The rating downgrade reflects the credit institution's substantially higher risks arising from the establishment by the Bank of Russia of provisional administration to manage CB BFG-CREDIT (LLC) for a period of six months. In the temporary administration period, the powers of the credit institution's executive bodies are suspended.

In AK&M Rating Agency's view, the Bank's rating is also constrained by a weaker liquidity position, loan portfolio deterioration, and loss-making operations.

The Bank faces liquidity problems: as of March 1, 2016, its N3 ratio dropped to 52.3%, close to the minimum threshold. The acid test ratio also decreased to 27.0%. Since the start of the year, the amount of highly liquid assets decreased more than twice, their relative share in total assets decreasing to 5.6%.

The loan portfolio deterioration also constrains the rating of CB BFG-CREDIT (LLC): the relative share of non-prime loans over the period from October 1, 2015 to March 1, 2016 decreased from 56.2% to 39.2%, while the share of doubtful loans reached almost 45% increasing by 19.7 p.p. The share of problem and non-performing loans remains fairly high (14.1%).

In February, the Bank's provisions for possible losses and provisions for invested funds increased sharply (by 23% and 18%, respectively) as new loans were provided and some of the existing loans were transferred to higher risk groups.

As a result of additional provisions, the Bank had a negative financial result in the amount of RUB 1.15 billion for the first two months of 2016.

AK&M Rating Agency assigned a credit rating to CB BFG-CREDIT (LLC) for the first time on November 6, 2009. The last rating action in relation to the Bank was taken on November 19, 2015. All rating action announcements are available on the akmrating.ru website.

For estimation purposes, we completely rely on the reliability of information provided by the Bank. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

The rating assignment is based on the monitoring results of the current credit rating assigned to CB BFG-CREDIT (LLC) and the Credit Rating Methodology for Banks and their Debt Instruments rev. August 14, 2015.

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.

AK&M 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.