April 25, 2005

On 25 April, the National Foreign Exchange Association (NFEA) began to calculate an indicative rate for ruble-denominated credits (deposits) in Moscow market, MosPrime Rate – Moscow Prime Offered Rate. The NFEA Council decided to launch a new index aiming to improve the Association’s indicators and their practical use in market operations. According to Elvira Borzunova, the NFEA’s Executive Director, the launch of MosPrime Rate indicator was triggered by the address of European Bank for Reconstruction and Development (EBRD) to the NFEA. In the 2nd quarter of 2005, EBRD intends to launch a ruble-denominated floating rate bond loan in the Russian market. This will be the first issue tied to the indicative interest rate of placement of ruble-denominated deposits.

In compliance with the NFEA Council’s «Decree on the formation of MosPrime Rate, the indicative rate for ruble-denominated credits (deposits) in Moscow market», MosPrime rate is an independent indicative rate, calculated on the basis of rates for ruble-denominated deposits declared by leading participants in the Russian money market for first-class financial institutions. The list of banks, declaring rates, is formed by the NFEA Council and includes at least 6 banks. When forming the list, the NFEA takes into account banks’ reputation, financial state, volume of operations and experience in Moscow money market. The list of banks, participating in the formation of MosPrime Rate, is revised by the NFEA Council at least once a year. No limitations are imposed on repeated inclusion of a bank.

At present, the list of banks – participants in MosPrime Rate project includes:

ABN AMRO Bank

VestLB Vostok

Vneshtorgbank

Gazprombank

International Moscow Bank

Sberbank

Citybank

Raiffeisenbank

MosPrime Rate is calculated on the basis of banks’ deposit rates of 1, 2 and 3 months. MosPrime Rate is calculated each work day together with MosIBOR rates at 12.30, Moscow time. Banks-participants enter their quotations into Reuters system before 11.45, Moscow time. The rate value is indicated as per cent of yearly interest to the second decimal place. The highest and the lowest rates are cut off and the rest of the rates are used to calculate the arithmetic mean, which is assigned to MosPrime Rate. The value of MosPrime Rate is calculated as per cent of yearly interest to the second decimal place.

The NFEA intends to post information on MosPrime Rate index daily on its web site and publish it on special pages of Reuters news agency and in the media.

According to Stephen Kempfer, Vice-President of EBRD, “the launch of MosPrime Rate is an important step in the development of the Russian money market. The creation of a reliable and transparent money index is of key importance for our ruble-denominated bond issue. It serves as a benchmark for the market as a whole.”