The 'A' rating indicates that the rated Fund qualifies as a highly reliable guarantee institution. The risk of a failure to meet obligations in time is low. The rating assignment was based on the Credit Rating Methodology for Guarantee Institutions rev. March 3, 2015.

The guarantee institution's rating is supported by the growing equity capital, the high guarantee capital multiple, the profitable operations and the highly reliable guarantee coverage.

The Fund's equity capital is growing steadily owing to its sustained profitability. In particular, the guarantee institution's capital increased by 4% to more than RUB 291 million for the first 6 months of 2015 following a 6% growth in 2014). This growth is essentially driven by both retained earnings and regular inflows of monetary resources from budgets of all levels. In 2014-2015, the Fund received RUB 16.5 million from the federal budget, RUB 1.9 million from the regional budget for implementing the regional program of assistance to small and medium-sized businesses.

We are pleased to see the Fund maintain a high level of resource utilization when providing SME businesses with access to borrowings from partner banks. At the end of the second quarter of 2015, the guarantee capital multiple of the Fund reached 143%.

The rated guarantee institution improved its profit performance in 2014-2015. In particular, the Fund's profit grew by 37% year-on-year in 2014, by 49% year-on-year in the first half of 2015. As a result, its return on assets ratio also increased to a fairly high level of 6.9% on an annualized basis as of July 1, 2015 (5.8% in 2014).

The Ulyanovsk Regional Surety Fund has a healthy portfolio of financial investments. As of July 1, 2015, its funds amounting to RUB 254 million were placed with seven banks rated high by international rating agencies. All but one credit institution are ranked among the top 25 leading Russian banks in terms of asset size, three of them being publicly owned credit and financial institutions.

At the same time, the Fund's rating is constrained by the shrinking amount of sureties, the lower earnings from compensations for the sureties provided and the higher loss ratio.

The amount of sureties provided by the Fund has decreased substantially since 2014. In the first half of 2015, this figure decreased by 43% to RUB 44 million directly following from the partner banks' lower commitment to providing loans to SME businesses.

As a result, the Fund's revenue decreased considerably (by 48%) in 2015 and sufficed to cover less than half of its administrative expenses (RUB 1.1 million). At the same time, we have seen structural changes in the Fund's incomes: the relative share of earnings from compensations for sureties decreased by 5 p.p. since the start of the year to 6.2%.

As of July 1, 2015, the guarantee institution discharged 10 payment obligations (arising from the surety commitments undertaken by it) to partner banks, for a total amount of RUB 16 million (1.5% of the total amount of sureties provided). As of yet, the Fund has not received a single payment recovered from borrowers through applicable recourse procedures, which indicates the relatively poor efficiency of its risk management system. It should also be noted that over the period from September 16, 2015 to August 1, 2015, the commercial court of Ulyanovsk region made rulings to oblige the Fund to honor its payment obligations to partner banks for a total amount of ca. RUB 18 million under four surety agreements (according to data provided on the official commercial court website). As a result, the Fund's loss ratio (in terms of the Ministry of Economic Development, i.e. the amount of payments effected by the Fund in relation to the total amount of sureties provided) may increase more than twice to approximately 3%, although still not exceeding the average percentage of overdue debt on loans to non-financial entities, according to the Central Bank of Russia (3% as of July 1, 2015).

Full name: Ulyanovsk Regional Surety Fund.

Since 2009 when the Fund started providing sureties, it has concluded 472 surety agreements for a total amount of more than RUB 1 billion, which enabled small and medium-sized businesses to borrow RUB 2.4 billion in loans. As of July 1, 2015, the surety portfolio of the guarantee institution amounted to RUB 411.7 million. In 2014, the Ulyanovsk Regional Surety Fund secured the 22nd position in AK&M Rating Agency's Ranking of Regional Guarantee Institutions comprising 60 guarantee institutions.

AK&M Rating Agency has assigned a reliability rating to the Fund for the first time. All rating action announcements are available on the akmrating.ru website.

The rating is valid until October 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the Fund's creditworthiness are revealed.

This press release is based on the Statement of assignment of a guarantee institution rating to Ulyanovsk Regional Surety Fund and our Credit Rating Methodology for Guarantee Institutions rev. March 3, 2015.

Rating as well as any information and the conclusions contained in the present report, should be considered exclusively as opinion, instead of the recommendation about granting to Fund of borrowed funds or attraction of guarantees and sureties.

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.

AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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