CORPORATE GOVERNANCE SYSTEM
Controlling Shareholder's Memorandum

CREDIT BANK OF MOSCOW's corporate governance system is an important element of its policy, integrated into its business management system.

The Bank seeks to meet the best international and Russian standards by continuously improving its governance system in line with the Russian Corporate Governance Code recommended by the Bank of Russia and international corporate governance standards setting out most important principles shared by the Bank's shareholders, directors and officers.

The commitment of the Bank's shareholders, Supervisory Board members and employees to the Corporate Governance Code is attested by the fact that its principles and provisions are incorporated into the Bank's bylaws, and its corporate governance system is being developed according to a plan approved by the Supervisory Board. The development of corporate governance practices in the Bank is overseen by the Compensation, Corporate Governance and Nominations Committee of the Supervisory Board.

The controlling shareholder is a Supervisory Board member himself and confirms his commitment to best corporate governance practices by making sure each year that as many independent directors are elected to the Supervisory Board as necessary to comply with the listing rules and corporate governance principles.
The controlling shareholder also participates in annual shareholders meetings, thus giving minority shareholders an opportunity to ask him directly about the Bank's development.

The Supervisory Board pays much attention to the protection of minority shareholders' interests and to the quality of the Bank's disclosures to all stakeholders. To protect shareholders' interests and facilitate the achievement of the Bank's goals, the Supervisory Board regularly monitors the risk management and internal control system's effectiveness.

The Bank grows and develops actively, strengthening its capital base in particular by way of equity capital market exercises, and seeking to comply, now and going forward, with high corporate governance standards.
CREDIT BANK OF MOSCOW's corporate governance system is an important element of its policy, integrated into its business management system.

The Bank seeks to meet the best international and Russian standards by continuously improving its governance system in line with the Russian Corporate Governance Code recommended by the Bank of Russia and international corporate governance standards setting out most important principles shared by the Bank's shareholders, directors and officers.

The commitment of the Bank's shareholders, Supervisory Board members and employees to the Corporate Governance Code is attested by the fact that its principles and provisions are incorporated into the Bank's bylaws, and its corporate governance system is being developed according to a plan approved by the Supervisory Board. The development of corporate governance practices in the Bank is overseen by the Compensation, Corporate Governance and Nominations Committee of the Supervisory Board.

The controlling shareholder is a Supervisory Board member himself and confirms his commitment to best corporate governance practices by making sure each year that as many independent directors are elected to the Supervisory Board as necessary to comply with the listing rules and corporate governance principles. The controlling shareholder also participates in annual shareholders meetings, thus giving minority shareholders an opportunity to ask him directly about the Bank's development.

The Supervisory Board pays much attention to the protection of minority shareholders' interests and to the quality of the Bank's disclosures to all stakeholders. To protect shareholders' interests and facilitate the achievement of the Bank's goals, the Supervisory Board regularly monitors the risk management and internal control system's effectiveness.

The Bank grows and develops actively, strengthening its capital base in particular by way of equity capital market exercises, and seeking to comply, now and going forward, with high corporate governance standards.

Corporate governance
Corporate governance system

The Bank's corporate governance system is a system of principles and standards, balancing interests of its shareholders, management and other stakeholders, facilitating effective performance of its management bodies and enhancing its investment appeal.

Being committed to good corporate governance, CREDIT BANK OF MOSCOW improves its corporate governance system on an ongoing basis in line with legal changes, Moscow Exchange's listing rules, recommendations of the Russian Corporate Governance Code and the Bank of Russia, international standards and best practices, but, above all, its shareholders' interests.
General Shareholders
meeting
External Auditors
Audit Panel
» Strategy and Capital
Markets Committee

» Compensation, Corporate
Governance and Nominations
Committee

» Audit and Risc Committee
Supervisory
board
Chairmanof the management
board and the management board
Corporate
Secretary
Elects
Internal
audit division
Internal
control service
Reports to
отчитывается
Approves
Reports to
Forms
Advises and report to
Approves the
director of
Reports to
Reports to
Approves the
head of
Reports to
Appoints
Appoints
Reports to
Reports to
Advises
and report to
Elects
Corporate governance principles

The Bank has committed to the following corporate governance principles (as set forth in its Corporate Governance Code):
In respect of the shareholders
» equal and fair treatment

» equal and fair opportunity to participate in profits

» equal terms and conditions

» reliable and efficient means of recording title to shares
In respect of the Supervisory Board
» the Supervisory Board is responsible for the strategic management of the Bank, determines major principles of and approaches to creation of a risk management and internal control system within the Bank and monitors the activity of the Bank's executive bodies

» the Supervisory Board reports to the General Shareholders' Meeting

» the Supervisory Board should be an efficient and professional governing body of the Bank which is able to make objective and independent judgements and pass resolutions in the best interests of the Bank and its shareholders

» the Supervisory Board should include a sufficient number of independent directors

» the Chairman of the Supervisory Board should help it carry out the allocated functions in the most efficient manner;

» Supervisory Board members should act reasonably and in good faith in the best interests of the Bank and its shareholders

» meetings of the Supervisory Board, preparation for them and participation of Supervisory Board members therein should ensure the efficient operation of the Supervisory Board

» the Supervisory Board may form committees for preliminary consideration of the most important issues of the Bank's business

» the Supervisory Board should provide for an evaluation of the quality of its work and that of its committees and members
In respect of the Corporate Secretary
» the Bank's Corporate Secretary should ensure efficient interaction with its shareholders, coordination of the Bank's operations designed to protect the rights and interests of its shareholders, and support the efficient work of the Bank's Supervisory Board
In respect of the Bank's Supervisory Board member and executive remuneration system
» the level of remuneration paid by the Bank shall be sufficient to enable it to attract, motivate and retain persons having the required skills and qualifications

» remuneration due to the Supervisory Board members and executives of the Bank should be paid in accordance with the remuneration policy approved by the Bank

» the system of remuneration of the Supervisory Board members should ensure harmonisation of the financial interests of the directors with the long-term financial interests of the shareholders

» the Bank's executive remuneration system should ensure harmonisation of the directors' financial interests with the shareholders' long-term financial interests
In respect of the risk management and internal control system
» the Bank should have an efficient internal control and risk management system in place

» the Bank should arrange for an internal audit to independently appraise, on a regular basis, the reliability and efficiency of its risk management and internal control system and corporate governance practices
In respect of the Bank's information disclosure and its information policy
» the Bank and its activities should be transparent to its shareholders, investors and other stakeholders

» the Bank should disclose, on a timely basis, full, up-to-date and reliable information about its activities

» the Bank should provide any information or documents requested by its shareholders in accordance with the principle of equal and unhindered accessibility
In respect of material corporate actions
» any material corporate actions should be taken on fair terms and conditions, ensuring that the rights and interests of the shareholders as well as other stakeholders are observed

» the Bank should make provision for a procedure for taking any material corporate actions that would enable its shareholders to receive full information about such actions in due time and to influence them, and that would also guarantee that the shareholders' rights are observed and duly protected in the course of such actions
Improvement and development of the Bank's corporate governance system in 2018 and plans for 2019

The Bank clearly understands the role of corporate governance and develops and improves it
continuously. The following important changes were made in the reporting period:


» The Bank of Russia registered amendment No.2 made to the Bank's Charter to reflect an increase in its charter capital and synchronise the Charter with Russian laws.

» An updated Regulation on the General Shareholders' Meeting was approved.

» An updated Regulation on the Supervisory Board was approved.

» An updated Regulation on the Management Board and the Chairman of the Management Board was approved.
» An updated Regulation on the Audit Panel was approved.

»
An updated Regulation on the Audit and Risk Committee was approved.

» An updated Regulation on the Compensation, Corporate Governance and Nominations Committee was approved.

To further improve and develop its corporate governance system in 2019, the Bank plans to monitor changes in applicable laws and synchronise its Charter and other bylaws accordingly, and achieve fuller compliance with recommendations of the Russian Corporate Governance Code, in particular by amending its Charter to specify in more detail the procedure for qualifying Supervisory Board members as independent directors in line with the listing rules of Moscow Exchange.
The Bank clearly understands the role of corporate governance and develops and improves it continuously. The following important changes were made in the reporting period:
» The Bank of Russia registered amendment No.2 made to the Bank's Charter to reflect an increase in its charter capital and synchronise the Charter with Russian laws.
» An updated Regulation on the General Shareholders' Meeting was approved.
» An updated Regulation on the Supervisory Board was approved.
» An updated Regulation on the Management Board and the Chairman of the Management Board was approved.
» An updated Regulation on the Audit Panel was approved.
»
An updated Regulation on the Audit and Risk Committee was approved.
» An updated Regulation on the Compensation, Corporate Governance and Nominations Committee was approved.

To further improve and develop its corporate governance system in 2019, the Bank plans to monitor changes in applicable laws and synchronise its Charter and other bylaws accordingly, and achieve fuller compliance with recommendations of the Russian Corporate Governance Code, in particular by amending its Charter to specify in more detail the procedure for qualifying Supervisory Board members as independent directors in line with the listing rules of Moscow Exchange.
General Shareholders' Meeting

Registered, issued and placed equity of the Bank consists of 27,079,709,866 ordinary shares of 1 rouble par value each. The Bank's shares are admitted to trading on Moscow Exchange in the first level quotation list.
Other:
Shareholder

REGION Trust LLC (NPF NEFTEGARANT-NPO JSC)

REGION Trust LLC (NPF FUTURE JSC)

VektorInvest LLC

REGION Trust LLC (NPF NEFTEGARANT JSC)

Vladimir A. Chubar

IK Region JSC

REGION EsM JSC

AMC REGION Investments JSC

Total
3,44660%

2,61000%

1,20000%

0,48430%

0,01457%

0,00330%

0,00170%

0,00089%

7,76%
* As at 18.12.2018
Share capital structure*, %
ROSSIUM Concern LLC
Minority shareholders
AMC Region Finance Resource JSC
Other
IK Algorythm LLC
EBRD
56,07%
17,59%
8,23%
7,76%
6,34%
4,01%
Percentage
3,44660%


2,61000%


1,20000%

0,48430%


0,01457%

0,00330%

0,00170%

0,00089%

7,76%
Information about the Bank's shares

Ordinary registered

Uncertificated

27 079 709 866

1
Categories (classes) of shares

Type and category of shares

Issue form

Number of shares issued

Par value 1 (one) security, RUB
Preparations for General Shareholders' Meetings
The General Shareholders' Meeting is the Bank's supreme managing body. Shareholders' participation in general meetings is the basic form of exercising their right to participate in the Bank's management. It is primarily by voting that shareholders exercise their right to participate in managing the Bank and thereby substantially influence its business. In particular, shareholders' meetings have the power to approve the annual report and annual accounting statements, elect the Bank's key management and control bodies, approve major transactions and interested party transactions and a number of other important matters.

The procedure for preparing and holding General Shareholders' Meetings is governed by the Bank's Charter and the Regulation on the General Shareholders' Meeting, which are intended to ensure observance of shareholders' rights and comply with all requirements of Russian laws and recommendations of the Bank of Russia's Corporate Governance Code. The
Supervisory Board shall, when acting on any matters related to the calling or preparing of the General Shareholders' Meetings, observe, inter alia, the following rules:

» the Bank shall send to the shareholders a notice of the General Shareholders' Meeting and post it on the Bank's website at least 20 days prior to its date, at the same time providing access to the materials of the General Shareholders' Meeting, giving enough time to the shareholders for preparation of items of the agenda of the General Shareholders' Meeting;

» to ensure equal treatment of all its shareholders, including foreign shareholders, the Bank may provide materials and voting ballots in Russian and English;
» the Bank shall disclose the information about the date of drawing up a list of persons entitled to participate in a General Shareholders' Meeting at least 7 days prior to such a date;

» during the preparation for the General Shareholders' Meeting, the shareholders can ask questions by sending them to the Corporate Secretary's e-mail address cs@mkb.ru;

» the General Shareholders' Meetings shall be held in Moscow, and the venue and time shall be chosen with account taken of the number of shareholders and the possibility of personal attendance at such meetings by all the Bank's shareholders;

» each shareholder can participate in an in-person General Shareholders' Meeting exercising his/her right to vote in a way convenient for him/her: mailing the voting ballot or attending in person;

» in contemplation of the General Shareholders' Meeting, the shareholders shall be given such information and in such manner as will enable them to get a comprehensive view of the Bank's performance and make well-grounded decisions on the items of the agenda thereof.
The General Shareholders' Meeting is the Bank's supreme managing body. Shareholders' participation in general meetings is the basic form of exercising their right to participate in the Bank's management. It is primarily by voting that shareholders exercise their right to participate in managing the Bank and thereby substantially influence its business. In particular, shareholders' meetings have the power to approve the annual report and annual accounting statements, elect the Bank's key management and control bodies, approve major transactions and interested party transactions and a number of other important matters.

The procedure for preparing and holding General Shareholders' Meetings is governed by the Bank's Charter and the Regulation on the General Shareholders' Meeting, which are intended to ensure observance of shareholders' rights and comply with all requirements of Russian laws and recommendations of the Bank of Russia's Corporate Governance Code. The
Supervisory Board shall, when acting on any matters related to the calling or preparing of the General Shareholders' Meetings, observe, inter alia, the following rules:

» the Bank shall send to the shareholders a notice of the General Shareholders' Meeting and post it on the Bank's website at least 20 days prior to its date, at the same time providing access to the materials of the General Shareholders' Meeting, giving enough time to the shareholders for preparation of items of the agenda of the General Shareholders' Meeting;

» to ensure equal treatment of all its shareholders, including foreign shareholders, the Bank may provide materials and voting ballots in Russian and English;

» the Bank shall disclose the information about the date of drawing up a list of persons entitled to participate in a General Shareholders' Meeting at least 7 days prior to such a date;

» during the preparation for the General Shareholders' Meeting, the shareholders can ask questions by sending them to the Corporate Secretary's e-mail address cs@mkb.ru;

» the General Shareholders' Meetings shall be held in Moscow, and the venue and time shall be chosen with account taken of the number of shareholders and the possibility of personal attendance at such meetings by all the Bank's shareholders;

» each shareholder can participate in an in-person General Shareholders' Meeting exercising his/her right to vote in a way convenient for him/her: mailing the voting ballot or attending in person;

» in contemplation of the General Shareholders' Meeting, the shareholders shall be given such information and in such manner as will enable them to get a comprehensive view of the Bank's performance and make well-grounded decisions on the items of the agenda thereof.

General Shareholders' Meetings in 2018

The annual General Shareholders' Meeting was held on 14 June 2018 to consider the following issues:

» Approval of the Bank's annual report for 2017.

» Approval of the Bank's annual accounting (financial) statements for 2017.

» Distribution of the Bank's income for 2017, including payment (declaration) of dividends;

» Approval of the Bank's auditors.

» Determination of the number of Supervisory Board members.

» Election of the Supervisory Board members.

» Determination of remuneration and compensation for Supervisory Board members.

» Election of the Audit Panel members.
» Approval of amendments to the Bank's Charter.

» Approval of the Regulation on the General Shareholders' Meeting.

» Approval of the Regulation on the Supervisory Board .

» Approval of the Regulation on the Management Board and Chairman of the Management Board.

» Approval of the Regulation on the Audit Panel.

» Approval of the Regulation on Remuneration and Compensation to be paid to the Supervisory Board Members.

The list of items of agenda of the annual General Shareholders' Meeting and its resolutions are available on the Bank's website in the disclosure section, and on the website of Interfax-CRKI, an information agency accredited by the CBR for disclosures (the "Interfax website").
The annual General Shareholders' Meeting was held on 14 June 2018 to consider the following issues:
» Approval of the Bank's annual report for 2017.
» Approval of the Bank's annual accounting (financial) statements for 2017.
» Distribution of the Bank's income for 2017, including payment (declaration) of dividends;
» Approval of the Bank's auditors.
» Determination of the number of Supervisory Board members.
» Election of the Supervisory Board members.
» Determination of remuneration and compensation for Supervisory Board members.
» Election of the Audit Panel members.
» Approval of amendments to the Bank's Charter.
» Approval of the Regulation on the General Shareholders' Meeting.
» Approval of the Regulation on the Supervisory Board .
» Approval of the Regulation on the Management Board and Chairman of the Management Board.
» Approval of the Regulation on the Audit Panel.
» Approval of the Regulation on Remuneration and Compensation to be paid to the Supervisory Board Members.

The list of items of agenda of the annual General Shareholders' Meeting and its resolutions are available on the Bank's website in the disclosure section, and on the website of Interfax-CRKI, an information agency accredited by the CBR for disclosures (the "Interfax website").

Quorum of the General Shareholders' Meetings in 2017-2018
76,10%
19.06.2017
82,64%
23.10.2017
80,72%
15.11.2017
84,36%
14.06.2018
The Supervisory Board's approach to recommending dividend size and payment mechanics is set forth in the Bank's Dividend Policy.

Any decision to pay (declare) dividends, including any decision on dividend size and payment procedure for shares of each category (type) shall be taken by the General Shareholders' Meeting based on the Supervisory Board's recommendations.

Dividends shall be paid out of the Bank's net income and distributed among shareholders in proportion to the number of their shares of the respective category and type.

The Supervisory Board shall recommend dividend amounts to the General Shareholders' Meeting so that at least 10% of the Bank's RAS net income is distributed thereby.
The Annual General Shareholders' Meeting, held on 14 June 2018 decided not to pay any dividends for 2017. The income earned in 2017 was left at the disposal of the Bank. Similar resolutions were made in the previous years.
Dividend policy
Dividend history
Registrar
As a means to safeguard the shareholders' title to shares, the Bank's share register is maintained by an independent registrar. The Bank's registrar since December 2016 has been JSC IRC – R.O.S.T. (former JSC R.O.S.T. Registrar) who also has the statutory duty to act as the counting commission.
Dividend policy
The Supervisory Board's approach to recommending dividend size and payment mechanics is set forth in the Bank's Dividend Policy.

Any decision to pay (declare) dividends, including any decision on dividend size and payment procedure for shares of each category (type) shall be taken by the General Shareholders' Meeting based on the Supervisory Board's recommendations.

Dividends shall be paid out of the Bank's net income and distributed among shareholders in proportion to the number of their shares of the respective category and type.

The Supervisory Board shall recommend dividend amounts to the General Shareholders' Meeting so that at least 10% of the Bank's RAS net income is distributed thereby.

Dividend history
The Annual General Shareholders' Meeting, held on 14 June 2018 decided not to pay any dividends for 2017. The income earned in 2017 was left at the disposal of the Bank. Similar resolutions were made in the previous years.
Registrar
As a means to safeguard the shareholders' title to shares, the Bank's share register is maintained by an independent registrar.The Bank's registrar since December 2016 has been JSC IRC – R.O.S.T. (former JSC R.O.S.T. Registrar) who also has the statutory duty to act as the counting commission.
Supervisory Board

The Supervisory Board is a collective body and the key element of the Bank's corporate governance system. It represents shareholders' interests and is responsible for increasing the value of the business by formulating the long-term strategy, defining principles and approaches to arranging a risk management system and internal controls, and by monitoring performance of the Bank's executive bodies.

The Supervisory Board's competence is set out in the Bank's Charter and the Regulation on the Supervisory Board of CREDIT BANK OF MOSCOW, which also specifies the procedure for convening and holding Supervisory Board meetings, and formulates the basic qualification requirements for Supervisory Board members.
Supervisory Board meetings are called according to a timetable of meetings to be approved by the Supervisory Board, and cover main issues of the Bank's operations.
The Supervisory Board is a collective body and the key element of the Bank's corporate governance system. It represents shareholders' interests and is responsible for increasing the value of the business by formulating the long-term strategy, defining principles and approaches to arranging a risk management system and internal controls, and by monitoring performance of the Bank's executive bodies.

The Supervisory Board's competence is set out in the Bank's Charter and the Regulation on the Supervisory Board of CREDIT BANK OF MOSCOW, which also specifies the procedure for convening and holding Supervisory Board meetings, and formulates the basic qualification requirements for Supervisory Board members.

Supervisory Board meetings are called according to a timetable of meetings to be approved by the Supervisory Board, and cover main issues of the Bank's operations.
Preparation of Supervisory Board meetings and their quorum

The Charter requires that materials relating to the agenda be provided to Supervisory Board members 15 days prior to the relevant meeting so as to allow them to make reasonable decisions. The Supervisory Board seeks to make any resolutions on agenda items at in-person meetings after they are first considered at meetings of the Supervisory Board committees. The Supervisory Board's work plan pre-defines which committee is to examine and scrutinise which matter. The Regulation on the Supervisory Board covers the procedure for preparing and holding Supervisory Board meetings.
When holding in-person meetings, Supervisory Board members also have business meetings as business dinners, where they informally discuss colleagues' (including the Chairman of the Management Board and a representative of the majority shareholder) viewpoints in respect of agenda items.

No Supervisory Board meeting was adjourned for want of quorum.
The Charter requires that materials relating to the agenda be provided to Supervisory Board members 15 days prior to the relevant meeting so as to allow them to make reasonable decisions. The Supervisory Board seeks to make any resolutions on agenda items at in-person meetings after they are first considered at meetings of the Supervisory Board committees. The Supervisory Board's work plan pre-defines which committee is to examine and scrutinise which matter. The Regulation on the Supervisory Board covers the procedure for preparing and holding Supervisory Board meetings.

When holding in-person meetings, Supervisory Board members also have business meetings as business dinners, where they informally discuss colleagues' (including the Chairman of the Management Board and a representative of the majority shareholder) viewpoints in respect of agenda items.

No Supervisory Board meeting was adjourned for want of quorum.
Supervisory Board's report for 2018

32 Supervisory Board meetings were held in 2018 (of which four were in-person meetings), 2 meetings more than in 2017.

The full list of items of agenda of Supervisory Board meetings, and their resolutions are available on the Bank's website in the disclosure section and on the Interfax website.
38
64
67

130



159



187
Statistics of issues discussed
Number of issues transacted at Supervisory Board meetings
2016
2017
2018
20
20
21

15
15
18

2016
2017
2018
2016
2017
2018
4
21


5
25


4
28
Number of Supervisory Board meetings
Absentee votings
In-person meetings
Audit and control
management,
financial reports
Renumerations
and nominations
Corporate
governance
Strategy,
capital incraese
Draft
documents
Preparation
for GSMs
Transactions
21
17
45

8
19
21

14
13
11

14
12
4

Attendance of Supervisory Board and Supervisory Board committees meetings by directors in 2018

William Forrester Owens

Roman I. Avdeev

Andrew Sergio Gazitua

Vladimir A. Chubar

Thomas Günther Grasse

Andreas Klingen

Ilkka Seppo Salonen

Sergey Yu. Menzhinsky

Lord Daresbury (Peter)

Alexey A. Stepanenko
32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32 (100%)

32/32(100%)

32/32 (100%)
-

-

-

-

23/23 (100%)

23/23 (100%)

23/23 (100%)

-

-

-
5/5 (100%)

5/5 (100%)

5/5 (100%)

5/5 (100%)

5/5 (100%)

5/5 (100%)

5/5 (100%)

5/5 (100%)

2/2 (100%)

-
9/9 (100%)

-

9/9 (100%)

-

-

-

-

-

9/9 (100%)

-
Supervisory Board
Audit and Risk
Committee
Compensation, Corporate
Governance and Nominations Committee
Strategy and Capital Markets Committee
Director
William Forrester Owens

Roman I. Avdeev

Andrew Sergio Gazitua

Vladimir A. Chubar

Thomas Günther Grasse

Andreas Klingen

Ilkka Seppo Salonen

Sergey Yu. Menzhinsky

Lord Daresbury (Peter)

Alexey A. Stepanenko
Director
William Forrester Owens

Roman I. Avdeev

Andrew Sergio Gazitua

Vladimir A. Chubar

Thomas Günther Grasse

Andreas Klingen

Ilkka Seppo Salonen

Sergey Yu. Menzhinsky

Lord Daresbury (Peter)

Alexey A. Stepanenko
William Forrester Owens

Roman I. Avdeev

Andrew Sergio Gazitua

Vladimir A. Chubar

Thomas Günther Grasse

Andreas Klingen

Ilkka Seppo Salonen

Sergey Yu. Menzhinsky

Lord Daresbury (Peter)

Alexey A. Stepanenko
Director
Director
Supervisory Board members as at 31 December 2018

The current Supervisory Board members were elected by the annual General Shareholders' Meeting on 14 June 2018 by cumulative voting and will serve until the next annual shareholders' meeting.


William Forrester Owens

Roman I. Avdeev

Andrew Sergio Gazitua

Vladimir A. Chubar

Thomas Günther Grasse

Andreas Klingen

Ilkka Seppo Salonen

Sergey Yu. Menzhinsky

Lord Daresbury (Peter)

Alexey A. Stepanenko
Banking,
Finance, audit
Corporate
governance

Strategy
Control, risk
management
Director
9
Key competences of Supervisory
Board members
3
10
Banking,
finance,
audit

Corporate
Governance
Strategy
Control, risk
management
5
The current Supervisory Board members were elected by the annual General Shareholders' Meeting on 14 June 2018 by cumulative voting and will serve until the next annual shareholders' meeting.
more than 8
1-3 years
3
Breakdown of Supervisory Board members by degree of independence
2
5
Non-Executive
Directors
Executive
Directors
Independent
Directors
Breakdown of Supervisory Board members by years of service
10
4-7 years
6
2
2
Changes in the Supervisory Board in 2018

There were no changes in the Supervisory Board in 2018.

As at 31 December 2018, there were 10 Supervisory Board members, five directors qualified as independent directors under the independence criteria set out by the Bank's Charter and Corporate Governance Code and Moscow Exchange's Listing Rules. This proportion of independent directors corresponds to international practice and ensures unbiased, prudent and independent decision-making.
One of the independent Supervisory Board members with extensive business experience, in particular in financial, investment and strategic management, is elected as the Senior Independent Non-Executive Director.
There were no changes in the Supervisory Board in 2018.

As at 31 December 2018, there were 10 Supervisory Board members, five directors qualified as independent directors under the independence criteria set out by the Bank's Charter and Corporate Governance Code and Moscow Exchange's Listing Rules. This proportion of independent directors corresponds to international practice and ensures unbiased, prudent and independent decision-making.

One of the independent Supervisory Board members with extensive business experience, in particular in financial, investment and strategic management, is elected as the Senior Independent Non-Executive Director.
Supervisory Board members as at 31 December 2018

Born on 22 October 1950 in Fort Worth, Texas (USA).
1973: bachelor's degree in Science from Stephen F. Austin State University (USA).
1975: master's degree in Public Affairs from University of Texas (USA).

First elected to the Supervisory Board by the extraordinary General Shareholders' Meeting on 28 November 2012; re-elected by the annual General Shareholders' Meeting on 14 June 2018. Chairman of the Supervisory Board since 16 April 2013. No stake in the Bank's charter capital.

Career summary

» 11.01.2007 – 15.12.2016: member of the Board of Directors of Key Energy Services, Inc.
» 01.02.2007 – to date: Senior Associate at University of Denver.
» 06.01.2010 – to date: member of the Board of Directors of Cloud Peak Energy, Inc.
» 01.04.2010 – 31.12.2015: Executive Director of Renew Strategies LLC.
» 13.05.2010 – 19.03.2018: member of the Board of Directors of Bill Barrett Corporation.
» 26.04.2011 – to date: member of the Board of Directors of Federal Signal Corporation.
» 28.11.2012 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 16.04.2013 – to date: Chairman of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 01.01.2016 – to date: Senior Director of Greenberg Traurig.
» 19.03.2018 – to date: member of the Board of Directors of High Point Resources.

Born on 17 July 1967 in Odintsovo, Moscow Region (Russia).
1994: certificate in banking from Moscow International University of Business and Information Technologies.
1996: degree in Industrial and Civil Construction from Lipetsk State Technical University.
1999: Ph.D. in Engineering Science from Penza State Academy of Architecture and Construction.

First elected to the Supervisory Board by the sole shareholder on 17 January 2008; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital. Indirectly controls 56.07% of shares in the Bank (as of 16.01.2019).

Career summary

» 17.01.2008 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 27.03.2014 – 27.02.2015: Chairman of the Board of Directors of MCB Capital LLC.
» 28.02.2015 – 28.12.2017: Vice President of MCB Capital LLC.
» 23.09.2015 – to date: member of the Board of Directors of Rossium Concern LLC.
» 23.09.2015 – 20.10.2015: Chairman of the Board of Directors of Rossium Concern LLC.
» 31.05.2016 – to date: member of the Board of Directors of Private Pension Fund Soglasie JSC.
» 30.06.2016 – 06.12.2018: member of the Board of Directors of Private Pension Fund Soglasie-OPS JSC.
» 06.08.2016 – to date: member of the Board of Directors of SKS Bank, LLC.
» 14.12.2017 – to date: member of the Board of Directors of INGRAD PJSC.
» 29.12.2017 – to date: Chairman of the Board of Directors of INGRAD PJSC.
» 17.01.2018 – to date: Chairman of the Board of Directors of Rossium Concern LLC.
Born on 14 February 1962 in New York (USA).
1985: bachelor's degree in Arts in Political Science from Haverford College.

First elected to the Supervisory Board by resolution of the sole shareholder on 13 April 2012; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital.

Career summary

» 30.06.2004 – to date: member of the Board of Directors of Web Financial Group, S.A.
» 15.12.2011 – to date: member of the Board of Directors of Civitas Partners Holdings Limited.
» 13.04.2012 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 11.04.2013 – 31.10.2017: Chairman of the Board of Directors of AS Expobank, Latvia.
» 16.04.2015 – 19.03.2019: member of the Board of Directors of Awad Capital Ltd., Dubai.
» 30.01.2016 – 16.07.2017: member of the Board of Directors of Walbrook Capital Markets Limited, UK.
» 17.05.2017 – to date: Chairman of the Board of Directors of Web Financial Group, S.A.
Born on 15 May 1955 in Ludwigshafen am Rhein (Germany).
1977: bachelor's degree in Banking from Frankfurt School of Finance and Management.
1999: training in investment and banking activities and corporate finance at J.P. Morgan, New York.

First elected to the Supervisory Board by the extraordinary General Shareholders' Meeting on 31 March 2014; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital.

Career summary

» 01.05.2009 – to date: owner of TG Consult, Munich, German.
» 04.05.2009 – 07.04.2014: member of the Board of Directors of Banca Intesa CJSC (Moscow).
» 25.03.2010 – 29.12.2014: member of the Board of Directors of Alliance Bank JSC (Almaty, Kazakhstan).
» 25.05.2012 – to date: member of the Consultative Board of Specta Group AG, Zug, Switzerland, and Moscow, Russia.
» 31.03.2014 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 29.04.2014 – to date: member of the Board of Directors of Banca Transilvania S.A., Cluj-Napoca, Romania.
» 24.07.2017 – to date: Managing Partner of ROMOTO GmbH (Munich, Germany).
» 28.06.2018 – to date: Deputy Chairman of the Board of Directors of Banca Transilvania S.A., Cluj-Napoca, Romania.
» 25.09.2018 – to date: member of the Board of Directors of B.C. VICTORIABANK S.A. (Chișinău, Republic of Moldova).
» 04.10.2018 – to date: Deputy Chairman of the Board of Directors of B.C. VICTORIABANK S.A., (Chișinău, Republic of Moldova).
Born on 18 July 1953 in London (UK).
1971: graduated from Eton College.
1975: Master of Arts' degree from Magdalene College, Cambridge.
1980: attended Sloan fellowship at London Business School.

First elected to the Supervisory Board by the annual General Shareholders' Meeting on 14 June 2018.
Stake in the Bank's charter capital as at the end of the reporting year: 0.00185%.
Percentage of ordinary shares held in the Bank as at the end of the reporting year: 0.00185%.
Shares of the Bank acquired or disposed of in the reporting year:
» transaction date: 21.09.2018
» transaction type: acquisition
» category (type) of shares: ordinary uncertificated registered shares, issue state registration number 10101978В, international securities identification number (ISIN) RU000A0JUG31
» number of shares: 500,000.

Career summary

» 26.04.1988 – 30.04.2014: Chairman of Aintree Racecourse Company Ltd.
» 31.05.1988 – 30.04.2014: Chairman of Grand National Steeplechase Limited.
» 02.01.2001 – 18.09.2017: Director of Delamere Forest Properties Limited.
» 18.10.2005 – to date: Director of Nasstar (UK) Ltd.
» 02.12.2005 – to date: Non-Executive Chairman of Nasstar Plc.
» 18.09.2006 – 30.04.2014: Director of Commonside Investments Ltd.
» 01.07.2007 – 03.11.2014: Non-Executive Chairman of Mallett Ltd.
» 19.12.2007 – to date: Director of Rusant.
» 14.01.2008 – 30.04.2018: Non-Executive Chairman of Stellar Diamonds plc.
» 20.06.2008 – 04.08.2014: Director of Green's (West End) Limited.
» 26.06.2008 – 04.08.2014: Director of The Greenhouse Wine Company Limited.
» 01.12.2008 – to date: member of PHD Core Investors LLP.
» 20.02.2009 – to date: Chairman of the Management Board of Jockey Club Catering Ltd.
» 01.03.2009 – to date: member of PHD Carried Interest LLP.
» 10.02.2011 – 30.09.2017: Non-Executive Director of Bespoke Hotel Group.
» 27.11.2012 – to date: Non-Executive Chairman of Aurian Mining.
» 01.01.2013 – 31.12.2018: member of the Board of Directors (Steward) of The Jockey Club.
» 17.04.2013 – to date: Director of Pesto Restaurants.
» 01.05.2013 – to date: Committee Chairman at Haydock Park Racecourse.
» 19.08.2013 – to date: Director of Daresbury Estates Ltd.
» 10.01.2014 – to date: Director of NASSTAR GROUP LTD.
» 12.05.2014 – 08.02.2017: Non-Executive Chairman of Timico Technology Group.
» 15.11.2017 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 06.07.2018 – to date: Director of Auriant Mining Zambia Ltd.
Born on 18 August 1964 in Berlin (Germany).
1991: Master of Science degree in physics from Technische Universität in Berlin.
1993: Master of Business Administration degree from Rotterdam School of Management.

First elected to the Supervisory Board by the extraordinary General Shareholders' Meeting on 07 November 2016; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital.

Career summary

» 01.10.2014 – 30.06.2017: Associate Professor at bbw Hochschule (Berlin, Germany).
14.11.2014 – 14.11.2018: member of the Board of Directors of KOMERCIJALNA BANKA A.D. (Belgrade, Serbia).
» 22.06.2015 – to date: member of the Supervisory Board of NOVA LJUBLJANSKA BANKA D.D. (Ljubljana, Slovenia).
» 07.11.2016 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 22.12.2016 – to date: member of the Board of Directors of Kyrgyz Investment and Credit Bank CJSC (Bishkek, Kyrgyz Republic).
Born on 27 June 1971 in Egoryevsk, Moscow Region (Russia).
1993: degree in Mechanics and Applied Mathematics from Lomonosov Moscow State University.
2011: degree in State and Municipal Administration from the Russian Presidential Academy of National Economy and Public Administration.
2009: advanced training courses at the Institute of Stock Market and Management.
2011: MBA qualification under the "Master of Business Administration – Strategic Management and Entrepreneurship" programme of Moscow International Higher Business School MIRBIS.

First elected to the Supervisory Board by the annual General Shareholders' Meeting on 19 June 2017; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital.

Career summary

» 11.07.2011 – 11.05.2014: Deputy General Director of REGION Investment Company JSC.
» 21.11.2012 – to date: member of the Board of Directors of REGION Broker Company LLC.
» 12.05.2014 – 14.04.2017: General Director of REGION Investment Company JSC.
» 24.06.2014 – to date: member of the Board of Directors of REGION Investment Company JSC.
» 30.06.2014 – to date: member of the Board of Directors of REGION Asset Management JSC.
» 27.02.2015 – 29.04.2015: Chairman of the Board of Directors of REGION Asset Management JSC.
» 30.04.2015 – to date: member of the Board of Directors of REGION Portfolio Investments LLC.
» 30.04.2015 – to date: member of the Board of Directors of REGION Trust LLC.
» 03.08.2016 – to date: member of the Board of Directors of Far Eastern Bank PJSC.
» 15.08.2016 – to date: Chairman of the Board of Directors of Far Eastern Bank PJSC.
» 01.11.2016 – to date: Chairman of the Board of Directors of Commercial Bank RUSNARBANK JSC.
» 15.04.2017 – 20.12.2017: Advisor at REGION Investment Company JSC.
» 17.04.2017 – to date: Chairman of the Board of Directors of REGION Investment Company JSC.
» 19.06.2017 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 14.12.2017 – to date: member of the Board of Moscow Exchange MICEX-RTS PJSC.
» 21.12.2017 – 31.01.2019: Advisor at ReSM Groups LLC.
» 19.06.2018 – to date: member of the Board of Directors of AO UGORIA Insurance Company.
» 01.08.2018 – 31.01.2019: Advisor (part-time) at REGION Investment Company JSC.
» 09.08.2018 – to date: Chairman of the Board of Directors of AO UGORIA Insurance Company.
» 27.08.2018 – to date: member of the Board of Directors of Investment Bank VESTA LLC.
» 06.09.2018 – to date: member of the Board of Directors of AMC REGION Investments JSC.
» 26.12.2018 – to date: Chairman of the Board of Directors of REGION Trust LLC.
» 01.02.2019 – to date: Advisor at REGION Investment Company JSC.
» 25/03/2019 – to date: member of the Board of Directors of AO UGORIA- LIFE Insurance Company
Born on 24 October 1955 in Espoo (Finland).
1981: Master of Political Science degree (major in Economics) from Helsinki University.
1994: completion of management courses at Kansallis-Osake-Pankki Bank (Finland).
2004: completion of executive education programme at IESE business school.

First elected to the Supervisory Board by the extraordinary General Shareholders' Meeting on 07 November 2016; re-elected by the annual General Shareholders' Meeting on 14 June 2018. No stake in the Bank's charter capital.

Career summary

» 03.09.2003 – to date: member of the Board of Directors of Corims Oy (Finland).
» 21.04.2010 – to date: Chairman of the Board of Directors of Garmoshka Oy (Finland).
» 24.04.2010 – to date: member of the Board of Directors of Sysmän Kirjakylä Oy (Finland).
» 21.06.2010 – to date: member of the Advisory Board of investment and finance company Essedel (Russia).
» 25.06.2010 – 27.06.2014: member of the Board of Directors of KAMAZ OJSC (Russia).
» 18.04.2011 – 11.03.2015: Chairman of the Board of Trustees of the Fund of Small Business Credit Assistance of Moscow.
» 28.06.2012 – 17.04.2015: member of the Supervisory Board of URALSIB BANK JSC (Russia).
» 18.09.2012 – 17.04.2015: Chairman of the Management Board of URALSIB BANK JSC.
» 22.11.2012 – 29.04.2015: member of the Board of Directors of Leasing Company URALSIB LLC (Russia).
» 29.04.2013 – 24.04.2014: member of the Board of Directors of URALSIB Capital – Financial Services LLC (Russia).
» 22.04.2014 – 29.04.2015: Chairman of the Board of Directors of Leasing Company URALSIB LLC (Russia).
» 21.07.2014 – 17.04.2015: member of the Board of Directors of Victoria Children Foundation (Russia).
» 23.07.2014 – 17.04.2015: member of the Board of Directors of Private Pension Fund URALSIB CJSC (Russia).
» 19.05.2015 – to date: partner at Septem Partners Oy (Finland).
» 01.06.2015 – to date: alternate member of the Board of Directors of Fennovoima Oy (Finland).
» 07.11.2016 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 16.01.2017 – 17.04.2017: Acting General Director of East Office of Finnish Industries (Finland).
» 18.04.2017 – to date: General Director of East Office of Finnish Industries (Finland).
» 01.01.2018 – to date: member of the Board of Directors of Lappeenranta University of Technology (Finland).
Born on 06 November 1981 in Nevinnomyssk (Russia).
2004: degree in Finance and Credit from the Financial University under the Government of the Russian Federation.
2003: broker / dealer firm executive / comptroller / specialist qualification from the Federal Commission for the Securities Market.

First elected to the Supervisory Board by the extraordinary General Shareholders' Meeting on 21 November 2014; re-elected by the annual General Shareholders' Meeting on 14 June 2018. Stake in the Bank's charter capital as at the end of the reporting year: 0.00252%. Percentage of ordinary shares held in the Bank as at the end of the reporting year: 0.00252%. Shares of the Bank acquired or disposed of in the reporting year:
» transaction date: 09.04.2018
» transaction type: acquisition
» category (type) of shares: ordinary uncertificated registered shares, issue state registration number 10101978В, international securities identification number (ISIN) RU000A0JUG31
» number of shares: 532,800 (total number of shares held: 682,500 units).

Career summary

» 04.03.2013 – 01.08.2014: Vice President of MCB Capital LLC.
» 27.03.2014 – 27.02.2015: Chairman of the Board of Directors of MCB Capital LLC.
» 01.08.2014 - to date: First Vice President of MCB Capital LLC.
» 06.08.2014 – to date: member of the Board of Directors of Ingrad JSC.
» 21.11.2014 – 28.06.2016: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 16.11.2015 – 13.04.2016: member of the Board of Directors of NCO INKAKHRAN (JSC).
» 31.05.2016 – to date: Chairman of the Board of Directors of PPF Soglasie JSC.
» 29.06.2016 – 17.01.2018: Chairman of the Board of Directors of ROSSIUM Concern LLC.
» 30.06.2016 – 06.12.2018: member of the Board of Directors of PPF Soglasie-OPS JSC.
» 06.08.2016 – to date: member of the Board of Directors of SKS Bank, LLC.
» 11.11.2016 – 03.04.2019: member of the Management Board and Deputy Chairman of the Management Board of CREDIT BANK OF MOSCOW.
» 10.02.2017 – to date: member of the Board of Directors of INGRAD PJSC.
» 15.11.2017 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 17.01.2018 – to date: member of the Board of Directors of ROSSIUM Concern LLC.
» 11.03.2019 – to date: member of the Board of Directors of United Wagon Company.
Born on 18 July 1980 in Bezhetsk, Tver Region (Russia).
2005: degree in Finance and Credit from the Finance Academy under the Government of the Russian Federation.
2007: course Budgeting and Financial Planning in Commercial Banks at the Association of Russian Banks' Institute of Banking Business.

First elected to the Supervisory Board by resolution of the sole shareholder on 20 October 2010; re-elected by the annual General Shareholders' Meeting on 14 June 2018. Stake in the Bank's charter capital as at the end of the reporting year: 0.014557%. Percentage of ordinary shares held in the Bank as at the end of the reporting year: 0.014557%. Shares of the Bank acquired or disposed of in the reporting year:
» transaction date: 09.04.2018
» transaction type: acquisition
» category (type) of shares: ordinary uncertificated registered shares, issue state registration number 10101978В, international securities identification number (ISIN) RU000A0JUG31
» number of shares: 1,112,300 (total number of shares held: 3,945,400).

Career summary

» 21.05.2008 – to date: member of the Management Board of CREDIT BANK OF MOSCOW.
» 20.10.2010 – to date: member of the Supervisory Board of CREDIT BANK OF MOSCOW.
» 01.02.2012 – to date: Chairman of the Management Board of CREDIT BANK OF MOSCOW.
» 23.09.2015 – to date: member of the Board of Directors of ROSSIUM Concern LLC.
» 06.08.2016 – to date: member of the Board of Directors of SKS Bank, LLC.
» 08.08.2016 – to date: Chairman of the Board of Directors of SKS Bank, LLC.
» 15.02.2018 - to date: member of the Board of Directors of NCO INKAKHRAN (JSC).
» 11.04.2018 - to date: Chairman of the Board of Directors of NCO INKAKHRAN (JSC).
Corporate Secretary

Born on 29 November 1984 in Moscow, Russia.
2017: degree in Finance and Credit from the Plekhanov Russian University of Economics,
2013: degree in Translation and Translation Studies from the Russian State University for the Humanities.

Specialised course Corporate Secretary at the Russian Institute of Directors, and qualification upgrade course Corporate Secretary in 2017. Svetlana Sukhareva started her career in 2007 at VTB Bank's FI Department. In 2014, she joined CREDIT BANK OF MOSCOW's Corporate Secretariat, and, in December 2014, was appointed the Bank's Corporate Secretary by resolution of its Supervisory Board. No stake in the Bank's charter capital.
The Corporate Secretary is an officer independent from the Bank's executive bodies and reports to its Supervisory Board.

The Corporate Secretary's main functions include:
» arranging preparation and holding of the Bank's General Shareholders Meetings
» ensuring operation of the Supervisory Board and its committees
» assisting in implementation of the disclosure policy and keeping the Bank's corporate documents
» managing the Bank's relationships with its shareholders and contributing to the prevention of corporate conflicts
» ensuring the Bank's interactions with regulators, trading facilities, the registrar and other professional stock market participants
» ensuring and checking the fulfilment of statutory and internal procedures intended to give effect to shareholders' rights and lawful interests
» informing the Supervisory Board immediately of any identified violations of laws or the Bank's bylaws
» contributing to improvement of the Bank's corporate governance.
The Corporate Secretary is an officer independent from the Bank's executive bodies and reports to its Supervisory Board.

The Corporate Secretary's main functions include:
» arranging preparation and holding of the Bank's General Shareholders Meetings
» ensuring operation of the Supervisory Board and its committees
» assisting in implementation of the disclosure policy and keeping the Bank's corporate documents
» managing the Bank's relationships with its shareholders and contributing to the prevention of corporate conflicts
» ensuring the Bank's interactions with regulators, trading facilities, the registrar and other professional stock market participants
» ensuring and checking the fulfilment of statutory and internal procedures intended to give effect to shareholders' rights and lawful interests
» informing the Supervisory Board immediately of any identified violations of laws or the Bank's bylaws
» contributing to improvement of the Bank's corporate governance.
Svetlana S. Sukhareva
Since December 2014 Svetlana S. Sukhareva is the Corporate
Secretary of the Supervisory Board and its committees.
Supervisory Board committees

The Supervisory Board committees were created to undertake a preliminary study of the most important matters reserved to the competence of the Supervisory Board and to provide relevant recommendations. They serve as a venue for the open exchange of opinions and an in-depth study of the matters being considered.

The Committees consist mainly of Supervisory Board members who do not serve in the Bank's executive bodies.

According to Moscow Exchange's requirements for the first level quotation list which includes the Bank's securities, most members of the Audit and Risk Committee and all members of the Compensation, Corporate Governance and Nominations Committee are independent directors.
77
Number of Supervisory Board issues
pre-reviewed by its committees
35
11
Pre-reviewed by the Audit and Risk Committee
Pre-reviewed by the Compensation, Corporate
Governance and Nominations Committee
Pre-reviewed by the Strategy and Capital Markets Committee
Not reviewed by committies
64
The Supervisory Board committees were created to undertake a preliminary study of the most important matters reserved to the competence of the Supervisory Board and to provide relevant recommendations.They serve as a venue for the open exchange of opinions and an in-depth study of the matters being considered.

The Committees consist mainly of Supervisory Board members who do not serve in the Bank's executive bodies.

According to Moscow Exchange's requirements for the first level quotation list which includes the Bank's securities, most members of the Audit and Risk Committee and all members of the Compensation, Corporate Governance and Nominations Committee are independent directors.
William Forrester Owens
Independent Director

Roman I. Avdeev
Non-Executive Director

Andrew Sergio Gazitua
Independent Director

Vladimir A. Chubar
Executive Director

Thomas Günther Grasse
Non-Executive Director

Andreas Klingen
Independent Director

Ilkka Seppo Salonen
Independent Director

Sergey Yu. Menzhinsky
Non-Executive Director

Lord Daresbury(Peter)
Independent Director
Audit and Risk Committee
Compensation, Corporate Governance and Nominations Committee
Strategy and Capital Markets Committee
Changes in the Supervisory Board committees in 2018
Elected on
15.11.2018
Elected on
16.11.2017
Elected on 16.11.2017
Elected on 15.06.2018
Elected on 16.11.2017.
Elected on 15.06.2018
_
Chairman
The Audit and Risk Committee

The Audit and Risk Committee advises the Supervisory Board on the issues within its competence, controls reliability and efficiency of the Bank's risk management and internal control system, controls measures taken to ensure the Bank's financial (accounting) statements are complete, accurate and true, ensures implantation and promotion of risk management culture in the Bank, ensures independency and fairness of internal and external audit functions and controls performance of the system alerting of potential malfeasance by the staff or by third parties.

The full list of the Committee's functions and competences is given in the Regulation on the Audit and Risk Committee.
31
Issues addressed by the Audit and Risk
Committee in 2018
30
61
Financial statements section
Internal audit section
Risk management section
The Audit and Risk Committee advises the Supervisory Board on the issues within its competence, controls reliability and efficiency of the Bank's risk management and internal control system, controls measures taken to ensure the Bank's financial (accounting) statements are complete, accurate and true, ensures implantation and promotion of risk management culture in the Bank, ensures independency and fairness of internal and external audit functions and controls performance of the system alerting of potential malfeasance by the staff or by third parties.

The full list of the Committee's functions and competences is given in the Regulation on the Audit and Risk Committee.
Audit and Risk Committee's report
In 2018, the main target of the Audit and Risk Committee (ARC, the Committee) was to continue to further improve the level of good corporate governance built during the preceding years and ensure that the control processes at the Bank are of such quality that they correspond to the best practices of the industry. Ensuring full compliance with regulatory requirements for Systemically Important Financial Institutions were a preeminent goal of the Committee.

The ARC comprises of three members, each being a non-executive member of the Supervisory Board (SB). The ARC members were Thomas Grasse, Andreas Klingen and Ilkka Salonen (Chair). Every ARC member took part in each meeting of the Committee. As in previous years, the ARC meetings held in Moscow were also attended by other independent SB members. The Committee invited relevant members of the Bank's senior management to participate in discussion of the agenda items.

During the year 2018, the ARC convened 10 times, five in the form of physical presence and another five, as conference calls. The ARC also held 13 per capsulam votes during the year.
Each of the in-person ARC meetings considered reports from KPMG and RBS, on their respective findings in auditing the financials of the Bank. In addition to these meetings, the ARC members met from time to time with the IFRS auditor outside the Bank and without the presence of the management.

The ARC studied diligently the independence of the Bank's auditors and found it to be satisfactory.

In September 2017 the ARC proposed to the Supervisory Board of the Bank to start a tender process for the IFRS auditor. The tender process was completed in April 2018 and the ARC took the decision to recommend to the Supervisory Board of the Bank to continue using KPMG as the IFRS auditor. This recommendation was endorsed by the SB and tabled at the Annual General Meeting of the Shareholders, which made the corresponding decision. During the course of the year, the Auditing Partner from KPMG was changed from Alexey Kolosov to Natalia Lukashova.
In 2018, the main target of the Audit and Risk Committee (ARC, the Committee) was to continue to further improve the level of good corporate governance built during the preceding years and ensure that the control processes at the Bank are of such quality that they correspond to the best practices of the industry. Ensuring full compliance with regulatory requirements for Systemically Important Financial Institutions were a preeminent goal of the Committee.

The ARC comprises of three members, each being a non-executive member of the Supervisory Board (SB). The ARC members were Thomas Grasse, Andreas Klingen and Ilkka Salonen (Chair). Every ARC member took part in each meeting of the Committee. As in previous years, the ARC meetings held in Moscow were also attended by other independent SB members. The Committee invited relevant members of the Bank's senior management to participate in discussion of the agenda items.

During the year 2018, the ARC convened 10 times, five in the form of physical presence and another five, as conference calls. The ARC also held 13 per capsulam votes during the year.

Each of the in-person ARC meetings considered reports from KPMG and RBS, on their respective findings in auditing the financials of the Bank. In addition to these meetings, the ARC members met from time to time with the IFRS auditor outside the Bank and without the presence of the management.

The ARC studied diligently the independence of the Bank's auditors and found it to be satisfactory.

In September 2017 the ARC proposed to the Supervisory Board of the Bank to start a tender process for the IFRS auditor. The tender process was completed in April 2018 and the ARC took the decision to recommend to the Supervisory Board of the Bank to continue using KPMG as the IFRS auditor. This recommendation was endorsed by the SB and tabled at the Annual General Meeting of the Shareholders, which made the corresponding decision. During the course of the year, the Auditing Partner from KPMG was changed from Alexey Kolosov to Natalia Lukashova.
The good progress made in 2018 acts as a sound basis for further development in 2019
The ARC closely monitored completion of CBM's migration to comply with the most advanced requirements of the IFRS9 standard. In each of the meetings held in person the committee received a detailed report on progress on the migration process.

The ARC stressed the need to adhere to international best practices in disclosures made in the Bank's financial statements.

In addition to the financial reporting of the Bank the ARC had two more streams in each of its meetings, the Internal Audit Unit's report and the Bank's Risk Management Unit's report. The latter also included reports from Compliance and Internal Control functions.

Along with the recommendations given by PwC after conducting an external review in 2017, the ARC continued in 2018 to support the Head of IAD in his efforts to develop the human resources of the division in terms of both quality and quantity. The ARC endorsed the training programme prepared individually for each member of the IAD team. The number of internal auditors which rose in 2018 from 13 to 19 will continue to grow.
The ARC also recommended to the Head of IAD a new, more informative, format for reporting to the committee. The reports in a renewed format were launched in the July meeting of the ARC. The IAD conducted a corporate governance appraisal, the results of which were discussed in detail in the July meeting of the ARC.

The growing complexity of the Bank's business activities will impose new requirements on the IAD. The good progress made in 2018 acts as a sound basis for further development in 2019.

Issues pertaining to Risk Management were given high priority in the ARC discussions, credit risk being the main focus point as it constitutes the major risk factor in the Bank's activity. At the same time, the Committee took note of the growing complexity of the Bank's business model, which will impose new requirements on the staff of the relevant risk management structures as well as the IT systems supporting the risk management processes. In this context particular emphasis was placed on integration of the acquired assets of Bank Sovetsky, which operated 28 branches outside Moscow and Moscow Region, the traditional points of the Bank's presence.
The ARC closely monitored completion of CBM's migration to comply with the most advanced requirements of the IFRS9 standard. In each of the meetings held in person the committee received a detailed report on progress on the migration process.

The ARC stressed the need to adhere to international best practices in disclosures made in the Bank's financial statements.

In addition to the financial reporting of the Bank the ARC had two more streams in each of its meetings, the Internal Audit Unit's report and the Bank's Risk Management Unit's report. The latter also included reports from Compliance and Internal Control functions.

Along with the recommendations given by PwC after conducting an external review in 2017, the ARC continued in 2018 to support the Head of IAD in his efforts to develop the human resources of the division in terms of both quality and quantity. The ARC endorsed the training programme prepared individually for each member of the IAD team. The number of internal auditors which rose in 2018 from 13 to 19 will continue to grow.

The ARC also recommended to the Head of IAD a new, more informative, format for reporting to the committee. The reports in a renewed format were launched in the July meeting of the ARC.

The IAD conducted a corporate governance appraisal, the results of which were discussed in detail in the July meeting of the ARC.

The growing complexity of the Bank's business activities will impose new requirements on the IAD. The good progress made in 2018 acts as a sound basis for further development in 2019.

Issues pertaining to Risk Management were given high priority in the ARC discussions, credit risk being the main focus point as it constitutes the major risk factor in the Bank's activity. At the same time, the Committee took note of the growing complexity of the Bank's business model, which will impose new requirements on the staff of the relevant risk management structures as well as the IT systems supporting the risk management processes. In this context particular emphasis was placed on integration of the acquired assets of Bank Sovetsky, which operated 28 branches outside Moscow and Moscow Region, the traditional points of the Bank's presence.
The Committee continues to improve the processes for identifying, evaluating and managing the principal risks faced by the Bank and rates the achieved results highly
The Committee discussed the risk management issues extensively, in particular issues related to the largest corporate borrowers. It also had a close look at the work out procedures regarding loans to individuals and the efficiency of recovery of impaired loans in this category.

During 2018, ICAAP became part of the Bank's everyday routine. Discussion regarding fine tuning of the methodologies continued in each meeting. One of the topics given particular attention was the process of validating the models.

Given the abovementioned increasing complexity, the ARC also increased its attention to operational stability, a focus that will continue into the future.

In Q4 the Bank's IT-system malfunctioned as an aftermath of a database update. The issue was discussed in detail at the ARC and measures to avoid such an incident in the future were defined.

Among other issues discussed at the ARC meetings were improvement in the organisation of the Internal Control Department and Management Accounting Systems, and new Internal Transfer Rate methodology was introduced.
The ARC welcomed enhancement of the Bank's Internal Transfer Price system, which also improves the quality of how the contribution of the Bank's various profit centres to its net profit is assessed.

The Bank's Business Continuity Plan and its testing procedures continued to feature in the agenda of the Committee's meetings.

The Committee continues to improve the processes for identifying, evaluating and managing the principal risks faced by the Bank and rates the achieved results highly. It is clear that progress will not stop here and work on development will continue.

The Committee conducted an annual self-assessment, enlisting the services of an outside consultant in conjunction with the self-assessment performed by the Supervisory Board. The results demonstrate that the Committee is carrying out its responsibilities as laid out in its charter.
The Committee discussed the risk management issues extensively, in particular issues related to the largest corporate borrowers. It also had a close look at the work out procedures regarding loans to individuals and the efficiency of recovery of impaired loans in this category.

During 2018, ICAAP became part of the Bank's everyday routine. Discussion regarding fine tuning of the methodologies continued in each meeting. One of the topics given particular attention was the process of validating the models.

Given the abovementioned increasing complexity, the ARC also increased its attention to operational stability, a focus that will continue into the future.

In Q4 the Bank's IT-system malfunctioned as an aftermath of a database update. The issue was discussed in detail at the ARC and measures to avoid such an incident in the future were defined.

Among other issues discussed at the ARC meetings were improvement in the organisation of the Internal Control Department and Management Accounting Systems, and new Internal Transfer Rate methodology was introduced. The ARC welcomed enhancement of the Bank's Internal Transfer Price system, which also improves the quality of how the contribution of the Bank's various profit centres to its net profit is assessed.

The Bank's Business Continuity Plan and its testing procedures continued to feature in the agenda of the Committee's meetings.

The Committee continues to improve the processes for identifying, evaluating and managing the principal risks faced by the Bank and rates the achieved results highly. It is clear that progress will not stop here and work on development will continue.

The Committee conducted an annual self-assessment, enlisting the services of an outside consultant in conjunction with the self-assessment performed by the Supervisory Board. The results demonstrate that the Committee is carrying out its responsibilities as laid out in its charter.
The Compensation, Corporate Governance and Nominations Committee

The Compensation, Corporate Governance and Nominations Committee formulates the Bank's remuneration policy, principles and criteria for Supervisory Board members, Management Board members and the Chairman of the Management Board, preliminarily appraises the Management Board and the Chairman of the Management Board and annually conducts a self-appraisal, puts forward proposals to the Supervisory Board as to terms of contracts with Management Board members (including early termination provisions), advises the Board of Directors on setting the principles governing remuneration and bonus payments for the Corporate Secretary, communicates with shareholders to prepare recommendations for them as to voting on the election of Supervisory Board members, plans appointments and advises on building a good corporate governance system.

The full list of the Committee's functions and competences is given in the Regulation on the Compensation, Corporate Governance and Nominations Committee, available on the Bank's website.

3
Issues addressed by the Compensation, Corporate Governance and Nominations Committee in 2018
7
2
Remuneration of Supervisory Board members, Management Board members and the Chairman of the Management Board
Appraisal of the Management and appraisal of the Supervisory Board's perdormance
Planning of appointments
The Compensation, Corporate Governance and Nominations Committee formulates the Bank's remuneration policy, principles and criteria for Supervisory Board members, Management Board members and the Chairman of the Management Board, preliminarily appraises the Management Board and the Chairman of the Management Board and annually conducts a self-appraisal, puts forward proposals to the Supervisory Board as to terms of contracts with Management Board members (including early termination provisions), advises the Board of Directors on setting the principles governing remuneration and bonus payments for the Corporate Secretary, communicates with shareholders to prepare recommendations for them as to voting on the election of Supervisory Board members, plans appointments and advises on building a good corporate governance system.

The full list of the Committee's functions and competences is given in the Regulation on the Compensation, Corporate Governance and Nominations Committee, available on the Bank's website.
13
Review of internal
documents
18
Other functions of
the Committee
Compensation, Corporate Governance and Nominations Committee's report
The Compensation, Corporate Governance and Nominations Committee was established to advise the Supervisory Board on matters of corporate governance system development, appointment and succession of the Bank's management, giving recommendations to the Bank's shareholders as to nominations to the Supervisory Board and remuneration of Supervisory Board members, advising the Supervisory Board on determining the remuneration policy for and approving the actual remuneration to Management Board members and ensuring compliance with all the appropriate regulations within the committee's purview.

All Committee members are independent directors, as required by Moscow Exchange for admitting securities to its first level quotation list.

9 Committee meetings were held in 2018, 4 of which were in person. The Committee reviewed 43 items covering its following functions: revision of the Management Board remuneration policy and supervision of its implementation, development of criteria and a system for performance appraisal of executive bodies, conducting such appraisal and reporting its results to the Supervisory
Board, preliminary annual performance appraisal of the Corporate Secretary and preparing proposals for the Supervisory Board as to bonuses for the Corporate Secretary, annual detailed formalised self-appraisal of the Supervisory Board and its committees, review of proposals on how to improve Supervisory Board work upon this appraisal, review of proposals and choosing a company for an independent appraisal of the Supervisory Board, proposing ways to improve Supervisory Board performance and advising the Supervisory Board on payment of remuneration and bonuses for its members, review and appraisal of the list of Supervisory Board nominees for election at the annual General Shareholders' Meeting, evaluating, promoting and improving corporate governance within the Bank and advising on building a good corporate governance system, developing and approving plans intended to improve the Bank's corporate governance system, including development of the corporate governance practice improvement plan based on the Internal Audit Department's recommendations, revising the list of reports deliverable for Supervisory Board meetings, review of the new D&O policy, and a review of new versions of the Bank's bylaws.
The Compensation, Corporate Governance and Nominations Committee was established to advise the Supervisory Board on matters of corporate governance system development, appointment and succession of the Bank's management, giving recommendations to the Bank's shareholders as to nominations to the Supervisory Board and remuneration of Supervisory Board members, advising the Supervisory Board on determining the remuneration policy for and approving the actual remuneration to Management Board members and ensuring compliance with all the appropriate regulations within the committee's purview.

All Committee members are independent directors, as required by Moscow Exchange for admitting securities to its first level quotation list.

9 Committee meetings were held in 2018, 4 of which were in person. The Committee reviewed 43 items covering its following functions: revision of the Management Board remuneration policy and supervision of its implementation, development of criteria and a system for performance appraisal of executive bodies, conducting such appraisal and reporting its results to the Supervisory Board, preliminary annual performance appraisal of the Corporate Secretary and preparing proposals for the Supervisory Board as to bonuses for the Corporate Secretary, annual detailed formalised self-appraisal of the Supervisory Board and its committees, review of proposals on how to improve Supervisory Board work upon this appraisal, review of proposals and choosing a company for an independent appraisal of the Supervisory Board, proposing ways to improve Supervisory Board performance and advising the Supervisory Board on payment of remuneration and bonuses for its members, review and appraisal of the list of Supervisory Board nominees for election at the annual General Shareholders' Meeting, evaluating, promoting and improving corporate governance within the Bank and advising on building a good corporate governance system, developing and approving plans intended to improve the Bank's corporate governance system, including development of the corporate governance practice improvement plan based on the Internal Audit Department's recommendations, revising the list of reports deliverable for Supervisory Board meetings, review of the new D&O policy, and a review of new versions of the Bank's bylaws.
The Strategy and Capital Markets Committee

The Strategy and Capital Markets Committee analyses the Bank's strategic management issues and ensures functioning of the strategic management cycle, formulation of the Bank's dividend policy and evaluates the effectiveness of the Bank's long-term performance. The Committee also focuses on preparing recommendations for the Supervisory Board regarding fund raising from international capital markets, optimising the internal processes related to the Bank's capital market activities and building a model of internal cooperation in connection with funding.

In addition to the above tasks, the Committee is involved in the budget process, reviews information at the stage of budget preparation, and performs a preliminary review of the Bank's financial model.

The full list of the Committee's competences is given in the Regulation on the Strategy and Capital Markets Committee, available on the Bank's website.
11
Issues addressed by the Strategy and Capital Markets Committee in 2018
5
Strategic development areas
Approval of the budget and
retated utilisation report
The Strategy and Capital Markets Committee analyses the Bank's strategic management issues and ensures functioning of the strategic management cycle, formulation of the Bank's dividend policy and evaluates the effectiveness of the Bank's long-term performance. The Committee also focuses on preparing recommendations for the Supervisory Board regarding fund raising from international capital markets, optimising the internal processes related to the Bank's capital market activities and building a model of internal cooperation in connection with funding.

In addition to the above tasks, the Committee is involved in the budget process, reviews information at the stage of budget preparation, and performs a preliminary review of the Bank's financial model.

The full list of the Committee's competences is given in the Regulation on the Strategy and Capital Markets Committee, available on the Bank's website.
4
Investor relations
17
Other functions of the Committee
Report of the Strategy and Capital Markets Committee
Following recent years of prodigious growth and active capital market activities to support such growth, culminating in Credit Bank of Moscow's achievement of top 10 status among Russian banks, 2018 was a year where the Bank focused on strengthening its operational base and reviewing and broadening its strategic vision within the context of a more cautious projected economic environment. The Strategy and Capital Markets Committee (SCMC) spent the year working with management to take stock of the bank's market positioning and to consider areas for the bank to broaden its operational capabilities and market reach.

As a leading bank in the market, Credit Bank of Moscow prides itself on its ability to offer its core clients products, solutions and services which can compete intelligently with the leading banks in the market. This perspective has prompted the bank to bolster the Management Board with the addition of six new members over 2017-2019, who have all brought significant insight and experience from their previous positions, enabling Credit Bank of Moscow to enhance its universal banking model.

An important signal of the evolution of the model was the acquisition of the infrastructure and deposits of Sovetsky Bank (deposits in liabilities and cash from the DIA in assets) in early 2018. This represented the first acquisition made by Credit Bank of Moscow of a banking franchise outside the Moscow region, its traditionally core market.
Though not large, this acquisition is an important step for the bank as it broadens its services, products and capabilities outside its core market and allows for management to broaden its managerial capabilities and to address challenges presented by new geographical markets and client base. The SCMC continues to monitor the progress of this important step.

As Corporate Banking accounts for 87% of the bank's loan portfolio, the SCMC and management placed special emphasis on the bank's offering and approaches to this segment. Throughout the year, the SCMC worked with management on reviewing numerous strategies and innovations for our Corporate Banking and SME segments, as the bank continues to introduce new approaches and services for these segments. An example of this evolution was the entry of Credit Bank of Moscow into the fee-based business of investment banking and capital markets in late 2017. Last year, this division developed into a fully-functioning department, working alongside UK-based Sova Capital, to offer clients capital market solutions in Russian and foreign markets, expanding the bank's product offering beyond its traditional commercial banking products and services. In 2018, this team has established its presence with the arrangement of 24 debt issues with an aggregate nominal value of RUB 200.0 bln, ranking Credit Bank of Moscow among the top five sales arrangers in Russia and earning it the "Breakthough of the Year" award at the 2018 Cbonds Awards.
Following recent years of prodigious growth and active capital market activities to support such growth, culminating in Credit Bank of Moscow's achievement of top 10 status among Russian banks, 2018 was a year where the Bank focused on strengthening its operational base and reviewing and broadening its strategic vision within the context of a more cautious projected economic environment. The Strategy and Capital Markets Committee (SCMC) spent the year working with management to take stock of the bank's market positioning and to consider areas for the bank to broaden its operational capabilities and market reach.

As a leading bank in the market, Credit Bank of Moscow prides itself on its ability to offer its core clients products, solutions and services which can compete intelligently with the leading banks in the market. This perspective has prompted the bank to bolster the Management Board with the addition of six new members over 2017-2019, who have all brought significant insight and experience from their previous positions, enabling Credit Bank of Moscow to enhance its universal banking model.

An important signal of the evolution of the model was the acquisition of the infrastructure and deposits of Sovetsky Bank (deposits in liabilities and cash from the DIA in assets) in early 2018. This represented the first acquisition made by Credit Bank of Moscow of a banking franchise outside the Moscow region, its traditionally core market. Though not large, this acquisition is an important step for the bank as it broadens its services, products and capabilities outside its core market and allows for management to broaden its managerial capabilities and to address challenges presented by new geographical markets and client base. The SCMC continues to monitor the progress of this important step.

As Corporate Banking accounts for 87% of the bank's loan portfolio, the SCMC and management placed special emphasis on the bank's offering and approaches to this segment. Throughout the year, the SCMC worked with management on reviewing numerous strategies and innovations for our Corporate Banking and SME segments, as the bank continues to introduce new approaches and services for these segments. An example of this evolution was the entry of Credit Bank of Moscow into the fee-based business of investment banking and capital markets in late 2017. Last year, this division developed into a fully-functioning department, working alongside UK-based Sova Capital, to offer clients capital market solutions in Russian and foreign markets, expanding the bank's product offering beyond its traditional commercial banking products and services. In 2018, this team has established its presence with the arrangement of 24 debt issues with an aggregate nominal value of RUB 200.0 bln, ranking Credit Bank of Moscow among the top five sales arrangers in Russia and earning it the "Breakthough of the Year" award at the 2018 Cbonds Awards.
As a leading bank in the market, Credit Bank of Moscow prides itself on its ability to offer its core clients products,
solutions and services which can compete intelligently with the leading banks in the market.
The evolution of the Treasury Department has been an important contributor to the growth of Credit Bank of Moscow. The department oversees the internal allocation of funding which is instrumental for the bank's various products and divisions, allowing for more transparency in performance of business segments and pricing of products. This capability gives management and the SCMC an important tool for monitoring and developing new strategies and initiatives across the bank.

As part of the overall evolution of Credit Bank of Moscow, the SCMC takes special consideration of the bank's key subsidiaries. Last year, the new management of Inkakhran, the armour truck service wholly-owned by the bank, presented its strategy and projections for the company, which are both value enhancing and synergistic for Credit Bank of Moscow. The SCMC also supported the new approach for development of SKS Bank, transforming the subsidiary into a fee-driven institution, offering the bank's and third-party financial products through third-party networks and agents. Throughout the year, the SCMC reviewed and approved a number of smaller asset and share disposals and strategic initiatives, whose goal was to streamline the bank's operations and/or strengthen its distribution networks.

A core focus of the SCMC has been the evolution of Credit Bank of Moscow's Information Technology ("IT") and digitalisation platform and services. Last year, the SCMC requested several reviews on the overall position and functionality of the bank's IT platform and a review of the bank's digital vision and model for the future. This focus took on greater resolve, in part, after an unexpected incident caused a temporary outage in September of a specific protocol in the bank's online offering.
This incident led, in part, to the decision to strengthen the IT leadership of the Bank by recruiting a new Management Board member position responsible solely for the firm's Information Technology division and strategy. The SCMC is very supportive of the new IT management and is working closely with the team to further refine the vision and strategy for 2019 and beyond.

As in past years, the SCMC oversees the development and monitoring of Credit Bank of Moscow's financial targets over the year. As foreseen at the beginning of the year, the corporate market proved to be more challenging than in the recent past, which was reflected by modest budgeted growth targets. This concerning forecast was confirmed by the drop in the Bank's corporate lending levels by the end of the year, reflecting the management's focus on upholding the parameters around risk management and underlying profitability. Credit Bank of Moscow's retail business showed good growth and exceeded its target for the year. The bank also demonstrated strong funding growth by attracting corporate and retail deposits, so continuing to diversify its funding base and reducing its risk of exposure to any one specific area of funding. Overall, the bank enjoyed a good performance in 2018, in large part due to much lower loan provisioning levels as a result the management's efforts over the past few years to enhance the quality of the portfolio. Throughout the year, the SCMC reviewed the bank's quarterly performance and monitored key ratios highlighting the bank's capital and liquidity positions, as well as its asset quality and profitability measures.
The evolution of the Treasury Department has been an important contributor to the growth of Credit Bank of Moscow. The department oversees the internal allocation of funding which is instrumental for the bank's various products and divisions, allowing for more transparency in performance of business segments and pricing of products. This capability gives management and the SCMC an important tool for monitoring and developing new strategies and initiatives across the bank.

As part of the overall evolution of Credit Bank of Moscow, the SCMC takes special consideration of the bank's key subsidiaries. Last year, the new management of Inkakhran, the armour truck service wholly-owned by the bank, presented its strategy and projections for the company, which are both value enhancing and synergistic for Credit Bank of Moscow. The SCMC also supported the new approach for development of SKS Bank, transforming the subsidiary into a fee-driven institution, offering the bank's and third-party financial products through third-party networks and agents. Throughout the year, the SCMC reviewed and approved a number of smaller asset and share disposals and strategic initiatives, whose goal was to streamline the bank's operations and/or strengthen its distribution networks.

A core focus of the SCMC has been the evolution of Credit Bank of Moscow's Information Technology ("IT") and digitalisation platform and services. Last year, the SCMC requested several reviews on the overall position and functionality of the bank's IT platform and a review of the bank's digital vision and model for the future. This focus took on greater resolve, in part, after an unexpected incident caused a temporary outage in September of a specific protocol in the bank's online offering. This incident led, in part, to the decision to strengthen the IT leadership of the Bank by recruiting a new Management Board member position responsible solely for the firm's Information Technology division and strategy. The SCMC is very supportive of the new IT management and is working closely with the team to further refine the vision and strategy for 2019 and beyond.

As in past years, the SCMC oversees the development and monitoring of Credit Bank of Moscow's financial targets over the year. As foreseen at the beginning of the year, the corporate market proved to be more challenging than in the recent past, which was reflected by modest budgeted growth targets. This concerning forecast was confirmed by the drop in the Bank's corporate lending levels by the end of the year, reflecting the management's focus on upholding the parameters around risk management and underlying profitability. Credit Bank of Moscow's retail business showed good growth and exceeded its target for the year. The bank also demonstrated strong funding growth by attracting corporate and retail deposits, so continuing to diversify its funding base and reducing its risk of exposure to any one specific area of funding. Overall, the bank enjoyed a good performance in 2018, in large part due to much lower loan provisioning levels as a result the management's efforts over the past few years to enhance the quality of the portfolio. Throughout the year, the SCMC reviewed the bank's quarterly performance and monitored key ratios highlighting the bank's capital and liquidity positions, as well as its asset quality and profitability measures.
Overall, the bank enjoyed a good performance in 2018, in large part due to much lower loan provisioning levels as a result the management's efforts over the past few years to enhance the quality of the portfolio.
With lower asset growth in 2018 and the management's focusing on operational enhancements, Credit Bank of Moscow began the year with the expectation of relatively little need to access the capital markets. During the course of the first half of the year, feedback from forei