OWN UNIQUE

LEADER IN E-BANKING WITH OWN UNIQUE INNOVATIONS
Being one of the national digital banking leaders, the Bank continues to develop and introduce innovative solutions for online financial services, creating a unique cutting edge customer experience. Among the most important innovations of 2016 is the new BSPB Mobile app.
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UNIVERSAL

FULL-SERVICE UNIVERSAL SOLUTIONS
The Bank offers a full range of e-banking products and services to all customer categories. The new Traffic Lights feature, available to all corporate users from 2016, allows customers to receive up-to-date contractor details just before the time of payment.
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MULTICHANNEL

MULTICHANNEL SEAMLESS CUSTOMER EXPERIENCE
Bank Saint Petersburg offers a great customer experience across all channels: Mobile Bank, Internet Bank, ATM, support work together, creating a seamless experience.
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SELF-TRAINING

SELF-TRAINING SYSTEMS
WikiPay self-training database allows the customer to pay paper bills without the need to manually input the recipient’s extensive payment details.
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SOLUTIONS

FOR EVERY MOMENT OF YOUR LIFE
For instance, Bank Saint Petersburg introduced contactless payments on all 67 stations of the St. Petersburg metro – at the same time as London Tube.
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Management Report

One of the largest banks in Russia’s Northwest Region, Bank Saint Petersburg was founded in 1990, at the very beginning of Russia’s modern banking system. Since then, the Bank has become an integral part of Northwest Russia’s financial and economic system.

Bank Saint Petersburg is a leader in the city’s financial services market, ranking 16th among Russia’s largest banks (as of January 1, 2015). 

The Bank provides services through its 48 branches and offices to more than 1 400 000 private clients and 55 000 corporate clients, including major companies located in St. Petersburg. The Bank is proud of its market share and the long-term relationships it has with clients.

First and foremost, Bank Saint Petersburg is a city bank whose task is to contribute to St. Petersburg’s future by providing high quality banking services to the residents of the city and local companies. The Bank pays special attention to financing programs related to the city life of St. Petersburg by providing loans to all industries and production facilities and proactively developing credit programs focused on small- and medium-sized businesses (SMEs).

In late 2007, the Bank became the first privately-owned Russian bank to successfully complete an IPO. Today, the Bank’s shares are listed on the stock market of the Moscow Exchange.

The Bank follows the principles of corporate social responsibility and supports city programs aimed at improving the social and economic climate of St. Petersburg.

LETTER FROM THE MANAGEMENT

Dear customers, investors and partners,

2016 was a year of diverse trends. On the one hand, it was marked by the continuation of economic stagnation which made lending growth viable only with the acceptance of substantial risks, causing a major slowdown across the banking sector and intensifying the competition for high-quality borrowers. At the same time, the decline in assets, loans and deposits in the Russian banking sector during 2016 was largely due to currency revaluation. Strengthening rouble and lowering interest rates create opportunities for economic recovery and normalization in the financial sector.

In this challenging environment the Bank posted strong results. The revenues reached a record RUB 31 bn, boosted by net interest margin recovery. Compared with the previous year, net interest income gained 27% reaching RUB 22 bn, while net fee and commission income grew by 16% to RUB 4.7 bn. The Bank’s 2016 net profit amounted to RUB 4.3 bn, demonstrating an 18% growth year on year.

Selective Business Growth

We are making a shift to building comprehensive relationships with our corporate customers, focused on overall customer profitability rather than individual transactions. We are also launching new products for small and medium enterprises with the intent to boost cross sales and increase our non-interest income in St. Petersburg and Kaliningrad.

We work selectively with major borrowers, attracting new customers in the regions where we operate. For instance, the Novosibirsk Representative Office which the Bank opened in August 2016, targets large and medium-sized corporate customers in the Siberian and Far Eastern Federal Districts boasting at the year’s end a portfolio of 12 loan transactions with a total value of RUB 3 bn.

Retail lending, especially mortgage and unsecured loans, still demonstrate a great growth potential. By the end of 2016, Bank Saint Petersburg was ranked 5th in Russia within the State Mortgage Subsidy Program and 10th in terms of new mortgages issued. In December 2016, the Bank completed the debut RUB 3.7 bn mortgage loan portfolio securitization.

Innovations Leadership

Being one of the national digital banking leaders, the Bank continues to develop and introduce innovative solutions for online financial services, creating a unique cutting edge customer experience. Among the most important innovations of 2016, are the new BSPB Mobile app for individual users and the Traffic Lights solution for corporate users enhancing the security of their payments.

The high-tech services developed by the Bank became a convenient payment environment to the fullest extent possible. The number of our Internet Bank users already reached 770 000 individuals, representing 1/4 of the economically active population of St. Petersburg. Online deposits accounted for 62% of retail term deposits placed in 2016. Online consumer loans accounted for 85% of all consumer loans granted in 2016. Every year, 96% of retail payments and 99% of all corporate transactions are made through digital channels.

Loan Book Quality Management

Our principal goal for today is to retain our loan portfolio, adjusting its structure to improve quality. We refrain from taking greater risks in high-risk segments and pay particular attention to the collateral pledged. Throughout 2016, we gradually reduced loan loss provisions given the steady macroeconomic recovery.

Opportunities for Investors

Although the Bank’s share price grew in 2016 by 54% to RUB 67, the Bank still remains the most undervalued bank in the market (with P/BV remaining at 0.5), with a significant upside for the growth of shares. Since October 2016, the Bank’s ordinary shares have been traded with a level 1 listing. It proves that Bank Saint Petersburg conforms to the highest corporate governance standards and aims to achieve the maximum level of openness in dealing with its current and potential investors.

The Bank has been increasing book value per share for its shareholders: at the beginning of 2016, to support share price and to overcome the current undervaluation, the Bank bought back 2.7% of the share capital. In 2Q 2016, the Bank sold all of its acquired treasury shares. As at January 1, 2017, book value per share has reached RUB 138.

We deliver on our commitments, and, in line with our Dividend Policy, have once again paid dividend of 20% of our net profit under Russian Accounting Standards.

Ready to Face the Growing Market

Following the updates made by the Supervisory Board in September 2016, the key priority of the Bank’s Strategy is efficiency. During 2017–2018 we intend to significantly improve our internal processes and employee competencies, thus making the Bank substantially more efficient with the capacity for rapid growth in case of future economy acceleration.

The key financial target is still to achieve long-term sustained growth of the Bank's shareholder value and bring return on equity back to 15%. This is to be effected through increasing the percentage of retail loans in the loan portfolio to 20%, supporting selective growth of the corporate business coupled with enhanced profitability, and tightening our grip on the cost of risk.

We will continue to introduce innovative high tech solutions and develop our countless online banking know-how. We invest in innovations to stay on the cutting edge of technology both today and on a mid-term horizon.

We will continue to optimize our branch network to ensure full coverage of our home region. In 2017, we are completing a large-scale project with the aim of fully transforming our retail offices. 18 offices of the new format have already been opened in St. Petersburg, featuring comprehensive organizational and technological innovations and convenient locations. At the same time, we are starting to close down/relocate our old format offices.

We are justly proud of our market share, long-term customer relations, strong team of professionals, and impeccable reputation. We would like to express our most sincere gratitude to all customers, investors and partners for our mutually beneficial cooperation.

Elena Ivannikova Alexander Savelyev Maris Mancinskis
Chairperson of
the Supervisory Board
Chairman of
the Management Board
First Deputy Chairman of
the Management Board, CEO

THE BANK AND ECONOMIC TRENDS

Bank Saint Petersburg is the largest privately-owned universal bank in Northwest Russia and plays an important and constructive role in the development of the Russian banking system, established in the same year as the Bank. As of January 1, 2017, Bank Saint Petersburg was the 16th largest bank by assets and the 14th largest by retail deposits among Russian banks.

Bank Saint Petersburg is the largest Russian regional bank with a strong and positive brand that has won the trust and support of its customers: today, the Bank provides services to 1 770 000 individuals and 52 000 corporates, including major companies located in St. Petersburg. As of January 1, 2017, the Bank’s customer service network comprises 61 outlets (52 in St. Petersburg), 8 mortgage lending centres, 3 car lending centres and 781 ATMs.

The Bank’s business remains primarily focused on St. Petersburg, which has a market comparable in capacity and size to Paris or a medium-sized European country, such as Denmark or Finland. Bank Saint Petersburg maintains a stable position across all major banking service markets. As of the end of 2016, the Bank held the following market shares in St. Petersburg: 16.9% of the SME lending market, 8.6% of the corporate deposits market, 7.8% of the retail lending market, and 8.6% of the retail deposits market.

St. Petersburg accounts for 74% of loans and 91% of deposits of the Bank. Bank Saint Petersburg has expert knowledge of the region, responding promptly to customer needs and market changes. The Moscow branch accounts for 24% of loans and 6% of deposits and the Evropeisky Branch in Kaliningrad accounts for 2% and 3% respectively. Business is also diversified by industry and lending volumes.

Bank Saint Petersburg is the first bank in the last 100 years that has designed and built its own headquarters in St. Petersburg. The ultramodern Head Office was opened in 2011 and became an embodiment of the most advanced technologies in the fields of engineering solutions and customer service.

The Bank is one of the national leaders in the application of high technology solutions. When opening new offices, the Bank is introducing its "office of the future" concept and, at the same time, is actively developing its business in a digital environment. The number of individuals who signed up for Internet Bank showed a growth of more than 20% in 2016: from 600 000 to 770 000, representing 1/4 of the economically active population of St. Petersburg, and every eighth person in this population group uses the mobile banking application, with the number of downloads exceeding 200 000.

Bank Saint Petersburg became the first privately-owned Russian bank to complete an IPO at the end of 2007, as this guaranteed not only new equity, but also a new level of reliability and reputation. Today, Bank Saint Petersburg is listed on the Moscow Exchange. To this day, the IPO of Bank Saint Petersburg maintains its status as one of the most successful IPOs among Russian banks.

First and foremost, Bank Saint Petersburg is a city bank whose task is to contribute to St. Petersburg’s future by providing high quality banking services to the residents of the city and its local companies. The Bank pays special attention to the financing programs related to the city life of St. Petersburg by providing loans to all spheres of industry and production facilities, as well as actively developing credit programs focused on small and medium enterprises (SMEs). The Bank follows the principles of corporate social responsibility and supports city programs aimed at improving the social and economic climate of St. Petersburg.

STATEMENT OF COMPREHENSIVE INCOME ANALYSIS

The principal factors that influenced the Bank’s 2016 financial results included:

  • FY 2016 Net Income increased by 18.2% and amounted to RUB 4.3 bn;
  • FY 2016 Revenues increased by 11.0% and amounted to RUB 31.1 bn;
  • FY 2016 Net fee and commission income increased by 16.3% to RUB 4.7 bn;
  • The retail loan portfolio during FY 2016 increased by 11.7% to RUB 54.4 bn.

Income dynamics*, RUB mln

Income and expenses data*, RUB mln

* One-off incomes are excluded from Revenues and Net Trading Income. Provisions for FY 2012 have been reduced by gains from the disposal of investment property.

LOAN PORTFOLIO QUALITY

Since lending constitutes the majority of the Bank’s assets, the Bank focuses on maintaining the high quality of its loan portfolio.

In 2016, the volume of loans to customers (gross loans) decreased by 4.3% and stood at RUB 354.3 bn. The provision charge for FY 2016 remained at the previous year’s level and amounted to RUB 12.5 bn. As of January 1, 2017, the allowance for loan impairment amounted to 11.2% of the loan portfolio (compared to 9.4% as of January 1, 2016).

Loan portfolio quality

* Overdue loans include the entire principle of the loan at least one day overdue.

As of January 1, 2017, the share of problem loans in the Bank’s portfolio (the total share of overdue loans and impaired loans that are not past due) amounted to 15.2% (compared to 12.4% as of January 1, 2016). The share of overdue loans in the Bank’s portfolio amounted to 6.0% of the total volume of loans. The share of corporate overdue loans amounted to 6.0% of the total corporate loans; the share of retail overdue loans amounted to 6.0% of the total retail loans. As of January 1, 2017, impaired loans that are not past due constituted 9.2% of the total volume of loans.

Provisions for the coverage of overdue loans were 185%. In 2016, the volume of loans written off amounted to RUB 7.9 bn.

Provision charge and Cost-of-Risk

As of January 1, 2017, corporate loans comprised 83.0% of the loan portfolio, the volume of which decreased by 7.1% in 2016 to RUB 294.2 bn.

In 2016, the retail loan portfolio (mortgage, car and consumer loans) increased by 11.7% and amounted to RUB 54.4 bn. As of January 1, 2017, loans to individuals amounted to RUB 60.1 bn (up 12.4% compared to January 1, 2016). The share of loans to individuals in the loan portfolio amounted to 17.0% as of January 1, 2017 (compared to 14.4% in the previous year).

Retail loan portfolio dynamics, RUB bn

One of the highlights of 2016 for the Bank was mortgage lending. At the year’s end in 2016, Bank Saint Petersburg was ranked 5th in Russia within the State Mortgage Subsidy Program and 10th in terms of new mortgages issued. In St. Petersburg, the Bank’s share in new mortgage lending amounted to 18% in 2016.

Strong performance in the Russian mortgage lending market

BALANCE SHEET STRUCTURE

The Bank’s assets increased by 3.2% in 2016, reaching RUB 580.3 bn, compared to RUB 562.5 bn as of January 1, 2016.

Gross loans decreased by 4.3% in 2016 and stood at RUB 354.3 bn, compared to RUB 370.3 bn as of January 1, 2016. The share of loans and advances to customers comprised 54.2% of total assets.

Securities portfolio decreased by 5.3% in 2016 and amounted to RUB 105.4 bn, compared to RUB 111.4 bn as of January 1, 2016. The share of the securities portfolio comprised 18.2% of total assets.

Amounts under reverse repo increased in 2016 from RUB 15.2 bn to RUB 58.5 bn. The share of the amounts under reverse repo comprised 10.1% of total assets.

The volume of customer deposits (customer accounts and promissory notes and deposit certificates issued) increased in 2016 by 4.3% to RUB 357.8 bn, compared to RUB 343.0 bn as of January 1, 2016. The share of customer deposits comprised 61.7% of the liabilities and equity total.

The volume of due to banks decreased in 2016 by 2.7% to RUB 131.7 bn, compared to RUB 135.3 bn as of January 1, 2016. The share of due to banks comprised 22.7% of the liabilities and equity total.

As of January 1, 2017, the share of funds attracted from capital markets was 3.2% of the liabilities and equity total, compared to 3.9% as of January 1, 2016.

Assets and liabilities structure, January 1, 2017, RUB bn

CUSTOMER DEPOSITS

The volume of customer deposits (customer accounts and promissory notes and deposit certificates issued) increased in 2016 by 4.3%, reaching RUB 357.8 bn (RUB 343.0 bn as of January 1, 2016). As of January 1, 2017, 52.4% of customer accounts belonged to individuals and 47.6% belonged to corporate customers.

Retail customer deposits remained at the previous year’s level, amounting RUB 187.4 bn, whereas corporate customer deposits increased by 10.0% to RUB 170.4 bn.

During 2016, corporate term deposits went up by 10.1% to RUB 87.5 bn. Retail term deposits declined by 3.1% and stood at RUB 141.8 bn.

Customer deposits, RUB bn

SHAREHOLDERS EQUITY AND CAPITAL

As of January 1, 2017, the Bank’s shareholders’ equity stood at RUB 60.9 bn (up 7.2% compared to January 1, 2016). The Bank’s total capital amounted to RUB 81.6 bn (up 0.7% compared to January 1, 2016). In compliance with Basel Committee requirements, as of January 1, 2017, the Bank’s total capital adequacy stood at 16.2% and Tier 1 capital adequacy stood at 11.0%.

Capital Adequacy Ratio

INVESTOR RELATIONS

The Bank makes every effort to increase transparency, in addition to improving the quality and quantity of information available to its investors and shareholders. The Bank is focused on providing equal access to public information to all of its stakeholders.

Recognising that quality analytical coverage is a key aspect in the formation of an investor’s perception of an issuer, the Bank held an Analyst Day event in Moscow in April 2016. Among the Bank's guests were analysts from investment banks who prepared periodical reports about the Bank for stock market participants, analysts from rating agencies as well as journalists from leading federal mass media.

Making every effort to maintain a two-way dialogue with the investment community, the Bank’s representatives pay significant attention to interacting with its current and potential investors. Throughout 2016, the Bank's management participated in international investment conferences and road shows, while various one-on-one meetings were also held on a regular basis at the Bank's headquarters. In 2016, 4 webcasts dedicated to financial results were held for investors and analysts.

In September 2016, for the first time ever, Bank Saint Petersburg held an Investor Day event in Moscow. The Bank’s current and potential investors were given the opportunity to speak directly to representatives of the Bank's various businesses. The guests also received an overview of the Bank’s innovative online banking services, which are unparalleled in the market. Investor Day opened a new page in the Bank’s history of relations with its investors. The event’s guests mentioned that face-to-face communication with the Bank’s top-management was a significant step towards increasing transparency and investment attractiveness. Bank Saint Petersburg will retain the practice of regular meetings in the same format.

TRADING IN THE BANK’S ORDINARY SHARES

The Bank's ordinary registered shares (state registration number 10300436В, ISIN: RU0009100945) are listed on the stock market of the Moscow Exchange. Since October 28, 2016, the Bank’s ordinary registered shares have been traded with a level 1 listing (stock ticker BSPB). The Bank's shares are included into the following Moscow Exchange indices: the Moscow Exchange Indices (MICEX Second tier Index – MICEXSC – and RTS Second tier Index – RTS2); the Broad Market Index (MICEX BMI/RUBMI); and the Sectoral Financials Index (MICEX FNL/RTSFN). Information on the price can be found on the Moscow Exchange website at www.moex.com, stock ticker BSPB.

2016 The Bank’s ordinary shares performance vs. MICEX and MICEX Finance Indices

OPPORTUNITIES FOR INVESTORS

In 2016, although the Bank’s share price grew by 54% to RUB 67, the Bank still remains the most undervalued bank in the market (with P/BV remaining at 0.5), with a significant upside for the growth of shares.

The cheapest bank in the market

* Peers – other publicly-traded Russian banks.

The Bank has been increasing its book value per share for its shareholders: at the beginning of the year, in order to support share price and to overcome the current undervaluation, the Bank bought back 2.7% of the share capital. As of January 1, 2017, its book value per share has reached RUB 138.

The Bank is increasing book value per share for its shareholders

DIVIDEND POLICY

In accordance with the Russian legislation, dividends are based on net profit according to RAS. The dividend amount is approved by the General Shareholders’ Meeting, as recommended by the Supervisory Board.

In 2016, the Bank also paid dividends of 20% of RAS net profit, which corresponds to 13% of IFRS net profit.

2016 dividend payout ratio vs. 2015 IFRS net income

* Peers – other publicly-traded Russian banks. Unless otherwise indicated, capital adequacy ratio and ROAE are for 2015.

In February 2016, the Supervisory Board approved the Bank’s Dividend Policy. This document establishes the Bank's intention to maintain a dividend payout ratio of 20%+ of the Bank's RAS net profit (RUB 2.3 bn for FY 2016).

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Business
Divisions

CORPORATE BANKING

The Bank continues to improve its performance by offering a wide range of cutting-edge banking services to small, medium and large-sized enterprises, taking into account each client group’s particular requirements and interests.

To date, the Bank has 52 000 corporate customers. Bank Saint Petersburg’s corporate banking business remains primarily focused on the regional market of St. Petersburg. In addition, the Bank strengthened its positions in Kaliningrad in 2015 through the creation of its Evropeisky Branch, which currently has over 9 000 corporate customers (Bank Saint Petersburg completed the integration of Bank Evropeisky in Kaliningrad, reorganizing it together with the Bank's Kaliningrad Branch into the new Evropeisky Branch). In 2016, Bank Saint Petersburg also strengthened its presence outside the home Northwest region: the Bank opened a representative office in Novosibirsk, focused on working with corporate clients.

Loans to legal entities represent 83.0% of the total loan portfolio. The breakdown of the Bank’s corporate portfolio by sector reflects St. Petersburg’s economic structure, which has a high proportion of construction, real estate, trade and production, allowing the Bank to benefit from all the advantages of the region’s economic structure, as well as to contribute to its development.

During 2016, the corporate loan portfolio decreased by 7.1% to RUB 294.2 bn. The Bank pays particular attention to developing a high quality and well-balanced loan portfolio.

Corporate customer deposits remain the principal source of funding for the Bank, representing 47.6% of total customer deposits. Throughout the reporting year, corporate customer deposits increased by 10.0% and amounted to RUB 170.4 bn.

Geography of trade and structured finance arranged by the Bank

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RETAIL BANKING

As one of the key players in St. Petersburg’s retail banking services, Bank Saint Petersburg aims to become the first bank of choice for the city's residents. The Bank currently has 1 770 000 retail customers, forming a solid base for the future successful growth of its retail business.

Throughout 2016, the retail loan portfolio increased by 11.7% to RUB 54.4 bn. While mortgage loans gained 20.0%, consumer and car loans showed a 4.3% and 35.3% decline respectively. The share of loans to individuals reached 17.0% of the total loan portfolio.

In 2016, the total amount of retail deposits decreased by 0.3%, totalling RUB 187.4 bn. The share of retail deposits amounted to 52.4% of total customer deposits.

The Bank was ranked among the top 5 retail banks in terms of customer service quality, according to the Retail Finance Awards 2016.

PRIVATE BANKING

Since 2007, the Bank has successfully been developing a modern Private Banking business, providing personal banking services to the wealthiest private clients.

The Bank's VIP customers are served at a specially designated, centrally located office, which features the highest standards of comfort, safety and confidentiality, including a separate parking area and a convenient vault room.

As of January 1, 2017, the total number of VIP-segment clients stood at 2 109, of whom 1 348 were members of the VIP-Club Private Banking BSPb, a private club for wealthy private clients. In the uneasy economic climate of 2016, the volume of deposits from the VIP-segment increased by more than 5%, reaching more than RUB 46.8 bn.

Private Banking allows customers to receive the full range of banking products and services, including deposits, lending and cash management services, as well as brokerage, dealing and consulting services that are tailored to address the individual client’s needs. The large number of investment, real estate and insurance partners allows the settlement of customer issues in varying levels of complexity. The Bank's Concierge Service efficiently deals with customer requests related to travel, private aviation, real estate, art purchases, etc.

Private Banking is continuously updating and refining its own line of products and services offered to its customers. The following projects were launched in 2016:

  • Streamlined deposit and loan product lines;
  • Improved tariff plans for VIP customers;
  • A wider range of services related to the comprehensive support of real estate transactions;
  • The start of portfolio sales of Eurobonds issued by Bank Saint Petersburg and other issuers.

The Bank’s Private Banking business is committed to consistently enhancing its service quality, broadening its customer base, and improving the range of its products and services.

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Digital
Banking

One of the largest banks in Russia’s Northwest Region, Bank Saint Petersburg was founded in 1990, at the very beginning of Russia’s modern banking system. Since then, the Bank has become an integral part of Northwest Russia’s financial and economic system.

Bank Saint Petersburg is a leader in the city’s financial services market, ranking 16th among Russia’s largest banks (as of January 1, 2015). 

The Bank provides services through its 48 branches and offices to more than 1 400 000 private clients and 55 000 corporate clients, including major companies located in St. Petersburg. The Bank is proud of its market share and the long-term relationships it has with clients.

First and foremost, Bank Saint Petersburg is a city bank whose task is to contribute to St. Petersburg’s future by providing high quality banking services to the residents of the city and local companies. The Bank pays special attention to financing programs related to the city life of St. Petersburg by providing loans to all industries and production facilities and proactively developing credit programs focused on small- and medium-sized businesses (SMEs).

In late 2007, the Bank became the first privately-owned Russian bank to successfully complete an IPO. Today, the Bank’s shares are listed on the stock market of the Moscow Exchange.

The Bank follows the principles of corporate social responsibility and supports city programs aimed at improving the social and economic climate of St. Petersburg.

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Relationships and Responsibility

CUSTOMERS

Bank Saint Petersburg is the largest private bank in Northwest Russia. The financial services provided by the Bank support the local development of the region and its sustainable economic growth, as well as helping individual customers to reach their financial targets.

Services for customers still constitute the core of the Bank’s business. The Bank has 1 770 000 individual customers and 52 000 corporate customers. Its proximity to customers, high processing speed, and flexibility of decisions remain the traditional advantages of Bank Saint Petersburg in the Northwest region. Combined with the introduction of new quality standards for all operations, settlements and services, these factors determine the Bank’s contribution to the social and economic growth of the Russian Northwest.

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COLLEAGUES

Bank Saint Petersburg inspires its employees to grow and gives them every opportunity to unlock their potential and progress professionally. The human resources management strategy is set in the HR Policy and remains unchanged. However, the Bank applies unique and innovative HR management approaches and practices according to its business goals, from recruitment and competency training to employee engagement management.

Bank Saint Petersburg is one of the largest employers in the region, with a head count of 3 981 employees as of January 1, 2017. Currently, 40% of the Bank’s staff work in the branch network and 26% work in the Head Office business departments.

Staff composition by business line, January 1, 2017

Staff composition by age, January 1, 2017

COMMUNITY

Bank Saint Petersburg attaches great importance to the successful development of the regions of its presence, strictly adhering to social responsibility principles in its business operations. As the largest private bank in the Russian Northwest, Bank Saint Petersburg never distances itself from socially significant projects in the region, but rather takes an active part in them.

The Bank pays particular attention to the following three groups of social responsibility initiatives: support for underprivileged children, developing the urban environment, and encouraging financial awareness.

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Corporate Governance

Corporate Governance Structure, January 1, 2017

CORPORATE GOVERNANCE

Upgrading corporate governance in line with best practice is one of the Bank’s key tasks. Strictly observing the rights of shareholders, internal control and auditing procedures, a high level of transparency and information disclosure, as well as the maintenance of efficient management bodies, ensure customer confidence and the maximum efficiency of shareholders’ investments.

The following internal Bank documents regulate corporate governance:

  • The Charter, as approved by a resolution of the General Shareholders Meeting held on May 26, 2016;
  • The Policy on the Supervisory Board, as approved by a resolution of the General Shareholders Meeting held on May 26, 2016;
  • The Policy on the Management Board, as approved by a resolution of the General Shareholders Meeting on June 19, 2014;
  • The Policy on the Strategy Committee of the Supervisory Board, as approved by a resolution of the Supervisory Board on July 23, 2015;
  • The Policy on the Appointments and Remuneration Committee of the Supervisory Board, as approved by a resolution of the Supervisory Board on August 12, 2016;
  • The Policy on the Audit Committee of the Supervisory Board, as approved by a resolution of the Supervisory Board on August 12, 2016;
  • The Policy on the Risk Management Committee of the Supervisory Board, as approved by a resolution of the Supervisory Board on July 31, 2014;
  • The Policy on the Corporate Secretary, as approved by a resolution of the Supervisory Board on August 12, 2016;
  • The Policy on the Revision Committee, as approved by a resolution of the General Shareholders Meeting held on April 28, 2011.

THE SUPERVISORY BOARD

The Supervisory Board is responsible for the general management of the Bank’s activities, except for issues that fall under the competency of the General Shareholders’ Meeting. The Supervisory Board determines the strategic priorities for the Bank’s activity and controls the functioning of executive management bodies. According to a resolution from the 2016 General Shareholders’ Meeting, the Supervisory Board is made up of 9 members.

Elena V. Ivannikova

Elena V. Ivannikova has been the Chairperson of the Supervisory Board since July 2016 and has worked for the Bank since 2001. Previously, she worked as the Chief Accountant at the Petrovsky Commercial Bank and Baltoneximbank. Mrs. Ivannikova was born in 1965. She is a graduate of the Kiev Institute of the People’s Economy.

Mrs. Ivannikova owns 0.65% of the Bank’s ordinary shares. Her holding in the Bank’s charter capital is 0.63%.

Vladislav S. Guz

Vladislav S. Guz has been Deputy Chairman of the Supervisory Board since July 2016. Previously, Mr. Guz has acted as Chairman of the Management Board since 2014, the First Deputy Chairman of the Management Board since 2009 and the Deputy Chairman of the Management Board since 2004. His previous experience includes working at the St. Petersburg branch of Alfa-Bank as the First Deputy Director of the branch and its Executive Director (from 1996 until 2003). Mr. Guz was born in 1967. He is a graduate of Leningrad State University. Mr. Guz holds a PhD in Economics.

Mr. Guz owns no shares in the Bank.

Susan Gail Buyske

Susan Gail Buyske joined the Bank's Supervisory Board in April 2012. Mrs. Buyske has served as a non-executive director and chair of the risk and audit committee for a number of banks, as well as consulted on financial sector development issues for the World Bank, IFC, and others. She has also served as Vice President at JPMorgan Chase. Mrs. Buyske was born in 1954. She is a graduate of Middlebury College, Princeton University and Columbia University, and holds a PhD in Political Science.

Mrs. Buyske owns no shares in the Bank.

Andrey P. Bychkov

Andrey P. Bychkov has been a member of the Supervisory Board since April 2010. At present, Mr. Bychkov is the Deputy Director of the Financial Institutions Department at the Bank of Development and Foreign Trade (Vneshekonombank) State Corporation. Mr. Bychkov was born in 1961. He is a graduate of Moscow State University and the Russian Academy of Economics.

Mr. Bychkov owns no shares in the Bank.

Alexey A. Germanovich

Alexey A. Germanovich has been a member of the Supervisory Board since June 2014. He currently acts as an Advisor to the CEO of Upravleniye Investitsiyami CJSC and is a member of the Management Board of the St. Petersburg State University Development Endowment Fund and the Board of Directors of E.ON Russia OJSС. Mr. Germanovich was born in 1977. He is a graduate of Moscow State University and Cranfield University (UK).

Mr. Germanovich owns no shares in the Bank.

Andrey T. Ibragimov

Andrey T. Ibragimov has been a member of the Bank’s Supervisory Board since December 2005. He has also been a member of the Audit Committee since September 2007. From July 2002 to April 2004, Mr. Ibragimov worked in the capacity of the Bank’s Deputy Management Board Chairman and was the Director of the Legal Department. Currently, Mr. Ibragimov is the General Director of the Musin, Ibragimov and Partners LLC law firm. Mr. Ibragimov was born in 1954. He is a graduate of the KGB Higher School.

Mr. Ibragimov’s holding in the Bank’s charter capital is 0.0000022%.

Alexander I. Polukeyev

Alexander I. Polukeyev was a member of the Bank’s Supervisory Board from December 2005 to April 2008. He has held this position again since June 2014. From May 2006 to February 2009, he held the position of Vice Governor of Saint Petersburg. Mr. Polukeyev was born in 1948. He is a graduate of Riga Civil Aviation Engineering Institute and North-West Academy of Public Administration. Mr. Polukeyev holds a PhD in Economics.

Mr. Polukeyev’s holding in the Bank’s charter capital is 0.0000022%.

Alexander V. Pustovalov

Alexander V. Pustovalov joined the Bank's Supervisory Board in April 2012. From 1992–2005, Mr. Pustovalov worked for the Industry and Construction Bank (which later became VTB North-West), successively serving as Head of Department, Director, and the Chairman of Management Board. Starting in 2005, he has held the position of Vice President at OJSC Bank of Moscow. Between 2007 and 2012, Mr. Pustovalov was the Deputy Chairman of the Management Board at the Northwest Bank of the Savings Bank of the Russian Federation (Sberbank). His current positions include: CEO of Evolyutsiya Investment Group LLC and the Chairman of the Board of Directors of Malaya Okhta Management Company LLC. Mr. Pustovalov was born in 1967. He is a graduate of St. Petersburg State University.

Mr. Pustovalov owns no shares in the Bank.

Alexander V. Savelyev

Alexander V. Savelyev is the Chairman of the Management Board (from January 2001 to August 2014, and has again held this position since July 2016). Mr. Savelyev has been a member of the Supervisory Board since 2001; from August 2014 to July 2016, he also acted as Chairman of the Bank's Supervisory Board. His previous experience includes Deputy Chairman of the Management Boards of Petrovsky Commercial Bank and Baltoneximbank. Mr. Savelyev was born in 1954. He is a graduate of the Kazan Aviation Institute.

Mr. Savelyev owns 23.70% of the Bank’s ordinary shares. His holding in the Bank’s charter capital is 22.83%.


In accordance with corporate governance best practices, the Board includes three independent directors: Andrey P. Bychkov, Alexey A. Germanovich, and Alexander I. Polukeyev. These directors positively contribute to the Board’s functioning with their experience and professionalism.

In 2016, members of the Supervisory Board made no transactions with the Bank's shares.


CRITERIA FOR REMUNERATION


Based on a decision of the General Shareholders Meeting, members of the Bank’s Supervisory Board may be entitled to remuneration and compensation for costs related to performing their functions as members of the Supervisory Board. This remuneration and compensation is set by the General Shareholders’ Meeting. A Resolution of the General Shareholders’ Meeting in 2015 approved the Regulations on Remunerations and Compensations Paid to the Members of the Supervisory Board, establishing the terms and procedures for such payments.

According to a resolution of the General Shareholders’ Meeting held on May 26, 2016, remuneration paid to members of the Supervisory Board for the year 2015 stood at RUB 30.0 mln. Participation in Respective Committee meetings was also factored in when calculating remuneration amounts for the members of the Supervisory Board.


THE STRATEGY COMMITTEE


The Strategy Committee is not a management body of the Bank. Members of the Committee are appointed by the Supervisory Board. The Committee’s current members are: Alexander V. Savelyev (Chairman of the Committee), Alexey A. Germanovich, Vladislav S. Guz, Andrey T. Ibragimov and Elena V. Ivannikova.

The main task of the Strategy Committee is to assist the Supervisory Board in determining the long- and mid-term strategy of the Bank and its business priorities, as well as to review the Bank's major innovation and investment projects.


THE APPOINTMENTS AND REMUNERATION COMMITTEE


The Appointments and Remuneration Committee is not a management body of the Bank. Members of the Committee are appointed by the Supervisory Board. The Committee’s current members are: Alexander V. Pustovalov (Chairman of the Committee), Andrey P. Bychkov, and Alexander I. Polukeyev.

The main task of the Appointments and Remuneration Committee is to provide recommendations to the Supervisory Board with regard to candidates for key management positions, as well as to establish the principles and criteria for determining the amounts of remuneration for the Bank's key management and staff.


THE AUDIT COMMITTEE


The Audit Committee is not a management body of the Bank. Members of the Committee are appointed by the Supervisory Board. The Committee’s current members are: Andrey P. Bychkov (Chairman of the Committee), Alexey A. Germanovich, and Alexander I. Polukeyev.

The main task of the Audit Committee is to assist the Supervisory Board in controlling the Bank’s operations. The Committee verifies the integrity and accuracy of financial reporting, and preparation and presentation of the financial statements, examines the functioning of the internal control and audit systems, and issues recommendations to the Supervisory Board.


THE RISK MANAGEMENT COMMITTEE


The Risk Management Committee is not a management body of the Bank. Members of the Committee are appointed by the Supervisory Board. The Committee’s current members are: Susan Gail Buyske (Chairperson of the Committee), Andrey P. Bychkov, Andrey T. Ibragimov and Elena V. Ivannikova.

The principal task of the Risk Management Committee is to assist the Bank’s Supervisory Board in defining the Bank’s priorities related to its exposures and creating the conditions required for proper risk management.

THE MANAGEMENT BOARD

The Bank's ongoing operations are managed by the Chairman of the Management Board as its sole executive body, and by the Management Board as its collegial executive body. As of January 1, 2017, the Bank’s Management Board is made up of 11 members.

Alexander V. Savelyev

Alexander V. Savelyev is the Chairman of the Management Board (from January 2001 to August 2014, and has again held this position since July 2016). Mr. Savelyev has been a member of the Supervisory Board since 2001; from August 2014 to July 2016, he also acted as Chairman of the Bank's Supervisory Board. His previous experience includes Deputy Chairman of the Management Boards of Petrovsky Commercial Bank and Baltoneximbank. Mr. Savelyev was born in 1954. He is a graduate of the Kazan Aviation Institute.

Mr. Savelyev owns 23.70% of the Bank’s ordinary shares. His holding in the Bank’s charter capital is 22.83%.

Maris Mancinskis

Maris Mancinskis, First Deputy Chairman of the Management Board and Chief Executive Officer (СЕО), has been a member of the Management Board since September 2016. From 2009 to August 2016, Maris Mancinskis headed Swedbank in Latvia and was a top manager at Swedbank AB (Sweden). In 2012-2016, he acted as the Chairman of the Association of Latvian Commercial Banks. In 2006-2008, he acted as the Chairman of the Management Board of Swedbank Russia, and was a member of the Management Board of Hansapank (Estonia). In 2004-2006, he headed the Corporate Banking business and member of the Management Board at Hansabanka (later renamed to Swedbank). In 2001-2004, he acted as head of Financial Markets Department at Hansabanka and Chairman of the Management Board of Privatais pensiju fonds (a private pension fund, part of Hansabank Group). Mr. Mancinskis was born in 1974. In 1996, he received a degree in Economics and Management in the University of Latvia, and in 1999 he received an MBA from Hofstra University.

Mr. Mancinskis owns no shares in the Bank..

Konstantin Y. Balandin

Konstantin Y. Balandin has been the Deputy Chairman of the Management Board since January 2008. Mr. Balandin has worked for the Bank since 2000. From 1996 to 2000, he worked in the Treasury Department of the Industry and Construction Bank. Mr. Balandin was born in 1976. He is a graduate of the Economics Department of St. Petersburg State University. Mr. Balandin holds a PhD in Economics and a Qualification Certificate issued by the Federal Commission for the Securities Market.

Mr. Balandin owns 0.02% of the Bank’s ordinary shares. His holding in the Bank’s charter capital is 0.02%.

Tatiana Y. Bogdanovich

Tatiana Y. Bogdanovich has been a member of the Management Board since March 2016; at the same time, she is the Senior Vice-President and Director of the Bank’s Moscow branch. Ms. Bogdanovich has worked for the Bank since 2007. From 2000 to 2007, she worked for CB Russian International Bank as the Deputy Chairman of the Management Board and Chairman of the Management Board. From 1995 to 2000, she worked for CB Loko-Bank, including the holding the post of Deputy Chairman of the Management Board. Ms. Bogdanovich was born in 1972. She is a graduate of the Tver State University and the Russian Academy of State Service. Candidate of Sciences in Sociology.

Mrs. Bogdanovich owns no shares in the Bank.

Pavel V. Filimonenok

Pavel V. Filimonenok has been Deputy Chairman of the Management Board since 2003. Mr. Filimonenok joined the Bank in 2001 and worked as the Director of the Retail Business Department from August 2003 until June 2007. In May 2009, he was appointed Chairman of the Board of Directors of JSC Kompyuterniye sistemy dlya biznesa. His previous positions include Deputy Director of the Plastic Cards Department at the Petrovsky Commercial Bank. Mr. Filimonenok was born in 1971. He is a graduate of the St. Petersburg Institute of Precision Mechanics and Optics.

Mr. Filimonenok owns 0.005% of the Bank’s ordinary shares. His holding in the Bank’s charter capital is 0.005%. Mr. Filimonenok also holds a 100% interest in Lazoria Limited, which in turn owns 100% of Zerilod Holdings Limited. Zerilod Holdings Limited owns 26.576% of the charter capital of Verniye Druzya Management Company LLC. Verniye Druzya Management Company LLC owns 28.74% of the Bank's ordinary shares and holds a 27.68% interest in the Bank's share capital.

Alexander S. Konyshkov

Alexander S. Konyshkov is Deputy Chairman of the Management Board, and has been a member of the Management Board since July 2014; he has two decades of experience in the banking sector. Before joining Bank Saint Petersburg, Mr. Konyshkov worked for Raiffeisenbank, managing all of the bank's operations in the Northwestern Federal District. Prior to that, he was in charge of corporate and international businesses of Dresdner Bank and headed the Saint Petersburg Branch of International Moscow Bank. Mr. Konyshkov was born in 1970. He is a graduate of St. Petersburg University of Economics and Finance.

Mr. Konyshkov owns no shares in the Bank.

Vladimir K. Likhodievsky

Vladimir K. Likhodievsky has been Deputy Chairman of the Management Board since April 2015. He has been Advisor of the Chairman of the Management Board of the Bank since February 2015. Mr. Likhodievsky worked in the Minsk department of Belvnesheconombank from 1995 to 2008. He was Deputy Chairman of the Management Board of CJSC VTB Bank (Belarus) from 2008 to 2015. Mr. Likhodievsky was born in 1968. He graduated from Minsk Radio-Technical Institute and Belarus State Economic University.

Mr. Likhodievsky owns no shares in the Bank.

Kristina B. Mironova

Kristina B. Mironova has been Deputy Chairperson of the Management Board since September 2013, having joined Bank Saint Petersburg in 2002. Her previous positions include: Deputy Director of the Moscow Branch, Director of Investor Relations, and the Director of the Customer Monitoring Department. Mrs. Mironova was born in 1980 and graduated from St. Petersburg University for Economics and Finance.

Mrs. Mironova holds a 100% interest in Zugradia Enterprises Limited, which in turn owns 100% of Noroyia Assets Limited. Noroyia Assets Limited owns 26.578% of the charter capital of Verniye Druzya Management Company LLC. Verniye Druzya Management Company LLC owns 28.74% of the Bank's ordinary shares and holds a 27.68% interest in the Bank's share capital.

Vladimir G. Reutov

Vladimir G. Reutov has been Deputy Chairman of the Management Board since 2006, having joined Bank Saint Petersburg in 2001. Mr. Reutov has been a member of the Exchange Committee of the St. Petersburg Currency Exchange since May 2006. He is a member of NSMA’s Board. In 2008-2011, he served as member of the Board of Directors of CJSC Moscow Interbank Currency Exchange. From 2009 to 2011, he was a Board member at CJSC MICEX Stock Exchange. Mr. Reutov was born in 1963. He is a graduate of the Leningrad Ship Building Institute, and the International Banking Institute and St. Petersburg State University.

Mr. Reutov owns 0.003% of the Bank’s ordinary shares. His holding in the Bank’s charter capital is 0.003%. Mr. Reutov also holds a 100% interest in Magnonia Ventures Limited, which in turn owns 100% of Caristas Limited. Caristas Limited owns 26.576% of the charter capital of Verniye Druzya Management Company LLC. Verniye Druzya Management Company LLC owns 28.74% of the Bank's ordinary shares and holds a 27.68% interest in the Bank's share capital.

Oksana Sivokobilska

Oksana Sivokobilska has been Deputy Chairperson of the Board since November 2011. From April 2011, she served as Vice President-Director of the Bank’s Strategic Development Division. From 1998 to 2007, she worked as the head of the Marketing Division of Hansabanka in Latvia (which was later renamed Swedbank). From 2007 till 2010, she headed the retail division of Swedbank in Latvia. From 2010 till 2011, Mrs. Sivokobilska was in charge of business development for Swedbank in the Baltic Region. She was born in 1973 and graduated from the Economics Department of the Latvian State University with a Masters in Economics.

Mrs. Sivokobilska owns 0.03% of the Bank’s ordinary shares. Her holding in the Bank’s charter capital is 0.03%.

Vladimir P. Skatin

Vladimir P. Skatin is Deputy Chairman of the Management Board, has been a member of the Management Board since 2008. His career at the JSC Industry and Construction Bank (which later became VTB North-West) was launched in 1995 as Deputy Chairman of the Management Board. In 2001, he was appointed First Deputy Chairman of the Management Board and during 2006-2007, he served as the Chairman of the Management Board. Mr. Skatin was born in 1956. He is a graduate of Leningrad Polytechnic Institute and St. Petersburg State University for Economics and Finance. Mr. Skatin holds a PhD in Economics.

Mr. Skatin owns no shares in the Bank.


In 2016, members of the Management Board made no transactions with any of the Bank's shares.

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RISK MANAGEMENT

The strategic objective of risk management is to ensure the Bank’s financial stability. The existing risk management framework comprises a set of measures and solutions designed to identify, monitor and assess all material risk types, to determine their acceptable level, and to mitigate/limit each type of risk.

Pursuant to current legislation and the Bank’s Articles of Association, the Supervisory Board approves the Risk and Capital Management Policy, which covers the coordination of actions taken to enhance the risk management framework, to consistently improve methodology, to standardize and automate risk management processes. The Supervisory Board has a dedicated Risk Management Committee that assists the Supervisory Board in overseeing the Bank’s risk management system, and the efficient identification, quantification and control of risk.

The risk management system addresses the following types of banking risks:

  • Credit risk;
  • Liquidity risk;
  • Market risk, including:
    - Stock market risk;
    - Currency risk;
    - Commodity risk;
    - Interest rate risk;
  • Operational risk;
  • Strategic risk.

The Bank measures its assumed risks against its equity, supporting the capital adequacy level required by the Bank of Russia, which allows the bank to meet its obligations (including contractor covenants), and to maintain its efficient utilization of capital.

The Bank is consistently enhancing its risk management system and taking measures to identify foreign taxpayers among its customers. It is also developing procedures that are used to prevent money laundering and the financing of terrorism.

SHAREHOLDERS EQUITY STRUCTURE

As of January 1, 2017, the Bank’s charter capital was RUB 459 654 000 and consisted of 439 554 000 ordinary shares with a nominal value of 1 ruble per share and 20 100 000 preferred shares with a nominal value of 1 ruble per share. All issued shares have been paid in full.

Shareholders equity structure (ordinary shares), January 1, 2017

According to the resolution of the Supervisory Board, in March 2016 the Bank acquired 12 613 082 of its own outstanding ordinary shares. In 2Q 2016, the Bank sold all of its acquired treasury shares.

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