1. 1 Manfred Schepers Vice President, Finance Moscow 18 May 2007 The EBRD in the Russian Rouble Market

2. 2 EBRD activity in Russia Annual Volume € million

3. 3 EBRD 2007 - 2008 Growing proportion of Rouble lending to non-export sectors Promoting floating and fixed rate Rouble loans Continued expansion as an investor in Russian securitisation Borrower in the domestic and international Rouble markets Participant in Rouble IR and FX swaps Increasing operations as an investor of Rouble liquidity Participant in Russian CDS market EBRD continues to expand its activities in all aspects of Rouble capital markets

4. 4 EBRD: Managing Rouble risks Principles: Balance sheet is managed on a currency neutral basis Minimal interest rate mismatches Majority of loans benchmarked of MOSPRIME 3M index Fixed-rate loans funded through IRS Liquidity risk is handled per currency Managed vs MM benchmarks Optimise credit spread of high quality investments

5. 5 Challenges of the Rouble market Lack of liquidity of on-shore OTC derivatives market Liquidity in payment system Market incompleteness Consequences: Higher cost of managing Rouble disbursements and liquidity Lack of flexibility to offer floating and fixed rate loans Inability to risk manage our interest rate exposures

6. 6 On-shore Derivatives EBRD works under the standard ISDA documentation Barriers applicable in Russia are: Recognition of close out netting doubtful Uncertainties exist regarding use of collateralisation Limitations on range of counterparties Inability to enter into certain types of contracts with Russian clients

7. 7 Payment and collateral system Source of inefficiencies Costly overdrafts on increasing volume Limited collateralised overdrafts Possible solutions Intra day overdraft facilities Acceptance and implementation of pre-advices Greater pool of acceptable collateral

8. 8 Market incompleteness Incomplete range of instruments Need for liquid bond and repo markets Need for string short rate futures Acceptance of OTC swaps as liquid IR market Broader range asset classes traded No IR volatility (options) markets Support development of credit derivatives Attract market participants Short-term and long-term investors Hedge funds are key drivers of IR and credit liquidity

9. 9 Conclusion For the EBRD to operate efficiently in the Rouble markets we need: Legal certainty Efficient payment system Ability to transact with domestic clients in Rouble instruments Access to OTC and Exchange liquidity across asset classes

10. 10 Contact details Manfred Schepers, Vice President Finance email: schepers@ebrd.com tel: +44 20 7338 7700schepers@ebrd.com Axel van Nederveen, Treasurer email: vannedea@ebrd.com tel: +44 20 7338 6302vannedea@ebrd.com Isabelle Laurent, Deputy Treasurer, Head of Funding email: laurenti@ebrd.com tel: +44 20 7338 7215laurenti@ebrd.com