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Vneshtorgbank's Supervisory Council meets

30 September 2005

On 29 September 2005, a meeting of Vneshtorgbank`s Supervisory Council took place. A decision was made to hold an Extraordinary meeting of Vneshtorgbank`s shareholders on 20 October 2005. One of the issues on the agenda is an increase in the Bank`s authorized capital through issuing ordinary registered shares totaling RUR 10 billion at par. The placement price of the ordinary registered shares to be offered through a private subscription is defined by the Supervisory Council and amounts to RUR 3,760 per each share.

Vneshtorgbank intends to channel the proceeds of the additional share issue into the acquisition of the Bank of Russia`s interest in the Russian foreign banks, such as Moscow Narodny Bank, BCEN-Eurobank, Оst-West Handelsbank, East-West United Bank and Donau Bank. The proposed acquisition has been approved by the Russian government and is in line with the resolutions made by the National Banking Council to divest the Bank of Russia of its participations in the Russian banks located abroad.

Consolidation of the Russian foreign banks operating within the VTB Group, which now actually includes six subsidiaries and two affiliated banks located abroad, will further encourage their growth potential to fully implement the goals and priorities set in the Strategy of the Russian government and the Bank of Russia for a mid-term period, as well as the Development Strategy of the Russian Banking System for the period of up to 2008. In particular, enhanced presence of Vneshtorgbank Group in West Europe will allow to more effectively raise foreign investment for the Russian economy and to promote Russian investment abroad. It will also facilitate the support of foreign trade operations of the Russian companies and encourage trade development programs with West Europe. Through strengthening the system of its subsidiaries, Vneshtorgbank will further promote the economic performance and investment attractiveness of VTB Group. This, in turn, will allow the Russian banking sector solidify its share in the global financial markets and increase its influence on the international foreign exchange and financial relations, as well as to contribute to Russia`s advance towards global economic integration.

Strategic priorities set in the development concept of VTB Group`s foreign banks provide for an upgrade in their management and supervision. In the mid-term, a holding of these banks will be established in one of the European countries, which is in compliance with the principles of consolidated banking supervision in the EU countries. In the long-term, a large investment center is planned to be established in London on the basis of Moscow Narodny Bank.

Besides, the Supervisory Council discussed the issue of opening a representative office of Vneshtorgbank in Moscow and Moscow region. Such organizational form of Vneshtorgbank`s presence in the Moscow region will allow the Bank to assert its interests in Moscow and the Moscow region, once VTB moves to St. Petersburg as it was decided by the Extraordinary General meeting of Vneshtorgbank`s shareholder held in December 2004.

The Supervisory Council also approved opening a branch in Saransk and transforming the current Novorossiisk branch into a sub-office located in Krasnodar. In the context of measures aimed at establishing effective sale infrastructures in the regions, these decisions are designed to upgrade the network management system through consolidating management and accounting in the basic branch of a certain region and setting a unified technology and information platform.

Also, the Supervisory Council approved the nomination of Senior Vice President Vasily Kirpitchev for electing Member of VTV Management Board upon agreement with the Bank of Russia. Besides, some other issues reflecting current activities were also considered.

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