Joint-Stock Commercial Bank “BANKank OFof INVESTMENTS AND SAVINGSIinvestments and Ssavings “Investsberbank” (Open Joint Stock Company ОAO) (стр. 8 )

Trading securities - As of 31 December 2004 and 2003 trading securities are stated at fair value. Fair value of trading securities was determined with reference to an active market.

Loans and advances to customers - The fair value of the loan portfolio is based on the credit and interest rate characteristics of the individual loans within each sector of the portfolio. The estimation of the allowance for loan losses includes consideration of risk premiums applicable to various types of loans based on factors such as the current situation of the economic sector in which each borrower operates the economic situation of each borrower and guarantees obtained. Accordingly, the allowance for loan losses is considered a reasonable estimate of the discount required to reflect the impact of credit risk.

Loans and advances from banks - As at 31 December 2004 and 2003 the carrying amount of deposits from banks is a reasonable estimate of their fair value.

Deposits from customers - As at 31 Decmeber 2004 and 2003 the carrying amount of time deposits and current customer accounts of the Bank is a reasonable estimate of their fair value.

Debt securities issued - Debt securities issued are stated at cost, adjusted for amortization of premium and discounts, which approximates fair value.

287. REGULATORY MATTERS

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (as set forth in the table below) of total and tier 1 capital (as defined) to risk weighted assets.

The standard was calculated according to the principles employed by the Basle Committee by applying the following risk estimates:

Measurement	Description of position
0%	Cash and balances with the Central Bank of the Russian Federation
0%	State debt securities in Russian Rubles
20%	Loans and advances to banks for up to 1 year
50%	Commitments on unused loans with the initial maturity of up to 1 year
100%	Loans and advances to customers
100%	Guarantees
100%	Other assets

The Bank’s actual capital amounts and ratios are presented in the following table:

	Actual amount		For Capital Adequacy purposes		Capital adequacy ratio		Minimum Required Ratio
	(RUR’000)		(RUR’000)
As at 31 December 2004
Total capital	6179582,702166888713		6179582,70266818713		112.31569%		8%
Tier 1 capital	6179582,170266888713		6179582,70266818713		121.31569%		4%
As at 31 December 2003
Total capital	556,53943400		556,53943400		12.987%		8%
Tier 1 capital	556,53943400		556,53943400		12.987%		4%

298. RISK MANAGEMENT POLICY

Management of risk is fundamental to the banking business and is an essential element of the Bank’s operations. The main risks inherent to the Bank’s operations are those related to credit exposures, liquidity and market movements in interest rates and foreign exchange rates. A description of the Bank’s risk management policies in relation to those risks is as follows.

The Bank manages the following main types of risks:

Liquidity Risk

Liquidity risk refers to the inability to timely meet the Bank’s obligations to its clients and counterparties as well as to satisfy the clients’ and counterparties’ needs in credit resources. The Bank is subject to this risk since it has to use the cash resources on a daily basis in order to execute clients’ transactions, redeem deposits, issue loans, redeem guarantees and derivatives that involve movement of cash resources. The bank does not accumulate funds to meet all the liabilities simultaneously, as according to the practice, the necessary required amount of funds

can be reasonablyprecisely forecasted. The Bbank defines internal rules of management for funds with different maturity, investing them into securities with respective due date, or repayable within 10-30 banking days. The policy of liquidity risk management – Investmenting policy of the Bank is approved by the Board of Directors. Investmenting policy ratios are revised regularly (on the quarterly basis) and are directed to pass the crisis environment.

The liquidity risk monitoring is performed twice a month by athe risk-manager reporting to the Chairman, of Directors and by Credit Committee. Current liquidity management is controlled by Treasury of the Bank, which performs operations on money - market maintaining the current liquidity level and cash flows optimization.

The following table presents an analysis of interest rate risk and liquidity risk. Interest bearing assets and liabilities generally have relatively short maturities and interest rates are changed only at maturity.

.

Up to 1 month		1 month to 3 months		3 months to 1 year		1 year to 5 years		Over 5 years		Overdue		Maturity undefined (incl. allowance for losses)		2004 Total RUR’000
ASSETS
Interest bearing assets:
Cash and cash equivalents	374,542		-		-		-		-		-		-		374,542
Loans and advances to banks	5,692		-		-		-		-		-		-		5,692
Trading securities	177,224		-		-		-		-		-		-		177,224
Loans and advances to customers, less allowance for loan losses	716,21429,570		923,894		2,122,052		638,515		21,772		-		(127,290269,72930)(164,556)		4,308,5132952,517244,257,891
Total interest-bearing assets	1,28773,672028		923,894		2,122,052		638,515		21,772		-		(1276926,290723930)(164,556)		4,8651052,9711829754,815,349
Cash and cash equivalents	739,500		-		-		-		-		-		-		739,500
Obligatory reserves with the CBR	-		-		-		-		-		-		91,827		91,827
Loans and advances to banks	1,451		-		-		-		-		-		-		1,451
Loans and advances to customers, less allowance for loan losses	-13,356-		-		-		-		-		52,653		(1052,220653)(52,653)		-55,789-
Fixed and intangible assets, less accumulated depreciation	-		-		-		60,18815		9,862		-		-		70,047
Other assets, less allowance for losses	21306,73983542		10,95248		17,031		545		-		-		(340)		54148,5862938536
Interest income accrued on interest bearing assets	2531,059461		3,891		-		-		-		-		-		2835,950352
TOTAL ASSETS	2,066,436		938,7373		2,139,083		699,245		31,634		52,653		(88,45096)(125,722)		5,839,33226885,802,062

	Up to 1 month		1 month to 3 months		3 months to 1 year		1 year to 5 years		Over 5 years		Overdue		Maturity undefined (incl. allowance for losses)		2004 Total RUR’000
Up to 1 month		1 month to 3 months		3 months to 1 year		1 year to 5 years		Over 5 years		Overdue		Maturity undefined (incl. allowance for losses)		2004 Total RUR’000
LIABILITIES
Interest bearing liabilities:
Deposits from banks	3,229		-		-		-		-		-		-		3,229
Deposits from customers	467,664		230,618		1,340,675		534,184		-		-		-		2,573,141
Debt securities issued	317,191		236,995		407,161		9,584		-		-		-		970,931
Total interest bearing liabilities	788,084		467,613		1,747,836		543,768		-		-		-		3,547,301
Deposits from banks	6,097		-		-		-		-		-		-		6,097
Deposits from customers	1,568,448		189		541		636		-		-		-		1,569,814
Debt securities issued	14,737		-		-		-		-		-		-		14,737
Provisions for off-balance sheet commitments Provisions on guarantees	-		-		-		-		-		-		1,255		1,255
Provisions on for legal claims	-		-		-		-		-		-		12,315		12,315
Income tax liability	-		30		-		-		-		-		-		30
Other liabilities	564		7,934		35,734949		-		-		-		-		142,232447
Interest expense accrued on interest bearing liabilities	6,989		20,263		27,135		1,492		-		-		-		55,879
TOTAL LIABILITIES	2,384,919		4956,029999		1,77981,2461		545,896		-		-		13,570		5,2219,6360875
Liquidity gap	(318,483)		442,70438		3597,837622		153,349		31,634
Interest sensitivity gap	49885,588944		456,281		374,216		94,747		21,772
Cumulative interest sensitivity gap	498,94485,588		94155,869225		1,31629,085441		1,41024,832188		1,43245,604960
Cumulative interest sensitivity gap as a percentage of total assets	98%		16%		23%		24%		25%

	Up to 1 month		1 month to 3 months		3 months to 1 year		1 year to 5 years		Over 5 years		Overdue		Maturity undefined (including allowance for loss)		2003 Total RUR’000
ASSETS
Interest bearing assets:
Cash and cash equivalents	282,905		-		-		-		-		-		-		282,905
Loans and advances to banks, less allowance for loan losses	143,847		-		-		-		-		-		-		143,847
Trading securities	782,953		-		-		-		-		-		-		782,953
Loans and advances to customers, less allowance for loan losses	367,494		151,961		669,319		883,692		4,055		-		(106,908)		1,969,613
Total interest-bearing assets	1,577,1991,598,313		151,961151,982		669,319669,319		883,692883,692		4,0554,055		--		(106,908)(106,908)		3,179,3183,179,318
Cash and cash equivalents	439,596		-		-		-		-		-		-		439,596
Obligatory reserves and balances with the CBR	-		-		-		-		-		-		267,215		267,215
Loans and advances to banks, less allowance for loan losses	2,011		-		-		-		-		-		-		2,011
Loans and advances to customers, less allowance for loan losses	-		-		-		-		-		7,468		(7,468)		-
Investment securities	-		-		-		-		50		-		-		50
Fixed and intangible assets, less accumulated depreciation	-		-		-		22,097		38,608		-		-		60,705
Interest income accrued on interest-bearing assets	21,114		21		-		-		-		-		-		21,135
Other assets, less allowance for losses	9,439		24,778070		1,267614		-1,639		-50		-		(48)		15,12075
TOTAL ASSETS	2,049,359		1546,76670052		670,586933		9057,428789		42,7113		7,468		152,791		3,985,105
LIABILITIES
Interest bearing liabilities:
Deposits from banks	-		-		14,727		-		-		-		-		14,727
Deposits from customers	64,253		94,926		484,850		260,365		-		-		-		904,394
Debt securities issued	46,995		58,906		103,866		117,884		-		-		-		327,651
Total interest bearing liabilities	111,248		153,832		603,443		378,249		-		-		-		1,246,772
Deposits from banks	13,932		-		-		-		-		-		-		13,932
Deposits from customers	2,020,247		7,360		17,172		3,682		-		-		-		2,048,461
Debt securities issued	84,763		5,294		-		2,100		-		-		-		92,157
Provisions for off-balance sheet commitments	-		-		-		-		-		-		135		135
Income tax liabilitesy	430		4306430 -		-		-		-		-		-		43046430
Interest expense accrued on interest bearing liabilities	8,768		4,040		11,431		1,658		-		-		-		25,897
Other liabilities	56		671		-60		-		-		-		-		7827
TOTAL LIABILITIES	2,239,014		171,62766127		632,10046		385,689		-		-		135		3,428,511605571
Liquidity gap	(189,655)		(165,867901867575)		38,45840887		5201,739100		42,713
Interest sensitivity gap	1,465,951		(1,871)		65,876		505,443		4,055
Cumulative interest sensitivity gap	1,465,951		1,464,080		1,529,956		2,035,399		2,039,454
Cumulative interest sensitivity gap as a percentage of total assets	37%		37%		38%		51%		51%

Substantially all of the Bank’s interest-bearing assets and interest bearing liabilities are at fixed rates of interest.