taken account of in calculating eq�uity capital only inasmuch as they are the re�sult of the application of intrabank methodolo�gies that use average weighted prices in securi�ties trading on the organised securities market.

OFF�SITE SUPERVISION

improve supervision, encourage creditinstitutions to evaluate their conditionin substance rather than form and

implement risk�based supervision, the Bank ofRussia issued Regulation No. 310�P, dated Sep�tember 7, 2007, ‘On the Curators of Credit In�stitutions’ which set up the procedure for appoint�ing employees of Bank of Russia regional branchesas curators of credit institutions and establishedtheir duties, powers and responsibility and per�sonal and professional requirements to them.

Due to the changes in the accounting rules incredit institutions (Bank of Russia RegulationNo. 302�P) and in reporting forms and the pro�cedure for compiling and presenting them to the

Bank of Russia (Bank of Russia OrdinanceNo. 1881�U, dated August 31, 2007, ‘On Amend�ing Bank of Russia Ordinance No. 1376�U, DatedJanuary 16, 2004, on the List, Forms and Proce�dure for Compiling and Presenting ReportingForms to the Central Bank of the Russian Fed�eration by Credit Institutions’) the Bank of Rus�sia specified:— the procedure for compiling consolidated

statements, including the core principles ofcompiling consolidated statements and theirstructure, the methods of consolidatingstatements and the procedure for includingdata reported by individual group membersin the consolidated statements, the account�

To

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ing policy principles of a group in respect tocompiling consolidated statements, and therequirements for the presentation and con�tent of explanatory notes to consolidatedstatements (Bank of Russia OrdinanceNo. 1858�U, dated July 9, 2007, ‘OnAmending Bank of Russia RegulationNo. 191�P, Dated July 30, 2002, on Con�solidated Statements’;

— the procedure for recording indicators onnon�credit institutions�group members andcalculating individual consolidated statementindicators for the group as a whole and forits members, both credit and non�credit in�stitutions (Bank of Russia OrdinanceNo. 1859�U, dated July 9, 2007, ‘On Amend�ing Bank of Russia Regulation No. 246�P,Dated January 5, 2004, on the Procedurefor Compiling Consolidated Statements bythe Parent Credit Institution within a Ban�king/Consolidated Group’);

— the procedure for calculating the financial re�sult of a bank, used in calculating group prof�itability assessment indicators and the proce�dure for calculating individual group indica�tors, including the income structure, expensestructure, net interest margin and net creditspread indicators (Bank of Russia OrdinanceNo. 1861�U, dated July 10, 2007, ‘OnAmending Bank of Russia OrdinanceNo. 1379�U, Dated January 16, 2004, on theAssessment of Financial Soundness of a Bankfor the Purpose of Ascertaining its Adequacyfor Participation in the Deposit InsuranceSystem’).To optimise the procedure for compiling state�

ments by credit institutions, the Bank of Russiaissued Letter No. 192�T, dated December 4,2007, ‘On the Application of Individual Provi�sions of Bank of Russia Instruction No. 63, DatedJuly 2, 1997, on the Procedure for ConductingTrust Banking Operations and Accounting forthese Operations by Credit Institutions in theRussian Federation,’ which repealed the require�ment for credit institutions to present to the Bank

of Russia information about the trust managercredit institution.

To provide methodological aid to its regionalbranches, the Bank of Russia issued the follow�ing documents:— Letter No. 166�T, dated October 19, 2007,

‘On the Methodology for Determining Costs(Losses) Connected with Business Develop�ment’ which specified the structure of a bank’sexpenses that may be related to costs (losses)connected with business development and maynot be taken account of in compiling the indi�cator ‘financial performance of a bank’ accord�ing to clause 5.2.1. of Bank of Russia Ordi�nance No. 1379�U, dated January 16, 2004,‘On the Assessment of Financial Soundness ofa Bank for the Purpose of Ascertaining itsAdequacy for Participation in the Deposit In�surance System’;

— Letter No. 147�T, dated September 14, 2007,‘On Handling Individual Appeals (Com�plaints) ‘;

— Letter No. 156�T, dated October 1, 2007, ‘Onthe Application of Bank of Russia RegulationNo. 254�P, Dated March 26, 2004, and Fed�eral Anti�Monopoly Service and Bank of Rus�sia Joint Letter No. IA7235/No.77�T, DatedMay 26, 2005’ which set out the principles ofusing sanctions against credit institutions forfailure to disclose the effective interest rate andsuggested the methodology for analysing creditinstitutions’ activities on the consumer loanmarket;

— Letter No. 228�T, dated December 29, 2007,‘On Consumer Lending’ (on the applicationof Part 1 and paragraph four of Part 2 of Ar�ticle 10 of the Russian Federation ConsumerProtection Law);

— Letter No. 11�T, dated February 7, 2007, ‘Onthe List of Questions for the Assessment ofCorporate Governance by Credit Institutions’;

— Letter No. 173�T, dated November 2, 2007,‘On the Basel Committee Recommendationson “Compliance and Compliance Function inBanks”.’

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MEASURES TO UPGRADE INSPECTION

improve the procedure for organisingand conducting inspections, the Bank ofRussia issued the following documents

in 2007:— Ordinance No. 1814�U, dated March 30,

2007, ‘On Amending Bank of Russia Instruc�tion No. 105�I, Dated August 25, 2003, onthe Procedure for Conducting Inspections ofCredit Institutions and their Branches byAuthorised Representatives of the CentralBank of the Russian Federation’;

— Ordinance No. 1815�U, dated March 30,2007, ‘On Amending Bank of Russia Instruc�tion No. 108�I, Dated December 1, 2003, onOrganising Inspections by the Central Bankof the Russian Federation (Bank of Russia)’;

— Ordinance No. 1819�U, dated April 24, 2007,‘On Amending Bank of Russia InstructionNo. 108�I, Dated December 1, 2003, onOrganising Inspections by the Central Bankof the Russian Federation (Bank of Russia) ‘;

— Ordinance No. 1820�U, dated April 24, 2007,‘On Amending Bank of Russia OrdinanceNo. 1542�U, Dated January 13, 2005, ‘Onthe Specifics of Conducting Inspections ofBanks with the Participation of Deposit In�surance Agency Employees’.To enhance the effectiveness of inspections,

the Bank of Russia sent out the following docu�ments to its regional branches:— Official Clarification No. 33�OR, dated De�

cember 7, 2007, ‘On the Application of Cer�tain Clauses of Bank of Russia InstructionNo. 105�I, Dated August 25, 2003, on theProcedure for Conducting Inspections ofCredit Institutions and their Branches byAuthorised Representatives of the CentralBank of the Russian Federation’;

— Letter No. 26�T, dated March 23, 2007, ‘OnMethodological Recommendations on Con�ducting Inspections of the Banking Risk Man�agement System in a Credit Institution or aBranch of a Credit Institution’;

To — Letter No. 77�T, dated June 1, 2007, ‘OnMethodological Recommendations onOrganising and Conducting Inspections ofCredibility of Accounting and Statements of aCredit Institution or a Branch of a Credit In�stitution’;

— Letter No. 86�T, dated June 27, 2007, ‘TheRecommended Sample Structure and Contentsof a Report of Inspections of a Credit Institu�tion or a Branch of a Credit Institution’;

— Letter No. 199�T, dated December 10, 2007,‘On Methodological Recommendations on In�spections Conducted to Verify Compliancewith the Required Reserve Ratios by CreditInstitutions’.To improve the procedure for drafting, regis�

tering and presenting organisational and executivedocuments compiled in the course of organising andconducting inspections of credit institutions andtheir branches, the Bank of Russia issued:— Letter No. 116�T, dated August 3, 2007, ‘On

the Registration of Documents Relating to theOrganisation and Conduct of Inspections ofCredit Institutions and their Branches’;

— Letter No. 177�T, dated November 14, 2007,‘On Recommendations on Compiling and Pre�senting Electronic Documents (and their Cop�ies) Drawn up in the Course of Organising andConducting Inspections of Credit Institutionsand their Branches’;

— Administrative Department and Main Inspec�torate Joint Letter No. 10�1/2640, dated June18, 2007, ‘On the Registration of Documentson Inspections of Credit Institutions in theAutomated Record Keeping and DocumentTurnover System of Regional Branches’;

— Main Inspectorate Letter No. 25�3�7/1934,dated November 19, 2007, ‘On the Cancella�tion of Bank of Russia Documents Regulatingthe Compilation and Presentation of ElectronicDocuments (and their Copies) Drawn up in theCourse of Organising and Conducting Inspec�tions of Credit Institutions and their Branches’.

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FINANCIAL REHABILITATION AND LIQUIDATION OF CREDIT INSTITUTIONS

ank of Russia Regulation No. 301�P,dated January 16, 2007, ‘On the Pro�cedure for Compiling and Presenting the

Interim Liquidation Balance Sheet and Liquida�tion Balance Sheet of a Credit Institution BeingLiquidated and Agreeing them with the Bank ofRussia Regional Branch,’ which replaced Bankof Russia Regulation No. 125�P, dated October4, 2000, ‘On the Procedure for Compiling theInterim Liquidation Balance Sheet and Liquida�tion Balance Sheet of a Credit Institution andAgreeing them with Bank of Russia RegionalBranches’ set up the procedure for monitoring theliquidation of a credit institution, including thereporting of individual indicators thatcharacterise the liquidation process.

Bank of Russia Regulation No. 306�P, datedJuly 3, 2007, ‘On Bank of Russia Inspections ofReceivers and Liquidators of Credit Institutions’issued to replace Bank of Russia RegulationNo. 132�P, dated January 17, 2001, ‘On Bankof Russia Inspections of Receivers and Liquida�tors of Bankrupt Credit Institutions’ establishedthe grounds and procedure for appointing andconducting inspections of receivers (liquidators)of credit institutions and described the measuresthat may be taken as a result of the inspections.

The issue of Bank of Russia RegulationNo. 302�P required amending Bank of RussiaRegulation No. 279�P, dated November 9,2005, ‘On the Provisional Administration of aCredit Institution’, Bank of Russia RegulationNo. 301�P, dated January 16, 2007, ‘On theProcedure for Compiling and Presenting the In�terim Liquidation Balance Sheet and LiquidationBalance Sheet of a Credit Institution Being Liq�uidated and Agreeing them with the Bank of Rus�sia Regional Branch’, Bank of Russia OrdinanceNo. 1594�U, dated July 14, 2005, ‘On the List,Forms and Procedure for Compiling and Present�ing Statements by Credit Institutions Being Liq�uidated to the Central Bank of the Russian Fed�eration’ and Bank of Russia OrdinanceNo. 1260�U, dated March 24, 2003, ‘On theProcedure for Matching the Authorised Capitalof a Credit Institution with its Equity Capital’which excluded from the Chart of Accounts cer�

B tain financial performance accounts, changed thetitles of some balance sheet accounts and closed anumber of balance sheet accounts (Bank of Rus�sia Ordinances Nos. 1854�U—1856�U, datedJuly 5, 2007, and No. 1867�U, dated July 20,2007). Bank of Russia Ordinance No. 1867�Ualso stipulated that the amounts by which theauthorised capital of a credit institution is reducedmay be used to cover the previous year’s loss orthe uncovered loss approved by the annual share�holders’ meeting or to increase the current year’sincome.

Bank of Russia Ordinance No. 1853�U, datedJuly 5, 2007, ‘On the Specifics of Conducting Settle�ment Operations by a Credit Institution after theRevocation of the Banking Licence and on the Ac�counts Used by the Receiver (Liquidator and Liq�uidation Commission)’ set up the procedure forimplementing the provisions of the laws on the liq�uidation of credit institutions in respect to the use ofaccounts by receivers, liquidators and liquidationcommissions and by the Deposit Insurance Agencyin the course of fulfilling its functions of receiver.

Bank of Russia Ordinance No. 1874�U, datedAugust 13, 2007, ‘On Dealing with Credit Institu�tions that Had their Banking Licences Revoked(Cancelled) by Bank of Russia Regional Branchesand Settlement Divisions’ set up the procedure forcooperation between Bank of Russia divisions andcredit institutions being liquidated, including the liq�uidation commissions, liquidators, receivers andDeposit Insurance Agency representatives imple�menting liquidation procedures in credit institutions.

Bank of Russia Ordinance No. 1899�U, datedNovember 6, 2007, ‘On Amending Bank of Rus�sia Regulation No. 265�P, Dated December 14,2004, on the Accreditation of Arbitration Man�agers at the Bank of Russia as the Receivers ofBankrupt Credit Institutions’ drafted in compli�ance with the requirements of the Federal Per�sonal Data Law, stipulated that the arbitrationmanagers who have applied for Bank of Russiaaccreditation as receivers of bankrupt credit in�stitutions must give permission to the Bank ofRussia to process, publish in the Bank of Russia

Bulletin and post on the Bank of Russia officialwebsite their personal data.

178


MAINTAINING THE CENTRAL CATALOGUE OF CREDIT HISTORIES

Bank of Russia Ordinance No. 1821�U,dated April 25, 2007, ‘On the Procedurefor Filing Requests and Receiving Infor�

mation from the Central Catalogue of Credit His�tories by a Credit History Maker through a PostOffice’, the Bank of Russia and the Ministry ofInformation Technology and Communications ofthe Russian Federation established the procedurefor filing requests and receiving information fromthe Central Catalogue of Credit Histories (CCCH)by credit history makers about the credit bureauwhere their credit histories are kept through apost office (telegraph office) without using thecredit history maker’s code.

Bank of Russia Ordinance No. 1860�U, datedJuly 9, 2007, ‘On Keeping the Credit Bureaus’

Databases in the Central Catalogue of Credit His�tories’ set up the procedure for receiving credithistories by the CCCH from trade organisers andcredit bureaus, the rules on temporary storage inthe CCCH databases of liquidated and reorganisedcredit bureaus and credit bureaus struck off thestate register under Part 10 of Article 15 of theFederal Law on Credit Histories, the procedure forpassing on information from credit histories keptin the CCCH to individuals in compliance with thefederal law, the procedure for transferring (retir�ing) credit histories to the organiser of trades (ten�der) for subsequent transfer to the credit bureauthat has won the trades (tender), and the proce�dure for cancelling credit histories upon the expiryof their term of storage in the CCCH.

In

In

PREVENTING MONEY LAUNDERING AND TERRORIST FINANCING

2007, the Bank of Russia continued tocarry out the tasks and fulfil the func�tions assigned to it by Federal Law

No. 115�FZ, dated August 7, 2001, ‘On Coun�tering the Legalisation (Laundering) of Crimi�nally Obtained Incomes and the Financing of Ter�rorism’ (hereinafter referred to as Federal LawNo. 115�FZ). It paid special attention to theelaboration of recommendations aimed at enhanc�ing the effectiveness of credit institutions’ effortsto prevent money laundering and terrorist financ�ing and recommendations for regional branchesof the Bank of Russia on the inspection of creditinstitutions in this area, and the use of informa�tion received from the Federal Financial Moni�toring Service (Rosfinmonitoring) for supervisorypurposes.

Specifically, the Bank of Russia issued the fol�lowing documents:— Letter No. 1�T, dated January 10, 2007, ‘On

Recommended Methodologies for ConductingInspections of Credit Institutions’ ActivitiesAimed at Detecting, Recording and Present�ing to the Authorised Agency Information onCash Operations Subject to Mandatory Con�

trol’ which describes the procedure for pre�paring and conducting such inspections byBank of Russia regional branches, lists thedata and documents that must be examinedand describes the methods of analysing andassessing them;

— Letter No. 44�T, dated April 5, 2007, ‘On theInspection of the Identification by Credit In�stitutions of Customers Serviced Using Elec�tronic Banking Technology’ which describeshow Bank of Russia regional branches shouldestablish facts of use of electronic banking,including Internet banking, by credit institu�tions in servicing their customers and how theyshould assess identification of customers un�der Federal Law No. 115�FZ;

— Letter No. 51�T, dated April 12, 2007, ‘Onthe Use of Information Received fromRosfinmonitoring’ which contains recommen�dations on the procedure for the use for su�pervisory purposes by regional branches of theBank of Russia of the information they receivefrom Rosfinmonitoring on the observance bycredit institutions of the requirements of Fed�eral Law No. 115�FZ;

179


— Letter No. 69�T, dated May 11, 2007, ‘On theStatement by the Wolfsberg Group and theClearing House Association LLC’ which con�tains information on the joint statement bythese two institutions on payment messagestandards designed to make cross�border elec�tronic transfers by financial institutions moretransparent;

— Letter No. 74�T, dated May 18, 2007, ‘OnSuspect Operations Conducted through Cor�respondent Accounts of OAO RK Amanbank’which contains recommendations for Bank ofRussia regional branches on the supervisionof credit institutions that have established cor�respondent relations with this non�residentbank;

— Letter No. 79�T, dated June 6, 2007, ‘OnTransferring Information to Rosfinmonito�ring’ which contains recommendations forBank of Russia regional branches on the pro�cedure for transferring to Rosfinmonitoring

information and documents it needs to fulfilits functions;

— Letter No. 155�T, dated September 28, 2007,‘On Invalid Passports’ which informs Bank ofRussia regional branches and credit institu�tions that they can use information about in�valid passports, posted by the Federal Migra�tion Service on its official website, for the pur�poses of customer identification;

— Letter No. 170�T, dated October 30, 2007,‘On the Specific Procedure for Accepting forBanking Servicing Non�resident CorporateEntities that Are not Russian Taxpayers’which gives recommendations to credit insti�tutions on how they should open and main�tain bank accounts for such customers;

— Letter No. 182�T, dated November 26, 2007,‘On Invalid Passports’ which deals with theprocedure for using information posted onthe official site of the Federal MigrationService.

UPGRADING THE LEGISLATIVE FRAMEWORK OF OPERATION OF CREDIT INSTITUTIONS

AND BANKING REGULATION AND SUPERVISION AUTHORITIES

2007, the Bank of Russia took part indrafting the following federal laws thatcame into effect last year:

— Federal Law No. 248�FZ, dated November 2,2007, ‘On Amending Article 29 of the Fed�eral Law on Banks and Banking Activities’which added a new clause to Article 29 of theLaw, stipulating that a bank cannot unilater�ally reduce the term of a deposit agreementwith an individual before the expiry of itsterm, or cut the interest rate set in the agree�ment, or charge or increase the commissionfor transactions, except for the cases estab�lished by the federal law;

— Federal Law No. 325�FZ, dated December 4,2007, ‘On Amending Article 36 of the FederalLaw on Banks and Banking Activities’ whichstipulated that a newly registered bank or abank registered less than two years ago may belicensed to take household deposits on two con�ditions: 1) the authorised capital of a newlyregistered bank or the equity capital of an op�

In erating bank is no less than the ruble equiva�lent of 100 million euros and 2) the bank com�plies with the Bank of Russia requirement todisclose information about individuals who ex�ert directly or indirectly material influence onthe decisions taken by its management;

— Federal Law No. 82�FZ, dated May 17, 2007,‘On the Development Bank’ and Federal LawNo. 83�FZ, dated May 17, 2007, ‘On Amend�ing Certain Laws of the Russian Federation inConnection with the Adoption of the FederalLaw on the Development Bank’ whichamended the Federal Law on Banks and Bank�ing Activities, giving the Development Bankthe right to conduct banking operations un�der the Federal Law on the Development Bankand stipulating that the Bank of Russia estab�lishes specific accounting rules for the Devel�opment Bank;

— Federal Law No. 214�FZ, dated July 24,2007, ‘On Amending Certain Laws of theRussian Federation in Connection with the

180


Adoption of the Federal Law on Amending theCode of Criminal Procedure and the FederalLaw on the Prosecutor’s Office’ whichamended Article 26 of the Federal Law onBanks and Banking Activities, stipulating thata credit institution submits statements of op�erations and accounts of corporate entities,unincorporated entrepreneurs and individualsto the investigating authorities on the cases theyare investigating with the consent of the headof the investigation department rather than theprosecutor, as was the case before the amend�ments were made. In addition, the amendmentsto Article 27 of the Federal Law on Banks andBanking Activities stipulated that money andother valuables of corporate entities and indi�viduals in accounts, on deposits and in safekeep�ing in a credit institution may be arrested by acourt of law, an arbitration court, a judge orthe investigating authority by a court ruling;

— Article 26 of the Federal Law on Banks andBanking Activities was amended for the sec�ond time in 2007 in connection with the adop�tion of Federal Law No. 225�FZ, dated Octo�ber 2, 2007, ‘On Amending Certain Laws ofthe Russian Federation’, which, in turn, waspassed in connection with the adoption of thenew version of the Federal Law on Court En�forcement Action. This law extended the listof persons and organisations to which a creditinstitution should give statements of opera�tions and accounts of corporate entities, un�incorporated entrepreneurs and individuals byadding to it court action and other enforce�ment authorities in cases established by thelaws that regulate their activities.In 2007, the Bank of Russia took part in draft�

ing federal laws relating to various spheres of ac�tivity of credit institutions:— the Law on Consumer Lending, drafted by a

group of State Duma deputies;— the Law on Consumer Loans, drafted by the

Finance Ministry;— the Law on Amending Part 2 of the Civil Code

of the Russian Federation and the Federal Lawon Banks and Banking Activities (concerningthe early return of a deposit to a depositor bya bank);

— the Law on Amending Article 13.1 of the Fed�eral Law on Banks and Banking Activities

(concerning the settlement of relations be�tween a commercial enterprise other than acredit institution and a person who providesservices or carries out work for which a fee ischarged under federal legislation (e�mail ser�vices, housing and utility services);

— the Law on Amending the Federal Law on In�solvency (Bankruptcy) of Credit Institutions(concerning the legal regulation of thesecuritisation of credit institutions’ assets,framework agreements on the derivativesmarket and investments in the general bankmanagement funds);

— the Law on Amending the Federal Law onJoint�stock Companies and the Federal Lawon Limited Liability Companies, whichchanged the procedure for merging joint�stockcompanies and limited liability companies;

— the Law on Amending the Civil Code of theRussian Federation, the Federal Law on Lim�ited Liability Companies and the Federal Lawon Joint�stock Companies, which revised therequirement that a share or stake in theauthorised capital of a limited liability com�pany should have a nominal value;

— the Law on Amending the Federal Law on theSecurities Market, which settled some prob�lems relating to the regulation of securitiesmanagement;

— the Law on Amending the Code of Administra�tive Offences of the Russian Federation, whichincreased administrative responsibility for theviolation of federal laws on joint�stock compa�nies, limited liability companies, the securitiesmarket and investment funds, especially theFederal Law on the Securities Market, as itspecified and described in detail the signs ofprice manipulation on the securities market;

— the Law on Amending Article 59 of Part Oneof the Tax Code of the Russian Federation,which made it possible to write off bad debtthat resulted from the write�offs of funds fromtaxpayers’ settlement accounts to tax pay�ments and which were not transferred to thebudget because of the lack of funds in the cor�respondent accounts of the banks that wereliquidated when the decision to recognise thedebt as bad was taken;

— the Law on Amending Article 76 of Part Oneof the Tax Code of the Russian Federation,

181


which specified the procedures for suspend�ing operations with bank accounts of corpo�rations and unincorporated entrepreneurs;

— the Law on Amending the Federal Law on In�solvency (Bankruptcy), which changed theranking of creditors;

— the Law on Education Loans;— the Law on Building Societies;— the Law on Amending the Civil Code of the

Russian Federation and some other federallaws, drafted to eliminate discrepancies inthese laws;

— the Law on Amending Article 339 of the CivilCode of the Russian Federation, which speci�fied the procedure for registering motor ve�hicle mortgage agreements;

— the Law on Amending the Federal Law onBanks and Banking Activities, which simpli�fied the procedure for reorganising credit in�stitutions, making them more transparent andprotecting the interests of the reorganisedcredit institutions and their creditors;

— the Law on Amending the Federal Law on theCentral Bank of the Russian Federation (Bankof Russia), which legitimised the processingof personal data of bank managers and otherpersons by the Bank of Russia;

— the Law on Amending the Federal Law onBanks and Banking Activities, which madesome changes to the qualification requirementsfor the managers of non�bank credit institu�tions;

— the Law on Amending the Federal Law onBanks and Banking Activities, which in�creased five�fold the minimum authorisedcapital requirement for a newly registerednon�bank settlement credit institutions to 2.5million euros;

— the Law on Amending the Federal Law onBanks and Banking Activities and the FederalLaw on the Central Bank of the Russian Fed�eration (Bank of Russia), which specified therequirements for the executives and membersof the board of directors (supervisory board)of credit institutions, granting to the Bank ofRussia the right to establish criteria of theirbusiness reputation;

— the Law on Amending the Federal Law onJoint�stock Companies, which specified the

procedure for disclosing information about theownership structure of joint�stock companies;

— the Law on Amending Certain Federal Laws,which revised, among other things, the restric�tions on the issue of bonds by credit institu�tions;

— the Law on Amending the Federal Law on theSecurities Market, which set the requirementsfor the nominee holders of securities to dis�close to the Bank of Russia and credit institu�tions information about the persons in whoseinterest they are holding these securities;

— the Law on Amending Article 25 and Article27 of the Federal Law on the Securities Mar�ket, which is designed to simplify the issue ofsecurities and provides for the implementationof additional measures to facilitate thecapitalisation of credit institutions and createfavourable conditions for the public offeringof shares by credit institutions;

— the Law on Amending the Federal Law on In�solvency (Bankruptcy) and the Federal Lawon Insolvency (Bankruptcy) of Credit Insti�tutions, which improved the procedure for dis�puting debtors’ transactions in the course ofbankruptcy proceedings and initiating vicari�ous liability proceedings against persons whohave or had the right to give binding instruc�tions to the debtor.The Bank of Russia also examined the follow�

ing draft concepts and terms of reference for draftfederal laws:— the Law on Amending the Federal Law on

Banks and Banking Activities and the FederalLaw on the Central Bank of the Russian Fed�eration (Bank of Russia), which increased therole and responsibility of the board of directors(supervisory board) of a credit institution andgranted to the Bank of Russia the right to as�sess corporate governance in credit institutions;

— the Law on Amending the Civil Code of theRussian Federation, the Federal Law on Joint�stock Companies and Other Federal Laws,which specified the procedure for regulatingthe structure and powers of the managementof joint�stock companies;

— the draft development concept for Rossel�khozbank for the period until 2015;

— the Law on Microfinance Enterprises.

182


1. Key macroeconomic indicators .............................................................................. 184

2. Consumer prices by group of goods and services ........................................................ 184

3. Consumer price inflation structure ......................................................................... 185

4. Gross value added structure by economic activity in basic prices ................................... 185

5. Structure of GDP calculated by income consumption method in current market prices ...... 186

6. GDP consumption elements in comparable prices ...................................................... 186

7. GDP formation structure by source of income........................................................... 186

8. Balance of household money income and expenses in Russia ........................................ 187

9. Differentiation of population by income ................................................................... 188

10. Major financial performance indicators of large and medium�sized enterprises in 2007...... 189

11. Payments for produce shipped (work performed and services provided)by major taxpayers and industrial monopolies ........................................................... 190

12. Russia’s merchandise trade .................................................................................. 191

13. Commodity structure of Russian exports ................................................................. 192

14. Commodity structure of Russian imports ................................................................. 193

15. Russia’s exports to major trading partners ............................................................... 194

16. Russia’s imports from major trading partners ........................................................... 196

17. Russia’s foreign trade in services by group of countries in 2006—2007.......................... 198

18. Structure of Bank of Russia customers other than credit institutionsand number of accounts opened for them ................................................................. 199

19. Russia’s domestic government debt structure as of January 1, 2008 (at par) .................. 199

20. Finance Ministry debt to the Bank of Russia as of January 1, 2008 ............................... 200

21. Volume (turnover) of resident operations with non�residents to buy and sell Russiangovernment outstanding foreign currency debt obligations on secondary market in 2007(at market prices) .............................................................................................. 200

22. Institutionalised financial intermediaries ................................................................. 201

23. Russian government outstanding foreign currency�denominated loan bonds(as of January 1, 2008) ....................................................................................... 201

24. Russia’s balance of payments for 2007 (analytical presentation) .................................. 202

25. Private sector net capital inflow (outflow) (according to balance of payments data) ........ 205

IV.3. STATISTICAL TABLES

List of Tables

I V . 3 . S T A T I S T I C A L T A B L E S

183

26. Cross�border operations by residents and non�residents .............................................. 206

27. Cross�border remittances via money transfer systems and Russia’s Postal Service ............ 207

28. Functional structure of foreign investment in Russia in 2007 ....................................... 208

29. Functional structure of Russian resident investment in foreign assets (except reserves)in 2007 ............................................................................................................ 208

30. Russian banking sector international investment position(as of January 1, 2007, and January 1, 2008) ......................................................... 209

31. Russian banking sector foreign assets and liabilities on interbank operationsby group of countries as of January 1, 2008 ............................................................. 211

32. Russia’s international reserves in 2007 ................................................................... 212

33. Bank of Russia foreign exchange reserve portfolio asset yields in 2007 ........................... 212

34. Key ruble exchange rate indicators in 2007 .............................................................. 213

35. Russia’s foreign debt in 2007 ................................................................................ 214

36. Russia’s foreign debt in 2007 (analytical presentation) .............................................. 216

37. Key economic development indicators of Russia’s leading trading partnersin 2005—2007 .................................................................................................. 217

38. CIS countries’ key monetary indicators in 2007 ........................................................ 219

39. Money supply (national definition) ........................................................................ 220

40. Average monthly rates of growth in money supply in 2007 .......................................... 220

41. M2 structure ..................................................................................................... 220

42. Monetary base and its structure ............................................................................. 221

43. Monetary survey ................................................................................................ 221

44. Credit institutions’ analytical accounts .................................................................... 222

45. Corrective measures taken against credit institutions in 2007 ...................................... 223

46. Russian payment system key indicators ................................................................... 224

47. Bank of Russia payment system ............................................................................. 226

48. Note structure of Bank of Russia banknotes in circulation ........................................... 227

49. Structure of Bank of Russia coins in circulation ........................................................ 227

50. Bank of Russia stakeholdings in Russian and foreign credit institutionsand other organisations........................................................................................ 228

184


Table 1

Note. Tables 1, 2 and 3 are based on Rosstat data as of May 6, 2008, and Bank of Russia calculations.

Tables 4 to 11 are based on Rosstat data as of May 6, 2008.

Table 2

SROTACIDNICIMONOCEORCAMYEK SROTACIDNICIMONOCEORCAMYEK SROTACIDNICIMONOCEORCAMYEK SROTACIDNICIMONOCEORCAMYEK SROTACIDNICIMONOCEORCAMYEK

)raeysuoiverpfo%sa,secirpelbarapmocni( )raeysuoiverpfo%sa,secirpelbarapmocni( )raeysuoiverpfo%sa,secirpelbarapmocni( )raeysuoiverpfo%sa,secirpelbarapmocni( )raeysuoiverpfo%sa,secirpelbarapmocni(

5002 6002 7002

tcudorpcitsemodssorG 4.601 4.701 1.801

:hcihwfo

yrtserofdnagnitnuh,erutlucirga 1.101 6.301 1.301

gninimdnanoitcudorpnobracordyh 5.001 6.101 3.001

gnirutcafunam 0.601 9.201 4.701

retawdnasag,rewopcirtcelefonoitubirtsiddnanoitcudorp 2.101 7.401 1.89

noitcurtsnoc 5.011 6.111 4.611

rehtodna,edartliaterdnaelaselohw 4.901 6.411 9.211

snoitacinummocdnatropsnart 2.601 6.901 7.701

xednirotalfedPDG 2.911 7.511 5.311

)rebmeceDsuoiverpnorebmeceD(xedniecirpremusnoC 9.011 0.901 9.111

tnemtsevnilatipacdexiF 9.011 7.611 1.121

revonrutedartliateR 8.211 1.411 9.511

,ygolodohtemOLIotgnidroccaetartnemyolpmenUegarevalaunna,noitalupopevitcayllacimonocefo%sa 6.7 2.7 1.6

SECIVRESDNASDOOGFOPUORGYBSECIRPREMUSNOC SECIVRESDNASDOOGFOPUORGYBSECIRPREMUSNOC SECIVRESDNASDOOGFOPUORGYBSECIRPREMUSNOC SECIVRESDNASDOOGFOPUORGYBSECIRPREMUSNOC SECIVRESDNASDOOGFOPUORGYBSECIRPREMUSNOC

)rebmeceDsuoiverpfo%sarebmeceD,htworg( )rebmeceDsuoiverpfo%sarebmeceD,htworg( )rebmeceDsuoiverpfo%sarebmeceD,htworg( )rebmeceDsuoiverpfo%sarebmeceD,htworg( )rebmeceDsuoiverpfo%sarebmeceD,htworg(

5002 6002 7002

latot,secirpremusnoC 9.01 0.9 9.11

:hcihwfo

secirpdoof 6.9 7.8 6.51

:hcihwfo

secirptiurfdnaelbategevfoevisulcxesecirpdoof 1.9 5.8 9.41

secirptiurfdnaelbategev 3.41 3.01 2.22

secirpdoof�non 4.6 0.6 5.6

cilbupehtotdedivorpsecivresdiap 0.12 9.31 3.31

noitaluclacnidedulcnisecivresdnasdoogfosecirP)IPCC(xedniecirpremusnocerocfo 3.8 8.7 0.11


185

Table 3

Table 4

ERUTCURTSNOITALFNIECIRPREMUSNOC ERUTCURTSNOITALFNIECIRPREMUSNOC ERUTCURTSNOITALFNIECIRPREMUSNOC ERUTCURTSNOITALFNIECIRPREMUSNOC ERUTCURTSNOITALFNIECIRPREMUSNOC

6002 7002

htworgegatnecrepni

stniop

%noitubirtnoc

htworgot

htworgegatnecrepni

stniop

%noitubirtnoc

htworgot

)rebmeceDnorebmeceD(noitalfnienildaeH 0.9 0.001 9.11 0.001

:oteudhtworgnoitalfnI

dedulcnisecivresdnasdoogfosecirpniegnahcnoitaluclacIPCCni 1.6 1.76 7.8 8.27

dedulcnitonsecivresdnasdoogfosecirpniegnahcnoitaluclacIPCCni 0.3 9.23 2.3 2.72

:hcihwfo

secirptiurfdnaelbategevniegnahc 4.0 6.4 9.0 2.7

secirpleufdnaecivresderetsinimdaniegnahc 6.2 3.82 4.2 1.02

)%(SECIRPCISABNIYTIVITCACIMONOCEYBERUTCURTSDEDDAEULAVSSORG )%(SECIRPCISABNIYTIVITCACIMONOCEYBERUTCURTSDEDDAEULAVSSORG )%(SECIRPCISABNIYTIVITCACIMONOCEYBERUTCURTSDEDDAEULAVSSORG )%(SECIRPCISABNIYTIVITCACIMONOCEYBERUTCURTSDEDDAEULAVSSORG )%(SECIRPCISABNIYTIVITCACIMONOCEYBERUTCURTSDEDDAEULAVSSORG

5002 6002 7002

deddaeulavssorG 0.001 0.001 0.001

:hcihwfo

yrtserofdnagnitnuh,erutlucirga 1.5 7.4 4.4

gninimdnanoitcudorpnobracordyh 0.11 9.01 1.01

gnirutcafunam 6.81 8.71 5.81

retawdnasag,rewopcirtcelefonoitubirtsiddnanoitcudorp 3.3 2.3 0.3

noitcurtsnoc 3.5 2.5 7.5

rehtodna,edartliaterdnaelaselohw 2.91 2.02 2.02

snoitacinummocdnanoitatropsnart 1.01 7.9 2.9

seitivitcarehto 4.72 3.82 9.82

186


Table 6

Table 5

Table 7

)%(EMOCNIFOECRUOSYBERUTCURTSNOITAMROFPDG )%(EMOCNIFOECRUOSYBERUTCURTSNOITAMROFPDG )%(EMOCNIFOECRUOSYBERUTCURTSNOITAMROFPDG )%(EMOCNIFOECRUOSYBERUTCURTSNOITAMROFPDG )%(EMOCNIFOECRUOSYBERUTCURTSNOITAMROFPDG

5002 6002 7002

tcudorPcitsemoDssorG 0.001 0.001 0.001

:hcihwfo

)sgninraedetropernugnidulcni(srekrowderihfonoitarenumer 8.34 1.44 6.54

stropmidnanoitcudorpnosexatten 6.91 0.02 9.81

semocnideximssorgdnatiforpssorg 6.63 9.53 5.53

)%(SECIRPTEKRAMTNERRUCNIDOHTEMNOITPMUSNOCEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMNOITPMUSNOCEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMNOITPMUSNOCEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMNOITPMUSNOCEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMNOITPMUSNOCEMOCNIYBDETALUCLACPDGFOERUTCURTS

5002 6002 7002

dohtemnoitpmusnocemocniybdetaluclacPDG 0.001 0.001 0.001

noitpmusnoclanifnoerutidnepxE 2.66 7.56 5.66

:hcihwfo

rotcesdlohesuoh 0.94 1.84 2.84

rotcestnemnrevog 6.61 1.71 8.71

sdlohesuohotsecivresgnidivorpsnoitasinagrotiforp�non 6.0 6.0 5.0

noitamroflatipacssorG 1.02 4.12 7.42

:hcihwfo

noitamroflatipacdexifssorg)selbaulavfonoitisiuqcatengnidulcni( 8.71 6.81 2.12

seirotnevniniegnahc 3.2 9.2 5.3

secivresdnasdoogfostropxeteN 7.31 8.21 8.8

)raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDG )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDG )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDG )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDG )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDG

5002 6002 7002

tcudorPcitsemoDssorG 4.601 4.701 1.801

:hcihwfo

noitpmusnoclanifnoerutidnepxe 8.801 9.801 6.011

rotcesdlohesuohyb 8.111 2.111 8.211

rotcestnemnrevogyb 3.101 5.201 0.501

sdlohesuohotsecivresgnidivorpsnoitasinagrotiforp�nonyb 4.18 8.99 3.99

)selbaulavfonoitisiuqcatengnidulcni(noitamroflatipacssorg 5.901 3.811 6.221

secivresdnasdoogfostropxeten 1.88 4.48 9.17


187

Table 8

* Savings include increase (decrease) in deposits, purchase of securities, change in accounts of self�employed

entrepreneurs, change in debt on loans and purchase of real estate.

)selburnoillim(AISSURNISESNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNISESNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNISESNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNISESNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNISESNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB

6002 70027002

6002fo%sa

emocniyenoM 8.739,982,71 3.235,322,12 8.221

seiralasdnasegaW 8.699,632,11 5.379,939,41 0.331

erahs% 0.56 4.07

secnawollalaicoS 9.793,080,2 7.987,713,2 4.111

erahs% 0.21 9.01

seitivitcalairuenerpertnemorfemocnI 7.701,519,1 0.503,811,2 6.011

erahs% 1.11 0.01

ytreporpmorfemocnI 6.456,027,1 3.131,324,1 7.28

erahs% 0.01 7.6

emocnirehtO 8.087,633 8.233,424 0.621

erahs% 9.1 0.2

sesnepxeyenoM 7.594,047,31 8.524,354,71 0.721

sesnepxeremusnoc— 9.464,729,11 9.983,297,41 0.421

snoitubirtnocdnastnemyapyroslupmoc— 8.030,318,1 9.530,166,2 8.641

,dnahnohsacdnasgnivasnihtworGycnerrucngieroffoesahcrup 1.244,945,3 5.601,077,3 2.601

*sgnivas— 9.655,587,1 9.867,809,1 9.601

:hcihwfo

seitirucesdnastisoped— 9.983,271,1 1.229,793,1 2.911

esahcrupycnerrucngierof— 9.610,081,1 5.981,501,1 7.39

dnahnohsac— 3.868,385 1.841,657 5.921

:drocerehtroF

emocniyenomfoerahs%

sesnepxeremusnoc— 0.96 7.96

snoitubirtnocdnastnemyapyroslupmoc— 5.01 5.21

sgnivas— 3.01 0.9

:hcihwfo

seitirucesdnastisoped— 8.6 6.6

esahcrupycnerrucngierof— 8.6 2.5

dnahnohsac— 4.3 6.3

emocniyenomelbasopsiD 5.140,567,51 8.952,920,91 7.021

foerahs%

sesnepxeremusnoc— 7.57 7.77

sgnivas— 3.11 0.01

:hcihwfo

seitirucesdnastisoped— 4.7 3.7

esahcrupycnerrucngierof— 5.7 8.5

dnahnohsac— 7.3 0.4

secnattimer— 8.1 5.2

188


Table 9

EMOCNIYBNOITALUPOPFONOITAITNEREFFID EMOCNIYBNOITALUPOPFONOITAITNEREFFID EMOCNIYBNOITALUPOPFONOITAITNEREFFID EMOCNIYBNOITALUPOPFONOITAITNEREFFID EMOCNIYBNOITALUPOPFONOITAITNEREFFID

5002 6002 7002

*semit,oitarsdnuF 9.41 0.61 8.61

**stinu,tneiciffeociniG 604.0 614.0 224.0

ehtdnanoitalupopehtfo%01emocni�tsehgihehtfoemocniegarevaehtneewteboitarehtsioitarsdnufehT*

.noitalupopehtfo%01emocni�tsewol

dlohesuohfonoitubirtsidlautcaehthcihwottnetxeehtswohs)xedninoitartnecnocemocni(tneiciffeociniGehT**

sdrawotsdnettneiciffeociniGeht,ylnevedetubirtsidsiemocninehW.enilnoitubirtsidneveehtmorfsetaivedsemocni

.1otsitneiciffeociniGehtresolceht,noitalupopehtfonoitaitnereffidemocniehtretaergeht;orez

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

189

Table 10

)6002fo%sa(7002NISESIRPRETNEDEZIS�MUIDEMDNAEGRALFOSROTACIDNIECNAMROFREPLAICNANIFROJAM )6002fo%sa(7002NISESIRPRETNEDEZIS�MUIDEMDNAEGRALFOSROTACIDNIECNAMROFREPLAICNANIFROJAM )6002fo%sa(7002NISESIRPRETNEDEZIS�MUIDEMDNAEGRALFOSROTACIDNIECNAMROFREPLAICNANIFROJAM )6002fo%sa(7002NISESIRPRETNEDEZIS�MUIDEMDNAEGRALFOSROTACIDNIECNAMROFREPLAICNANIFROJAM )6002fo%sa(7002NISESIRPRETNEDEZIS�MUIDEMDNAEGRALFOSROTACIDNIECNAMROFREPLAICNANIFROJAM

teNlaicnanif

tluser

stessagnikroW selbayaP selbavieceR

latot

:hcihwfo

latothcihwfoeudrevo

latothcihwfoeudrevo

mret�trohslaicnaniftnemtsevni

hsac

latoT 7.711 0.531 5.641 7.121 4.831 4.101 5.041 3.58

yrtserofdnagnitnuh,erutlucirgA 1.271 3.031 2.441 8.741 1.901 4.07 1.331 7.59

gninimdnanoitcudorpnobracordyH 2.621 4.321 0.311 3.59 4.521 5.341 4.931 3.521

:hcihwfo

noitcudorpygrenednaleuf 7.821 5.221 6.211 5.19 8.821 0.941 8.141 4.821

gnirutcafunaM 9.811 6.331 6.251 7.211 6.921 9.29 2.311 3.74

retawdnasag,rewopcirtcelefonoitubirtsiddnanoitcudorP 9.101 8.461 8.643 8.802 9.031 0.59 9.141 5.99

noitcurtsnoC 2.351 8.651 0.121 2.231 2.281 5.821 1.361 6.531

rehtodna,edartliaterdnaelaselohW 5.611 7.531 4.661 9.401 7.941 4.321 6.051 2.311

snoitacinummocdnatropsnarT 1.661 3.321 0.591 3.531 7.911 4.68 4.651 4.89

190


Table 11

)DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSECUDORPROFSTNEMYAP )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSECUDORPROFSTNEMYAP )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSECUDORPROFSTNEMYAP )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSECUDORPROFSTNEMYAP )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSECUDORPROFSTNEMYAP

SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB

7002

6002fo%sAselburnoillib

erutcurts,stnemyapfo

%

deppihsecudorpfoeulaV 0.738,61 5.811

:hcihwfo

ecudorprof�diap 0.055,51 0.001 6.711

:htiwrofdiapecudorphcihwfo

yenom 0.663,51 8.89 0.221

setonyrossimorp 3.81 1.0 6.8

snoitagilboyrainucepnomialcfosthgirforefsnart 4.5 0.0 2.49

smialcfognitten 9.431 9.0 2.83

stnemegnarraretrab 2.4 0.0 3.44

tnemelttesfosdnikrehto 2.12 2.0 8.101

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

191

Table 12

Note. Total exports for 2003 in Tables 12, 13 and 15 include the value of crude oil exported in 2003 and cleared by customs in January 2004.

EDARTESIDNAHCREMS’AISSUR EDARTESIDNAHCREMS’AISSUR EDARTESIDNAHCREMS’AISSUR EDARTESIDNAHCREMS’AISSUR EDARTESIDNAHCREMS’AISSUR

)ygolodohtemstnemyapfoecnalabotgnidrocca( )ygolodohtemstnemyapfoecnalabotgnidrocca( )ygolodohtemstnemyapfoecnalabotgnidrocca( )ygolodohtemstnemyapfoecnalabotgnidrocca( )ygolodohtemstnemyapfoecnalabotgnidrocca(

srallodSUnoilliB raeysuoiverpfo%sA

1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

seirtnuocllA

revonruT 6.551 3.861 0.212 6.082 2.963 8.764 9.875 8.301 1.801 0.621 4.231 6.131 7.621 7.321

stropxE 9.101 3.701 9.531 2.381 8.342 6.303 5.553 0.79 3.501 7.621 8.431 1.331 5.421 1.711

stropmI 8.35 0.16 1.67 4.79 4.521 3.461 4.322 8.911 4.311 8.421 0.821 8.821 0.131 0.631

ecnalaB 1.84 3.64 9.95 8.58 4.811 3.931 0.231 0.08 3.69 2.921 4.341 9.731 7.711 8.49

seirtnuocSIC�noN

revonruT 3.721 7.931 6.571 5.032 8.313 4.004 3.394 2.401 7.901 6.521 3.131 1.631 6.721 2.321

stropxE 6.68 9.09 6.411 0.351 2.012 2.062 6.103 4.59 0.501 0.621 5.331 4.731 7.321 9.511

stropmI 7.04 8.84 0.16 5.77 5.301 2.041 7.191 6.921 9.911 9.421 0.721 6.331 4.531 7.631

ecnalaB 9.54 1.24 6.35 5.57 7.601 9.911 0.011 3.77 8.19 2.721 9.041 3.141 4.211 7.19

seirtnuocSIC

revonruT 3.82 5.82 4.63 1.05 4.55 4.76 6.58 3.201 8.001 7.721 5.731 7.011 6.121 0.721

stropxE 3.51 4.61 4.12 2.03 5.33 4.34 8.35 2.701 2.701 4.031 4.141 1.111 3.921 1.421

stropmI 0.31 2.21 1.51 9.91 9.12 0.42 8.13 1.79 2.39 1.421 9.131 1.011 8.901 1.231

ecnalaB 2.2 2.4 3.6 3.01 7.11 3.91 1.22 1.172 5.981 7.841 2.461 0.311 0.661 1.411

192

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 13

STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC

)ygolodohtemlacitsitatssmotsucotgnidrocca( )ygolodohtemlacitsitatssmotsucotgnidrocca( )ygolodohtemlacitsitatssmotsucotgnidrocca( )ygolodohtemlacitsitatssmotsucotgnidrocca( )ygolodohtemlacitsitatssmotsucotgnidrocca(

%,erutcurtS raeysuoiverpfo%sasetarhtworG

1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

latoT 001 001 001 001 001 001 001 79 701 621 531 331 521 711

,stcudorplareniM 7.45 2.55 6.75 8.75 8.46 9.56 8.46 89 801 231 631 941 721 511

:hcihwfo

stcudorpygrenednaleuf— 1.45 6.45 0.75 2.75 0.46 4.56 1.46 99 801 231 531 941 721 511

:hcihwfo

lio— 0.52 3.72 5.92 5.23 6.43 0.43 5.43 99 611 631 941 141 321 911

saglarutan— 8.71 9.41 9.41 0.21 0.31 5.41 7.21 701 98 621 901 441 041 201

stcudorplatem,slateM 7.41 1.41 8.31 7.61 0.41 7.31 1.41 48 301 321 461 111 221 121

rebbur,slacimehC 4.01 4.9 9.8 7.7 6.5 6.5 9.5 511 69 911 711 69 711 421

selcihevtropsnart,tnempiuqe,yrenihcaM 5.7 9.6 8.6 6.6 9.5 8.5 5.5 101 99 421 131 021 921 311

stcudorprepap�dna�plupdnarebmiT 4.4 6.4 2.4 9.3 4.3 2.3 5.3 99 111 411 621 811 511 921

slairetamwarlarutlucirga,sffutsdooF)selitxettpecxe( 9.1 6.2 5.2 8.1 9.1 8.1 6.2 711 841 221 69 731 221 561

mehtfoedamselcitradnaslatemsuoicerp,senotsmeG 1.4 5.4 9.3 5.3 8.2 6.2 9.1 38 611 901 221 701 411 88

raewtoof,stcudorpelitxet,selitxeT 8.0 8.0 7.0 6.0 4.0 3.0 3.0 89 111 701 811 68 001 69

mehtfoedamselcitradnasruf,rehtaeL 2.0 3.0 2.0 2.0 1.0 1.0 1.0 58 711 421 701 39 111 19

sdoogrehtO 3.1 6.1 4.1 2.1 1.1 0.1 3.1 78 921 711 311 711 521 041

:drocerehtroF

srallodSUnoillib,stropxelatoT)ecivreSsmotsuClaredeF:ecruoS( 0.001 7.601 5.431 7.181 5.142 2.103 6.253

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

193

Table 14

STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC



1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

latoT 001 001 001 001 001 001 001 421 011 421 231 131 041 541

selcihevtropsnart,tnempiuqe,yrenihcaM 0.43 3.63 4.73 1.14 0.44 7.74 0.15 431 811 821 541 041 151 551

slairetamwarlarutlucirgadnasffutsdooF( selitxettpecxe ) 0.22 5.22 0.12 3.81 7.71 7.51 8.31 521 311 611 511 621 421 821

rebbur,slacimehC 2.81 7.61 8.61 8.51 5.61 8.51 8.31 621 101 421 421 631 431 621

stcudorplatem,slateM 2.7 3.6 2.7 7.7 5.7 5.7 9.7 011 79 141 141 721 041 351

raewtoof,stcudorpelitxet,selitxeT 5.5 3.5 8.4 3.4 7.3 0.4 3.4 511 601 411 811 111 251 751

stcudorprepap�dna�plupdnarebmiT 0.4 2.4 2.4 8.3 3.3 9.2 7.2 031 411 521 911 411 121 431

,stcudorplareniM 1.4 7.3 8.3 0.4 1.3 4.2 3.2 08 101 521 241 99 901 241

:hcihwfo

stcudorpygrenednaleuf— 5.2 2.2 3.2 2.2 6.1 4.1 2.1 17 001 921 621 79 511 331

mehtfoedamselcitradnaruf,rehtaeL 5.0 4.0 4.0 3.0 3.0 3.0 3.0 571 49 011 901 211 751 061

mehtfoedamselcitradnaslatemsuoicerp,senotsmeG 1.0 1.0 1.0 2.0 3.0 2.0 3.0 53 341 371 252 051 911 371

sdoogrehtO 4.4 5.4 3.4 5.4 6.3 5.3 6.3 431 111 221 031 411 131 841

:drocerehtroF

srallodSUnoillib,stropmilatoT)ecivreSsmotsuClaredeF:ecruoS( 9.14 2.64 3.75 6.57 7.89 8.731 7.991

194

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 15

Note. In Tables 15—17 and 31, from May 2004 the EU is represented by 25 member states and from January 2007 — by 27 member states; EurAsEC includes the Republic

of Uzbekistan since 2006.

SRENTRAPGNIDARTROJAMOTSTROPXES’AISSUR SRENTRAPGNIDARTROJAMOTSTROPXES’AISSUR SRENTRAPGNIDARTROJAMOTSTROPXES’AISSUR SRENTRAPGNIDARTROJAMOTSTROPXES’AISSUR SRENTRAPGNIDARTROJAMOTSTROPXES’AISSUR



1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

latoT 001 001 001 001 001 001 001 79 701 621 531 331 521 711

:hcihwfo

seirtnuocSIC 6.41 7.41 3.51 2.61 5.31 0.41 9.41 601 701 131 341 111 031 421

:hcihwfo

seirtnuocCEsAruE 3.8 0.8 3.8 0.9 1.7 0.8 2.9 — 201 231 641 601 931 431

seirtnuocrehtO 3.6 7.6 0.7 2.7 4.6 0.6 7.5 — 411 031 041 711 911 111

seirtnuocSIC�noN 4.58 3.58 7.48 8.38 5.68 0.68 1.58 69 601 521 331 831 421 611

:hcihwfo

seirtnuocUE 7.63 4.53 3.53 0.64 3.55 6.65 8.55 001 301 621 671 061 821 511

seirtnuocCEPA 1.51 3.51 4.41 8.41 4.21 8.11 0.21 79 801 911 931 111 911 911

seirtnuocrehtO 6.33 6.43 0.53 0.32 8.81 6.71 3.71 19 011 821 88 011 611 511

:drocerehtroF

seirtnuocDCEO 7.85 6.75 6.65 3.85 6.46 6.66 6.56 69 501 421 931 741 821 511

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

195

End


1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

srentrapgnidartrojaM

sdnalrehteNehT 7.4 0.7 6.6 4.8 2.01 9.11 1.21 801 851 911 371 161 641 911

ylatI 4.7 0.7 5.6 7.6 9.7 3.8 8.7 201 101 711 931 851 231 011

ynamreG 2.9 6.7 8.7 3.7 2.8 1.8 5.7 001 88 031 721 841 421 701

yekruT 2.3 2.3 6.3 1.4 5.4 7.4 2.5 501 301 541 351 641 231 821

suraleB 3.5 5.5 6.5 2.6 2.4 3.4 9.4 69 011 921 841 09 921 131

eniarkU 3.5 5.5 7.5 9.5 1.5 0.5 6.4 501 111 031 141 511 121 901

anihC 6.5 4.6 2.6 6.5 4.5 2.5 5.4 701 221 221 221 921 121 101

dnalreztiwS 3.2 0.5 3.4 2.4 5.4 0.4 0.4 06 232 901 231 041 311 711

dnaloP 2.4 5.3 4.3 1.3 6.3 8.3 8.3 49 98 421 321 151 331 611

natshkazaK 8.2 3.2 4.2 6.2 7.2 0.3 4.3 421 68 731 241 041 731 331

KU 3.4 6.3 7.3 1.3 5.3 5.3 1.3 29 98 031 411 941 321 601

dnalniF 1.3 8.2 2.3 2.3 2.3 1.3 0.3 001 49 841 431 131 021 711

ecnarF 3.2 5.2 6.2 4.2 5.2 5.2 5.2 811 811 231 621 831 521 311

ASU 2.4 7.3 1.3 6.3 6.2 9.2 3.2 09 59 601 751 69 731 39

napaJ 4.2 7.1 8.1 9.1 5.1 5.1 1.2 88 47 531 041 011 021 561

aeroKhtuoS 1.1 2.1 0.1 1.1 0.1 9.0 7.1 411 511 401 841 021 611 522

:drocerehtroF

srallodSUnoillib,stropxelatoT)ecivreSsmotsuClaredeF:ecruoS( 0.001 7.601 5.431 7.181 5.142 2.103 6.253

196

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 16

SRENTRAPGNIDARTROJAMMORFSTROPMIS’AISSUR SRENTRAPGNIDARTROJAMMORFSTROPMIS’AISSUR SRENTRAPGNIDARTROJAMMORFSTROPMIS’AISSUR SRENTRAPGNIDARTROJAMMORFSTROPMIS’AISSUR SRENTRAPGNIDARTROJAMMORFSTROPMIS’AISSUR



1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

latoT 001 001 001 001 001 001 001 421 011 421 231 131 041 541

:hcihwfo

seirtnuocSIC 7.62 0.22 9.22 5.32 2.91 2.61 9.41 79 19 921 531 701 811 331

:hcihwfo

seirtnuocCEsAruE 7.41 2.31 1.31 4.31 3.9 9.8 7.7 — 89 421 531 09 431 521

seirtnuocrehtO 0.21 8.8 8.9 1.01 9.9 3.7 2.7 — 18 731 531 031 301 341

seirtnuocSIC�noN 3.37 0.87 1.77 5.67 8.08 8.38 1.58 831 711 321 131 831 541 741

:hcihwfo

seirtnuocUE 9.63 7.93 7.83 0.34 2.44 0.44 7.34 831 911 121 641 431 931 441

seirtnuocCEPA 5.81 1.91 8.91 5.12 6.52 5.82 8.13 241 311 921 441 551 651 261

seirtnuocrehtO 9.71 2.91 6.81 0.21 0.11 3.11 6.9 231 911 021 58 811 441 321

:drocerehtroF

seirtnuocDCEO 7.65 5.95 7.85 0.95 3.16 6.26 9.16 631 611 321 231 631 241 341

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

197

End


1002 2002 3002 4002 5002 6002 7002 1002 2002 3002 4002 5002 6002 7002

srentrapgnidartrojaM

ynamreG 9.31 3.41 1.41 0.41 4.31 4.31 3.31 941 411 321 031 621 931 441

anihC 9.3 2.5 8.5 3.6 4.7 4.9 2.21 471 641 831 341 351 871 981

eniarkU 2.9 0.7 7.7 1.8 9.7 7.6 7.6 501 48 731 731 821 811 441

napaJ 1.2 1.2 3.3 2.5 9.5 6.5 4.6 251 311 291 902 841 431 361

ASU 8.7 5.6 2.5 2.4 6.4 6.4 7.4 121 29 99 801 341 041 741

suraleB 5.9 6.8 5.8 6.8 8.5 0.5 4.4 701 101 221 331 88 021 031

aeroKhtuoS 7.1 0.2 3.2 7.2 1.4 9.4 4.4 202 821 341 251 891 961 031

ylatI 1.4 8.4 2.4 2.4 5.4 2.4 3.4 141 031 801 331 831 031 941

ecnarF 7.3 1.4 1.4 1.4 7.3 3.4 9.3 031 321 421 131 021 061 231

KU 4.2 4.2 5.2 7.2 8.2 7.2 8.2 711 211 921 341 531 231 451

dnalniF 1.3 3.3 2.3 1.3 1.3 9.2 5.2 431 811 221 621 331 921 621

dnaloP 3.2 8.2 0.3 1.3 8.2 5.2 3.2 431 531 231 531 911 421 631

natshkazaK 8.4 2.4 3.4 6.4 3.3 8.2 3.2 29 69 721 931 49 911 021

yekruT 2.1 6.1 6.1 6.1 8.1 0.2 1.2 941 041 721 331 141 951 251

sdnalrehteNehT 0.2 3.2 2.2 8.1 0.2 9.1 9.1 411 521 911 901 141 831 441

dnalreztiwS 9.0 9.0 9.0 9.0 9.0 9.0 9.0 441 701 721 221 531 841 531

:drocerehtroF

srallodSUnoillib,stropmilatoT)ecivreSsmotsuClaredeF:ecruoS( 9.14 2.64 3.75 6.57 7.89 8.731 7.991

198

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 17

)srallodSUnoillim(7002—6002NISEIRTNUOCFOPUORGYBSECIVRESNIEDARTNGIEROFS’AISSUR )srallodSUnoillim(7002—6002NISEIRTNUOCFOPUORGYBSECIVRESNIEDARTNGIEROFS’AISSUR )srallodSUnoillim(7002—6002NISEIRTNUOCFOPUORGYBSECIVRESNIEDARTNGIEROFS’AISSUR )srallodSUnoillim(7002—6002NISEIRTNUOCFOPUORGYBSECIVRESNIEDARTNGIEROFS’AISSUR )srallodSUnoillim(7002—6002NISEIRTNUOCFOPUORGYBSECIVRESNIEDARTNGIEROFS’AISSUR

revonruT stropxE stropmI ecnalaB

6002 7002foetar,htworg

%6002 7002

foetar,htworg

%6002 7002

foetar,htworg

%6002 7002

foetar,htworg

%

latoT 149,57 925,89 031 201,13 743,93 721 938,44 281,95 231 737,31— 438,91— 441

:hcihwfo

seirtnuocSIC 491,11 883,41 921 359,5 011,8 631 042,5 872,6 021 317 238,1 semit6.2yb

:hcihwfo

seirtnuocCEsAruE 091,4 213,6 151 295,2 212,4 261 895,1 990,2 131 499 311,2 semit1.2yb

seirtnuocrehtO 631,5 790,6 911 193,2 497,2 711 547,2 203,3 021 353— 805— 441

detacollatonsecivreSyrtnuocyb 768,1 089,1 601 079 301,1 411 798 678 89 27 722 semit2.3yb

seirtnuocSIC�noN 847,46 141,48 031 941,52 732,13 421 995,93 409,25 431 054,41— 766,12— 051

:hcihwfo

seirtnuocUE 237,03 056,14 631 969,11 428,51 231 267,81 728,52 831 397,6— 300,01— 741

seirtnuocCEPA 503,01 774,21 121 763,5 523,6 811 839,4 251,6 521 924 271 04

seirtnuocrehtO 781,61 943,02 621 448,5 601,7 221 343,01 342,31 821 994,4— 631,6— 631

detacollatonsecivreSyrtnuocyb 525,7 466,9 821 969,1 289,1 101 655,5 286,7 831 885,3— 996,5— 951

:drocerehtroF

seirtnuocDCEO 757,14 397,35 921 197,61 817,02 321 669,42 570,33 231 471,8— 753,21— 151

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

199

Table 18

Table 19

)dnasuoht(MEHTROFDENEPOSTNUOCCAFOREBMUNDNASNOITUTITSNITIDERCNAHTREHTOSREMOTSUCAISSURFOKNABFOERUTCURTS )dnasuoht(MEHTROFDENEPOSTNUOCCAFOREBMUNDNASNOITUTITSNITIDERCNAHTREHTOSREMOTSUCAISSURFOKNABFOERUTCURTS )dnasuoht(MEHTROFDENEPOSTNUOCCAFOREBMUNDNASNOITUTITSNITIDERCNAHTREHTOSREMOTSUCAISSURFOKNABFOERUTCURTS )dnasuoht(MEHTROFDENEPOSTNUOCCAFOREBMUNDNASNOITUTITSNITIDERCNAHTREHTOSREMOTSUCAISSURFOKNABFOERUTCURTS )dnasuoht(MEHTROFDENEPOSTNUOCCAFOREBMUNDNASNOITUTITSNITIDERCNAHTREHTOSREMOTSUCAISSURFOKNABFOERUTCURTS

sremotsucforebmuN stnuoccaforebmuN

7002.10.1fosa 8002.10.1fosa 7002revoegnahc 7002.10.1fosa 8002.10.1fosa 7002revoegnahc

latoT 4.63 3.92 1.7— 2.38 9.97 3.3—

yrusaerTlaredeF 2.1 0.1 2.0— 0.33 1.73 1.4

seidobgnitucexetegdublacoldnalanoigeR 0.3 2.2 8.0— 9.5 0.6 1.0

slevelllafostegdubmorfdecnanifsnoitasinagrO 0.72 5.02 5.6— 6.53 5.82 1.7—

sdnufyrategdub�artxetnemnrevoG 1.2 8.1 3.0— 4.4 4.3 0.1—

snoitasinagrorehtO 1.3 8.3 7.0 3.4 9.4 6.0

)selburnoillib,rapta(8002,1YRAUNAJFOSAERUTCURTSTBEDTNEMNREVOGCITSEMODS’AISSUR )selburnoillib,rapta(8002,1YRAUNAJFOSAERUTCURTSTBEDTNEMNREVOGCITSEMODS’AISSUR )selburnoillib,rapta(8002,1YRAUNAJFOSAERUTCURTSTBEDTNEMNREVOGCITSEMODS’AISSUR )selburnoillib,rapta(8002,1YRAUNAJFOSAERUTCURTSTBEDTNEMNREVOGCITSEMODS’AISSUR )selburnoillib,rapta(8002,1YRAUNAJFOSAERUTCURTSTBEDTNEMNREVOGCITSEMODS’AISSUR

stnemurtsnitbeD tbedtnemnrevogcitsemodnihtiwlatoT tekramseitirucesdesinagronodedart,esehtfO

)DA�ZFO(sdnobnaollaredefnoitaicerpedtbeD 6.708 6.707

)DP�ZFO(sdnobnaollaredefemocni�nopuoctnenamreP 4.882 4.882

)DF�ZFO(sdnobnaollaredefemocni�nopuocdexiF 4.15 4.15

tbedtnemnrevogcitsemodfotrapsarofdetnuoccatbedrehtO 7.351 —

latoT 1.103,1 4.740,1

200


Table 20

Table 21

* Net of accrued coupon income.

*)selburnoillim(8002,1YRAUNAJFOSAAISSURFOKNABEHTOTTBEDYRTSINIMECNANIF *)selburnoillim(8002,1YRAUNAJFOSAAISSURFOKNABEHTOTTBEDYRTSINIMECNANIF *)selburnoillim(8002,1YRAUNAJFOSAAISSURFOKNABEHTOTTBEDYRTSINIMECNANIF *)selburnoillim(8002,1YRAUNAJFOSAAISSURFOKNABEHTOTTBEDYRTSINIMECNANIF *)selburnoillim(8002,1YRAUNAJFOSAAISSURFOKNABEHTOTTBEDYRTSINIMECNANIF

teehs�ecnalabtAeulav

snoitagilbotbedtnemnrevognaissuR 191,463

:hcihwfo

denwo�aissuRfoknaBfognirutcurtserehtfotluserasadeviecerDP�ZFOdnaDA�ZFO—aissuRfoknaBehtybderiuqcadnaDA�ZFOdnaDP�ZFO,KP�ZFO 934,532

snoitagilbotbedrehto— 485,711

soperhguorhtderiuqca— 861,11

LLESDNAYUBOTSTNEDISER�NONHTIWSNOITAREPOTNEDISERFO)REVONRUT(EMULOV LLESDNAYUBOTSTNEDISER�NONHTIWSNOITAREPOTNEDISERFO)REVONRUT(EMULOV LLESDNAYUBOTSTNEDISER�NONHTIWSNOITAREPOTNEDISERFO)REVONRUT(EMULOV LLESDNAYUBOTSTNEDISER�NONHTIWSNOITAREPOTNEDISERFO)REVONRUT(EMULOV LLESDNAYUBOTSTNEDISER�NONHTIWSNOITAREPOTNEDISERFO)REVONRUT(EMULOV

7002NITEKRAMYRADNOCESNOSNOITAGILBOTBEDYCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 7002NITEKRAMYRADNOCESNOSNOITAGILBOTBEDYCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 7002NITEKRAMYRADNOCESNOSNOITAGILBOTBEDYCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 7002NITEKRAMYRADNOCESNOSNOITAGILBOTBEDYCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 7002NITEKRAMYRADNOCESNOSNOITAGILBOTBEDYCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR

)srallodSUnoillib,secirptekramta( )srallodSUnoillib,secirptekramta( )srallodSUnoillib,secirptekramta( )srallodSUnoillib,secirptekramta( )srallodSUnoillib,secirptekramta(

1Q 2Q 3Q 4Q 7002

noitpircsbusnepoybdecalpsdnoboruE 59.0 93.1 43.1 26.0 03.4

OKGgnirutcurtserfoesruocehtnideussisdnoboruE 84.0 89.0 83.0 13.0 41.2

tbedgnirutcurtserfoesruocehtnideussisdnoboruEsrotidercknablaicremmocfobulCnodnoLot 04.7 39.01 74.7 30.41 38.93

eussi9991fosdnobZVGOdnaZVGVO 54.0 06.1 71.0 78.0 90.3


201

Table 22

* Source: Federal Insurance Supervision Service.

** Source: News agency Cbonds.ru.

*** Source: Federal Financial Markets Service.

Table 23

SEIRAIDEMRETNILAICNANIFDESILANOITUTITSNI SEIRAIDEMRETNILAICNANIFDESILANOITUTITSNI SEIRAIDEMRETNILAICNANIFDESILANOITUTITSNI SEIRAIDEMRETNILAICNANIFDESILANOITUTITSNI SEIRAIDEMRETNILAICNANIFDESILANOITUTITSNI

8002.10.1:drocerehtroF

7002.10.1

snoitutitsnitiderC

latot,snoitutitsnitidercgnitarepO 631,1 981,1

:hcihwfo

sknab— 290,1 341,1

snoitutitsnitidercknab�non— 44 64

latipacdesirohtuanisekatsngierofhtiwsnoitutitsnitidercgnitarepO 202 351

aissuRnignitareposnoitutitsnitidercfosehcnarB 554,3 182,3

snoitutitsnitidercnaissuRgnitarepofoseciffoevitatneserpeR 408 996

*seinapmocecnarusnI

seinapmocecnarusnideretsigeR 758 819

**sdnuftnemtsevnitinU

latot,sdnuftnemtsevnitinU 420,1 146

:hcihwfo

dne�nepo— 974 503

lavretni— 101 98

dne�desolc— 444 742

***sdnufnoisneplatnemnrevog�noN

sdnufnoisneplatnemnrevog�nongnitarepO 252 982

8002,1YRAUNAJFOSASDNOBNAOLDETANIMONED�YCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 8002,1YRAUNAJFOSASDNOBNAOLDETANIMONED�YCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 8002,1YRAUNAJFOSASDNOBNAOLDETANIMONED�YCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 8002,1YRAUNAJFOSASDNOBNAOLDETANIMONED�YCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR 8002,1YRAUNAJFOSASDNOBNAOLDETANIMONED�YCNERRUCNGIEROFGNIDNATSTUOTNEMNREVOGNAISSUR

eussifoetaD ytirutaM ycnerruC,raptanoitalucricniemuloV

srallodSUnoillim,etartseretninopuoC

.a.p%

noitpircsbusnepoybdecalpsdnoboruE

8991.60.42 8202.60.62 )DSU(rallodSU 005,2 57.21

sdnobOKGgnirutcurtserfoesruocehtnideussisdnoboruE

8991.70.42 8102.70.42 )DSU(rallodSU 664,3 11

)seussi2(srotidercknablaicremmocfobulCnodnoLottbedfognirutcurtserdnocesehtnideussisdnoboruE

0002.30.13 0102.30.13 )DSU(rallodSU 046,1 52.8

0002.30.13 0302.30.92 )DSU(rallodSU 600,12 5.7

)sehcnartIIVdnaVZVGVO(sdnobnaoldetanimoned�ycnerrucngieroftnemnrevogcitsemoD

3991.50.41 8002.50.41 )DSU(rallodSU 738,2 3

6991.50.41 1102.50.41 )DSU(rallodSU 057,1 3

202

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 24

)srallodSUnoillim,noitatneserplacitylana(7002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserplacitylana(7002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserplacitylana(7002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserplacitylana(7002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserplacitylana(7002ROFSTNEMYAPFOECNALABS’AISSUR

1Q 2Q 3Q 4Q 7002:drocerehtroF

6002

tnuoccatnerruC 639,22 219,41 524,51 630,52 903,87 763,49

edartfoecnalaB 189,82 280,13 063,13 126,04 340,231 962,931

stropxE 357,17 638,38 886,98 881,011 564,553 055,303

lioedurc 283,32 569,82 325,13 236,73 305,121 382,201

stcudorpmuelortep 959,9 009,11 050,41 813,61 822,25 276,44

saglarutan 245,01 058,9 478,9 175,41 738,44 608,34

rehto 968,72 021,33 242,43 666,14 798,631 987,211

stropmI 277,24— 357,25— 923,85— 765,96— 124,322— 182,461—

secivresfoecnalaB 122,3— 385,4— 282,6— 847,5— 438,91— 737,31—

stropxE 866,7 043,9 288,01 754,11 743,93 201,13

secivrestropsnart 816,2 177,2 089,2 164,3 928,11 180,01

levart 315,1 905,2 852,3 723,2 706,9 826,7

secivresrehto 735,3 060,4 546,4 966,5 119,71 393,31

stropmI 988,01— 329,31— 461,71— 502,71— 281,95— 938,44—

secivrestropsnart 137,1— 162,2— 305,2— 358,2— 843,9— 227,6—

levart 999,3— 503,5— 037,7— 322,5— 852,22— 532,81—

secivresrehto 951,5— 653,6— 139,6— 921,9— 675,72— 288,91—

ecnalabegaW 040,1— 696,1— 375,2— 475,2— 488,7— 193,4—

emocnitnemtsevnifoecnalaB 793,1— 556,9— 868,5— 885,5— 905,22— 732,52—

elbavieceremocnI 582,01 039,9 767,11 718,21 897,44 858,72

elbayapemocnI 286,11— 585,91— 536,71— 504,81— 703,76— 590,35—

tnemnrevoglaredeF 912 853— 515— 924— 380,1— 403,2—

elbavieceremocnI 238 272 29 781 383,1 704,1

elbayapemocnI 416— 036— 706— 616— 764,2— 017,3—

)elbayapemocni(stnemnrevoglacoldnalanoigeR 11— 11— 01— 37— 501— 221—

seitirohtuayratenoM 282,3 212,4 127,4 869,4 381,71 452,01


elbayapemocnI 0 0 0 0 0 044—

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

203

Cont.


6002

sknaB 178— 722,1— 326,1— 724,1— 741,5— 417,1—

elbavieceremocnI 049 180,1 250,1 346,1 617,4 819,2

elbayapemocnI 018,1— 703,2— 676,2— 960,3— 368,9— 136,4—

srotcesrehtO 610,4— 172,21— 244,8— 726,8— 653,33— 253,13—


elbayapemocnI 742,9— 736,61— 343,41— 646,41— 378,45— 191,44—

srefsnarttnerrucfoecnalaB 683— 632— 112,1— 476,1— 605,3— 735,1—

tnuoccalaicnanifdnalatipaC 161,41 736,74 996,1— 161,42 952,48 036,5

)srefsnartlatipac(tnuoccalatipaC 578— 551 98 395,9— 422,01— 191

)sevresertpecxe(tnuoccalaicnaniF 630,51 284,74 887,1— 457,33 384,49 044,5

)esaercedseifingis—,esaercniseifingis+(seitilibaiL 817,14 096,76 947,73 614,25 375,991 905,07

tnemnrevoglaredeF 175,1— 643,2— 955,1— 549,1— 124,7— 650,82—

stnemtsevnioiloftroP 018— 428,1— 400,1— 522— 368,3— 599—

ecnaussi 2 0 0 0 2 840,1

noitpmeder 689— 071,2— 401,1— 343— 306,4— 996,3—

lapicnirp 204— 278,1— 533— 822— 738,2— 120,2—

snopuoc 485— 892— 967— 511— 667,1— 776,1—

emocnifotnemtsevnier 574 584 184 764 709,1 668,1

tekramyradnoces 003— 931— 183— 943— 961,1— 112—

snaoL 608— 735— 185— 088— 408,2— 888,32—

noitasilitu 76 46 36 481 873 876

noitpmeder 698— 106— 446— 068,1— 000,4— 784,62—

gnirutcurtser 22 0 0 697 818 129,1

tbedeudrevO 21— 11 32 587— 367— 802,3—

noitalumucca 31 91 32 41 96 961

gnirutcurtser/tnemyaper 52— 8— 0 997— 338— 673,3—

seitilibailrehtO 75 4 3 55— 9 53

stnemnrevoglacoldnalanoigeR 91 37— 4— 47— 331— 361

seitirohtuayratenoM 18 57 571 055 288 133,7—

204

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

End

Note. Other sectors are non�financial corporations, financial corporations, except credit institutions, non�profit organisations providing services to households, and house�

holds.


6002

sknaB 529,41 090,32 220,71 828,51 568,07 451,15

stnemtsevnitceriD 627,1 119,1 689,1 047,1 363,7 015,2

stisopeddnasnaoL 327,7 482,41 949,31 200,51 959,05 306,74

seitilibailrehtO 774,5 598,6 680,1 519— 345,21 140,1

srotcesrehtO 462,82 449,64 511,22 750,83 083,531 875,45

stnemtsevnitceriD 930,61 407,7 824,7 249,31 211,54 778,92

stnemtsevnioiloftroP 309,4— 654,6 255,3— 065,4 165,2 942,8

snaoL 712,71 729,23 153,81 507,91 102,88 048,61

seitilibailrehtO 88— 341— 211— 051— 494— 883—

)esaercniseifingis—,esaercedseifingis+(sevresertpecxe,stessA 286,62— 902,02— 735,93— 266,81— 090,501— 960,56—

tnemnrevoglaredeF 666— 246— 504 651,8 352,7 064,1—

snaoL 581 062 631 471,2— 495,1— 600,4—

tbedeudrevO 438— 793— 17— 180,01 977,8 210,3

stessarehtO 71— 505— 043 942 86 664—

seitirohtuayratenoM 87— 46 914— 43— 764— 046,7

sknaB 378,41— 428,31 245,02— 224,3— 210,52— 836,32—

stnemtsevnitceriD 611— 69— 011— 663— 786— 752—

stisopeddnasnaoL 126,41— 196,51 416,02— 952,2— 308,12— 359,22—

stessarehtO 631— 077,1— 281 797— 225,2— 824—

srotcesrehtO 560,11— 654,33— 289,81— 263,32— 468,68— 016,74—

stnemtsevnioiloftropdnatceriD 616,6— 494,22— 717,9— 156,8— 774,74— 805,32—

hsacycnerrucngieroF 001,2 861,4 989,4 854,4 517,51 232,01

stnemyapecnavdadnasnaollaicremmoC 850,3 300,3— 018— 751,1— 219,1— 626—

stnemeergalatnemnrevogretnirednuseireviledytidommocnotbeD 373— 635— 667 573— 715— 57

secivresdnasdoogfoyrevileddeyaleddnastropxemorfsdeecorpdeyaleDsrefsnart,stcartnoctropmirednuderrefsnartyenomhtiwrofdiap

seitiruceshtiwsnoitareposuoititcifno 091,6— 884,7— 280,9— 395,7— 353,03— 549,91—

stessarehtO 440,3— 201,4— 821,5— 540,01— 913,22— 938,31—

snoissimodnasrorreteN 471,4— 999,2 038,5— 636,6— 046,31— 864,7

sevreseregnahcxengierofniegnahC)esaercniseifingis—,esaercedseifingis+( 329,23— 845,56— 698,7— 165,24— 829,841— 664,701—

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

205

Table 25

* Excluding debt on commodity deliveries under intergovernmental agreements.

** Net errors and omissions fully applies to other sector operations. This means that accounting for financial operations conducted by these sectors is the most difficult part of

compiling the balance of payments.

Note. “—” signifies capital outflow, “+” signifies capital inflow.

)WOLFTUO(WOLFNILATIPACTENROTCESETAVIRP )WOLFTUO(WOLFNILATIPACTENROTCESETAVIRP )WOLFTUO(WOLFNILATIPACTENROTCESETAVIRP )WOLFTUO(WOLFNILATIPACTENROTCESETAVIRP )WOLFTUO(WOLFNILATIPACTENROTCESETAVIRP)srallodSUnoillib,atadstnemyapfoecnalabotgnidrocca( )srallodSUnoillib,atadstnemyapfoecnalabotgnidrocca( )srallodSUnoillib,atadstnemyapfoecnalabotgnidrocca( )srallodSUnoillib,atadstnemyapfoecnalabotgnidrocca( )srallodSUnoillib,atadstnemyapfoecnalabotgnidrocca(

rotcesetavirPwolfnilatipacten

,)wolftuo(latot

tenrotcesgniknaBwolfnilatipac

)wolftuo(

:hcihwfotenrotcesrehtO

wolfnilatipac)wolftuo(

:hcihwfo

ngierofstessa

ngierofseitilibail

ngierof*stessa

ngierofseitilibail

stnemyapfoecnalaBsrorreten

**snoissimodna

1002 0.51— 3.1 4.1— 7.2 2.61— 0.01— 7.3 0.01—

2002 1.8— 5.2 1.1— 6.3 6.01— 5.81— 3.41 5.6—

3002 9.1— 3.01 0.1— 3.11 2.21— 6.42— 1.22 7.9—

4002 9.8— 5.3 6.3— 1.7 4.21— 7.73— 7.13 4.6—

5002 1.0 9.5 4.31— 2.91 8.5— 9.94— 4.25 3.8—

6002 9.14 5.72 6.32— 2.15 4.41 7.74— 6.45 5.7

1Q6002 6.5— 0.3— 7.9— 7.6 6.2— 0.31— 3.31 9.2—

2Q6002 6.02 9.9 6.0 3.9 7.01 5.3— 8.41 6.0—

3Q6002 4.21 8.8 0.3— 8.11 7.3 3.51— 2.41 8.4

4Q6002 5.41 9.11 5.11— 4.32 6.2 9.51— 3.21 2.6

7002 2.18 9.54 0.52— 9.07 4.53 3.68— 4.531 6.31—

1Q7002 5.31 1.0 9.41— 9.41 4.31 7.01— 3.82 2.4—

2Q7002 9.35 9.63 8.31 1.32 0.71 9.23— 9.64 0.3

3Q7002 0.7— 5.3— 5.02— 0.71 5.3— 7.91— 1.22 8.5—

)etamitse(4Q7002 8.02 4.21 4.3— 8.51 4.8 0.32— 1.83 6.6—

206

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 26

* Cross�border non�cash transfers (receipts) by resident and non�resident individuals with and without opening accounts in credit institutions, including remittances through

money transfer systems and the Russian Postal Service.

** Negative balance signifies an excess of total money transfers from Russia over total receipts in Russia.

*STNEDISER�NONDNASTNEDISERYBSNOITAREPOREDROB�SSORC *STNEDISER�NONDNASTNEDISERYBSNOITAREPOREDROB�SSORC *STNEDISER�NONDNASTNEDISERYBSNOITAREPOREDROB�SSORC *STNEDISER�NONDNASTNEDISERYBSNOITAREPOREDROB�SSORC *STNEDISER�NONDNASTNEDISERYBSNOITAREPOREDROB�SSORC

1Q 2Q 3Q 4Q 6002 1Q 2Q 3Q 4Q 7002

srallodSUnoillim,latoT

aissuRmorfsrefsnartlaudividnI 092,3 872,4 402,5 689,5 957,81 649,5 448,5 337,8 482,9 708,92

seirtnuocSIC�nonot 144,2 119,2 322,3 519,3 194,21 225,4 567,3 927,5 711,6 331,02

seirtnuocSICot 948 763,1 189,1 170,2 862,6 424,1 970,2 500,3 761,3 576,9

aissuRnislaudividniybstpieceR 854,1 368,1 149,1 082,2 245,7 492,2 316,2 117,2 316,2 132,01

seirtnuocSIC�nonmorf 152,1 575,1 916,1 488,1 033,6 749,1 671,2 461,2 880,2 673,8

seirtnuocSICmorf 602 882 223 693 212,1 743 734 745 525 658,1

**ecnalaB 338,1— 514,2— 362,3— 607,3— 712,11— 256,3— 132,3— 220,6— 276,6— 675,91—

seirtnuocSIC�non 091,1— 633,1— 306,1— 230,2— 161,6— 575,2— 885,1— 465,3— 920,4— 757,11—

seirtnuocSIC 346— 970,1— 956,1— 576,1— 650,5— 770,1— 246,1— 854,2— 246,2— 918,7—

srallodSU,eulavnoitarepoegarevA

aissuRmorfsrefsnartlaudividnI 414,1 204,1 224,1 095,1 564,1 809,1 134,1 977,1 597,1 527,1


seirtnuocSICot 914 805 906 826 655 525 575 486 696 436

aissuRnislaudividniybstpieceR 096,1 260,2 962,2 433,2 690,2 105,2 993,2 339,2 773,2 935,2

seirtnuocSIC�nonmorf 844,2 338,2 650,3 052,3 809,2 106,3 301,3 179,3 803,3 364,3

seirtnuocSICmorf 885 928 889 799 358 229 621,1 244,1 121,1 151,1

IV

.3

. S

TA

TI

ST

IC

AL

TA

BL

ES

207

Table 27

* Anelik, BLIZKO, Contact, InterExpress, Migom, MoneyGram, PrivatMoney, Travelex, UNIStream, Western Union, AziyaExpress, ALLUR, Bystraya Pochta, Guta

Sprint, Zolotaya Korona and LIDER.

** Negative balance means the excess of total remittances from Russia over total remittances to Russia.

ECIVRESLATSOPS’AISSURDNA*SMETSYSREFSNARTYENOMAIVSECNATTIMERREDROB�SSORC ECIVRESLATSOPS’AISSURDNA*SMETSYSREFSNARTYENOMAIVSECNATTIMERREDROB�SSORC ECIVRESLATSOPS’AISSURDNA*SMETSYSREFSNARTYENOMAIVSECNATTIMERREDROB�SSORC ECIVRESLATSOPS’AISSURDNA*SMETSYSREFSNARTYENOMAIVSECNATTIMERREDROB�SSORC ECIVRESLATSOPS’AISSURDNA*SMETSYSREFSNARTYENOMAIVSECNATTIMERREDROB�SSORC

1Q 2Q 3Q 4Q 6002 1Q 2Q 3Q 4Q 7002

srallodSUnoillim,latoT

aissuRmorfsecnattimeR 518 092,1 119,1 889,1 500,6 273,1 500,2 939,2 721,3 444,9

seirtnuocSIC�nonot 601 821 881 102 226 271 281 032 582 868

seirtnuocSICot 907 261,1 327,1 887,1 283,5 102,1 428,1 907,2 248,2 575,8

aissuRotsecnattimeR 172 133 043 263 403,1 243 004 154 984 186,1

seirtnuocSIC�nonmorf 561 291 391 691 647 081 202 012 022 318

seirtnuocSICmorf 601 931 741 761 955 261 791 142 862 868

**ecnalaB 445— 959— 275,1— 626,1— 007,4— 030,1— 606,1— 884,2— 936,2— 367,7—

seirtnuocSIC�non 95 46 5 5— 321 8 12 02— 56— 55—

seirtnuocSIC 306— 320,1— 775,1— 126,1— 428,4— 930,1— 626,1— 964,2— 475,2— 707,7—

srallodSU,eulavecnattimeregarevA

aissuRmorfsecnattimeR 714 494 006 316 645 215 165 476 786 326


seirtnuocSICot 083 464 365 575 115 174 135 446 256 985

aissuRotsecnattimeR 114 484 335 294 084 884 265 166 306 975

seirtnuocSIC�nonmorf 794 335 875 735 635 915 085 836 795 385

seirtnuocSICmorf 323 034 584 944 224 854 545 286 706 575

208


Table 29

Table 28

* Net growth in liabilities to non�residents according to balance of payments data.

** Exclusive of operations related to debt restructuring and remission.

Note.“—” signifies decrease in residents’ foreign liabilities. Minor discrepancies between the total and the sum of

items are due to the rounding of data.

* Net growth in residents’ assets according to balance of payments data.

** Exclusive of operations related to debt restructuring and remission.

Note. “—” signifies decrease in residents’ foreign assets. Minor discrepancies between the total and the sum of

items are due to the rounding of data.

7002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTSLANOITCNUF 7002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTSLANOITCNUF 7002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTSLANOITCNUF 7002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTSLANOITCNUF 7002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTSLANOITCNUF

*)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib(

epyTtnemtsevnifo

1Q 2Q 3Q 4Q 7002**drocerehtroF

7002 6002

tceriD 8.71 6.9 4.9 7.51 5.25 5.25 4.23

oiloftroP 7.0— 6.11 2.3— 0.5 7.21 7.21 1.8

laicnaniFsevitavired 3.0— 4.0— 7.0— 0.1— 4.2— 4.2— 3.1—

rehtO 9.42 9.64 2.23 7.23 8.631 6.731 9.13

latoT 7.14 7.76 7.73 4.25 6.991 4.002 1.17

7002NI)SEVRESERTPECXE(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTSLANOITCNUF 7002NI)SEVRESERTPECXE(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTSLANOITCNUF 7002NI)SEVRESERTPECXE(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTSLANOITCNUF 7002NI)SEVRESERTPECXE(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTSLANOITCNUF 7002NI)SEVRESERTPECXE(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTSLANOITCNUF

*)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib( *)srallodSUnoillib(

epyTtnemtsevnifo

1Q 2Q 3Q 4Q 7002**drocerehtroF

7002 6002

tceriD 3.6 5.12 2.9 7.8 7.54 7.54 2.32

oiloftroP 9.0 8.2 2.0 2.3 0.7 0.7 2.6—

laicnaniFsevitavired 3.0— 3.0— 8.0— 4.1— 8.2— 8.2— 2.1—

rehtO 8.91 7.3— 0.13 1.8 2.55 9.46 4.94

latoT 7.62 2.02 5.93 7.81 1.501 8.411 1.56

IV

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TA

TI

ST

IC

AL

TA

BL

ES

209

Table 30

NOITISOPTNEMTSEVNILANOITANRETNIROTCESGNIKNABNAISSUR NOITISOPTNEMTSEVNILANOITANRETNIROTCESGNIKNABNAISSUR NOITISOPTNEMTSEVNILANOITANRETNIROTCESGNIKNABNAISSUR NOITISOPTNEMTSEVNILANOITANRETNIROTCESGNIKNABNAISSUR NOITISOPTNEMTSEVNILANOITANRETNIROTCESGNIKNABNAISSUR

)srallodSUnoillim,8002,1yraunaJdna,7002,1yraunaJfosa( )srallodSUnoillim,8002,1yraunaJdna,7002,1yraunaJfosa( )srallodSUnoillim,8002,1yraunaJdna,7002,1yraunaJfosa( )srallodSUnoillim,8002,1yraunaJdna,7002,1yraunaJfosa( )srallodSUnoillim,8002,1yraunaJdna,7002,1yraunaJfosa(

ecnalaB7002.10.1fosa

segnahCsnoitarepooteud

segnahCnoitaulaveroteud

rehtOsegnahc

latoTsegnahc


1 2 3 4 5 6

stessA 153,56 210,52 514,6 87— 943,13 107,69

daorbastnemtsevnitceriD 075,1 786 552 02 369 335,2

emocnidetsevnierdnalatipacnignidlohekatS 312,1 486 942 71 059 361,2

latipacrehtO 753 3 7 3 31 073

stnemtsevnioiloftroP 546,7 905,4 857 75— 012,5 558,21

latipacnignidlohekatS 172 287,1 22 22— 287,1 350,2

seitirucestbeD 473,7 727,2 637 53— 724,3 208,01

mret�gnol 473,6 335,3 684 9— 010,4 483,01

mret�trohs 000,1 608— 052 62— 385— 714

sevitaviredlaicnaniF 222 267,2— 139,3 0 961,1 193,1

stnemtsevnirehtO 419,55 875,22 074,1 14— 800,42 129,97

stisopeddnahsacycnerrucngieroF 492,23 914,01 587 63— 961,11 364,34

ycnerrucngieroflliT 730,3 412— 08 8— 141— 698,2

stisopeddnastnuoccatnerruC 752,92 336,01 507 72— 013,11 765,04

mret�gnol 172,3 069,4 141 0 101,5 273,8

mret�trohs 689,52 276,5 465 72— 902,6 591,23

snaoL 224,22 071,11 316 4— 087,11 202,43

mret�gnol 021,8 381,8 581 0 863,8 884,61

mret�trohs 203,41 889,2 824 4— 214,3 417,71

tbedeudrevO 34 9— 1 0 8— 63

stessarehtO 551,1 799 17 1— 660,1 122,2

mret�gnol 701 282 4 0 682 293

mret�trohs 840,1 517 76 1— 187 828,1

210

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A2

00

7A

NN

UA

L R

EP

OR

T

End

Notes.

1. “+” in columns 2, 3, 4 and 5 denotes net growth in assets and liabilities, “—” denotes their net decrease. This contingent use of the sign differs from its use in balance of

payments statistics.

2. This table presents data compiled by credit institutions and Vneshekonombank.

3. Column 4 shows, among other things, assets and liabilities of credit institutions that had their banking licences revoked in the period under review.


segnahCsnoitarepooteud

segnahCnoitaulaveroteud

rehtOsegnahc

latoTsegnahc


1 2 3 4 5 6

seitilibaiL 729,321 568,07 915,11 374,4 758,68 487,012

aissuRnistnemtsevnitceriD 721,9 363,7 567 36 191,8 913,71

emocnidetsevnierdnalatipacnignidlohekatS 817,8 994,6 917 671 393,7 111,61

latipacrehtO 904 468 64 311— 897 702,1

stnemtsevnioiloftroP 171,71 461,41 065,4 01— 417,81 588,53

latipacnignidlohekatS 078,31 593,21 274,4 135— 533,61 502,03

seitirucestbeD 103,3 967,1 98 125 973,2 086,5

mret�gnol 377,1 888 23 325 344,1 612,3

mret�trohs 825,1 188 65 2— 539 364,2

sevitaviredlaicnaniF 871 034,2— 460,3 0 436 118

stnemtsevnirehtO 154,79 867,15 131,3 024,4 813,95 967,651

stisopeddnastnuoccatnerruC 397,72 465,11 813,1 12— 168,21 356,04

mret�gnol 140,9 851,6 755 51— 007,6 147,51

mret�trohs 257,81 504,5 167 6— 061,6 319,42

snaoL 757,76 593,93 436,1 154,4 084,54 632,311

mret�gnol 991,05 594,33 722,1 364,4 581,93 483,98

mret�trohs 855,71 009,5 704 21— 592,6 358,32

tbedeudrevO 7 4— 1 0 4— 4

seitilibailrehtO 498,1 418 871 11— 289 678,2

mret�gnol 762 402 8 1— 012 874

mret�trohs 726,1 016 171 9— 177 893,2

noitisoptnemtsevnilanoitanretniteN 575,85— 358,54— 501,5— 155,4— 805,55— 480,411—

IV

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TI

ST

IC

AL

TA

BL

ES

211

Table 31

Note. Data in this table only include balances on interbank operations in the form of loans, deposits and correspondent accounts and foreign currency in credit institutions’

cash departments.

)srallodSUnoillim(8002,1YRAUNAJFOSASEIRTNUOCFOPUORGYBSNOITAREPOKNABRETNINOSEITILIBAILDNASTESSANGIEROFROTCESGNIKNABNAISSUR )srallodSUnoillim(8002,1YRAUNAJFOSASEIRTNUOCFOPUORGYBSNOITAREPOKNABRETNINOSEITILIBAILDNASTESSANGIEROFROTCESGNIKNABNAISSUR )srallodSUnoillim(8002,1YRAUNAJFOSASEIRTNUOCFOPUORGYBSNOITAREPOKNABRETNINOSEITILIBAILDNASTESSANGIEROFROTCESGNIKNABNAISSUR )srallodSUnoillim(8002,1YRAUNAJFOSASEIRTNUOCFOPUORGYBSNOITAREPOKNABRETNINOSEITILIBAILDNASTESSANGIEROFROTCESGNIKNABNAISSUR )srallodSUnoillim(8002,1YRAUNAJFOSASEIRTNUOCFOPUORGYBSNOITAREPOKNABRETNINOSEITILIBAILDNASTESSANGIEROFROTCESGNIKNABNAISSUR

stessangieroF seitilibailngieroF ecnalaBstessangieroffo

seitilibaildnamret�trohs mret�gnol latot mret�trohs mret�gnol latot

latoT 7.775,14 9.802,11 6.687,25 7.450,92 5.350,96 2.801,89 6.123,54—

:hcihwfo

seirtnuocSIC 0.211,1 1.918 1.139,1 2.066,1 2.864 4.821,2 3.791—

:hcihwfo

seirtnuocCEsAruE 9.943 8.502 7.555 8.441,1 2.863 1.315,1 4.759—

seirtnuocrehtO 1.267 3.316 5.573,1 4.515 0.001 4.516 1.067

seirtnuocSIC�noN 6.353,04 8.983,01 4.347,05 3.681,72 7.345,86 0.037,59 7.689,44—

:hcihwfo

seirtnuocUE 0.223,72 8.243,01 9.466,73 7.863,42 4.127,16 1.090,68 3.524,84—

seirtnuocCEPA 4.371,8 7.2 1.671,8 4.700,1 0.587,5 4.297,6 7.383,1

seirtnuocrehtO 2.858,4 2.44 4.209,4 2.018,1 3.730,1 5.748,2 9.450,2

snoitasinagrolaicnaniflanoitanretnI 1.211 0.0 1.211 1.802 6.14 7.942 6.731—

:drocerehtroF

seirtnuocDCEO 2.953,73 7.300,01 8.263,74 1.123,42 9.655,26 0.878,68 1.515,93—

212

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 33

).a.p%(7002NISDLEIYTESSAOILOFTROPEVRESEREGNAHCXENGIEROFAISSURFOKNAB ).a.p%(7002NISDLEIYTESSAOILOFTROPEVRESEREGNAHCXENGIEROFAISSURFOKNAB ).a.p%(7002NISDLEIYTESSAOILOFTROPEVRESEREGNAHCXENGIEROFAISSURFOKNAB ).a.p%(7002NISDLEIYTESSAOILOFTROPEVRESEREGNAHCXENGIEROFAISSURFOKNAB ).a.p%(7002NISDLEIYTESSAOILOFTROPEVRESEREGNAHCXENGIEROFAISSURFOKNAB

detanimoned�rallodSUstessa

detanimoned�oruEstessa

detanimoned�gnilretsdnuoPstessa

detanimoned�neyesenapaJstessa

oiloftropnoitcasnarToiloftroplautca 12.5 11.4 88.5 86.0

oiloftropdradnats 69.4 20.4 47.5 46.0

oiloftroptnemtsevnIoiloftroplautca 81.8 12.3 96.7

oiloftropdradnats 55.8 24.3 58.7

latoT oiloftroplautca 92.6 18.3 40.7 86.0

Table 32

)srallodSUnoillib(7002NISEVRESERLANOITANRETNIS’AISSUR )srallodSUnoillib(7002NISEVRESERLANOITANRETNIS’AISSUR )srallodSUnoillib(7002NISEVRESERLANOITANRETNIS’AISSUR )srallodSUnoillib(7002NISEVRESERLANOITANRETNIS’AISSUR )srallodSUnoillib(7002NISEVRESERLANOITANRETNIS’AISSUR

fosaecnalaB

7002 8002

10.1 20.1 30.1 40.1 50.1 60.1 70.1 80.1 90.1 01.1 11.1 21.1 10.1

sevreseR)stessayrtsiniMecnaniFgnidulcni( 7.303 9.303 5.413 8.833 1.963 2.304 8.504 2.614 614 4.524 744 5.364 4.674

stessaycnerrucngieroF 6.592 6.592 9.503 3.033 4.063 7.493 4.793 5.704 1.704 3.514 634 2.254 4.464

dlogyratenoM 2.8 3.8 7.8 5.8 7.8 5.8 4.8 7.8 9.8 1.01 0.11 4.11 0.21

IV

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TA

TI

ST

IC

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TA

BL

ES

213

Table 34

* “+” signifies appreciation of the Russian ruble against foreign currencies, “—” signifies its depreciation.

7002NISROTACIDNIETAREGNAHCXEELBURYEK 7002NISROTACIDNIETAREGNAHCXEELBURYEK 7002NISROTACIDNIETAREGNAHCXEELBURYEK 7002NISROTACIDNIETAREGNAHCXEELBURYEK 7002NISROTACIDNIETAREGNAHCXEELBURYEK

yraunaJ yraurbeF hcraM lirpA yaM enuJ yluJ tsuguA rebmetpeS rebotcO rebmevoN rebmeceD

,doirepfodnefosaetarlanimonelbur/rallodSUrallodrepselbur 35.62 61.62 10.62 96.52 9.52 28.52 6.52 56.52 59.42 27.42 53.42 55.42

,doireprevoetarlanimonegarevaelbur/rallodSUrallodrepselbur 74.62 43.62 11.62 48.52 28.52 39.52 65.52 36.52 43.52 98.42 74.42 75.42

ecnisetarlanimonegarevaelbur/rallodSUrallodrepselbur,raeyfotrats 74.62 4.62 13.62 91.62 11.62 80.62 10.62 69.52 98.52 97.52 76.52 75.52

,doirepfodnefosaetarlanimonelbur/oruEoruerepselbur 93.43 25.43 96.43 70.53 28.43 27.43 39.43 10.53 53.53 95.53 40.63 39.53

,doireprevoetarlanimonegarevaelbur/oruEoruerepselbur 74.43 14.43 75.43 98.43 19.43 77.43 10.53 88.43 61.53 4.53 9.53 8.53

,raeyfotratsecnisetarlanimonegarevaelbur/oruEoruerepselbur 74.43 44.43 84.43 85.43 56.43 76.43 27.43 47.43 87.43 58.43 49.43 10.53

*6002rebmeceDfo%sahtworG

xednietarlanimonrallodSU/elbuR 7.0— 2.0— 7.0 7.1 8.1 4.1 9.2 6.2 7.3 6.5 4.7 0.7

xednietarlanimonorue/elbuR 8.0 0.1 5.0 4.0— 5.0— 1.0— 8.0— 4.0— 2.1— 9.1— 2.3— 0.3—

elburehtfoetarevitceffelanimonfoxednIseicnerrucngieroftsniaga 2.0 5.0 4.0 1.0— 4.0— 2.0— 3.0— 2.0— 5.0— 7.0— 1.1— 0.1—

xednietarlaerrallodSU/elbuR 7.0 8.1 3.2 3.3 4.3 8.3 3.6 3.6 1.8 5.11 1.41 0.51

xednietarlaerorue/elbuR 6.2 5.3 1.3 3.2 7.2 1.4 3.4 7.4 5.4 1.5 5.4 8.5

elburehtfoetarevitceffelaerfoxednIseicnerrucngieroftsniaga 7.1 6.2 7.2 4.2 4.2 3.3 9.3 9.3 8.3 5.4 4.4 1.5

*doirepsuoiverpfo%sahtworG

xednietarlanimonrallodSU/elbuR 7.0— 5.0 9.0 0.1 1.0 4.0— 4.1 3.0— 1.1 8.1 7.1 4.0—

xednietarlanimonorue/elbuR 8.0 2.0 5.0— 9.0— 1.0— 4.0 7.0— 4.0 8.0— 7.0— 4.1— 3.0

elburehtfoetarevitceffelanimonfoxednIseicnerrucngieroftsniaga 2.0 3.0 1.0— 5.0— 3.0— 1.0 1.0— 1.0 3.0— 2.0— 4.0— 1.0

xednietarlaerrallodSU/elbuR 7.0 1.1 5.0 0.1 1.0 4.0 4.2 0.0 7.1 2.3 3.2 8.0

xednietarlaerorue/elbuR 6.2 9.0 4.0— 8.0— 4.0 4.1 2.0 4.0 3.0— 7.0 6.0— 2.1

elburehtfoetarevitceffelaerfoxednIseicnerrucngieroftsniaga 7.1 9.0 1.0 3.0— 0.0 9.0 6.0 0.0 1.0— 6.0 0.0 7.0

214

BA

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SI

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00

7A

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UA

L R

EP

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Table 35

)srallodSUnoillib(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib(7002NITBEDNGIEROFS’AISSUR

7002.10.1 7002.40.1 7002.70.1 7002.01.1 8002.10.1

latoT 6.013 0.843 9.193 0.134 6.954

tnemnrevoG 7.44 4.34 8.04 7.93 4.73

tnemnrevoglaredeF 2.34 9.14 3.93 1.83 8.53

tbednaissuRweN 8.33 0.33 8.03 9.92 7.82

snoitasinagrolaicnaniflanoitanretnimorfsnaol 4.5 3.5 1.5 0.5 0.5

DRBI 8.4 6.4 5.4 4.4 3.4

rehto 7.0 7.0 7.0 7.0 7.0

snaolrehto 6.2 4.2 3.2 2.2 7.1

seitirucesdetanimoned�ycnerrucngierof 0.52 2.42 3.22 9.12 3.12

OKGgnirutcurtserfoesruocehtnideussidnanoitpircsbusnepoybdecalpsdnoborue 7.4 7.4 7.2 7.2 8.2

tbedgnirutcurtserfoesruocehtnideussisdnoborue

srotidercknablaicremmocfobulCnodnoLot 3.91 6.81 5.81 2.81 6.71

6 ht 7dna ht 9991nideussisdnobZVGOdnasdnobZVGVOfosehcnart 0.1 0.1 0.1 0.1 9.0

)ZFO(seitirucesdetanimoned�elbur 5.0 7.0 7.0 4.0 3.0

tbedrehto 3.0 4.0 4.0 4.0 3.0

tbedare�teivoS 4.9 9.8 5.8 2.8 1.7

snoitanrotidercfobulCsiraPfosrebmemmorfsnaol 6.0 1.0 1.0 0.0 0.0

seirtnuoccolb�teivoSremrofottbed 9.1 9.1 9.1 6.1 5.1

srotiderclaicifforehtootdewotbed 3.3 3.3 0.3 0.3 2.2

3 dr 4, ht 5dna ht sdnobZVGVOfosehcnart 1.2 0.2 9.1 0.2 0.2

tbedrehto 6.1 6.1 6.1 6.1 3.1

stnemnrevoglacoldnalanoigeR 5.1 5.1 5.1 6.1 5.1

snaol 0.1 0.1 1.1 1.1 1.1

seitirucesdetanimoned�elbur 5.0 5.0 4.0 4.0 4.0

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End

* Repo transactions.

** From January 1, 2007, include debt on repo operations.

*** These include the market price of preference shares owned by non�residents. Preference shares are classified as a foreign debt component due to the issuer’s obligation to

pay dividends on them, although the issuer does not assume the obligation to repurchase them at market price.

Note. These include foreign debt denominated in national and foreign currency. Government securities are accounted for as part of debt owed to non�residents and evaluated

at their nominal value.

7002.10.1 7002.40.1 7002.70.1 7002.01.1 8002.10.1

seitirohtuayratenoM 9.3 8.8 2.8 8.21 0.9

*snaol 0.3 7.7 0.7 5.11 1.7

stisopeddnaselburhsac 9.0 0.1 1.1 3.1 9.1

)latipacnignidlohekatstuohtiw(sknaB 2.101 9.011 0.131 7.741 7.361

srotsevnitceridotsnoitagilbotbed 4.0 5.0 7.0 9.0 2.1

snaol 8.76 4.47 6.88 7.89 2.311

stisopeddnastnuoccatnerruc 8.72 3.92 8.33 2.93 7.04

seitirucestbed 3.3 1.4 9.4 4.5 7.5

tbedrehto 9.1 7.2 0.3 5.3 9.2

)latipacnignidlohekatstuohtiw(srotcesrehtO 7.061 0.581 0.212 8.032 6.942

srotsevnitceridotsnoitagilbotbed 1.12 6.82 4.42 9.42 2.42

**snaol 4.711 4.431 0.361 9.281 3.302

***seitirucestbed 0.91 5.81 9.71 4.71 1.71

gnisaelecnanifnotbed 8.2 1.3 3.3 6.3 1.4

tbedrehto 4.0 4.0 3.3 0.2 9.0

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Table 36

)srallodSUnoillib,noitatneserplacitylana(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,noitatneserplacitylana(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,noitatneserplacitylana(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,noitatneserplacitylana(7002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,noitatneserplacitylana(7002NITBEDNGIEROFS’AISSUR

7002.10.1 7002.40.1 7002.70.1 7002.01.1 8002.10.1

tbedngierofs’aissuR 6.013 0.843 9.193 0.134 6.954

snoitagilbomret�trohS 7.65 5.76 2.68 7.001 3.501

snoitagilbomret�gnoL 8.352 5.082 6.503 3.033 4.453

*tbedngieroftnemnrevoglareneG 4.531 4.251 1.371 2.681 1.781



tnemnrevoG 7.44 4.34 8.04 7.93 4.73



seitirohtuayratenoM 9.3 8.8 2.8 8.21 0.9


sknaB 4.14 2.64 2.45 2.95 5.56



srotcesrehtO 4.54 1.45 0.07 6.47 1.57



*tbedngierofrotcesetavirP 1.571 6.591 8.812 7.442 6.272



sknaB 8.95 6.46 8.67 5.88 1.89



srotcesrehtO 3.511 9.031 0.241 2.651 4.471



* General government foreign debt covers foreign debt of the government, monetary authorities and banks and non�financial organisations in which the government and

monetary authorities hold, directly or indirectly, 50% or more of shares or control otherwise. Debt obligations of other residents to non�residents, which do not fit into this

definition, are classified as private sector foreign debt.

Note. Including foreign debt denominated in national and foreign currency.

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Table 37

*7002—5002NISRENTRAPGNIDARTGNIDAELS’AISSURFOSROTACIDNITNEMPOLEVEDCIMONOCEYEK *7002—5002NISRENTRAPGNIDARTGNIDAELS’AISSURFOSROTACIDNITNEMPOLEVEDCIMONOCEYEK *7002—5002NISRENTRAPGNIDARTGNIDAELS’AISSURFOSROTACIDNITNEMPOLEVEDCIMONOCEYEK *7002—5002NISRENTRAPGNIDARTGNIDAELS’AISSURFOSROTACIDNITNEMPOLEVEDCIMONOCEYEK *7002—5002NISRENTRAPGNIDARTGNIDAELS’AISSURFOSROTACIDNITNEMPOLEVEDCIMONOCEYEK

,PDGlaeRraeysuoiverpfo%sahtworg

,secirpremusnoCrebmeceDnihtworg

raeygnitroperfo**rebmeceDsuoiverpfo%sa

,ecnalabtnuoccatnerruC***PDGfo%sa

,sevreserlanoitanretnI****srallodSUnoillib

5002 6002 7002 5002 6002 7002 5002 6002 7002 5002 6002 7002

ASU 1.3 9.2 2.2 4.3 5.2 1.4 1.6— 2.6— 3.5— 1.45 9.45 5.95

*****)seirtnuoc72(noinUnaeporuE 9.1 1.3 9.2 3.2 2.2 2.3 2.0— 8.0— 7.0— 5.593 9.134 3.005

******)seirtnuoc31(enozoruE 6.1 8.2 6.2 2.2 9.1 1.3 1.0 2.0— 1.0 7.481 0.791 3.512

muigleB 0.2 9.2 7.2 8.2 1.2 1.3 6.2 7.2 2.3 2.8 8.8 4.01

ynamreG 8.0 9.2 5.2 1.2 4.1 1.3 6.4 0.5 6.5 1.54 7.14 3.44

ylatI 6.0 8.1 5.1 1.2 1.2 8.2 6.1— 6.2— 2.2— 5.52 7.52 4.82

niapS 6.3 9.3 8.3 7.3 7.2 3.4 4.7— 6.8— 1.01— 7.9 8.01 5.11

sdnalrehteNehT 5.1 0.3 5.3 0.2 7.1 6.1 2.7 3.8 6.6 0.9 8.01 3.01

dnalniF 8.2 9.4 4.4 1.1 2.1 9.1 6.3 6.4 6.4 5.01 5.6 1.7

ecnarF 7.1 0.2 9.1 8.1 7.1 8.2 9.0— 3.1— 3.1— 8.72 7.24 7.54

modgniKdetinU 8.1 9.2 0.3 9.1 0.3 1.2 5.2— 9.3— 9.4— 5.83 7.04 0.94

yragnuH 1.4 9.3 3.1 3.3 5.6 4.7 8.6— 5.6— 6.5— 6.81 5.12 0.42

ainauhtiL 9.7 7.7 8.8 0.3 5.4 1.8 1.7— 8.01— 0.31— 7.3 7.5 6.7

dnaloP 6.3 2.6 5.6 7.0 4.1 0.4 6.1— 2.3— 7.3— 9.04 4.64 0.36

aikavolS 6.6 5.8 4.01 7.3 2.4 4.3 5.8— 1.7— 3.5— 9.41 6.21 2.81

cilbupeRhcezC 4.6 4.6 5.6 2.2 7.1 4.5 6.1— 1.3— 5.2— 3.92 2.13 6.43

nedewS 3.3 1.4 6.2 9.0 6.1 5.3 8.6 5.8 3.8 1.22 8.42 0.72

ainotsE 2.01 2.11 1.7 6.3 1.5 6.9 0.01— 5.51— 0.61— 9.1 8.2 3.3

airagluB 2.6 3.6 2.6 5.6 5.6 5.21 0.21— 6.51— 4.12— 0.8 9.01 5.61

ainamoR 2.4 9.7 0.6 6.8 9.4 6.6 9.8— 4.01— 9.31— 9.91 1.82 2.73

218

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End

* According to official sources of statistical information of corresponding countries, EUROSTAT agency and the IMF as of April 10, 2008.

** For the EU, UK, eurozone, Germany, France and Italy: harmonised consumer price indices calculated in accordance with the EU Commission’s general recommenda�

tions in respect to the consumer goods basket and methods of determining unit weights of goods and services and calculating averages.

*** “+” denotes a surplus, “—” denotes a deficit.

**** As of end of year; including monetary authorities’ foreign currency assets and SDRs and reserve position in the IMF (each country’s reserve share and credit position in

the IMF). For EU: estimates based on IMF data (sum total of international reserves of EU member states). For eurozone, as determined by the European system of central

banks.

***** Austria, Belgium, Bulgaria, UK, Hungary, Germany, Greece, Denmark, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands,

Poland, Portugal, Romania, Slovakia, Slovenia, Finland, France, the Czech Republic, Sweden and Estonia.

****** Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, Finland and France.

,PDGlaeRraeysuoiverpfo%sahtworg

,secirpremusnoCrebmeceDnihtworg

raeygnitroperfo**rebmeceDsuoiverpfo%sa

,ecnalabtnuoccatnerruC***PDGfo%sa

,sevreserlanoitanretnI****srallodSUnoillib

5002 6002 7002 5002 6002 7002 5002 6002 7002 5002 6002 7002

dnalreztiwS 4.2 2.3 1.3 0.1 6.0 0.2 5.31 1.51 2.71 3.63 1.83 5.44

yekruT 4.8 9.6 5.4 7.7 7.9 4.8 7.4— 1.6— 7.5— 6.05 9.06 4.37

suraleB 4.9 0.01 2.8 0.8 6.6 1.21 4.1 1.4— 6.6— 1.1 2.1 8.2

eniarkU 7.2 3.7 3.7 3.01 6.11 6.61 9.2 5.1— 2.4— 0.91 8.12 8.13

natshkazaK 7.9 7.01 5.8 5.7 4.8 8.81 8.1— 2.2— 6.6— 1.6 8.71 5.51

napaJ 9.1 4.2 1.2 4.0— 3.0 7.0 6.3 9.3 9.4 3.438 7.978 8.259

anihC 4.01 1.11 4.11 6.1 8.2 5.6 2.7 4.9 1.11 5.128 5.860,1 3.035,1

aeroKhtuoS 2.4 1.5 0.5 6.2 1.2 6.3 9.1 6.0 6.0 3.012 9.832 2.262

aidnI 1.9 7.9 2.9 6.5 9.6 5.5 3.1— 1.1— 8.1— 9.131 7.071 0.762

learsI 3.5 2.5 3.5 4.2 1.0— 4.3 3.3 0.6 1.3 1.82 2.92 5.82

lizarB 2.3 8.3 4.5 7.5 1.3 5.4 6.1 3.1 3.0 2.35 2.58 4.971

IV

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219

Table 38

* According to data compiled by CIS national (central) banks.

** Source for number of commercial banks in Kazakhstan is the Agency for Regulation and Supervision of the Financial Market and Financial Institutions of the Republic of

Kazakhstan.

*7002NISROTACIDNIYRATENOMYEK’SEIRTNUOCSIC *7002NISROTACIDNIYRATENOMYEK’SEIRTNUOCSIC *7002NISROTACIDNIYRATENOMYEK’SEIRTNUOCSIC *7002NISROTACIDNIYRATENOMYEK’SEIRTNUOCSIC *7002NISROTACIDNIYRATENOMYEK’SEIRTNUOCSIC

najiabrezA ainemrA suraleB aigroeG natshkazaK natszygryK avodloM aissuR natsikijaT eniarkU

,)etarecnanifer(etarknab)lanoitan(lartneclaiciffO:%,raeyfodnefosa

6002 5.9 57.4 01 — 9 51.3 5.41 11 21 5.8

7002 31 57.5 01 — 11 97.8 61 01 51 8

etaregnahcxeknab)lanoitan(lartneclaiciffOraeyfodnefosa)ycnerruclanoitanfostinu(

:rallodSUtsniaga

6002 4178.0 05.363 041,2 5317.1 00.721 8321.83 0509.21 1133.62 5624.3 50.5

7002 3548.0 22.403 051,2 6195.1 03.021 8894.53 2913.11 2645.42 9464.3 50.5

:elburnaissuRtsniaga

6002 1330.0 08.31 31,18 0560.0 28.4 2544.1 4984.0 — 31031.0 97191.0

7002 6430.0 04.21 16,78 9460.0 29.4 6644.1 9164.0 — 61141.0 47502.0

ycnerruclanoitanniylppusyenoM)%,raeyfogninnigebybhtworgfoetar( 9.501 9.36 2.92 3.45 7.52 2.44 3.74 5.74 3.93 8.05

:sknablaicremmocderetsigerforebmuN

6002 44 12 23 71 **33 12 51 392,1 51 391

7002 64 22 13 91 **53 22 61 342,1 51 891

220


Table 41

Table 40

Table 39

)selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM

7002.10.1 7002.40.1 7002.70.1 7002.01.1 8002.10.1

latot,)2M(ylppusyenoM 8.599,8 6.214,9 7.758,01 0.494,11 1.272,31

*)0M(noitalucricnihsac— 2.587,2 2.147,2 5.720,3 9.022,3 2.207,3

sdnufhsac�non— 6.012,6 4.176,6 2.038,7 2.372,8 9.965,9

.metsysgniknabehtedistuonoitalucricnihsaC*

)%(7002NIYLPPUSYENOMNIHTWORGFOSETARYLHTNOMEGAREVA )%(7002NIYLPPUSYENOMNIHTWORGFOSETARYLHTNOMEGAREVA )%(7002NIYLPPUSYENOMNIHTWORGFOSETARYLHTNOMEGAREVA )%(7002NIYLPPUSYENOMNIHTWORGFOSETARYLHTNOMEGAREVA )%(7002NIYLPPUSYENOMNIHTWORGFOSETARYLHTNOMEGAREVA

1Q 2Q 3Q 4Q raey�lluF

latot,)2M(ylppusyenoM 5.1 9.4 9.1 9.4 3.3

*)0M(noitalucricnihsac— 5.0— 4.3 1.2 8.4 4.2

sdnufhsac�non— 4.2 5.5 9.1 0.5 7.3


ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M

7002.10.1fosA 8002.10.1fosAxednihtworG

selburnoillib % selburnoillib %

latot,)2M(ylppusyenoM 8.599,8 0.001 1.272,31 0.001 84.1

:hcihwfO

*)0M(noitalucricnihsac— 2.587,2 0.13 2.207,3 9.72 33.1

sdnufhsac�non— 6.012,6 0.96 9.965,9 1.27 45.1

:hcihwfo

sdnufrotcesesirpretnelaicnanif�non— 3.089,2 1.33 0.500,5 7.73 86.1

stisopeddlohesuoh— 3.032,3 9.53 9.465,4 4.43 14.1



221

Table 42

* Excluding cash in Bank of Russia institutions’ cash departments.

** Ruble�denominated accounts, including cash balances on organised securities market.

*** For ruble and foreign currency funds raised by credit institutions to accounts.

**** At market value.

Table 43

ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM

7002.10.1fosA 8002.10.1fosAxednihtworG

selburnoillib % selburnoillib %

)noitinifeddaorb(esabyratenoM 4.221,4 0.001 3.315,5 0.001 43.1

:hcihwfo

secnalabgnidulcni,noitalucricnihsac—*stnemtrapedhsac’snoitutitsnitidercni 1.260,3 3.47 6.811,4 7.47 53.1

stnuoccatnednopserroc’snoitutitsnitiderc—**aissuRfoknaBehthtiw 1.836 5.51 2.208 6.41 62.1

***sevreserderiuqer— 1.122 4.5 6.122 0.4 00.1

stisoped’snoitutitsnitiderc—aissuRfoknaBehthtiw 1.89 4.2 3.072 9.4 67.2

sdnobaissuRfoknaB—****snoitutitsnitidercybdleh 1.301 5.2 7.001 8.1 89.0

sevresernoitarepoegnahcxengierof—aissuRfoknaBehthtiwdetisoped 0.0 0.0 — — —

)selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM

7002.10.1 8002.10.1revoegnahC

7002

seitirohtuayratenomfostessangierofteNsnoitutitsnitidercdna 03.492,509,6 09.389,119,9 06.986,600,3

smialccitsemoD 08.366,727,5 02.603,422,8 04.246,694,2

tnemnrevognosmialcteN 08.859,569,2— 05.476,757,4— 07.517,197,1—

sesirpretnerotces�cibuplaicnanif�nonnosmialC 02.254,122 04.317,882 02.162,76

sesirpretnerotces�etavirplaicnanif�nonnosmialCsdlohesuohdna 00.456,742,8 02.568,054,21 02.112,302,4

snoitutitsnilaicnanifrehtonosmialC 04.615,422 01.204,242 07.588,71

)ygolodohtemyevrusyratenomotgnidrocca(ylppusyenoM 01.237,641,01 09.810,826,41 08.682,184,4

yenoM 07.604,895,5 09.462,479,7 02.858,573,2

yenom�isauQ 04.523,845,4 01.457,356,6 07.824,501,2

stisopedelbisseccaniyliraropmeT 06.610,22 08.050,14 02.430,91

stnemurtsnitekramyenoM 04.775,327 07.406,017 07.279,21—

tnuoccalatipaC 07.453,477,1 09.242,343,3 02.888,865,1

)ecnalab(rehtO 07.227,33— 03.726,685— 06.409,255—

222


Table 44

)selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC

7002.10.1 8002.10.1revoegnahC

7002

sevreseR 01.565,933,1 04.536,718,1 03.070,874

stessangieroF 09.771,346,1 01.904,092,2 02.132,746

tnemnrevognosmialC 09.377,177 07.237,958 08.859,78

:hcihwfo

stnemnrevoglacoldnalanoigernosmialc— 04.233,591 07.596,342 03.363,84

sesirpretnerotces�cilbuplaicnanif�nonnosmialC 05.134,122 04.407,882 09.272,76

sdlohesuohdnasesirpretnerotces�etavirplaicnanif�nonnosmialC 01.910,542,8 09.899,744,21 08.979,202,4

snoitutitsnilaicnanifrehtonosmialC 04.615,422 01.204,242 07.588,71

stisopeddnameD 02.153,457,2 01.678,528,3 09.425,170,1

stisopedycnerrucngierofdnasgnivas,emiT 08.713,845,4 06.847,356,6 08.034,501,2

:hcihwfo

stisopedycnerrucngierof— 04.414,551,1 01.821,663,1 07.317,012

stisopedelbisseccaniyliraropmeT 06.610,22 08.050,14 02.430,91

stnemurtsnitekramyenoM 04.775,327 07.406,017 07.279,21—

seitilibailngieroF 09.345,547,2 07.074,980,4 08.629,343,1

stisopedtnemnrevoG 06.848,692 02.026,003 06.177,3

:hcihwfo

stisopedtnemnrevoglacoldnalanoiger— 05.101,462 05.939,972 00.838,51

seitirohtuayratenomotsnoitagilbotbeD 00.804,44 07.496,05 07.682,6

stnuoccalatipaC 05.891,096,1 03.291,188,2 08.399,091,1

)ecnalab(rehtO 00.877,973— 05.573,606— 05.795,622—


223

Table 45

* The number of credit institutions in points 4 and 6 differs from the number of credit institutions in the respective

sub�points because several corrective measures have been used against banks.

As of January 1, 2008, the restriction on settlements on behalf of legal entities, such as the transfer of funds to

budgets of all levels and government extra�budgetary funds was in effect with regard to one credit institution.

As of January 1, 2008, none of the operating credit institutions had a backlog of non�executed settlement docu�

ments on payments to budgets of all levels.

7002NISNOITUTITSNITIDERCTSNIAGANEKATSERUSAEMEVITCERROC 7002NISNOITUTITSNITIDERCTSNIAGANEKATSERUSAEMEVITCERROC 7002NISNOITUTITSNITIDERCTSNIAGANEKATSERUSAEMEVITCERROC 7002NISNOITUTITSNITIDERCTSNIAGANEKATSERUSAEMEVITCERROC 7002NISNOITUTITSNITIDERCTSNIAGANEKATSERUSAEMEVITCERROC

.oN serusaemfonoitpircseDrebmuNsknabfo

serusaemevitneverP

1 )draobyrosivrepus(srotceridfodraobro/dnatnemeganamehtfonoitacifitonnettirWnoitcalaidemerdednemmocerdnakrowstinisgnimoctrohstuobanoitutitsnitidercafo 1,1 90

2 gniteemagnillaC 464

3 ,gnitroperrevolortnocnethgit,snoitcalaidemerfonalpapuwardotsnoitadnemmocer(rehtO).cte,stropernistnemetatssimdiova,ksirtidercfotnemssessacitsilaeraekam 941

serusaemdecroF

4 *seniF 844

:hcihwfo

1.4 stnemeriuqerevreserhtiwecnailpmoc�nonroF 79

2.4 swalesehtfoecnausrupnideussisnoitalugeraissuRfoknaBdnaswallaredeffosehcaerbroFgnitropereslafrognitroperrednu,gnitroper�nonrofdna 093

5 ,snoitutitsnitidercybdetcudnocsnoitarepogniknablaudividninosnoitcirtsergnisopmI 57

:sahcus

1.5 tisopednosgnivasdlohesuohgnikaT 21

2.5 slevelllafostegdubotsdnufrefsnartotseititneetaroprocfoflahebnostnemelttesgnitceffEsdnufyrategdub�artxetnemnrevogdna 63

6 ,*snoitarepogniknablaudividnignitcudnocmorfsnoitutitsnitidercgnitibihorP 36

:sahcus

1.6 tisopednosgnivasdlohesuohgnikaT 81

2.6 stnuoccalatememitdnadnameddetacollanugnidulcni,stnuoccaknabdlohesuohgninepO 71

3.6 rehtO 16

:drocerehtroF

desopmistnuoccalanosrepnepodnatisopednosdnufdlohesuohekatotnoitibihorP,ZF�771.oNwaLlaredeFfo84elcitrAottnausrupnoitutitsnitidercaottcepserni

3002,32rebmeceDdetad 7

7 *snoitpircserP 896

:hcihwfo

1.7 soitarderiuqeraissuRfoknaBhtiwylpmocotnoitpircserP 41

2.7 tnemeganamecalperotnoitpircserP 5

8 sehcnarbgninepomorfsnoitutitsnitidercgnitibihorP 45

9 ecnecilstignikovertuohtiwnoitutitsnitidercaeganamotsnoitartsinimdalanoisivorpgnitnioppA —

01 ecnecilgniknabgnikoveR 94

224


Table 46

SROTACIDNIYEKMETSYSTNEMYAPNAISSUR SROTACIDNIYEKMETSYSTNEMYAPNAISSUR SROTACIDNIYEKMETSYSTNEMYAPNAISSUR SROTACIDNIYEKMETSYSTNEMYAPNAISSUR SROTACIDNIYEKMETSYSTNEMYAPNAISSUR

6002 7002

*metsystnemyapaissuRfoknaBfoerutcurtslanoitutitsnI

:stnapicitrapmetsystnemyapforebmuN 393,5 373,5

snoitutitsniaissuRfoknaB— 329 287

snoitutitsnitiderc— 981,1 631,1

:hcihwfo

snoitutitsnitiderctnemelttesknab�non— 34 24

snoitutitsnitidercfosehcnarb— 182,3 554,3

:drocerehtroF

snoitutitsnitidercfosehcnarbdnasnoitutitsnitidercfoseciffolanoitiddaforebmuN 700,51 979,81

**snoitutitsnitidercfosehcnarbrosnoitutitsnitidercfosnoisividlanretnirehtO 188,61 927,61

,***sremotsucrofstnapicitrapmetsystnemyapybdenepostnuoccaforebmunlatoTnoillim 1.963 7.124

:hcihwfo

stnuoccadlohesuoh— 8.363 9.514

stnuoccaetaroproc— 3.5 8.5

smetsystnemyaplaudividniybdetceffestnemyaP

dnasuoht,stnemyapforebmuN

:hcihwfo

metsystnemyapaissuRfoknaBybdetceffestnemyap— 5.952,696 6.768,338

smetsystnemyapetavirpknabretniybdetceffestnemyap— 5.931,75 0.256,38

knabenofosnoisividneewtebsmetsystnemyapknabartniybdetceffestnemyap— 4.316,662 8.057,683

selburnoillib,stnemyapfoeulaV

:hcihwfo

metsystnemyapaissuRfoknaBybdetceffestnemyap— 0.803,762 2.357,544

smetsystnemyapetavirpknabretniybdetceffestnemyap— 2.707,81 4.750,53

knabenofosnoisividneewtebsmetsystnemyapknabartniybdetceffestnemyap— 7.884,65 8.351,201

metsystnemyapaissuRfoknaBnistnemurtsnitnemyaphsac�noN

dnasuoht,tnemyapfostnemurtsnisuoiravgnisudetceffestnemyapforebmuN

:hcihwfo

sredrotnemyap— 9.281,600,1 5.485,411,1

sredronoitcellocdnastseuqertnemyap— 6.173,34 8.605,08

tidercfosrettel— 8.273 1.92

seuqehc— 8.426 5.362

tnemyapfostnemurtsnirehto— 8.570,754 2.148,297

selburnoillib,tnemyapfostnemurtsnisuoiravgnisudetceffestnemyapfoeulaV

:hcihwfo

sredrotnemyap— 9.972,153 7.478,015

sredronoitcellocdnastseuqertnemyap— 0.446,2 3.036,6

tidercfosrettel— 7.101 4.831

seuqehc— 6.78 6.75

tnemyapfostnemurtsnirehto— 8.944,8 2.958,4


225

End

* As of end of year.

** Operations offices, cash and credit offices, cash departments outside cash settlement centres.

*** Accounts which can be used to effect payments.

**** Payment cards issued by Russian credit institutions and payment cards issued outside Russia.

6002 7002

desuygolonhcetybmetsystnemyapaissuRfoknaBnistnemyaphsac�noN

detceffe)dnasuoht(stnemyapforebmuN

yllacinortcele— 7.277,492,1 8.044,817,1

repapno— 8.848,773 6.722,737

detceffe)selburnoillib(stnemyapfoeulaV

yllacinortcele— 6.436,404 3.160,196

repapno— 3.673,14 9.410,55

srotacidniyektekramdractnemyaP

,*snoitutitsnitidercnaissuRybdeussisdractnemyapforebmuNdnasuoht 2.267,47 6.694,301

:hcihwfo

dnasuoht,sdractiderc— 6.956,5 3.449,8

****sdractnemyapgnisuaissuRnidetcudnocsnoitarepoforebmunlatoT ,dnasuoht 0.025,891,1 2.796,426,1

:hcihwfo

,snoitutitsnitidercnaissuRybdeussisdractidercgnisudetcudnocsnoitarepo—dnasuoht 0.338,71 4.132,23

****sdractnemyapgnisuaissuRnidetcudnocsnoitarepofoeulavlatoT ,selburnoillib 7.693,4 7.944,6

:hcihwfo

,snoitutitsnitidercnaissuRybdeussisdractidercgnisudetcudnocsnoitarepo—dnasuoht 3.88 7.331

226


Table 47

* As of end of year.

** Based on the reporting form compiled according to a methodology different from the methodology for calculat�

ing other Bank of Russia payment system indicators.

METSYSTNEMYAPAISSURFOKNAB METSYSTNEMYAPAISSURFOKNAB METSYSTNEMYAPAISSURFOKNAB METSYSTNEMYAPAISSURFOKNAB METSYSTNEMYAPAISSURFOKNAB

6002 7002

,*devressremotsucforebmuN 256,93 547,23

:hcihwfo

snoitutitsnitiderc— 981,1 631,1

snoitutitsnitidercfosehcnarb— 260,2 582,2

snoitutitsnitidercnahtrehtosremotsuc— 104,63 423,92

dnasuoht,detceffestnemyapforebmuN 5.952,696 6.768,338

:hcihwfo

sehcnarbriehtdnasnoitutitsnitidercyb— 4.949,075 2.449,796

snoitutitsnitidercnahtrehtosremotsucyb— 2.974,421 6.260,531

snoisividaissuRfoknaByb— 9.038 9.068

selburnoillib,detceffestnemyapfoeulaV 0.803,762 2.357,544

:hcihwfo

sehcnarbriehtdnasnoitutitsnitidercyb— 8.449,522 2.871,853

snoitutitsnitidercnahtrehtosremotsucyb— 7.833,43 9.066,83

snoisividaissuRfoknaByb— 4.420,7 1.419,84

dnasuoht,stnemyapcinortceleforebmuN 5.976,296 7.910,138

selburnoillib,stnemyapcinortcelefoeulaV 1.432,662 2.226,444

gnitapicitrapsnoitutitsniaissuRfoknaBforebmuN*stnemelttescinortcelelanoigerartnini 298 757

gnitapicitrapsnoitutitsniaissuRfoknaBforebmuN*stnemelttescinortcelelanoigerretnini 298 757

*stnemucodcinortcelegnignahcxesremotsucforebmunlatoT 156,3 908,3

:hcihwfo

sehcnarbriehtdnasnoitutitsnitiderc— 752,3 423,3

snoitutitsnitidercnahtrehtosremotsuc— 493 584

**dnasuoht,slennahcnoitacinummochguorhtdeviecerstnemyapforebmuN 9.689,096 4.278,218

dnasuoht,repapnodetceffestnemyapforebmuN 9.975,3 9.748,2

selburnoillib,repapnodetceffestnemyapfoeulaV 9.370,1 0.131,1


227

Table 48

Table 49

NOITALUCRICNISETONKNABAISSURFOKNABFOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNABFOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNABFOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNABFOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNABFOERUTCURTSETON

,noitanimoneDselbur

,noitalucricnilatoTselburnoillim fo%sA

7002.10.1

erahs%

fosa7002.10.1

fosa8002.10.1

fosa7002.10.1

fosa8002.10.1

000,5 1.302,341 9.677,958 4.006 7.4 0.12

000,1 5.477,711,2 2.960,174,2 7.611 5.96 2.06

005 7.320,146 7.660,916 6.69 0.12 1.51

001 7.501,801 3.963,211 9.301 5.3 7.2

05 4.400,03 0.034,03 4.101 0.1 7.0

01 9.166,9 3.830,11 2.411 3.0 3.0

5 6.73 8.63 9.79 0.0 0.0

rebmunteehsecnalablatoTeussi7991fosetonknabfo 9.018,940,3 2.787,301,4 6.431 0.001 0.001

*NOITALUCRICNISNIOCAISSURFOKNABFOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNABFOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNABFOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNABFOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNABFOERUTCURTS

noitanimoneD

,noitalucricnilatoTselburnoillim fo%sA

7002.10.1

erahs%

fosa7002.10.1

fosa8002.10.1

fosa7002.10.1

fosa8002.10.1

kcepok1 3.95 7.46 1.901 4.0 3.0

skcepok5 6.512 7.142 1.211 3.1 2.1

skcepok01 8.751,1 2.753,1 2.711 0.7 7.6

skcepok05 7.813,1 6.495,1 9.021 0.8 8.7

elbur1 0.842,3 8.669,3 1.221 7.91 4.91

selbur2 0.304,2 6.589,2 2.421 5.41 6.41

selbur5 2.674,5 1.357,6 3.321 2.33 0.33

selbur01 3.126,2 3.584,3 0.331 9.51 0.71

rebmunteehsecnalablatoTeussi7991fosniocfo 9.994,61 0.944,02 9.321 0.001 0.001

.slatemsuoicerpfoedamsniocgnidulcxE*

228

BA

NK

O

F R

US

SI

A2

00

7A

NN

UA

L R

EP

OR

T

Table 50

* The nominal value of Bank of Russia shares in Sberbank has increased (according to the decision by the Sberbank shareholders’ meeting to place an additional share issue)

as a result of the purchase of 892,601 ordinary shares of the additional issue.

SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISGNIDLOHEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISGNIDLOHEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISGNIDLOHEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISGNIDLOHEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISGNIDLOHEKATSAISSURFOKNAB

noitartsigerfoecalp,noitasinagrofoemaN ycnerruC

eulavlanimoNserahsdenwo�aissuRfoknaBfo

erahs%aissuRfoknaB8002.10.1fosa

8002.10.1fosa 7002.10.1fosadesirohtuani

latipacgnitovni

latipac

,knabrebS*wocsoM

selburdnasuoht 704,910,93 406,143,63 85.75 52.06

,)XECIM(egnahcxEycnerruCknabretnIwocsoMwocsoM

selburdnasuoht 049,133 049,133 97.92 97.92

,)XECPS(egnahcxEycnerruCgrubsretePtSgrubsretePtS

selburdnasuoht 203 203 09.8 09.8

,ertneCyrotisopeDlanoitaNwocsoM

selburdnasuoht 005,42 005,42 00.94 03.24

,stnemeltteSlanoitanretnIrofknaBlesaB

RDS 000,550,61 000,550,61 95.0 55.0

,).T.F.I.W.S(snoitacinummoceleTlaicnaniFknabretnIediwdlroWrofyteicoSmuigleB

orue 578 578 600.0 —

,knaBetatsretnIwocsoM

selburdnasuoht 000,01 000,01 00.05 00.05

Published by Business News Agency Prime�TASS

Printed by Novosti PressNumber of copies — 330. Order No. 1604

20072007

THE CENTRAL BANK

OF THE RUSSIAN FEDERATION

ANNUAL REPORTBA

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