Saint-Petersburg Commercial Bank “Tavrichesky” (joint-stock) (стр. 4 )

As of December 31st, 2006, the official rate of ruble used for re-estimation of the remainders for accounts in foreign currency was 26.3311 rubles per 1 US dollar (2005: 28.7895 rubles per 1 US dollar), 34.6965 rubles per 1 Euro (2005: 34.1850 rubles per 1 Euro)

At exchange of Russian rubles for other currencies measures of currency control are used. Nowadays the Russian ruble is not a freely converted currency in most countries outside the Russian Federation.

Derivative financial instruments

Derivative financial instruments including currency exchange contracts, interest futures, agreements of future interest rates, currency and interest swaps, currency and interest options and other derivative financial instruments are primarily represented in the balance at fair value (which is, as a rule, cost of acquisition including expenses for the transaction) and re-estimated at fair value. The fair value is calculated on the basis of rated market prices, models of discounting monetary funds flow, models of price determination for option or spot rate for the end of year depending on type of transaction. All derivative instruments are accounted as assets if their fair value is positive and as obligations if their fair value is negative.

Derivative financial instruments are included into the balance article “Financial assets estimated according to fair value via profit or loss” if fair value of a derivative financial instrument is positive, or into the article “Financial obligations estimated according to fair value via profit or loss” if fair value of a derivative financial instrument is negative.

Changes of the fair value of derivative instruments are included into the income with deduction of expenditures from operations with foreign currency, income with deduction of expenditures from operations with financial assets estimated according to fair value via profit or loss and income with deduction of expenditures from operations with precious metals, depending on the type of transaction.

Mutual clearing

Financial assets and obligations can be accounted against each other and the net result of such account is represented in the balance in case if there is legal basis for execution of such an account and if there is an intention to carry out such mutual clearing of requirements and obligations or if the realization of assets and fulfillment of obligations are planned at the same time.

Assets under custody

Assets belonging to third persons being clients of the Bank handed over on the grounds of a deposit contract, agent contract, trust management contract and other similar contract are not the assets of the Bank and are not included in the Bank’s balance.

Accounting at hyperinflation

Until 2003 Russia was considered as a country with hyperinflation economy. The Bank used the IFRS 29 “Financial accounting in hyperinflation conditions”. Naturally, some corrections have been added to the present financial account representing changes in costs of non-monetary funds and own funds as a result of hyperinflation.

Correction sums were calculated on the basis of re-calculation factors based on the indexes of consumer prices of the Russian Federation (ICP) published by the State Statistics Committee, and on indexes obtained from other sources for the periods before 1992. ICP used for re-calculation of financial accounts are based on the prices of 1988, in this case the basic index was 100. The table below gives the ICP within five years finished December 31st, 2002 and the corresponding re-calculation factors:

ICP Re-calculation factor

124

164

237

215

200

Capital assets are corrected with consideration of the ICP used for them from the date of acquisition or the last re-estimation ponents of the shareholders own funds are corrected by using the ICP from the date of operations resulting in changes of ownership funds.

Obligations for payment of the unified social tax

The Bank pays contributions into the Pension fund, Fund of social insurance, Fund of obligatory medical insurance and Fund of employment of the Russian Federation for its employees. These expenditures are accounted as they occur and are included into the expenditures for employees.

NOTE 5 – MONETARY FUNDS AND THEIR EQUIVALENTS

Monetary funds and their equivalents consist of the following:

	2006	2005
Cash
Remainders on accounts of the Bank of Russia (except for obligatory reserves)	1	1
Correspondent accounts and “overnight” deposits in banks
- of the Russian Federation	33 673	38 236
- in other countries	25 677
Settlement accounts in commercial systems and funds in non-bank credit companies	29 544	8 013
Total: monetary funds and their equivalents	2	1

Geographic analysis, analysis of monetary funds according to structure of currencies, repayment periods and analysis of interest rates are given in Note 25.

NOTE 6 – FINANCIAL ASSETS ESTIMATED ACCORDING TO FAIR VALUE VIA PROFIT OR LOSS

	2006	2005
Shares	3 635	3 976
Derivative financial instruments	1 107	553
Bonds of companies	-	2 279
Municipal bonds	-	629
Total: financial assets, estimated according to fair value via profit or loss	4 742	7 437

Corporate shares are presented by shares of Russian companies freely circulating on the Russian market.

For determination of the fair value of financial assets estimated according to fair value via profit or loss, the market prices of the Moscow Interbank Currency Stock Exchange (MICEX) were used.

Financial assets estimated according to fair value via profit or loss include derivative financial assets with the positive cost as of the end of the year. See Note 26.

Geographic analysis, analysis of financial assets, estimated according to fair value via profit or loss according to currency structure, repayment periods and analysis of interest rates are given in Note 25.

Note 7 – Assets In Other Banks

Assets in other banks comprise:

	2006	2005
Current credits and term deposits in other banks		1 439
Bills of exchange	6 857
Assets in other banks, total

The bills of exchange are presented by short-term discount securities of Sberbank of the Russian Federation and ZAO “Konversbank”. The bills of exchange mature after sight, but no earlier than December, 2006.

Assets in credit institutions are presented in amortized costs in accordance with the provisions of IFRS 39.

Reserves for depreciation of assets in other banks were not created in 2006 and 2005.

Geographic analysis, as well analysis of assets in other banks according to their currency structure, maturity terms and analysis of interest rates are presented in Note 25.

Note 8 – Credits And Receivables

Credits have been generally granted to borrowers of the Russian Federation and include:

	2006	2005
Current credits	7	6
Assets for settlements of brokerage transactions	20 002	24 656
Overdue credits
	7	6
With the deduction of the depreciation reserve	(	(
Credits and receivables, total	6	5

In the profit and loss account of 2006 there is a loss from assessment of credits at the fair value of 42,384 thousand rubles. (2005: loss totaling 17,745 thousand rubles).

Credit portfolio structure of the Bank on economy branches is given in the following table:

	2006	2005
	Amount	%	Amount	%
Trade		13.2%	2	41.1%
Real estate operations		11.1%	-	0.0%
Services		10.4%	65 763	1.1%
Rent		10.1%	-	0.0%
Industry		8.0%		13.8%
Physical persons		7.3%		5.5%
Construction		7.2%		12.0%
Transport and communication		5.9%		8.3%
Power industry		5.2%		2.2%
Private entrepreneurs		4.1%		3.9%
Agriculture		3.9%		4.7%
Financial operations		3.2%	76 580	1.3%
Education		1.5%	-	0.0%
Healthcare	22 926	0.3%	-	0.0%
Forestry	21 353	0.3%	39 199	0.7%
Other branches		8.3%		5.6%
Credits and receivables, total	6	100.0%	5	100.0%

As of December 31, 2006 the indebtedness of the 10 biggest borrowers of the Bank made 1,926,541 thousand rubles or 27.6% of the total credit portfolio. (in 2005 the indebtedness of 13 borrowers made 1,875,359 thousand Rubles, or 28.4%).

Credits and receivables are presented at the amortized cost in accordance with the provisions of the IFRS 39.

The movement of reserves for depreciation of the credit portfolio is presented in the following table:

	2006	2005
Reserve for depreciation of the credit portfolio by December, 31 of the year which precedes the reporting year
Creation of reserves during the year
Credits and receivables amortized during the year as uncollectible	(
Reserve for depreciation of the credit portfolio by December, 31 of the reporting year

Geographic analysis, as well analysis of credits and receivables according to their currency structure, maturity terms and analysis of interest rates are presented in the Appendix 25.

The Bank has granted a certain amount of credits to affiliated parties. The corresponding information on the credits to affiliated parties is presented in the Appendix 27.

Note 9 – Financial Assets Available For Sale

Financial assets available for sale comprise:

	2006	2005
Quotas of participation in business entities	60 000	3
Shares	12 066	2 687
With the deduction of depreciation reserves	(300)	(62)
Financial assets available for sale, total	71 766	2 628

Shares of participation of the Bank in authorized capitals of business entities comprise the share in OOO Sheron which totals 30,000 thousand rubles (18.1%) and OOO “DTs Torzhkovsky” which totals 30,000 thousand rubles (18,1%). These investments are not essential for the purposes of consolidation.

Investments in shares present securities quoted and not quoted on the market, with par value in Russian rubles, which are issued by Russian companies. Securities for which the due and effective methods of the sound assessment of their fair value are not defined, are presented in the form of actual purchase costs.

The information on changes of the balance value of financial assets available for sale is given below:

	2006	2005
Balance value by December, 31 of the year which precedes the reporting year	2 690	2 716
Purchase of financial assets available for sale	74 619	-
Change of the revaluation reserve at the fair value of financial assets available for sale	2 130	-
Retirement of financial assets available for sale	(7 373)	(26)
Balance value by December, 31 of the reporting year before the deduction of reserves	72 066	2 690
With the deduction of the depreciation reserve	(300)	(62)
Balance value by December, 31 of the reporting year	71 766	2 628

The movement of reserves is presented in the following table: