The ‘A’ rating indicates that StarBank CJSC qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.

This rating action is motivated by the Bank’s improving key performance indicators (equity, assets, deposits of individuals). The favorable balance of liabilities across the group of depositors and a strong liquidity position are further positive signals for the rating.

In 2012, the Bank’s equity capital increased by 30.7% (RUB 340.3 million), the average growth rate in Russia’s banking system for the same period being 16.6%. Over the period from January 1 to May 1, 2013, equity capital further increased by RUB 280.5 million (19.4%).

Assets of StarBank CJSC are on the rise. In 2012, they increased by RUB 1,932.2 million (16.7%). As of April 1, 2013, the Bank’s assets were estimated at RUB 14,970.8 million (increasing by RUB 1,485.0 million, or 11.0%, since the start of the year).

Another positive argument for the Bank’s rating is the ongoing growth in the personal deposits attracted. In 2012 and the first quarter of 2013, the deposit growth rate exceeded the average levels in Russia’s banking system.

As of May 1, 2013, the Bank keeps the concentration of liabilities across the groups of depositors low. The largest group of depositors accounts for 3.3%, the ten largest investors (groups of investors) for 10.2% of the Bank’s liabilities.

We also appreciate the strong liquidity position of StarBank CJSC as a positive rating driver. As of May 1, 2013, the Bank’s quick liquidity ratio was 99.03%, the minimum value required being 15%; current liquidity ratio was 224.6% against the minimum acceptable percentage of 50%. Long-term liquidity was 28.7%, far below the maximum limit of 120%.

At the same time, the unstable quarterly earnings in 2011-2013, high commitment to investments in securities, considerable loan arrears and low capital adequacy are working against the Bank’s rating.

As a whole, the Bank’s quarterly earnings have lacked stability in 2011-2013 down to provisions against possible loan and securities losses. In particular, the Bank posted a net loss of RUB 212.1 million in the first quarter of 2013, but reached a positive profit result (RUB 1.4 million) as of May 1, 2013. Besides, pre-tax profit increased 2.2 times, profit after tax by an order of magnitude in 2012.

We regard the high share of investments in securities in the Bank’s total assets as a risk factor for the Bank. Since our previous review, the Bank has been highly committed to such investments which accounted for 49.1% of its total assets as of April 1, 2013.

Also, the considerable arrears on the loans granted by the Bank and other funds placed by it (7.1% of the loan portfolio as of May 1, 2013) exert pressure on the rating. The Bank’s provisions for possible loan losses amount to RUB 199.8 million, which is lower than the loans in arrears.

While always meeting the applicable requirements of the Central Bank of Russia, StarBank CJSC’s capital adequacy ratio (N1) is fairly low, which is one of the negative signals.

StarBank CJSC has been operating in the market of banking services since 1980. The bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of April 12, 2013, and a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies, as of April 12, 2013.

The Bank participates in the compulsory deposit insurance scheme (registered under no. 485 as of January 20, 2005.

StarBank CJSC provides the standard range of banking products and services involving Russian rubles and foreign currencies.

The Bank is headquartered at: Moscow, Butyrsky Val street 68/70 bld. 1. Apart from the head office, StarBank CJSC operates 3 branches, 13 operational offices, 1 stand-alone cash desk and 2 representative offices in the Central, Volga, Ural and Siberian federal districts of the Russian Federation.

The Bank’s auditor is NORMA-PROFAUDIT LLC, a member of SRO Audit Chamber of Russia (non-profit partnership), primary registration number (ORNZ) 10301001996.3

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This press release is based on the statement of assigning a credit rating to StarBank CJSC.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank’s credit standing 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 – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia’s Government AK&M Ratings count for the recapitalization of 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<br /> ul. Gubkina 3<br /> Moscow, Russia<br /> www.akmrating.ru<br /> Press release by: Y.B. Kuznetsova<br /> Phone no. (495) 916-70-30, fax no.: (499) 132-69-18