The 'C+' rating indicates that BFG-Credit (LLC) qualifies as a borrower with low creditworthiness. The full or partial debt restructuring risk is high.

The rating downgrade reflects the continuing deterioration in the Bank's financial position. The Bank has encountered serious difficulties in processing client payments because of a liquidity gap (as of May 1, 2016, the balance of account 47418 was RUB 5.7 billion). In April, the amount of highly liquid assets decreased by 83%, the Bank's investment in securities shrank by 93%.

The quality of the loan portfolio continues to decrease. In April, the share of overdue debt in the corporate loan portfolio increased to 7%. Accordingly, the amount of provisions increased twice to RUB 14 billion, which resulted in a loss of RUB 7.3 billion last month.

Corporate deposits remain on a downward trend (-22.2% in April). Since the start of the year, deposits of legal entities have decreased by 42.5% (RUB 10.5 billion).

Another point of concern, in our view, is the almost twofold growth of the amount of guarantees sureties provided by the Bank last month (from RUB 8.8 billion to RUB 15.1 billion).

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 April 12, 2016 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.

AK&M Rating Agency

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www.akmrating.ru

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