Banking Sector of the Republic of Belarus - Stabilization and Development Member of the Board Head of Banking Supervision Directorate of the National Bank of the Republic of Belarus Helen Mashnina

24 banks Main Characteristics of the Banking Sector 5 state-owned Structure of investments in the banks’ authorized funds 24 banks 5 private 4 being liquidated 5 state-owned 14 foreign Total authorized fund of Belarusian banks: USD2.6 billion Share of foreign capital in the banks’ authorized funds,% The quota of participation of foreign capital in the Belarusian banking sector is no more than 50 percent of the total authorized capital The data as of February 28, 2019

Performance Indicators of the Banking Sector Assets dynamics, USD bn Regulatory capital dynamics, USD bn Distribution of Assets, % Distribution of Capital, % The minimum amount of a bank’s regulatory capital as of 2019 Q1 – BYN55.39 million, or USD25.66 million in the equivalent The regulatory capital adequacy of the banking sector – 17.9 percent ■ – state-owned banks ■ – foreign banks ■ – private banks The data as of February 28, 2019

Distribution of Liabilities, % Banks’ Liabilities Distribution of Liabilities, % ■ – Natural persons’ funds ■ – Economic entities’ funds ■ – Other liabilities (banks’ equity capital, revaluation accounts, interbank and interbranch settlements, securities issued by banks, formation of special provisions) ■ – Non-residents’ funds ■ – Funds of central government and local governments ■ – Funds of other deposit organizations ■ – National Bank’s funds March 1, 2019 - the share of non-performing assets - 6.1%. May 1, 2018 - 3.5% (an increase of 2.6 percentage points). This indicator is one of the most important in the process of supervisory activities. The data as of February 28, 2019

Banking Supervision and Regulation Since January 1, 2016, Basel III international standards have been set as prudential standards Regulatory capital (10%) Tier I Core Tier I deductions Additional Tier I Tier II Leverage (3%) Ratio of Tier I to the total amount of claims subject to risks Conservation buffer (2.5%) For each bank is 2.5 % Since January 1, 2018, Basel III liquidity indicators, a countercyclical buffer, and a systemic importance buffer have been established as prudential standards Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) no less than 100% liquidity risk monitoring instruments Countercyclical buffer (0%) 0 – 2.5% in line with the decisions of the NBRB Board, now – 0% Systemic importance buffer Group of Importance I II 1.5% 1%

Remuneration and Compensation system Corporate Governance Remuneration and Compensation system setting the list of employees accepting risks definition of forms of payment for labour and types of payment to employees definition of terms of payment to employees accepting risks Shareholders’ General Meeting Articles of Association and (or) local regulatory legal acts Board of Directors (Supervisory Board) Remuneration Committee (systemically important banks, non-bank financial institutions, Development Bank) Articles of Association and (or) local regulatory legal acts setting the amounts of remunerations and compensations based on the bank’s performance results and risks accepted by an employee and (or) bank

The “House of SREP” BUSINESS MODEL ASSESSMENT GOVERNAN-CE ASSESSMENT CAPITAL ADEQUACY ASSESSMENT LIQUIDITY ASSESSMENT Viability and sustainability of business model assessment (Score + Rationale) Assessment of governance, risk management and internal control systems (Score + Rationale) Block 1 Assessment of Risk Level and quality of risk management (for each risk: CR, MR, OR, IRRBB) Block 2 ICCAP asses-sment Block 3 Supervisory stress tests Block 1 Assessment of Risk Level (for each risk: short-term liquidity, funding risk) and quality of liquidity risk management (Score + Rationale) Block 2* Internal liquidity ILAAP Block 3* Supervi-sory stress tests Capital adequacy assessment (Score + Rationale) * perspective Overall SREP assessment => Score + Rationale/main conclusions Supervisory Examination Programe (SEP) Quantitative capital measures Other supervisory measures

Mutual Evaluation of the Republic of Belarus as to Compliance With FATF Standards Evaluation stages 2018 Banks demonstrated a high level of understanding of ML/FT risks. The risk of financing terrorist activities is rated as low. National ML/FT Risk Assessment 2019 The on-site mission revealed that in the banking system the effective AML/CFT system is used and the national legislation complies with the FATF recommendations. EAG expert visiting mission Technical compliance with legislation Evaluating the effectiveness of the country's AML / CFT system Presentation of report at the EAG plenary meeting in November 2019 Country Mutual Evaluation Report

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