Uralsib CSR Report 2009

2009
SUSTAINABILITY REPORT FOR URALSIB FINANCIAL CORPORATION
Corporate Identification:
Open Joint Stock Company OJSC URALSIB Financial Corporation (OJSC FC URALSIB)
Limits and Scope of the Report

OJSC FC URALSIB is the parent organization in the banking holding structure. The Sustainability Report (hereinafter referred to as the Report) has been prepared based on consolidated data for FC URALSIBs activities and those of its subsidiaries and dependent companies, which jointly form the FC URALSIB Group of Companies. The Report covers data for the period from January 1st till December 31st, 2009.
The Report has been approved by a third party:
GRI
GRI Report Services confirmed that the Corporations performance indicators are fulfills the requirements of Application Level A+. GRI Application Levels communicate the extent to which the content of the G3 Guidelines has been used in the submitted sustainability reporting. The Check confirms that the required set and number of disclosures for that Application Level have been addressed in the reporting and that the GRI Content Index demonstrates a valid representation of the required disclosures, as described in the GRI G3 Guidelines and the FSSS supplement for financial organizations*. Applicability of the A+ reporting standard has been confirmed by the approval of KPMG Auditors. Information and indicators contained in FC URALSIBs 2009 Sustainability Report correspond to the maximum level of applicability for Sustainability Reporting Guidelines issued by the Global Reporting Initiative.
KPMG
* The certification for complying with GRI standards is not equivalent to the auditors approval. Application Levels do not provide an opinion on the sustainability performance of the reporter nor the quality of the information in the report.
To learn more about the Corporations history and its services and social programs, visit www.uralsib.ru. Electronic copies of the reports for current and preceding periods are available at www.uralsib.ru/about/social_responsibility. Comments, suggestions and requests for additional information on the Report are welcome at csr@uralsib.ru. We value your judgment and will take it into account when planning the Corporations activities. We would also appreciate you taking the time to fill in the questionnaire on the last page of the Report. Your feedback will contribute to improving the Companys future non-financial reporting. You can send the completed questionnaire to the Social Reporting Division of FC URALSIBs PR Department at the following address: 8 Yefremova St., Moscow, Russia 119048 Fax number: +7 (495) 723-7006.
THE 2009 SUSTAINABILITY REPORT FOR URALSIB FINANCIAL CORPORATION
2009 | Sustainability report for URALSIB Financial Corporation
For the purpose of this Report, the following variations have been adopted: URALSIB Financial Corporation Group of Companies is also referred to as FC URALSIB, the Financial Corporation, the Corporation, the Group and URALSIB; Open Joint Stock Company URALSIB Bank is also referred to as OJSC URALSIB and the Bank; Open Joint Stock Company URALSIB Financial Corporation is also referred to as OJSC FC URALSIB and the Company.
The Reports priorities include the following: responsible business, internal social policy, social investments and charitable programs.
Forward-looking statements Forward-looking statements include statements on FC URALSIBs plans, goals, tasks and strategies for future activities and indicators, as well as implications on which the above-mentioned statements concerning the future are based. The statements may contain such words and expressions, as: expects, estimates, assumes, considers, intends, plans, could do, would do, shall do and the like, particularly in sections that concern future plans, prospects, forecasts, tendencies and predictions. These statements do not constitute any guarantees for future indicators, as the statements are based solely on the beliefs of the Corporations management on the date said statements concerning future events and financial performance were made. The statements reflect the precise judgment of the Corporations management, but are liable to risks and uncertainty factors, which may lead to considerable differences between actual and planned results forecast in the statements in question. Uncertainty and risk factors include (but are not limited to): the ability of FC URALSIB to implement its strategic initiatives; economic and market conditions; state regulations; interest rate risk and competition. Taking these uncertainties into account, the reader should not rely on forward-looking statements. FC URALSIB is not liable for updating forward-looking statements, as well as corresponding estimates and implications, taking into account events or circumstances, as well as modified expectations or the occurrence of expected events after the date when such statements were originally made.
CONTENTS
Address of the Chairman of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Address of the Chief Managing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 1. FC URALSIB General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 FC URALSIB history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 FC URALSIB infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Geographic scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 URALSIB Bank (the retail segment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Private Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 URALSIB Bank (the corporate segment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Asset management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Key economic indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Consolidated management statements on FC URALSIBs key activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Data on major clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Key business segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Changes in shareholder capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 2. CORPORATE GOVERNANCE An interview with Dmitry Shmelev, the Chief Executive Officer, the Head of the Corporate Governance and Legal Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Corporate governance structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 The General Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 The Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Changes in the membership of OSJC FC URALSIBs Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 The executive body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Seven basic principles of the corporate policy for social responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Corporate Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 An interview with Michail Molokovsky, First Vice President of FC URALSIB, the Head of Corporate Center strategic direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 The Complex Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Business strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Functional strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 The Dynamic Scenario Modeling System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Information disclosure policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Risk management system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Internal control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Internal audit system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Interacting with stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 Participating in associations and external initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3. RESPONSIBLE BUSINESS An interview with Ilya Filatov, First Vice President of FC URALSIB, Manager of the Financial Supermarket strategic direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Marketing and product promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 2009 marketing campaigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Indirect economic impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Private client privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Assessing the safety of consumer products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Practices intended to take into account client requirements for products already in circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Legal compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Interacting with suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Accessibility of financial services for disadvantaged persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Social financial products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 SME development support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Retail client projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 4. INTERNAL SOCIAL POLICY An interview with Yekaterina Uspenskaya, the Head of the HR Department . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Organizational structure of FC URALSIBs Human Resources Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Personnel structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Workplace health and safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 Initiatives on improving labor conditions and health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 Personnel training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 Social guarantees and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Initiatives on preventing discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 5.PUBLIC RELATIONS AND HUMAN RIGHTS Observance of human rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 Social investments and charitable programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Charity-related activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 The goals and intent of charitable activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 The principles of managing charitable projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 2009 key charitable projects implemented with the participation of FC URALSIB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 Social marketing and sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91 Sponsorship projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91 Public-private partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92 6. ENVIRONMENTAL IMPACT Environmental impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Decreasing the risk of environmental pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Energy-saving priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 Urban gardening initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 Organizing environmental management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 Resource consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 7. KEY EVENTS AND AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 8. ABOUT THE REPORT General information on the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Scope and margins of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Priority subjects of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Independent conclusion on approval of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109 GRI standard element table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 Feedback questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115
ADDRESS OF THE CHAIRMAN OF THE BOARD OF DIRECTORS
Dear Reader! You are about to begin reading Financial Corporation URALSIBs Sustainability Report. The key purpose of the Report is to highlight approaches to forming a spiritually- and socially-balanced business. The crisis provided us with a fresh view of the world where we achieve our goals and build our childrens future. I am convinced that environmental and sustainability issues will be top priorities for the majority of large companies and corporations in the near future. The 2009 Report is the Corporations fifth report prepared based on international standards. As a result, at URALSIB, we can refer to our non-financial reporting as traditional. During the last year, Russias economic situation became more stable and predictable. In review, we can conclude the test that our country and the world have been subjected to. The Corporations high stability margin is due to the formation of long-lasting relationships with the public, our partners and customers. We believe that consequences of the crisis will be felt for quite some time and we have adjusted our plans accordingly. Our approaches are based on common sense and adequate risk assessment. Under these circumstances, it is the correct path to achieving our long-term objective of being an
example of an efficient and socially responsible business that is strategically oriented and managed on the basis of values. Our basic operating principle was and still is to be a socially responsible enterprise. We do our best to ensure that the Corporations financial products and services are profitable and meet our customers needs. Meanwhile, we have always tried to act in a way that contributes to human capital development and upgrading living standards for Russians. And we will be guided by these principles in the future. The social enterprise model determines the logic of our decisions. During the crisis, we tried to approach each distressed borrower individually to work out a compromise settlement and nearly always succeeded. This allowed us to maintain control over troubled assets and to strengthen relationships with our customers and partners. Today, hand-in-hand with our friendly and timetested partners we have limitless prospects. In 2009, for the first time, we offered our customers products with integrated charity components. A certain share of interest on the deposit entitled Decent Housing for the Children and the corresponding bank card goes to finance the repair and development of childrens homes. For
us, this is not simply an additional source of financing for charitable programs. In our experience, the first step is often the most difficult one for individuals to take and the Corporation (through this program) helps depositors take it and start his/her charitable activities. We hope that the number of depositors involved in charityrelated activities will grow considerably in 2010. URALSIBs priorities are focused on supporting children left without parental care and educational activities. Doing good satisfies peoples souls. For the Corporation, it is also a technology, since it is the result that matters. Managing charity-related activities is part of the Corporations overall management system, which complies with the Corporations unified strategy, values and mission. I am extremely grateful to our employees who have worked in charitable projects as volunteers and have suggested ideas and programs of their own. Their positive attitude toward each other, as well as their tolerance and support, are the basis for successful interactions within our team. Having such people around means that you can be sure they will correctly understand you, that they are sincere in their opinions and that they are ready to follow you.
This Report is the story of the life of URALSIB and each of its employees, including key events and achievements that have contributed to the Corporations sustainability and peoples living standards. In case you are interested in the practices highlighted in the Report, please feel free to contact us. URALSIB is open to dialogue. I am convinced that sharing experiences in the corporate social responsibility sphere will be good for all of us. N.A. Tsvetkov, Chairman of the Board of Directors
ADDRESS OF THE CHIEF MANAGING OFFICER
Dear partners, clients and colleagues! The past year was complex and busy for all of us. Financial market uncertainty and the economic downturn required our concentrated efforts. Based on global and Russian economic trends, we forecast limited production growth beginning in Q3 2009, expecting financial market growth as well. As time went by, our forecast proved to be correct. In 2009, FC URALSIB switched over to the short-term operations planning model, which let us promptly respond changing market conditions. We defined three priorities for the Corporation: lowering expenses, maintaining troubled assets at an acceptable level and upgrading business stability. Despite the tangled market situation, URALSIB fulfilled all obligations made to agents. We redeemed two syndicated international loans totaling USD 717 million and returned to the Bank of Russia all funds received in 2008 within the framework of unsecured auctions. Memorable events during the past year include a decision to consolidate the Corporations banking business under a single brand. Historically, URALSIB Bank was formed by consolidating five federal and regional banks. In December, the shareholders of Uralsib-Yug (South) Bank and Stroivestbank approved consolidating their
banks with URALSIB. The procedure will be completed in 2010. Following the shareholders decision, URALSIBs charter capital increased RUR 6.1 billion to reach RUR 26.5 billion. All these measures improved the Corporations stability as a whole. The URALSIBs business is widely represented in Russian regions. In some regions, we are the largest financial organization. Due to this, we have to accept responsibility for these territories social and economic development. Through social partnership agreements, we cooperate with the administrations of nineteen regions. This cooperation includes, for example, a special policy in regard to our offices which often are the only access points to advanced financial services in small localities. The Social Card of the Region project must also be mentioned, as it is intended to organize granting different benefits and subsidies to citizens, while cutting budget costs. A total of 20.5 thousand credits were issued to small- and medium-sized enterprises with a value of RUR 217 billion. The Corporation ranks second in Russia in terms of this type of credit. This is more than just business for us supporting the business activities and employment of the Russian population is an integral part of the Corporations social mission. Speaking of charity, we
have implemented more than 200 regional projects jointly with our partners. Over 40 thousand children benefitted from these projects. We could continue these and other programs due to our business stability, while coping with turbulent economic situations was feasible due to longterm relationships with our partners and society as a whole, since we started forming these relationships long before the crisis. Every employees workload increased during the unstable period, making us reconsider the personal social package so as to ensure that it complied with the increased workload. We also continued promoting healthy lifestyle programs. I am very glad to know that a larger number of employees have demonstrated their commitment to a healthier way of life; their participation in the related initiative reached 45%. Generally speaking, we managed to adapt to new economic conditions and preserve the Corporations basic values. This was possible due to our employees, customers and partners. I am convinced that the work that we have done has formed a potential for sustainable development during the next economic growth cycle. I.R. Muslimov, Chief Managing Officer
FC URALSIB
The united corporate culture
455 offices in 51 subjects of Russia RUR 1,027 million net profit RUR 157 million charitable contributions
GENERAL INFORMATION
URALSIB Financial Corporation is one of Russias major multi-product financial structures with a regional branch network that offers a variety of products. The Corporations largest asset is URALSIB Bank, which was formed via consolidation of the banking business for the 20012007 period. In addition to the Bank, the Group is composed of: URALSIB Leasing Company, URALSIB Asset Management, URALSIB Private Bank, URALSIB Capital, URALSIB Financial Corporation Holding Company and other subsidiaries and dependent companies (a full list of the Groups companies can be found at www.uralsib.ru in the Annual Report section). All companies in the Group are guided by a common standard of corporate culture based on the Corporate Code of Conduct. The interaction among companies concerning the essential issues of environmental safety, external and internal social policy and risk management is carried out in accordance with ethical business practices (of common corporate culture), Russian legal requirements and internal normative documents. Integrated corporate governance enables adequate solutions to social and environmental issues to be found within FC URALSIB. During the economic downturn, the interaction with subsidiaries and dependent companies was guided by a coordinated internal social policy, intended to motivate and develop personnel. Based on a rating by CNews Analytics, FC URALSIB is one of the top ten major financial companies in terms of information system development and the use of advanced IT strategies.
The Corporation offers its clients a wide range of financial services, including: banking and broker services, leasing, asset management, etc. To improve the manageability of the Corporations financial products, all products are consolidated into five key sub-holdings, namely: commercial banking, leasing, private banking, asset management and investment banking. This sub-holding management structure was launched in 2006. As compared with 2008, this sub-holding structure remains essentially the same. The Corporations financial statements are prepared according to Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS). Meetings with analysts surrounding IFRS/RAS financial results are regularly held, according to the approved procedure for preparing statements. IFRS standards were first used by URALSIB Bank in 2004. IFRS annual consolidated statements have been prepared since 2007. Segmental financial reporting is meant to reflect the Corporations key performance indicators concerning the performance of its subholdings. As compared to the previous reporting period, the composition of segmental financial reporting has remained essentially the same. KPMG auditing company was approved to audit FC URALSIBs 2009 financial statements.
FC URALSIB HISTORY
1988 Established OAO AKB Avtobank to provide services for the automotive industry. 1993 Established NIKoil Investment Company. 1996 Established the NIKoil Group of Companies. Rodina Commercial Bank joined the Group. 1998 RINAKO Plus Broker Company joined the Group. 2000-2001 Completed reorganization of the NIKoil Group as a multi-product financial corporation. 2002 Purchased Avtobank and developed the insurance business by acquiring Open Joint Stock Insurance Company PromyshlennoStrakhovaya Kompaniya. 2003 Acquired Uralo-Sibirsky Bank with a broad branch network. 2004 Re-branded the Group under the name URALSIB. 2005 Established the federal level network URALSIB Bank by integrating five of the Corporations banks. In addition to URALSIB Bank, the Corporations banking group unites numerous regional banks. 2006 Implemented a strategic management system based on the Balanced Scorecard System (BSC). 2007 Established Open Joint Stock Holding Company FC URALSIB. 2008 Approved the Banks strategy till 2014, which was developed in cooperation with Boston Consulting Group. Deutsche Bank and Morgan Stanley purchased 2.1% of URALSIB Banks shares respectively. 2009 The Banks charter capital increased 30% in Q2 to reach RUR 26.5 billion as the result of an additional share issue.
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25 FC URALSIB CORPORATE GOVERNANCE
51 RESPONSIBLE BUSINESS
63 INTERNAL SOCIAL POLICY
83 PUBLIC RELATIONS AND HUMAN RIGHTS
95 ENVIRONMENTAL IMPACT
101 KEY EVENTS AND AWARDS
107 ABOUT THE REPORT
INFRASTRUCTURE OF FC URALSIB Regional allocation of personnel

Siberia 11% Southern 10% Central 41%
Points of sale, Bank

800 600 400 200
Payment terminals, thousands

10
494
568
8.4 6.7
8.7 6.3
521
455
8 6 4
Ural 6%
Points of sale, Leasing

80 Total number of employees 13,442 100% 60 40 20
Client base physical persons, millions

72 66 60
4 3
3.8 3.3 2.8
3.4
29
2 1
NorthWestern 7% Volga 25%
Automatic cash points, thousands

4 3 2 1
Employees, thousands
20
2.7 2.2 1.3 1.7
15.2
17.3
16.1 13.4
15 10 5
2006
2007
2008
2009
2006
2007
2008
2009
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GEOGRAPHIC SCOPE
FC URALSIBs activities are coordinated through two management centers. The Moscow-based center is responsible for implementing strategies on the corporate scale, while the remote center in Ufa controls regional development. The regional network is managed through seven regional divisions: the Volga Region division, the NorthWestern Region division, the Southern Region division, the Siberia-Far East Region division, the Ural Region division, the Central Region division and the Moscow division. In the Republic of Bashkortostan, the Krasnodar and Kemerovo Regions, the Corporation plays an important
URALSIB FC integrated sales offices
Federal district/region 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Opened 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Closed 31.12.09 18 7 0 5 0 0 1 3 2 0 0 0 5 1 0 2 1 0 0 0 212 168 1 16 1 1 0 8 2 8 6 1 36 4 2 19 0 1 1 1
role in forming these territories financial infrastructure, providing access to up-to-date financial services for the population and economic agents. Of the seven federal districts, as of year end, only the Far Eastern Federal District does not have FC URALSIB presence. Due to the sale of a controlling interest in NIKoil Investment Commercial Bank, FC URALSIB restricted its presence in Azerbaijan. By the end of 2009, URALSIB Bank had a presence in 51 Russian regions (out of 83 total regions). During 2009, the Bank left two regions, namely: the Leningrad Region (the city of Vyborg) and the Mariy El Republic (the city of Yoshkar-Ola). All sales office closures in 2009 were due to low efficiency and were
performed within the framework of the Banks anticrisis program. URALSIB Private Bank is present in 10 Russian cities: Moscow, Yekaterinburg, Krasnodar, Nizhny Novgorod, Rostov-on-Don, St. Petersburg, Surgut, Tyumen, Ufa and Chelyabinsk. A representative office in Surgut was opened in 2009. The network was enlarged to ensure geographical accessibility of services and products that the Private Bank supplies to major private clients. The Regions were selected based on an integrated assessment of branch potential. No further enlargement of the network is planned. Asset management is developed at the Corporations central office in Moscow.
Federal district/region
Opened 0 0 0 3 0 1 0 2 0 0 0 3 0 0 2 1 0 0 0 0
Closed 31.12.09 0 0 1 5 2 0 0 1 1 1 0 10 0 4 4 1 1 0 20 1 2 2 4 49 5 6 4 3 20 7 4 33 2 8 13 7 1 2 71 3
Federal district/region 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 The Vladimir Region The Ivanovo Region The Ryazan Region The Belgorod Region The Voronezh Region The Lipetsk Region The Tambov Region The Bryansk Region The Orel Region The Tver Region The Tula Region The Moscow Region The city of Moscow SFD The Krasnodar Region The Stavropos Region The Rostov Region The Astrakhan Region The Volgograd Region
Opened 0 0 0 0 0 0 0 0 0 0 0 0 0 3 3 0 0 0 0
Closed 31.12.09 2 0 1 0 1 0 0 1 0 0 0 6 8 5 5 0 0 0 0 6 1 3 2 1 1 1 5 1 2 1 10 34 54 46 3 3 1 1
VFD Republic of Bashkortostan The Orenburg Region The Nizhniy Novgorod Region The Republic of Chuvashia The Republic of Mordovia The Republic of Mariy El The Perm Region The Samara Region The Republic of Udmurtia The Saratov Region The Penza Region SWFD The Vologda Region The Novgorod Region St. Petersburg The Leningrad Region The Murmansk Region The Republic of Komi The Republic of Karelia
19 The Arkhangelsk Region 20 The Republic of Tatarstan 21 The Kaliningrad Region SFD 22 The Krasnoyarsk Region 23 The Omsk Region 24 The Altai Region 25 The Irkutsk Region 26 The Kemerovo Region 27 The Novosibirsk Region 28 The Tyumen Region UFD 29 The Kurgan Region 30 The Sverdlovsk Region 31 The Chelyabinsk Region 32 Khanty-Mansyisk AD Yugra 33 The Tyumen Region 34 Yamalo-Nenets AD CFD 35 The Smolensk Region
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The Siberia Federal District 49
The Central Federal District 71 The North-Western Federal District 36
The Volga Federal District 212 The Southern Federal District 54
Number of Offices
The Ural Federal District 33
31.12.2008 509
Opened 9
Closed 63
31.12.2009 455
In 2009, FC URALSIBs strongest position was in the Republic of Bashkortostan (168 offices), the Krasnodar Region (46 offices), the Moscow Region (44 offices), the Kemerovo Region (20 offices) and St. Petersburg (19 offices).
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BRANDS
In 2004, all businesses of FC URALSIB were united under the URALSIB umbrella brand. This unification allows the Corporation to optimize its marketing budget when marketing new products and to increase client loyalty. The common brand simplifies the cross-sale of different corporate products.
from Standard & Poors and Ba3 from Moodys Investors Service. To learn more about the products and services of URALSIB Bank visit www.bankuralsib.ru URALSIB Leasing Company is one of Russias largest and most diversified leasing companies. The Company has been cooperating with Russian and foreign financial institutions and suppliers for more than ten years, using the most advanced financial processes. URALSIB Leasing Company has received one of the highest credit ratings among Russian leasing companies: a B+ rating from Fitch Ratings, as well as an A+ (high level of financial stability) and an A.rm (high efficiency of the risk-management system) from Expert RA. Since 2009, FC URALSIB Leasing Company has represented Russia in the International Finance and Leasing Association (IFLA). To learn more about URALSIB Leasing Companys products and services visit www.leasing.uralsib.ru.
URALSIB Bank is one of Russias top ten banks, providing its retail and corporate clients with a variety of banking products and services in 51 Russian regions. The Banks operation is based on the financial supermarket principle. The common brand is used to provide services for private clients, SMEs, corporate clients and financial institutions. The range of the Banks services consists of more than 40 products, including: deposits, mortgage, consumer and automotive lending, investment services and shares in mutual funds. According to 2009 ratings compiled by Expert RA (Rating Agency), the Bank held the top slot for SME crediting and is one of Russias top five banks based on the size of its regional branch network. The Bank also ranks among the top three for the number of automatic cash machines and is third in terms of plastic cards issued. The Bank has received international credit ratings of: B+ from Fitch Ratings, B+
URALSIB Bank 121 was established fifteen years ago to provide services for well-to-do clients. The Banks One-to-One concept means that every client is unique. According to Euromoney, URALSIB Bank 121 was recognized as The Leading Bank in Private Banking in Russia in 2006, 2007 and 2008. URALSIB Bank 121, the founding bank in Russias private banking industry, is todays leader in the elite financial services sphere, fully justifying its primary mission of exemplifying high standards of private banking on the Russian market and contributing to the development of the family capital management culture. The brands motto is: to preserve and multiply clients funds. The relationship between the Bank and its clients is based on trust and reliability. Its products and services meet various client needs in financial, as well as non-financial, spheres. To learn more about URALSIB Bank 121s products and services visit www.bank121.ru.
URALSIB Management Company The Corporations member management companies have operated on the trust management market since 1996. The largest member companies include: URALSIB Management Company, URALSIB Asset Management and URALSIB Capital Management. In the autumn of 2009, the companies that make up the Group of Management Companies (URALSIB Management Company, URAL-
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SIB Asset Management and URALSIB Capital Management) confirmed the highest AAA reliability rating from the National Rating Agency, as well as the exclusive high/highest reliability rating of A++ from the Expert RA Rating Agency. As of now, the amount of assets managed by these companies totals more than USD 3.6 billion, while the number of clients exceeds 58 thousand. URALSIB Management Company offers a broad range of asset management services, including: investments in mutual funds, closed mutual funds, asset management for non-governmental pension funds, trust management of securities and the development of investment strategies for different categories of investors. Assets managed by URALSIB Management Company include: the family of LUKOIL Fund mutual funds and URALSIB Fund industry mutual funds. These funds are the largest on the Russian collective investment market. URALSIB Management Company also manages reserves of seventeen of Russias fifty largest non-governmental pension funds. To learn more about URALSIB Management Companys products and services visit: www.am.uralsib.ru for URALSIB Management Company www.wealth-management.uralsib.ru for URALSIB Capital Management www.uralsib-asset.ru for URALSIB Asset Management.
URALSIB Capital is one of Russias oldest and most famous investment and brokerage companies, offering a full range of investment and banking services. URALSIB Capitals leading position on the Russian market is complemented by the Companys access to global markets via offices located in Moscow, New York and London. This allows the Company to offer its clients efficient and non-traditional solutions to capital management. The team of analysts working at URALSIB Capital is one of the best in Russia. It offers a variety of services, including: independent assessments, the development of investment strategies and macro-economic, strategic and fundamental market analysis, covering main sectors of the Russian stock market. In addition to in-depth analysis of the stock market, the Companys analysts pay significant attention to debt and derivative instrument markets. URALSIB Capital is the leader on the ruble bond market, being one of the most efficient operators on the secondary bond market and with REPO-transactions. Professionals dealing with debt instruments are also active on the Eurobond market and in consulting with clients on forming investment portfolios. Offers made by URALSIB Capital to exclusive clients include: developing personal strategies and upgrading investment opportunities. The work is carried out in close cooperation with Russian issuers, providing a full range of services and advice, facilitating the successful implementation of plans and achieving strategic goals set by the Companys clients. The cor-
porate finance and consulting teams offer solutions in the field of mergers and acquisitions, asset disposal, business re-organization, stock buy-out and transactions involving hybrid products and debt financing. The Companys internet-trading system based on QUIK platform provides access to the leading Russian trading sites, allowing investors to make independent, efficient and flexible investment decisions. To learn more about URALSIB Capitals products and services visit www.uralsibcap.ru and www.uralsibweb.ru
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MARKETS
The information is provided based on the 2009 IFRS consolidated financial statements of FC Uralsib audited by KPMG. URALSIB BANK (THE RETAIL SEGMENT) URALSIB Bank offers retail banking services for attracting and allocating funds and settling operations operations. The product range in each segment of the retail bank covers clients basic needs and complies with market practices systematically implemented by federal-level banks. When working out a development strategy for the retail banking market, the Bank takes into account key needs of the mass segment of retail clients. These needs are closely interrelated with social needs. Thus, the development of crediting for physical persons is focused on balancing the profitability of operations and the availability of credit facilities for the general population. Therefore, all basic credit products (consumer, automotive, mortgage credits and credit cards) are issued with moderate interest rates. The Bank does not generate surplus profit on this market segment and its credit portfolio contains no risks associated with crediting obviously high risk borrowers. The Bank does not offer over-estimated interest rates on deposits, when attracting funds from the general population. The main priority in this sector is to maintain and protect the funds of clients who endowed the Bank with their savings. The maximum interest rate on deposits is in line with the maximum average interest rates paid by the top
Mortgage lending
31.12.2008 31.12.2009 URALSIB Bank (RUR billion) Total mortgage lending market (RUR billion) URALSIB Banks share (%) 44.27 1,270.2 3.48 40.2 1,181 3.4
Automotive credit
ten banks, which are published by the Central Bank of Russia each decade. As of the end of 2009, the total number of active clients (physical persons) stood at 3.4 million people. This is comparable to the number registered in 2008. As measured by the number of deposits owned by physical persons, URALSIB Bank ranks 11th among Russian banks, whereas it ranks 7th based on credits granted to physical persons.
Deposits owned by physical persons
31.12.2008 31.12.2009 URALSIB Bank (RUR billion ) Overall market for attracting funds for physical persons (RUR billion) URALSIB Banks share (%) 74.04 5,907 1.25 100.70 7,485 1.34
31.12.2008 31.12.2009 URALSIB Bank (RUR billion) Total automotive credit market (RUR billion) URALSIB Banks share (%) 18.14 557.83 3.25 12.55 411.51 3.05
Unsecured consumer lending

31.12.2008 31.12.2009 URALSIB Bank (RUR billion) Total unsecured lending market (RUR billion) URALSIB Banks share (%) 22.72 2,188.97 1.04 16.33 1,981.49 0.82
PRIVATE BANK The Private Bank works with clients prepared to deposit a sum equivalent to at least USD 1 million in financial instruments. For the Banks regional offices, the minimum deposit is set at an equivalent of USD 500 thousand. The Bank offers customized programs for family capital management, which include the following:
Credits granted to physical persons

31.12.2008 31.12.2009 URALSIB Bank (RUR billion) Total retail credit market (RUR billion) URALSIB Banks share (%) 86.83 4,017 2.16 70.37 3,574 1.97
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financial
services banking and investment solutions; family office structured family capital management; legal and tax consulting; services pertaining to real estate, art dealing and travel. URALSIB Bank 121 helps its clients preserve and augment their capital, successfully combining the best European standards of banking services with in-depth expertise in the Russian private capital market, while providing access to the best investment products in Russia and abroad. As of now, the number of clients serviced by URALSIB Bank 121 in 10 Russian regions totals 1,161.
Number of clients
Managed assets, RUR billion

31.12.2008 31.12.2009 Private bank deposits Client funds under trust management Client deposits in retail banks (regions) Other managed assets (precious metals, lending, leasing, etc.) Total 7.5 5.8 1.6 4.3 19.2 9.7 7.0 3.8 7.3 27.8
Operating revenue growth was principally driven by yields on deposits. In 2009, due to optimizing operating costs and the growing volume of assets managed by the Bank, the operating costs/gross income ratio fell 44%, standing at 59% which falls within European standards for private banks.
Change in cost/income ratio, %
cards, investment operations, operations with precious metals and leasing. Financial organizations are subject to a special range of services, including: correspondent accounts, loan participation and trade finance, operations on the inter-bank market, security services, sponsorship programs in international payment systems and precious metals operations. As assessed by the amount of deposits held by legal entities, URALSIB Bank has been a long-time member of Russias top ten banks. As of December 31st, 2009, the Group had 117.8 thousand corporate clients. The main target audience for this segment consists of small- and medium-sized enterprises, with small-sized enterprises accounting for 91.7% of corporate clients.
Corporate clients breakdown

2009 59 Reduction 44 Segment Small-sized enterprises Medium-sized enterprises Large-sized enterprises Number of clients 107,992 8,346 1,489 Share, % 91.6 7.1 1.3
Client funds managed by the Bank > 20 million USD 1020 million USD 110 million USD Total:
31.12.2008 31.12.2009 7 10 85 102 8 14 118 140 Operating costs/ gross income
2008 103
URALSIB BANK (THE CORPORATE SEGMENT) The drop in the number of clients was the result of some clients transferring to retail banking. This transfer occurred because the funds owned by these clients dropped below the minimum level set by the Private Bank. The services of URALSIB Bank in the corporate segment are intended to satisfy the needs of legal entities. The Corporation strives to develop a comprehensive approach to client policy by analyzing actual demands and expectations. In 2009, this segment included the following: settlement and cash services, control of foreign exchange, fund deposits, trade financing, crediting, bank In the SME segment in 2009, the Group granted 20.5 thousand credits, with a value of RUR 217 billion (including 7.4 thousand credits with a value of RUR 16.6 billion to small-sized enterprises). As measured by credits granted to the SME segment, URALSIB Bank ranked first (Expert RA Agency).
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Services provided to corporate clients by region, RUR million

Regional Directorate Moscow CFD NWFD VFD SFD UFD SFD Crediting Regional share in the portfolio , % 44.4 5.1 5.8 20.1 8.9 5.9 9.8 Attraction Regional share in the portfolio, % 25 3 4 48 7 10 3
ASSET MANAGEMENT The services provided by FC URALSIB in this segment of the financial market include: managing pension savings, deposited securities and mutual funds. The major shares of this market traditionally belong to three companies URALSIB, Troika-Dialog and Alfa Capital. This historic trio weathered the 2008 crisis, and in 2009, other collective investment market players could not beat them. The three leaders managed 39 open and interval funds and controlled 40% of the market. FC URALSIB controls more than 15% of the collective investment market (only open and interval mutual funds). In 2009, Expert RA Rating Agency assigned an A rating for high quality fund asset management to four funds managed by URALSIB Managing Company, including: URALSIB First Fund, URALSIB Russian Metals, URALSIB Energy Perspective and URALSIB Communication and Information. The largest mutual fund managed by URALSIB MC is URALSIB First Fund, which totals RUR 8.9 billion or 9% of the collective investment market. URALSIB manages 10 funds (open and interval).
The amounts held in open and interval mutual funds managed by URALSIB MC, RUR billion
31.12.2008 8.33 31.12.2009 14.81 Dynamics, % 56.2
54.23 6.20 7.08 24.47 10.79 7.19 11.90
42.82 5.14 7.27 84.25 12.09 17.41 5.98
With an yield of 27.5%, URALSIB Capital Management ranks 34th in the pension savings management segment. In 2008, the Corporation ranked among the top ten Russian finance organizations in securities investments. However, the Corporation decreased its activities in this segment in 2009. As of the end of 2009, URALSIB ranks 13th based on client funds invested in securities.
Clients funds invested in securities, RUR billion
31.12.2008 34.95 31.12.2009 31.49 Dynamics, % 9.9
Services provided to corporate clients, RUR million

Indicator Credits Deposits As of 31.12.2008 184.50 169.13 As of Growth, % 31.12.2009 144.60 175.23 21.6 3.6 Market share, % 1.1 1.9
LEASING URALSIB is a traditional leader in the leasing services market. URALSIB Leasing Company was the winner of the Annual National Prize Financial Russia; it was nominated as the Best Russian Leasing Company of 2008. In 2009, URALSIB LC was fourth among leading leasing companies, based on payments received (RUR 15,354.4 million). Despite some ebb in the competitiveness of URALSIB LC as of the end of 2009, it confirmed that financial stability was consistent with an A++ rating (Expert RA Rating Agency). As of the end of 2009, in terms of portfolio volume (of leasing payments due), URALSIB Leasing Companys market share stood at 4.76%, a 0.5% increase compared to the previous year.
In 2009, the volume of the credit portfolio dropped due to negative changes in market conditions. The growth in deposits owned by legal entities was caused by active efforts to attract them.
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Portfolio volume, RUR billion

31.12.2008 48.55 31.12.2009 32.76 Dynamics, % 32.5
KEY ECONOMIC INDICATORS
Data is presented based on the consolidated 2008-2009 IFRS statements of FC URALSIB, audited by KPMG.
Capitalization (equity and liabilities), RUR million Payments received, RUR billion
2008 16.08 2009 15.35 Dynamics, % 4.5 Liabilities Funds owned by credit organizations Settlements with broker and investment companies Trade portfolio liabilities 31.12.2008 145,316 11,189 357 243,177 8,907 18,210 1,351 2,679 431,186 31.12.2009 47,059 8,599 950 275,937 11,584 16,832 1,168 3,309 365.438 Dynamics, % 67.62 23.15 166.11 13.47 30.06 7.57 13.55 23.52 15.25
The evolving economic crisis prevented leasing companies from expanding to regions at the same rate observed in 2007 and the beginning of 2008. According to Expert RA estimates, during the past year, the branch network of Russian leasing companies dropped 25%. However, URALSIB Leasing Company with its 60 branch offices is still the market leader. The Company is present in all Russian Federal Districts. Today, the Companys branch network covers 88% of Russias most economically advanced regions.
Client funds Issued promissory notes and deposit certificates Other borrowed funds Postponed tax liabilities Other liabilities Total liabilities
Equity Charter capital Added capital Paper profit (loss) on operations with securities available for sale Buildings revaluation reserve Foreign currency transfer reserve Undistributed profit Total equity due to shareholders of the holding company Minority shareholders stake Total capital
31.12.2008 1,146 22,965 1,662 6,403 242 33,821 62,431 1,552 63,983
31.12.2009 1,146 29,275 162 4,660 1,459 34,691 68,475 2,654 71,129
Dynamics, % 27.48 109.75 27.22 502.89 2.57 9.68 71.01 11.17
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The overall 15.25% drop in liabilities compared with 2008 was due to a considerable reduction in funds owned by credit organizations (namely, fixed-term deposits and credits, attracted syndicated loan balances and re-purchase agreement balances). Client funds grew due to an increase in the balance of fixed deposits owned by physical and legal entities, which was driven by higher interest rates. Profit
Undistributed profit, RUR million
2008 Undistributed profit 2009 Dynamics, % 2.57
The amount of funds spent on external socially significant projects, including environmental and charitable activities (total for all assets), RUR million
2008 127 2009 157 Dynamics, % 23.62
Operating costs, RUR million

2008 2009 Dynamics, % 1.04 11.93 22.50 137.47 1.44
Salary and other personnel remuneration 10,452 10,343 Administrative and operating costs Wear and depreciation 9,425 1,102 491 8,301 1,350 1,166
Credit portfolio, RUR million

31.12.2008 31.12.2009 Total amount of credits to clients 271,331 214,970 Dynamics, % 20.77
Asset impairment provision Total operating costs
21,470 21,160
Total amount of credits to legal entities 197,060 163,461 Minus provision for impairment Net credits to legal entities 12,563 18,857 184,497 144,604 91,379 4,545 86,834 77,147 6,781 70,366
Dividends paid, RUR million

17.05 2008 50.10 21.62 15.58 49.20 18.97 188 2009 26 Dynamics, % 86.17
33,821 34,691
Net profit, RUR million

2008 Annual profit 1,977 2009 1,027 889 138 Dynamics, % 48.05 50.14 28.87
Total credits to physical persons Minus provision for impairment Net credits to physical persons
Due to major shareholders of the Group 1,783 Due to the Groups minority shareholders 194
In 2009, dividends were paid to non-controlling shareholders of FC URALSIB member companies. No dividends were paid to shareholders of OJSC URALSIB FINANCE CORPORATION (the parent company of the banking holding).
Corporate profit tax, RUR million
2008 1,863 2009 929 Dynamics, % 50.13
Assets, RUR million

31.12.2008 495,169 31.12.2009 436,567 Dynamics, % 11.83
Due to the increased reserve fund requirement set by the Russian Central Bank, FC URALSIB reserves grew 369% compared with 2008, totaling RUR 3,063 million.
The 20.7% reduction in the credit portfolio and the number of financial lease agreements was due to unfavorable conditions on the Russian credit market in 2009. Negative trends impacted the total, as well as the quality of URALSIB Banks credit portfolio, to say nothing of the number of financial lease agreements for URALSIB Leasing Company.
Corporate profit tax cuts were caused by a reduction in the 2009 tax base compared to 2008.
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CONSOLIDATED MANAGEMENT STATEMENTS ON FC URALSIBS KEY ACTIVITIES

The financial statement on eight key business activities is the main element of management statements, integrated into the IFRS Consolidated Annual Statement. Management statements consist of the following segments: corporate banking operations, retail banking operations, leasing operations, investment banking operations, private banking operations and asset management, treasury and resource management operations, corporate investment and other operations and inter-segmental operations. Management statements contain no separate statistics on services that have social implications. This is due to guideline limitations concerning the selection of unified criteria for the impact that the Corporations commercial products have on the social environment. Traditionally, the socially-oriented product range provided by FC URALSIB includes the following: mortgage lending, automotive lending, pension deposits and credit facilities for SME. The range is complemented by products such as: regional social cards and the Decent Housing for Children deposits. The statements contain no accounts on investment projects with an environmental component. The Corporation assesses environmental risks for all investment agreements in compliance with Russian legal requirements.
DATA ON MAJOR CLIENTS Nearly all earnings from external clients are received from Russian residents. Virtually all of the Corporations non-current assets are located on Russian territory. Below one can find an analysis of differences between consolidated returns prior to taxation for all segments listed in management statements and total income prior to taxation based on IFRS.
KEY BUSINESS SEGMENTS Corporate Banking Operations: providing credit to legal entities, attracting deposits, settlements and cash operations, export financing and operations with precious metals. Retail Banking Operations: a full range of banking services for physical persons, including: attracting deposits, providing credits, money transfers and currency exchange operations, bank card issuance and servicing operations. Leasing Operations: providing leasing facilities to small-, medium- and large-sized enterprises to purchase automotive vehicles, special machinery and equipment, real estate and other property. Investment Banking Operations: operations on primary and secondary markets for equity instruments and borrowed funds, providing broker services and trade operations with securities, including: REPO operations and financial derivative transactions. Private Banking Operations and Asset Management: the full range of banking services for well-to-do clients, including: managing
their savings and offering financial consulting services, trust management and attracting funds owned by major corporate and private clients through the formation of individual and collective investment schemes. Treasury and Resource Management Operations: the treasury engaged in placements and borrowings on the money market, funding the Corporation at the expense of issuing debt securities, attracting syndicated credits and operations with foreign currency. This segment is responsible for the accumulation and subsequent re-allocation of resources attracted by other segments. Corporate Investment and other Operations: corporate operations not performed by other segments and not attributed to them. This segment accounts for operations with related parties for the Corporation and certain securities operations. General Business Operations: unallocated costs borne by the Corporations central administration. This segment also includes: other headquarter costs and indirect overhead costs, such as brand advertising, which are common for all segments. The segment also includes operations not related to the Corporations core activity, such as: real estate management. As an integral part of management statements, segmental analysis is periodically submitted to the Corporations Board of Directors for consideration. The analysis is used to assess the efficiency of these activities and to make decisions on resource allocation. In accordance with management accounting guidelines, capital is allotted to the Corporate investment and other operations segment. In 2009, approaches to the allotment for a number of indicators were re-considered due to
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certain changes in the Banks internal organization. Comparative data for 2008 were re-classified, taking into account said changes (detailed information is available at www.uralsib.ru under the Financial Statements heading).
The comparison of consolidated returns prior to taxation for all segments based on data from management statements and the IFRS consolidated returns prior to taxation, RUR billion
2008* Consolidated returns prior to taxation based on management statements IFRS Consolidated returns prior to taxation * re-considered data 7.45 3.84 2009 4.47 1.96
Key indicators for business segments*, RUR million

Profits Corporate banking operations Retail banking operations Leasing operations Investment banking operations Private banking operations and asset management Treasury and resource management operations Corporate investments and other operations Headquarter and joint services Inter-segmental operations Total Assets Corporate banking operations Retail banking operations Leasing operations Investment banking operations Private banking operations and asset management Treasury and resource management operations Corporate investment and other operations Headquarter and joint services Inter-segmental operations Total Liabilities Corporate banking operations Retail banking operations Leasing operations Investment banking operations Private banking operations and asset management Treasury and resource management operations Corporate investments and other operations Headquarter and joint services Inter-segmental operations Total * based on data from management statements. 2008 8,925 3,858 121 109 237 3,679 3,167 15,455 671 3,980 2008 152,111 85,667 39,590 34,119 3,250 110,222 89,825 7,340 27,461 494,663 2008 161,410 70,911 37,328 16,221 8,809 135,409 36,110 0 27,437 438,761 2009 2,636 2,481 153 2,889 2,324 2,963 5,225 14,005 2,059 2,607 2009 118,985 68,548 33,355 39,641 6,665 95,868 96,135 8,977 22,092 446,082 2009 172,455 94,961 30,659 13,135 12,269 47,818 27,849 321 19,364 380,103
The difference in bottom-line figures for segment (management) statements and the consolidated IFRS accounts is due to different methods used to prepare these statements.
Personnel costs (not including the salary fund)*, RUR million
2008 366.9 2009 236.6 % 35.5
* based on data from management statements
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State support accepted by member-companies of FC URALSIB, RUR million

Types of funds Credits (including: intra-day, overnight and secured) received according to procedures and based on conditions set by Regulation No 236-P of the Bank of Russia Collateralized credits received according to the procedures and based on conditions set by Regulation No 312-P of the Bank of Russia Federal budget funds deposited with the Bank according to Decree No 227 of the Russian Government as of 29.03.2008. Unsecured credits received according to procedures and based on conditions set by Regulation No 323-P of the Bank of Russia Direct REPO transactions concluded according to procedures and based on conditions set by Directive No 1365-U and Regulation No 357-P of the Bank of Russia Total 2008 0 2009 3,000 (secured credits) 27,000 (guaranteed credits) 23,800 108,900 97,823.2 260,523.2
21,700 48,000 355,997.1 425,697.1
Beginning in September 2008, the Bank attracted funds from auctions held by the Russian Ministry of Finance and from unsecured auctions held by the Bank of Russia. The total amount of funds attracted was RUR 69.7 billion. Beginning in November 2008, the Bank of Russia increased the overall limit on attracting funds from unsecured auctions for URALSIB Bank. As a result, the total amount of funds borrowed in 2009 stood at RUR 162.7 billion. In 2009, URALSIB attracted funds against the guarantees of other banks, with the amount of such funds totaling RUR 27 billion. In June 2009, the Bank participated in a secured auction. The total amount of secured credits comprised RUR 3 billion. Dealing with the Bank of Russia, URALSIB Bank used direct REPO instruments. Total transactions by period are specified in the table.
CHANGES IN SHAREHOLDER CAPITAL

Changes in shareholder capital, %
Shareholders Campsbay Limited DALECOAST LIMITED URALSIB-Finance Ltd. Tsvetkov Nikolay Aleksandrovich VTK Closed Company NIKoil Finance Corporation Ltd. Others Total 2008 99.62 0.38 100.00 2009 43.85 42.13 0.07 5.33 1.64 6.98 100.00
In 2009, FC URALSIB was re-organized to merge with VTK Closed Company.
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2
Efficiency Scale Innovation
Corporate governance
Good standing
Responsibility for consequences Partnership
Corporate unity
TACTICS MAY CHANGE, BUT PRIORITIES REMAIN THE SAME An interview with Dmitry Shmelev, the Chief Executive Officer, the Head of the Corporate Governance and Legal Department
Will you comment on changes that took place in FC URALSIBs system of corporate governance in 2009? Apart from focusing on current issues, significant attention was paid to studying the positive experience of other companies and aggregate market data. 2009 illustrated the results of different anticrisis management strategies and we were very keen to analyze the most efficient solutions. All basic corporate governance principles and its structure remained the same. Changes in certain management components were qualitative in nature. For example, pursuant to amendments of the Federal Law On Joint Stock Companies, we carried out numerous legal procedures ensuring that management systems in the Groups open joint stock companies comply with new legal requirements. To improve interactions between the different structural divisions of FC URALSIB, Boards of Directors for five key sub-holdings were established in 2009. This contributed not only to the possibility of immediate strategic decision-making, but also to the ability to quickly analyze market changes in key directions. Although by the end of 2009 the market showed some signs of recovery, the year can hardly be called stable for financial markets. What topics were discussed most frequently at meetings of the Corporations Board of Directors? In 2009, the majority of financial companies focused their attention on troubled assets. Troubled
assets and ways to effectively reduce default risks were widely discussed at the beginning of the crisis. But in reality, companies faced these problems in H2 2009. Priority topics for the year included overcoming the crisis and coping with challenges posed by troubled assets as a global social and economic phenomenon. Due to the high corporate stability risk, the issue of controlling troubled assets became a concern for the Corporations Board of Directors. Subject to controlling became mostly the changes in credit portfolio indicators and the volume dynamics of customer funds. Standard reports prepared for the Board of Directors were supplemented by special reports focused on the condition of troubled assets. This approach provided good results. Therefore, the practice of preparing these special reports for the Board of Directors was adopted as standard. During the crisis, the banks extensively used state programs to support the financial sector. URALSIB Bank also used state-owned credit facilities. Did the requirements for controlling the spending of state-granted funds have any effect on the Banks corporate governance system? In 2008, the Russian government implemented a series of measures to support the financial sector. Funds received by URALSIB Bank within the framework of this program undoubtedly contributed to the success of the package of anti-crisis solutions developed by the Corporation. During operations with these funds we regularly submitted reports on their targeted usage. To provide maximum access to data, representatives of the Bank of Russia were in-
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vited to attend meetings of the Banks Management Board held in person. I think this practice of extended meetings contributed to establishing mutual trust and understanding. The project of consolidating assets under the URALSIB brand can without exaggeration be called formative for the Corporation as a whole. 2009 marked the completion of all key legal procedures pertaining to the integration of Stroivestbank and URALSIB-Yug Bank. What opportunities emerged for the Corporation due to this merger? The integration of Stroivestbank and URALSIBYug Bank marks the final stage in the process of consolidating 12 banking assets under the URALSIB brand. We started this consolidation in 2001 and are scheduled to complete all technical procedures in 2010. In 2009, we evaluated the property of these two banks and finished converting the shares of all participants in the consolidation. We also prepared a common IT platform for a new document flow system. At the end of the year, the General Meetings of shareholders of Stroivestbank and URALSIB-Yug Bank approved resolutions concerning the merger with URALSIB Bank. The consolidation, which was started long before the crisis, significantly mitigated the difficult situation in 2008-2009. First of all, consolidation increased the capital, thereby upping the stability of the Corporations banking business, which forms the core of the Group. A smaller bank is much more prone to bankruptcy risks during the crisis due to a less diversified business. Therefore, in this regard,
we are in line with the State policy of enlarging Russian banks. During the crisis, reducing our spending and consolidating the balances of these banks led to the establishment of a mightier and more resistant structure. Consolidation reduced managerial staff and related costs and unified the majority of business processes, thus reducing operational costs. On the whole, the managerial system became simpler and more efficient. Having completed consolidation during the crisis, we hope to upgrade the investment attractiveness of URALSIB Bank when the time comes for economic growth and investors activity upturn without a doubt. In periods of a dramatic reduction in earnings and profits, many companies suspended implementing social programs, whereas URALSIB managed to increase the scope of its social programs for employees and keep all existing charitable projects operating. What is the principle of managing social programs? Probably the primary factor that helps maintain stability is the common social policy that applies to all of the Groups subsidiaries and dependent companies. Strategic social activities are controlled by two of the Corporations departments with clearly separated spheres of responsibility. The Initiative Programs Department is responsible for implementing external social programs, whereas the Human Resources Department is responsible for employee-oriented programs. Some activities are implemented by these departments jointly, for ex-
ample, the corporate volunteering initiative. These Departments communicate the strategic directions of social policy to all of the Corporations companies. The adopted management principles allow the companies to independently determine the degree of their participation in individual projects. Such policy is explained by the fact that each entity allots funds to social projects depending on the volume of its earnings, which can be different. Therefore, the companies can set their own priorities within the framework of common social policy. One of the basic elements of the corporate social responsibility model is environmental safety. What measures have been implemented by the Corporation in the field of environmental safety management? First of all, we strictly adhere to environmental legislation requirements. When controlling the environmental impact of implemented investment projects with FC URALSIB participation, we support the policy of delegating authority. If project implementation is permitted by state bodies authorized to supervise compliance with environmental standards, financing will not be unreasonably withheld. There is one more important principle a credit facility is granted, provided that a project has all required approvals, licenses and permits. The Bank does not perform environmental certification or investment project evaluations.
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MISSION
The Corporate mission is to improve the quality of life of the population and to develop business activities by providing clients with financial products and services, all while exemplifying efficient business practices in key sectors of the Russian financial market.
CORPORATE GOVERNANCE STRUCTURE

FC URALSIB is a Group of companies, consisting of OJSC URALSIB Financial Corporation and its subsidiaries and dependent companies. The Group of subsidiaries and dependent companies that forms FC URALSIB is united by common goals and values, as well as by an ownership system. As a holding group, FC URALSIB is not an independent subject of law. In compliance with the Federal Law On Banks and Banking, OJSC URALSIB Financial Corporation (OJSC FC URALSIB) has all the attributes of a banking holding and forms its parent organization; based on Russian legal requirements, the Bank of Russia has been informed of this fact. OJSC FC URALSIB is a holding company that holds stocks and shares in the charter capital of its subsidiaries and dependent companies. A full list of FC URALSIBs subsidiaries and dependent companies is published in the 2009 Consolidated Financial Statements of OJSC FC URALSIB. In addition to making a profit, Company shareholders want to maximize total added value by forming a balanced portfolio of businesses. The portfolio is intended to diversify business risks and implement inter-segmental and service synergies, and to acquire considerable market shares in promising business segments, particularly in which (in the long-term) FC URALSIB and its subsidiaries hold competitive positions. The Company is not engaged in vigorous activities in any one sector. All the Companys sector-related risks are associated with its subsidiaries and dependent companies, which are active in different segments of the Russian fi-
VISION
The Corporation is a socially responsible federal-scale company, which complies with international standards of efficiency and quality. The Company is one of the top five companies in key sectors of the financial market and has an extensive sales network.
VALUES
FC URALSIBs corporate values system is recorded in the Code of Conduct, which forms the basis for interacting with all groups of stakeholders, and is the target, as well as the element of business practice. The corporate values system is based on six key principles: Engaging in efficient and socially responsible business practices; Having a successful and inspired team; Carrying out partner relationships with clients; Displaying positive thinking; Living a healthy lifestyle; Demonstrating commitment and loyalty.
nancial market. The dominant activities of the Groups member-companies include: banking businesses (with OJSC URALSIB being the key market participant), leasing (with URALSIB Leasing Company being the key market participant), and investment and asset management (with Closed Company FC URALSIB and URALSIB Capital LLC being the key market participants). The Group markets its products across different segments of the Russian financial market. The traditional market focused on Moscow includes: banking, leasing and investment services. The Republic of Bashkortostan is also a major market for the Group. The Groups subsidiaries and dependent companies also develop businesses in other regions of the country. To minimize potential risks, FC URALSIB capitalizes on the synergistic effect, obtained through interactions between OJSC FC URALSIB and its subsidiaries and dependent companies in different segments of the financial sphere via cross-sales, product standardization and implementation of common sales and risk management processes.
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FC URALSIB Group of Companies The parent company of OJSC URALSIB Financial Corporation Holding Group
Shareholders meeting Board of Directors

Audit Committee Committee on Social Responsibility Strategy and Investment Committee HR and Remuneration Committee
Types of businesses
Retail bank Corporate bank Regional business Overdue indebtedness recovery Services for VIP clients
Broker services for private and corporate clients Corporate finance (equity and debt markets, consulting) Analytical research
Asset management Mutual funds Pension fund management Private property asset management Leasing services for corporate clients
Ownership system Common objectives Common values
Consolidated financial statements Sub-holdings Commercial banking
Special reports
The Board of Directors
Private banking
Investment banking
Asset management
Leasing
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THE GENERAL MEETING OF SHAREHOLDERS The General Meeting of Shareholders is the supreme management body of OJSC FC URALSIB. Scheduled meetings are held once per year, as stipulated by the Company Charter. To make decisions on emergency issues, shareholders may be summoned to an extraordinary meeting (EGM). The terms of reference for the General Meeting of Shareholders: Introducing modifications and additions to the Companys Charter or approving a revised Corporate Charter; Specifying members of the Companys Board of Directors, electing its members and engaging in early termination of their powers; Specifying the number, nominal value and category (type) of authorized shares and rights granted by them; Forming the Companys executive body and early termination of its powers; Paying (declaring) dividends based on results of the financial year; Approving interested party transactions; Approving major transactions; Making decisions regarding participating in holding companies, financial industrial groups, associations and other commercial organization unions; Re-organizing the Company; Deciding on other legally provided for issues. The Company has no special mechanisms and/or procedures for personnel to give recommendations to the General Meeting of Shareholders. Additionally, the governance system has no limitations on employees communicating their opinions to the Companys shareholders.
According to the Corporate Charter, voting on different issues, including economic and social ones, is possible by proxy. In 2009, no voting by proxy on environmental and/or social issues was performed. No conflicts of interests were registered during the operating period for FC URALSIB FC, as the Companys major shareholders are united by common interests. Basic procedures pertaining to operating the supreme management body, including in cases of conflicts of interest, are recorded in the Provision on the Board of Directors and the Compliance Policy of the Company Charter.
THE BOARD OF DIRECTORS The Board of Directors is a collegial management body, intended to manage the activities of FC URALSIB on the whole, except for issues that fall under the competence of the General Meeting of Shareholders based on the Corporate Charter. The Board of Directors plans its activities by determining key strategic initiatives to be implemented under the control of the Board of Directors. These initiatives cover all issues essential for corporate development, including social and economic issues. Meetings of the Board of Directors held periodically (in accordance with the work plan) are devoted to management reports on implementing strategic initiatives and related decisions. All issues considered at meetings of the Board of Directors are subject to preliminary review by Board of Directors committees, giving the corresponding recommendations. The Company has a system for controlling the execution of decisions of the Board of Directors, consisting of periodic reports of the Corporate Secretary to the Board of Directors on the execution of assignments. In addition, the efficiency of managerial solutions is assessed within the framework of a balanced system of indicators
and a strategic management model based on strategic charts. FC URALSIBs corporate governance system is based on interactions between the Board of Directors of the parent company and the Boards of Directors for subsidiaries and dependent companies. Thus, the terms of reference for OJSC FC URALSIBs Board of Directors include setting the Corporations, as well as subsidiaries and dependent companies, development priorities and strategies. OJSC FC URALSIBs Board of Directors makes decisions concerning approving candidates for election to the Boards of Directors of subsidiaries and dependent companies. Members of these Boards of Directors include the Corporations most efficient and competent employees, taking into account specific characteristics of the businesses that FC URALSIB is engaged in. Terms of reference for the Boards of Directors of subsidiaries and dependent companies include discussions and decisions concerning the most vital issues pertaining to the activities of said subsidiaries and dependent companies. The efficiency of the Board of Directors in economic, environmental and social spheres is assessed based on the strategic charts model and the system of balanced indicators used by the Corporation. The main efficiency criterion consists in fulfilling key indicators for the yearly business plan. In 2009, no special reports on crisis events in social and environmental spheres were presented for consideration either to the Committee on Social Responsibility or the Board of Directors.
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CHANGES IN THE MEMBERSHIP OF OJSC FC URALSIBs BOARD OF DIRECTORS According to a resolution adopted at the General Meeting of shareholders, in 2009, members of the Board of Directors were reappointed with no changes in the total number of Board members. M.M. Sagalov and D.A. Timoshin were removed from the Board; they were replaced by I.R. Muslimov and S.S. Mitirev. Members of the Board of Directors by periods: From 01.01.2009 till 14.07.2009: Tsvetkov Nikolay Aleksandrovich (Chairman) Gardner Douglas Wyre Donskikh Andrey Mikhailovich Korobkov Denis Igorevich Sagalov Mikhail Mironovich Smirnov Dmitry Vladimirovich Timoshin Dmitry Andreevich Shabalkina Lydmila Alekseevna From 15.07.2009 till 31.12.2009: Tsvetkov Nikolay Aleksandrovich (Chairman) Gardner Douglas Wyre Donskikh Andrey Mikhailovich Korobkov Denis Igorevich Mitirev Sergey Sergeevich Muslimov Ildar Raviljevich Smirnov Dmitry Vladimirovich Shabalkina Lydmila Alekseevna In accordance with Directive No 421/R of the Federal Commission for the Securities Market On Recommendations for Using the Corporate Conduct Code as of 04.04.2002, an independent director has been elected to the Corporations Board of Directors. For 2009, Mr. Gardner Douglas Wyre has served as the independent director.
Background profiles of members of FC URALSIB's Board of Directors (as of 31.12. 2009): TSVETKOV Nikolay Aleksandrovich Chairman of OJSC FC URALSIBs Board of Directors since 2007 and advisor to the Chairman of OJSC URALSIB Banks Management Board. As of December 31st, 2009, he holds 30,420,000 ordinary registered shares, which comprise 5.33% of the charter capital of OJSC FC URALSIB. Mr. Tsvetkov was born in 1960 in Novobratsevo, Krasnogorsk district, the Moscow Region. Mr. Tsvetkov graduated from the Tambov Higher Military Air Force Engineering College named after F.E. Dzerzhinsky, majoring in radio and electronic equipment. In 1988, he became a distinguished graduate of the Air Force Engineering Academy named after N.E. Zhukovsky, majoring in radio and electronic equipment. In 1996, Mr. Tsvetkov graduated from the Russian Academy of Economy named after G.V. Plekhanov, majoring in marketing and economics. He also graduated from the Moscow International School of Business MIRBIS, with a Masters of Business Administration (MBA). In 1998, he also received a ph.D. in economics. GARDNER Douglas Wyre Mr. Gardner is an independent director on the Corporations Board of Directors. He was born in 1962 in Oklahoma (USA). Mr. Gardner graduated from the University of Oklahoma with a Master of Business Administration (MBA), majoring in finance. He has been the Director of Gaspian Group B.V. since 2007.
DONSKIKH Andrey Mikhailovich Chairman of OJSC URALSIBs Management Board since January 1st, 2009 and CEO of OJSC FC URALSIB since December 8th, 2009. He was born in 1967 in Moscow. Mr. Donskikh graduated from the Moscow Institute of Peoples Economy named after G.V. Plekhanov, majoring in trade economics. In 1995, Mr. Donskikh finished the management training course attached to the Russian Academy of Economy named after G.V. Plekhanov, majoring in finance and credit facilities, currency circulation/currency and financial operations of a commercial bank. KOROBKOV Denis Igorevich CEO and Chairman of the Management Board of Evolutsia Upravlencheskoye I investitsionnoye konsultirovanie (Evolution Managerial and Investment Consulting). He was born in 1967 in Moscow. Mr. Korobkov graduated from the Moscow State University named after M.V. Lomonosov, majoring in economics and social planning. In 1995, he completed his ph.D. in economics. In 2002, Mr. Korobkov finished the School of International Business attached to the Academy of Peoples Economy, MBA- professional specialization, with a degree in strategic management. MITIREV Sergey Sergeevich Investment risk management advisor at URALSIB Bank and legal advisor at Evolutsia I.M. Limited (Moscow office). He was born in 1975 in Orsha, the Vitebsk Region, Belorussia. Mr. Mitirev graduated from the Moscow State Institute of Foreign Affairs (MGIMO), majoring in international law with foreign language knowledge. In 2002, Mr. Mitirev graduated from the New York University Law School (LL. M.), with a law degree in corporate law and taxes.
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MUSLIMOV Ildar Raviljevich Chairman of OJSC URALSIB Banks Management Board. He was born in 1965 in Bakaly, the Bakaly District, the Republic of Bashkortostan. Mr. Muslimov graduated from the Bashkir State University with a degree in law. In 1994, he completed courses for managerial employees at the Central Institute for Advanced Training (Moscow), majoring in the credit operations of commercial banks. In the course of advanced training at the International Moscow School of Finance and Banking, Mr. Muslimov majored in financial analysis and evaluating credit risks. During his study at Nasledie (Heritage) Training Center attached to the Association of Russian Banks, Mr. Muslimov majored in credit and settlement operations at a commercial bank. While studying at the International Moscow School of Finance and Banking, Mr. Muslimov majored in organizing foreign currency crediting. SMIRNOV Dmitry Vladimirovich Member of the Board of Directors of OJSC FC URALSIB since 2007. He was born in 1969 in Moscow. Mr. Smirnov graduated the Financial Academy attached to the Government of the Russian Federation, majoring in international economic relations. Mr. Smirnov is a Certified Public Accountant (USA).
SHABALKINA Lydmila Alekseevna CEO of OJSC FC URALSIB from January 1st till December 7th, 2009; Deputy General Manager of the same from December 8th, 2009. She was born in 1951 in Zaraisk, the Moscow Region. Ms. Shabalkina graduated the Moscow Financial Institute, majoring in finance and credit. In 1990, she graduated from the Institute for Advanced Training of the Academy of Peoples Economy attached to the Council of Ministers of the USSR, with a degree in economic management.
THE EXECUTIVE BODY In 2009, OJSC FC URALSIB was managed by a sole executive body in the person of the General Manager (CEO). The General Manager is elected by the Companys Board of Directors if the appointment term for the acting General Manager expires or if there is early termination of the appointment term. The following individuals have held the position of General Manager of FC URALSIB: Shabalkina Lydmila Alekseevna from January 1st, 2009 till December 7th, 2009; Donskikh Andrey Mikhailovich from December 8th, 2009 till February 29th, 2010; Molokovsky Mikhail Yurievich from March 1st, 2010 till the present day.
Committees of FC URALSIBs Board of Directors The Committees of the Board of Directors conduct preliminary analysis of key corporate issues and prepare materials for the Board of Directors in order to provide for the most efficient resolution of tasks assigned to the Board of Directors and to improve control over the Corporations executive bodies. The Committees add to the efficiency of the Corporations activities in the long-term, increasing earning power and upgrading investor attractiveness. . The following are Committees of the Board of Directors: The Audit Committee (Chairman Gardner Douglas Wyre); The Committee on Social Responsibility (Chairman Tsvetkov Nikolay Aleksandrovich); The Committee on Strategy and Investment (Chairman Korobkov Denis Igorevich); The HR and Remuneration Committee (Chairman Shabalkina Lydmila Alekseevna). All provisions regulating the activities of the Committees have been approved. All Committees are chaired by members of the Board of Directors. In addition to members of the Board of Directors, the Committees include officials that manage the corresponding activities within the Corporation. The Committee on Social Responsibility assists the Board of Directors in resolving issues related to the Corporations participation in socially significant and charitable projects, including activities related to the Corporations operation, social development, environmental protection and employee health safety. In 2009, issues related to the Corporations activities in the field of social policy and charity were delegated to the functional departments of FC URALSIB the Human Resources Department and the Initiative Programs Department. No
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meetings of the Committee on Social Responsibility were held in 2009. The Report on the Activities of the Board of Directors Twenty-six meetings of the Board of Directors were held in 2009 dedicated to the following priority issues: Setting priorities for corporate activities and its development strategy; Approving the Companys business plans (budgets); Reviewing the Companys 2009-2010 business concept, as well as the concept for its subsidiaries and dependent companies; Carrying out the early termination of the term for the General Manager and electing a new General Manager; Reviewing the report on the performance of the Company and its subsidiaries and dependent companies for H1 2009 and forecasting performance till the end of 2009; Reviewing the business plan for the Company and its subsidiaries and dependent companies for H2 2009; Reviewing the consolidated financial statement (according to IFRS) for the period ending December 31st, 2008; Discussing the issue of electing the Chairman of the Companys Board of Directors; Discussing the issue of consolidating credit organizations; Reviewing the report of the Audit Committee; Approving individual membership on the Committees of the Board of Directors; Approving the Policy on the Companys Internal Audit Department; Discussing the issue of increasing the Companys charter capital and of approving a resolution on the Companys additional securities issue;
Reviewing the Companys dividend policy and develop-
ment strategy; Approving the Board of Directors operational plan.
MANAGEMENT
MUSLIMOV Ildar Raviljevich Chief Managing Director of FC URALSIB, Chairman of URALSIB Banks Management Board DEMENTJEV Aleksandr Viktorovich First Vice President of FC URALSIB, Deputy Chairman of OJSC URALSIBs Management Board, Investment Banking, Asset Management, Private Banking, International Business, Direct Investment Funds and Leasing Division FILATOV Ilya Valentinovich First Vice President of FC URALSIB, Deputy Chairman of OJSC URALSIBs Management Board, Retail Banking and Marketing Division MOLOKOVSKY Michail Yurievich First Vice President of FC URALSIB, Corporate Center Strategic Division PETUKHOV Yuri Valentinovich Chief Financial Officer of FC URALSIB SAZONOV Alexey Valerievich Vice President of FC URALSIB, Deputy Chairman of OJSC URALSIBs Management Board, Risk Management and Compliance
Mr. Muslimov has worked in the banking sector for more than 17 years. His career started in 1993 at Bashkreditbank (which later became URALSIB Bank), where he held various management positions. In 2004, he was appointed Deputy Chairman of the Banks Management Board. Since 2006, his responsibilities have included: managing the corporate banking business, managing the regional network and controlling the remote Central Office of the Bank, as well as the Banks legal support. In December 2009, Mr. Muslimov was appointed Chairman of URALSIB Banks Management Board. Mr. Dementjev has worked for the Corporation since 1995. In 2004, he was appointed Deputy Chairman of URALSIB Banks Management Board. Since April 2007, he has served as the First Vice President of FC URALSIB. Mr. Filatov has worked in the banking business for more than 13 years. Prior places of employment include: ELBIM Bank, Platina Commercial Bank and Moscow Credit Bank. He has been First Vice President of FC URALSIB since October 2008. Mr. Molokovsky has worked in the banking sector for more than 17 years. Prior employment includes management positions at: OJSC Belkomrus, Alpha Development Closed Company and OJSC Ingosstrakh Insurance. In 2005, he started working at the Corporation, holding the position of Chief Financial Officer of SG URALSIB Closed Company. In June 2006, Mr. Molokovsky was appointed Deputy General Manager for Insurance. Since the end of 2009, he has held the position of First Vice President of FC URALSIB. His responsibilities include strategy and finance, IT and operational support.
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For 16 years, Mr. Petukhov has worked in the banking sector. He previously held management positions at MFK Bank, the United Export-Import Bank, and Rosbank. He joined the Corporation in 2000. His latest position was as Chief Accounting Officer of URALSIB Bank. He was appointed Chief Financial Officer of FC URALSIB in April 2010. From 2005 till 2007, Mr. Sazonov was the head of the risk management department at MDM Bank. In total, he has worked more than 10 years in the banking sector. He was previously employed at TRUST Investment Bank and VTB. He has worked as Vice President of FC URALSIB since November 2007.
Key Performance Indicators are measured within the framework of the annual personnel efficiency assessment procedure, which is mandatory for all categories of employees. In 2009, the personnel efficiency assessment was not taken into account when calculating actual bonuses; bonuses were determined based on final results for the reporting period. As bonuses are not binding in nature, considering the high degree of uncertainty surrounding financial and economic market conditions, in 2009, Corporation management decided not to pay year-end bonuses to personnel across all categories.
Good Standing Impeccable business worthiness is a major asset of the Corporation, a key to both successful partnerships and honest competition. FC URALSIB does everything to associate its business reputation with reliability, honesty and successful business practices. Fulfilling obligations to its shareholders, clients, partners, employees, the State and society is an unconditional priority for the Corporation. Scale FC URALSIBs FC leading position among financial companies is based on an integrated regional network engaged in selling financial products. Points of sale are located in regions which hold the greatest attractiveness for the banking business. Furthermore, additional offices, established within the framework of social partnership agreements concluded with regional administrations, provide the full range of financial services in sparsely populated and remote locations. Efficiency The Corporations sustainable development is based on optimizing operating costs while maintaining high quality services and products, which is also a competitive advantage for the Corporation. To cut the level of relative expenses, certain initiatives were envisaged and implemented in 2009; these initiatives were intended to improve the maturity of business processes, along with simplifying and automating them. To effectively manage post-crisis processes, the level of operational costs achieved in 2009 will be maintained in 2010. Responsibility for consequences Being aware of its responsibilities to society, partners, employees, clients and shareholders under any economic conditions, the Corporation upgraded the efficiency of its business processes throughout 2009, broadening the
REMUNERATION Remuneration of members of OJSC Financial Corporation URALSIBs Board of Directors Remuneration and compensation for members of the Board of Directors, as well as for the Chairmen of Committees of the Board of Directors, was approved by a resolution of the Extraordinary General Meeting of shareholders (August 31st, 2007). In 2009, remuneration (including: salaries, bonuses, commission fees and other benefits) for carrying out the functions of the sole executive body, as well as for participating in the activities of the Board of Directors, totaled RUR 25,921,311.60. Annual bonuses for the Corporations top managers depend on the financial performance of the Corporation, and controlled businesses, as well as on individual Key Performance Indicators (KPIs). Total profit and the profitability of controlled businesses are determined based on approved managerial reports and end results for the reporting period.
SEVEN BASIC PRINCIPLES OF THE CORPORATE POLICY FOR SOCIAL RESPONSIBILITY

From the moment that NIKoil Investment Company was established, later to be succeeded by the FC URALSIB Group of Companies, the Corporations shareholders and management have consistently implemented the strategy of a socially responsible business, paying significant attention to societys interests and problems. The principal objectives of charitable activities, as part of being a socially responsible Corporation, consist of directly supporting those in need by implementing innovative projects across Russia, generating greater volunteer involvement in social programs and positively impacting the social environment through the high quality financial services and products offered by the Corporation. When implementing the policy of corporate responsibility, all member-companies of the FC URALSIB Group are guided by the following seven principles:
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range of social guarantees for its employees, offering debt restructuring programs and implementing numerous social, charity and sponsor programs all across Russia. Partnership The Corporation is a reliable business partner of the State in implementing long-range social and economic development programs in Russian regions. Specialized charity programs focused on education and supporting children are implemented in partnership with non-profit and charitable organizations. The programs for upgrading the general populations financial literacy and developing enterprises are implemented in partnership with regional employment agencies. Innovation Innovation is an integral part of the Corporations development, enabling the preservation and multiplication of its advantages. In the course of continuously improving the Corporation, new products, processes and procedures are implemented and best domestic and foreign management practices are adopted. Corporate unity The Corporations corporate culture is based on the system of shared values, internal business principles, ethical norms and rules, which are in line with the corporate mission, philosophy, vision and strategy. The personal values of the Corporations employees correspond to corporate values. The employees actively participate in forming and discussing corporate values, as well as accepting and sharing them, while the system of communicating internal information is used to communicate these values to each employee.
CORPORATE CODE OF CONDUCT

Moral, ethical and business principles and rules are summarized in FC URALSIBs Code of Conduct. The Code is the Corporations main internal document, providing the basis for the development of detailed corporate business practice standards and norms of conduct for employees recorded in other key normative documents of the Corporation. Adherence to provisions in the Code of Conduct is mandatory for all corporate employees, irrespective of their position. Adherence to the Code of Conduct is taken into account when assessing the strategic and tactical (operational) achievements of each manager. The Code of Conduct is applicable to all of the Corporations member entities. The Code of Conduct adopted at FC URALSIB is characterized by its practicality. The Codes provisions contain not only common corporate values and ethical standards, but also regulations pertaining to business processes, based on compliance standards, including the following: legal and fair commercial practices; avoiding business relationships with clients that lack the required and sufficient information or that present invalid documents or that supposedly participate in terrorist activities; dealing with a client only after the final owner and recipient is established; excluding any transactions that are incompatible with the law and the principles and values of the Code of Conduct, the Compliance Policy and other internal corporate documents.
Excerpts from FC URALSIBs Code of Conduct: We respect our clients and provide them with differentiated, quality products and services, taking into account individual needs and capabilities; The Corporation establishes partner relationships with its clients. The Corporations employees are to supply clients with complete and truthful information on all advantages and risks, as well as possible results of the interaction with the Corporation; The Corporations employees are not to place a client under such service conditions that impair the Corporations interests and/or impinge other clients from their rights; The Corporation is responsible for the correctness and truthfulness of its advertising campaigns; Advertising should not result in clients forming unrealistic expectations about the Corporations capabilities; Client information may be used only by the division engaged in servicing this particular client and the divisions supporting these services. Transferring client information inside the Corporation for the purpose of offering the services of other divisions should be authorized by the client.
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Our Code project During the reporting period, a version of the Code which was approved by an order of the Chief Managing Director in 2007 was used. As of the end of 2008, one of the Corporations strategic goals was to implement a value-based Code of Conduct. The transition to a value-based system was evolutionary, as a logical continuation of targeted governance based on the system of balanced indices which the Corporation has successfully used since 2006. The new corporate culture is characterized by understanding the principles and goals shared by the personnel, as well as a deep mutual understanding of and commitment to common priorities. Value-based governance will become a significant instrument for establishing a stable, competitive and humane corporate culture in the future. The project intended to update the Code of Conduct in accordance with the new strategic vision conditioned by the transfer to value-based governance was launched in 2009. The project was titled Our Code. In the history of FC URALSIB, developing new corporate values became one of the major projects dedicated to developing corporate culture. The project was implemented with the participation of all corporate divisions, with an open vote organized on the corporate Intranet. Upper-level values were determined by shareholders and the Boards of Directors of the Groups membercompanies in 2008. They included the following: Healthy lifestyle; Positive thinking; Employee loyalty. The Corporations unique values were formulated by members of FC URALSIBs Management Board in 2009. They included the following: Partner relationships with clients; Efficient and inspired team;
Efficient and socially responsible business.
The nine principles of the new corporate culture included the following: Trust as the basis of success; Possibilities and incentives for personal development; Efficiency; Gratitude; Feeling corporate pride; Transparency and publicity; Honesty; Justice; Social responsibility and charity. Suggestions put forward by the Corporations Management Board were discussed in all departments of the Central Office and the Corporations regional network from October till December 2009. Each division made its own suggestions concerning the content of values and principles. The discussions were moderated by HR managers from the corresponding departments and divisions. To communicate information to all stakeholders, a new section was formed on the corporate intranet, where new suggestions were published in real time. An open vote was organized on the corporate intranet to differentiate employees preferences and value priorities. Based on information gathered, specialists from the Corporations HR Department developed a questionnaire to determine the content for each value and application limits for the corporate culture principles. The questionnaire was completed by nearly 8 thousand employees (45% of the total number of employees). During subsequent open discussions and voting, employees defined actions encouraged and prohibited within the framework for each principle, providing comprehensive definitions for basic corporate culture values.
Thus, the Our Code project laid the foundation for FC URALSIBs modern corporate culture as stipulated by internal normative documents, with principles of corporate culture, corporate values and conduct principles accepted and shared by the majority of employees.
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THE LONG-TERM STRATEGY OBJECTIVE IS TO EXEMPLIFY EFFICIENT OPERATION OF THE BUSINESS An interview with Michail Molokovsky, First Vice President of FC URALSIB, the Head of Corporate Center strategic direction
Will you comment on trends that determined corporate development in 2009? The encouraging fact is that 2009 results did not include any major bankruptcies in the Russian banking system that could lead to an avalanche of crises, which is worthy of noting. Anti-crisis measures implemented at the end of 2008 the beginning of 2009 contributed to the Corporations lasting stability and its market leadership. The Corporation has successfully redeemed all anti-crisis credits received from the Bank of Russia and can now use free resources for its own development. Without a doubt, the acute phase of the crisis is over, but consequences of the crisis will determine economic development for years to come. The strategy we will adhere to is developed taking into account objective conditions of declining profitability in the banking business. We will attract funds in an amount in proportion to the opportunity to invest them in efficient working assets and not to simply preserve them in high liquidity assets. The crisis heritage, in the form of troubled and non-core assets that burdened the Corporations balances during the acute phase of the crisis, also requires significant attention. In 2009, we established a specialized Debt Center division that developed a unique set of regulations, policies and processes to effectively manage troubled assets. This will be the Corporations priority in 2010. Corporate development is based on the model of a strategically-oriented organiza-
tion. What strategic direction required the concentration of efforts in 2009? FC URALSIB implemented a progressive management model based on a system of balanced indices and strategic maps in 2006. Today, we can confidently state that the innovation was correct. The model allowed us to maintain manageability and corporate integrity at a high level even under challenging economic conditions. To adapt the basic instruments of the new model to individual characteristics of FC URALSIB, the process was complemented with a Complex Strategic Plan, which enabled the different initiatives to be integrated into a single strategic management instrument. Implementing the Complex Strategic Plan in 2009 was mostly associated with developing a set of functional strategies, such as enhancing the operating processes, sustainability and good standing. Due to the objective increase in market financial risks, the 2009 Plan contained an additional priority to decrease the crisis impact on FC URALSIBs target financial performance. Active involvement in governmental social programs, charitable programs, providing social security and developing opportunities for employees also became integral parts of the 2009 corporate strategy. Were there any essential changes made in FC URALSIBs Complex Strategic Plan for 2009? What corporate innovations succeeded?
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Due to the low degree of predictability surrounding crisis development and associated responses, strategic planning and forecasting became a challenge for all market players. Taking this into account, on-line management of the Corporation in 2009 was achieved practically in a manual mode. We refused to take a single scenario approach to strategic planning, as the probability of implementing forecasts within the framework of a single scenario were practically zero. FC URALSIBs Management Board decided to use the advantages of dynamic scenario modeling that enables external factors to be associated with the Corporations key performance indicators and to get a number of possible development scenarios. As a result, the Corporation received a quality instrument that enabled it to assess the impact of macro-economic factors on the Corporations volume and profit indicators. Apart from the mathematical association with macro-economic factors, the model allows for the assessment of the organizations response to strategic initiatives, such as liquidating liquid reserves, securities disposal, restructuring toxic debts and optimizing operating costs, etc. Dynamic scenario modeling enabled a considerable minimization of risks when making important managerial decisions in 2009. Therefore, the Corporation plans to use this approach in 2010. Does the Complex Strategic Plan include the strategy of developing social programs?
What is the impact of social projects on the Corporations sustainable development? Charity and volunteering are traditional for the Corporations member companies. For example, the Corporation has supported children in distress for more than 20 years. During this period, priorities for support have been transformed from independent support programs to in-house methods. We actively develop partner relationships with State and non-profit organizations. The Corporations employees participate in charitable events as volunteers. Supporting the needy and developing human resources is as important for us as financial efficiency and our responsibility to our employees. If we view social investments from the standpoint of strategic planning, our goal is to upgrade the quality of life in regions in which the Company is present. In the long run, these improvements will benefit the Corporations business. The Corporation is an undisputed leader in strategic business directions. What competitive advantages have helped maintain this status in the long-term? I am quite confident that the Corporation overcame the crisis having preserved its record as a reliable and stable agent, since we fulfilled all of our obligations. The advantages you speak about consist of a combination of factors, namely a highly recognizable URALSIB brand, a balanced and customer-oriented strategy, cross-sales and the status of being a federal-level universal network bank.
In the crediting sphere, the Corporation tries to make concessions to its customers, restructuring the debt of in-distress customers in situations where the distress was caused by unfavorable market conditions. This practice deserves its own mention, since it contributes to fostering the Corporations positive standing on the market and forms a stable foundation for further long-term, mutually profitable cooperation. The environmental safety of business processes and investment projects has become one of the principal trends in the global economy recently. What are the Corporations environmental priorities? The financial sector is not a resource-consuming industry by any means. However, as a major player on the financial market and a socially responsible enterprise, URALSIB does everything to ensure that its projects are implemented with minimal environmental impact. Despite the fact that operating the Corporation poses no environmental threat worth speaking of, the Corporations environmental policy is intended to minimize negative environmental impact. The primary factors driving such a minimization include: decreases in electrical energy consumption, the active use of IT solutions and the rational use of paper. These processes are implemented via electronic document flow, the use of power-saving equipment and periodic upgrades of computers. Meetings, seminars and conferences held in person are alternated with video versions.
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What economic development scenario will serve as the basis for FC URALSIBs mid-term strategic modeling? The decline in key global economic indicators in 2009 became one of the most severe during the last seventy years. The probability of a long crisis or a quick revival is rather low. Large-scale measures to stimulate the economy, which were implemented in many countries, stabilized the situation, but contributed to state budget deficits and an increase in public debt. Nevertheless, the vigorous actions of governments of major countries around the world, particularly member countries of the Big Twenty, give us some hope for successfully resolving these problems. This is not grounds for euphoria, nor does it represent any hope for quick economic revival. The revival will be slow everywhere, and local recessions or drop offs are highly likely. Therefore, the risk for additional upheaval on the financial markets is rather high. Measures to stimulate the economy may be suspended at the end of the year, provided that there are signs of sustainable growth across all segments of the social and economic sphere. Overcoming this large-scale crisis quickly is not an easy task for Russia. Therefore, our strategy is based on the U scenario, implying slow, but sustainable growth. Based on the long-term strategy, we expect that general trends for Russian economic development will meet our basic forecast. Naturally,
we have adjusted our short- and medium-term strategies to account for the current macroeconomic situation. In 2009, the focus shifted to upgrading business efficiency, while expanding the business became a minor task.
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STRATEGIES
FC URALSIBs development strategies are based on efficient cooperation among the Groups businesses. According to this approach, when creating new commercial offers, priority is given to complex cross-products, thus broadening the offer for each client and providing for increased earning power per client. To promote new complex offers on the market, FC URALSIB uses two marketing models the Financial Bridge model to operate on the corporate financial services market and the Financial Supermarket model to promote new offers on the retail banking market. Jointly applying these models provides for the synergy of different business directions and increases the Groups capitalization, thus contributing to achieving one of the strategic goals formulated by shareholders. In 2008, FC URALSIBs Board of Directors adopted a long-term strategic plan for corporate development till 2014. The main indicators were calculated based on a predictive model of macro-economic growth. The 2009 economic downturn resulted in corrections to the strategic plan and the Corporation modified its mid-term efficiency indices accordingly, but the overall vision formulated in The Strategy for 2008-2014 remained the same. The unstable macro-economic situation shifted priorities from long- and medium-term strategic planning to developing short-term tactical schemes. In 2009, the Corporation switched over to short-term tactical planning, which made it possible to efficiently respond to changing market conditions. The top down strategic planning model was also actively used, with the Board of Directors assigning priorities to different businesses. This permitted the Corporation to not be overly optimistic and to arrange priorities so that the Corporations interests took precedence over the interests of member-companies.
In 2009, the Corporations activities were focused on the following: Transitioning from targeted to value-based governance. The Corporation adopted a program to develop corporate culture and broadened the scope of programs intended to promote a healthy lifestyle and spiritual development; Preserving the stability and independence of business. The Banks capital increased and highly liquidity assets remained at a high level; Managing credit risks and activities intended to decrease the volume of troubled assets, including developing corresponding infrastructure and instruments; Managing profitability. The amount of net fee revenue was restored in H2 2009, while the total amount of operating costs decreased; Interfacing with regulators and managing reputation. All Group member-companies adhered to requirements set by regulators. All ratings assigned to the Corporation by international rating agencies have been maintained. The Corporations mid-term development strategy is intended to develop a model of a multi-product, sociallyoriented private financial corporation, taking into account two opposing trends, namely, positive economic growth trends and the probable negative impact of financial crisis consequences.
THE COMPLEX STRATEGIC PLAN Strategic planning and assessing the Corporations efficiency in economic, social and environmental spheres is based on the strategic charts model and the system of balanced indicators (the model developed by R. Kaplan and D. Norton). Implementing the strategic vision is based on the Complex Strategic Plan, which includes the sum of strategies aimed at ensuring the Corporations stability and potential on the one hand and to shape the Corporations economic efficiency and the market share on the other hand. These goals are achieved by implementing functional and business strategies. All key businesses and functional divisions of the Corporation are provided with corresponding strategic charts that comply with the Complex Strategic Plan. These strategic charts contain priorities, objectives, strategic initiatives, implementation mechanisms and key efficiency indicators. The charts also assign personal responsibilities for achieving target indicators to employees across all levels of the Corporation. This model, implemented in 2006 during a period of economic growth, became one of the most significant factors contributing to the Corporations stability during the crisis. These processes, tested during periods of economic growth and the global financial crisis, give the Corporation an essential competitive advantage to be used in post-crisis situations. The processes allow for renewing long-term strategic planning without any decentralization. The unified planning methodology based on strategic charts allows for adjusting, overhauling or improving strategic plans in any economic situation, ensuring the continuity of planning and the completeness of information.
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Strategic planning chart

Sub-holdings Business strategies Complex cross-products
Commercial banking Private banking Investment banking Asset management Leasing
Leadership in the scale and profitability of the business
Functions Brand management External communications Finance management Risk management Internal control and compliance Business support IT support Operational support Human resources Initiative programs (charity-related activities)
Functional strategies
Brand management Development strategies of URALSIB under the umbrella brand determine the mechanisms used to position the Corporation and its member-companies in three main target groups: the clients, the entrepreneurial population and society as a whole. Therefore, strategies are implemented at the level of the Finance Corporation (the parent brand), as well as at the level of individual businesses (sub-brands). In particular, the Corporation promotes the URALSIB brand as being positive and socially-oriented by implementing socially significant programs, including: programs of the Corporate Charity Fund, by encouraging corporate volunteers and accomplishing projects within the framework of the Public Private Partnership. The sub-brands develop the principles of responsible business practices, adhering to high service standards. External communications The strategy for developing external communications is targeted at forming long-term relationships between the Corporation and its environment. This strategic line includes: interactions with federal and local authorities, the mass media, associations, unions and the public. Financial management The financial strategy is designed to ensure the Corporations financial stability and liquidity. The 2009 financial strategy was developed based on the predictive model of a U-shaped economic recovery, development prospects forecast for the financial market, risks associated with probable increases in troubled assets, inflation and acts of God. Risk management The risk management strategy is intended to decrease the level of possible risks while maintaining acceptable earning power. The priority lies in maintaining a balance between the level of risk and shareholders economic interests. The strategy takes into account best international practices of risk management.

BUSINESS STRATEGIES Business strategies are developed for all businesses at the level of the Corporations sub-holdings. Business strategies contain detailed descriptions of the mechanisms used to achieve leadership in the scale and profitability of each business. All business strategies have common attributes, as they are strategically targeted, implemented in synergy with related businesses and segmented to specialized client groups. In 2009, local operative solutions were in focus, intended to achieve competitive advantages in corresponding client segments, taking into account the global economic crisis. FUNCTIONAL STRATEGIES Functional strategies determine development goals and development implementation mechanisms for the Corporations divisions, which carry out supportive and administrative functions. The functional strategies complement and support the implementation of business strategies. In 2009, all functional strategies focused on optimizing operational costs.
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Internal control and compliance The strategy is intended to develop a system, controlling the compliance of activities of FC URALSIB membercompanies with Russian legal norms. The second purpose of the strategy is to identify possible sources and to prevent conflicts between the Corporation and clients, the Corporation and its employees and between corporate divisions. Business support The business support strategy is developed taking into account the implemented business model. The strategy is intended to increase business efficiency. In 2009, certain functions of support departments were centralized, which resulted in reduced costs. IT support The strategy is intended to develop integrated IT systems meeting the requirements of the Corporations business logic and envisages the maximum integration of IT platforms into the system of corporate governance, the provision of full range IT services, sophisticated access to existing databases and their protection, maximum automation of business processes and other systemic and IT solutions based on best international practices. Operational support The strategy is intended to improve operational support processes for the business, to ensure the development of said support and to reduce the cost and duration of operating cycles. The strategy envisages establishing common standards of service quality.
Human resources The strategy is intended to form and develop the Corporations human capital by creating a competent, motivated, creative and loyal team based on a shared corporate culture and values. The strategy includes developing motivation systems, forming a personnel reserve, providing occupational training and encouraging a healthy lifestyle. Initiative programs (charity-related activities) The strategy is intended to develop and upgrade the efficiency of external social and charitable programs. Traditionally, FC URALSIBs priorities lie in providing support for children in distress, as well as educational activities. The strategy pays significant attention to the mechanisms of partnering with corresponding non-profit organizations and developing the concept of corporate volunteering. As the procedures determining the strategies of FC URALSIB in relation to economic, environmental and social issues are the most important directions and spheres for corporate development, the qualifications and competencies of members of the Management Board will be determined based on the model of competencies developed in the Corporation. At present, the Corporations supreme governing body assesses its own efficiency in regard to economic, environmental and social issues based on the system of balanced indicators and Key Performance Indicators (KPIs).
THE DYNAMIC SCENARIO MODELING SYSTEM The unique dynamic scenario modeling system was developed by FC URALSIB in conjunction with Oliver Wyman consulting company in 2009. The system enables the on-line calculation of forecast monthly balances, profits and losses, as well as the Banks and Corporations liquidity and capital adequacy as a whole. The system allows for highly accurate predictions based on monitoring key internal data, macro-economic indices and pre-set strategic initiatives. The analysis of forecast data results in a number of possible development scenarios. This opportunity is of paramount importance during macro-economic uncertainty. Actively applying the dynamic scenario modeling system for the Bank and the Corporation enabled the selection of optimal strategic initiatives for each business in 2009. The dynamic approach, inherent to the system, enabled the on-line analysis of the sensitivity of the Banks or Corporations main efficiency indicators to changes in any variable within each of the scenarios. Implementing a computer-based modeling system enables FC URALSIB to develop analytical and databases for any of the Corporations businesses. The system allows the following types of analysis to be conducted: comparative macro-economic analysis, assessing the impact of the environment in each scenario on the Banks and the Corporations key performance indicators profits, volumetric balance indicators and efficiency; Comparative strategic analysis intended to forecast the impact of strategic initiatives tested within a given scenario on the Banks or Corporations key indicators and to select an optimal strategy for a pre-set macro-economic scenario based on comparative results;
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Detailed analysis of the selected strategys impact
Information resources, reflecting the operations of FC URALSIB
within a given scenario on individual components of the balance; Dynamic analysis, intended to assess the efficiency of implementing different strategies within each scenario. The assessment for the next two years is performed based on key indicators; Marginal analysis, intended to forecast the impact of events on future results. The analysis covers the period from the start of the year. Therefore, when the global and Russian economy are unstable, the dynamic scenario modeling system can be used as a compass for managerial staff of all Group member-companies, allowing long-term strategies to be adjusted.
Key data on FC URALSIBs operations are presented in both Russian and English
INFORMATION DISCLOSURE POLICY Information on resolutions of the Board of Directors, annual and quarterly reports, as well as complete data on products and services offered, can be found on the Corporations official Internet sites. Each site has a feedback form and a hotline telephone number. FC URALSIB also publishes a periodical entitled Corporate News, which contains information on different events and interviews with top managers. The periodical is circulated among the Corporations employees and partners.
www.uralsib.ru www.uralsib.com
THE BANK BANKURALSIB.RU BANK121.RU (ONE-TO-ONE.RU) Operation sites: PAY.URALSIB.RU Internet banking (for physical persons) CLIENT.BANKURALSIB.RU OPLATA.BANKURALSIB.RU Bank-Client (for legal entities) DBO.URALSIBBANK.RU Payments for partner banks PLATIPOKARTE.COM Electronic periodical URALSIBBONUS.RU Promotional sites: PORARASTY.RU IPOTEKAURALSIB.RU Management companies URALSIB MC MANAGEMENT-URALSIB.RU Pension management PENSION.URALSIB.RU URALSIB MC Capital Management WEALTH-MANAGEMENT-URALSIB.RU URALSIB Asset Management URALSIB-ASSET.RU URALSIB Real Estate Funds ZPIF.URALSIB.RU URALSIB NON-STATE PENSION FUND NPF.URALSIB.RU URALSIB Capital Ltd. (internet trading) URALSIBCAP.RU URALSIB Capital Financial Services Ltd. URALSIBWEB.RU Depositories DEPOSITORY.URALSIB.RU SD-CENTRE.RU DEPO-URALSIB.RU Leasing LEASING.URALSIB.RU LEASING4U.RU Insurance Group URALSIBINS.RU Other FACTORING.RU RCNIKOIL.RU
uralsib.ru/about/ social_responsibility/ soc_otchet.ru
The Corporations annual reports on sustainable development
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RISK MANAGEMENT SYSTEM

In the course of financial and economic activities, various financial and non-financial risks are borne by the Corporation. To manage these risks, global best practices are used, taking into account the nature of the activities of subsidiaries and dependent companies. The Board of Directors of FC URALSIB plays a key role in risk management, determining the basic principles of system functioning and monitoring its compliance with the scale and operations of the Corporation. The Corporation, as well as its subsidiaries and dependent companies, often employ professional advisors and experts to monitor the quality of the functioning of the risk management system and to determine future development priorities. The Boards of Directors of subsidiaries and dependent companies implement the strategy and approve risk management policies for their respective companies; the management board/sole executive bodies of subsidiaries and dependent companies allocate risk management functions among the collective bodies and divisions of subsidiaries and dependent companies, controlling the performance of these functions and approving limits for different types of financial risk and allocating these limits for different activities. The level of current risks is reflected in reports generated based on regularly monitoring activities. These reports enable the Corporation to quickly respond to risks by reallocating risk limits to optimize the risk/earnings ratio. The management boards/sole executive bodies of subsidiaries and dependent companies may delegate their risk management powers to a number of collective bodies. For example, in credit organizations, the Assets and Liabilities Management Committee is responsible for implementing the policy managing the structural risks of balance, including price, interest rate, exchange and liquidity risks. The Credit Committee evaluates corporate borrowers and approves the parameters of credit trans-
actions. The functions of managing current risks are delegated to specialized departments, competent in the corresponding fields. For example, exchange and interest rate risks are managed by treasury departments. Managing financial and non-financial risks in subsidiaries and dependent companies is based on common principles and guidelines, but when managing the financial risks of subsidiaries and dependent companies, one should take into account risks inherent to the nature of their activities. All risks related to the environmental aspect of operating office buildings housing the offices of the Groups companies are borne by service utility organizations, as stipulated in agreements concluded with these organizations. Due to the insignificant influence that the climate change risk could have on the Corporations operations, no procedures for managing this particular risk have been developed.
INTERNAL CONTROL FC URALSIB pays significant attention to organizing and developing an internal control system in all of its subsidiaries and dependent companies. The key bodies determining the general principles of forming an internal control system and monitoring system compliance with the nature and scale of the business are FC URALSIBs Board of Directors, the General Director, collegial corporate bodies and most importantly, the Audit Committee of the Board of Directors. The Concept for Reforming the Corporations Internal Control System till 2011 was approved by the Board of Directors in 2008 based on results of monitoring the internal control system. According to the Concept, the new internal control system will be based on the COSO-ERM standard, which is the best way to reflect the Corporations efforts to minimize risks, while preserving accept-
able profitability. The use of the COSO-ERM standard as the main tool for risk management is based on continuous monitoring and controlling risk processes. Development priorities for the internal control system include: documenting (by owners of business processes) the risks associated with business processes, as well as control procedures (controls) and an independent body assessing and optimizing business processes. The foundation for documenting risks and control procedures, as well as for performing risk-oriented assessments, was established in 2009, when pilot risk-oriented assessments were carried out. The existing internal control system is a sum of procedures implemented by the Board of Directors, the collegial bodies, specialized departments, the managerial staff and other employees. These procedures are intended to ensure confidence in achieving goals, including: operating efficiency, the certainty of financial reports, adherence to current law and external and internal standards and rules. Internal control on the corporate level is implemented by centralizing, standardizing and regulating business processes, and by assigning responsibilities of collegial bodies and the powers of managerial staff, by coordinating essential decisions and transactions, by setting objectives and assessing activities and controlling the execution of orders. Internal control also takes into account the reporting system and the system that controls and protects information flow. The range of control procedures includes: automated control, authorization, verification, material and physical control, assets, operations and business processes checks, monitoring and analysis. The control procedures are performed continuously by participants of the process, as well as by automated systems and specialized departments (business support, risk management and compliance departments). The application of control procedures is regulated by FC URALSIBs internal documents and its subsidiaries and
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dependent companies. The content of these documents complies with requirements of the Bank of Russia and decrees of the Russian government, the Federal Service for Financial Markets, the Ministry of Finance, etc. The methods used in the documents are based on best practices developed in Russia (including processes developed at FC URALSIB), as well as on best international standards, including publications issued by the Basel Committee (for banking) and standards of the Institute of Internal Auditors (USA). Internal control is designed to achieve the following goals: Strategic to implement the Corporations mission and vision, including: target strategic indicators, complying with the corporate Policy of Social Responsibility; Operational to ensure financial and operating efficiency; Informational to provide reliable, complete, current and protected information on financial and managerial issues to internal and external users to facilitate the effective management of internal social and environmental programs; Compliance-goals to ensure compliance with the law and internal rules and regulations, including the Code of Conduct; Reputational to ensure the Corporations good standing in the public and business environment, including establishing friendly relationships with clients, investors and regulators.
nancial reports, the efficiency of the internal control system, the risk management system and the system of corporate governance. The independent nature of the internal audit function is based on the following: The function is centralized. The Internal Audit Department is part of OJSC FC URALSIBs organizational structure. Therefore, its opinions and conclusions are independent from the Corporations subsidiaries and dependent companies; The function is accountable to Mr. D.W. Gardner, an independent director on OJSC FC URALSIBs Board of Directors; The function is accountable to the Audit Committee of the Board of Directors. The Internal Audit Department operates in compliance with Russian laws, the Corporations internal documents and the decisions of its governance bodies, as well as with Service Regulations, the International Standards of Professional Activities of Internal Auditors and the Code of Conduct (documents of the Institute of Internal Auditors, USA).
INTERNAL AUDIT SYSTEM Internal control and internal audit functions are performed separately. The Internal Audit Department was formed in 2008. Internal audit procedures ensure that the Board of Directors is reasonably confident about the certainty of fi-
Compliance control Implementing compliance control functions allows the risks of conflict of interests between the Corporation and its employees and between the employees and clients to be minimized. Compliance control also minimizes the risk of non-compliance in the course of carrying out professional activities on the securities market involving the participation of professional market players. The functions of the Compliance Control Department include: organizing and implementing internal control intended to prevent the legalization (laundering) of illegal proceeds. FC URALSIB operates according to the Compliance Policy approved by an order of the Corporations President in 2008. The Rules for disclosing and managing
conflicts of interests between managers and members of the collegial bodies of FC URALSIB were developed by the Department in 2009 to implement a detailed regulation of procedures for disclosing and controlling risks associated with conflicts of interests. To manage conflicts of interests, the transfer of information among and within the Corporations business processes is limited and is subject to authorization. Rules for disclosing and managing conflicts of interests are also in effect. According to the Compliance Policy, the following events are subject to disclosure and analysis: participation in any mergers or acquisitions using personal funds; any affiliation with any company or business; participation, including free-of-charge, in the management bodies of a client that is serviced by any member-company of the Corporation; any employment with state authorities or stateowned enterprises; participation in political parties or movements; financial consulting services performed outside the framework of employment duties; transactions with assets partially owned by FC URALSIB, carried out using personal funds, etc. In 2006, the Compliance Department developed and adopted Regulations on the interaction of FC URALSIBs divisions with the Compliance Department, concerning applications submitted to member-companies of FC URALSIB participating in financial markets. The Regulations were developed to minimize the Corporations reputation and legal risks while providing services to clients. Amendments to the Regulations were approved in 2009. The Guest Book database was upgraded, along with procedures for employees interacting with the Compliance Department on claims. The upgraded version of the Regulations provides for the following:
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organizing
feedback from client of the companies participating in the securities market, in order to improve the quality of their servicing and to maintain their loyalty to the Corporation; responding to client claims in a timely manner, identifying and filing typical client claims; improving internal procedures (business processes) for rendering services to FC URALSIBs clients; maintaining continuity for claims procedures. To prevent corruption, the Internal Control, Compliance and Business Support Departments control the operation of the Central Office and the Corporations regional offices (within the framework of their key responsibilities). To ensure early identification of cases violating anti-corruption laws, said departments perform regular checks in relation to key managers and persons responsible for strategic decisions. In 2009, no violations of anti-corruption laws by the Corporations employees were registered. Corporate business ethics principles include strict compliance with the current law, other regulations and internal normative documents, including: anti-trust laws and normative acts and orders of the Russian Federal Anti-monopoly Service. All instructions of the Federal Anti-monopoly Service concerning rectifying violations received by the Corporation in 2009 were followed within the specified term. No fines or sanctions for violating anti-monopoly laws were imposed on FC URALSIBs member companies, furthermore, no suits were lodged during the reporting period.
INTERACTING WITH STAKEHOLDERS

FC URALSIB defines stakeholders as persons, a group of persons or an organization that influences the Corporations operations or that experience the influence of the Corporations operations or its services and products. Interacting with key groups of stakeholders is based on the Corporations vision, mission and current functional and business strategies. Stakeholder structure was determined by analyzing operations and charitable activities performed during strategy development till 2014. In 2009, the structure of stakeholders remained essentially the same. The main priorities and goals of interaction were adjusted for each group of stakeholders, taking into account current social and economic conditions. Shareholders increasing capitalization and sustainability, efficiently managing assets; Clients reliability, quality, efficiency, safety, availability; Personnel and management appreciation, stability, career development, extended social package; Strategic partners and potential investors business transparency and stability; Business partners and suppliers stable relationships, compliance, mutual profitability and loyalty; Regulatory authorities compliance with legal requirements and disclosure; Public and state stability, adherence to existing contractual obligations, SME sector support. Stakeholder engagement, including: the frequency of engagement by type and by stakeholder group and key topics. Shareholders the main form of interaction is the shareholders' meeting. Meetings are held regularly. At the AGM, the annual report and annual financial statements are adopted, including income statements for the year. At the General Meeting, dividend payment deci-
sions are made. Extraordinary Meetings of shareholders address mergers and other important business issues. In 2009, the Corporation held two general shareholder meetings. Customers to maintain the competitiveness of its product range and a high level of service, URALSIB Bank regularly conducts in-depth studies of the needs of small- and medium-sized enterprises, as well as assesses these enterprises satisfaction with the Banks product offerings and services. The study is conducted on a yearly basis and is based on data from previous periods and the actions taken. To upgrade the financial literacy of small businesses, the Bank regularly participates in conferences and forums, online conferences for small businesses, conducts advertising campaigns in the media and organizes free expert advice on specialized sites. During the reporting period, URALSIB staff participated in more than 10 such events. Staff and management to monitor the quality of social programs and healthy lifestyle programs, URALSIB currently conducts full-time interviews with immediate beneficiaries of these services. For more detailed qualitative sections, the Corporation conducts in-depth interviews using the "360 degree" method. In total, when developing recommendations for workplace healthy and safety, more than 50% of the Corporations employees are interviewed. The Corporation identifies the preferences of its employees twice a year. Strategic partners and potential investors URALSIB considers its work with professional organizations to be a key area of development for the Russian banking system. Corporation representatives work on committees and commissions and professional associations that upgrade banking legislation. A number of joint projects aimed at developing the regional banking market were implemented, including local banking associations. The Corporation regularly participates in professional associations. During the period, 15 meetings and discussions were held.
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Regulatory authorities URALSIB representatives work on committees and commissions, specialized NGOs, that prepare proposals upgrading banking legislation. Within this framework, URALSIB cooperates with the Bank of Russia, the Ministry of Finance and the Ministry of Economic Development, the Agency for Housing Mortgage Lending and the Deposit Insurance Agency. During 2009, a number of proposals and initiatives were made in the following areas: mortgage legislation, standard forms for credit agreements, arrangements for insurance payments with the Deposit Insurance Agency, a national payment system and banking operations with precious metals. In 2009, more than 10 meetings were held. Public and state representatives of the Corporation are included in the advisory council of Moscows Finance Department. Corporations are expected to participate in developing and implementing city programs aimed at improving the welfare of Muscovites, developing business activity in the Moscow region and upgrading urban infrastructure. URALSIB, together with regional administrations, developed a series of measures aimed at developing the priority national project "Affordable and Comfortable Housing for Russian citizens." In 2009, the Corporation participated in 6 meetings. To identify the expectations of beneficiaries of charitable programs, URALSIB annually holds a series of dialogues with operators of charitable programs, beneficiaries, regional authorities and experts. Due to economic instability in 2009, most stakeholder expectations have been associated with observing the Corporations member companies, its obligations, maintaining the same level of external philanthropic programs and social guarantees for its employees. Corporations could be more important in meeting stakeholder needs: collective bargaining agreements with employees, maintaining all strategic areas of charitable activity and carrying out all obligations under commercial contracts. These themes are reflected in the Report.
The Corporation strives to organize long-term cooperation taking into account the mutual interests of all parties involved. To achieve this, meetings with representatives of various groups are regularly held, to identify mutual expectations and to find new forms of interaction, which facilitate the development of social and economic spheres and integrated services and products. The Corporation uses a variety of communication tools to ensure efficient interaction with stakeholders, include: meetings, presentations and conferences; employee and client satisfaction surveys; feedback forms on the intranet and the official web sites; mass media; non-financial reporting; initiatives implemented jointly with public and nongovernment organizations. FC URALSIB regularly participates in significant public events. Managers of key divisions regularly appear at conferences, forums and round table discussions dedicated to Russian economic development. The list of events attended by Corporation representatives in 2009 includes: the 20th Congress of the Association of Russian Banks, the RUSSIA Investment Road show, the 24th Annual Meeting of members of the Association of Russian Regional Banks, the Fifth Annual Business Forum of Russias Real Sector Enterprises, the Third National Banking Festival and the Fourth International Best Practice Conference Bank Cards as a Potent Business. To ensure long-term partner relationships with the government, a number of social partnership agreements were concluded with authorities, accompanied by conferences on the social and economic development of regions in which the Corporation has a strong presence. In 2009, the list of events attended by representatives of FC URALSIB within the context of maintaining a dialog with
authorities totaled more than 150 functions. Basic forms of interaction include: participating in conferences and forums (some 100 functions), participating in meetings of advisory bodies, expert committees and working groups attached to bodies of state power (some 30 functions), and participating in direct meetings and negotiations (some 20 functions). Due to the complicated economic situation, in 2009, the number of appeals submitted to the Initiative Programs Department of FC URALSIB grew dramatically. Taking this fact into account, it was important not only to assess the efficiency of current charitable initiatives implemented by the Corporation, but also to accurately determine the needs of all involved stakeholders. In particular, to assist children in crisis, a broad public coalition was formed, consisting of owners, employees, clients, partners, representatives of authorities, local communities and non-profit organizations. Financing and implementing numerous charitable initiatives was accomplished with active assistance from corporate volunteers. In 2009 for the first time, the Corporations clients became involved in implementing charity programs. This was possible due to implementing the Proper Housing for Children project. The Corporations charitable projects were implemented with the active participation of major corporate clients as partners. A good example of this is the provision of a practical study and the probationary placement of orphaned students within the frameworks of the charitable project titled URALSIB gives hope: education employment housing. At the end of 2009, a specialized survey Dialogues with Key Stakeholders was carried out to analyze feedback from beneficiaries, to arrange data and to assess the performance of the Victoria Childrens Fund, which served as the Programs operations center. The survey encompassed stakeholders from 23 Russian regions, including representatives of dedicated bodies of regional authorities, directors and specialists for childrens boarding schools, the children themselves, recipient families,
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as well as agents, partners and volunteer participants in the program. Corrective measures for program development were worked out based on analyzing disclosure, key performance indicators and the compliance of project content with stakeholders expectations. FC URALSIB pays significant attention to the needs of its charitable program partners. Therefore, suggestions made by stakeholders during surveys were arranged systematically, to form the foundation for the strategic planning of the 2010 charitable program. Representatives of all stakeholder groups emphasized the extreme social significance, urgency and relevance of the activities implemented by Victoria Childrens Fund. The Funds activity contributed to the greater involvement of different social groups in resolving problem related to orphanhood. Positive dynamics in these spheres coincide with the Funds activities in several regions. Conversations revealed that communication among the directors of childrens institutions and the Funds experts became more in-depth, while the participation of specialists working directly with children in events held by the Fund (for sharing experiences) became greater. Trying to meet growing demand, the Fund plans to host a number of conferences and round table discussions to foster interactions with this group of stakeholders. The majority of program partners voted for greater information disclosure on the Funds activities. They believe that greater disclosure will attract more volunteers, and draw public attention not only to the Funds activities, but also to the problems of social orphans. Comments made on the Decent Home for Decent Life project We would like the school repair program to continue and the reason is quite simple we have a lot of problems and this needs to be done. The regional authorities
do their best, but it is not an easy task, considering the conditions that we are in. Since nearly all our school buildings date back to the sixties, we need significant money for repairs (an excerpt from an interview with a representative of regional authorities). This project is extremely vital, as the place where a child spends the greater part of his/her life should be as comfortable as home (an excerpt from an interview with directors of boarding schools). Comments on the Strategy of Success program We are trying to support talented parentless children. This goal should be developed, because due to turns in their fortune, many of these children have low self-esteem and our task is to reveal their talents, which is a good cause. And the Fund is doing an excellent job of it, since the children are starting to open up (an excerpt from an interview with representatives of regional authorities). The stakeholders remarked on the Funds comprehensive approach to revealing the childrens talents. The Fund provides continuous support once a talented child is discovered, the support continues all the time and the childs talent develops with each passing year. This support provides the children with opportunities to travel outside the region and the most gifted children were granted personal computers to work with. I think this support is simply great (an excerpt from an interview with representatives of regional authorities). Comments on the activity of the Victoria Childrens Fund We are fully satisfied with the projects implemented by the Fund, as well as with their efficiency and the support granted (an excerpt from an interview with representatives of regional authorities). Stakeholders have singled out the Victoria Childrens Fund comprehensive and forward-thinking approach as the Funds key characteristics.
What I like most is that the entire structure and cooperative scheme were already there. It is very hard to decide what to do for a start and they had it all clearly stated the mission, the subjects of support, the scope of projects open for cooperation (an excerpt from an interview with representatives of regional authorities). The Funds comprehensive approach to solving the problems of orphans is one of the essential characteristics that sets the Fund apart from other charitable and public organizations that implement comparable projects. the Fund offers a number of programs to choose from, establishing personal relations with childrens institutions and children. The children get to know them and its not like some programs that no one hears of once they are implemented (from an interview with volunteers). All stakeholders hold a positive opinion when it comes to assessing the professional qualities of the specialists from the Funds they work with. We work with two specialists and they are very responsible, positive, civil and simply very intelligent people (from an interview with directors of boarding schools). All expectations revealed in the course of these conversations will be taken into account in future charity project planning. All expectations revealed during these dialogues will be taken into account when planning future charitable projects.
PARTICIPATING IN ASSOCIATIONS AND EXTERNAL INITIATIVES One of the Corporations main tasks is to contribute to the comprehensive development of financial market institutions and the professional business community. The Corporation adheres to the principle of fair competition and respects other market players.
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FC URALSIB considers its interactions with public and professional organizations to be one of the key trends in developing the Russian banking system. The Corporations representatives participate in committees and commissions of specialized public organizations, as well as in professional associations, contributing to improving banking legislation. A number of projects were implemented to develop the regional banking market. Some of these projects were implemented jointly with local banking associations. Association of Russian Banks (ARB) The Bank has been a member of the ARB since 1991 (as Avtobank). Mr. A.M. Donskikh, Chairman of the Management Board of URALSIB Bank, became a member of the ARB Board in 2009. Within the framework of ARB membership, the Banks representatives participated in the following socially significant events: the Congress of the Association of Russian Banks; the All-Russian Banking Forum; meeting of the management of the Russian Central Bank with managers of Russian banks; meetings of the Inter-regional Banking Council attached to the Federation Council of the Federal Assembly of the Russian Federation; the conference entitled Legal groundwork for the Russian System of Preventing Laundering Illegal Proceeds and Financial Terrorism; the National Banking Prize; the All-Russian Banking Festival in Montenegro; Representatives of URALSIB Bank also participated in the work of different committees and commissions of the ARB. URALSIB Bank participated in developing the draft law On the National Payment System, contributing to regulations determining the procedures for operators of electronic money and electronic money transfers.
A number of meetings were held to develop suggestions for the regulation of pledge relationships, including foreclosure. A number of consultancies were held, concerning implementing requirements of the Federal Law On Personal Data. Association of the Regional Banks of Russia (Russia Association) URALSIB Bank has been a member of the Russia Association since August 2008. Mr. A.M. Donskikh, Chairman of the Management Board of URALSIB Bank, became a member of the Associations Board in May 2009. Within the framework of Association membership, in 2009, the Banks representatives participated in the following socially significant events: Russian Banks XXI century International Banking Forum, Sochi; The Russian Banking System All-Russian Banking Conference; Bank Cards as a Potent Business the Fourth International Best Practices Conference; The general meeting of members of the Association of Regional Banks of Russia. Representatives of URALSIB Bank also participated in the work of different committees and commissions of the Association. The Russian Union of Industrialists and Entrepreneurs URALSIB Bank has been a member of the Russian Union of Industrialists and Entrepreneurs (RUIE) since August 2008. Within the framework of RUIE membership, in 2009, representatives of the Bank participated in the following socially significant events: the Russian Business Week; the All-Russian Congress of Industrialists and Entrepreneurs;
the Russian-Chinese Trade and Economic Forum; the joint meeting of the Cabinet of Ministers of the Re-
public of Tatarstan and the Russian Union of Industrialists and Entrepreneurs; the All-Russian Conference Financial Restructuring and Bankruptcy in Crisis Conditions. Problems and Efficiency. URALSIB Bank representatives contributed to preparing proposals on amending the first and the second part of the Russian Tax Code, as well as proposals to render certain provisions of the Federal Law No 154-FZ On Modifying and Amending the First Part of the Russian Tax Code void. It was proposed to render said provisions void due to upgrading principles of determining taxable prices. The proposals on amending federal laws On Insolvency (Bankruptcy) and On Enforcement Proceedings were prepared jointly with RUIE experts. FC URALSIB regularly supports social initiatives intended to further develop partner relationships among Russian financial market participants. In 2009, the Corporations representatives attended the following federal and regional events: Sochi 2009 the Eighth International Investment Forum; the St. Petersburg International Economic Forum; the Investment Forum of the Central Federal District; the St. Petersburg Mortgage Forum; the Krasnoyarsk Economic Forum; the Far Eastern International Economic Forum; the Baikal Economic Forum; the Tver Economic Forum; the Voronezh Economic Forum; the Bryansk Economic Forum.
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Responsible business
20.5 thousand credits, granted to SMEs 309.5 thousand regional social bank cards 3.7 thousand Decent Home for Children deposits 39.1 thousand pension deposits
"RESPONSIBLE RELATIONS WITH CLIENTS ARE OUR PRIORITY" An interview with Ilya Filatov, First Vice President of FC URALSIB, responsible for "Financial Supermarket" Strategic Direction
The global economic crisis resulted in an adjustment to peoples' approaches to controlling personal financing. What tendencies do you think were decisive for development of the retail banking segment in 2009?
Certainly, negative money intelligence information and active discussions regarding the causes and probable consequences of the crisis had some influence on people's behavior. However, the reaction of retail banking clients differed from the dynamics of falling stock exchange indices. Prior to the crisis, one of the main drivers that ensured stable purchasing power for individuals in developed countries was consumer credit. The same was true for Russia, although the credit load for Russian households is much lower (than in other developed countries). At the end of pre-crisis 2008, growth in the savings market stood at 12.5%, whereas growth in the credit market for individuals was 26%. This tendency changed completely as the financial crises evolved. The uncertainty factor was dominant in the very beginning, in the autumn of 2008. This resulted in a considerable downturn in activity on the credit and deposit markets. This consumer behavior can be described as the "anticipation of uncertainty." But already by the spring of 2009, anti-crisis measures adopted by the government resulted in greater market stability. Funds lent by the government and the Central Bank mitigated the liquidity problem. State support programs for systemic enterprises helped ease tension in the
business community, thus weakening the influence of the uncertainty factor. In addition, the policy of preventing capital outflow from the banking system resulted in higher rates for money attraction operations. This allowed people to allocate more funds to deposit accounts for different withdrawal periods. In the beginning, these periods were short. Then they became longer reaching up to a year in length. The credit market stagnated till the end of the year, with no noticeable signs of change. At the end of 2009, the downturn in the credit market was 12.5%, whereas the volume of savings grew 21.1% and ruble devaluation driver was practically worked out by the end of the year. Analysis shows that these structural shifts occurred due to consumer behavior switching to a greater focus on savings. This can be explained on the one hand by increased risks of credit, as the banks became stricter in evaluating borrowers and had to raise their rates. On the other hand, potential borrowers re-evaluated the risks of losing their solvency and adjusted their credit plans. All this resulted in the retail finance market being the savings market in 2009.
In 2008, due to the liquidity deficit, banks had to reduce their retail product range, as well as the product range for corporate clients. What are FC URALSIB's 2009 priorities for client service?
The Corporation's 2009 client service priorities remain the same. We are still the federal
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25 CORPORATE GOVERNANCE RESPONSIBLE BUSINESS
network bank, active in major segments of the Russian retail market. The proportion of legal and physical entities in the operations structure has been practically unaffected by the crisis. And we do not need to reduce our product range the only things that changed are certain product parameters, such as rates, borrower age and work record duration at the last job requirements and the ultimate proportion between income and payments for credit.
What approaches in the anti-crisis package have allowed the Corporation to upgrade its potential for further development?
During 2009, we tried to work with the existing portfolio, reducing and minimizing reserves and fulfilling our obligations per previous contracts. The Corporation focused its efforts on two aspects people and processes. In 2009, we increased the level of social security for our employees and their motivation. We developed informational and technical solutions, standardizing processes and centralizing certain managerial functions. The process of optimizing credit underwriting for physical persons is a good example. Resources required to check the solvency of potential borrowers were concentrated at the remote Central Office, Ufa, thus resulting in a twofold decrease for operating costs for underwriting.
The Corporation is active in many regions of the Russian Federation. Does the principle of a fair and socially responsible distribution of services work in sparsely populated regions?
Historically, the Corporation's development has been driven by expansion of the regional network. Today, our services are offered in 455 offices located in 51 regions. Therefore, when developing new offers we definitely take territorial needs into account, but stick to a common marketing strategy for the network as a whole. The Corporation provides the full range of services in each region in which it is present, and the services are equally priced, irrespective of the size of the territory or its unique economic characteristics. In regions in which the major share of the local market belongs to the Corporation, we bear an additional social responsibility. For example, we have sales offices in a number of small towns in the Republic of Bashkortostan, which are the only financial service providers for the local population. As a rule, these offices operate on the margin of profitability and we have to close them if they do not break even. However, in this situation, these communities would lose access to up-todate financial services. But, using the funds of our depositors to support money-losing offices is not responsible. In these situations, the Corporation's socially-oriented and responsible position manifests itself in the fact that we start to look for a balanced solution that helps us maintain the existing level of service, taking into account the interests of our depositors. Usually by discussing these situations with regional authorities, we are able to find a suitable compromise.
What requirements for new product safety for clients and the community are of the highest priority for the Corporation?
Retail banking is a streamlined process. Each stage, be it development, implementation or support, is supervised by the department responsible for that stage as a whole. In addition, there are special departments in FC URALSIB established to ensure safety at each stage of product processing. The greatest share of work is performed by the Internal Control Service, which is a part of the Information Safety Department. When developing a new offer we take into consideration two major components: namely potential risks for the Bank and the level of consumer safety since what we really want is not simply to sell a service, but to enter into a lasting relationship. For example, in 2009, cards with a magnetic strip for certain categories of clients were replaced with cards with built-in chips. In this case, the Bank could use a cheaper alternative, because issuing and servicing magnetic strip cards is five-times cheaper than for cards with chips. However, cards with chips cannot be faked or cloned. Therefore, they are much safer for both the Bank and clients. That is why the Bank decided to bear the costs associated with issuing and servicing cards with chips, while keeping their price for clients at the previous level. In the future, we plan to stop issuing magnetic strip cards.
FC URALSIB applies the principles of corporate social responsibility not only within the
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personnel development and with charitable projects. What is the Corporation's policy in regard to developing socially significant services?
Within the framework of our long-standing cooperation with the Victoria Children's Fund, we support children who are left without parental care. In 2009, we suggested that our clients join this noble initiative. Most of us are ready to provide some support when the issue is children who have been left without parental care. However, sometimes we lack the time to provide this support, and our "Decent Housing for the Children" social product is intended exactly for these active, busy people who care about the lives of these children. The product consists of a card and a deposit with a higher interest rate. When servicing this card, the Bank transfers from its own funds 0.5% of the operating sum to the account of the Children's Fund. The Bank's clients can always choose one of the two functionally equal cards; one of which is socially-oriented. The same with the deposit account the bank suggests that the client open a deposit account with the maximum interest rate and transfers 0.5% of the annual interest rate from the deposit for charitable uses, subject to the client's written approval. The Victoria Children's Fund transfers amounts received within the framework of this program to repair and develop children's institutions. In 2009, more than 14 thousand clients joined the program.
In 2009, the majority of FC URALSIB's clients were busy trying to preserve the stability and quality of life. What approaches did the Corporation use to relieve social tension?
Ordinary citizens were the primary victims of the financial crisis and some of our borrowers became unemployed or experienced a drop in their earnings. It is important to remember that a credit is granted by the bank based on mutual trust between the bank and the borrower. And the crisis highlighted many such situations. How should a creditor treat a borrower in a difficult situation? Should the creditor make any allowances for the borrower or should it simply start the procedure of forced debt collection without going into detail? Judging by the end results of 2009, I am sure that we have passed this test and have proved our standing as a socially responsible creditor. We have developed a number of programs to support such borrowers, such as changing the currency of the credit to Russian rubles or considering the part of debt paid in advance as current payments or attracting co-borrowers or extending the credit term to its maximum to lower the debt load. Despite dramatic changes in financial market conditions, we have maintained the rates for previously granted credits at their original levels, in order not to make our clients' financial positions more difficult. As of the end of 2009, the share of defaulted debt for physical persons in our credit portfolio was lower than for the market as a whole. This was the result of proper credit risk management policy, as well as the responsible attitude of our borrowers during the crisis. We also proceeded to implement regional projects aimed at developing social cards which ensure that any recipient can receive any allowances, subsidies and governmental grants.
We became reliable partners for administrations in a number of regions on the question of improving the efficiency of budgetary funds spent on social needs. By the end of 2009, the number of social card owners in the Bashkortostan, Ivanovo and Smolensk Regions stood at 150, 158 and 1.5 thousand respectively. We plan further steps in this direction we will not only establish partner relationships with new regions, but form the infrastructure capable of developing the issuance of social cards together with other financial market players.
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MARKETING AND PRODUCT PROMOTION

From the point of view of product safety, the primary risks for a retail banking client lie in possibly losing savings deposited with the bank and inadequately assessing his/her solvency, or misunderstanding the system of fees charged for services. Any of these risks can result in financial liabilities which are beyond ones capacities. Therefore, when promoting deposit products, the Bank does not offer its clients higher interest rates, but instead focuses their attention on the scale of the Banks business as a reliable federal-level financial institution. When promoting credit products, the Bank relies on responsible borrowers who need money not to satisfy their whims, but to implement deliberate plans. The volume of payments for credit services are communicated to clients in the form of a comprehensive data block in the Tariffs, enabling clients to understand and assess the financial load associated with the service. URALSIB Banks activities in the sphere of advertising retail banking services are regulated by the law On Advertising. Taking into account specific characteristics of retail banking products, which are subject to different fees in the form of interest rates, commissions, etc., advertisements associated with such products must contain all essential transaction conditions, which may influence the clients product choice.
2009 MARKETING CAMPAIGNS To encourage client participation in the Corporations charity programs, a federal campaign was accomplished in 2009, advertising the Decent Home for Children program, which was jointly implemented with the Victoria Childrens Fund. Two products were promoted, including the Decent Home for Children affiliate card and a deposit of the same name. An important aspect for FC URALSIB is creating comfortable conditions for cooperation between suppliers and consumers of financial services. To achieve this, it is necessary to eliminate the general populations financial illiteracy. A federal campaign to focus peoples attention on the safe and competent use of financial services was launched in 2009 in cooperation with the Peoples Initiative Fund.
INDIRECT ECONOMIC IMPACT FC URALSIBs regional network was broadened via corporate development, together with the implementation of high quality service standards. Today, the Corporation has an extensive network of sales offices and maintains mutually profitable cooperation between its clients and partners, taking into account specific regional needs. Improving the quality of life and developing enterprises are key priorities for FC URALSIBs corporate mission. The mission is implemented with the help of a set of inter-related marketing processes, which includes: the development of complex sales, the maintenance of high quality services and a broad range of financial services for different categories of clients. This approach contributes to the Corporations stable business reputation and also upgrades investment attractiveness in the territories. The regions where the Groups position was the strongest in 2009 include: the Republic of Bashkortostan, the Krasnodar Region, Moscow and the Moscow region, the Kemerovo Region and St. Petersburg. Financial infrastructure in these areas is considerably influenced by the Corporation, which provides access to high quality financial instruments and services for a variety of economic subjects. The development of socially significant business products, such as social cards, is an integral part of corporate strategy. Implementing a card-based system to account for benefits granted to different categories of citizens provides the following economic benefits: upgrades the efficiency of state control over the use of budget funds intended for social purposes;
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improves
the efficiency and quality of social services for the population, as provided for by state-owned and commercial organizations; ensures targeted social support for regional populations; provides electronic access to state (municipal) services via the banking network (information kiosks, automated cash machines and internet-banking).
ASSESSING THE SAFETY OF CONSUMER PRODUCTS The product safety assurance system is applied throughout the life cycle of a product. The system is based on regulatory requirements of the Central Bank of Russia and the Federal Law On the Protection of Consumer Rights, as well as on internal corporate procedures and directives. In the course of developing credit products, significant attention is paid to determining the purpose of credit and differentiating categories of potential borrowers. This enables developers to bear in mind specific characteristics required for the product. An underwriting stage is envisaged in the process of offering a credit product, enabling the customer to take affordable credit, thus lowering the risk of borrower indebtedness and upgrading customer stability. During the promotional stage, the Corporation tries to segment the target audience as much as possible. Advertising and marketing activities are focused on the customer segment for which the product is intended. During product sales, customer safety is ensured via strict compliance with legal requirements and regulatory authorities. The Bank participates in the system of deposit insurance, adhering to recommendations of the Russian Central Bank on limits for the maximal interest rate for deposits and observing requirements of Rospotrebnadzor (the Russian Agency for Health and Consumer Rights) concerning rating credit agreements, communicating the full price of the credit product to customers.
PRACTICES INTEDED TO TAKE INTO ACCOUNT CLIENT REQUIREMENTS FOR PRODUCTS ALREADY IN CIRCULATION FC URALSIB is a client-oriented company. We make every effort to encourage repeated use of our financial and/or consulting services by our clients. Therefore, receiving client feedback is one of our priorities. The primary instruments used to maintain feedback are remote data transfer channels, including electronic ones. The Bank implemented the Red Line of Quality project in 2007, which provides clients with a unified postal address and contact telephone number placed on all promotional materials, including: outdoor advertisements, printed matter and Internet sites. This allows clients to more easily express their opinions and wishes. Received messages are then decoded and transferred to corresponding divisions for further processing. Recurrent issues are subject to special response measures. A survey was conducted in 2009, involving clients and the heads of regional sales offices, to implement service quality management procedures for sales offices. The survey included 340 sales offices managers and 24,035 clients. According to the survey, more than 60 percent of clients assessed service quality as high. Improvement requests were primarily associated with work schedule and the location of sales offices (to avoid queues). This data generated the following responses: flexible business hours were set for certain front office employees, depending on the density of client flow, the Electronic Queue system was implemented in the busiest offices and the waiting areas were
PRIVATE CLIENT PRIVACY The retail bank is responsible for gathering and processing clients personal data. Personal data databases are used to conduct analytical research and direct marketing communication. When developing a product offer and establishing service standards, the clients personal data is used in an anonymous format only. The banks targeted marketing communication is performed in accordance with federal legal requirements and are subject to the written consent of the client.
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equipped with additional seating facilities. Other measures included: seven day a week operating schedules in the regions that are most significant for the Bank, upgrading computer and office equipment and increasing the number of automatic cash machines. LEGAL COMPLIANCE FC URALSIB strives to establish a social enterprise model based on the synergy of the strategic interests of the business, the state and the public. This synergy forms a basis for sustainable development, according to which each product, service or initiative should correspond to the needs and interests of their recipients. This ensures that every product, service or initiative is valuable for society. In 2009, non-compliance with marketing communication and end-user information norms regarding product characteristics occurred only occasionally. All requests pertaining to eliminating violations identified by control bodies were fulfilled on time. No cases of non-compliance with norms and codes regulating the impact of products on clients health and safety were registered.
INTERACTING WITH SUPPLIERS The Corporation selects suppliers through negotiations. The contracts are subject to adjustment by the Corporations Legal Department. Interactions with suppliers are based on mutually profitable long-term relationships, allowing the Corporation to ensure the stability, quality and minimal cost for supplies. In regions in which the Corporation has a presence, the volume of supplies purchased from local suppliers ranges from 80 to 95 percent. The remaining supplies are centralized. In Moscow, local supplies supply 100 percent of products.
The amount of fines imposed for breaching legislation regulating the provision and use of products and services, thousand rubles
Amount of fine The breach of conditions regulating operations with securities The breach of conditions regulating operations with bank cards (partner banks) The breach of conditions regulation the issuance of cash at automated cash points The breach of conditions regulating bank card settlement operations The breach of conditions contained in credit agreements (except for inter-bank credit agreements) Other violations of agreements with physical persons Total 239.07 74.12 17.40 1.70
119,055.47 77.81 119,465.57
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ACCESSIBILITY OF FINANCIAL SERVICES FOR DISADVANTAGED PERSONS URALSIB Banks marketing strategy is based on unified standards of client servicing, ensuring the maximum availability of services. The amount, quality and cost of services are not associated with either the size or development level of a region. The range of deposit products offered by URALSIB Bank includes URALSIB Social deposit, which allows clients to generate income from deposited funds without any prejudice in their authority to use them with a minimum balance of one ruble.
SOCIAL FINANCIAL PRODUCTS

The development of social products and services is one of the Banks priorities. The Bank contributes to solving key social and economic problems, as a leader in SME and general population crediting. SME DEVELOPMENT SUPPORT SME development in the current economy is of particular importance to the public, as smalland medium-sized businesses can be established by almost anyone and the SME segment is capable of fast growth. In light of this, the Bank offers the SME segment products that will contribute to their development. The offer for SME clients is based on Business Growth and Business Development products that were developed taking into account specific characteristics of the SME segment. These products ensure a flexible approach to crediting. Service parameters can be adjusted, depending on region and industry specifics. According to an independent survey conducted by Expert RA Agency, in 2009, URALSIB Bank became the leader among Russian banks in SME crediting. The Bank granted 20.5 thousand credits, valued at RUR 217 billion. In cooperation with regional funds that support SMEs in the Republic of Bashkortostan, Kemerovo, Sverdlovsk, Perm, the Khanty-Mansiisk Autonomous District, Moscow and St. Petersburg, URALSIB Bank implements programs that enable SME clients to obtain additional guarantees against their liabilities.
Social services (as of December 31st, 2009)

Quantity Amount (thousands) (RUR billion) Mortgage loan portfolio Automotive loan portfolio Regional social cards Decent Housing for the Children deposits Decent Housing for the Children bank cards Pension deposits SME loans 33.7 47.7 309.5 3.7 10.2 39.1 20.5 0.78 0.135 7.3 217 41 11.58
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The Bank also cooperates with public organizations in the sphere of promoting the development of small- and medium-sized enterprises. In August 2009, a General Partnership Agreement was concluded between URALSIB and OPORA-Credit (a financial Internet project (www.opora-credit.ru) launched by OPORA ROSSII, an all-Russian public organization for SME development). This General Partnership Agreement is meant to ensure the joint efforts of URALSIB Bank and OPORA-Credit for develping the SME crediting system. A credit application may be submitted at the www.opora-credit.ru portal. As stipulated by the Agreement, credit applications from businessmen who operate in any regions in which URALSIB Bank is present are considered within five working days. If an application is approved, the Bank will contact the potential borrower directly. Businessmen can also use a popular interactive service called A question to the expert. On-line answers to all questions are provided by a qualified URALSIB Bank specialist. The partnership agreement concluded between URALSIB Bank and the OPORA ROSSII public organization calls for joint efforts for enterprise development, as well as developing and implementing state policy to increase the availability of banking services for the SME segment. A special Internet site, www.porarasty.ru, has been developed that focuses on small enterprises businessmen and managers. The site provides information on credit programs and the documents required to get credit approval. The site also offers on-line consulting and credit application services.
Customer surveys at points of sale To maintain the competitiveness of its product range and high service quality, URALSIB Bank carries out surveys of small- and mediumsized enterprises to assess the demand for and satisfaction with the Banks product range and services. The surveys are performed regularly. Results from the latest survey demonstrate that on the whole the Banks customers greatly appreciate the Banks activities. To improve the financial literacy of small businesses, the Bank participates in topical conferences and forums and holds internetconferences; the Bank also carries out advertising campaigns in the mass media and offers free expert consulting services using specialized Internet sites.
RETAIL CLIENT PROJECTS Social Card of the Region Project An innovative product in the form of regional social cards is used in numerous Russian regions. The product is intended for all categories of citizens that receive social benefits, including: students, retirees, military service members and civilian servants, etc. The card owner can use it to get access to various social subsidies and benefits, such as free public transport services, discounts for pharmaceuticals and communal services, etc. Implementing this product contributes to the rational use of budget funds, simplifies accounting and reduces costs borne by welfare agencies. The card can be used to pay for goods and services, and it is accepted at all automated cash machines.
In 2009, social card projects were implemented in the Republic of Bashkortostan and the Ivanovo and Smolensk Regions. The total number of card owners stood at 309.5 thousand persons. The Social Card of Bashkortostan project became the first Russian laureate of the 2009 OSCARD, a prestigious international competition for innovative banking products. The OSCARD Prize is one of the leading international awards for card products. The 2009 competition involved more than 500 banking products with 15 winners in several categories. URALSIB Bank was nominated The Best Innovative Banking Product in the services category, along with US Bank (USA), which presented a similar product called the ReliaCard Visa. The Bank plans to implement card projects in the Republic of Udmurtia, the Kemerovo and Krasnodar Regions. The social card may be adapted to cover a broader range of social issues pertaining to granting and accounting for benefits and other services. Broadening the functionality of the social card will facilitate its use in implementing socially significant regional programs, as well as high priority national projects. Decent Housing for the Children deposit and card URALSIB Bank implements its social programs in partnership with charitable, non-governmental and public organizations. The Bank cooperates with the Victoria Childrens Fund, which was established in 2004 to support children in distress for a number of years. Since the Funds establishment, support
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has been granted to children in 42 Russian regions. In 2009, a joint charitable program was launched by the Bank and the Fund, involving issuing a special affinity MasterCard Decent Housing for the Children. The Bank committed 0.5% of amounts paid using the card in question to implementing the charitable projects of the Victoria Childrens Fund. The Bank also made a new offer to its investees, providing them with the opportunity to open a special deposit account Decent Housing for the Children with a higher interest rate. Subject to deposit conditions, a client assigns the Bank the authority to transfer 0.5% of the annual deposit interest to fund the Decent Home for Decent Life project, implemented by the Victoria Childrens Fund. As of the end of 2009, the number of Decent Housing for the Children deposits stood at 3.7 thousand. The number of plastic cards issued totaled 10.2 thousand. Mortgage Lending Despite the drop in mortgage lending in 2009, as a result of the international financial crisis, URALSIB Bank continued to provide mortgage lending services based mostly on social implications. The total amount of mortgage loans issued by the Bank in 2009 stood at RUR 41.2 billion (the volume of the portfolio as of December 31st, 2009). Social mortgage lending projects are implemented by OJSC Bashprombank a specialized regional mortgage bank established by URALSIB Bank in conjunction with the government of the Republic of Bashkortostan to make a wide range of mortgage lending programs available in the Republic.
Bashprombanks key activities are focused on social mortgage lending programs (implemented within the framework of the Republics program on social mortgage lending). In the city of Anapa (the Krasnodar Region), URALSIB Bank has implemented a federal subprogram dedicated to relocating Russian citizens from slum-like dwellings and dangerous structures. The sub-program is implemented jointly with the regional administration. To decrease housing costs, the Bank decreased the earning power of credits granted to construction contractors. This resulted in lower construction costs, thus reducing the size of credits required for future homeowners. In addition, the whole construction cycle was controlled by the Bank, ensuring the lowest possible construction costs. The process suggested by URALSIB resulted in a 1.6-times increase in the number of families who upgraded their living conditions, compared with processes used earlier. A share of housing was handed over to municipal authorities free-of-charge to be provided to persons on the waiting list, while another share of housing was made available for young families to purchase at a fixed price. URALSIB Bank regularly helps thousands of people solve their housing problems.
Automotive crediting When developing offers for clients, the Bank pays significant attention to their social components, even if the products are strictly commercial. In 2009, the Bank participated in the Lada Finance credit program, which was implemented jointly with official AvtoVAZ dealers, who offered Lada line cars at discounted prices, whereas the Bank provided buyers with reduced rate credit facilities. Implementing this program contributed to an increase in Lada cars sales, while allowing many buyers to purchase cars on favorable terms. In addition, the major national car manufacturer was able to maintain tens of thousands of working places. URALSIB Bank also develops partner relationships with the worlds leading car manufacturers. Special Bank offers cover the most popular Ford and Volkswagen models. A number of promotional offers also include special car insurance conditions. As measured by the number of automotive loans issued, the Bank ranks 12th among Russian banks (according to an RBC.Rating). The number of automotive loans issued in 2009 totals 6.4 thousand, with a value of more than RUR 2 billion (the portfolio volume as of December 31st, 2009 stood at RUR 11.58 billion).
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Repackaging loans The Bank treats its clients whose financial conditions worsened due to objective reasons responsibly and with understanding. These clients are offered debt repackaging opportunities, including suspending surcharges and fines, modifying payment priorities or converting loan to another currency. A borrower is offered a variety of customized repackaging opportunities. This individualized approach enables borrowers to fulfill their obligations in the most comfortable way, in order to resume normal debt servicing when their solvency is restored. Pension deposits The range of deposit products offered by URALSIB Bank includes products designed for older individuals. URALSIB Pension deposit combines increased earning power with low initial and additional deposits. The interest rate on URALSIB Pension deposits for any deposited amount corresponds to the interest rate on URALSIB Stable deposit in the amount of at least RUR 1 million. A deposit is opened upon the submission of a pension certificate, a certificate showing that someone is a World War II veteran or certificates of being a veteran of labor, military service, internal affairs agencies and public prosecutors office, etc. Funds deposited using the URALSIB Pension deposit product totaled RUR 7.3 billion (as of December 31st, 2009).
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Internal social policy
lifestyle programs
13,442 employees RUR 236.6 billion to implement internal social policy 1,789 thousand hours of employee training per year 7 different programs in the social package 45% of employees participate in healthy
URALSIB UPGRADES ITS POTENTIAL An interview with Yekaterina Uspenskaya, Head of the HR Department
What was FC URALSIBs HR policy in 2009? From the beginning of 2008 till the middle of 2009, a trend toward actively reducing or at least freezing the number of employees dominated the market. For URALSIB, the situation at the beginning of 2009 was comparable to that in the preceding period. In 2008, we hired practically no new employees. New employees were only hired to replace ones that left the Corporation. In the beginning of the year, the head count for personnel engaged in operational activities, transactions analysis and credit issuance support was reduced. The reduction was due to a decline in the credit market. However, the first signs of economic revival occurred in H2 2009, with the consumer crediting market growing and banks starting to increase the volume of their credit portfolios. Following in line with market dynamics, FC URALSIB also modified product policy priorities. The Corporation paid more attention to decreasing the share of troubled assets and improving the quality of credit services. This resulted in new vacancies for credit managers and business support specialists. But its too early to speak of any mass hiring of personnel. According to data from the consolidated report, the overall reduction in personnel in 2009 was 11%. Social support for employees is traditionally a matter of serious concern for FC URALSIB. Were there any changes in social policy priorities in 2009?
The social security offered to our employees working in the Corporation traditionally exceeds legal requirements. No reductions in the social package were implemented during the crisis. Simply fixing the social support budget at its precrisis level resulted in a decrease in the volume and quality of services provided. Therefore, we conducted a market survey of medical services and decided to develop compensation measures aimed at improving the quality of services included in our social package. The Corporations top managers voluntarily reduced their social compensation, as they were able to pay for many services out of pocket. The resulting funds were used to finance social packages for other employees. In addition, the Corporations Board of Directors decided to increase the budget for social packages. Thus, we have managed to considerably improve the quality of services. Material support was another instrument that influenced the well-being of personnel. Just like in pre-crisis times, any employee could apply for material support connected with the death of a relative or the birth of a child. Such support is provided by many major companies. However, what separates URALSIB is the fact that a specially established commission considers applications for material support, submitted in connection with acts of God, emergency surgical procedures and preparing children for school. This is a unique service on the labor market. Throughout 2009, the Corporation spent more than one million rubles per month on material support.
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25 CORPORATE GOVERNANCE
51 RESPONSIBLE BUSINESS INTERNAL SOCIAL POLICY
Broadening the range of social security services partially compensated for the lack of an annual wage concession and minimized employee tension caused by the crisis. What HR processes used in FC URALSIB do you consider to be the most efficient and in compliance with requirements for the labor market and its personnel? Speaking of innovations, the development of programs offering non-material motivation in 2009 was quite new for the Corporation. Due to economic reasons, financial companies did not pay traditional bonuses to its employees or dividends to shareholders during the last two years, even though employees had to cope with increasing workloads. The loads increased due to cutting staff and overall market uncertainty. In these conditions, we thought it was important to provide our employees with social security and comfortable work conditions. We opted to develop a system of non-material motivation and implemented a variety of new measures for the Corporation. In 2009, we organized Spring in URALSIB a beautifully arranged event, housing eight different programs. An electronic auction was held for the first time, dealing with employee products. All funds raised during the auction were used to pay for a costly surgical operation for one of our employees. This was possible not only due to employee support, but also because of help from the Corporation and a personal contribution by Mr. Tsvetkov, Chairman of FC URALSIBs Board of Di-
rectors. We also organized a contest for childrens drawings, spring compositions, spring verses and songs, etc. A healthy food event took place, enabling employees to purchase fresh juices at their prime cost. We received a lot of positive comments on these events during the year. The I want to thank you initiative deserves special mention. Unfortunately, the Corporation did not consider it necessary to publicly express gratitude for successfully implemented projects. Prior to 2009, a formal management approach prevailed that took into account only plans, facts and controlling deviations. In 2009, the situation became different oral and written gratitude for successfully implementing different tasks became a public matter recorded in employees workbooks and announced at corporate council meetings. The initiative gave employees the opportunity to express their gratitude to other employees and departments for their professionalism, assistance and support. The initiative is on the intranet and all employees can take part in it. New motivational initiatives normalized the psychological environment in departments, improving the emotional, psychological and social atmosphere at URALSIB. Employees felt their importance for the Corporation and we will surely continue to develop non-material motivation programs, as they proved to be very effective. FC URALSIB won many competitions for its healthy way of life. How does The Healthy Way of Life program influence corporate atmosphere?
It is better to be rich, healthy and happy than to be poor, ill and unhappy. This seems so obvious that we have stopped thinking about the impact that our lifestyle has on the environment. Medical professionals are well aware of the fact that the performance of a man, his mental outlook and his relationships with those around him, including family members and colleagues, depends on his well-being. Weakness in his well-being leads to a chain reaction in all inter-related aspects you only have to wait a little. Therefore, healthy lifestyle programs are not simply fashionable, they enable us to maintain human capital at its highest level. The corporate programs were first introduced a rather long time ago, but in 2009, their range broadened significantly. Compared to programs implemented in the past, in which only approximately 20% of employees participated in them, program participation in 2009 reached a record high of 45%. In June 2009, FC URALSIB concluded a Collective agreement with its employees. This instrument is not very popular among Russian financial organizations. What changes took place in the Corporation due to the document being adopted? Such agreements are rarely concluded at the initiative of the employer and even more so for companies in the financial sector. Employer-employee relationships in URALSIB are traditionally based on the principles of commitment and trust. Even without the agreement, the level of social guarantees was high in the Corporation. Therefore, the idea to
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formalize URALSIBs responsibilities to its employees came naturally. The agreement is actually a systematized expression of things that have always been true for the Corporation. The most valuable thing that the agreement gave employees was a feeling of confidence, the assuredness that no matter how unstable the labor market condition is or how great the reduction in the number of personnel, the employer will stand by his obligations. The agreement freed employees from unreasonable fears. Employees understood that even if their situation turned for the worst, they will receive even more than required by law. The conclusion of the agreement was so timely and efficient that once the agreement was signed no employee ever remembered its existence and no one went to court to defend his rights granted by this document. The agreement perfectly relieved tension in a critical situation. No less essential is the fact that the Corporation underscored its commitment to further continuing social support for its employees. In 2009, a new value-based management concept was adopted by the Corporation. Did the concept have any influence on HR development priorities? URALSIB is a large company with some 13.4 thousand employees. These very different people must manage to work together somehow. There are managers who use their employees, hindering their promotion and appropriating their ideas. On the other hand, there are smart managers
who train their subordinates, passing on experience and processes to them. These managers play the role of a father or mother to their employees. And the Corporation is not indifferent to the people working for it. To succeed on todays market, the ambitions of both personnel and the Corporation have to be unified and the loyalty and trust of employees, as well as their enthusiasm and efficiency, is of paramount importance. Unity is not a thing that emerges from nowhere and we need instruments to develop it. The starting point for adopting a new management strategy was two milestone projects, namely the Collective Bargaining Agreement and Our Code. These projects were used to unite such approaches, which were traditional for the Corporation, such as, for example, a healthy lifestyle and a commitment to it, with principles that require people to be honest and fair, and to note and encourage other peoples skills. In 2009, standards of corporate thinking, corporate management and corporate quality were developed thanks to the efforts of all of our employees. Thus, we made a first and very significant step URALSIB publicly declared its intentions to implement value-based management. Employees who do not comply with these newly adopted norms will leave the Corporation sooner or later. This does not mean that the situation will change all at once. Value-based management is the latest trend in corporate management. This management approach will undoubtedly be used by lead-
ing Russian businesses and will become an approved practice for major corporations in the future. The results of implementing value-based management at URALSIB will be able to be assessed in three to four years. The requirements set for personnel qualification are changing dynamically. What employee training programs were most important in 2009? Employee training programs are compiled annually with due regard to strategic, as well as tactical, issues. On the one hand, we are driven by priorities which are dictated by shareholders and top managers. On the other hand, we take into account suggestions submitted by corporate divisions. In 2008-2009, many financial organizations refused to participate in almost all employee programs, trying to optimize costs by cutting both the social package and the number of employees. Our Corporate University programs underwent no reductions in 2009. URALSIB maintained all existing product, management and specialty programs. To minimize costs, we implemented webinar-based training, a method that is new to the Corporation. Thus, we considerably cut down on business trips, accommodation and instructor-related costs. Communication training programs underwent no changes. In 2009, many programs were launched that involved personal development training. We hired new instructors and used new training methods. The range of programs was complemented by
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leadership courses, courses on classifying psychological types and other non-traditional seminars. Knowledge of psychological types and the nuances of interaction with people certainly contributed to the efficiency of the Corporations sales managers and negotiators. During the crisis, with no market growth and all processes nearly frozen, improving internal communication and forming the potential for future growth became increasingly important for the Corporation. The reaction to personal development seminars varies, as with any innovation. But, this is normal. On the whole, seminars broadened employees personal opportunities, proving to be particularly useful for those on the verge of mak-
ing important life decisions. By the end of the year, the HR Department received new requests from divisions to further develop this direction, so the search for new programs and instructors will continue. Social policy measures implemented by the Corporation far exceed Russian and international norms. Quite right. The commitment to corporate responsibility principles is not simply a declaration for URALSIB. Observing fundamental norms of the Universal Declaration of Human Rights, Russian labor law and internal regulations, the Corporation is engaged in a variety of social and charity-related activities.
In 2009, FC URALSIB became a participant in a federal program that employs students. While the program is implemented with the participation of a limited number of branch offices, judging by comments from the participants, this number will be increased in 2010. As of today, FC URALSIB is the only financial organization in Russia that participates in this initiative. What comments do you have on the Corporation joining the UN Global Compact? I believe we will be able to join the Global Compact in the near future. This initiative is very capacious and the Corporation wishes to comply with it in practice fully complying with the Compacts ten principles.
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ORGANIZATIONAL STRUCTURE OF FC URALSIBs HUMAN RESOURCES DEPARTMENT

Human resources management at FC URALSIB is based on a scheme, which is traditional for large corporations: the structural units of the HR Department support the main directions of corporate activity and take into account the priorities of shareholders of member-companies. FC URALSIB develops standard approaches, as well as services, which are unique for the Russian HR market. HR document management is organized in a traditional manner. A unique element is internal consulting service. FC URALSIB incorporates different businesses and legal entities, which periodically require expert consulting services on labor disputes, legal issues and complicated labor conflicts. These occurrences are not systemic in nature. Therefore, it is not cost-effective to have full-time consulting experts in each company. The banking division provides HR consulting and auditing services to each business unit of the Corporation. Motivation. The Motivation and Remuneration Department is responsible for motivating personnel. Department specialists do all personnel cost planning tasks and monitor labor market conditions. The Department is also responsible for allocating material support funds intended to support employees in distress. Due to the considerable amounts spent on material support ( more than RUR 16 million per year), a unique department has been formed at FC URALSIB, involving a special commission engaged in justifying applications for material
support, developing corresponding regulations and criteria and budget planning. The second distinctive function of the Motivation and Remuneration Department is monitoring the labor market. The Corporation regularly participates in surveys conducted by PwC, E&Y and IMT. This participation makes it possible for the Corporation to register market dynamics concerning each position twice a year. Analytical reports on labor market conditions are prepared by Department specialists several times per year. These reports become the subject for discussions at Management Board meetings. A unique method developed at FC URALSIB is used to compare salary levels with market dynamics. The method ensures that salaries in all operating territories of FC URALSIB are in line with average market values. Social issues: according to personnel development priorities, social issues are dealt with in two manners, namely: non-material incentives and healthy lifestyle. Personnel recruitment: the Corporation recruits personnel on its own, as well as by using the services of recruitment agencies. For the most part, personnel are recruited directly by the Corporation. Third party services are used primarily to recruit top managers and dedicated experts. Cross-transfers form a distinctive feature of career management. FC URALSIB uses its subsidiaries and dependent companies to develop the careers of promising employees inside the Corporation.
Corporate culture development: corporate culture development is a traditional activity of the corporate HR Department. Its significance increased considerably in 2009, when the Corporation started implementing the concept of value-based governance. In compliance with this concept, FC URALSIB makes every effort to establish suitable conditions for creative activities and to generate new ideas. The efforts are focused on making job-related activities a natural part of life. Internal communication functions are not typical for this approach. The HR Department informs employees on the decisions of the Board of Directors, translates decisions made by the management of different sub-holdings and makes personnel aware of key corporate life events. An electronic periodical titled URALSIB Messenger is published by the HR Department. Training: 2009 total training hours equaled 1,789,059. The Corporation utilized remote training facilities, external training programs and Corporate University programs. The teaching staff of the Corporate University is made up of highly qualified specialists, capable of conducting and developing training courses, as well as implementing new methods required by individual businesses. The Corporate University has an extensive network of regional training centers. The scope of University activities is considerable, as the range of requirements set for the types and quality of training is wide, and the products of the Corporations membercompanies are diverse. Personnel management: taking into account the specific nature and scale of the corporate organizational structure, as well as the
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Chairman of the Management
Department for Labor Relations and Personnel Registration HR documentation management Internal consulting
The HR Department
Central Office Regional network Surveys on personnel involvement
Department for Personnel Management
Motivation and Remuneration Department Personnel cost planning Labor market monitoring
* 360 Degrees is a method of acquiring data on employees behavior

(including their business capabilities) in actual work situations. The method is used to identify training needs, assess training results and work out individual development plans.
Material support Social issues

non-material incentives, a healthy lifestyle
diversity of businesses and the extensive regional network, personnel management functions at FC URALSIB are sub-divided into two categories. The first function is to achieve personnel management in regions, coordinating the needs of different divisions, as well as their budgeting and communication with the Central Office. The second function is responsibility for Central Office personnel. Different divisions are under the management of HR supervisors, as is typical for the Corporation. HR supervisors are there to identify each employees needs and to determine his/her career dynamics. They are also responsible for resolving labor conflicts and disputes, and for helping newcomers acclimate. This second function involves a considerable number of surveys. To determine employee satisfaction and involvement, the Hewitt method is used. This method is internationally recognized by investors and companies. This method allows for the assessment of risk and development zones, as well as for the determination of stable spheres and spheres in which effort should be focused. The HR Department carries out research on social and psychological conditions in divisions. The 360 Degrees method* is used to assess the level of servicing provided by functional departments inside the Corporation. A detailed report on modifications is presented by HR specialists to major division managers once per year.
Organizational structure of the HR Department
Chairman of the Board of Directors
The Corporate University Regional training centers Corporate training courses
Personnel Recruitment and Development Department In-house staff recruitment division Cross transfers Internal communications Corporate culture development
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PERSONNEL STRUCTURE
The total number of employees by sub-holdings
Sub-holdings Commercial Bank Private Bank Leasing Asset Management Investment Banking Total 31.12.2008 14,239 83 407 183 220 15,132 31.12.2009 12,596 63 435 148 200 13,442 Change, % 12 24 7 19 9 11
The number of personnel employed by regional divisions

Siberia and the Far East 1,457 16% Moscow 746 8%
provide the Corporation with an inflow of new employees, which means new ideas and innovation.
Personnel turnover, %*
Based on management accounting data 25 20
24.8
13.0
15 Total number of employees in all divisions 9,368 or 100% 10 5 0 2.9 (II) 2.3 (I) 3.6 (IV) 4.2 (III)
Employment Full-time 10,900 Reduced working day 2,542 (part-time) By contract type Short-term 1,239 (temporary employees) Long-term 12,203 (staff) Changes in the number of personnel In 2009, the total number of staff employees decreased 11.2% (or by 1,690 employees), whereas the number of non-staff workers dropped 41.9% (or by 316 employees). From 2008-2009, the Corporation optimized headcount. The total number of employees decreased 33.4% (or by 6,959) with the number of staffers dropping 27.1% (or by 4,995 employees) and the number of non-staff employees falling 81.7% (or by 1,964 employees).
31.12.2008 31.12.2009 Total number: Including staffers Non-staff workers 15,887 15,132 755 13,881 13,442 439 Change in number Absolute Relative 2,006 1,690 316 12.6% 11.2% 41.9%
2008
Southern 1,402 15% Central 613 6% Ural 842 9% Volga 3,328 36%
2009
* When calculating personnel turnover, the following formula is used:

K = (dismissed at his/her own request and for breaching labor discipline / average number) * 100% (K = (1791/13777) * 100% = 13%). Average number of personnel 13,777, number of personnel as of 31.12.2009 13,442.
North-Western 980 10%
Personnel turnover index by:

Gender Women Male Age under 25 years 2535 years 3555 years over 55 years Region Moscow Ufa Regional Network % 12.9 13.2 % 19.6 15.8 8.2 9.2 % 9.3 7 14.6
Data is valid as of December 31st, 2009, not including Central Office personnel (4,074 employees), who do not belong to regional divisions within the corporate structure. Personnel turnover The consolidated index for FC URALSIBs personnel turnover was 13% in 2009. Compared to 2008, the index is rather low (a drop of 11.8%), but taking into account the labor market crisis, this value is considered acceptable. In the future, as the market evolves, the Corporation plans to keep this value in the 1530% range, which is optimal for the financial sector based on international best practice standards. The current personnel turnover index will
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The structure of internal social policy costs

Awards for personnel employed by FC URALSIB for 10 or 15 years RUR 4.9 million, 2.04% Reimbursement of mobile communication costs RUR 23.2 million, 9.69% Additional payments for night shifts RUR 12.2 million, 5.11% Social consumer basket RUR 95.8 million, 41.12%
RUR 16.2 million, 6.79%
2009 total costs RUR 236.6 million, 100%
Pregnancy and childbirth payments RUR 4.3 million, 1.79%
Payments per disability certificates RUR 51.1 million, 21.39% Enhanced Workplace program RUR 9.9 million, 4.14% Social support for the disadvantaged with an income of less than RUR 8 thousand and disabled children RUR 0.1 million, 0.04% Additional accident insurance RUR 0.8 million, 0.32% Corporate sporting events RUR 17.0 million, 7.10% Healthy lifestyle programs RUR 1.1 million, 0.47%
The Corporation does not support the practice of gathering personal information other than that required for formalizing employeremployee relationships. No data concerning the nationality of an employee is requested, as such the Corporation has no access to this personal data and maintains no records concerning the nationality of its employees. In accordance with regional laws on quota allocation, FC URALSIB provides employment for disabled persons and young specialists sent by employment agencies in Moscow and Ufa. No new employees with disabilities were hired in 2009. The Corporation has 64 fulltime employees with disabilities, which is in line with the quota. As of December 31st, 2009, the Corporation had 2,011 employees on maternity leave (15% of the total staff). In 2009, the Corporation made RUR 4.3 million in pregnancy and childbirth payments. Remuneration paid by the Corporation is based on business results and the achievement of planned KPIs. The Corporation developed a universal salary scale and a system of regional coefficients. Men and women have equal basic payment rates. The minimum rate is RUR 7,500 (for an operations accountant). A difference in actual salaries occurs when additional payments for working in harsh conditions (for men, usually) or payments for part-time work are taken into account.
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Personnel allocation per position
Gender breakdown
Managers 2,796 20.3%
Personnel age structure
Service personnel 1,986 15%
Top managers 100 0.7%
Men 34%
Women 66% 3555 years old 41%
Older than 55 4%
Younger than 25 13%
Specialists 8,560 64%
2535 years old 42%
The share of managers is 21.5% of the total number of employees (13,442).
FC URALSIBs gender breakdown is traditionally dominated by women. This is due to employment specifics in the financial sector. Nearly all of the Banks and Leasing Companys operations staff is female.
Over 70% of corporate employees are between 25 and 40 years old. Young specialists make up 13% of the workforce.
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WORKPLACE HEALTH AND SAFETY

Occupational health and safety issues are recorded in the Collective Bargaining Agreement, internal normative documents and labor agreements concluded with employees. FC URALSIB has concluded no official agreements with trade unions. However, all requirements set by trade unions were taken into account during collective bargaining negotiations and when concluding the Collective Bargaining Agreement. The share of personnel represented in joint committees on health and safety is 1% of the Corporations workforce.
The number of employees involved in implementing health and safety projects in 2009
Type of social service Division for developing social projects Division for remuneration and benefits Social workers in the regional network (HR Department employees, whose duties include organizing social programs within the network) Managers participating in forming social policy Labor safety engineers Share of the total number of employees, % 0.06 0.03
To monitor the quality of social programs and healthy lifestyle programs, FC URALSIB interviews direct recipients of these services. To obtain more detailed data on quality, in-depth interviews are conducted using the 360 degrees method*. Recommendations on healthy lifestyle and occupational safety are developed with the participation of more than 50% of the Corporations total number of employees. No occupational deaths were recorded among FC URALSIBs employees in 2009. The HR Department received no documents confirming the loss of earning capacity due to occupational deaths, including conclusions issued by medical and social expert authorities who have the capacity to determine the percent of disability and the disability group, as well as to stipulate the nature and conditions of permissible labor.
The number of occupational accidents

15
10
10 5 0
11
2008
2009
Injury rate, %**

1,5 1,0 0,5 0
0.7
0.8
2008
2009
The average number of disability days***

0.6 0.01 0.29
40
38.3
* See page 69 of the Report. ** Injury rate (Ir) per 1,000 employees:
Ir = Ni/(Ne/1,000), where Ni is the number of injuries and Ne is the number of employees. *** Days of temporary disability (DTD) per 1,000 employees: DTD = D/(Ne/1,000), where D is the number of days of temporary disability and Ne is the number of employees.
30
21.3
20 10
2008
2009
73
INITIATIVES ON IMPROVING LABOR CONDITIONS AND HEALTH On the whole, social policy development is maintained and coordinated by the Corporations shareholders. All projects and programs are subject to the consideration and approval of FC URALSIBs Management Board. In 2009, the Corporation implemented the following programs: Enhanced Workplace The Corporation appropriates resources for enhancing labor conditions annually. Employees receive drinking water, meal preparation facilities and climate control equipment. The program can be used by any employee, irrespective of his/her position, length of service or location. In 2009, the Corporation spent RUR 9.9 million to implement this program. Healthy lifestyle programs FC URALSIB actively promotes and implements a healthy lifestyle. The Corporation supports the viewpoint of the World Health Organization (WHO), which believes that behavioral risks such as smoking, unhealthy food, low physical activity, being overweight, etc. affect economic indicators. When developing corporate healthy lifestyle programs, the Corporation is guided by the Framework Convention on Tobacco Control (WHO), the Concept on Increasing Physical Activity and Decreasing the Number of Overweight Individuals for the European Region (WHO) and the National Strategy for Tobacco Control.
Being aware of the emergent nature of these problems and sharing the principles of the above-mentioned documents, the Corporations management developed an employee-focused strategy for promoting a healthy lifestyle. Programs implemented in 2009 included the following: Stop smoking and win!, Healthy weight and Physical activity week. The programs were based on annual health monitoring data and the assessment of risk factor allocation. The programs turned out to be a success, as they provided employees with convincing motivation, encouraging them to stop smoking, to lose weight and to become more physically active. In 2009, employee satisfaction with healthy lifestyle programs scored 6 out of 10. Over 94% of employees considered the implementation of such programs useful. The percentage of employees who changed their habits concerning smoking, food and physical activity ranges from 33 to 57 percent. The 2009 budget for healthy lifestyle programs was RUR 1.1 million. Corporate sporting events To provide physical training facilities for its employees, the Corporation leases sports clubs and swimming pools. Corporate competitions in team sports are regularly held. FC URALSIBs employees and their family members can buy club cards at leading fitness clubs at a discount of up to 40%. The Corporation has 319 leased sports sites, which provide sporting facilities for 32% of employees. In 2009, the Corporations budget for sporting programs stood at RUR 17 million.
Additional days off Employees whose working days are unregulated are provided with additional paid leaves and personalized days off. Any employee can apply for a short-term compassionate leave (in case of marriage or the loss of a relative). Employee immunizations Taking into account the risk of seasonal viruses, the Corporation provides employees with influenza vaccinations. The immunization is voluntary and free-of-charge. Mobile communication cost reimbursement The Corporations employees can connect to the corporate tariff plan for mobile communications. Certain employees are entitled to the reimbursement of mobile communication costs within defined limits. The limits for said employees are set depending on their functional duties and positions. In 2009, total mobile communication costs stood at RUR 23.2 million. Payment of daily subsistence allowances in excess of limits set by the law Daily subsistence allowances for employees on business trips are paid in excess of limits set by the law. The amounts of such allowances depend on the employees position and the trip destination. Hospitality costs FC URALSIB employees are reimbursed for hospitality costs if there is an operational need for them to conduct negotiations out of the office.
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FC URALSIBS FOOTBALL TEAM FC URALSIBs football team was established in 1999. The team today fuses traditions, youth and experience. The team has been a leader in corporate football for a number of years. The team is the favorite in almost all tournaments it attends. The teams principal goal is to promote the idea of a healthy lifestyle for corporate employees and their family members, as well as to contribute to the development of amateur sports. The Corporations management created all necessary conditions for the teams functioning, including: the opportunity to train yearround on a heated football field. The team receives uniforms and material support, which ensures its participation in corporate football tournaments. During 2009, the team participated in two major corporate competitions and won the bronze medal in the Mini-Football Super-League sponsored by the Association of Russian Banks. The team also won the seasons main trophy the Mini-Football RTS Cup.
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PERSONNEL TRAINING
In 2009, full-time courses of the Corporate University on professional product and client training were attended by 9,534 and 1,812 employees respectively. The number of employees trained in managerial skill development and upgrading personal efficiency was 911. Residential training courses in third-party training centers were attended by 1,450 of the Corporations employees. In 2009, the total number of training hours stood at 1,789,059. Training opportunities available for FC URALSIB personnel include training by thirdparty providers, meaning leading training centers and higher educational institutions, as well as training under the instruction of the Corporate Universitys teaching staff and business instructors and regional training centers. Programs for skill development and advanced occupational training are intended to maintain employees competency at the level required by the market and to support employees finishing their careers. Internal occupational and product training All training programs intended to maintain the quality of operations for clients are developed and implemented by the Corporate University. Residential occupational and product training is achieved in the Central Office and in regional training centers. Remote training is accomplished via the Corporations training portal.
The main residential seminars and training courses in 2009 included the following: operations with the Banks debt instruments; active sales and efficient client servicing; efficient telephone communication; debt collection; implementation and replication of IT technologies. In 2009, principal remote training courses included the following: services for physical persons; loans for physical persons; loans for legal entities; resource allocation; evaluations and operations with pledges; deposit products; treasury functions of the Corporation; operational risks; prevention of the legalization (laundering) of illegal proceeds and terrorism financing; prevention of violations in the crediting and financial spheres; prevention of confidence abuse and fraud; Training to upgrade the skills of mid-level managers in 2009 included the following courses: practical management foundations; managerial communication; management styles; team leadership; hard talks; motivation in personal interaction; coaching as a management style; conflict management; business presentation skills; competency interviews; effective talks; delegating authority.
Educational, training and consulting programs related to serious illnesses To minimize the risk of illnesses for its employees and family members, FC URALSIB offers the following recurring programs: know your blood pressure; increase your physical activity; womens health. One-time consultations by third-party specialists are performed based on employee requests. The division for developing social projects prepares information reviews and mail distributions on vital topics associated with healthy lifestyles. A new program on preventing alcohol abuse is planned for 2010. In-depth training on social and environmental responsibility policies was provided by external training centers. 2009 main topics included the following: labor safety; fire safety; traffic safety; operations safety; environmental safety; social policy; radiation safety. The Corporation trained 301 employees on the above topics. In 2009, cash operators received training on a program dedicated to operations on the identification, temporary storage, discharge and elimination of radio-contaminated bank notes. The number of remotely trained operators was 315.
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9 FC URALSIB
In cases, when developing the Corporations training products was not expedient, training by external providers was organized. Training programs provided by external providers include the certification and re-certification of tradesmen and preparation for the promotion exams for certification on standard qualifications for professional market makers, tax advisors, certified accountants, auditors, etc. Standard training programs ordered from external sources included the following: prevention of the legalization (laundering) of illegal proceeds and the financing of terrorism; information safety; changes in Russian regulatory systems, the Bank of Russia and other federal bodies; project management; implementation of new business processes; information technologies; borrower rating during the crisis; debt management during the crisis, etc.
In 2009, the average training per employee stood at 133 hours
The total number of training hours for all employees Including: managers specialists service personnel 328,641 1,458,082 2,336 1,789,059
In 2009, 64 employees were assessed.

Assessment based on the SHL TOOLS tests Individual assessment* Assessment based on the 360 degrees method** Group assessment 11 assessments (11 employees) 17 assessments (17 employees) 15 employees passed the assessment. There were 122 respondents. 4 assessments (21 employees)
The total number of trained employees stands at 619 (with total training hours of 3,072), including 491 specialists for the Security Service (or 90% of staff size); 107 employees were trained using external training service providers, 384 employees were trained remotely by the Corporation. The share of employees trained on anti-corruption policies and procedures To prevent corruption and the laundering of illegal proceeds, FC URALSIB conducts training and certification programs annually. When developing these training programs, the Corporation is guided by recommendations of the Bank of Russia (Instruction No 1485-U as of 09.08.2004). In 2009, 7,266 employees were trained and assessed in this area with 714 of them receiving first-time training.
In 2009, no specialized training programs on policies and procedures relating to human rights were implemented in the Corporation. Training on these issues was accomplished within courses on occupational safety, main labor law issues, dismissal for mixed causes, environmental safety provisions in waste handling, the training of civil defense and emergency situations offices and specialists, conflicts of interests between employee and employer and legal regulations that govern the employer-employee relationships in a contemporary context.
In 2009, the Corporation selectively checked managerial skills to identify managers strong sides and those in need of development.
* The individual assessment is a process that enables employees to be assessed on a number of parameters, including: the performance of job duties, behavioral characteristics, efficiency, competency, the achievement of goals and personality traits. ** See p. 69.
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SOCIAL GUARANTEES AND BENEFITS

FC URALSIB provides its employees with social guarantees and benefits in the form of a consumer basket, which includes: voluntary medical insurance, sanatorium and spa treatment and a fitness club payment card. Each employee can choose the range of services he/she needs. In 2009, the limit for funds allotted for the social consumer basket for the average employee was increased, whereas the limit for a similar basket for top managers was decreased. Funds spent on voluntary medical insurance were reduced 9.5% due to optimizing the Corporations staff size. Per capita medical insurance costs increased 15.6% from RUR 6,168 to RUR 7,130.
Costs associated with the Social Consumer Basket program, RUR million
120 110 100 90 80 70 60
Costs associated with employee occupational insurance, RUR million

1.48
1,5 1,2 0,9 0,6
Non-recurrent
material support for employees who have worked for the Corporation for 10 or 15 years. In 2009, the material support payments totaled RUR 16.2 million.
0.82
0.77
0.23
0,3 0
2006
2007
2008
2009
112 105 95.8
76
In 2010, a special fund will be established, intended to provide employees with medical care in cases not covered by medical insurance. This new fund will increase the material support provided to employees, widening the scope of assistance. In case any illnesses are diagnosed which are not covered by voluntary medical insurance policies, medical care will be paid for out of funds allotted for material support in cases of grave illnesses. The social consumer basket that FC URALSIB gives its employees is complemented by more than 15 types of social compensation. Material support The Corporation provides its employees with the following types of material support: Non-recurrent material support in the case of childbirth (or adoption); Quarterly material support for employees with disabled dependents; Non-recurrent material support in the case of a loss of a close relative;
Long-term (mortgage) lending To provide its employees and family members with decent housing, the Corporation develops the most efficient economic tools for long-term mortgage lending. The long-term mortgage lending program for employees involves the following: Cutting the initial installment to 5% of the total cost of housing facilities; Simplifying the review of the document package and credit applications; No fees on credit till State registration.
Social consumer basket recipients (the number of employees)
Sanatorium and spa treatment 2009 245 Voluntary medical insurance 2009 6281 2008 9165 2008 total 9,763 employees 2009 total 6,743 employees 2008 193
Fitness clubs 2009 217 2008 405
2006
2007
2008
2009
The mandatory accident insurance provided by FC URALSIB is complemented by employee risk insurance, for employees who work in high risk positions (cash operators, cash messengers and drivers). The level of insurance coverage is RUR 300 thousand. In 2009, costs related to this type of insurance were reduced 6.1%.
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9 FC URALSIB
Consumer credit for employees The development and practical implementation of crediting within the corporate system makes all the Banks credit products approved by corresponding normative documents available to the Corporations employees. The Corporations employees can use a simplified form to obtain credits. This simplified form entails the following: no checks are performed by the Business Support Department when an employee acts as the borrower or co-borrower; when executing a credit application, an employee of the Corporation who acts as a borrower or co-borrower may skip filling in the earnings statement, instead submitting an excerpt from the salary account, containing salary data from the last six months. Such an excerpt should be certified by an employee from the Corporations operations department; no length of service requirement (at least six months) is applicable if an employee transferred from one legal entity to another. Personal insurance The Corporation developed personal insurance to upgrade protection for its employees and their family members in cases of personal injury or if the need arises for medical assistance. Employees can purchase the following insurance policies at the corporate price: personal accidents insurance; travelers insurance; life insurance (covering death from any cause).
Disability compensation In case of illness, the Corporations staffers are entitled to be compensated for the difference between the limits of the Social Insurance Fund and their salaries for the disability period. In 2009, the number of compensated days for temporary disability for cases of out-patient care was increased from 7 working days to 9 calendar days. The number of compensated days for temporary disability for cases of in-patient care is 60 days. The same applies to personal injury cases. For maternity leaves, the additional payment provided by the Corporation to the Social Insurance Fund totals 50% of the employees salary. Short-term compassionate leaves connected with the death of a close relative If an employee loses a close relative (a parent, a spouse, a son, a daughter, a brother or a sister), said employee is entitled to a paid compassionate leave for two working days or an unpaid leave for up to three days. Short-term leaves connected with marriage If an employee is getting married, he/she is entitled to a short-term leave for two days (paid) or an unpaid leave for up to three days. Additional paid leaves Scheduled paid leaves for 28 calendar days, as set by the Russian Labor Code, are complemented by additional annual paid leaves for employees with unregulated working days. Labor and health safety To upgrade employee health, the Corporation organizes periodic medical examinations and develops and implements long-term and
annual targeted programs to prevent occupational deaths, including certifying workplaces to decrease the risk of such deaths. Additional payments for night shifts in excess of limits set by the law Minimum additional payments for night shifts are set by the Russian government. These limits are set at 20% of the basic rate for each hour of a night shift, whereas FC URALSIB employees receive 40%. Pension program Due to the economic crisis, the Corporation cancelled the pension program that it had developed in 2008. In 2009, no pension program was implemented. A new program will be developed and implemented in 2010, taking into account the Federal Law No 56-FZ On Additional Insurance Contributions to the Funded Part of the Work Pension as of 01.10.2008. The Collective Bargaining Agreement The Collective Bargaining Agreement encompasses 12,489 employees or 92.9% of the Corporations staff size. The Agreement stipulates the rights and obligations of the employees and the employer in the following sections: Working Hours, Rest Hours, Remuneration, Guarantees in case the employee is released, Labor conditions and labor safety, Compensation for injuries to an employees health, Social guarantees and employee compensation, Warranties for trade union organizations, Collective bargaining agreement execution control. As stipulated by the Agreement, the minimum period for notification on changes in the organizations functioning is two months.
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INITIATIVES ON PREVENTING DISCRIMINATION

In 2009, FC URALSIB implemented a number of initiatives to prevent possible labor market discrimination against students and specialists who were temporarily unemployed due to mass staff reductions. The program on involving young people and students in trainee jobs with employment prospects with member-companies of FC URALSIB FC URALSIB participates in a federal program aimed at providing employment opportunities to graduates and students. To assist young specialists in their search for a decent job during a period of economic uncertainty, the Corporation developed and implemented a project entitled URALSIB is a road to success. Take the first step. This project, which was launched in 2009, was implemented jointly with regional employment agencies. FC URALSIB creates temporary three month vacancies for the graduates and students, while the State compensates the costs of membercompanies for paying for the services of these temporary employees. The vacancies available for graduates include: operations employees, junior accountants, legal specialists, credit and sales managers and HR and securities specialists. The Corporations employees help the trainees adapt and teach them banking business basics. Trainees have the experience of working in a prestigious bank, which they can then add to their resumes. The best trainees are included in the Corporations external HR pool. In 2009, project participants worked in 31 corporate units. In total, 414 graduates
and students participated in the program. Eighty-nine trainees were enrolled in the operations HR pool and 10 trainees became employees of the Corporation. FC URALSIB plans to provide trainee job opportunities for 2010 graduates. Programs on cooperating with employment agencies FC URALSIB actively participates in developing Russian regions. The program Management in Commerce was developed in 2009 in conjunction with the Moscow International Business School (MIRBIS). The program is designed to upgrade the qualification of unemployed citizens. Training was provided in the form of free three week long training courses. The skills covered by the courses included: HR management, career development, corporate governance, practical management, business planning and marketing. Graduates of the courses were granted staterecognized certificates on qualification advancement. The pilot stage of the program was successfully implemented in September October 2009 in the Krasnodar Region and the Republic of Bashkortostan. Employment agencies in these regions were responsible for communicating information on the courses to the general public and for accepting enrollment applications. A number of meetings were conducted with representatives from regional employment agencies to determine target audiences, as well as the terms and contents of training. The courses were attended by more than 50 temporarily unemployed individuals. In 2010, the geographical scope of the program will be broadened.
The Job Search Technology training program was developed by the Corporate University for trainees to successfully adapt to current labor market conditions and to find employment. The skills covered by the program included: cover letter preparation, negotiations with the employer or representatives from the recruitment agency, self-presentation and time management. Comments from course attendees illustrated that these skills are extremely practical. In 2009, nineteen Job Search Technology training courses were held in 12 cities, including: Voronezh, Krasnodar, Saint Petersburg (4), Ufa (2), Nizhny Novgorod (2), Bryansk, Kurgan (3), Barnaul, Irkutsk, Omsk, Nizhnevartovsk and Arkhangelsk. The total number of participants in these courses was 206.
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9 FC URALSIB
Preventing personnel discrimination All policies and procedures regulating relationships within the workforce are based on basic human rights principles set out by Russian law. Therefore, all normative documents of the Corporation contain due regard to human rights and particularly employee rights. Corresponding norms are contained in the following documents: Internal Regulations, the Procedure for Granting Vacations, Official Business Trips Policy, etc. FC URALSIB monitors compliance with current legislative requirements concerning employees of legal entities that make up the Corporation. Monitoring is carried out by periodic audits of business processes and normative documents. Interactions among FC URALSIBs personnel is based on the fundamental principles: cooperation, fairness and efficiency. The Corporation does not support competition among divisions and business types, but appreciates a spirit of competition among employees. The Corporation adopts a tolerant attitude towards any ideological, personal or physical differences among employees. Individual employee characteristics that do not negatively impact the quality of work performed cannot be qualified as violations of discipline. Employees with limited abilities (disabled individuals) and students are hired in compliance with current regulations, namely federal laws On the Employment of the Russian Federation Population, On the Social Protection of Disabled Persons in the Russian Federation and On Additional Guarantees of Social Protection for Orphaned Children and Children Left Parentless. In addition, the Corporations
regional offices are guided by laws on workforce quota allocation, which have been adopted in their regions. In 2009, the Corporation did not hire any employees in these categories. The Corporation has hired 100% of its top management from the regions in which it has a strong presence. In 2009, 10 top managers were hired in the regional network: Branch Manager 2; Deputy Branch Manager 3; Chief Accountant 3; Advisor 2. The Corporation appoints division managers by using resources of the external labor market, as well as by promoting qualified personnel from within the Bank. It is stipulated that candidates comply with requirements of the Russian Central Bank. Candidates for the Branch Manager position are evaluated by the HR Department in Moscow, as stipulated by the Procedure for Intra-bank Document Flow Concerning the Approval of Candidates for the Position of Branch Manager in Regional Branches of the Bank of Russia as of December 18th, 2007. No cases of discrimination based on race, color, sex, religion, political views, foreign or social origin (including employment) were registered in 2009. No child labor is used in the Corporation. The Corporation does not operate on territories inhabited by aboriginal people. No cases of violating the rights of aboriginal people or other suits from representatives of national minorities were registered in 2009. No cases of forced and/or mandatory labor were registered in 2009. All labor conditions are recorded in job descriptions and labor
agreements; the content of which is communicated to all employees in compliance with an established procedure. The Corporation adheres to the policy of free negotiations, as well as employees freedom to associate based on interests and topics. No cases of restricting the freedom of employees to establish associations, groups or public unions were registered in 2009. Additionally, there were no cases of persecution, oppression or employee lockouts. No informal employee associations were established in FC URALSIB in 2009.
81
5
172
Public relations and human rights
into account basic human rights principles
100% of investment agreements are drafted taking 240
RUR million is allotted for implementing external social programs charitable projects implemented in 45 Russian regions
the Corporations social initiatives
42 thousand children was supported 2,262 employees participated in implementing
OBSERVANCE OF HUMAN RIGHTS

Discrimination In terms of staff interaction, URALSIB adheres to three basic principles: cooperation, fairness and efficiency. The Corporation does not support competitive relationships between divisions and categories of its business, but welcomes the spirit of competition in relationships between its staff. The Corporation embraces the tolerance principle towards any ideological, personal and physical differences of its employees. Individual to individual, which do not adversely impact work quality cannot be qualified as disciplinary offenses. Hiring staff with restricted work abilities (the disabled) and students is carried out within the framework of current legislation. In 2009, no cases of discrimination against staff based on race, color, sex, religion, political opinion, nationality or social origin (including for those employed) were registered. FC URALSIB's position on human rights is based on three principles: adherence to norms of Russian law, implementation of the Code of Conduct and respect for its employees wishes. In addition, the Corporation strictly adheres to international conventions, recommendations and charters concerning human rights. FC URALSIB prohibits any discrimination against its employees or business partners. No child or forced labor is used by member-companies of FC URALSIB. The principles of conducting business in a responsible manner and for ethical relations among employees are set out in the Code of Conduct, which serves as the basic document for all internal procedures and policies. All normative documents of member-companies of the Corporation contain stipulations as to rights, privileges, guarantees and compensation in compliance with the Russian Labor Code. In certain cases, labor
agreements enlarge the scope of employees' rights, compared to those contained in current Russian law. Taking this into account, the Corporation does not conclude any special agreements with employees that relate to the observance of human rights. Advanced social guarantees granted to Corporation employees are intended to protect against any negative trends in the social sphere. The last two years marked a critical period for the system of labor relationships which had been developed during the previous seven years (from the moment that the Labor Code went into effect). The extreme social and economic conditions revealed weaknesses in certain provisions of the Labor Code. The legal control of labor relations actually became the prerogative of enterprises' internal regulations. Under these conditions, the employer's position in the sphere of social policy and corporate responsibility became increasingly important. FC URALSIB traditionally invests considerable resources into personnel development. The Corporation's efficient operation depends on its employees' professional skills and their motivation and innovative approach to challenges. Taking into account the labor market situation, the Corporation concluded a collective agreement with employees in 2009, thereby stipulating social guarantees, privileges and compensation, broadening their scope and giving them the status of warranties. The conclusion of the collective agreement was preceded by the election of a representative body of the Corporation's employees and an employee conference. Thus, the collective agreement was discussed by all involved stakeholders, including the Corporation's trade union organizations. The Corporation respects the religious and political views of its employees, provided that these views do not contradict the law. FC URALSIB does not prevent its employees from participating in political, religious and public activities, provided that the employees partici-
pate in these activities as private persons in their offduty hours. Relations between FC URALSIB and its partners and suppliers are based on balancing interests and mutual respect. The Corporation prohibits any relations with any partners that conducting their business in a manner that violates laws or fails to respect basic human rights principles. The Corporation respects the civil rights and freedoms of its customers, strictly adhering to requirements for protecting civil rights and ownership rights while processing personal data. Personal data is disclosed by customers exclusively for the purpose of financial operations. No customer personal data can be gathered, stored, used or distributed without the written authorization of the customer. Concerning the observation of ownership rights, the Corporation refers to provisions of the Russian Constitution (Articles 35, 45 and 46), Russian law and relevant court decisions. No essential fines and/or non-financial sanctions were imposed on the Corporation in 2009 in connection with violations of the law and/or normative requirements regulating human rights. Policies and procedures developed in the Corporation are based on current legislation. All normative documents of FC URALSIB contain stipulations regarding the rights of employees, customers and its business partners. The basic documents that contain the procedures for addressing human rights include: the Code of Corporate Ethics, Internal Regulations, the Procedure for Granting Vacations and the Official Business Trips Policy, etc. FC URALSIB monitors the observance of current Russian legislation that relates to employees and membercompanies of the Corporation by regularly auditing existing business processes and normative documents. The Corporation also has procedures for assessing investment
84
9 FC URALSIB
63 INTERNAL SOCIAL POLICY PUBLIC RELATIONS AND HUMAN RIGHTS
contracts and borrowers, which contain norms and rules relating to human rights. FC URALSIB's major projects deal with financing the real sector of the economy, with a focus on the oil and gas industry, the machine tool industry, retail trade and agriculture. The Corporation also implements projects designed to develop the SME sector. Investment decisions and the interaction with partners are determined to a great extent by basic social, economic and cultural rights, such as the freedom of enterprise (the right to engage in any economic activity not prohibited by law), ownership rights, the right to protect the family, motherhood, fatherhood and childhood, the right for social security, the right to housing, the right of health safety and medical care, the right for fair taxation and the right to a healthy environment. The contents of the above-listed rights and freedoms are taken into account in model provisions of investment and contractor agreements. Therefore, the Corporation maintains no special record of agreements which take into account norms of the Universal Declaration on Human Rights, the International Labor Organization or Russian law. To ensure the safety of the business and adherence to current laws, each contractor agreement is subject to internal reconciliation, involving mandatory legal assessment performed to reveal any non-compliance with Russian law and to adjust any disputable provisions or wording. FC URALSIB observes the personal, political and cultural rights and freedoms of citizens irrespective of their skin color, nationality and/or religion. The internal audit and compliance check revealed no cases of discrimination against contractors, partners and/or customers. As of the end of 2009, FC URALSIB operates in 51 regions of the Russian Federation. The Corporation strictly observes federal and regional legal norms in the regions in which it is present. The Corporation's economic activities and the preparation of investment agreements on
territories of compact habitation by Northern aboriginal people are guided by the Federal Law "On the Guaranteed Rights of Aboriginal People of the Russian Federation." No violations of the rights of aboriginal people by the Corporation were revealed in 2009.
The cost structure associated with implementing external social programs

Social marketing 24%
SOCIAL INVESTMENTS AND CHARITABLE PROGRAMS

The total amount spent by FC URALSIB on implementing socially-oriented external programs was RUR 240 million, including: social marketing* RUR 57 million; sponsorship RUR 26 million; charity-related activities RUR 157 million. The amount spent on public needs and charity-related activities comprised 0.7% of non-distributed profits earned by FC URALSIB in 2009 (RUR 34.691 million). Social marketing and sponsorship do not fall under the umbrella of charity-related activities. However, they represent important components of the Corporations social activity. For this reason, their budgets are included when calculating total expenditures for public needs. The Corporation implemented 172 charitable projects in 45 regions of Russia during 2009. More than 42 thousand children benefited from these activities. Targeted support was provided to 80 children. The projects were implemented with the help of 2,262 volunteers from the Corporations personnel (which represents 16.8% of all employees).
Sponsorship 11% Total RUR 240 million, 100%
Charitable donations 65%
CHARITY-RELATED ACTIVITIES The Corporation has a 20-year history of engaging in charity-related activities. During these years, the Corporations member-companies implemented hundreds of different project and long-term social programs. The majority of social projects and programs have been implemented within the framework of the venture philanthropy concept to achieve measurable results, the Corporation invests in long-term relationships with childrens and medical facilities and educational institutions. The investment includes not only money, but also the time and intellectual resources of the Corporations employees.
* For the purposes of this Report, the term social marketing denotes commercial activities of the Corporation that enable customers to support children in distress..
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The framework of stakeholder interactions

External applications and requests. Federal and regional programs
Stakeholder dialogues
FC URALSIBs priorities. Community needs
The Initiative Programs Department
Shareholders, the Board of Directors Internal initiatives
Regional divisions and branches
Implementing external social programs
Charity The Initiative Programs Department
Targeted Support
Social Marketing and Sponsorship Projects The Public Relations, Marketing and Advertising Department
FC URALSIBs Corporate Charity Fund (CCF)
FC URALSIBs Corporate Charity Fund
Healthy Generation strategy. Programs: URALSIB for the Healthy Generation; URALSIB gives hope education employment housing; URALSIB for Equal Opportunities; URALSIB for Children;
Financial support for treating and educating orphans
Social advertising campaigns; Sochi 2009 International Investment Forum; Regional holiday events, exhibitions and conferences; Russian Monarchs the Romanoff Dynasty exhibition; the Reading Gogol educational project; Spasskaya Tower Festival.
Participation in high priority national projects the Affordable and Comfortable Housing project; the Regional Social Card project; the Improving Financial Literacy information campaign; Agreements on social partnerships with regional administrations; the URALSIB is the road to success. Take the first step project; the Job Search Technologies training course; the Plant a tree with URALSIB environmental initiative.
Corporate volunteer strategy; Forming a partner network strategy; Strategic partners: Victoria Childrens Fund, MIRBIS Business School, the META Educational Fund
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Vision, mission and strategy of FC URALSIB Corporate Code of Conduct, charitable principles
Socially significant problems
The Board of Trustees of CCF
Private-public Partnership The Department of Relations with State Authorities The HR Department
9 FC URALSIB
The Corporate Charity Fund was established in 2006 to coordinate the Corporations charitable activities. Charter members of the Fund include: URALSIB Bank, URALSIB Insurance Group, URALSIB Leasing Company, URALSIB Management Company and URALSIB Capital. The Funds activities are controlled by resolutions of the meetings of the charter members and of members of the Board of Trustees. In 2009, the Funds efforts were concentrated on targeted support, while the majority of charitable programs were coordinated by the Initiative Programs Department.
THE GOALS AND INTENT OF CHARITABLE ACTIVITIES Traditionally, FC URALSIBs charitable activities have been targeted at supporting children in need of social and material assistance, as well as on measures intended to foster family values and to provide educational assistance. The Corporations responsible social policy is based on targeted support for those who are designated as a socially insecure population a definition which is used in governmental social programs. The Corporations charitable activities are carried out in line with key trends in the countrys social and economic development and objectives of the national projects Health, Education, Affordable and Comfortable Housing for Russian Citizens and the federal targeted program Children of Russia. Together with state structures, the public and its business partners, the Corporation strives to create a society which provides a comfortable social environment for more Russian citizens with each passing year.
The system of values, principles and standards governing activities of FC URALSIB in the field of social investment and charitable activities includes the following: social partnership; wellness and goodness; voluntary creative cooperation of likeminded persons; focus on the future; sincerity and integrity of thoughts; transparency and openness; reliability and good standing. The system of values, principles and standards governing charitable activities is in line with the Corporations mission and vision as a socially responsible business undertaking. Of paramount importance to the system are values and principles contributing to the formation of a broad public coalition to organize support for those in need, and to facilitate the practical involvement in charitable activities of interested parties. The share of regional divisions of FC URALSIB participating in corporate charitable activities will reach 100% in the near future. The number of recipients will be increased, as will program efficiency. The best projects will be popularized and developed to reach federal scale. The partner programs on presenting orphanhood, the support for educational activities and healthy ways of life will be broadened. Corporate volunteering as a method to employee self-actualization will also be developed.
THE PRINCIPLES OF MANAGING CHARITABLE PROJECTS All charity-related activities of FC URALSIB are coordinated by the Initiative Programs De-
partment. The coordination includes: planning, adjustment, implementation and report data gathering. Charitable projects are selected based on the criteria of their compliance with the values, principles and standards of corporate charitable activities carried out by FC URALSIB. The projects are selected based on the open doors principle with no limits as to the date(s) a resolution on financing should be made. The projects are reviewed, approved and implemented within a year. New projects and changes in the targets for earlier approved projects and their budgets are reviewed in the process. Decisions on additional financing (if required) are made at meetings of the Corporations Management Board. Key performance indicators for all charitable activities of FC URALSIB include the following: the number of children who participated in the projects or received targeted support; the number of volunteers; the number of regions participating in charitable activities; the number of social projects. FC URALSIB plans to develop and implement a unified corporate system of accounting for quality indices for charitable activities based on the model of value-based corporate management approved in 2009. Consolidated reporting on all charity-related and social activities is generated once per year. The primary programs and the annual budget for these activities are approved by the Corporations Management Board. The approved budget is allocated among regional offices, where the corresponding coordinators develop targeted projects. Financing decisions on these projects are made by the Initiative Pro-
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grams Department. Decisions on financing targeted support are made by the KBF of FC URALSIB. The network of regional coordinators unites the Corporations employees who are most active in managing the Corporations charitable projects. The basic function of the coordinators is to gather and process primary applications submitted by persons and organizations. The coordinators also organize the interactions with the recipients, the execution of documents and project certificates and report preparation. All coordinators are volunteers. URALSIB Bank ranked first in The Leader of Corporate Charity 2009 rating. In addition, the Bank was the first in the Banks sub-ranking. The ranking was compiled based on a survey organized by Vedomosti newspaper jointly with PricewaterhouseCoopers international network of auditing and consulting companies and the Forum Donorov
(Forum of Donors) non-commercial partnership of grant sourcing organizations. Survey participants included 53 Russian and foreign companies working in Russia. The leaders were identified based on the results and systemic nature of charitable initiatives, as well as by the practices of sharing positive experiences. 2009 KEY CHARITABLE PROJECTS IMPLEMENTED WITH THE PARTICIPATION OF FC URALSIB Healthy Generation Strategic Direction is aimed at supporting children in distress or in need of medical aid. The measures implemented within the framework of this initiative include: purchasing advanced medical equipment for childrens medical institutions, providing targeted support and assisting in the socialization of orphaned children and children with disabilities. The projects are implemented in regions where the Corporation has a strong presence. The projects cover the following four key programs: URALSIB for Healthy Generation; URALSIB gives hope: education employment housing; URALSIB for Equal Opportunities; URALSIB for Children. More than 150 projects are implemented annually within the framework of the Healthy Generation Strategic Direction. Programs implemented within the framework of Healthy Generation include projects to re-equip medical facilities. Major recipients of re-equipment projects include the following: The State Health Care Facility (SHCF) The Republican Childrens Clinical Hospital (Ufa)
providing medical equipment (4,900 children*); SHCF The Bryansk Regional Hospital purchasing a mobile X-ray unit for the perinatal center (3,500 children); SHCF The Regional Childrens Hospital (Novgorod) purchasing medical equipment for the admissions room, the trauma center and the pre-term infant care department (1,861 children); SHCF The Moscow Regional Psycho-neurological Hospital for Children with Damage to the Central Nervous System and Mental Disturbances replacing all windows (1,500 children); Kindergartens in the city of Odintsovo purchasing medical equipment for medical rooms at the districts pre-school educational establishments (1,375 children); The municipal health care facility Maternity Hospital No4 (Tver) purchasing the Arabella system for delivering positive nasal pressure to maintain proper breathing for newborns with respiratory disturbances (840 children); The municipal educational establishment for children in need of psychological, medical and social adaptation Valeo-Center (Tula) purchasing equipment and diagnostic materials for treating autistic children (780 children); SHCF The Novgorod Regional Narcology Dispensary Catharsis purchasing medical equipment for the department engaged in treating children and adolescents (686 children).
* Total number of yearly recipients.
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URALSIB gives hope: education employment housing: the program has been implemented in a number of cities, including: St. Petersburg (2005), Ufa (2006) and Petrozavodsk (2007). The program provides long-term support to orphaned children for receiving professional education, employment and housing. No similar projects have been implemented elsewhere in Russia. It is common knowledge that in most cases orphaned children attend technical-vocational schools and only a small percentage of them enter higher education institutions. The unique socialization methods allow the Program to identify and support talented children. By 2010, the program will include 148 students at boarding schools. Seventy-five of these participants, who have completed their schooling, have entered higher education establishments or technical colleges attached to them. URALSIB for Equal Opportunities the program is intended to create additional opportunities and incentives for children with disabilities to receive higher education. The program was launched in 2007 in partnership with Chelyabinsk State University, the Russian Humanitarian University, and Ural State University (Yekaterinburg). The program includes financing for additional educational services for children with disabilities, a scholarship system and purchasing special equipment to train children with disabilities. Targeted financing is used to make the spending more efficient. URALSIB for Children the program unites the initiatives of regional offices on material support for childrens boarding homes and orphanages (including assistance in organizing festive activi-
ties). In 2009, support was granted to 3,175 children in the Republic of Bashkortostan, 1,537 children in Sterlitamak and 800 children in Nizhny Novgorod, etc. This program is implemented with active participation from Corporation staff volunteers, who organize lectures on different educational subjects at the childrens boarding homes and medical institutions, as well as visits of the children to the Banks branch offices, where they learn banking basics and participate in different competitions. In addition, employees of the Corporation participate in raising donations for the establishments that they support. Corporate Volunteering Strategic Direction the program unites volunteer events held in all regions in which the Company is present, as well as corporate auctions held to sell the artistic products of employees and students at the sponsored establishments. What makes these events unique is the simultaneous participation of thousands of employees from different levels of the Corporation. Information on these events is provided on-line on the intra-net. Organizational and informational support for these events is provided for by personnel of the Initiative Programs Department, the HR Department and regional coordinators. Many volunteer projects are financed by employees out of their own pockets, without using corporate funds. In 2009, the number of corporate volunteers grew significantly due to involving employees from the regional network and members of their families. This allowed the Corporation to implement volunteer activities on a larger scale, to review more applications and to utilize more new ideas. In 2009, a forum was organized on the intra-net for regional coordinators to discuss
new social initiatives, the execution of draft projects and reporting forms. A database was also established to store applications and project certificates. All information in any region is available to any regional coordinator. Major volunteer initiatives launched in 2009 include From Heart to Heart, Its School Time Soon and Happy New Year. These events have become tradition for the Corporation necessary things, goods, stationery and gifts are collected and delivered to the sponsored establishments several times during the year. Establishing a Partner Network Strategic Direction to upgrade the efficiency of long-term corporate charitable projects, the management of some projects is implemented by specialized charitable funds, namely the Victoria Childrens Fund and the META Educational Fund. The funds have the necessary organizational and personnel resources and they have experience implementing projects in numerous regions simultaneously, which is very important for the replication of charitable programs and the involvement of more partners and volunteers. Pursuant to the strategic partnership agreement between FC URALSIB and the Victoria Childrens Fund, the organizations have implemented several major projects in 28 Russian regions. All programs are intended to support orphaned children and children left without parental care. The programs implemented by the Victoria Childrens Fund use processes which comply with international standards of quality in providing social services. These programs bring real changes to the lives of orphaned children.
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The major projects implemented in cooperation with the Victoria Childrens Fund include the following: Home for Decent Life this project is intended to provide children with decent and safe living conditions that comply with all applicable sanitary norms. The project uses an individualized approach with every sponsored establishment. Activities performed within the framework of the project include repairing bathroom facilities and living quarters, including replacing windows and delivering new furniture. In addition, it should be noted that the project focuses on developing sports grounds the active use of these facilities by children reduces the risk of such illnesses as lateral curvature, flatfoot and slow movement. Childrens behavior also changes they become more self-confident, more open and less aggressive. They acquire personal space where they can spend some time alone. In addition, they start to treat things around them with greater respect. In 2009, the project was implemented in numerous regions, including: Irkutsk, Kaluga, Kemerovo, Murmansk, Novosibirsk, Rostov, the Republic of Karelia, the Republic of Northern Ossetia-Alania, the Republic of Tatarstan, the Primorie Region and the Republic of Udmurtia. Project recipients included 21 childrens facilities housing 1,779 children. Assistance in the Social Adaptation of Orphaned Children the program is targeted at children living in boarding schools. It helps them to develop social activities and acquire essential skills. The children participate in a variety of activities, including: social and psychological training, contests and festivals. The program includes training on social project planning and communication using a social
network on the Internet (www.v2me.ru) where the children can share information and get answers to their questions. The children participate in summer camps with children who have families. Throughout the program, each child is supported by professional psychologists. In 2009, the program was implemented in numerous regions, including: Bryansk, Volgograd, Irkutsk, Kaliningrad, Moscow, Murmansk, Nizhny Novgorod, Novosibirsk, Pskov, Smolensk and Tomsk, as well as the Republics of Bashkortostan, Karelia, the Altai, Krasnodar, Krasnoyarsk, Primorie and the Khabarovsk Regions. The program has benefited 1,671 children at 63 childrens facilities. Strategy of Success the program addresses three aspects, namely the following: supporting and developing talented and able orphans; assisting tutors who work with the children personally and who are capable of helping them identify and develop their talents; supporting the physical infrastructure of childrens facilities. The program includes academic competitions in different subjects, enabling the development of individualized educational strategies and the selection of a personal tutor for each child. Senior students attend higher education institutions during open door days to complete some testing and to pass practice exams that check their potential. The Home of the Young service offers former students of boarding schools that are now studying at higher education institutions an opportunity to take lessons in social adaptation and to receive advice from psychologists and lawyers.
In 2009, the program included 859 children from 176 childrens facilities. Projects implemented jointly with MIRBIS the Moscow International Higher Business School Projects implemented jointly with MIRBIS Moscow International Higher Business School include a program to upgrade the qualifications of temporarily unemployed citizens. The program is essential, particularly given the fact that 2009 labor market conditions were far from stable and many specialists lost their jobs. The program was initiated by URALSIB to improve the qualifications of former office employees to enable them to establish their own business. The teaching staff of MIRBIS developed a three week long training course titled Management in Commerce which enables temporarily unemployed specialists to improve their qualifications in the fields of personnel management, career development, corporate management and business planning and marketing. Graduates of the course received state-recognized certificates that improved their chances of getting new jobs or opening their own businesses during the crisis. The number of graduates from the Krasnodar Territory and the Republic of Bashkortostan totaled 54. Programs launched in partnership with the META Educational Fund In 2009, FC URALSIB participated in constructing a series of buildings of the ecclesiastical seminary of Moscow episcopate, Russian Orthodox church, that is located on the territory of the Bogoyavlensky Staro-Golutvin Friary in Kolomna. The construction was carried out under the curacy of Juvenalius, the Metropolite of Krutitsk and Kolomna. The functions of the META Fund were
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those of operator, supervising the proper performance of construction work and optimizing construction expenses. Commissioning of household outbuildings and the boiler house is planned for 2010. In 2009, within the framework of the program intended to support the artistic and aesthetical upbringing of the younger generation, the META Fund organized visits of students and teachers of theater schools to the premiere performances of Empress a modern Russian opera that was staged with considerable support from the Fund. In 2009, FC URALSIB supported the First AllRussian Academic Competition based on orthodox culture, titled Holy Russia, Keep the Orthodox Faith. The Competition was organized by the Orthodox Saint Tikhon Humanitarian University. The Competition revealed that children were greatly interested in religious education and orthodox culture issues. Approximately 8 thousand children from 30 Russian regions attended the four rounds of the competition.
SOCIAL MARKETING AND SPONSORSHIP

Special socially-oriented products in the form of an affinity card and the Decent Housing for the Children deposit were introduced by FC URALSIB in the summer of 2009 within the framework of the public charitable project for supporting children in distress, entitled Decent Housing for the Children (see the Social Financial Products section). The social advertising campaign to support the project was accomplished by the Bank via a joint effort with
the United Nations Childrens Fund. The campaign, which was implemented in 20 Russian cities, involved media coverage and position advertising. FC URALSIB also participated in the The Happy Farmer project one of the most popular applications of the vkontakte.ru social network and the undisputed leader among on-line social games. The Corporation established a virtual bank, enabling its clients to get credit for developing their farms or to deposit idle funds. This enabled young people to gain more insight into the possibilities of developing their business using up-to-date financial products. In 2009, total costs related to social marketing stood at RUR 57 million, including the following: social advertising campaigns implemented jointly with the Russian Ministry of Finance RUR 23 million; social advertising campaign implemented jointly with the vkontakte.ru social network RUR 5 million; social advertising campaigns implemented in Russian cities to support the Happy New Year initiative, promoting positive thinking RUR 6 million ; social advertising campaign implemented to support the Decent Housing for the Children project RUR 23 million. SPONSORSHIP PROJECT In 2009, FC URALSIB participated in numerous major professional conferences and forums. The Corporation sponsored the XX Congress of the Association of Russian Banks (Moscow) and the International Investment Forum Sochi 2009.
Jointly with the Russian Pension Fund, the Corporation organized the second all-Russian exhibition on pension benefits and insurance, enabling the public to upgrade their understanding of pension issues. URALSIB Bank was the first to provide its private clients with access to information on their personal accounts in the Russian Pension Fund. The educational project Reading Gogol was implemented in cooperation with the art gallery owned by Anastasia Tchizhova. The project was dedicated to the writers bicentennial birthday. The project paid particular attention to initiatives involving socially disadvantaged people. The exhibition Give us LyapkinTyapkin! displayed dolls representing characters from Gogols books and was attended by thousands of children from childrens homes, boarding schools and other childrens establishments. The children also participated in various competitions and contests. The Corporation also sponsored the Russian Monarchs the Romanoff Dynasty exhibition in Saint Petersburg another project implemented by the art gallery. This project with patriotic goals was intended to draw the publics attention to the need to study Russian history. In 2009, FC URALSIB became a partner to numerous all-Russian congresses, forums and exhibitions focused on social development issues, the formation of civil society, corporate social responsibility and reporting and the public-private partnership. FC URALSIB also contributes to implementing various social projects on the regional and local level. It is traditional for the Corporations regional representatives to participate in regionally significant festivities and to assist in or-
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ganizing sporting and cultural events. Since 2006, FC URALSIB has sponsored Moscow Day initiatives which are conducted annually in September. The list of regional events supported and sponsored by the Corporation in 2009 includes: the Republican Congress of Entrepreneurs (the Republic of Bashkortostan), the Tomsk Innovation Forum, Evening Bells the Eleventh International Kuban Orthodox Church Film Festival and the Public Appreciation regional competition (the city of Orel). The Corporation assisted in organizing the The Ural Aerial Fair the Eighth International Festival of Air Navigation in Kungur (the Perm Region) and competitions to win the Cups of the Russian Federation for Air Navigation. A number of initiatives for developing childrens creative activities and childrens support were implemented on a regional level. Such initiatives include support for Step Forward - the International Festival for Disabled Children (Saint Petersburg) and sponsorship of childrens chess competitions (Velikiy Novgorod). Spasskaya Tower, the International Military Music Festival, is organized by the Kremlin Suppliers Guild with the support of various state-owned organizations and sponsors, including FC URALSIB. From September 510th, 2009, Red Square, Moscow, became the stage for various military orchestras from different cities and countries to perform in front of an audience of more than 6 thousand. Participating musicians totaled more than one thousand. Charitable initiatives implemented within the framework of the Festival made it possible for disabled people, children from correctional institutions and members of veteran organizations to attend the
performances. Approximately 40% of admission passes were distributed within the framework of federal and municipal social programs. In 2009, the total budget for sponsorship projects stood at RUR 26 million.
PUBLIC-PRIVATE PARTNERSHIP
FC URALSIB considers its partnerships with state authorities and public organizations to be of paramount importance for corporate strategy. The partnership is focused on the social and economic development of Russian regions and on the implementation of joint local projects. Within the framework of the partnership, the Corporation contributes financial resources and actively utilizes the potential of its employees for consulting and expertise. Representatives of OJSC URALSIB work in committees and commissions of specialized public organizations and participate in preparing suggestions on improving banking legislation. This activity involves interactions with the Central Bank of Russia, the Ministry of Finance, the Ministry of Economic Development, the Agency for Mortgage Lending and the Deposit Insurance Agency. The following suggestions and initiatives were developed during 2009: legislation on the pledge; model forms of credit agreements; Mechanisms for insurance to be paid by the Deposit Insurance Agency; the national payment system; banking operations with precious metals. FC URALSIBs regional offices in 51 Russian regions participate in developing and implementing joint projects. In 19 regions, the partnership is imple-
mented based on the On Social Partnership agreement. The content of these agreements is developed paying due consideration to each regions social and economic development priorities and the Corporations long-term development strategy. The main text of the agreements sets the framework, implying the conclusion of additional cooperation agreements within the framework of individual projects. In 2009, the administrations of Arkhangelsk and Novosibirsk became partners of FC URALSIB. URALSIB Bank is an authorized bank of the Moscow Government. The status was granted in 2006 and confirmed in 2009 (Moscow Government Decree No 947-PP as of 08.09.2009). The Bank issues bank guarantees to Moscow-based enterprises engaged in the wholesale food products trade. In addition, the Bank also acts as an agent of the Moscow Government, authorized to receive and transfer payments of physical persons intended for the city budget and extra-budgetary funds (residential rent and municipal services, etc.). The Bank has 34 offices in Moscow, with 192 automated cash machines and 2,300 installed POSterminals. Corporate representatives are members of the Expert Council attached to the Moscow Department of Finance. The Corporation is planned to participate in developing and implementing city-scale programs to improve the well-being of Moscow residents, to develop business activities in the Moscow Region and to upgrade municipal infrastructure. In cooperation with regional administrations, FC URALSIB has developed a set of measures to develop the top priority national project Affordable and Comfortable Housing for Russian Citizens. In line with this project, in 2009,
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the Corporation participated in the regional program Housing for Young Families, as well as in regional and municipal social mortgage lending programs. Jointly with the administration of the Krasnodar Region, a program for civil and housing construction was implemented within the framework of the Affordable and Comfortable Housing for Russian Citizens national project. The innovative financing scheme, suggested by FC URALSIB specialists, helped increase the number of families that improved their housing conditions 1.6 times. FC URALSIB cooperates with regional SME support funds, implementing joint projects with funds from the Moscow, St. Petersburg, Kemerovo, Sverdlovsk and Perm Regions, the Republic of Bashkortostan and the KhantyMansijsk Autonomous District. SME subjects in these regions are credited based on concessional lending under guarantees of SME support funds. A social advertising campaign to support SMEs was jointly realized in 2009 with the Union of Russian Cities. The main slogan for the campaign was: Small- and medium-sized business offer more goods and services to improve employment and make the country richer. For numerous years, FC URALSIB has supported social information programs of state authorities and public organizations. The Corporation participated in social information projects implemented by the Ministry of Internal Affairs, the Ministry for Civil Defense, the Emergency Management and Natural Disasters Response, the Ministry of Finance, the Ministry of Economic Development and Trade, the Charitable Fund for the Protection of Motherhood and
Childhood and the All-Russian Public Organization OPORA ROSSII (Russias Support) for the support of SMEs. In 2009, FC URALSIB organized a federal advertising campaign in cooperation with the Russian Ministry of Finance to improve the financial literacy of the population. The campaign was aimed at decreasing the probability of individuals making personal finance mistakes during the crisis. The campaign was based on a set of simple rules enabling each Russian family to feel more confident when setting priorities for borrowing, investing or saving. The campaign utilized the most efficient information delivery channels, such as outdoor advertising billboards and major national newspaper(s). Numerous conferences and round tables were conducted with the participation of representatives from URALSIB Bank, the SMEs and regional administrations, as well as journalists. Implementing the campaign cost RUR 23.3 million. In 2009, FC URALSIB proceeded to develop the innovative partner project titled The Social Map of the Region. This long-lasting initiative calls for implementing a universal plastic card, which grants its owners access to a variety of socially- oriented services, including: social subsidies, travel privileges when using municipal transport, payments for housing and municipal services, updates concerning the balance of personal pension accounts, medical and pharmaceutical services and entering social payments on the accounts of citizens, etc. FC URALSIB developed a unique process to implement universal social cards for all recipients of social benefits, including: students, pensioners, servicemen and employees of state establishments, etc.
Utilizing universal plastic cards in the social sphere allows for the possibility of lowering administrative costs and for rationalizing the use of budget funds, reducing the expenses of social security bodies and ensuring the observance of targeted support principles. The project is implemented in close cooperation with the administrations of the Ivanovo and Smolensk Regions, as well as the government of the Republic of Bashkortostan. The regions where the project will be implemented in the nearest future include: the Republic of Udmurtia, the Kemerovo and Krasnodar Regions. The project is supported by local public organizations and social establishments (hospitals, polyclinics, pharmacies, etc.), as well as by transportation and energy supply companies. In 2009, FC URALSIB did not make any direct financial or other contributions to political parties, politics or affiliated organizations.
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Environmental impact
Reduction in energy consumption
8% Decrease in paper consumption 14.7% Drop in toxic wastes 22.5% 12 cities
The Plant a tree with URALSIB initiative was implemented
ENVIRONMENTAL IMPACT The majority of environmental problems faced by society are caused by multi-factor changes in natural features. Minimizing negative environmental impact has become a priority for a growing number of organizations with time. However, many environmental issues cannot be resolved without knowing the processes and volume of economic activity. Therefore, acquiring, accumulating and analyzing environmental data has become a priority for many companies. FC URALSIB fully supports the necessity of implementing environmentally safe processes and adheres to the policy of disclosing environmentally significant information. FC URALSIBs two primary environmental priorities were identified, taking into account the specific nature of the Corporations activity. They include decreasing the negative impact of the Corporations economic activities and preventing the implementation of environmentally destructive and unreasonable projects. The Corporations operations have much less of a negative environmental impact, compared to operations in the mining or processing industry. The Corporations activities pose no serious ecological threat. Waste generated is low toxicity and belongs to less hazardous categories. Nonetheless, FC URALSIB considers it to be its duty to contribute to decreasing the environmental load and to promoting environmentallyfriendly projects. The Corporation actively implements energysaving processes in its divisions. The Corporations initiatives in the environmental safety sphere are based on the following federal laws: On the Populations Sanitary and Epidemiologic Wellbeing, On Protecting Con-
sumer Rights, On Environmental Protection, On Environmental Expert Assessment, On Energy Saving and Energy Efficiency and on the Introduction of Amendments to Certain Regulations of the Russian Federation, On Production and Consumer Waste, and On Protecting Atmospheric Air. The Corporation does its best to minimize environmental risks when interacting with business partners, suppliers and clients by setting reasonable environmental requirements for investment and partner projects. All environmental risk assessments associated with site selection, the development of feasibility analyses, or facility construction (renovating, expanding or upgrading) are performed based on the Manual for Assessing Environmental Impact.
CLIMATE CHANGE The evaluation of total atmospheric pollutant emissions indicates that the operating activities of financial corporations places much less stress on the ecosystem, for example, than the operating activities of production and processing companies, and does not pose a serious environmental risk. Climate change is global, persistent and very risky for world capital markets. However, the term is broad and covers a wide range of factors. It is almost impossible to adequately assess the influence that these factors may have on an individual company or a group of companies (as is the case with FC URALSIB) during a short reporting period. The Corporation has no evidence of the existence of market unified methods for calculating the financial impact of climate change effects on the financial institution and has no
plans in the near future to develop their own calculation methods. Models of possible long-term costs required to overcome the negative consequences of climate change show that the most efficient measure, capable of smoothing the negative impact, is to reduce greenhouse gas emissions. The 20072011 program to reduce atmospheric emissions envisages implementation of Maximum Allowable Atmospheric Pollutants Emission projects. The norms adopted by the Corporation were developed based on the requirements of the Federal Law On Protecting Atmospheric Air, the Guidelines for Calculating the Concentration of Pollutants Contained in Enterprise Emissions (OND-86), the Sanitary Norms for the Design of Industrial Enterprises (SN-244), GOST 17.2.3.02-78 and other normative documents. To decrease environmental impact and to decrease transportation activities in 2009, the following measures were implemented: dispatching transportation activities and division transportation services, using cellular and trunk communication equipment; collecting and processing electronic applications for transportation services to optimize routes; engaging in wholesale deliveries of material assets using suppliers transportation vehicles; completing long-distance transportation of large volumes of material assets and employees via public transportation facilities (air, motor and railway transportation); using labor saving devices (hydraulic handlers, forklifts and hydraulically operated carriers) to reduce transportation downtime while handling material assets.
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83 PUBLIC RELATIONS AND HUMAN RIGHTS ENVIRONMENTAL IMPACT
DECREASING THE RISK OF ENVIRONMENTAL POLLUTION Organizational measures implemented when using transportation vehicles include the following: Transportation vehicles purchased in the first place include vehicles equipped with environmentally safe power units (of at least Euro-2 class); Diagnostics and maintenance work on these vehicles power unit systems are performed regularly; The volume of fuel consumed by transportation vehicles are subject to monitoring; To decrease fuel consumption, monthly limits are optimized along with rationalizing the available motor car fleet; To prevent environmental contamination with fuel spillage, the Corporations transportation vehicles are fuelled at stationary filling stations using filling equipment. Subject to corresponding agreements, waste generated by the Corporation is transferred for processing to specialized organizations. The agreements for waste removal and disposal are concluded based on tenders. The tenders stipulate that a potential contractor use environmentally friendly and certified materials. Apart from a license for performing waste disposal operations, a contractor should also have landfills to accommodate solid waste. The following waste generated by the Corporation is subject to recycling: paper (approximately 10%), used oil, car batteries and tires. The low percentage of paper waste is explained by the specific nature of business the Corporation is engaged in.
Basic mechanisms to decrease negative climatic and environmental impact
Energy Implementing energy-saving processes
Climate The MPC project Reducing transportation movement
FC URALSIB
Environment Environmentally-friendly transportation facilities Waste disposal Recycling materials Decreasing the resource intensity of business processes Urban gardening initiatives
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The Corporate Information System (CIS) was implemented by FC URALSIB in 2006 to provide for electronic document flow. The system is a set of integrated sub-systems providing for the automated flow of management- and process-related documents. The System upgrades performance efficiency, ensuring the protection, manageability and availability of documents, which contributes to saving resources (time and processes) and reducing paper consumption. In 2009, the Corporation moved forward with implementing new communication and IT facilities to organize video conferences, webinars and remote training. Using IT technologies resulted in a considerable decrease in the number of employee business trips, thus leading to a significant reduction in harmful atmospheric emissions. As emissions monitoring is irregular, no statistics on such emissions are available.
URBAN GARDENING INITIATIVES The Corporations offices are located in cities and towns with developed economic infrastructure, which do not belong to the category of protected natural sites. The Corporations employees actively participate in volunteer environmental clean-up initiatives organized by the administrations of cities and towns to upgrade atmospheric air protection from dust, dirt, and harmful gases, and to oxygenize it, as well as to stimulate landscape and bio-diversity. In 2009, the annual initiative Plant a Tree with URALSIB resulted in improving alleys, boulevards, city parks and public gardens in 12 cities. The initiative was attended by regional division managers, employees, representatives of local authorities, clients and partners and journalists.
ENERGY-SAVING PRIORITIES To ensure electrical energy saving, the Corporation has implemented the following: using energy-saving equipment, including gasdischarge lamps; controlling energy consumption on a daily basis; periodically engaging in preventive maintenance and the repair of energy-powered equipment; periodically controlling adherence to operating rules for electrical installations; using automated systems that regulate energy consumption.
ORGANIZING ENVIRONMENTAL MANAGEMENT Environmental management at FC URALSIB is organized by implementing four inter-related activities, namely the following: environmental control; environmental certification; environmental reporting; environmental monitoring. To organize the management of environmental impact produced by the Corporation and to ensure that this impact is properly registered, the Corporation established environmental departments staffed with the managers of major divisions, branches and additional offices, as well as with full-time specialists from the ecological de-
partment of the Business Support Division and employees from divisions responsible for fire safety and for interacting with supervisory authorities. The monitoring system controls five parameters: consumption of electric power, heat, water, greenhouse gas emissions and solid waste generation. Materials used by the Corporation in the operation process include: writing paper, office equipment consumables and stationery. Writing paper comprises the largest share of materials. The Corporations operations departments do not use recycled paper, as the quality of such paper does not meet requirements for the safe operation of office equipment (printers, faxes and scanners). All Corporation offices are located in areas that have well-developed utilities infrastructure, and thus use centralized power and heat supply systems. In these conditions, generating energy from primary sources (coal, gas, diesel fuel, etc.) is counter-productive. Due to low performance and high potential investment costs required to put into operation electrical plants based on renewable energy sources (solar, wind, biological fuel, etc), the Corporation does not consider these alternatives to be substitutes for traditional power supply schemes. The Corporations operations are not related to transporting, importing and/or processing hazardous waste.
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RESOURCE CONSUMPTION
Power energy consumption
2008 kW/h GJoule 15,259,053 54,932.6 2009 14,043,218 50,555.6 Change, % 8 8
Paper consumption dropped due to a fall in head count and fewer regional offices. In 2009, the total cost for ensuring environmental safety stood at RUR 702.3 thousand. No significant fines and/or non-financial sanctions were imposed on the Corporation for failing to comply with environmental norms.
The Corporation transferred 100% (868.3 tons) of toxic waste for disposal. All waste generated in FC URALSIBs operating process, irrespective of its type and class is transferred to specialized organizations for transportating, allocating, using, disposing and neutralizing.
Non-toxic waste
Reducing electrical power consumption was achieved by optimizing the operation of engineering equipment and improving installed power per employee in the offices. Water is supplied via the municipal water supply network.
Water consumption (cubic meters)
2008 60,893 2009 61,836 Change, % 1.55
EMISSIONS
Waste volume (tons) classified by the degree of toxicity
Waste class I II III IV V Total 2008 5.0 0.7 5.9 805.0 304.0 1,120.6 2009 4.7 1.7 4.4 566.8 290.7 868.3 Change, % 6 142.9 25.4 29.6 4.4 22.5
Water consumption increased due to a relatively hot summer. Per capita daily water consumption complies with norms set by Construction Norms and Regulations (SNiP).
Heat consumption (Gcal)
2008 8,703.7 2009 9,487.6 , % 8.26
A significant amount of non-toxic waste is paper. The Corporation, through its activities, produced 38.28 tons of paper. Approximately 10% of the paper used is recycled. Low paper recycling levels are due to specifics of the financial business. The contract for removing and disposing waste is determined based on tenders with specialized organizations. Mandatory conditions of the tender are that the contractor use environmentally friendly and certified materials, as well as that they possess a license for this type of activity and have special disposal sites for solid waste.
Volume (cubic meters) of discharged waste water
2008 60,893 2009 61,836 Change, % 1.55
Heat consumption increased due to a longer cold autumn-winter period in 2009. The basic material essential for the Corporations operation is writing paper.
Writing paper consumption (tons)
2008 44.88 2009 38.28 Change, % 14.7
The volume of discharged waste water is calculated as 100% of water consumption. The Companys operation does not involve reusing water. Discharged water is received by the municipal water supply network. The amount of atmospheric pollutants emitted by all divisions of FC URALSIB in 2009 does not exceed the following: 1.304 tons per year for greenhouse gases; 0.589 tons per year for nitrogen oxides (NOX); 0.062 tons per year for sulfur dioxide (SOX), which complies with approved maximum permissible discharge limits.
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Key events and awards
URALSIB Bank won the Financial Olympus National Prize URALSIB Bank was ranked first in the Corporate Charity Leader 2009 Signing the Collective Bargaining Agreement with employees URALSIB Bank won the OSCARDS-2009 International Competition Issuing Decent Housing for the Children financial products with an integrated charitable component
JANUARY
A regional program to improve the general populations financial literacy has been launched In January, the financial literacy hotlines took place in six cities in Russia, including: Yekaterinburg, Krasnodar, Nizhny Novgorod, Ufa, Saint Petersburg and Novosibirsk. People calling could ask questions about their own fund management and get expert consulting advice and recommendations from qualified specialists. The program implemented by URALSIB Bank involved outdoor advertizing with messages warning the population about inconsiderate acts and errors in crisis periods. URALSIB Leasing Company assigned an A+ financial stability rating Expert RA Rating Agency assigned LLC URALSIB Leasing Company an A+ financial stability rating (a very high level of financial stability). What influenced the assessment is primarily the rapid business growth of the Company transaction volume grew by 152% during the first 9 months of 2008, while the market volume fell 9% during the period. The rating also took into account the large geographical scope of operations, as well as its high transparency and the diversity of financing sources. URALSIB Management Company became the leader in the Investfunds Rating, as rated by the value of net assets MC URALSIB became the leader in the 2008 ranking of management companies as ranked by net asset value. The rating was published by Investfunds information service. MC URALSIB beat out MC Troika Dialog, its closest competitor, by RUR 1 billion.
URALSIB Bank signed a credit agreement with Ausfuhrkredit-Gesellschaft mbH, a German banking concern Following the Agreement, AusfuhrkreditGesellschaft mbH granted URALSIB Bank a buyers credit in the amount of Euro 1.8 million for 4.5 years. The funds were spent purchasing various pieces of equipment in Germany for a corporate client of the Bank. The Agreement became the first signed in 2009 and the thirteenth in the history of cooperation between the Bank and AusfuhrkreditGesellschaft mbH.
MARCH
URALSIB Bank was named The Best Institutional Lender in the Republic of Bashkortostan for 2008 The official award ceremony took place March 19th in the Republics House of the State Assembly (Kurultai RB). An official commemorative token and a letter of appreciation signed by the President of the Republic of Bashkortostan were given to URALSIB Bank, stating its outstanding contribution to the Republics economic development. The Bank is one of the major creditors for industrial facilities, the agricultural sector and the Republics SME sphere. URALSIB Bank 121 published a guide book for long-term investors A book entitled Do not lose or what daddy Kiyosaki kept silent about on personal fund management under crisis conditions (written by Isaak Bekker, one of the leading international experts in private banking and Vedomosti newspaper longterm columnist) was published with the financial support of URALSIB Bank 121. The book was planned six years before todays world financial crisis, but nowadays the ideas in the book became even more relevant.
FEBRUARY
The government of the Republic of Bashkortostan and FC URALSIB concluded a strategic partnership agreement The Agreement addresses providing support for the development of the Republics agricultural sector, as well as for major industries and the SME sector. Certain provisions of the Agreement stipulate FC URALSIBs participation in social projects, including the construction of social facilities and support for Bashkortostans childrens and medical facilities. URALSIB-YUG (South) Bank received a B/B credit rating Long-term B and short-term B counterparty credit ratings were assigned to URALSIB-YUG (South) JSC Commercial Bank by Standard & Poors, with developing outlook. The Bank also received a ruA national scale rating. These ratings were possible due to a strong connection with FC URALSIB, including the integration of key business areas and risk management policies and systems. Contributing factors also included: good market standing and the Banks popularity in the Krasnodar Region, as well as the profitability of core operations and adequate capitalization.
APRIL
URALSIB Management Company became the leader in the trustee ranking compiled by the Housing and Community Amenities Reform Fund On April 1st, 2009, temporary idle funds of the Fund managed by MC URALSIB totaled RUR 48 billion. MC URALSIB became one of the top ten managing companies in 2008 In 2008, MC URALSIB placed second in the updated ranking of the National Rating Agency, as
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95 ENVIRONMENTAL IMPACT KEY EVENTS AND AWARDS
rated by the amount of the Companys equity, and placed seventh in terms of managed assets. Rating participants included 83 managing companies operating on the Russian market. URALSIB Bank won the Financial Olympus 2008 National Prize The Bank was named first in the Corporate Bank Dynamics and Efficiency category. The national prize Financial Olympus is a professional prize awarded annually to the most successful companies and top-managers operating on the Russian financial market. The LUKOIL Conservative Fund won the Financial Olympus 2008 National Prize The open mutual fund LUKOIL Conservative Fund managed by MC URALSIB was named the winner in the Popular Mutual Fund category in the Dynamics and Efficiency sub-category.
MAY
Mr. Andrey Donskikh, the Chairman of URALSIB Banks Management Board was the winner of The Best Russian Banker 2008 competition Qualities assessed by the competition included: the organizational abilities of participants, as well as the degree of trust that their banks hold. Other parameters included: bank reliability and their achievements in ensuring credit institution stability, as well as development dynamics, attractiveness and client service quality. The development of branch networks and social programs for the general population were also taken into account. A credit agreement concluded between URALSIB Bank and Credit Suisse became The 2008 Transaction of the Year According to the opinion of experts from Trade Finance Magazine (Euromoney plc), the unique-
ness nature of this transaction lies in the ability to attract a considerable sum of money (Euro 39.7 million) at the peak of the crisis and within a short time period too, which means that both teams worked very efficiently. The transaction is structured for five years under guarantees from the Finnvera Export Credit Agency (Finland), to lease handling equipment manufactured by the Finnish company Konecranes to OJSC Saint Petersburg Sea Port. Mr. Oleg Litovkin was appointed CEO of URALSIB Leasing Company The priorities of the new CEO include: consolidating business, implementing operating leasing, carrying out operations with troubled assets and upgrading efficiency. The Plant a Tree with URALSIB initiative covered 12 Russian cities Traditionally, participants in the Initiative included: regional office managers, clients and local mass media representatives.
JUNE
URALSIB Bank increased its charter capital Additional ordinary non-documentary shares of the Bank, with a par value of RUR 0.1, were placed via closed subscription among current shareholders, including: CJSC Delovoi Centr URALSIB (URALSIB Business Center) and OJSC FC URALSIB. The additional share issue increased the Banks charter capital 30% to a total of RUR 26.5 billion. The share of charter capital owned by member-companies of FC URALSIB amounted to 95.88%. The Bank of Russia registered the Report on the Banks additional share issue. The Annual General Meeting of URALSIB Banks shareholders The Annual General Meeting of shareholders, which was held June 29th, approved the year-end
report and accounting statements, including the 2008 profit and loss statements. The General Meeting of shareholders elected members of the Auditing Commission and approved KPMG as the Banks auditor. The AGM decided to retain 2008 the Banks net profit and not to pay dividends. URALSIB Bank became the first Russian investment bank to organize a conference on the debt market during the crisis The Russian Bond Market. Reload-2009 International Conference was held in Moscow. The Conference was organized jointly by URALSIB Capital and Cbonds Information Agency. The Conference was attended by representatives from the Federal Service for Financial Markets, the Russian Ministry of Finance, the Bank of Russia and the MICEX Stock Exchange, as well as by leading experts on the debt market from international and Russian investment banks and legal companies. Those attending also included top managers from major Russian issuers and foreign and Russian investors. The Social card for Smolensk Region residents project was launched by URALSIB Bank in the city of Roslavl The social card is intended to provide access to pensions and subsidies. The card can be used to pay for housing and amenities or for shopping. The project was implemented jointly with the administration of the Smolensk Region.
JULY
URALSIB Bank repaid syndicated credits URALSIB Bank repaid two syndicated credits totaling USD 717 million. The credits were attracted from numerous international banks in 2007-2008 for a period of one and two years. The repayment became possible due to liquidity reserves accumulated by the Bank.
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The amount of assets managed by MC URALSIB increased 41.8% MC URALSIB maintained its leading position among companies managing open- and intervalmutual funds on the Russian collective investments market. Net assets managed by the MC totaled more than RUR 11.9 billion. Compared to the beginning of the year, this represents a 43.3% increase. The total amount of assets managed by MC URALSIB increased 41.8% in H1 and exceeded RUR 28.19 billion. The META Educational Fund presented the Empress opera to the public The world premiere of the Empress opera, by David Tukhmanov, took place in the Aleksandrinsky Theater in Saint Petersburg. The opera was staged under the direction of Dmitry Bertman, the Peoples Artist of Russia. The opera was performed by soloists, the choir and orchestra of Moscow Gelikon-Opera Theater. The project was implemented by the META Educational Fund with the support of FC URALSIB. URALSIB Bank and JSC Agency for Repackaging Mortgage Lending concluded a cooperation agreement The Agreement considerably reduced the time required to assess URALSIB Banks borrowers, as well as to reduce the document flow circulating between the two organizations within the repackaging program. The Agency performs repackaging of mortgage lending subject to terms, the payment and reverse stipulations, allowing borrowers to continuously repay their monthly mortgage payments during a 12-month period, taking into account the borrowers current financial condition. The Agreement makes it possible for borrowers who found themselves in a difficult financial situation due to unemployment or a drop in earnings or an increase in costs to postpone payments till they restore their solvency.
URALSIB Bank signed a Collective Bargaining Agreement with its employees A conference including the Banks employees, held in May, resulted in a conclusion of the Collective Bargaining Agreement between the employer and its employees. In conditions of financial uncertainty, with many companies optimizing their costs and reducing social packages, URALSIB Bank confirmed its obligations to its employees, taking a further step in developing its corporate social responsibility.
rated by the total amount of pension savings managed by the Pension Fund of the Russian Federation and non-governmental pension funds. The amount managed by the MC as of the end of H1 2009 stood at more than RUR 2.64 billion. The total amount of pension savings managed by the MC totals more than RUR 4.75 billion.
SEPTEMBER
URALSIB Banks HR Department won the Fifth All-Russian Contest The Best HR Department-2009 HR technologies presented by URALSIB Bank were recognized as the best in Russia. The contest jury was extremely impressed by URALSIB Banks HR policy, as well as by the Banks active social attitude on the whole. The Bank was also awarded a prize in the honorary category The leader in socially responsible business. URALSIB Bank started accepting Decent Housing for the Children deposits and issued an affinity card URALSIB Bank issued products with an integrated charitable component. The products include the Decent Housing for the Children deposit and an affinity card. Subject to conditions of the deposit, a client authorizes the Bank to transfer a share of the annual interest rate on the deposit, in the amount of 0.5%, to the Victoria Childrens Fund. The same applies to the affinity card. Funds transferred to the Victoria Childrens Fund are used to finance the development and repair of childrens homes and boarding schools.
AUGUST
The depositary of URALSIB Bank became a member of the maximum reliability group AAA At the end of 2008, URALSIB Banks depositary confirmed its membership in the maximum reliability group AAA of the INFI/PARTAD National Depositary Rating. The rating is based on a survey of Russian depositaries conducted jointly by the Infrastructure Institute a fund for developing financial research (INFI) and PARTAD. URALSIB Bank and OPORA-Credit Internet portal launched a joint project URALSIB Bank and the financial Internet portal OPORA-CREDIT launched a project for developing credit facilities for the SME sector. The project has been implemented within the framework of the General Partnership Agreement concluded between the parties. In addition to filing a credit application, SME businessmen can now use a popular service called A question to the expert to receive on-line consulting advice from a SME-qualified URALSIB Bank expert. In H1 2009, MC URALSIB became one of the top three managing companies ranked by pension savings managed MC URALSIB became one of the top three leaders in the Russian collective investments market, as
OCTOBER
Jointly with MIRBIS the Moscow International Business School, URALSIB Bank implemented an occupational re-training program for unemployed individuals. The first gradu-
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95 ENVIRONMENTAL IMPACT KEY EVENTS AND AWARDS
ates of the Management in Commerce training course were scheduled for October The first class of students who attended training courses conducted within the framework of the occupational re-training program for temporarily unemployed individuals was in Krasnodar. The program is based on a free training course developed by the Corporate University based on the Banks regional training center. Training was conducted by the teaching staff of MIRBIS the Moscow International Business School. During the course, students learned about practical management, business planning and production costs. They were also informed about marketing theory and practice for commercial activities. The National Rating Agency confirmed the AAA maximum reliability individual ratings for the group of URALSIB managing companies The National Rating Agency confirmed the AAA maximum reliability individual ratings for the group of URALSIB managing companies. The group consists of MC URALSIB, URALSIB Capital Management and URALSIB Asset Management. Distinguishing characteristics noted by the National Rating Agency included the quality of the centralized risk management system and efforts of the MC team to develop their own risk management service. MC URALSIB Group became one of the top three management companies in Q3 2009 According to the National Rating Agency, MC URALSIB Group became one of the three leading managing companies as rated by managed assets volume. The volume of assets managed by the MC increased almost 30% to total RUR 91.8 billion.
NOVEMBER
URALSIB Bank ranked second for corporate charity The Banks charitable programs were highly regarded by the jury for the Corporate charity in Russia 2008 ranking organized by Vedomosti newspaper, together with PricewaterhouseCoopers and the Donor Forum. In 2008, the Bank implemented 145 charitable programs in 73 Russian regions, benefiting 33,164 children. Total fund spent to finance the programs stood at RUR 145 million. The number of volunteer participants in the programs totaled 1,100 employees of the Corporation.
DECEMBER
URALSIB Bank was the winner of the Fifth National Banking Prize The Bank was the winner in the Socially responsible business category. A new Chairman of URALSIB Banks Management Board was appointed A meeting of OJSC URALSIBs Supervisory Board took place December 7th, 2009. A resolution was passed to appoint Ildar Muslimov acting Chairman of URALSIB Banks Management Board as of December 8th, 2009. The corresponding documents to gain candidate approval were submitted to the Bank of the Russian Federation. A decision was made concerning integrating OJSC Stroivestbank with OJSC URALSIB A resolution was passed at the Extraordinary General Meeting of JSC Stroivestbank shareholders, held December 8th, 2009, to re-organize the Bank in the form of integrating with OJSC URALSIB. Shareholders approved the Integration Agreement and Handover Statement.
A decision was made concerning integrating URALSIB-YUG Bank with OJSC URALSIB A resolution was passed at the Extraordinary General Meeting of shareholders of OJSC URALSIBYUG Bank, which was held December 11th, 2009, to re-organize the Company in the form of an integration with OJSC URALSIB. The shareholders approved the Integration Agreement and Handover Statement. A project developed by URALSIB Bank won the OSCARDS 2009 International Competition award The Social card of Bashkortostan, which is issued by URALSIB Bank, was named one of the winners of OSCARDS 2009 the international competition for innovative banking products. The product was a winner in the Services category. .
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About the Report
5th social report prepared by URALSIB Financial Corporation in accordance with international standards The report is prepared in accordance with GRI G3 standards and the Financial Services Sector Supplement (FSSS) GRI Application Level Check A+ External independent review by KPMG A+
GENERAL INFORMATION ON THE REPORT

The current Report is the fifth social report prepared by URALSIB Financial Corporation. As with previous reports, it was prepared in accordance with Global Reporting Initiative reporting requirements on sustainable development. During 2009 report preparation, the Corporation focused on GRI standard indicators (version 3/2006) and the Financial Services Sector Supplement (FSSS/2008), as well as on experience garnered from previous reports and the Corporation`s 2009 development priorities. GRI Report Services confirmed that the Corporations performance indicators are fulfills the requirements of Application Level A+. GRI Application Levels communicate the extent to which the content of the G3 Guidelines has been used in the submitted sustainability reporting. The Check confirms that the required set and number of disclosures for that Application Level have been addressed in the reporting and that the GRI Content Index demonstrates a valid representation of the required disclosures, as described in the GRI G3 Guidelines and the FSSS supplement for financial organizations. The 2009 report underwent an external independent review by KPMG and corresponds with the A+ level of GRI G3 application.
elaborate on the strategy for interacting with interested parties. Collecting, consolidating and analyzing information in the sustainable development field is based on Russian legislative requirements and intra-corporate standards. The current Report does not contain significant changes in measurement methodology compared with previous period. There were also no significant changes in the scope and margins of the Report compared with the previous reporting period. There were no changes in the structure of assets and/or subsidiaries, which could potentially influence the comparability of the previous and current report. All material indicators in the 2009 Report are given in comparison with the same 2008 indicators. Uralsib Financial Corporations consolidated annual financial reports, which were audited, serve as the basis for the data presented in the current Report. To fully reflect key parameters, material issues and corporate priorities, the current Report contains interviews with the directors of key corporate divisions. The interviews reflect the positions of the Corporation`s top management in regard to social and economic development, main themes and problems connected with the future development of the financial branch, Corporation values, critical factors for success and short- and medium-term development priorities.
All data and indicators used in the Report are presented by responsible corporate officials and are verified for accuracy by employees of the Internal Audit Department and the Division for Social Reporting of the Public Relations Department. Key performance indicators in the Report were verified by an independent party during the external audit procedure. Relevant references in the current Report: The group of companies Financial Corporation Uralsib is also referred to as FC Uralsib, the Financial Corporation, the Corporation, the Group FC Uralsib, the Group, URALSIB; Open joint stock company Bank URALSIB is also referred to as OJSC URALSIB, the Bank; Open joint stock company Financial Corporation Uralsib is also referred to as OJSC FC Uralsib, the Company.
SCOPE AND MARGINS OF THE REPORT Data in the Report is aggregated for all Uralsib Financial Corporation sub-holdings and include the period from January 1st, 2009 to December 31st, 2009. FC Uralsib completes sustainable development reporting on an annual basis. Data in the Report is used by top managers of companies that are part of FC Uralsib to evaluate the effectiveness of the Corporations social and charitable programs, as well as one of the instruments to
PRIORITY SUBJECTS OF THE REPORT Responsible business, internal social policy, social investment and charitable programs. In the Report, words, definitions and terms were used in the meaning in which they are presented in reporting guidelines in the field of GRI G3 sustainable development and corporate documents. The Report contains no changes in wording compared with the previous period.
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109
110
111
STANDARD GRI ELEMENTS TABLE

Some GRI Guidelines indicators which belong to the group of ecological efficiency indicators are not relevant for FC Uralsib as a financial institution. Due to this, indicators EN3, EN4, EN7, EN11, EN12, EN13, EN 14, EN15, EN19, EN23, EN25, EN26 and PR1 are only partly disclosed or undisclosed in the Report since they are not applicable to the Corporation. EN3 is not disclosed due to the fact that primary energy source records are possible only on a regional or country-wide level because of Russias unified electric network infrastructure. Therefore, data on primary energy sources consumed at the company-level for FC URALSIB is not available. Information about the management approach (DMA) on main GRI performance indicators is reflected in the following pages: EC 26, 37, 52; EN 27, 38, 98; LA 64 67; SO 27, 38, 54; PR 3435, 53; HR 84; and FS 28, 3839, 5254. For each of these indicators, short comments are provided in the table. Other primary and additional indicators for GRI standards (version 3/2006) and the financial services sector supplement (FSSS/2008) are disclosed on the respective pages of the Report.
GRI standard element table
GRI Page Section/Comments
GRI 2.8 2.9
Page 1923 10 12 23 28 102105
Section/Comments Key economic indicators General information Geography of FC Uralsibs activities Changes in shareholders capital Corporate governance Key events and awards
2.10
1. Strategy and Analysis 1.1 47 Chairman of the Board of Directors of FC Uralsib N.A.Tsvetkov reference. Chief Managing Officer of FC Uralsib I.R.Muslimov reference 1.2 26 Corporate governance. Interview with the Chief Executive Officer, the Head of the Corporate Governance and Legal Department Dmitry Shmelev 37 Strategies. Interview with the First Vice President of FC Uralsib, the Head of the Corporate Center strategic direction, Mikhail Molokovsky 44 Risk management system 52 Responsible business. Interview with the First Vice President of FC Uralsib, the Head of the Financial Supermarket strategic direction, Ilya Filatov 64 Internal social policy. Interview with the Head of the HR Department, Ekaterina Uspenskaya 46 Risk management system 2. Organizational characteristics 2.1 Second page of the cover Full organization name 2.2 1415 Brands. Key brands, types of products and services 2.3 10, 29 FC Uralsib. Functional structure of the organization 2.4 12 Geography of FC Uralsibs activities 2.5 15 Geography of FC Uralsibs activities 2.6 10 FC Uralsib. Property description and development history of FC Uralsib 2.7 1619 Markets
3. Parameters of the Report 3.1 108 About the Report. Reporting period 3.2 108 About the Report. Publication date for the most recent previous reports 3.3 108 About the Report. Reporting period 3.4 Second page of cover Contact point for questions regarding the Report or its contents 3.5 108 About the Report. Priority subjects of the Report 3.6 108 About the Report 3.7 108 About the Report 3.8 12 General information 3.9 108 About the Report 3.10 108 About the Report 3.11 108 About the Report 3.12 112114 GRI standard element table 3.13 109111 Independent audit opinion on FC Uralsibs sustainable development report addressed to the top management of OJSC Financial Corporation Uralsib 4. Governance, commitment and interaction with stakeholders 4.1 2834 Corporate governance structure of FC Uralsib 4.2 33 FC Uralsib management 4.3 31 Changes in the composition of JSC FC Uralsibs Board of Directors 4.4 30 General Meeting of shareholders 4.5 34 Remuneration 4.6 30 General Meeting of shareholders 45 Compliance-control 4.7 40 Strategies 4.8 28 Mission, vision, values 3536 Corporate ethics code 4.9 30 Board of Directors 4.10 40, 42 Complex strategic plan 4.11 96 Environmental impact. The Company does not apply the principle of prudence when assessing social and ecological risks of investment agreements 4.12 68 Internal social policy
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101 KEY EVENTS AND AWARDS ABOUT THE REPORT
GRI 4.13 4.14 4.15 4.16
Page 48 46 46 4648 57 49 48 59
Section/Comments Participation in associations and external initiatives. The Corporation plans to join UN Global Compact, the Corporation is not a member of protection of interests associations Interaction with stakeholders Interaction with stakeholders Interaction with stakeholders Work with suppliers Clients review in the points of sales Interaction with stakeholders Clients review in the points of sales
GRI EN7 EN8 EN9 EN10 EN11 EN12 EN13 EN14 EN15 EN16 EN18 EN19 EN20 EN21 EN22 EN23 EN24 EN25 EN26 EN27 EN28 EN29 EN30
Page 99 9899 9899 98 97
Section/Comments The indicator is not relevant for FC Uralsibs main activities. Resource consumption Organization of ecological management Organization of ecological management. Emissions Planting greenery on city territory Decreasing environmental contamination risks The indicator is not relevant for FC Uralsibs main activities. The indicator is not relevant for FC Uralsibs main activities. The indicator is not relevant for FC Uralsibs main activities. Emissions Climate change The indicator is not relevant for FC Uralsibs main activities. Emissions Emissions Emissions The Corporations activities relate to financial services and are not connected with the production or use of material goods. Significant spills were not recorded during the reporting period. Emissions. The Appendices I, II and IV of Basel Convention is not used at waste recording The indicator is not relevant for FC Uralsibs main activities. Environmental impact The Corporations activities relate to financial services and are not connected with production or the use of material goods. The Corporation does not use packaging materials. Environmental impact Climate change Environmental impact
4.17
5. Information on management approaches and performance indicators 5.1. Economic efficiency indicators DMA 26 Interviews with top management EC 37 52 1 21 Key economic indicators EC2 96 Climate change 44 Risk management EC3 78 Social guarantees and perks for employees. Retirement plan EC4 23 State aid received by companies that are part of the Financial Corporation, in 2008 and 2009 EC5 68 Structure of FC Uralsib HR Department EC6 57 Responsible business. Work with suppliers EC7 81 Preventing discrimination in the labor collective. The hiring of local population is a practice pattern for the Corporation EC8 5861 Socially oriented financial products 8591 Charitable activity EC9 55 Indirect economic impact 5.2. Ecological performance indicators DMA 27 Interviews with top management EN 38 98 Ecological management organization EN1 99 Resource consumption EN2 97 Resource consumption EN3 98 Ecological management organization. Data on primary energy sources consumed at the company-level for FC URALSIB is not available. EN4 The indicator is not relevant for FC Uralsibs main activities. EN5 99 Resource consumption EN6 98 Organization of ecological management
99 96 99 99 99 97 99
96
99 9697 99
5.3. Efficiency indicators for approaches to organizing work DMA LA LA1 LA2 LA3 6467 70 70 71 78 7980 7980 Interview with the Head of the Human Resources Department Personnel structure. Total head count broken down by sub-holdings Personnel structure. Staff turnover Structure of expenses for the internal social program Social guarantees and perks, social perks and the right to use services from the social basket are provided to staff employees who have successfully completed the probationary period Collective agreement Collective agreement
LA4 LA5
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GRI LA6 LA7 LA8 LA9 LA10 LA11 LA12 LA13 LA14
Page 73 73 74 76 79 76 7677 68, 77 3134 70 71
Section/Comments Health and workplace safety Health and workplace safety. Fatal cases are not registered. Measures to improve labor conditions and health Education, training and consulting programs for serious illnesses Collective agreement. The Corporation did not conclude health and safety agreements with labor unions Personnel training Personnel training Structure of HR Department Composition of the Board of Directors. Corporation Management. Personnel structure Personnel structure
GRI
Page
Section/Comments
5.6. Efficiency indicators: responsibility for products DMA 34 Interviews with top management PR 35 53 PR1 58 Evaluation of consumer product safety PR2 57 Conformity with legislative requirements PR3 55 Product marketing and promotion PR4 56 Conformity with legislative requirements PR5 56 Practice of incorporating requirements for products already in circulation PR6 56 Evaluation of consumer product safety PR7 56 Conformity with legal requirements PR9 57 Product marketing and promotion 6. Impact of products and services (financial services sector supplement (FSSS)) DMA 28 Interviews with top management FS 3839 5254 FS1 10 General information 35 Corporate ethics code 96 Climate change. The Corporations products belong to the sphere of financial services and do not have a direct ecological or social impact on society. To analyze the impact of products, indirect consequences are monitored (an increase in demand for some financial products, an economic effect from introducing social cards, etc.) The Corporation does not use specialized policies and procedures for evaluating the social and ecological impact of products and services. FS2 46 Risk management system. Social and ecological risks are not included in the Corporation key activities FS3 Large corporate clients, preparing sustainable development reports, regularly addressing their annual non-financial reports to the Corporation. This process has not been formalized and has a notification-based character. The monitoring of clients adherence to the principles of social and ecological responsibility is not conducted. FS4 76 Personnel training FS5 26 Interview with the Executive Director, Head of the Corporate Governance and Legal Department, Dmitry Shmelev FS6 52 Interview with the First Vice President of FC Uralsib, Head of the Financial Supermarket strategic direction, Ilya Filatov FS7 58 The volume of socially oriented services
5.4. Efficiency indicators: human rights DMA 84 Respect for human rights HR HR1 85 Observance of human rights HR2 85 Observance of human rights HR3 76 Personnel training HR4 84 Observance of human rights HR5 85 Observance of human rights HR6 85 Observance of human rights HR7 85 Observance of human rights HR8 76 Personnel training HR9 85 Observance of human rights 5.5. Efficiency indicators of societal interaction DMA 27, 38 Interviews with top management SO 54 SO1 8591 Social investment and charitable programs 9293 Public-private partnership 4648 Interaction with stakeholders SO2 46 Risk management system SO3 77 Personnel training SO4 No cases of corruption identified SO5 48 Participation in associations and external initiatives 9293 Public-private partnership SO6 93 Public-private partnership SO7 46 Risk management system SO8 44 Risk management system 56 Product marketing and promotion
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GRI FS8
Page
Section/Comments The Corporations products belong to the sphere of financial services and have no direct ecological impact on society. Currently, the Corporation performs no breakdowns of products and services depending on their ecological impact. However, this is taken into account when financing decisions are made The Corporation has prepared social reports since 2004. Each report has undergone an external audit by an independent auditor, at the same time, a selective audit of social processes and procedures was carried out (which was reflected in the auditors conclusions) General information Subsidiaries and dependent companies of FC Uralsib operate on the financial market and cause no negative ecological or social impact to society. Regulations and procedures exist in the Corporation, which allow the Corporation to observe conformity with social standards and ecological norms established by Russian legislation Competence of the General Meeting of shareholders Interview with the First Vice President of FC Uralsib, Head of the Financial Supermarket strategic direction, Ilya Filatov Pension deposits of Uralsib Bank Interview with the First Vice President of FC Uralsib, Head of the Financial Supermarket strategic direction, Ilya Filatov Seven basic principles of social responsibility policy. Public-private partnership. Events and awards
FS9
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FS10 FS11
10 44
FS12 FS13 FS14 FS15 FS16
30 52 61 52 34 93 102
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Dear Readers! You are invited to express your opinions, make comments on and offer recommendations on information disclosed in the Report. We value your judgment and will take it into account when preparing future sustainability reports. We would also appreciate your completing the questionnaire below.
You can send the questionnaire to the Social Reporting Division of FC URALSIBs PR Department at the following address: 8 Yefremova St., Moscow, Russia 119048. Fax number: +7 (495) 723-7006, email: csr@uralsib.ru
FEEDBACK QUESTIONNAIRE
FC URALSIBs 2009 Sustainability Report
1. Which group of FC URALSIB stakeholders do you belong to? Shareholder Employee Client Partner Investor Government representative Mass media Other 4. What information should be included in the next Report? 8. How would you rate the ease of navigating the Report Excellent Good Satisfactory Insufficient Other
5. How would you rate the completeness of information presented in the Report? Excellent Good Satisfactory Insufficient Other
2. Did you find the information disclosed in the Report important to you? Yes, I use the data from the Report in my work Yes, it was interesting for me to learn more about the Corporation The information is abundant, but I dont need it No 3. What section or topic of the Report is most interesting for you?
6. How would you rate the objectivity of information presented in the Report? Excellent Good Satisfactory Insufficient Other
9. How would you rate the Reports graphic design? Excellent Good Satisfactory Insufficient Other
Additional comments and suggestions 7.How would you rate the clarity of information presented in the Report? Excellent Good Satisfactory Insufficient Other
Comments, suggestions and requests for additional information on the Report are welcome at csr@uralsib.ru.

Uralsib CSR Report 2009

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2009

SUSTAINABILITY REPORT FOR URALSIB FINANCIAL CORPORATION

Limits and Scope of the Report

The Report has been approved by a third party:

THE 2009 SUSTAINABILITY REPORT FOR URALSIB FINANCIAL CORPORATION

2009 | Sustainability report for URALSIB Financial Corporation

ADDRESS OF THE CHAIRMAN OF THE BOARD OF DIRECTORS

ADDRESS OF THE CHIEF MANAGING OFFICER

The united corporate culture

2009 | Sustainability report for URALSIB Financial Corporation

25 FC URALSIB CORPORATE GOVERNANCE

63 INTERNAL SOCIAL POLICY

83 PUBLIC RELATIONS AND HUMAN RIGHTS

101 KEY EVENTS AND AWARDS

107 ABOUT THE REPORT

INFRASTRUCTURE OF FC URALSIB Regional allocation of personnel

Points of sale, Bank

Payment terminals, thousands

Points of sale, Leasing

Client base physical persons, millions

3.8 3.3 2.8

NorthWestern 7% Volga 25%

Automatic cash points, thousands

2.7 2.2 1.3 1.7

2009 | Sustainability report for URALSIB Financial Corporation

25 FC URALSIB CORPORATE GOVERNANCE

63 INTERNAL SOCIAL POLICY

83 PUBLIC RELATIONS AND HUMAN RIGHTS

101 KEY EVENTS AND AWARDS

107 ABOUT THE REPORT

The Siberia Federal District 49

The Central Federal District 71 The North-Western Federal District 36

The Volga Federal District 212 The Southern Federal District 54

2009 | Sustainability report for URALSIB Financial Corporation

25 FC URALSIB CORPORATE GOVERNANCE

63 INTERNAL SOCIAL POLICY

83 PUBLIC RELATIONS AND HUMAN RIGHTS

101 KEY EVENTS AND AWARDS

107 ABOUT THE REPORT

2009 | Sustainability report for URALSIB Financial Corporation

Unsecured consumer lending

Credits granted to physical persons

25 FC URALSIB CORPORATE GOVERNANCE

63 INTERNAL SOCIAL POLICY

83 PUBLIC RELATIONS AND HUMAN RIGHTS

101 KEY EVENTS AND AWARDS

107 ABOUT THE REPORT

Managed assets, RUR billion

Corporate clients breakdown

31.12.2008 31.12.2009 7 10 85 102 8 14 118 140 Operating costs/ gross income

2009 | Sustainability report for URALSIB Financial Corporation

Services provided to corporate clients by region, RUR million

54.23 6.20 7.08 24.47 10.79 7.19 11.90

42.82 5.14 7.27 84.25 12.09 17.41 5.98

Services provided to corporate clients, RUR million

25 FC URALSIB CORPORATE GOVERNANCE

63 INTERNAL SOCIAL POLICY

83 PUBLIC RELATIONS AND HUMAN RIGHTS

101 KEY EVENTS AND AWARDS

107 ABOUT THE REPORT

Portfolio volume, RUR billion

KEY ECONOMIC INDICATORS