OREANDA-NEWS  On 15 October was announced, that Standard & Poor’s lowered its outlook for thirteen Russian banks and financial institutions. As a result, MDM Bank’s Long Term Credit Rating has changed from ‘BB’ (Stable) to ‘BB’ (Negative) in connection with mediumterm risks related to the global credit crisis and its impact on the Russian banking sector. It is important to note that MDM Bank remains one the two highest-rated private Russian banks.

MDM Bank was one of the first Russian banks to take steps to address the crisis and in August 2007 began to hold a reserve of excess liquidity, which today exceeds USD 1 bln. In addition, MDM Bank would like to point out the following about the Bank’s current position:

• MDM Bank has not seen any signs of a significant decline in asset quality in its corporate, consumer or small business loan books: the share of non-performing loans (NPLs), as well as coverage of NPLs by loan loss provisions, remained stable during the third quarter, based on preliminary reporting; during 3Q 2008 NPLs decreased in retail and small business lending due to the Bank’s ongoing improvements to underwriting and collection in these segments;

• The Bank continues lending to corporate, small business and retail clients, though has taken measures to reduce credit risks on new loans and any roll-overs on existing loans by obtaining additional collateral and using other credit enhancements, as well as to reduce exposure to higher-risk sectors of the economy;

• MDM Bank has not seen any unplanned material deposit outflows from corporate or retail customers;

• The excess liquidity held by MDM Bank is more than sufficient for full and timely repayments of all the bank’s existing international borrowings. Further, MDM Bank has sufficient nationwide network infrastructure to continue to accelerate depositgathering efforts;

• As one of the largest and most respected privately-owned banks in Russia, MDM Bank has full access to, but is not dependent upon, the wide array of liquidity measures available from the Russian Central Bank and Ministry of Finance, other than those intended solely for state-owned banks;

• The Bank has minimized its equity portfolio, and is a selective lender on the interbank market;

• The continued global credit crisis has not led the Bank to alter its strategy to become a leading universal financial institution, providing top-quality banking services to clients throughout Russia.