Strategy

Annual report 2011

# Strategy

Bank Vozrozhdenie focuses on developing key business lines to meet the requirements of the corporate and retail sectors of the Russian economy, delivering long-term growth in shareholder value.

Offering a full range of banking services, the Bank strives to be within easy reach for clients and help them with all of their needs. We aim to constantly improve customer service, establish long-term client relationships and promote our brand. Our customer policy is to ensure strong client loyalty through offering a wide range of modern and convenient products, as well as high standards of service.

Key goals in the development of our client base are to increase sales of different products and use the potential in the corporate client base to generate retail business. With an extensive line of banking services, we focus on proactive development of cross-selling and boosting noninterest income as a share of the revenue structure. The key source for financing active operations is funds of our clients, whom we offer convenient instruments offering decent returns in which to invest available funds.

Bank Vozrozhdenie focuses on sustainable growth by business development assistance and increasing clients’ prosperity.

Business segments

Bank Vozrozhdenie operates in three key segments.

- In the corporate segment, Bank Vozrozhdenie’s main target is SMEs, as well as core companies with well established networks whose offices overlap with the Bank’s branch network.
  Our goal is to establish long-term relationships with clients by offering not just personal service, but also an essential set of products. Key factors in our success are personal service, responsiveness, attention to detail and long-term relations with customers.
  A priority client segment is SMEs. Alongside increasing the number of new borrower companies, the Bank intends to enhance the quality of its services by improving existing credit products and developing new ones. It has also launched a new SME lending program that has vast potential and will diversify the client base significantly: attract new categories of borrowers and make the business more profitable.
  In expanding its corporate funding base, Bank Vozrozhdenie will focus on working with resource-rich companies, as well as attracting smaller deposits from major clients to diversify its deposit book. Priorities in the corporate segments remain increasing the number of products used by each client, and boosting clients’ usage of remote services.
  Bank Vozrozhdenie plans to pro-actively develop its bank-card service infrastructure as the main instrument of attracting corporate clients for payroll programs. Here, the main goals will be to maintain the Bank’s leading position in Moscow Region and to provide active support to the corporate segment at regional branches.
- I n the retail segment, the key products are deposits, consumer and mortgage lending, bank-card services, payments and cash services for individuals. Bank Vozrozhdenie sees funds from individuals as a major source of funding for its operations, and generally as a stabilizing factor in its activities. We intend to maintain our position in the top 15 Russian banks by volume of retail deposits, delivering annual deposit growth above the market average. Individual deposits will comprise at least 40% of the Bank’s balance sheet.
  Bank Vozrozhdenie shapes its loan portfolio based primarily on quality and yield. It plans to run lending operations primarily with customers involved in its payroll projects, employees of corporate clients, major companies or state organizations, depositors, and people with a proven credit history. Mortgages remain our core lending product, and access to long-term sources of financing is the key to developing this business line further. Developing retail financing contributes to enhancing the profitability of active operations.
  Another important area for the Bank is cross-selling of retail products using bank cards, as well as supporting the greater use of self-service facilities by offering a full range of remote technologies and operations.
  Non-interest income is an extremely important element in the Bank’s revenue. Growth rates of non-interest income in the retail business are directly correlated to loan and payment volumes, as well as cash operations.
- In its operations on financial markets, Bank Vozrozhdenie intends to further diversify its securities portfolio in order to maintain sufficient long-term liquidity, reduce risk and increase asset yield. The Bank continues to develop instruments for reducing risks relating to operations on financial markets, including currency, interest-rate and market risk.

### Sales and service network

To support long-term growth across all business segments, Bank Vozrozhdenie plans to create an efficient sales and service infrastructure. The Bank focuses on balanced development of its sales network of offices and self-service facilities. We adhere to a strategy of gradual regional expansion, and plan to focus on regions where we already have branches. The number of sales points will be increased to meet market demand in each specific region and within the limits of the business model. Further development of the Bank’s sales infrastructure will focus mainly on Moscow Region and surrounding areas, and on the Southern and North-West parts of the country.

### Marketing

The Bank’s marketing strategy is intertwined with its key business goals. Its priorities include developing sales channels, launching products that match client requirements more closely than those of competitors, and developing the brand. The ultimate aim of the strategy is to strengthen market positions and increase customer loyalty. Bank Vozrozhdenie’s target is to be a market leader in terms of customer satisfaction in both the corporate and retail segments.

Our brand is a crucial asset. We will develop the brand in the belief that our most valuable asset is our client relationships.

### Information technology

The Bank sees IT as a crucial factor in maintaining its competitive advantages, expanding the product range, and enhancing the quality of customer service. We intend to use the latest information and communications technologies to streamline the management system and make business process more efficient.

### Corporate governance

Bank Vozrozhdenie’s strategy includes ongoing corporate governance development in accordance with best international practice and interests of the shareholders. The Bank intends to improve the efficiency of the Board of Directors - key initiatives would include launching self-assessment procedures and optimizing interaction with the executive management. We also intend to increase the role of the Board of Directors in our risk-management function by improving the way in which we provide information to Board members in this area. We will also further develop the system for monitoring the use of insider information.

### Risk management

The Bank’s risk-management strategy targets further improvements to the riskmanagement system that are appropriate to the Bank’s business goals and risk exposure. It is based on meeting the strategic goals, as defined by the Board of Directors. High-quality risk management is a competitive advantage that improves the Bank’s capitalization.

### Personnel development

Bank Vozrozhdenie’s HR policy aims to unlock the potential of every employee. Priorities in this area include motivating employees to achieve key business goals, creating an effective internal-communications function, and developing employees’ professional potential.

### Optimizing the business model

To maintain its position and become more competitive on the market, Bank Vozrozhdenie has undertaken a major project, in partnership with international consulting company, to optimize the business model. On the basis of a rigorous analysis of work processes, measures will be implemented to update the management system, bank structure and operating procedures. Ultimately, they should enhance productivity and make the Bank more attractive to clients.

We do not intend to simply repeat the experience of other banks, however. As such, alongside the changes made, we will rely on our tried-and-tested approach to working with clients and retain the best of our experience gained over 20 years on the Russian banking market.

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