The 'B++' rating indicates that Bank VENETS, JSC qualifies as a sufficiently creditworthy borrower. The risk of a delay in meeting obligations is moderate, the full or partial debt restructuring risk is insignificant.

Bank VENETS, JSC is a regional bank focused on operations in Russia's Ulyanovsk region. The Bank specializes in conventional banking activities (lending and servicing of private customers and legal entities, attraction of deposits of their funds, currency transactions). The Bank is a member of the deposit insurance system.

As of July 1, 2014, the Bank's assets amounted to RUB 3,505.1 million, equity capital totaled RUB 716.7 million.

We regard the Bank's high capital adequacy, well-structured and improving liabilities, and a favorable net income profile as the key positive rating drivers.

Bank VENETS, JSC keeps its capital adequacy high (20.1%, much above the average percentage in Russia's banking system). In June 2014, the bank took out a subordinated loan and increased its equity capital by more than 20%.

As a whole, the liabilities of Bank VENETS, JSC are on a positive trend. Since January 1, corporate customers have increased their deposits with the Bank by 56% against the previous year. Far from offsetting a minor outflow of retail deposits, this has also increased the Bank's liabilities by 13% to RUB 2,751.8 million.

The Bank's earnings are growing steadily. The Bank traditionally derives them from net interest (79% as of July 1, 2014), net fees and commissions (24% as of the same date).

Despite the overall challenging situation in the financial market we have revised the outlook on the rating to positive expecting further improvements in the Bank's operation, its regional expansion and an increase in key performance indicators.

At the same time, the Bank's rating is under pressure of lower profits and return ratios as well as an increase in debt arrears.

In 2013, the Bank's financial performance weakened, its profit decreasing by 68%. This, in many respects, results from a ca. 50% increase in expenses for the credit institution's current operations. Being an active player in the segment of retail lending and raising funds from the population, Bank VENETS, JSC annually increases the number of service outlets. In particular, the credit institution opened 3 new satellite offices in the period under review. As a result, the Bank's earnings per ruble of capital were below the average level in Russia's banking sector. As of April 1, 2014, its return on assets and equity ratios were 0.42% and 1.96%, respectively.

For 6 months of 2014, arrears on the loans provided by Bank VENETS, JSC increased 1.2 times to RUB 241.8 million. Most of the defaulted borrowers are small and medium-sized businesses registered in Ulyanovsk region (accounting for 84% of the total amount of loan arrears in the Bank's loan book), the risk of lending to them always being understandably high (quality grade 4 loans).

The Bank possesses a license to provide banking services involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of July 30, 2012 and a license to accept ruble-denominated money deposits from individuals as of July 30, 2012. The Bank has been a member of the deposit insurance system since October 14, 2004, registered in the DIS register under no. 77.

Headquartered in Ulyanovsk, the Bank has a branch network in Ulyanovsk and Ulyanovsk region.

The bank provides all types of services involving Russian rubles and foreign currencies to legal entities and individuals, lends to individuals and legal entities.

This press release is based on the Statement of assignment of a credit rating to Bank VENETS, JSC.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC Analysis, Consulting and Marketing Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

CJSC AK&M Rating Agency

ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.