CJSC AK&M Rating Agency confirmed the ‘B++' credit rating (stable outlook) assigned to CB Transnational Bank (Limited) (license no. 2108) as per the national scale.

The ‘B++' rating indicates that CB Transnational Bank (Limited) is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade). Risk of a delay in meeting liabilities is moderate, restructuring risk for the loan / part of the loan is insignificant.

The positive performance trend in the key performance indicators of the Bank is supportive for the rating score. From January 1, 2010 to October 1, 2011, the Bank's equity capital increased by 17%; funds of the customers classified as non-credit institutions increased 3.7-fold; assets grew 2.7-fold.

Equity capital of CB Transnational Bank (Limited) as of October 1, 2011 totaled RUB 722,586 thousand; funds of the customers classified as non-credit institutions amounted to RUB 3,571.7 million; assets reached RUB 4,564.8 million.

The quality of the Bank's capital is high, the core capital accounting for almost 100 percent of it. The Bank's authorized capital increased by 20% to RUB 600 million as of September 2011 and currently accounts for the greater part of its equity capital (83% as of October 1, 2011). Capital adequacy ratio as of October 1, 2011 reached 15.4%.

Liabilities of CB Transnational Bank (Limited) are well-balanced in both structure and currency. As of October 1, 2011, the share of physical persons' deposits in the liabilities was 65%; funds of the customers classified as non-credit institutions accounted for 28%. On-call liabilities as of 11/01/2011 was about 41% of the total amount of obligations, the share of liabilities maturing in over 90 days was about 44%.

CB Transnational Bank (Limited) features positive financial performance. The Bank's pre-tax profit was RUB 36.8 million for 2010, RUB 40.1 million for nine months 2011 (net profit was RUB 8.4 million and RUB 18.4 million, respectively).

The rating score of CB Transnational Bank (Limited) is restricted by the lack stability of liquidity ratios, a large share of net lending receivables in its assets, and high credit risks.

The Bank's liquidity are within acceptable ranges but lack stability. Quick liquidity ratio decreased from 72.7% to 44.0% over 01/01/2011 to 07/01.2011 (43.8% as of 11/01/2011). Current liquidity ratio was 90.6% as of 01/01/2011, 53.1% as of 07/01/2011 (56.2% as of 11/01/2011). Long-term liquidity ratio increased from 7.2% as of 01/01/2011 to 89.0% as of 11/01/2011. Since 04/01/2011, quick and current liquidity ratios of CB Transnational Bank (Limited) have been below the average level in the banking sector of the Russian Federation. Long-term bank liquidity was above the banking average as of 11/01/2011.

Net lending receivables of CB Transnational Bank (Limited) as of 10/01/2011 totaled RUB 3,848.5 million accounting for 84.3% of assets. The average share of net lending receivables in the assets across Russia's banking sector as of the same date was 69.3%. In 2011, the net lending receivables were the main driver for the growth of the Bank's assets increasing by 104.7% or RUB 1,968.5 million year-on-year at the end of 9 months 2011. For the same period, other assets increased by 30.2% (RUB 32.8 million), monetary assets by 5.4% (RUB 11.9 million). For 9 months 2011, the Bank's funds at the Central Bank of Russia and other credit institutions decreased by 40.5% (RUB 161.5 million) and 63.5% (RUB 179.2 million), respectively.

Another restriction on the Bank's rating score is its high credit risk. As of November 1, 2011, legal entities accounted for 82%, physical persons for 14% of the total loan portfolio and similar liabilities, with many of the large borrowers being wholesale and retail trade enterprises (59% of large loans as of 11/01/2011). The maximum amount of large credit risks of CB Transnational Bank (Limited) as of 11/01/2011 was 407%, far above the banking average (218% as of the same date). However, this indicator does not exceed the upper threshold value.

CB Transnational Bank (Limited) has been active in the market of banking services since 1992. The Bank of Russia assigned it registration no. 2108 as of October 09, 1992. The Bank possesses a license for banking operations involving rubles and foreign currencies (without attraction of deposits of monetary resources from physical persons) as of August 10, 1999, a license for attraction of deposits of precious metals as of August 27, 1999, and a license for attraction of deposits of monetary resources in rubles and foreign currencies from physical persons as of August 10, 1999.

The Bank participates in the compulsory deposit insurance system (registered under no. 286 as of December 9, 2004).

The bank is headquartered in Moscow and has four branches in. Bodaybo (Irkutsk region), St. Petersburg, Yekaterinburg and Nizhny Novgorod.

The bank provides all types of services involving Russian rubles and foreign currencies, readily provides loan facilities and services bank cards.

The auditor of CB Transnational Bank (Limited) is Alt-Audit LLC. According to Certificate of Membership in the non-profit partnership Audit Chamber of Russia (no. 463), Alt-Audit LLC is registered in the State Register of Self-regulatory Audit Organizations under primary registration number 10401001986 as of December 28, 2009 (line 194 of the list).

This press release is based on the statement of assigning a credit quality rating to CB Transnational Bank (Limited).

The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.

AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: A.M. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18