ZAO IFD Kapital – holding company of the Financial Group IFD Kapital.

Russia, 123100, Moscow, 6 Krasnopresnenskaya nab., tel.: (495) 411-52-00, fax: (495) 411-63-61.

Another contacts:

+7 (495) 777-77-01 (Moscow)
+7 (800) 200-4-200 (Toll-free nationalwide number)
+7 (800) 200-64-11 (Petrocommerce Bank)

• Address of the Chairman of the Board of Directors
• Structure Of IFD Kapital Financial Group (main Russian entities)
• About the Group
• Banking Business
• Insurance Business
• Investment banking business
• Pension Fund Management Business

ADDRESS OF THE CHAIRMAN OF THE BOARD OF DIRECTORS

Dear Clients and Partners,

Last year our acquisition of Petrocommerce Bank completed an important stage in the building of our business portfolio. Our business portfolio now includes a commercial bank, an insurance company, an investment bank and a pension asset management company.

We have brought together companies from various parts of the financial services industry and we  have created a group that offers integrated financial management solutions to large corporate clients, medium-sized companies and small businesses as well as to private customers.

Today IFD Kapital has an extensive network of sales offices. We are capitalizing on our nationwide reach by offering the full range of financial services both to companies operating in Russia’s regional markets and to the country’s largest corporations. Our work can be best described as the design and implementation of custom-tailored financial solutions meeting our clients’ objectives, values and scope of operations.

The professionalism of the employees of our Group, a high level of customer service and provision of the most technologically advanced products are the pillars of IFD Kapital’s successful growth. These factors have become IFD Kapital’s key competitive advantages and allowed us to create a stable and reliable relationship on the basis of partnership with each and every one of our clients.

Leonid Fedun
Chairman of the Board of Directors, IFD Kapital.

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STRUCTURE OF IFD KAPITAL FINANCIAL GROUP (MAIN RUSSIAN ENTITIES)

• Insurance division
  • Insurance company Kapital Insurance
  • Insurance company Kapital Reinsurance
  • Medical insurance company Kapital Medical Insurance
  • Life insurance company Kapital Life Insurance
• Banking division
  • Petrocommerce bank
  • Ukhtabank
  • Stavropolpromstroybank
• Investment division
  • Kapital Asset Management Company
  • Kapital Investment Company
• Pension fund division
  • Pension Kapital pension fund management company
  • Non-state pension fund (NPF) LUKOIL-Garant
  • NPF Pension Kapital
  • NPF First Pension Fund (Pervy Pensionny Fond)

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ABOUT THE GROUP

IFD Kapital is one of the largest financial groups in Russia. Total assets of the international Group are US$ 4.9 billion. Total equity of the international Group is US$ 2 billion (as of January 1, 2005). IFD Kapital has more than 7,000 employees.

Financial Group IFD Kapital unites companies that are well known in Russia and the leading companies in their market segments. The acquisition of a commercial bank completed IFD Kapital’s product portfolio. The Group’s product range currently includes financial products and solutions in all major segments of the financial services market.

IFD Kapital offers a comprehensive range of insurance products, full-service banking and investment banking services, including trust management services and corporate and individual pension plan management.

Member companies of the Group have  a track record of more than 10 years of operations in the Russian market and are among the largest players in the market. The reliability and stability of these companies is reflected by the high ratings awarded by international and Russian rating agencies and leading professional associations.

IFD Kapital companies operate in over 30 Russian regions, as well as in the CIS and Europe.

IFD Kapital is also active in the Ukrainian financial services market. The Group’s assets in Ukraine include an insurance company and Petrocommerce-Ukraina subsidiary bank. The Group is also developing investment banking operations and pension fund management services in the Ukrainian market.

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BANKING BUSINESS

Bank Petrocommerce was established in 1992. It holds general license #1.html776 issued by the Bank of Russia. Petrocommerce Bank offers a full range of services to corporate and private customers. The Bank is one of the largest financial institutions in Russia. According to The Banker magazine, Petrocommerce Bank is one of the world’s 1,000 largest banks and is ranked 866 by capital.
The Bank’s regional network includes four subsidiary banks: Komiregionbank Uhtabank, Stavropolpromstroybank, Bank Petrocommerce-Ukraine and  CB UNIBANK (Moldova), in addition to the Bank’s 20 branches in Russia. The Bank has established 11 additional offices in the Moscow region.
Petrocommerce Bank is a member of a number of Russian financial associations and organizations; it has Principal Member status in the Visa International and MasterCard International payments systems.
 
The Bank’s reliability is reflected by the high credit ratings awarded by international and Russian ratings agencies such as Standard&Poor's, Moody's, Moody's Interfax Rating Agency and Expert-RA agency

Main financial indicators as of 01.07.2005:

• Total assets: US$ 2.26 billion. Total equity: US$ 282.64 million.
• Net profit for the first six months of 2005: US$ 32.32 million.

FOR CORPORATE CUSTOMERS

• Cash and payment services
• Electronic banking software system
• FX conversion
• Currency control services
• Cash collection
• Transactions in securities markets
• Placement of excess customer cash
• Lending
• Guarantees and surety
• Documentary and trade finance
• Leasing
• Factoring
• Project and trade finance
• Export financing guarantee programs
• Plastic cards
• Acquiring operations
• Safe deposit box rentals

FOR PRIVATE CUSTOMERS

• Deposits
• Certificates of deposit
• Accounts and funds transfers
• Travelers’ checks
• Cash FX transactions
• Plastic cards
• Online services
• Safe deposit box rentals
• Consumer lending
• Securities markets transactions

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INSURANCE BUSINESS

Kapital Insurance Group is one of the leading insurance underwriters in the Russian market. The Group is a universal insurance company offering over 80 types of insurance services. Kapital Insurance Group was awarded the highest rating of creditworthiness and reliability, A++, by Expert RA rating agency.

The Group includes:

• Kapital Insurance is the core of the Group. One of Russia’s largest insurance companies, it is among the leaders in property and casualty insurance in Russia. The company has 27 branches in Russia. Kapital Insurance has provided insurance services since 1992.
  Holder of licenses issued by the Russian Federation Ministry of Finance #4.html448D dated 07.07.2003, #4.html375D dated 16.06.2003 and #4.html536V dated 05.11.2003
• Kapital Reinsurance is one of the leaders in the reinsurance market. It has business relationships with over 200 Russian insurance and reinsurance companies as well as companies from CIS countries, the Baltic States, and Eastern and Western Europe. It was established in 1997.
  Holder of license issued by the Russian Federation Ministry of Finance #4.html449D dated 16.05.2005
• Kapital Medical Insurance is one of Russia’s leading insurance companies in the area of obligatory medical insurance. It has over 60 branches and representative offices in Russia and more than nine million customers. Company partners include leading medical facilities in Russia. It was established in 1994. Holder of the license of Russian Insurance Supervision Committee (Rosstrahnadzor) С # 217986 dated 28.09.2005.
• Kapital Life Insurance is a specialized life insurance underwriter providing services to both private and corporate clients. It was established on December 9, 2004. In 2005 the company opened 4 branches: in Moscow, Kogalym, Volgograd and Perm. Holder of the license of the Russian Insurance Supervision Committee (Rosstrahnadzor) # 4894D dated 05.04.2005.

Main financial indicators as of 01.07.2005:

• Total assets of Kapital Insurance Group: US$ 1.07 billion.
• Insurance premiums of US$ 261 million (for the first six months of 2005)

PROPERTY AND CASUALTY INSURANCE

• We offer insurance products to both corporate and individual policyholders covering various types of property:
• Real estate - Buildings and structures
• Works in progress
• Inventories
• Electronic equipment
• Goods (cargo) in the process of transportation
• Assets serving as collateral or pledge
• Motor vehicles
• Buildings in rural areas
• For large corporate customers we have comprehensive insurance programs:
• Insurance of energy companies
• Insurance of banks
• Insurance of construction and installation works
• Insurance program for leasing operations
• Insurance against industrial risks
• Marine insurance
• Insurance of motor vehicles

PERSONAL INSURANCE

We offer both obligatory and optional medical insurance, health and accident insurance. Our clients are guaranteed provision of medical services at any time of day or night; our clients’ costs of medical services are reimbursed in full and in a timely manner; and we assiduously look after the rights of our clients in hospitals and other facilities.

LIABILITY INSURANCE

• Third-party civil liability insurance.
• Insurance of hazardous and other increased-risk facilities.
• Professional liability insurance for property appraisers, auditors and notaries.

LIFE INSURANCE

Kapital Insurance Group provides life insurance services including endowment insurance, annuity insurance, whole life insurance, health and accident insurance.

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INVESTMENT BANKING BUSINESS

Kapital Investment Group is one of the leading investment groups in the Russian market offering companies and private investors a full range of services in the investment banking sector. Trust management, asset management, trading and brokerage, raising debt and equity financing and financial consultancy are the main areas of Investment Group operations.

Kapital Investment Group was awarded the highest reliability rating (AAA) by NAUFOR – the National Association of Securities Market Participants.

The Group includes:

• Kapital Asset Management Company . It is one of the largest asset managers in Russia. The company offers investment products for corporate and private customers on an individual (single investor) and collective (mutual fund) basis. The client list of UK Kapital includes over 120 companies (among them are 43 non-state-owned pension funds and 31 insurance companies) and over 400 private investors. UK Kapital holds  FSFR (Federal Service for Securities Markets) licenses #1.html77-06232-001000 dated 09.10.2002 and #2.html1 -000-1 -00058 dated 01.02.2002.
• Kapital Investment Company . IC Kapital ( formerly IC LUKOIL-Rezerv-Invest) has been operating in the Russian market since 1995. The company provides brokerage services on the leading Russian exchanges and in the OTC market and a complete range of investment banking services.
  Holder of FSFR licenses #1.html72-06228-100000 dated 09.09.2003, #1.html72-06235-010000 dated 09.09.2003and #1.html72-06327-000100 dated 16.09.2003; Holder of license #6.html47 dated 16.04.2004 issued by the Russian Anti-Trust Service.

Main financial indicators as of 01.07.2005:

• Total assets of Kapital Investment Group: US$ 756 million (top position in NAUFOR ranking)
• Total equity – US$ 125 million (second position in NAUFOR ranking)
• Total assets under management US$ 1.2 billion. (fourth position in NAUFOR ranking)

Services:

• Asset management services for mutual funds
• Trust management services – management of reserves of pension funds and insurance companies
• Trust management services – management of personal pension plans (private customers)
• Securities transactions on the MICEX and RTS exchanges and on the OTC market:
  • equities
  • bonds and other securities
  • promissory notes and certificates of deposit
  • REPO transactions
  • Online trading
• Provision of funding (in REPO transactions and via other methods):
  • Using equities as collateral
  • Using sovereign Eurobonds as collateral
  • Using corporate Eurobonds as collateral
• Derivatives and structured products transactions
• Raising funds in the capital markets:
  • Arrangement of bond issues
  • Arrangement of commercial paper (promissory note) programs
  • IPOs
• Comprehensive set of services in M&A transactions
• Financial and management consultancy; development of short- and long-term strategic development programs
• Project financing:
  • Organizing investor pools
  • Debt financing (loans, promissory note transactions, REPO deals etc.)
  • Refinancing of leasing transactions
  • Private equity financing deals.

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PENSION FUND MANAGEMENT BUSINESS 

The pension management division is represented by Pension Kapital Company, which manages the following non-state pension funds (NPFs):

• NPF LUKOIL-Garant
• NPF Pension Kapital
• NPF First Pension Fund (Pervy Pensionny Fond)

NPF LUKOIL-Garant is one of the largest Russian NPFs. The fund provides non-state-funded pension programs to employees of NK LUKOIL and companies from other industries. The fund has 217 corporate clients, is active in 50 Russian regions and has been in operation since 1994.
Based on the results of 2004, NPF LUKOIL-Garant was the leader in the system of obligatory pension insurance by number of customers – over 60,000 individuals – and by amount of funds raised – 447 million rubles. Holder of the license #1.html1 dated 27.10.1995 of the NPF Inspectorate at the Ministry of Social Protection of the Russian Federation.

NPF Pension Kapital is one of the largest funds among non-captive NPFs. It has successfully operated in the pension fund management sector since 1996. Based on the results of 2004, NPF Pensionny Kapital is one of the top ten funds in the obligatory pension insurance segment. Holder of the license #2.html22/2 dated 16.04.2004 (issued to replace license #2.html22 dated 31.10.1996) by the Ministry of Labor of the Russian Federation.

NPF First Pension Fond is one of the oldest non-state pension funds in Russia. It was established in 1994. Holder of the license #5.html2/2 dated 16.04.2004 of the Ministry of Labor of the Russian Federation.

• Total NPF assets are equal to US $900 million.
• Total number of pension plan holders exceeds 257,000
• Pension funds are managed by Pension Kapital

Services

OBLIGATORY PENSION INSURANCE

Management of the invested part of retirement pension funded through employer contributions or transferred into the pension management account of an individual from the Pension Fund of the Russian Federation.

PENSION PROGRAMS FOR CORPORATE CUSTOMERS

Providing employees with additional pension schemes. Standard pension products were developed using the experience of servicing corporate customers and designing corporate pension programs:

• VIP pension program
• Departmental pension program
• Company-wide pension program

The parameters of these programs are set in line with the company’s social and personnel policies.

MUNICIPAL PENSION PROGRAMS

There are additional (non-state-funded) pension programs for employees of municipal companies and state-funded organizations.

ADDITIONAL PENSION PLANS FOR INDIVIDUAL CUSTOMERS

Seven individually-funded pension plan programs provide an individual customer with the opportunity to receive pension payments in addition to the state-funded retirement pension. The terms of the program allow private customers of the non-state pension fund to select a pension scheme best fitting their individual needs and financial capabilities.