COMMERCIAL BANK “R C (LIMITED LIABILITY COMPANY...Commercial bank “Kaznachey” (Ltd.) to Commercial bank “Renaissance Capital” (Limited liability company). The Bank operates

COMMERCIAL BANK “RENAISSANCE CAPITAL” (LIMITED LIABILITY COMPANY)

Unaudited Interim Condensed Financial Statements

June 30, 2008 Together with Report on Review

of Interim Condensed Financial Statements

Commercial bank “Renaissance Capital” (Limited liability company)

Interim Condensed Financial Statements

June 30, 2008

Contents Report on Review of Interim Condensed Financial Statements Interim Condensed Financial Statements Interim Condensed Balance Sheet .................................................................................... 1 Interim Condensed Income Statement .............................................................................. 2 Interim Condensed Statement of Changes in Net Assets Attributable to the Participant....... 3 Interim Condensed Statement of Cash Flows..................................................................... 4 Notes to Interim Condensed Financial Statements ............................................................. 5

CJSC Ernst & Young Vneshaudit Sadovnicheskaya Nab., 77, bld. 1 Moscow, 115035, Russia

Tel: +7 (495) 705 9700 +7(495) 7559700

Fax: +7 (495) 755 9701 www.ey.com/russia

3A0 uapncr 3~ Rnr Bneuraycu(n> POCCIAR, 115035, MOCKEEI Canos~rrrec~afl ~a6., 77, crp. 1

Ten.: +7 (495) 705 9700 +7 (495) 755 9700

Report on Review of Interim Condensed Financial Statements

To the Participant and Board of Directors of Commercial bank "Renaissance Capital" (Limited liability company) -

Introduction

We have reviewed the accompanying interim condensed financial statements of Commercial bank "Renaissance Capital" (Limited liability company) (the "Bank") as of June 30, 2008, comprising of the interim condensed balance sheet as of June 30, 2008, and the related interim condensed income statement for the three months and six months then ended, statements of changes in net assets attributable to the participant and cash flows for the six months then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting ("IAS 34"). Our responsibility is to express a conclusion on these interim condensed financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial statements are not prepared, in all material respects, in accordance with IAS 34.

August 28,2008

Commercial bank "Renaissance Capital" (Limited liability company)

Interim Condensed Balance Sheet

As of June 30,2008

(Thousands of Russian Rubles)

June 30, December 31, Notes 2008 2007

(Unaudite@ (Audited)

Assets Cash and cash equivalents Amounts due from credit institutions Available for sale securities:

- pledged under repurchase agreements - other

Loans to customers Property and equipment Intangible assets Deferred tax asset Other assets

Total assets

Liabilities Amounts due to credit institutions Amounts due to customers Debt securities issued Other borrowed funds Other liabilities Deferred tax liabilities

Liabilities excluding net assets attributable to participant

Net assets attributable to the participant Charter capital Additional paid-in capital Net change in available-for-sale securities, net of tax Accumulated deficit

Total net assets attributable to the participant Total liabilities including net assets attributable to the participant

Signed and authorized for release on behalf of the Management Board of the Bank

S.B. Korolev

L.B. Maryina

August 28,2008

Vice-President

ccountant

The accompanying notes on pages 5 to 22 are an integral part of these interim condgnsed financial statements.

1


Interim Condensed Income Statement

For the three and six months ended June 30, 2008


2

Notes 2008 2007 2008 2007(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Loans to customers 3,052,294 908,809 5,644,042 1,922,172Amounts due from credit institutions 9,276 1,056 25,106 3,540Available-for-sale securities 29,426 1,360 29,426 1,360Interest income 3,090,996 911,225 5,698,574 1,927,072

Debt securities issued (494,174) (303,822) (949,550) (505,677)Amounts due to customers (414,264) (29,634) (661,605) (87,887)Other borrowed funds (176,862) (35,496) (292,930) (62,543)Amounts due to credit institutions (67,454) (16,197) (94,352) (21,619)Interest expense (1,152,754) (385,149) (1,998,437) (677,726)

Net interest income 1,938,242 526,076 3,700,137 1,249,346Allowance for loan impairment 8 (1,346,775) (712,464) (2,384,999) (1,262,849)Net interest income after allowance for loan impairment 591,467 (186,388) 1,315,138 (13,503)

Fee and commission income 1,163,986 429,720 2,040,586 724,315Fee and commission expense (126,938) (59,573) (220,909) (99,127)Net fee and commission income 1,037,048 370,147 1,819,677 625,188

Fines and penalties for overdue payments on loans 438,662 338,495 823,373 379,789Loss from early extinguishment of debt securities issued - (2,287) - (2,287)Gains less losses from available-for-sale securities (28,024) - (28,024) -Gains less losses from foreign currencies: - translation differences 76,113 23,326 728,438 31,495 - dealing (223,186) (28,818) (925,824) (35,123)Other income 8,867 10,550 2,752 22,335Other non-interest income 272,432 341,266 600,715 396,209

Compensation and benefits (775,001) (377,338) (1,567,017) (713,303)General administrative and operating expenses (567,846) (282,720) (946,406) (471,621)Depreciation and amortisation (113,765) (48,324) (216,052) (85,977)Taxes other than income taxes (94,631) (53,973) (168,072) (84,685)Other non interest expense (1,551,243) (762,355) (2,897,547) (1,355,586)

Profit / (loss) before income tax 349,704 (237,330) 837,983 (347,692)Income tax (charge) / benefit 9 (103,627) 46,762 (245,943) 63,483

Net profit / (loss) for the period before transactions with participant 246,077 (190,568) 592,040 (284,209)

For the six months ended June 30,

For the three months ended June 30,

The accompanying notes on pages 5 to 22 are an integral part of these interim condensed financial statements.


Interim Condensed Statement of Changes in Net Assets Attributable to the Participant

For the six months ended June 30, 2008


3

Charter capital

Additional paid-in capital

Accumulated deficit

Net change in available for sale securities

net of tax

Net assets attributable

to the participant

December 31, 2007 501,000 7,736,226 (613,754) - 7,623,472Contributions from the participant (Note 15) (Unaudited) - 1,443,760 - - 1,443,760Net profit for the period before transactions with participant (Unaudited) - - 592,040 - 592,040Net change in available for sale securities net of tax (Unaudited) - - - (856) (856)

June 30, 2008 (Unaudited) 501,000 9,179,986 (21,714) (856) 9,658,416

Charter capital

Additional paid-in capital

Accumulated deficit

Net change in available for sale securities

net of tax

Net assets attributable

to the participant

December 31, 2006 501,000 2,913,400 (859,495) - 2,554,905Contributions from the participant (Note 15) (Unaudited) - 1,529,964 - - 1,529,964Net loss for the period before transactions with participant (Unaudited) - - (284,209) - (284,209)

June 30, 2007 (Unaudited) 501,000 4,443,364 (1,143,704) - 3,800,660



Interim Condensed Statement of Cash Flows



4

Notes 2008 2007

(Unaudited) (Unaudited)Cash flows from operating activitiesNet profit / (loss) for the period before transactions with participant 592,040 (284,209)Adjustments for

Depreciation and amortization 216,052 85,977Allowance for loan impairment 8 2,384,999 1,262,849Accrued coupon on available for sale securities (5,348) -Accrued interest on amounts due from credit institutions 401 164Accrued interest expenses on amounts due to customers 70,486 (24,578)Accrued interest expenses on amounts due to credit institutions 69,759 6,722Accrued interest on loans to customers (1,365,372) (224,054)Accrued interest expenses on debt securities issued 108,489 167,110Accrued interest expenses on other borrowed funds 63,507 8,591Accrued expenses 35,140 145,095Deferred tax charge / (benefit) 9 245,943 (63,483)Accrued gains less losses under term deals 225,931 16,936Gains less losses from foreign currencies (728,438) (31,495)

Operating gain before change in operating assets and liabilities 1,913,589 1,065,625(Increase)/decrease in operating assets:

Loans to customers (15,432,303) (7,896,016)Amounts due from credit institutions (624,271) (38,811)Other assets (60,903) (16,606)

Increase/(decrease) in operating liabilities:Amounts due to credit institutions 4,267,355 1,144,525Amounts due to customers 581,849 (1,031,538)Other liabilities 151,794 (4,389)

Net cash used in operating activities (11,116,479) (6,777,210)

Cash flows from investing activitiesPurchase of property and equipment (129,621) (159,681)Purchase of intangible assets (136,022) (111,516)Disposal of property and equipment 703 34Purchase of available for sale securities (6,578,676) -Disposal of available for sale securities 5,918,085 -

Net cash used in investing activities (925,531) (271,163)

Cash flows from financing activitiesContributions from the participant 15 1,443,760 1,529,964Proceeds from debt securities issued 8,604,912 12,912,916Redemption of debt securities issued (4,041,714) (1,157,000)Proceeds from other borrowed funds 4,344,152 645,763Redemption of other borrowed funds (829,533) (105,000)

Net cash provided by financing activities 9,521,577 13,826,643Effect of currency exchange rates on cash and cash equivalents (132,439) (6,188)Net change in cash and cash equivalents (739,283) 6,772,082

Cash and cash equivalents as of January 1 5 4,906,887 771,181

Cash and cash equivalents as of June 30 5 4,167,604 7,543,263

Supplemental information:Interest income received 4,307,798 1,425,139Interest expense paid 1,939,592 618,417




Notes to the Interim Condensed Financial Statements



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1. Principal Activities Commercial bank “Renaissance Capital” (Limited liability company) (the “Bank”) was formed on November 24, 2000 under the laws of the Russian Federation. In March 2004 the Bank obtained approval from the Central Bank of Russia (“CBR”) to change its name from Commercial bank “Kaznachey” (Ltd.) to Commercial bank “Renaissance Capital” (Limited liability company). The Bank operates under banking licenses number 3354 issued by the CBR on March 30, 2004 allowing the Bank to provide banking services to corporate clientele and individuals. The Bank also possesses license of equity market participant (trust operations) number 077-10123-001000 issued by Federal Service for the Securities Market on April 24, 2007 and licenses of equity market participant (brokerage, dealer and depositary activity) issued by Federal Service for the Securities Market on January 29, 2008. Starting on December 23, 2004 the Bank is a member of the obligatory deposit insurance system. The system operates under the Federal laws and regulations and is governed by State Corporation “Agency for Deposits Insurance”. Insurance covers Bank’s liabilities to individual depositors for the amount up to RUR 400 for each individual in case of business failure and revocation of the CBR banking license. In February 2007 the Bank received the credit rating Fitch B- stable, and in August 2007 - the credit rating Rus-Rating BB- stable. In May 2007 Moody’s changed the Bank’s credit rating from B2 stable (assigned in December 2006) to B1 stable. In May 2007 Standard & Poor’s awarded the Bank the long-term contractor credit rating at B-/Stable and the short-term rating at C, as well as a national rating at ruBBB. In July 2007 the Bank registered its trade mark “Renaissance Credit”. The Bank is a 100% subsidiary of OOO “Kaznachey-Financeinvest” (the “Company”), a limited liability company, registered under the laws of the Russian Federation on November 16, 1993. In December 2003 ownership structure of the Company changed and it became a part of “Renaissance Capital Consumer Finance Group” (the “Group”) – a financial group comprising a number of companies registered in the Netherlands, the Netherlands Antilles, and the Russian Federation, with Renaissance Capital International Services Limited being the holding company registered under the laws of Bermuda on June 26, 2003. As of June 30, 2008 the shareholders of the holding entity are Renaissance Group Holdings Limited (“RGHL”) – 89.52% and other corporate investors - 10,48%. (December 31, 2007: Appleby Trust (Bermuda) Limited – 100%). RGHL is a 100% owned subsidiary of Renaissance Holdings Management Limited (“RHML”). The Group is ultimately indirectly owned by shareholders of Renaissance Holdings Management Limited (“RHML”). 100% of the ultimate beneficial owners of RHML are employees or managers (current and former) of RHML’s operating subsidiaries, related holding companies or trusts, or other persons related to the above. Two shareholders of RHML each legally control 10% or more shares of RHML. RHML does not have an ultimate controlling party for the purposes of disclosure under International Accounting Standard No. 24 “Related Party Disclosures”(“IAS 24”)


Notes to the Interim Condensed Financial Statements (continued)


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1. Principal Activities (continued) The Bank extends consumer loans through points of sale, branches and cash offices, issues auto loans, general purpose loans, mortgage loans and credit cards. The Bank’s registered office is Kozhevnicheskaya street 14, Moscow, Russia. As of June 30, 2008 the Bank had 66 representative offices in the Russian Federation (December 31, 2007: 60). 2. Basis of Preparation General The interim condensed financial statements for the six months ended June 30, 2008 have been prepared in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting (“IAS 34”). The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Bank’s annual financial statements as of December 31, 2007. These interim condensed financial statements are presented in thousands of Russian Rubles (“RUR”), unless otherwise indicated. Significant Accounting Policies The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Bank’s annual financial statements for the year ended December 31, 2007, except for the adoption of new Standards and Interpretations, noted below. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Bank:

• IFRIC 11, IFRS 2 Group and Treasury Share Transactions This interpretation requires arrangements whereby an employee is granted rights to an entity’s equity instruments, to be accounted for as an equity-settled scheme, even if the entity buys the instruments from another party, or the shareholders provide the equity instruments needed.

• IFRIC 12 Service Concession Arrangements

This Interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements.

• IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction This interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be recognized as an asset under IAS 19 Employee Benefit.




7

2. Basis of Preparation (continued) Significant Accounting Policies (continued) Repurchase and reverse repurchase agreements and securities lending Sale and repurchase agreements (“repos”) are treated as secured financing transactions. Securities sold under sale and repurchase agreements are retained in the balance sheet and, in case the transferee has the right by contract or custom to sell or repledge them, reclassified as securities pledged under sale and repurchase agreements. The corresponding liability is presented within amounts due to credit institutions or customers. Securities purchased under agreements to resell (“reverse repo”) are recorded as amounts due from credit institutions or loans to customers as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of repo agreements using the effective yield method. Securities lent to counterparties are retained in the balance sheet. Securities borrowed are not recorded in the balance sheet, unless these are sold to third parties, in which case the purchase and sale are recorded within gains less losses from trading securities in the income statement. The obligation to return them is recorded at fair value as a trading liability. 3. Seasonality of Operations Apart from installment loans which generate the majority of sales in the last quarter of the year other consumer finance products are not significantly affected by seasonal factors. 4. Significant Accounting Estimates Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Allowance for impairment of loans and receivables The Bank regularly reviews its loans and receivables to assess impairment. The Bank uses its experienced judgement to estimate the amount of any impairment loss in cases where a borrower is in financial difficulties and there are few available sources of historical data relating to similar borrowers. Similarly, the Bank estimates changes in future cash flows based on the observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the group of loans and receivables. The Bank uses its experienced judgement to adjust observable data for a group of loans or receivables to reflect current circumstances.




8

4. Significant Accounting Estimates (continued) Estimation uncertainty (continued) The allowances for impairment of financial assets in these financial statements have been determined on the basis of current economic and political conditions. The Bank is not in a position to predict what changes in conditions will take place in the Russian Federation and what effect such changes might have on the adequacy of the allowances for impairment of financial assets in future periods. 5. Cash and Cash Equivalents Cash and cash equivalents comprise:

June 30,

2008December 31,

2007(Unaudited) (Audited)

Current accounts with credit institutions 2,501,354 3,906,888Current accounts with the CBR (other than obligatory reserves) 1,048,496 798,217Cash on hand 612,358 196,782Funds on brokerage account 5,396 5,000Cash and cash equivalents 4,167,604 4,906,887 There was a high concentration of current accounts with credit institutions as of June 30, 2008: 51% of funds were placed in USD-denominated account with JP Morgan Chase Bank N.A., New York, NY and 42% of funds were placed in USD-denominated account with LLC “Bank Renaissance Capital” (Ukraine) (a related party) (Note 17). (December 31, 2007: 67% of funds were placed in USD and EUR-denominated account with JP Morgan Chase Bank N.A., New York, NY and 23% of funds were placed in USD-denominated account with LLC “Bank Renaissance Capital” (Ukraine) (a related party) (Note 17)). 6. Amounts Due from Credit Institutions Amounts due from credit institutions comprise:

June 30, 2008

December 31, 2007

(Unaudited) (Audited)

Obligatory reserve with the CBR 981,926 481,898Deposits granted to non-resident banks 244,032 128,709Amounts due from credit institutions 1,225,958 610,607




9

6. Amounts Due from Credit Institutions (continued) Obligatory reserves with the CBR represent mandatory reserve deposits which were not available to finance the Bank’s day to day operations and hence were not considered as part of cash and cash equivalents. Credit institutions were required to maintain a non-interest earning cash deposit (obligatory reserve) with the CBR, the amount of which depended on the level of funds attracted by the credit institution. There was a high concentration of deposits granted to non-resident banks as of June 30, 2008: 76% of funds were placed as a non-interest bearing guarantee deposit with HSBC Bank PLC related to settlements with MasterCard and 20% of funds were placed as USD-denominated deposit, bearing effective interest of 6.0% per annum maturing in 2008, with LLC “Bank Renaissance Capital” (Ukraine) (a related party) (Note 17). (December 31, 2007: 59% of funds were placed as a non-interest bearing guarantee deposit with HSBC Bank PLC related to settlements with MasterCard and 38% of funds were placed as USD-denominated deposit, bearing effective interest of 9.8% per annum maturing in 2008, with LLC “Bank Renaissance Capital” (Ukraine) (a related party) (Note 17)). 7. Available for sale securities As of June 30, 2008 available for sale securities are represented by bonds. The bonds carry interest of 11.2% per annum and mature in 2015. Securities of RUR 524,122 are pledged under sale and repurchase agreement (Note 11). 8. Loans to Customers The Bank provides six main types of consumer loans, being installment loans (i.e. consumer loans extended through points of sale), auto loans, general purpose loans, loans on credit cards, mortgage loans, and employee loans. Analysis of the loan portfolio by types of loans follows:

Outstanding balance Structure, %

Outstanding balance Structure, %

Installment loans 19,666,205 35.5% 17,583,418 43.7%General purposes loans 19,248,476 34.7% 12,234,064 30.4%Auto loans 10,410,518 18.8% 7,226,456 18.0%Credit cards 5,909,506 10.7% 3,015,752 7.5%Mortgage 106,346 0.2% 119,625 0.3%Employees loans 75,364 0.1% 59,649 0.1%Gross loan portfolio 55,416,415 100.0% 40,238,964 100.0%Less: Allowance for loan impairment (2,580,179) (1,815,355)Net loan portfolio 52,836,236 38,423,609

December 31, 2007June 30, 2008(Unaudited) (Audited)

Loan portfolio in the amount of RUR 290,279 is pledged under the obtained credit facility (December 31, 2007: 282,128) (Note 14, Note 17).




10

8. Loans to Customers (continued) As of June 30, 2008 the ratio of non-performing loans (i.e. loans which are not serviced for more than 90 days according to the original contractual terms) to the gross loan portfolio, excluding accrued late payment fees, amounted to 4.0% (December 31, 2007: 3.3%). As of June 30, 2008 the Bank provided to related parties RUR-denominated and USD-denominated loans for the total amount of RUR 2,720 and RUR 940, respectively, bearing average effective interest of 12.2% and 10.0% per annum, respectively, maturing in 2009-2010. As of December 31, 2007 the Bank provided to related parties RUR-denominated loans for the total amount of RUR 4,991, bearing average effective interest of 12.9% per annum maturing in 2008-2010. Analysis of collateral Mortgage loans are secured by underlying housing real estate. Auto loans are secured by underlying car. Installment loans, general purpose loans, credit cards and employee loans are not secured. The Bank collects precise information on the value of collateral only on origination. The Bank estimates that the fair value of the collateral for overdue mortgage loans is not less than 110% of the mortgage balance. Management believes that it is impracticable to estimate fair value of collateral held in respect of other loans to individuals because fair value information is not readily available. It is the Bank’s policy to dispose of repossessed collateral in an ordinary fashion. The proceeds are used to reduce or repay the outstanding claim. In general the Bank does not occupy repossessed properties for business use. As of June 30, 2008 and December 31, 2007 the Bank did not have material amounts of repossessed collateral. Allowance for impairment of loans to customers A reconciliation of the allowance for impairment of loans to customers by class is as follows:

Installment loans

General purpose Autoloans Credit cards

Mortgage Loans Employees TOTAL

Opening balance, January 1 967,498 455,558 193,170 199,119 10 - 1,815,355Charge 398,875 1,378,048 186,156 410,268 11,211 441 2,384,999Write-offs (534,627) (741,936) (167,023) (168,590) (7,558) (441) (1,620,175)June 30 831,746 1,091,670 212,303 440,797 3,663 - 2,580,179

Installment loans

General purpose Autoloans Credit cards

Mortgage Loans Employees TOTAL

Opening balance, January 1 268,135 106,568 67,622 31,235 961 - 474,521Charge 372,775 450,125 286,657 154,409 (1,118) 1 1,262,849Write-offs (298,604) (339,669) (212,434) (85,022) 1,498 (1) (934,232)June 30 342,306 217,024 141,845 100,622 1,341 - 803,138

For the six months ended June, 30 2008 (Unaudited)

For the six months ended June, 30 2007 (Unaudited)




11

8. Loans to Customers (continued) Allowance for impairment of loans to customers (continued) Allowances for impairment of assets are deducted from the related assets. In accordance with the Russian legislation, loans may only be written off with the approval of the Management Board and, in certain cases, with the respective decision of the Court. As of June 30, 2008 and December 31, 2007 there were no loans that were individually determined to be impaired. 9. Taxation The corporate income tax charge/(benefit) comprises:

2008 2007(Unaudited) (Unaudited)

Deferred tax charge / (benefits) - origination and reversal of temporary differences 245,673 (63,483)Less: Deferred tax recognised directly in net assets attributable to the participant (270) -Income tax charge / (benefit) 245,943 (63,483)


The Bank is liable to profits tax in Russia on its taxable profit and capital gains other than profits on certain types of securities at a rate of 24%. Pursuant to Russian profits tax law interest income on certain types of securities is subject to profits tax at a rate of 15%, 9% or 0%.


Deferred tax charge / (benefits) - origination and reversal of temporary differences 103,357 (46,762)Less: Deferred tax recognised directly in net assets attributable to the participant (270) -Income tax charge / (benefit) 103,627 (46,762)


As of June 30, 2008 and December 31, 2007 the Bank has approximately RUR 1,007,391 and RUR 903,212 of tax losses available for relief against future profits, respectively. These tax losses can be carried forward for 10 years from the end of the year in which the respective loss was incurred.




12

10. Other Assets and Other Liabilities Other assets comprise:

June 30, 2008

December 31, 2007


Settlements with suppliers, customers and contractors 121,687 84,743Prepayments 58,208 43,144Receivables under insurance agency contracts 52,852 47,537Current tax assets 14,213 11,537Credit cards deferred acquisition expenses 11,767 8,779Forward deals 3,030 45,321Other 18,700 15,646Other assets 280,457 256,707

Other liabilities comprise:

June 30, 2008

December 31, 2007


Settlements with employees under payroll 391,756 244,654Forward deals 230,867 47,228Operating taxes payable 227,593 145,388Accrued expenses 159,367 174,133Settlements 107,879 39,571Accrued retailer fees 46,535 160,528Other liabilities 1,163,997 811,502

Derivative financial instruments The Bank enters into derivative financial instruments for risk mitigation purposes. All derivative financial deals are intended to lower balance sheet open currency position in USD. The table below shows the fair values of derivative financial instruments, recorded as assets or liabilities, together with their notional amounts. The notional amount, recorded gross, is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at the end of the reporting period and are not indicative of the credit risk.

Notional principal

Fair value assets

Fair value liabilities

Notional principal

Fair value assets

Fair value liabilities

Foreign Exchange Forwards - foreign 10,431,461 - (134,342) 7,630,800 16,713 (38,100)Foreign Exchange Forwards - domestic 8,270,744 3,030 (96,525) 6,314,444 28,608 (9,128)Derivative financial instruments 18,702,205 3,030 (230,867) 13,945,244 45,321 (47,228)

June 30, 2008 December 31, 2007(Unaudited) (Audited)




13

10. Other Assets and Other Liabilities (continued) Derivative financial instruments (continued) Forwards are contractual agreements to buy or sell a specified financial instrument at a specific price and date in the future. Forwards are customised contracts transacted in the over-the-counter market. As of June 30, 2008 and December 31, 2007 Foreign Exchange Forwards – foreign were concluded between the Bank and Renaissance Securities (Cyprus) Limited (a related party). As of June 30, 2008 and December 31, 2007 Foreign Exchange Forwards – domestic were concluded with a Russian bank. All forward deals are recorded at fair value estimated based on quoted market prices. 11. Amounts Due to Credit Institutions Amounts due to credit institutions comprise:

June 30, 2008

December 31, 2007


Deposits received from OECD banks 2,824,577 -Deposits received from Russian banks 1,608,273 123,101Amounts due to credit institutions 4,432,850 123,101 There was a high concentration of deposits received from OECD banks as of June 30, 2008: 67% of funds were received from Pictet & Cie (Europe) S.A. and 33% of funds were received from Dresdner Bank Luxembourg. As of June 30, 2008 deposits received from OECD banks included two loans received from Dresdner Bank Luxembourg bearing interest rates of 12.5% p.a. and 13% p.a. with a prepayment option. In case of repayment prior to maturity interest rates on these loans vary from 9.25% to 12.5% and 9.0% to 13% depending on related maturity (2008-2010). There was a high concentration of deposits received from Russian banks as of June 30, 2008: 58%, 31% and 11% of funds were received from OAO MDM Bank, OAO Bank URALSIB and ZAO Raiffeisen Bank, respectively. (December 31, 2007: 100% of funds were received from OAO MDM Bank). As of June 30, 2008 deposits received from Russian banks includes deposits of RUR 461,188 payable under repurchase agreements. As of June 30, 2008 the Bank pledged certain securities as collateral under repurchase agreements (Note 7).




14

12. Amounts Due to Customers Amounts due to customers include the following:

June 30, 2008

December 31, 2007


Time deposits 9,194,786 8,351,388Current accounts 6,289,555 6,733,602Amounts due to customers 15,484,341 15,084,990

As of June 30, 2008 the Bank received from related parties RUR-denominated, USD-denominated and EUR-denominated time deposits for the total amount of RUR 2,083,733, RUR 2,795,735 and RUR 38,699, respectively, bearing average effective interest of 11.8%, 10.0% and 6.5% per annum, respectively, maturing in 2008-2010 (Note 17). As of December 31, 2007 the Bank received from related parties RUR-denominated, USD-denominated and EUR-denominated time deposits for the total amount of RUR 1,389,644, RUR 893,478 and RUR 36,516, respectively, bearing average effective interest of 8.5%, 10.1% and 6.5% per annum, respectively, maturing in 2008 (Note 17). As of June 30, 2008 current accounts due to customers of RUR 1,428,629 were due to related party customers (December 31, 2007: RUR 4,340,168) (Note 17). Amounts due to customers include accounts with the following types of customers:

June 30, 2008

December 31, 2007


Private enterprises 12,986,383 13,060,769Individuals 2,497,958 2,024,221Amounts due to customers 15,484,341 15,084,990

An analysis of customer accounts by sector is as follows:

June 30, 2008

December 31, 2007


Financial services 10,808,135 7,074,249Individuals 2,497,958 2,024,221Telecommunications 1,166,433 -Trade 754,634 379,232Insurance 257,158 96,635Manufacturing 17 15Oil & Gas 6 5,009,871Mass Media - 500,767Amounts due to customers 15,484,341 15,084,990




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12. Amounts Due to Customers (continued) There was a high concentration of amounts due to customers as of June 30, 2008: 22% of funds were attracted from one customer operating in the financial services sector (December 31, 2007: 33% of funds were attracted from one customer operating in the oil and gas services sector). 13. Debt Securities Issued Debt securities issued include the following:

Interest rate MaturityJune 30,

2008December 31,

2007(Unaudited) (Audited)

Loan participation notes - RCFL Ltd. 9.5% June 2010 6,991,589 7,305,281 - Ensorte Enterprises Limited (2007 issue) 10.5% October 2008 3,366,480 3,360,648 - E.M.I.S. Finance B.V. (2007 issues) 12.0% December 2008 - June 2009 704,389 738,534 - E.M.I.S. Finance B.V. (2008 issues) 12.0% December 2008 469,719 - - Ensorte Enterprises Limited (2006 issue) 12.0% May 2008 - 2,153,629

11,532,177 13,558,092 Documentary interest-bearing non-convertible bonds - issue #40103354B 10.5% March 2010 2,057,914 2,055,511 - issue #40203354B 11.7% April 2012 3,053,649 - - issue #40303354B 13.8% June 2012 4,000,063 -

9,111,626 2,055,511 Promissory notes issued

- USD - denominated 10.8% / 12.0%February 2011 / January -

March 2008 959,530 1,856,553 - RUR - denominated 10.7% July - August 2008 70,903 -

1,030,433 1,856,553 Debt securities issued 21,674,236 17,470,156

Loan participation notes E.M.I.S. Finance B.V. In January – February 2008 the Bank obtained additional financing in the amount of USD 20,000 thousand through two issues of loan participation notes, which were organized through E.M.I.S. Finance B.V. Documentary interest-bearing non-convertible bonds On April 17, 2008 the Bank placed under open subscription issue #40203354B of 3,000,000 rouble- denominated documentary interest-bearing non-convertible bonds with par value of RUR 1 each. The bonds mature in April 2012, and the principal is repaid at maturity. Bondholders may present bonds for repurchase at par plus accrued coupon when the Bank changes coupon interest rate, and in the event of certain payment terms not being followed by the Bank. The first put option may be exercised in April 2009 at par plus accrued coupon. Interest is payable semi-annually, the interest rate for the first and second coupon payments was fixed at 11.66% per annum during the initial subscription auction held on April 17, 2008. The interest rate for the six subsequent payments will be assigned by the issuer at its sole discretion. The guarantor of the issue is Renaissance Capital - International services Ltd (a related party, Note 17). The Bank recognized commissions of RUR 16,760 (out of which RUR 15,222 was paid to a related party, Note 17) in respect of issue of the above documentary interest-bearing non-convertible bonds. The commission paid was included into transaction costs and recognized as an adjustment to the effective yield of these bonds.




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13. Debt Securities Issued (continued) Documentary interest-bearing non-convertible bonds (continued) On June 19, 2008 the Bank placed under open subscription issue #40303354B of 4,000,000 rouble- denominated documentary interest-bearing non-convertible bonds with par value of RUR 1 each. The bonds mature in June 2012, and the principal is repaid at maturity. Bondholders may present bonds for repurchase at par plus accrued coupon when the Bank changes coupon interest rate, and in the event of certain payment terms not being followed by the Bank. The first put option may be exercised in December 2009 at par plus accrued coupon. Interest is payable semi-annually, the interest rate for the first and second coupon payments was fixed at 13.75% per annum during the initial subscription auction held on June 19, 2008. The interest rate for the six subsequent payments will be assigned by the issuer at its sole discretion. The guarantor of the issue is Renaissance Capital - International services Ltd (a related party, Note 17). The Bank recognized commissions of RUR 16,092 (out of which RUR 14,160 was paid to a related party, Note 17) in respect of issue of the above documentary interest-bearing non-convertible bonds. The commission paid was included into transaction costs and recognized as an adjustment to the effective yield of these bonds. Promissory notes issued As of June 30, 2008 RUR-denominated promissory notes were issued to a Russian entity. 14. Other Borrowed Funds Other borrowed funds include the following:

Interest rate Maturity

June 30, 2008

December 31, 2007


Ensorte Enterprises Ltd. (2007 issue) 12.0% November 2008 2,844,145 2,976,201Ensorte Enterprises Ltd. (2008 issues) - March 2008 issue 12.0% March 2011 729,215 - - April 2008 issue 12.0% March 2009 1,389,640 - - June 2008 issue 13.0% June 2009 592,072 -Syndicated loan (2008 issue) floating April 2009 1,705,628 -European Bank for Reconstruction and Development floating February 2009 319,873 536,236IRRUS S.a.r.l. Luxembourg 12.5% December 2008 290,279 282,128Syndicated loan (2007 issue) floating February 2008 - 617,798Other borrowed funds 7,870,852 4,412,363

Other borrowed funds represent loans from non-resident financial institutions with the purpose to finance lending operations of the Bank. Ensorte Enterprises Ltd. In March 2008 the Bank obtained loan from Ensorte Enterprises Limited (the original financing for which was obtained from a related party) in the amount of USD 30,000 thousand. The loan bears fixed interest rate of 12.0% p.a. during the first year and floating interest rate equalling the yield (which is a market rate of return to be received by a purchaser of the Bank’s loan participation notes issued through Renaissance Consumer Funding Ltd.) plus 0.5% (Note 17).




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14. Other Borrowed Funds (continued) Ensorte Enterprises Ltd. (continued) In April 2008 the Bank obtained loan from Ensorte Enterprises Limited (the original financing for which was obtained from a related party) in the amount of USD 58,000 thousand (Note 17). In June 2008 the Bank obtained loan from Ensorte Enterprises Limited in the amount of RUR 590,000. The loan bears a prepayment option. In case of repayment prior to maturity interest rate on this loan vary from 9.5% to 13% depending on related maturity (2008-2010). Syndicated loan (2008 issue) On May 28, 2008 the Bank obtained dual-currency term loan facility arranged by Standard Bank Plc, ZAO Raiffeisenbank, ZAO Standard Bank and OJSC “Alfa-Bank”. The facility amount of USD 25,000 thousand bears floating interest rate of Libor(3m) plus 5.5% and the mandatory costs (specific fees in addition to interest rate) (the effective interest rate comprised 8.15% per annum upon issuance). The facility amount of RUR 1,127,000 bears floating interest rate of MosPrime3 rate plus 5.0% and the mandatory costs (specific fees in addition to interest rate) (the effective interest rate comprised 11.26% per annum upon issuance). The dual-currency term loan facility has initial maturity in April 30, 2009 and subject to extension for 364 days. The Bank recognized commissions of RUR 25,971 in respect of issue of the above dual-currency term loan facility. The commission paid was included into transaction costs and recognized as an adjustment to the effective yield of these bonds. 15. Net Assets Attributable to the Participant The Bank was founded as a limited liability company with a sole participant. As of June 30, 2008 and December 31, 2007 charter capital totalled RUR 501,000. Charter capital was formed by contribution of RUR 30,000 in December 2000 and RUR 471,000 in July 2001. During six months ended June 30, 2008 the Bank’s participant transferred funds to the Bank in the amount of RUR 1,443,760 in the form of debt free financing (six months ended June 30, 2007: RUR 1,529,964). In accordance with the Russian legislation, participants in limited liability companies may unilaterally withdraw from the company. In such cases the company will be obliged to pay the withdrawing participant’s share of net assets of the company, determined on the basis of statutory accounting reports for the year of withdrawal, in cash or, subject to consent of the participant, by in-kind transfer of assets. The payment should be made no later than six months after the end of the year of the withdrawal. 16. Commitments and Contingencies Operating environment Whilst there have been improvements in the Russian economic situation, such as an increase in gross domestic product, Russia continues economic reforms and development of its legal, tax and regulatory frameworks as required by a market economy. The future stability of the Russian economy is largely dependent upon these reforms and developments and the effectiveness of economic, financial and monetary measures undertaken by the government.




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16. Commitments and Contingencies (continued) Legal In the ordinary course of business, the Bank is subject to legal actions and complaints. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition or the results of future operations of the Bank. Taxation Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently and at short notice. Management's interpretation of such legislation as applied to the transactions and activity of the Bank may be challenged by the relevant regional and federal authorities. Trends within the Russian Federation suggest that the tax authorities are taking a more assertive position in its interpretation of the legislation and assessments and it is possible that transactions and activities that have not been challenged in the past may be challenged in the future, and if successful, additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year of review. Under certain circumstances reviews may cover longer periods. The Bank determined its tax liabilities arising from intercompany transactions using actual transaction prices. It is possible with the evolution of the interpretation of the transfer pricing rules in the Russian Federation and the changes in the approach of the Russian tax authorities, that such transfer prices could potentially be challenged in the future. Based upon management’s understanding of the tax regulations, management believes its interpretation of the relevant tax legislation is reasonable and will be sustainable. Moreover management believes that the Bank has accrued all applicable taxes. However, the interpretations of the relevant authorities could differ and if the authorities were successful in enforcing their interpretation additional taxes and related fines and penalties may be assessed, the effect of which cannot be practicably estimated, but could be significant to the financial condition of the Bank. Therefore, filing positions taken by the Management, if successfully challenged by virtue of varying interpretations of tax law by the tax authorities, might have an effect on the amount of loss carried forward available to the Bank. Financial Commitments and Contingencies Financial commitments and contingencies comprised the following:

June 30, 2008

December 31, 2007

(Unaudited) (Audited)Credit related commitmentsUndrawn loan commitments 10,545,292 6,939,934Guaranties issued - 110,458Financial commitments and contingencies 10,545,292 7,050,392




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16. Commitments and Contingencies (continued) Operating lease commitments The Bank entered into commercial leases for rent of non-residential premises under non-cancellable operating lease agreements. These leases have on average life between 1 and 5 years with a renewal option included in the contracts. The Bank’s operating lease commitments comprised the following:

June 30, 2008

December 31, 2007

(Unaudited) (Audited)Lease commitmentsNot later than 1 year 327,127 165,330Later than 1 year but not later than 5 years 572,865 204,843Lease commitments 899,992 370,173

The Bank has recognized RUR 158,956 lease expenses for six months ended June 30, 2008 (six months ended June 30, 2007: RUR 81,761). Insurance The Bank has not currently obtained insurance coverage related to liabilities arising from errors or omissions. Liability insurance is generally not available in Russia at present. Trust Activities The Bank provides trust services to individuals and legal entities, whereby it holds and manages assets or invests funds received in various financial instruments at the direction of the customer. The Bank receives fee income for providing these services. Trust assets are not assets of the Bank and are not recognised in the balance sheet. The Bank is not exposed to any credit risk relating to such placements, as it does not guarantee these investments. The Bank may only be liable for losses or actions aimed at appropriation of the clients’ funds if such funds or securities are not returned to the client due to gross negligence or wilful misconduct by the Bank. The maximum potential financial risk of the Bank at any given moment is equal to the volume of the clients’ funds plus/minus any unrealized gains / losses on the assets under the Bank’s management. As of June 30, 2008 the total assets held by the Bank on behalf of customers were RUR 1,712,956 (December 31, 2007: RUR 1,563,654). 17. Related Party Transactions In accordance with IAS 24 “Related Party Disclosures”, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.




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17. Related Party Transactions (continued) The volumes of related party transactions, outstanding balances as of June 30, 2008 and December 31, 2007, respectively, comprised:

Key management

personnel

Entities under common control and shareholder

Key management

personnel


Cash and cash equivalents – opening - 906,483 - -Cash and cash equivalents placed - 14,913,525 - 4,782,229Cash and cash equivalents withdrawn - (14,776,821) - (3,875,746)Cash and cash equivalents – closing - 1,043,187 - 906,483

Amounts due from credit institutions - opening - 49,330 - -Placed on amounts due from credit institutions - 125,260 - 207,290Withdrawn from amounts due from credit institutions - (127,583) - (157,960)Amounts due from credit institutions - 47,007 - 49,330

Loans to customers – opening 4,991 - 10,880 -Loans to customers issued 2,603 - 4,015 39,896Loans to customers repaid (3,934) - (9,904) (39,896)Loans to customers – closing 3,660 - 4,991 -Less: Allowance for impairment - - - -Loans to customers – closing, net 3,660 - 4,991 -

Other assets - opening - 16,863 - 150Other assets issued 42 160 32,791Other assets repaid (42) (16,863) (160) (16,078)Other assets - closing - - - 16,863

Amounts due to customers - opening 368 6,659,438 672 2,288,030Placed on customer accounts 3,779 24,839,971 35,672 43,727,804Withdrawn from customer accounts (4,090) (25,152,613) (35,976) (39,356,396)Amounts due to customers - closing 57 6,346,796 368 6,659,438

Debt securities issued - opening - 1,856,553 - -Debt securities issued during the period - 1,080,011 - 1,856,553Debt securities repaid during the period - (1,977,034) - -Debt securities issued - closing - 959,530 - 1,856,553

Other borrowed funds - opening - 282,128 - -Placed on other borrowed funds - 2,127,006 - 282,128Withdrawn from other borrowed funds - - - -Other borrowed funds - closing - 2,409,134 - 282,128

Other liabilities - opening - 59,466 - -Other liabilities issued - 547,134 - 59,466Other liabilities repaid - (453,161) - -Other liabilities - closing - 153,439 - 59,466

Commitments and guarantees received - 12,478,106 - 7,569,788

June 30, 2008 December 31, 2007(Unaudited) (Audited)




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17. Related Party Transactions (continued) The volumes of related income and expense for the three months and for the six months ended June 30, 2008 and June 30, 2007, respectively, comprised:

Key management

personnel


Key management

personnel


Interest income 541 23,925 526 -Interest expense - (387,736) - (82,447)Gains less losses from foreign currences (dealing) - (574,598) - -General administrative and operating expense - (8,902) - (7,384)

(Unaudited) (Unaudited)2008 2007


Key management

personnel


Key management

personnel


Interest income 212 8,319 229 -Interest expense - (257,578) - (24,846)Gains less losses from foreign currences (dealing) - (43,649) - -General administrative and operating expense - (4,425) - (3,699)

For the three months ended June 30,2008 2007

(Unaudited) (Unaudited)

In August 2007 the Bank signed with a related party the following agreements: the credit facility agreement to borrow funds and two agreements to provide collateral against drawings to be received by the Bank. According to the terms of those agreements the Bank will have to pledge certain part of its loan portfolio upon drawing funds from the lender, and the value of pledged assets will at all times be equal to the percentage of total loan book funded by the facility. As of June 30, 2008 and December 31, 2007 the drawings in the amount of EUR 7,800 thousand were obtained by the Bank under the above credit facility agreement (Note 8, Note 14). More details on the related party transactions are provided in other notes to these Financial Statements.




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17. Related Party Transactions (continued) For the three months and for the six months ended June 30, 2008 and June 30, 2007 the compensation of key management personnel comprised, respectively, the following:


Salaries and other short-term benefits 51,964 23,023Social security costs related to pension system 966 454Total key management compensation 52,930 23,477



Salaries and other short-term benefits 28,140 16,379Social security costs related to pension system 57 113Total key management compensation 28,197 16,492


18. Segment Reporting The Bank’s operations are highly integrated and constitute a single industry segment, retail banking. Assets and liabilities of the Bank are primarily concentrated in the Russian Federation and the largest proportion of its revenues and financial result is received from the operations within the territory of the Russian Federation. 19. Subsequent Events In July – August 2008 the Bank received funds from its sole participant totaling RUR 228,214 in form of debt free financing. In July 2008 the Bank obtained financing in the amount of RUR 57,344 and RUR 94,960 through the issue of loan participation notes, which was organized through Reachcom Public Limited (a related party). The loan participation notes bear interest rate of 14.8% per annum and mature in January 2010. In July 2008 the Bank obtained financing in the amount of RUR 1,000,000 through the issue of loan participation notes, which was organized through E.M.I.S. Finance B.V. The loan participation notes bear interest rate of 14.5% per annum and mature in October 2009. On July 31, 2008 the Bank and its sole participant signed the agreement for transferring funds by several tranches to the Bank totaling RUR 3,000,000 in the form of debt free financing till June 30, 2009.

Documents

COMMERCIAL BANK “R C (LIMITED LIABILITY COMPANY...Commercial bank “Kaznachey” (Ltd.) to Commercial bank “Renaissance Capital” (Limited liability company). The Bank operates