Ratings On 13 Russia-Related Financial Institutions Placed On CreditWatch Negative Following Same Action On Sovereign Primary Credit Analyst: Sergey Voronenko, Moscow (7) 495-783-4003; [email protected] Secondary Contacts: Natalia Yalovskaya, London 44 (0)207 176 3407; [email protected] Anastasia Turdyeva, Moscow 7 (495) 783-4091; [email protected] Roman Rybalkin, CFA, Moscow (7) 495-783-4094; [email protected] Ekaterina Marushkevich, CFA, Moscow (7) 495-783-4135; [email protected] Victor Nikolskiy, Moscow (7) 495-783-4010; [email protected] Boris Kopeykin, Moscow (7) 495-783-4062; [email protected] Pierre Gautier, Paris (33) 1-4420-6711; [email protected]

• We are reviewing our assessment of Russia's monetary flexibility and the impact of the weakening economy on its financial system, and on Dec. 23, 2014, we consequently placed our long- and short-term sovereign credit ratings on Russia on CreditWatch with negative implications. • We generally do not rate domestic banks above the foreign currency sovereign rating on their country of domicile. • Therefore, we have placed various ratings on 13 Russia-related financial institutions on CreditWatch with negative implications. • These CreditWatch placements parallel the action on Russia and reflect our view that the banks may face increasing challenges as a result of the weakening economic and operating environment as well as the government's deteriorating capacity to provide support if needed. • We plan to resolve the CreditWatch placements upon the conclusion of our review of the ratings on Russia. MOSCOW (Standard & Poor's) Dec. 30, 2014--Standard & Poor's Ratings Services today placed on CreditWatch with negative implications its long-term ratings on 13 Russia-related financial institutions:

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Ratings On 13 Russia-Related Financial Institutions Placed On CreditWatch Negative Following Same Action On Sovereign

• • • • • • • • • • • • •

Raiffeisenbank ZAO, BNP Paribas ZAO, ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia), JSC Sumitomo Mitsui Rus Bank, ZAO UniCredit Bank, ZAO INDUSTRIAL AND COMMERCIAL BANK OF CHINA (Moscow), Rusfinance Bank, Gazprombank, Gazprombank (Switzerland) Ltd., Alfa-Bank OJSC, ABH Financial Ltd., VEB-leasing OJSC, and TENEX-Service.

We also placed on CreditWatch with negative implications the short-term ratings on these entities except those on Alfa-Bank, ABH Financial Ltd., and TENEX-Service, which we affirmed. At the same time, we placed our ratings on these banks' senior unsecured and subordinated debt on CreditWatch negative. In addition, we placed on CreditWatch negative our Russia national-scale ratings on Russian entities, with the exception of the 'ruAAA' rating on VEB-leasing, which we affirmed. These rating actions follow the similar rating action on Russia (see "Russian Federation Ratings Placed On CreditWatch Negative On Review Of Monetary Flexibility And Weakening Economy," Dec. 23, 2014). The sovereign CreditWatch placement stemmed from what we view as a rapid deterioration of Russia's monetary flexibility and the impact of the weakening economy on its financial system. Seven of the CreditWatch placements affect subsidiaries of large foreign groups, namely Raiffeisenbank ZAO, BNP Paribas ZAO, ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia), JSC Sumitomo Mitsui Rus Bank, ZAO UniCredit Bank, ZAO INDUSTRIAL AND COMMERCIAL BANK OF CHINA (Moscow), and Rusfinance Bank. We cap the long- and short-term ratings on these seven banks at our foreign currency sovereign ratings on Russia. This is because they operate within Russia almost exclusively, and therefore they are very sensitive to Russian economic and operating conditions. In our view, these banks do not meet the criteria under which we would rate them higher than Russia, given that they are predominantly exposed to the domestic market (see "Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions," Nov. 19, 2013). We regard all but one of these banks as "highly strategic" subsidiaries of their respective parents. The exception is Rusfinance Bank, which we consider to be a "strategically important" subsidiary of Société Générale. The ratings on Gazprombank incorporate a two-notch uplift above its stand-alone credit profile (SACP), reflecting its status as a government-related entity (GRE) with a "strong" link with Russia through

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Ratings On 13 Russia-Related Financial Institutions Placed On CreditWatch Negative Following Same Action On Sovereign

ownership by Gazprom and other related entities, "very important" role for the Russian economy, and consequently "high" likelihood of government support. Placing the sovereign on CreditWatch with negative implications also indicates potentially lower capacity to support state companies like Gazprombank if necessary, even though we believe the government's willingness to do so remains unchanged. Because we classify Gazprombank (Switzerland) Ltd. as "core" to Gazprombank, we align the ratings on this entity with those on its parent. We believe that continued deterioration of the sovereign's creditworthiness could lead to reduced capacity to support systemically important banks, including private ones. Our view is that privately owned Alfa-Bank OJSC is of "high" systemic importance. This gives the ratings on Alfa-Bank one notch of uplift due to government support, although the rating action on the sovereign indicates potentially lower capacity to support systemic banks. We believe Alfa-Bank's strong stand-alone creditworthiness in a Russian context will not make it immune to these risks. Our ratings on ABH Financial, the Cypriot holding company that owns Alfa-Bank, reflect the strength of Alfa-Bank's operations. The long-term rating on ABH Financial is two notches lower than that on the operating entity, Alfa-Bank. This rating differential is mainly due to structural subordination and ABH Financial's reliance on dividends and other distributions from Alfa-Bank to meet its obligations. Rating actions on VEB-leasing and TENEX-Service follow similar actions on their parents, state-owned Vnesheconombank and Atomic Energy Power Corp. JSC, respectively (VEB and AtomEnergoProm; see "Russian State-Owned Development Bank Vnesheconombank Ratings Placed On Watch Negative Following Sovereign Action," Dec. 26, 2014, and "Russian Nuclear Energy Monopoly AtomenergoProm Ratings Placed On Watch Negative After Similar Action On The Sovereign," Dec. 26, 2014). We consider VEB-leasing to be a "core" subsidiary of VEB, given its full strategic integration with VEB and VEB's commitment to the company. Therefore, we align the ratings with those on VEB. Given that TENEX acts as quasi-captive in the leasing segment of its parent, we consider it to be a "highly strategic" subsidiary of AtomEnergoProm under our criteria, and we cap the ratings at one notch below those on the parent. These CreditWatch placements parallel the similar action on the sovereign and reflect our view that there is at least a one-in-two likelihood of a negative rating action within 90 days. If we lower our local or foreign currency ratings on Russia, it could affect our view on Russia's financial capacity to support state-related organizations as well as private systemically important banks, and it could lead us to take negative rating actions on them as well. We plan to resolve the CreditWatch placements following the resolution on the sovereign.

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Ratings On 13 Russia-Related Financial Institutions Placed On CreditWatch Negative Following Same Action On Sovereign

RELATED CRITERIA AND RESEARCH Related Criteria • National And Regional Scale Credit Ratings, Sept. 22, 2014 • Group Rating Methodology, Nov. 19, 2013 • Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, Nov. 19, 2013 • Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 • Banks: Rating Methodology And Assumptions, Nov. 9, 2011 • Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 • Bank Capital Methodology And Assumptions, Dec. 6, 2010 Related Research • Russian Federation Ratings Placed On CreditWatch Negative On Review Of Monetary Flexibility And Weakening Economy, Dec. 23, 2014 • Russian Banks’ Capital Adequacy Is At Risk Amid Geopolitical Tensions And A Weakening Economy, Oct. 16, 2014 • Banking Industry Country Risk Assessment: Russia, June 17, 2014 • Russia Foreign Currency Ratings Lowered To 'BBB-/A-3' On Risk Of Marked Deterioration In External Financing; Outlook Neg, April 25, 2014 RATINGS LIST Ratings Placed on CreditWatch Negative To

From

Raiffeisenbank ZAO BNP Paribas ZAO ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia) JSC Sumitomo Mitsui Rus Bank ZAO INDUSTRIAL AND COMMERCIAL BANK OF CHINA (Moscow) Rusfinance Bank Gazprombank Counterparty Credit Rating BBB-/Watch Neg/A-3 Russian National Scale ruAAA/Watch Neg/--

BBB-/Negative/A-3 ruAAA

ZAO UniCredit Bank Gazprombank (Switzerland) Ltd. Counterparty Credit Rating

BBB-/Watch Neg/A-3

BBB-/Negative/A-3

Alfa-Bank OJSC TENEX-Service L-T Counterparty Credit Rating Russian National Scale

BB+/Watch Neg ruAA+/Watch Neg/--

BB+/Negative ruAA+

ABH Financial Ltd. L-T Counterparty Credit Rating

BB-/Watch Neg

BB-/Negative

VEB-leasing OJSC Counterparty Credit Rating

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Ratings On 13 Russia-Related Financial Institutions Placed On CreditWatch Negative Following Same Action On Sovereign

Foreign Currency Local Currency

BBB-/Watch Neg/A-3 BBB/Watch Neg/A-2

Ratings Affirmed Alfa-Bank OJSC TENEX-Service ABH Financial Ltd. S-T Counterparty Credit Rating

B

VEB-leasing OJSC Russian National Scale

ruAAA

BBB-/Negative/A-3 BBB/Negative/A-2

LT--Long-term. ST--Short-term. N.B. This list does not include all ratings affected. Additional Contact: Financial Institutions Ratings Europe; [email protected]

Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at spcapitaliq.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.

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