OREANDA-NEWS. July 3, 2007. An agreement has been reached on the sale of a 10% stake of MDM Bank to Olivant Limited, a specialist advisory and investment company. A holding company controlled by the beneficial interests of Mr. Sergey Popov and Mr. Martin Andersson will sell the stake to Olivant.  Olivant’s co-founder, Mr. Luqman Arnold, is already a member of the Bank’s Board of directors and chairs its strategy committee. Olivant will have an option to purchase a further 5% equity interest in the bank within six years.

In addition, the Board of Directors of International Finance Corporation (IFC), the private sector arm of the World Bank Group, has recently approved IFC’s equity investment of up to 5% in the bank’s capital in the form of an additional share issue. The sale is expected to take place in September 2007 upon receipt of all necessary regulatory approvals. The decision to issue additional shares has been submitted for review at MDM Bank’s extraordinary shareholders’ meeting on July 25, 2007.

These further changes in the shareholder structure represent another important step in implementing the bank’s development strategy, which aims to build MDM into Russia’s leading privately-owned bank. In the MDM Bank shareholders’ opinion, the partnerships with Olivant and IFC will enable the bank, its senior executives and clients to gain access to state-of-the-art international banking know-how, will help further develop MDM’s operational efficiency and the quality of its services, and increase the transparency of its operations on the Russian regional banking market.

The Bank’s executives, Board of directors and Shareholders expect this new shareholding structure to remain in place for the foreseeable future.

Olivant’s Chairman Luqman Arnold said: “We are delighted to be part of the MDM team. We view the Russian banking sector in general and MDM bank in particular as a dynamic environment with considerable growth potential. We are keen on bringing our experience and expertise to support the implementation of the bank’s ambitious strategy.”

Mr. Edward Nassim, IFC’s vice president for Africa, Europe and Middle East, noted: “IFC has long been working on the Russian banking market and perceives it as one of the key areas of activity. Participation in MDM Bank capital is a move towards mutually beneficial and promising cooperation with one of the leaders in the Russian banking sector.”

Mr. Michel Perhirin, Chairman of MDM Bank’s Management Board, said: ”We are confident that the arrival of such highly-experienced international investors, who will join the bank as demanding and committed minority shareholders, will provide a further significant boost to our business processes and corporate culture.”

Mr. Oleg Vyugin, Chairman of the Board of Directors of MDM Bank, said the board thoroughly reviewed the decision to invite international institutions as investors. Mr. Vyugin stressed he is certain that “the new shareholders’ expertise and their involvement in the bank’s corporate governance will have a positive impact on the quality of our strategic decisions.”

Olivant is an investment company established by Luqman Arnold and Alan Morgan to provide strategic and operational expertise along with investment capital for financial service businesses in Europe, the Middle East and Asia-Pacific. Olivant's core proposition involves delivering superior risk-adjusted returns through operational alpha. For more information, please visit www.olivant.com.

IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries.  IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.

IFC in Russia. Russia became a member and a shareholder of IFC in 1993.  Since then IFC has invested $3.4 billion in the country, including $527 million in syndicated loans, in over 130 projects across a variety of sectors.  In FY06, IFC’s investments reached $519 million.  IFC’s investment portfolio in Russia stands at $2 billion, making it the largest country exposure for IFC globally.  IFC has invested in key sectors, including agribusiness, banking, construction materials, health care, housing finance, information technologies, infrastructure, leasing, mining, oil and gas, pulp and paper, retail, and telecommunications.  For more information, please visit www.ifc.org/europe.