Russia presentation Natalia Smirnova +7(916)

Russia: key information Territory: sq.m, 65% of it belongs to permafrost Overall quantity of cities, towns, villages etc (nearly 20% of them don’t have telecommunications) Population: people, 81% of which live in cities and big towns. Nearly 10% of the population leave in Moscow. 61% of population are pensioners. 81% of population either don’t work or work in the budget sphere, so less than 20% of population provide state budget with income. Average income per person - $ 250

GDP of Russia №Country GDP, mln. $ (according to International Monetary Fund, 2008) 1USA14,264,600 2China7,916,429 3Japan4,354,368 4India3,288,345 5Germany2,910,490 6Russia2,260,907 Russian GDP statistics, %

GDP: dependence on oil and gas export

GDP and inflation forecast for GDP $ 1 608,6 billion inflation - 8,5% 2010 GDP – $ 1 848,3 billion Inflation – 7% 2011 GDP - $ 2112,8 billion Inflation – 6,8%

History of financial market in Russia: the USSR period 1 bank in the country (Sberbank) 1 insurance company in the country (Gosstrakh) Zero inflation rate No stock market or FOREX, no mutual funds Any operation with foreign currency is forbidden. Foreign financial instruments are forbidden. No pension programs. Everyone has the same state pension. No private equity People have no experience in personal finances management

History of financial market in Russia: the “perestroika” period ( ) Financial pyramids Privatization Incredible inflation Economic collapse Incredible unemployment Loss of trust to the government and any financial organizations

History of financial market in Russia: pre- millenium period Denomination of ruble (1997) Foundation of Russian stock market and two main indices – RTSI and MICEX First investment companies launch first mutual funds First private pension funds are founded A lot of private banks are founded, however after the default in 1998 significant part of them went bankrupt. Collapse of the stock market in Lack of trust to banks, investment and any other financial instruments

Major Russian stock indices RTSI – Russian Trade system index Date of foundation It is based on 50 Russian stocks with the highest liquidity MICEX – Moscow interbank currency exchange Date of foundation (however, it has been calculated since ) It is based on 30 Russian stocks with the highest liquidity

History of financial market in Russia: 21 century Pension reform in Russia (2002 and 2008) Rapid development of stock market, FOREX, real estate market, credit market Bank crisis (2004) First financial advisors appear in the market Financial crisis ( ), devaluation of ruble.

Personal finances in Russia now: key figures About 60% of people don’t have any savings 50% of people either used credits or intend to do this in the nearest future. Less than 5% of people in Russia invest in stock market either using mutual funds or via their broker trade account Less than 50% use bank accounts and/or bank deposits Less than 2% have life insurance policies About 50% of those who have an auto, an apartment or house and other property don’t insure it against accidents, damage etc. Less than 30% are more or less concerned about their pension

Financial planning in Russia: market and regulation First financial planners appeared in Russian market in There are less than 400 financial planners in Russia Financial planning activity in Russia is not regulated in any way, is not licensed and not certified. There is no limitations for a person to become a planner: one could even have no bachelor degree and no experience in financial sphere Planners don’t have any proper software for calculating financial plan There are no standards for financial plan: it may differ significantly depending on the planner

Financial planning in Russia: average business model Income from consulting Commission from partners Financial planning Consultations concerning investment, credit and other financial instruments Financial planners get commissions for selling: mutual funds credit products life, medical and property insurance real estate pension programs

Financial planning in Russia: list of most popular services 1.Investment planning, choosing appropriate investment instruments and preparing all the documents for investing 2.Financial planning 3.Choosing appropriate credit instruments and preparing all the documents for it 4.Choosing appropriate instruments for property insurance and preparing all the documents for it 5.Pension planning, choosing appropriate pension instruments and preparing all the documents for investing 6.Tax planning and assistance with tax declaration

Cooperation between financial corporations and financial planners Bank Financial planning company Real estate Life, medical, property insurance Pension products Foreign funds Investment companyPrivate pension fund CreditsOther services Commission Bank’s products: Deposits Accounts Credits Products from financial planning company: Financial plan Investment funds Pension products. Products from financial planning company: Financial plan Credits Pension products. Products from financial planning company: Financial plan Investment funds Credits. Investment products: Funds Broker trade accounts Pension products: State pension Private pension Х % from commission Client