Financial Statements. For the year ended 31 December 1999 and 1998 (стр. 18 )

The contractual maturity of the above instruments is the latest date that the Bank may be called to honour its obligation under the instrument.

Based on management’s estimate, no provisions are required against guarantees and letters of credit issued by the Bank.

Pension and retirement plans

Employees receive pension benefits from the Government of Russian Federation in accordance with the laws and regulations of the country. As of 31 December 1999 and 1998, the Bank was not liable for any supplementary pension, post-retirement health care, or insurance benefits to its current or former employees.

28. RENT

Future rent payments payable, by year, under contracts in effect at 31 December are as follows:

		1999 RUR ‘000		1998 RUR ‘000
1999		-		43,977
2000		-		43,977
2001		3,618		14,659
2002		32,908		-
2003		32,908		-
2004		27,423		-
		96,857		102,613

29. CONTINGENCIES

Taxation

The taxation system in the Russian Federation is relatively new and is characterised by numerous taxes and frequently changing legislation, which may be applied retroactively and is often unclear, contradictory, and subject to interpretation. Often, differing interpretations exist among numerous taxation authorities and jurisdictions. Taxes are subject to review and investigation by a number of authorities, who are enabled by law to impose severe fines, penalties and interest charges.

These facts may create risks in the Russian Federation substantially more significant than in other countries. Management believes that it has adequately provided for tax liabilities based on its interpretation of tax legislation. However, the relevant authorities may have differing interpretations and the effects could be significant.

Insurance

The Russian insurance industry is in a developing state and many forms of insurance protection common in other parts of the world are not yet generally available in Russia. The Bank does not have full coverage for its fixed assets, business interruption, or third party liability in respect of property or environmental damage arising from accidents on Bank property or relating to Bank operations. Until the Bank obtains adequate insurance coverage, there is a risk that the loss or destruction of certain assets could have a material adverse effect on the Bank’s operations and financial position.

Management is currently not engaged in any litigation and knows of no potential litigation against the Bank.

30. RELATED PARTY TRANSACTIONS

For purpose of the financial statements the following are considered to be related parties of the Bank:

·  The Bank’s Shareholders and their immediate families;

·  Directors and officers of the Bank and their immediate families; and

·  Enterprises in which the Bank or its shareholders, officers or directors or their immediate families, have control or significant influence.

30. RELATED PARTY TRANSACTIONS (continued)

The outstanding balances and the average interest rates as of 31 December 1999 and 1998 with related parties are as follows:

	1999 RUR ‘000	Average Weighted Interest Rate		1998 RUR ‘000	Average Weighted Interest Rate
Assets
Loans to shareholders	427,054	4.02%		55,245	5.16%
Receivable from ING Group companies	235,484	8.59%		278,449	7.67%
Loans to directors and senior management	800	9.62%		1,487	9.62%

Liabilities

Deposits from shareholders	3,670,273	5.99%		12,512,639	5.69%
Guarantee fees payable	15,750	-		1,742	-

Amounts included in the profit and loss statement in relation to related party transactions are as follows