1. NPL and Risk Management Advisory IFC – ASROS Cooperative Project Russian Federation

2. WHY IMPROVE NPL and RISK MANAGEMENT 2 Avoid continued deterioration of Portfolio Implement best practice NPL resolution techniques Implement appropriate NPL portfolio disposition strategies (sell, outsource, improve internal capacity, other options) Access external funding sources and investors IFIs and other sources of funds looking critically at Risk Management Systems IFC Russia Bank Capitalization Fund currently discussed Avoid repetition of mistakes and future crisis Using risk Indicators rather than only market forces to ensure portfolio quality Conform to new Central Bank standards Improve profitability through better decision making Assess and manage Risk – Return dynamics Attract new clients Improved reputation and image

3. Working with a Bank to Improve Risk Management 3 Diagnostic Discussions of priority interventions Implementation Post evaluation Apply through ASROS 4 - 8 weeks for completion Varying cost structure to client Mix of in-house IFC staff and consultants Focus on NPL resolution/disposition and Risk Management – can widen scope as needed Stress testing, on-site review Report consists of current state and recommendations for implementing best practice. 1- 12 months for implementation Cost share 50% Bank/50% IFC IFC or external consultant implementation – Bank decision. Modular delivery, Bank chooses priority

4. Diagnostic Stage 4 Perform diagnostic of Bank’s current capacity – NPL and Portfolio Management – Risk Management Liquidity Credit Market Operational – Associated Assessments SME Corporate Governance

5. Project Components 5 Individual Bank Advisory – Based on Diagnostic Outcome Training and capacity building – RM staff, ALCO, Risk Committees, Portfolio management ALM Reporting Software Stress test models Upgrade RM policy, procedures, organisational structure, modeling, reporting standards

6. How to Become a Partner Bank Steps Submit application to ASROS Contract signed with IFC/Consultant Bank completes background questionnaire IFC/ Consultant conducts interviews with bank staff Delivery of Diagnostic to Bank Agreement on next steps Contacts ASROS IFC – Natalia Ponomareva 36, Bld. 1, Bolshaya Molchanovka Str. Moscow, 121069, Russia Tel: +7 (495) 411-7555 ext. 2135 Email: NPonomareva@ifc.org NPonomareva@ifc.org 6