VTB Bank (France) SA

Annual Report 2015

Access to the Annual Report

The Bank’s Annual Report, the Report of the Executive Board in particular, can be consulted on request at the head office,

86, boulevard Haussmann, 75008 Paris.

Richard Vornberg Chairman of the Board

Bastien Martin Member of the Board

Contents

Key figures as of 31 December 2015 4Administration, Control andManagement Authorities 5Report of the Executive Board 8Report of the Supervisory Board 292015 Financial Statements 30 Balance and Off-Balance Sheets 32 Income Statement 35

Notes to the Financial Statements 2015 36 Income Statement Analysis 64Statutory auditors’ report on the financial statements 66Statutory auditors’ reporton related party agreements 68

4 Key figures as of 31 December 2015 (FGAAP)

31/12/2015(EURO million)

31/12/2014(EURO million)

Total gross assets 1,255 1,160

Stock of provisions -15 -15

Capital + reserves + FRBG 236 236

Subordinated loan 894 822

Retained earnings -59 -59

Net income 10.0 0

Permanent funds 1,080 999

5Administration, Control and Management Authorities

VTB Bank (Austria), Vienna 86.980%

JSC VTB Bank 9.210%

GUPVO NOVOEXPORT, Moscow 3.690%

Mikhail Yakunin 0.030%

Alexey Krokhin 0.015%

Svetlana Fedorenko 0.015%

Andrei Movtchan 0.015%

Yves-Thibault de Silguy 0.015%

Tatiana Mukhina 0.015%

Vsevolod Smakov 0.015%

6Supervisory Board

Mikhail Yakunin Chairman

Alexey Krokhin Vice-Chairman

Olga Avdeeva Member of the Supervisory Board (from June, 11th, 2015)

Svetlana Fedorenko Member of the Supervisory Board

Vsevolod Smakov Member of the Supervisory Board

Andrei Movtchan Member of the Supervisory Board

Yves-Thibault de Silguy Member of the Supervisory Board

Tatiana Mukhina Member of the Supervisory Board

Management Board

Richard Vornberg Chairman of the Board

Christophe Boutry Member of the Board (until March, 13th, 2015)

Bastien Martin Member of the Board (from May, 12th, 2015)

7Managers

Sandrine Gout

Georges Kobakhidze

Michel Laily

Christophe Mathieu

Victoria Orlova-Szmidt

Oleg Pitchouguine

Mickaël Pertegaz

Statutory Auditors

Ernst & Young Audit represented by Vincent ROTY, Partner

Deloitte & Associés represented by Jean-Marc MICKELER, Partner

Report of the Executive Board 2015

101. Economic environment

1.1. Global economic situation

The year 2015 was especially marked by a disap-pointing economic growth (2.4% vs. 2.6% in 2014, according to the World Bank), below initial expec-tations (0.4 point below June 2015 forecasts), a collapse of international trade, extremely accom-modative monetary policies, and a confirmed drop in oil prices. Moreover, the 2014 economic growth, also very disappointing, had been marked by a net slowdown of emerging countries.

Emerging markets had been a driving force of global growth in the past decade, and especially after the 2007-2008 financial crisis. However, since 2010, emerging economies face a clear slowdown. Again in 2015, the growth of emerging economies (BRICS) proved disappointing, as some face a deep reces-sion (Brazil, Russia). Brazil will have to face dire consequences, with a recession twice stronger than forecast up until now (-3.0% in 2015).

The World Bank’s latest report emphasizes that a 1 percentage point decline in growth in BRICS is associated with a reduction in growth by 0.4 points in the global economy (“Global Economic Prospects”, January 2016 World Bank report).

The year 2015 was marked by fluctuations in the Chinese economy, which set the tone on financial markets – stock, interest-rate and commodity markets alike. While the Chinese slowdown probably reached its low point over the summer, and even though concerns on China’s growth and financial system somewhat eased, they did not vanish altogether, as prove the plunge in Asian markets at the beginning of 2016. There are signs of stabilization of retail sales and housing markets, but the Chinese manufacturing sector remains ill-oriented and China’s potential eco-nomic growth will be closer to 4-5% at the end of the year than the current 7% targeted by the government.

Chinese growth should slow down again and mod-erate to 6.7% this year, against 6.9% in 2015 (World

Bank projections). Risks include a stronger than pro-jected slowdown of activity in China, the possibility of renewed turbulence on financial markets and a sharp tightening up of financial conditions.

Once at the heart of the 2008-2009 global crisis, rich countries now seem better-off. They can rely on a more “convincing” recovery in the US and the UK, according to various analyses by the IMF. With regards to developed economies, net importers of raw mate-rials (United States, Japan, Germany, Italy, France, UK and Spain, a third of world GDP), GDP growth signif-icantly quickened, from 1.5% at the end of 2014 to 2.1% over a year at the end of S1-2015.

The World Bank noted that in the US, domestic de-mand in 2015 was supported by robust consumption and dynamic investment outside the oil sector. These two factors should continue to be the main drivers of growth in 2016, projected at 2.7% (against 2.5% in 2015). In addition, falling oil prices earned the econ-omies importing raw material between 0.6 and 1% of GDP. In the end, over the second semester, the growth appeared to be more modest, especially in the Euro-zone (1.5% in 2015), with the resurgence of hazards posed by the Greek crisis and various concerns on the future of the country within the Eurozone.

While the IMF estimated that risks of spillovers relat-ed to Greece are lower than at the beginning of 2015, they remain a subject of concern. Yet a “recovery” sit-uation was noted in the Eurozone in 2015, sustained both by the strengthening of domestic demand and exports, which resumed thanks to the depreciation of the euro. In average, the main four economies of the Eurozone show a strengthening growth, albeit very weak (1.7% projected in2016 according to the IMF).

In conclusion, in 2015 the world economy did not succeed in picking up. The strong fall in commodity prices should have been favorable, as the weigh of net importing economies was higher than that of producing and net exporting economies.

The lack of acceleration owes to contradicting evolu-tions currently traversing the world greatest econo-

11mies. “The return to robust and synchronized global expansion remains elusive” summarized at the end of 2015 Maurice Obsfeld, new Economic Counsellor at the IMF. Indeed, the IMF cast a worried eye on the Chinese slowdown, which drags emerging economies along the way. In addition, in the US, the industry is recessive, investments perspectives in decline, and growth is based on services and employment creation in services.

The main economic risks projected for 2016 are mostly related to a possible slowdown in China, a sudden increase in oil prices, degraded risk premiums in some emerging countries (with unchanged economic situation) and a stronger reversal of American economy than expected (premature rate increase by the FED).

1.2. France

For the second year in a row, France should display a growth rate inferior to that of the Eurozone, drive by German and Spanish economies.

However, with a growth over 1% in 2015, the cycle of GDP stagnation, observed over the previous three years, has come to an end. According to the first estimate published by the INEE on 29 January 2016, France’s GDP increases by 0.2% in the 4th term of 2015 (after 0.3% in the previous term).

On a yearly average, economic activity increased from 1.1% in 2015, after 0.2% in 2014.

Macroeconomic projections from the Bank of France (as of 4 December 2015) forecast a GDP growth at 1.4% in 2016 and 1.6% in 2017. These projections have been revised downward, since in June 2015 they forecasted a GDP growth at 1.8% in 2016 and 1.9% in 2017.

French economic growth would be supported by a number of external factors (decreased oil prices and depreciation in the nominal effective exchange rate of the euro), factors common to the Eurozone (accommodative monetary policy) and internal factors (improvement in companies margins). However, the

growth would remain slightly inferior to that of the Eurozone, with a projected growth at 1.7% in 2016.

In addition, Brussels and now Berlin show more com-prehension toward public deficit. The French govern-ment was not obliged to increase taxes, which would have broken the weak recovery. French government accounts fall short again in 2015 (-3.8%) and would stand at -3.4% in 2016 and -3.2% in 2017.

From 2014 to 2016, the budgetary consolidation should be reassessed at levels much less ambitious than initially projected, and the deficit should not reach the Maastricht threshold of 3% of the GDP before 2017 or 2018. As a consequence public debt increased in 2015 (96.3% of the GDP). However it should stabilize in the coming years owing to econom-ic recovery and savings plan initiated by the govern-ment. Yet it remains higher to that of Germany, which started to decrease.

One remarkable event in 2015 is the near-zero infla-tion in France. The low inflation globally is an effect of the intensification of downward pressures of energy prices, owing to the fall in oil prices. Energy prices overall greatly decreased. In 2015 they decreased by 6%, while the price of oil per barrel was almost divided by two over the same period. The decrease dented French inflation by 0.5 percentage point over the year. Projections by the Inflation Commission were revised downward, at 0.5% in 2016 and 1.5% in 2017 in the Eurozone and 0.6% in 2016 and 1.3% in 2017 in France.

Despite a slight decrease half course through the year, the unemployment rate has kept growing in 2015. It would be slightly higher than that of the Euro-zone, at 10.6% in France and 10.4% in the Eurozone. The number of job seekers increased again in Decem-ber (+15,800 new registered job-seekers). There were 3,590,600 job seekers at the end of 2015.

Clearly the economic growth was not sufficiently supported to allow massive job creations. The build-ing sector, historically an antagonist to employment creation, kept losing jobs. However, after three years

12of net employment loss in the trade sector, the INSEE estimated that 46,000 jobs were created in 2015, to be added to the 48,000 jobs outside the trade sector, although these were largely stimulated by State-sub-sidized contracts.

The conjecture seems more positive in terms of offer. French industrials registered an increase competitive-ness owing to the fall in oil prices and depreciation of the euro, which naturally drove exports.

The increase in consumption in France as well as the economic recovery in the Eurozone were determining factors, knowing that France’s main trading partners are located within the Eurozone. Corporate invest-ments also increased ever so slightly.

However, it did not translate into a consequential growth. According to the INSEE, corporate investment would grow by 1% in 2015 (downward revision by -1 per-centage point compared to July 2015 survey). It should be noted that recovery of margins was mostly privileged.

In 2016, investments are projected to grow by 3% accor ding to first estimates, slowly picking up. Better financing conditions and the beginning of the economic upturn should facilitate the acceleration. Of course accommodative policies from the ECB have a positive impact. Domestic and external demands are projected to rise; the necessity to renew the capital stock after several years of weak investment; abundant liquidity; and improved profit margins are all factors supporting investment expenditure.

What is more, the debt to equity ratios fell sharply and have reached very low levels compared to the peaks registered during the financial crisis.

However, this recovery will still be impeded by antici-pations of a weaker projected growth than in the past, enduring financial bottlenecks and high indebtedness in some countries.

As a conclusion, in the short term, growth perspec-tives in France remain moderate. The improved global

environment, favorable currency exchange rate and falling oil prices all are benefic factors to an economic rebound. The positive effects of ongoing structural reforms are significant, but will be fully perceptible in the medium term.

It is important that France should pursue its commit-ment to budgetary consolidation at an adequate pace and in compatibility with an economic recovery, while letting automatic stabilizers act.

However this modest growth would limit employment perspectives, and the unemployment rate should only slightly decrease. Households should maintain cautiousness in real estate investment decisions and maintain a high savings rate facing the continuing uncertainty surrounding them, thereby restraining domestic demand.

1.3. CIS

The year 2015 was marked by an increased exchange rate volatility, correlated with a fall in oil prices, strong inflation and massive capital outflow.

As CIS countries economies are narrowly dependent on the financial and economic situation in Russia, they suffered from the adverse climate there: decreased demand and investments, reduced trade flows.

After a short rebound in 2010-2011, the Russian economy, very dependent on raw materials, has been experiencing a structural slowdown since the summer 2012, amplified since 2014 by the fall in oil price and international sanctions., In 2015 the Russian economy faced an almost 4% recession.

Even though some macroeconomic indicators are relatively satisfactory (current account surplus, limited public debt, sustainable budget deficit in the short run), the Russian economy, deprived of its engines of growth, risks stagnating in the coming years. Russia’s main weaknesses are related to the structure of its economy, its low labour productivity, lack of investment and lack of competitiveness of exports outside hydrocarbons.

13For the economic growth to pick in the medium term, structural reforms need to be implemented, which the government has already undertaken.

The weak performances in 2015 reflect the fall in oil prices, and the impact of international sanctions. Russian authorities are still projecting a recovery of the economic growth in 2016 (official projections at 0.7%).

The deteriorating economic situation is mostly related to the decreased demand, as the government’s support to consumption was lower than in 2009. The freeze in real salaries in the public sector in 2016 and the indexation of pensions to a much lower rate than that of the inflation will continuing weighing on consumption in 2016.

The decreased investment in fixed assets, ongoing since the end of 2013, was even deteriorated in 2015, as a consequence of the lack of confidence in the per-spectives of the Russian economy. In terms of offer, the industrial production reached a low point at -4.9% in annual gains in the 2nd term of 2015, but started to show signs of stabilization in the 3rd term (-4.1% in annual gains).

The limited access to international financial mar-kets, a consequence of western sanctions, the rise in financing costs in the domestic market, as well as the lack of confidence of private actors related to geopolitical tensions, weigh on corporate invest-ments. In this context, the public authorities attempt to stimulate investments by financing great projects mobilizing a growing part of the National Welfare Fund (FNB, 74 billion dollars as of 1 November 2015). In its action plan for the coming years, the govern-ment targets a return to 22-24% investments in the GDP structure by 2020.

As inflation does not slow down as fast as expected, the Central Bank has paused the cycle of loose mon-etary policy since July. The strong depreciation of the rubble by 50% at the end of 2014 – beginning of 2015 after the transition to floating exchange rate translated into a quickened inflation at 16.9% in annual gains in

March. The inflation started slowing down in April and at the end of 2015 stands at 15.6% in annual gains.

In its monetary policy guidelines for 2015-2017, the RCB is still aiming at reducing inflation at 4% by the end of 2017. After a strong increase in the lending rate, at 17% in December 2014, the RCB proceed-ed to loosening its monetary policy starting from January 2015 (-600 bp over January-July, as soon as the situation on the exchange rate markets and weekly inflation stabilized.

The RCB has kept its lending rate unchanged at 11% since the end of July. Since the middle of May, the ruble is again under pressure, as a result of the hydrocarbon market environment. And the end of 2015, the correlation between RUB/USD and the oil price stands at 0.8. The ruble exchange rate seems to remain an important reference for the RCB. Mid-May 2015, when the ruble appreciated up to 50 RUB/USD, the RCB resumed its regular purchases of foreign currencies (100-200 million USD per day), thereby taking some distance with the classic implementation of target inflation. The objective of these interventions is to recover federal reserves, up to 500 billion USD (358 billion at the beginning of August) at the horizon of the next 5-7 years, a level which, according to the RCB, would enable to cover considerable capital outflows for two or three year. Regular purchase of foreign currencies were suspended at the end of July when the ruble depreciated at 60 RUB/USD.

The financial sector, affected by the economic slow-down and international sanctions, remains at an inter-mediate development stage. The Russian bank sector, very fragmented (767 banks as of 1 October 2015), is largely dominated by a few great State banks – Sber-bank, VTB Group, Gazprombank, Rosselkhozbank -, which represent over half of the assets in the sector. Closures of banks picked up in 2014, as the RCB with-drew 87 banking licenses in 2014 and over 80 in 2015 (against close to thirty in 2013).

License withdrawal for small banks are mostly based on anti-money laundering legislation. The Russian

14bank sector remains relatively under-dimensioned (the credit to GDB ratio stands at about 60% at the end of 2014), especially in comparison with other emerging economies. Structurally, the development of the banking sector remains limited by a deficit in long-term resources in Russia – the Russian population has a low propensity to saving, and there are almost no large institutional investors.

Finally, public finances, greatly dependent on oil and gas revenues, are deteriorating. The situation of public finances strongly deteriorated in 2015 as the oil prices stabilized at a much lower level than over the previous three years. After close-to-balance positions between 2011 and 2014, the deficit of the federal budget should reach 3% of the GDP in 2015. A similar deficit is projected in 2016. The de-preciation of the ruble only allowed counterbalanc-ing part of the negative impact of the oil situation on revenues.

The federal budget remains strongly dependent on oil and gas revenues, which represent almost 50% of the total revenues. The deficit outside oil and gas is estimated at 11.4% in 2015, which is close to the peak of 13.7% in 2009, and very far from the almost 4% recorded before the 2009 crisis.

As the Russian economy is largely dependent on raw material and their prices (Russia was the world’s 3rd largest producer in oil and 2nd largest in gas in 2014), its diversification is lesser to that other great emerging economies. Diversifying its exports, preferably with high-technology products, remains nowadays Russia’s primary economic challenge. Russian authorities now put more emphasis on the policy of substitution to imports, thereby attempting to benefit from trade restrictions and the depreciat-ed ruble. However, concrete measures undertaken in this area remain limited.

The presence of the State in the economy remains strong, and has become stronger again as the Russian

oil company Rosneft acquired British group BP’s shares in the co-enterprise TNK-BP.

The business climate, insufficiently favorable, remains an obstacle to an increase of investments. However, Russia made considerable progress in the World Bank’s Ease of Doing Business ranking. Three years after its accession to the WTO, the impact on Russian economy is still barely perceptible.

Russia is slow in implementing a number of com-mitments, which prompted the European Union to engage several litigation proceedings, in order to protect its trade interests. Lastly, Russia’s accession process to the OECS was suspended in March 2014, in a context of geopolitical tensions.

1.4. Activities of the Bank in 2015

1.4.1. Corporate clients and financial institutions

The Bank’s trading activity in 2015 was affected by the substantial deterioration of the political and econom-ical environment, even compared to 2014, which was already a difficult period. The fall in oil prices increased economic difficulties in Russia and in several other countries. In France, economic growth remained low.

Political and economic sanctions implemented toward Russia were maintained and reinforced in some as-pects. Together with the geopolitical crisis in Ukraine and in the Middle-East, the situation was not favora-ble to the development of the Bank’s activities.

In this context, the total balance sheet of the Bank only slightly increased compared to the previous year, to stand at 1,255 MEUR by French standards. The Bank’s key activities have remained centered on financial services to corporate clients and financial in-stitutions in Russia and other CIS countries, as well as to some French companies, especially those partaking in economic exchanges between the two countries. New counterparts were initiated in Central European

15countries. Collaboration with financial institutions noticeably decreased, which reflects the status of the economic crisis.

The Bank’s activity is still relying on an extensive knowledge of those markets and of its traditional products, such as structured finance, trade finance and syndicated loans.

The Bank has maintained its presence on the local market, especially by developing offers of VTB group services to large French corporations interested in the Russian market and markets of other countries where the VTB Group is present.

The net result as of 31 December 2015, prior to the application of the drawback clause, stands at 9.9 MEUR, against 0.4 MEUR as of 31 December 2014.

In all its activities, the Bank continued to strengthen its integration in the VTB Group and the European subgroup, consisting of VTB Bank (Austria) AG, VTB Bank (Deutschland) AG and VTB Bank (France) SA.

1.4.2. Private customers - VTB-Direct

The year 2015 presented two steps. The first two thirds of the year were devoted to stabilizing assets. The end of the year was marked by a finer manage-ment of liquidity within the subgroup.

From January to August 2015, assets remained rela-tively stable (102 MEUR excluding accrued interests at the beginning of the year, against 100.4 MEUR at the end of August). The interest rate on offer remains high, in spite of some cuts, and is located among the best 2 offers on the market. The loyalty building/customer retention offer was maintained throughout the period.

Starting from September, the offer was gradually reduced in a context of general decrease in rates, and with a view to harmonizing offers within the subgroup. Deposits were reduced (excluding accrued

interests) to 89.3 MEUR at the end of 2015, against 101.9 MEUR at the end of 2014. The average rate on new or renewed commitments decreased from 2.18% (for an average duration of 14 months) to 0.88% (for an average duration of 8.6 months).

The average rate of total outstanding barely de-creased, owing to the higher importance of historical outstanding (average rate at 3.08% at the beginning of 2015 against 2.75% at the of the same year). For the same reason, the average duration of term deposits increased from 34.1 month to 35 months at the end of the year. However, the remaining average duration of term deposit accounts decreased from 14.9 months to 11.7 months.

From an operational point of view, the year was also marked by a change in the site host (now Linkbynbet), which was operated at the same time that VTB Bank (France) SA changed headquarters. Direct costs (Mar-keting and Servicing mainly) were also strictly contained and reached a total below that in the initial budget.

1.4.3. Private banking

The new activity – Private banking, launched in 2014, was marked by the development of mortgage lending, which reached levels targeted for 2015 at the end of the year.

Other elements of this activity - the basic services of a retail bank:

· current account with payment means; · investments in the form of term deposit account or passbook savings accounts;

were essentially offered to clients as products associ-ated with mortgage lending.

These services are targeted in the first place to VIP clients of VTB group who have interests in the real estate industry in France.

161.4.4. Equity holdings of the Bank

The Bank’s current strategy does not involve devel-oping its activity by means of its equity holdings. To this day, four minority equities are recorded on the balance sheet.

The cooperation with the bank EVROFINANCE MOSNARBANK (EVF MNB), of which the VTB Group is one of the main shareholders, was limited as per the previous years, to documentary business in favor of beneficiaries located in France.

2. Organization of internal and compliance controls

Context of the internal control system

The main legislation applicable to VTB France (SA) in terms of internal control is the regulation dated 3 November 2014, on the internal control of cor-porations in the banking, payment services and investments services subjected to the control of the Resolution and Prudential Supervisory Authority.

The new regulation updates the principles regarding control systems for internal procedures and opera-tions; accounting organization and data processing; results and risks assessment systems; monitoring systems and risk controls; the role of the Bank’s executive and decision-making bodies.

Management of the internal control system

The internal control system is a continuous process, implemented by the executive body. It involves operational and functional managements as well as all members of staff, and contributes to achieving the organization’s objectives in terms of profitability and to maintaining a reliable internal and external reporting system.

Within VTB Bank (France) SA, the management of the internal control system relies on:

· the Executive Board, who defines and implements the necessary structures and resources to ensure with op-timal and exhaustive efficiency that risks are correctly assessed and managed, and to establish a level of control adequate to the Bank’s strategy and financial situation. The Executive Board is responsible for daily risk management, and reports to the Supervisory Board in this regard; · the Supervisory Board, who, in accordance with the regulatory framework, monitors the management of any risk incurred and assesses the internal control sys-tem. In its role of monitoring systems of internal con-trol, compliance and risk management, the Supervisory Board calls on the assistance of the Audit Committee; · the Audit Committee, who provides assistance to the Supervisory Board, was created in replacement of the Audit Committee, following publication of the decree dated 3 November 2014 and repeal-ing the Accounting Regulation Committee (CRC) 97-02 regulation. As such, it assesses the quality of the information provided and, more generally, executes the tasks provided under the decree date 3 November 2014, in particular:

· verifying the quality of the information provided and assessing the relevance of the accounting methods used to prepare the accounts;

· assessing the quality of internal control, and in particular the consistency of all systems of measure-ment, monitoring and management of risks;

· ensuring the follow-up of any recommendations reached by regulators and periodic control missions.

· the Compensation Commission, who provides assis-tance to the Supervisory Board in the implementation of the regulation in force and of rules applicable at the VTB Group level in terms of Compensation Policy and of its compliance with provisions of the French Financial and Monetary Code.

17Actors and organizations of the internal control system

The scope of VTB Bank (France) SA internal control sys-tem covers all kinds of risks and all organizational units. In addition, it covers core or important operational tasks and services that have been outsourced, in compliance with the conditions provided under regulations.

In compliance with banking regulations and best manage ment practices, the internal control system is based on three main levels: two levels of permanent control and one level of periodic control.

Permanent controls performed by operational services (level 1)

The first level of permanent control is ensured by the operational or functional services, under the supervi-sion of their hierarchy.

As such, the services are especially responsible for verifying that risk limits are observed; verifying the proper implementation of operations processing pro-cedures and their compliance; supporting evidence for accounting balances resulting from movements of accounts concerned with transactions initiated by the services; and reporting any operating risk incident that may have been noted.

Permanent controls ensured by dedicated services (level 2)

The second level of permanent control is ensured by units exclusively dedicated to these tasks within the Bank, as follows:

· the Risks unit is responsible for measuring and monitoring market, credit, liquidity and operational risks within the Bank. As such, it performs preliminary analyses on new operations and monitors the Bank’s various thresholds. In addition, it ensures that mar-ket, credit, liquidity and operational risks comply with

VTB Bank (France) SA credit policy, as well as with its risk and return objectives; · the Permanent Control unit supervises the systems of permanent control, compliance and IT security. It is responsible for the horizontal coordination with all operational and dedicated services in order to ensure the consistency and efficiency of the permanent con-trols operated within VTB Bank (France); · the Compliance unit is responsible for implementing and supervising the prevention system for risks of non-compliance and risks of money laundering and terrorist financing. It intervenes in principle on all new relationships and new operations, on AML/CFT client identification and verification, on the monitoring of capital inflows, and on regulatory watch; · the Information System Security unit defines and ensures the respect of safety rules pertaining to the information systems.

Periodic control (level 3)

The periodic control is the system by which controls are performed with suitable frequency to monitor the regularity and compliance of operations, the obser-vance of procedures and the effectiveness of perma-nent controls.

The Compliance, IT Security, Risks, Permanent Control and Periodic Control units report to the Executive Board, the Audit and Risks Committee and the Supervisory Board as to the execution of their tasks.

Noteworthy events 2014

Following the publication of the decree dated 3 November 2014, the permanent control units were re-organised under two direction: the Risks Direction, in charge of measuring and monitoring credit, market, liquidity and operational risks, and the Internal Con-trol Direction, in charge of supervising the permanent control, the compliance and IT security.

18With regards to general operations, these units were involved in several projects related to regulatory changes or changes within the Group:

· Updating the market activity procedures · Creating a new procedure, entitled ethics guidelines · Updating procedures of relationship entry for corpo-rate, private banking and direct banking clients, as well as their introduction to relevant members of staff.

Finally, the year 2015 was marked the continued sanctions and restrictions to individuals, legal entities or industries primarily linked to Russia, in the frame of the Ukrainian crisis.

In this context, the monitoring system of sanctions was maintained and the following aspects were especially monitored:

· updating lists of sanctions or restrictions: the Com-pliance constituted a specific file summarizing all individuals or legal entities listed by the United-States or the European Union on their sanction lists since the beginning of the crisis in Ukraine (March 2014). For each person or entity, the lists were reconciled with the client base to identify whether some assets may be subject to suspension; · updating tools: the system of real time control of in-coming and outgoing payments (Fircosoft) is updated by initiative of the Compliance as soon as new lists are issued; · controlling outgoing payment and monitoring trans-actions: in order to reinforce the monitoring system, since July 2014 the back office communicates on a daily basis a follow-up chart of frozen assets to the Cash, Risk and Compliance departments;

· sanction committee: following the implementation of restrictions, the Bank set up in August 2014 an ad hoc sanction committee, entrusted to assess the possibil-ity to operate certain types of transactions, or specific transactions with regard to sanctions; · informing collaborators: the different sanctions or restrictions of activity were continuously communi-cated to and discussed between the collaborators and the Management of the Bank. In addition, with respect to procedures, a specific document was added to detail the main sanctions, their impacts and the concerned entities.

As of the date of this report, no client asset was blocked, and no payment issued by VTB Bank (France) was blocked by another banking institution.

With regards to IT changes, the year 2015 was mainly marked by the Bank moving to new premises, which implied in the first place:

· Reviewing physical accesses; · Controlling the various IT systems related to the new premises; · Reviewing IT vulnerabilities following relocation of the registered office.

Secondly, in order to identify more rapidly Cyber attacks and block network penetrations, hackings or computer forensics, the Bank finalized the Cyber-defense project, to reinforce the IT safety level and adopt a pro-active safety strategy.

In order to take into account new vulnerabilities, such as targeted attacks which are neither blocked nor detected by traditional defense systems, the Bank has adopted

19adequate systems to detect suspicious activities (SIEM solution: Security Incident & Event Management) and to delete network traffics identified as dangerous (IPS solution: Intrusion Prevention System). The implementa-tion of this new software enables to control and secure more efficiently the Bank IT System and to reduce the impact of Cyber attacks.

3. Systems of risk management

3.1. Credit risks

The analysis and monitoring of credit risks are organized in compliance with the requirements of the decree dated 03 November 2014 on the internal control of credit and investment institutions, which incorporates into French law the CRD IV requirements.

A limit system is in place to provide a framework to decision-making regarding the approval of new com-mitments and to monitor risks pertaining to existing outstanding loans. The limits are defined for each coun-try, sector and company (third-party). These limits are reviewed periodically on a semi-yearly or yearly basis.

The Bank has 27 country limits, 13 sector limits and about 70 corporate limits (third-party limits). Any overrun must be justified and authorized by a decision -making body.

Property loans marketed since 2014 as part of the Private Banking offer are mainly targeted to clients who are Russian tax residents.

Notwithstanding, and in compliance with the regula-tion in place, the Bank implemented the necessary

controls to ensure proper observance of criteria re-lated to repayment costs with regard to the borrow-ers’ disposable income, of the correlation between the total value of loans granted and that of the assets financed and the duration of the loans. These controls were inscribed in relevant procedures. Usually and generally:

· the repayment costs must not exceed 30% of the borrower’s income, unless the borrower has a signifi-cant amount of assets other than the income; · the correlation between the loan granted and the value of the asset financed should not exceed 50%, unless additional guarantees are registered as part of the transaction; · the maximum duration of the loan is 10 years.

For the purpose of creating a common database to the VTB group and subgroup, the Bank prepares and communicates to VTB Moscow a report on the current portfolio of credits and guarantees, as well as a monthly report on the use of geographic limits.

The Bank’s commitments consist in loan and securi-ties portfolios, as well as interbank loans.

They also incorporate all loans that have been agreed but not yet drawn down, including those which completion is uncertain because subject to meeting certain provisions. Only guarantees de-livered by OECD public insurers such as Coface and cash pledges domiciled with the Bank are taken into account and deducted from the commitments they cover. On this basis, the Bank’s total commit-ments stand at 1,296 MEUR as of 31 December 2015, against 1,186 MEUR as of 31 December 2014.

20

Sectors (merchandises) 31/12/2015 31/12/2014

Financial services 20,1% 28,9%

Real Estate 16,9% 13,2%

Air transport equipment 7,8% 4,7%

Miscellaneous food products 5,4% 5,9%

Steel, Cast Iron 5,0% 3,4%

Handling and storage services 4,4% 4,3%

Other manufactured goods 3,9% 1,3%

Gas 3,7% 2,6%

Precious metals 3,5% 0,0%

Fertilizers 3,1% 3,1%

Shares of the first 10 sectors in the Bank’s commitments

A double internal rating system was maintained through-out 2015, covering separately and complementarily:

· the risk generated by a third-party, on a similar risk scale, given that the Credit Committee takes into account the third-party rating suggested by the Risk Management when presenting or renewing limits and commitments. The third-party rating is reviewed prior to each new presentation to the Credit Committee, on the basis of the updates provided by the project man-ager and/or obtained by the analysts themselves; · the risk inherent to the transaction (integrating all counterparties involved), on a rating scale

reflecting the opinion of the Risk Management. The rate takes into account intrinsic risks, guarantees attached, and the financial setup retained. Along with rating the transaction, the Risk Management expresses its opinion on the commitment and makes suggestions.

Use of a rating framework common to the European subgroup since 2013 has provided an homogene-ous vision of common third-parties and enabled a common approach for individual clients of each entity of the subgroup. In 2015, another entity of VTB group started using this method, VTB Capital (Great-Britain).

Country of residence 31/12/2015 31/12/2014

RUSSIA 18,4% 20,1%

FRANCE 14,6% 12,9%

GERMANY 13,7% 1,6%

CYPRUS 12,1% 12,3%

IRELAND 7,7% 7,3%

ANGOLA 5,7% 2,1%

CROATIA 5,4% 5,9%

GREAT BRITAIN 3,9% 7,1%

BELARUS 3,9% 5,2%

KAZAKHSTAN 3,2% 2,0%

Shares of the first 10 countries in the Bank’s commitments

21The rating system is based on the scoring approach, and provides a rating scale with 14 levels, from AA, new scoring added in 2015 (best rate) to F (lowest rate). A G rate is automatically given to doubtful third parties.

In 2015, this third party rating system was approved by VTB Moscow (Russia) as part of its transition to the IRBF (Basel III) rating system. The transaction rating system used by the Bank allows for a standard assessment of elements mitigating the debtor’s credit risk. Moreover, taking into account eligible collateral allows for a maximum improvement of the transaction rate by two points compared to the debtor’s score.

Commitments of over 12 months are subjected to a full revision by the Risk Management at the end of each year, submitted to the Credit Committee. At the en of 2015, a revision process common and harmo-nized at the subgroup level was introduced to signif-icantly improve the formal annual revision system of commitments and to save time in the synergy. A file revision platform common to the European subgroup was created in 2016 to initiate file revisions.

The Bank opted for the standard approach of credit risk to calculate the statutory solvency ratio. The calculation is performed by dedicated software. A monthly follow-up of statutory ratios is operated with-in the Bank and reported to decision-making bodies. As of 31 December 2015 the Bank’s solvency ratio was in excess of 12% in core capital (Tier 1).

3.2. Operational risks

VTB Bank (France) opted for the so-called basic ap-proach: 15% of the average GDP over 3 years.

Mapping operational risks

The mapping of operational risks is periodically reviewed, based on a “self-assessment” approach, along three axes:

· revision of the allocation of risks to the various organizational units; · revision of the inventory of risks to take into account changes in the activity;

· revision of the levels or risks (impact and probability of occurrence).

In 2015, a RCSA (Risk and Control Self Assessment) was performed at the European subgroup level, and the resulting risk level was minor to moderate, both at the subgroup level and within the Bank.

Inventory of incidents

A database to collect information on incidents has been in place for several years. It aims to track all inci-dents related to operational risks, whether or not they resulted in financial loss. In 2015 VTB Bank (France) suffered mainly a limited number of incidents, for a non-significant amount. The required measured were undertaken to avoid repetition of this type of risks.

Reporting used for measuring and monitoring the operational risk

The reporting on operational risks is submitted to the Board once a year. It includes a description of the incidents occurred throughout the year, and the updated mapping.

A monthly report is prepared for VTB Bank (Moscow). It includes any incident occurred during the month, the monthly cumulative income statement and indica-tors of operational risks.

3.3. Measuring the liquidity risk

The principles and norms of the liquidity risk manage-ment are established in compliance with the decree dated 3 November 2014.

· The Management Board defines the organization and implement the means required to measure the liquid-ity risk. It supervises and approves the framework of structural liquidity risk and decides on the implemen-tation of corrective measures; · The Audit and Risks Committee analyses and com-municates to the Supervisory Board the decision made by the Bank as part of the application of the overall risk strategy. It approves the liquidity risk

22management process of the Bank and reports to the Supervisory Board; · The Supervisory Board defines the liquidity risk toler-ance level as part of the risk appetite strategy of the Bank, and periodically assesses how the liquidity risk is standing (as a minimum on a yearly basis); · The ALM Committee is dedicated to the management of the balance sheet of the Bank, and is responsible for suggesting to the Board a management policy for the liquidity, interest rate and currency exchange risks. The Committee meets periodically, at the minimum every month, to analyze the liquidity situ-ation. When applicable, it may also have to decide on methodological aspects in terms of liquidity risk management; · The Statutory Watch Committee examines statutory changes and their impact; · The Cash Management ensures especially the financing of the Bank’s business activity, maintains its required level of liquidity to face its commitments, monitors daily liquidity; · The Risk Management implements systems to analyze and measure liquidity risks. It performs controls on the limits, and is responsible for their annual revision. It devises stress scenarios in terms of liquidity risk and identifies long term liquidity risks.

The initial objective of the Bank in terms of liquidity management is to warrant the refinancing of its business activities at optimal cost, by keeping the liquidity risk un-der control, and in compliance with regulatory constraints. The liquidity risk management system enables to pilot the balance sheet to draw a target structure of assets and liabilities, consistent with the risk appetite defined by the Supervisory and the Management Boards.

In compliance with the regulations in place, the Bank calculates the LCR and NSFR ratios. Both exceed the minimum regulatory level by 100%.

Monitoring of the margin call risk as part of the daily liquidity management is done on a daily basis for SWAP transactions registered in the frame of an ISDA/CSA.

In addition to statutory ratios communicated to the French regulatory authorities, the Bank communicates starting

from 31 January 2016 the short term liquidity ratio due to be integrated in the Group system on consolidated bases and communicated to the Russian Central Bank.

3.4. Risks of market activities

Over the past 12 months, market transactions were monitored by means of real-time and follow-up controls.

The middle office runs a daily follow-up of the valuation of all transactions, of realized and latent results, of the level of stop-losses, and of the acceptable Potential Maximum Loss (PML).

Every month, the middle office analyses variances between management and accounting results for the whole market activity.

Daily information is communicated to decision-making bodies in charge of this activity.

3.4.1. Risk monitoring

Defining market limits

According to delegations and charters in force, limits are defined by the Management Board within a frame-work of global limits, and by the Credit Committee within a framework of counterparty limits. All limits and lines granted are periodically reviewed (at most yearly).

Monitoring counterparty limits

With regards to limits authorized, 7 counterparties were granted an overrun by the relevant decision-mak-ing bodies in the second half of 2015. This exceptional decision was taken to face a reduction in the number of counterparties with which the Bank could deal with, following European sanctions, but also with “in-tra-group” counterparties, toward the end of Decem-ber, to face the constraint for stabilization of the LCR.

Monitoring currency exchange risks

Currency exchange positions and results by nature of transaction and currency are followed up in real time

23using Kondor/Reuters, reconciled with the accounting data. All variances are analyzed and justified.

They are also analyzed on a monthly basis, and the analysis is communicated to the ALM Committee, who is in charge of proposing the most appropriate hedging strategy to the Board.

En 2015, the Bank completed no operations to hedge foreign exchange risks.

Stress scenario

The Bank devised stress scenarios for each of the main risk factors to assess the consequences of strong fluctuations in the market parameters.

With regards to the securities portfolio, hypotheses are based on historical data, and especially on the fluctuation of market prices related to the crisis of emerging market in 1998, and more recently to the fi-nancial crisis in autumn 2008 then in 2014, for a stock price variation of 50%, combined with an exchange rate variation of 30%.

With regards to the currency exchange risk, based on historical fluctuations of the euro/dollar exchange rate, the stress scenario reflects the impact of a 30% appreciation/depreciation.

With regards to the overall interest rate risks, the stress scenario incorporates the impact of a change of 2% to -0.25% of the dollar and euro yield curves, over an average gap of 1 year.

3.4.2. Measuring the overall interest rate risk

The interest rate risk is the risk of losses following fluctuations in interest rates. It is a source of vulnera-bility for the Bank’s financial situation, when faced to adverse changes in interest rates.

In compliance with the EBA’s directions on the man-agement of interest rate risk, in analyzing the equity

allocation to the overall interest rate risk, the Bank chose to differentiate:

· the current internal capital allocated to risks on the economic value, likely to be affected by a sudden interest rate shock; · future capital requirements based on the impact of interest rate fluctuations on the future capacity to generate profits.

Given the structure of the balance sheet of the Bank, its main risk consists in a depreciation of interest rates.

As such, the Bank calculates the impact of a uniform shock of the interest rate curve by 1% on the equity and the current NBI. These projections are calculated in equi-valent EUR on all lines, independently of the currency, and for all significant currencies in use: EUR, USD, CHF.

The shock impact on equity is estimated at 27 MEUR. The Bank allocates a limit of 70 MEUR, or 20% of the regulatory capital, as of 31 December 2015.

The NBI sensitivity is estimated at 3.1 MEUR as of 31 December 2015, for an allocation of 10 MEUR of economic capital.

3.4.3. Securities portfolio

The open positions, in terms of acquisition value of investment securities, stand at 256 MEUR at the end of 2015 against 237 MEUR at the end of 2014, owing to the euro to dollar exchange rate fluctuations. In nominal value, the portfolio decreased by 6 MUSD.

A new HTM portfolio was created in August, is in open position at 58 MEUR as of 31 December 2015.

The fluctuations of the 3 securities in collateral posi-tion in the frame of JPMorgan rating are controlled on a daily basis.

There was no open position at the trading portfolio as of December 31 2015 and 2014.

24

2015

31.01.2015 28.02.2015 31.03.2015 30.04.2015 31.05.2015 30.06.2015 31.07.2015 31.08.2015 30.09.2015 31.10.2015 30.11.2015 31.12.2015

(euro/dollar rate for the month analysed) 1.1305 1.1240 1.0759 1.1215 1.0970 1.1189 1.0967 1.1215 1.1203 1.1017 1.0579 1.0887

Change in the dollar rate over the year -3.84%

(in euros, rate as of 31.12.2015)1.0887 (coefficient) 1.0384 1.0324 0.9882 1.0301 1.0076 1.0277 1.0073 1.0301 1.0290 1.0119 0.9717 1.0000

Securities trading activities (in thousands of euros)

Annual Stop Loss HOLD TO MATURITY Open position 34 907 35 481 58 281

Unrealised result 629

Annual Stop Loss PLACEMENT Open position 253 424 254 802 265 517 255 337 254 767 250 077 254 832 249 532 249 783 253 745 263 624 256 594

(11 022) Unrealised result 846 14 386 26 049 30 916 36 847 30 651 33 413 28 463 32 367 36 439 40 355 36 626

The investment portfolio is monitored at acquisition value.

The unrealised result is determined in relation to the securities market price as of 31 December 2014.

Foreign exchange activity (in thousands of euros)

Annual Stop Loss CHANGE Open position -216 91 -2 560 2 003 -302 272 -271 258 13 -120 -339 256

(640)Unrealised resultend of the period 1 166 1 257 -1 303 700 398 670 399 657 671 550 211 467

Position and stop loss limits were not reached during 2014, either for securities or for FX activities.

On the foreign exchange activity, the daily stop loss limit was breached on January 27.

On the securities trading activity, the daily stop loss limit was breached twice in January and twice in August 2015, then the stocks recovered and compensated for the unrealised part.

Quantitative information on market risk exposure

25

2015

31.01.2015 28.02.2015 31.03.2015 30.04.2015 31.05.2015 30.06.2015 31.07.2015 31.08.2015 30.09.2015 31.10.2015 30.11.2015 31.12.2015

(euro/dollar rate for the month analysed) 1.1305 1.1240 1.0759 1.1215 1.0970 1.1189 1.0967 1.1215 1.1203 1.1017 1.0579 1.0887

Change in the dollar rate over the year -3.84%

(in euros, rate as of 31.12.2015)1.0887 (coefficient) 1.0384 1.0324 0.9882 1.0301 1.0076 1.0277 1.0073 1.0301 1.0290 1.0119 0.9717 1.0000

Securities trading activities (in thousands of euros)

Annual Stop Loss HOLD TO MATURITY Open position 34 907 35 481 58 281

Unrealised result 629

Annual Stop Loss PLACEMENT Open position 253 424 254 802 265 517 255 337 254 767 250 077 254 832 249 532 249 783 253 745 263 624 256 594

(11 022) Unrealised result 846 14 386 26 049 30 916 36 847 30 651 33 413 28 463 32 367 36 439 40 355 36 626

The investment portfolio is monitored at acquisition value.

The unrealised result is determined in relation to the securities market price as of 31 December 2014.

Foreign exchange activity (in thousands of euros)

Annual Stop Loss CHANGE Open position -216 91 -2 560 2 003 -302 272 -271 258 13 -120 -339 256

(640)Unrealised resultend of the period 1 166 1 257 -1 303 700 398 670 399 657 671 550 211 467

Position and stop loss limits were not reached during 2014, either for securities or for FX activities.

On the foreign exchange activity, the daily stop loss limit was breached on January 27.

On the securities trading activity, the daily stop loss limit was breached twice in January and twice in August 2015, then the stocks recovered and compensated for the unrealised part.

263.5. Information regarding payment deadlines to suppliers

Within VTB Bank (France), any payment to a supplier is subjected to the general procedure for processing any kind of payment. Payments are executed accord-ing to deadlines specified on suppliers’ invoices, or upon reception thereof if no deadline is specified.

The Financial Direction performs a systematic control of the correct execution of this type of payment.

No invoice payment delay was detected as of 31 December 2014 and 2015.

4. Comments on the financial statements

4.1. Balance sheet

As of 31 December 2015, the balance sheet total stands at 1,255.1 MEUR against 1,159.9 MEUR as of 31 December 2014, or an increase by 95.2 MEUR. The dollar to euro exchange rate went from 0,8237 to 0,9185, an appreciation of 11.51%.

Assets

Asset line items that underwent a significant variation between 31 December 2014 and 31 December 2015 are as follow:

· deposits, central bank, CCP (Central Office for Credits to Individuals: -49.73 MEUR; · client transactions: +81.7 MEUR (especially private private banking); · bonds and fixed-income marketable securities: +108.2 MEUR.

Liabilities

Liabilities line items that underwent a significant variation are as follow:

· due to credit institutions: +22 MEUR; · client accounts: -6.5 MEUR; · subordinated debt: +71.48 MEUR, caused by the application of the claw back clause in 2014 (+0.439 MEUR) as well as exchange rate fluctuations (+71.041 MEUR). The augmentation of the subordi-nated debt after application of the claw back clause in 2015 will amount to 10 MEUR approximately.

Off-Balance-Sheet

Off-balance-sheet commitments that underwent significant variations in 2015 are as follow:

· funding commitments received from credit institu-tions: -164.7 MEUR. Owing to the non-renewal of a credit line with VTB Moscow at 200 MUSD. · guarantee commitments to the benefits of cus-tomers: -103.98 MEUR. Owing to the end of DCNS commitment especially.

4.2. Profit and Loss Account

The net income as of 31 December 2015 prior appli-cation of the claw back clause stands at 9.951 MEUR against 0.439 MEUR as of 31 December 2014.

The Net Banking Income comes in at 88.35 MEUR, an in-crease of 66.98 MEUR compared to 31 December 2014.

General operating costs (-18.19 MEUR) and deprecia-tions and amortizations (-0.83 MEUR) yield a total of

2719.02 MEUR, a decrease of 0.35 MEUR compared to the previous year.

The Basic Operating Income amounts to 69.33 MEUR, an increase by 67.33MEUR.

The cost of risk, at – 42.487 MEUR, consists in the following:

· provisions on doubtful loans and bad debt expenses: -48.688 MEUR;

· provisions for country risks: -12.378 MEUR; · reversal of provisions for doubtful debts: + 7.529 MEUR; · reversal of provisions for country risks: +14.713 MEUR; · bad debts expenses: -3.664 MEUR.

Net gains on investment portfolio operations amount to +32.482 MEUR.

4.3. Charts of the last five years

Year 2011 2012 2013 2014 2015

Duration in month 12 12 12 12 12

1. Financial situation at the end of the year

Social capital (KEUR) 185 344 185 344 185 344 185 344 185 344

Number of existing ordinary shares 165 789 165 789 165 789 165 789 165 789

2. Global result of effective operations (KEUR)

Tumover excluding tax 88 447 107 336 87 506 27 343 94 008

Income before tax, depreciation, amortization and provisons -3 252 -827 6 719 58 028 22 491

Income taxes 0 0 0 0 0

Income after tax, depreciation, amortization and provisions 0 0 0 0 0

Dividends distributed 0 0 0 0 0

3. Result of operations reduced to a single share (EUR)

Income after tax, but before depreciation,amortization and provision -20 -5 41 350 136

Income after tax, depreciation, amortization and provisions 0 0 0 0 0

Dividend distributed to each share 0 0 0 0 0

4. Staff

Number of staff 58 59 61 60 54

Total payroll (KEUR) 7 810 8 020 6 684 6 435 5 975

Employee benefits(social security, other benefits) (KEUR) 2 945 2 763 2 874 2 156 2 015

In compliance with the decisions of the general assembly, no dividend was distributed over the past five years.

284.4. Information on corporate officers

The governing body of VTB Bank (France) is made of two members of the Board and eight members of the Supervisory Council as of 31 December 2015.

The Board is represented by Mr. VORNBERG, Chairman of the Board, and Mr. MARTIN, Member of the Board.

The Supervisory Council is constituted by Mr. YAKUNIN, Mr. KROKHIN, Mr. MOVTCHAN, Mr. DE SILGUY, and Mr. SMAKOV, and Ms. AVDEEVA, Ms. FEDORENKO and Ms. MUKHINA.

4.5. Perspectives 2016

The 2015 Business Plan focuses more on maintain-ing the Bank’s position on the market rather than a substantial increase of its activities, given the highly uncertain market conditions.

In terms of trade activity, the Bank will continue to provide structured financing and trade financing services, especially to Russian and CIS corporate clients. The development policy of service offers to VIP clients of the VTB Group will be pursued. Securi-ties activities will be pursued at a similar level to that of 2015. In addition, VTB Bank (France) will pursue its diversification strategy, which consists in developing its commercial network in Europe.

Regarding its global operation and maintenance plan, VBT Bank (France) will pursue its convergence strategy with the VTB group in the frame of the latter’s new man-agement system. Among the main common projects is the elaboration of a database common to the sub-group to respond to new reporting needs, and the implemen-tation common software for market risks management. In addition, it is expected that harmonization of tools and methods for risk management at the level of the European subgroup, especially within the frame of the ICAAP and ILAAP processes, will be finalized.

29Report of the Supervisory Board to the General Meeting of Shareholders

Ladies and Gentlemen, honorable Members,

Pursuant to legal and statutory provisions, you have been convened by the Company’s Management Board to attend the Ordinary General Meeting of Shareholders. You shall be presented with VTB Bank (France) SA activities during the 2015 financial year, as well as its results and prospects. The financial statements for the year ended December 31, 2015 shall also be submitted to your approval.

The Supervisory Board has executed its mission of supervision of the management of the Bank during the past financial year. It was kept regularly informed by the Management Board and was able to fully assess the situation and evolution of the main business line, to monitor the progress of activity according to the objectives specified in the

Business Plan for the year and to keep track of the project concerning the VTB Bank (France) relocation and the arrangement of the new headquarters at 86, boulevard Haussmann, Paris 75008. It noted the work executed in terms of internal control, assisted in this respect by the Audit Committee (henceforth, the Audit and Risk Committee) and it examined the Annual Report on the measurement and monitoring of risks, along with the Annual Report on internal control.

Together with the Management Board, the Supervi-sory Board examined the balance sheet and income statement for the Bank as of December 31, 2015. No reservations were called for in respect to these documents, therefore it asks the Ordinary General Meeting to approve the financial statements for 2015 and the Report of the Management Board.

The Supervisory Board

2015 Financial Statements

32 Balance Sheet as of 31 December 2015

ASSETS 31/12/2015 31/12/2014

EUR thousand EUR thousand

Cash and amount due from central bank, postal accounts 46,710 96,444

Treasury and assimilated securities 0 0

Due from and advances to financial institutions 253,662 283,571

Due from and advances to customers 635,479 553,807

Debt securities and other fixed-income securities 301,441 193,260

Shares and other variable-yield securities 175 175

Holdings and other long-term securities 11,245 25,220

Equity holdings in associated companies 0 0

Lease financing and purchase-option rentals 0 0

Rentals 0 0

Intangible fixed assets 1,304 2,503

Tangible fixed assets 2,771 1,650

Subscribed capital, unpaid 0 0

Own shares 0 0

Other assets 1,833 1,160

Prepayments and accrued income 502 2,086

TOTAL 1,255,122 1,159,875

33

LIABILITIES 31/12/2014 31/12/2013

EUR thousand EUR thousand

Due to central bank and postal accounts 0 0

Due to financial institutions 35,659 13,622

Customers transactions 124,781 131,328

Liabilities in the form of securities issued 0 0

Other liabilities 769 631

Accruals and defered income 7,634 15,491

Provisions for general risks and expenses 6,049 8

Subordinated debt 903,793 822,360

Reserves for general banking risks (FRBG) 13,613 13,613

Equity excluding FRBG 162,824 162,824

Subscribed capital 185,344 185,344

Share premium account 0 0

Reserves 35,981 35,981

Revaluation difference 898 898

Tax-regulated provisions and investment securities 1 1

Retained earnings/losses -59,400 -59,400

Net income / loss for the financial year 0 0

TOTAL 1,255,122 1,159,875

34 Off-Balance Sheet as of 31 December 2015

OFF BALANCE SHEET 31/12/2015 31/12/2014

EUR thousand EUR thousand

Commitments given

Funding commitments

In favour of financial institutions 0 0

In favour of customers 25,565 19,512

Guarantee commitments

In favour of financial institutions 6,550 5,322

In favour of customers 17,479 121,461

Securities commitments

Securities acquired with repurchase or resell options 0 0

Securities to deliver 0 0

Other commitments given 0 0

Commitments received

Funding commitments

received from financial institutions 0 164,731

Guarantee commitments

received from financial institutions 94 85

Securities commitments

Securities sold with repurchase or resell options 0 0

Securities to receive 0 0

Othe commitments received 0 0

35Income statement as of 31 December 2015

31/12/2015 31/12/2014

EUR thousand EUR thousand

Interests and similar income 59,755 60,688

Interests and similar expenses -5,253 -5,477

Income from lease financing and similar 0 0

Expenses from lease financing and similar 0 0

Rental income 0 0

Rental expenses 0 0

Income from variable-yield securities 924 1,321

Commissions and fee income 2,847 7,749

Commissions and fee expenses -402 -492

Gains or losses on trading securities -2,046 400

Gains or losses on short term investments and similar 32,482 -42,860

Other income from banking transactions 46 44

Other expenses from banking transactions 0 0

Net banking revenue 88,353 21,373

General operating expenses -18,188 -18,158

Depreciation expenses and allocations to provisions for intangible and tangible fixed assets -831 -1,212

Gross operating income 69,334 2,003

Cost of risk -42,487 -21,987

Operating income 26,846 -19,984

Gains or losses on fixed assets -16,955 11,447

Pre-tax ordinary income 9,891 -8,537

Extraordinary income / loss -9,891 37

Income tax 0 0

Surplus of allocation / recoveries from reserves for general banking risk and tax regulated provisions 0 8,500

Net profit for the financial year 0 0

Notes to the Financial Statements 2015

381. Presentation

VTB Bank (France) SA financial statements are presented in accordance with generally accepted French accounting principles and the provisions of Accounting Regulation Committee (CRC) Regulation 2000-03 dated July 4, 2000, modified by Regulations 2004-16 dated November 23rd, 2004, 2005–04 dated November 3rd, 2005, 2007-05 dated Decem-ber 14, 2007 and 2008-02 dated April 3rd, 2008, applicable to financial institutions, which modify the Banking and Finance Regulatory Committee (CRBF) Regulation 91-01 dated January 16, 1991, modi-fied by the Finance Regulatory Committee (CRBF) Regulation 92-05 dated July 17, 1992, 93-06 dated December 21st, 1993, 94-03 and 944-05 dated December 8, 1994, as well as by the Accounting Regulation Committee (CRC) Regulation 99-04 dated June 23rd, 1999, 99-07 dated November 24, 1999 and by the order dated September 3rd, 2001.

VTB Bank (France) SA financial statements are consoli-dated in those of its headquarter VTB Bank (Austria) AG.

Unless otherwise indicated, amounts are expressed in thousands of euros.

2. Accounting principles and valuation methods

2.1. Fixed assets

Fixed assets are recorded on the asset side of the balance sheet at their acquisition price. The Bank revalued all its tangible and financial fixed assets as of December 31st, 2009.

For fixed assets subject to depreciation, the net book value was revalued at current value by deducting cu-mulated depreciation from the cost of the fixed asset.

Depreciation is calculated according to the esti-mated life of the assets, using the straight-line or decreasing balance method. After revaluation, depreciation is calculated by applying the initial plan to the new book value.

2.2. Securities

Securities are classified according to type and economic purpose for which they are held.

Trading securities

Trading securities are recorded at their acquisition price, including expenses and accrued coupon interest. They are revalued monthly on the basis of their market value and the differential is recorded as a gain or loss.

Securities held within the framework of a fast-trade activity, that is to say those generally acquired or sold with the intention of selling or buying them in the short term, are posted to this item.

Short-term investment securities

Short term investment securities are considered to be those securities not included in trading, invest-ment or portfolio activity securities, other long-term securities, investments in affiliates or subsidiaries and holdings in associated companies.

They are recorded at their acquisition price. Related fees are posted to expenses and the accrued coupon interest is recorded as related receivables.

Fixtures 10 years

Furnishing and office equipment 10 years

Equipment, tools and vehicles 5 years

Software 5 years

39At the end of the financial year, these securities are revalued according to the marked to market method based on official quotations.

Unrealised capital gains are not accounted for; alloca-tion to provisions is established for unrealised capital losses under impairment in value of securities.

Accrued interest between the acquisition of securities and the financial year close-off date are posted to the holdings and other long-term securities account.

Investment securities

Are considered as investment securities fixed-in-come securities with fixed maturity, purchased or reclassified as “Trading securities” or “Investment securities”, with the positive intention to the hold the investment to maturity.

Institutions registering securities as investment secu-rities must have the ability to hold the investment to maturiy, especially by having the necessary financing ability to to keep holding the securities until their maturity, and by being subjected to no existing legal or other constraint, which could compromise their in-tention to hold the investment securities to maturity.

Investments in subsidiaries and affiliates and other long-term securities

Investments in affiliates and subsidiaries and other long-term securities are ones, the long-term possession of which is considered useful for the Bank’s activity.

The category of other long-term securities includes investments in the form of securities, the aim of which is to foster development of long-term professional re-lations by creating a preferential link with the issuing company but without influence over its management.

These securities are posted at the acquisition price, in the currency of acquisition, costs excluded.

At the end of the financial year, these securities are valued individually at the lowest prices between the acquisition value and use value.

Capital gains or losses are posted to the Income Statement under “Gains or Losses on fixed assets”.

At the time of payment, dividends are recorded under “Income from variable-yield securities”.

2.3. Interest et Commissions

Interest is recognised pro rata temporis to the under-lying related receivables/payables with the corre-sponding entry in the Income Statement.

For commissions taken on the discount of commercial paper, the differential between the net discounted and the face value of the note is considered as interest. Interest re-ceived in advance for discount transactions is spread out over time on the basis of a compound interest calculation.

Under the terms of provisions of CRC Regulation 2009-03 applicable to financial years opened from January 1st, 2010 and relating to accounting of com-missions received and marginal costs paid by financial institutions granting loans, commissions received and marginal costs have been spread systematically. Alternative method described by article 8 has been selected, say spread over lifetime of credit on a linear basis or pro rata remaining debt.

Reprocessing has been done on operations initiat-ed in 2010 in accordance with provisions linked to change of accounting method specified by article 314-1 of CRC Regulation 99-03. For technical reasons, the bank opted for prospective reprocessing.

40Commission types involved are the following:

· Business intermediaries; · File costs and management fees; · Guarantees; · Participations received and reassigned on syndicated loans; · Utilisation and drawdown of credit lines.

2.4. Foreign currency transactions

Assets, liabilities and commitments in foreign currency are converted into euros at the prevailing rate at year-end.

Foreign exchange gains and losses from ordinary foreign currency transactions are recorded on the Income Statement.

2.5. Financial forward instruments

Hedged and market foreign exchange financial futures and interest rate swap transactions are recorded in accordance with CRBF 90-15, modified by Regulations 92-04 dated July 17, 1992, 95-04 dated July 21st, 1995, 97-02 dated February 21st, 1997, by CRC Reg-ulation 2002-01 dated December 12, 2002 and the Order dated February 20, 2007.

These foreign exchange financial futures and inter-est rate swap transactions are made on an over the counter market and recorded at par value among the off-balance sheet items.

Foreign exchange future transactions on an over-the-counter market

Contracts are recorded among off-balance sheet items at their forward rate, with each commitment being re-corded separately. Transactions are separated accord-

ing to the destination of the transactions and results allocated on this basis. For hedging transactions, unrealised gains and losses are directly recorded in the year’s result. For market transactions, provisions are only set up for unrealised losses.

Hedged foreign exchange financial future premiums and discounts are recorded in the Income Statement over the lifetime of the contract until maturity, in ac-cordance with the guidelines of Article 9 of Regulation 89-01 of the Banking and Finance Regulatory Com-mittee (CRBF), modified by Regulations 90-01 dated February 23rd, 1990, 95-04 dated July 21st, 1995, by CRC regulation 2000-02 dated July 4, 2000, 2002-01 dated December 12, 2002, 2005-01 dated November 3rd, 2005, 2008-07 dated April 3rd, 2008 and 2008-17 dated December 10, 2008.

Interest rate swap transactions on an over-the-counter market

Commitments relating to these transactions are recorded at their par value among off-balance sheet items under three categories:

· Transaction portfolio of open position swaps (category A). Income and expenses are recorded pro rata tempo-ris on the one hand and a provision is set up for risks and charges for unrealised losses on the other hand. · Transaction portfolio of micro-hedging swaps (category B), which facilitates a reduction in the interest rate fluctuation risk on items classified under due from and advances to financial institutions and customers.

Expenses and income from forward financial instru-ments used for hedging exposure which are related to one item or an identified category of related items, are recorded in the Income Statement in a symmetri-cal way as the income or expenses of items hedged.

41They are recorded under the same headings as in-come and expenses for hedged items, net of interest.

· Transaction portfolio of macro-hedging swaps (cate-gory C), which include contracts entered into in order to hedge the Bank’s global asset, liability and off-bal-ance sheet interest rate risk.

Income and expenses related to forward financial instruments used to hedge global rate exposure are recorded pro rata temporis in the Income Statement.

2.6. Credits

Credits are recorded on the balance sheet at par value, plus interest payable and not due.

In application of CRC Regulation 2002-03 dated Decem-ber 12, 2002, modified by Regulations 2005-03 and 2007-06, and by National Credit Council (CNC) recom-mendation 2006-16, all doubtful debt is classified as compromised doubtful debt except for “Government restructuring” debt.

Doubtful debt

Commitments where payment of principal or inter-est is more than three months past due, credits to companies involved in joint legal action and credit to third-parties presenting a risk of total or partial non-recovery are recorded in doubtful credits.

This downgrading covers the full commitment of doubtful third parties.

A provision for depreciation is set up for compromised doubtful debt, on the basis of individual economic and financial analysis to cover the estimated risk of non-recovery. A 100% provision is set up for interest related to these credits. Depreciation is deducted from the corresponding assets (CRC Regulation 2000-03 dated July 4, 2000 modified by CRC Regulations 2004-16, 2005-04, 2007-05 and 2008-02).

Compromised doubtful debt is provisioned at a level of 81,63 % as of December 31st, 2015.

Country risk

Outstanding related to country risk are constituted by the debt and commitments relative to the public or private debtors of countries that have requested rescheduling of their debt and/or present a risk of continued deterioration in their economic and political situations.

Provision ratios are based on an economic study of the country and follow the evolution of geopolitical risks, particularly any changes as regards the restruc-turing facilities granted by creditors. Provision ratios are applied to the principal.

Provisions for country risk are deducted from the corresponding assets. They amounted to 36,517 million euros as of December 31st, 2015.

As, for conservative reasons, the Bank wishes to achieve a coverage ratio in excess of the provision ratio, part of the subordinated loan granted by the JSC VTB Bank was allocated as additional provision for country risk. Moreover, on December 5, 2007, the Bank received authorization from the General Secretariat of the Banking Commission to specifically allocate the available portion of the subordinated loan to cover certain major risks, irrespective of the nationality of the counterpart.

In terms of additional country risk coverage, the portion of the subordinated loan assigned to balance sheet and non-balance sheet out-standing as of December 31st, 2015 amounted to 328,853 million euros.

The following table shows a detailed analysis of the coverage ratios for Russia in 2014 and 2015.

42

2014

Russia Gross

outstanding Provisions

A/C provisions & revaluation

(1) Ratio

(%)

Subordinated loan

allocation Coverage

(%)

Country risk (healthy debt) 228 428 179 009 8 950 5.00 67 320 33.39

Doubtful debt 5 036 5 036 3 525 70.00 0 70.00

Off-balance sheet commitments 161 161 8 4.97 16 14.91

Trading securities (losses) & short-term investment securities (provisions) 241 189 241 189 44 344 18.39 42 162 35.87

Unconsolidated equity investments 25 173 25 173 0 0.00 25 015 99.37

TOTAL 499 987 450 568 56 827 12.61 134 513 38.27

(1) “Accounting Provisions & revaluation” column includes country risk provisions and doubtful debt depreciation.

Comparison of 2014 & 2015 Russia coverage ratios

43

2015

Russia Gross

outstanding Provisions

A/C provisions & revaluation

(1) Ratio

(%)

Subordinated loan

allocation Coverage

(%)

Country risk (healthy debt) 159 390 63 245 6 324 10,00 38 473 28,11

Doubtful debt 5 036 5 036 4 784 95,00 0 95,00

Off-balance sheet commitments 0 0 0 0,00 0 0,00

Trading securities (losses) & short-term investment securities (provisions) 275 568 275 568 17 719 6,43 82 526 36,38

Unconsolidated equity investments 28 072 28 072 16 904 60,22 11 168 100,00

TOTAL 468 066 371 921 45 731 12,30 132 167 38,01

(1) “Accounting Provisions & revaluation” column includes country risk provisions and doubtful debt depreciation.

442.7. Allocation of subordinated debt at risk coverage

Allocation of subordinated debt as risk coverage for all countries amounts to 328.853 million euros, broken down as follows as of December 31st, 2015, including:

As of December 31st, 2014, it amounted to 364.803 million euros, including:

2.8. Tax charges

Tax and similar charges

In addition to the taxes and similar due and paid for the same financial year, provisions have also been set up under this item for the social solidarity contribu-tion and financial institution contribution, to be paid after close-off of the reference year.

The income tax rate is 33 1/3%.

An additional contribution of 3.3% is applied to taxable income.

As of December 31st, 2015, tax carry forward loss amounted to 63 684 KEUR.

2.9. Retirement benefit plans

In 1993, along with the entire French banking profes-sion, VTB Bank (France) SA signed a national retire-ment benefit agreement with the AGIRC and ARRCO pension plans which function on a distribution basis.

According to the CRPB, the portion of the commitment of the Bank as of December 31st, 2010 is nil.

In accordance with the Collective Labour Agreement, the Bank pays an indemnity to staff on retirement. A retrospective actuarial valuation method is used to calculate retirement indemnities corresponding to the value of the potential rights of staff currently active, with forecasts of future salary increases. It amounted to 1,661 million euros as of December 31st, 2015.

The amount was calculated on the basis of retirement at the age of 67, integrating a headcount rotation rate assessed according to the age of each employee, as well as the life expectancy of each employee as of the date of retirement.

In accordance with standard practice in France, the Bank has chosen not to establish any provisions to cover these commitments.

2.10. Fund for general banking risks (FRBG)

There were no movements to be recorded in 2015 with regards to the fund for general banking risks.

2.11. Earnings per share

Profit for 2015 after the clawback clause application amounts to 0 EUR per share.

EUR million

Russia 134.92

Other countries 193.93

EUR million

Russia 124.90

Other countries 239.90

45

2015EUR thousand

2014EUR thousand

Total asset 1 255 122 1 159 875

Including:

Assets in “out” foreign currency (c/v EUR) 711 417 737 848

Liabilities in “out” foreign currency (c/v EUR) 745 115 629 405

2015EUR thousand

2014EUR thousand

Due from financial institutions 253 662 283 571

payable on demand 45 908 4 437

payable at maturity 207 754 279 134

Due to financial institutions 35 659 13 622

payable on demand 35 659 13 622

payable at maturity 0 -

Including refinancing operations from the Bank of France 0 0

3. Balance sheet information

3.1. Total asset

3.2. Breakdown of due from and due to financial institutions

46

2014

Less than3 months

From3 monthsto 1 year

From1 to 5 years Over 5 years TOTAL

Financial institutions

Loans & credits 188 494 98 781 8 771 - 296 046

Gross compromised doubtful debt* 87 228 - - - 87 228

Depreciation (77 630) - - - (77 630)

Country risk provisions (22 073) - - - (22 073)

TOTAL 176 019 98 781 8 771 - 283 571

Customers

Loans & credits 89 276 68 628 328 324 50 046 536 274

Gross compromised doubtful debt* 88 092 - - - 88 092

Depreciation (55 680) - - - (55 680)

Country risk provisions (14 879) - - - (14 879)

TOTAL 106 809 68 628 328 324 50 046 553 807

Due from & advances to financial institutions 13 622 - - - 13 622

Due from & advances to customers 47 602 31 090 47 029 5 607 131 328

2015

Less than3 months

From3 monthsto 1 year

From1 to 5 years Over 5 years TOTAL

Financial institutions

Loans & credits 219 706 21 549 2 030 - 243 285

Gross compromised doubtful debt* 104 959 - - - 104 959

Depreciation (84 235) - - - (84 235)

Country risk provisions (10 347) - - - (10 347)

TOTAL 230 083 21 549 2 030 - 253 662

Customers

Loans & credits 18 315 130 763 435 285 28 536 612 899

Gross compromised doubtful debt* 147 867 - - - 147 867

Depreciation (105 166) - - - (105 166)

Country risk provisions (20 121) - - - (20 121)

TOTAL 40 895 130 763 435 285 28 536 635 479

Due from & advances to financial institutions 35 659 - - - 35 659

Due from & advances to customers 57 699 33 657 33 425 - 124 781

3.3. Breakdown of balance sheet due from and due to financial institutions and customers (remaining maturity)

* total outstanding gross doubtful debt settled by convention in “Less than 3 months” column

473.4. Breakdown of balance sheet due from (loans) and due to (deposits) of associated companies and other business entities.

3.5. Other assets, liabilities and accruals.

2015 2014

Due from & advances to financial institutions 253 662 283 571

Associated companies 137 363 83 193

Other companies 116 299 200 378

Due from & advances to customers 635 479 553 807

Associated companies - -

Other companies 635 479 553 807

Due to financial institutions 35 659 13 622

Associated companies 25 284 9 527

Other companies 10 375 4 095

Due to customers 124 781 131 328

Associated companies 63 30

Other companies 124 717 131 297

2015 2014

Other assets 1 833 1 160

Sundry debtors 1 817 1 144

Gold & precious metals 16 16

Other liabilities 769 631

Sundry creditors 769 631

Accrued income & deferred charges 502 2 086

Prepaid expenses 418 1 964

Income receivables 4 0

Other accruals 67 116

Foreign currency adjustment accounts 13 6

Accrued liabilities & deferred income 7 634 15 491

Prepaid income 1 226 1 851

Expenses payable 5 075 7 054

Other deferrals 502 2 152

Foreign currency adjustment accounts 831 4 434

483.6. Breakdown of transactions with customers

3.7. Indeterminate term loans granted to customers

NIL

3.8. Securities transactions

Breakdown of securities portfolio

2015 2014

Assets 635 479 553 807

Commercial receivables 6 529 7 562

Other customer financing 628 945 546 244

Ordinary debtors accounts 6 1

Factoring - 0

Liabilities 124 781 131 328

Special saving accounts 11 257 8 708

payable on demand 11 257 8 708

payable at maturity - 0

Other amounts owed 113 524 122 620

payable on demand 19 992 13 582

payable at maturity 93 532 109 038

Bank of France refinancing

Commercial claims (assets) 0 0

2015 2014

Bond portfolio & other fixed-income securities* 301 441 193 260

Public sector bonds 72 364 68 200

Corporate bonds 169 880 125 060

Corporate investment bonds 59 197 0

Differences between acquisition & reimbursement prices 8 435 7 234

Differences on trading portfolio 0 0

Differences on investment portfolio 8 435 7 234

Unrealised capital gains / losses on investment portfolio (12 832) (47 296)

Unrealised capital gains 6 031 633

Unrealised capital losses (18 863) (47 929)

2015 2014

Trading Investment Trading Investment

Listed

Bond & other fixed-income securities (net value) 59 197 242 244 - 193 260

Non listed

Capital & other variable-income securities (net value) - 175 - 175

49Breakdown of bonds & other fixed-income according to remaining maturity

2015 2014

Capital & other variable-yield securities 175 175

2014

Trading Investment TOTAL

Less than 3 months 0 0 0

From 3 months to 1 year 0 0 0

From 1 to 5 years 0 106 886 106 886

Over 5 years 0 86 374 86 374

TOTAL 0 193 260 193 260

2015

Trading Investment TOTAL

Less than 3 months 0 0 0

From 3 months to 1 year 14 328 36 054 50 382

From 1 to 5 years 44 869 155 412 200 281

Over 5 years 0 50 778 50 778

TOTAL 59 197 242 244 301 441

Value as of31.12.2014

FX variation in 2015

Movements in 2015

Value as of 31.12.2015

Subsidiaries

French 0 0 0 0

Provisions 0 0 0 0

Foreign 0 0 0 0

Provisions 0 0 0 0

Affiliates

French 44 0 31 75

Provisions 0 0 0 0

Foreign 25 175 2 900 0 28 075

Provisions 0 0 16 904 16 904

TOTAL 25 219 2 900 16 935 45 054

3.9. Investment in subsidiaries & affiliates and other long-term securities

50

Financial information subsidiaries & affiliates

Reference currency of

capital

Capital* (in foreign currency)

Reserves & retained

earnings before profit allocation

Percentage of Capital

owned

Book value of shares heldLoans & advances

granted not yet reimbursed

(euros)

Guarantees & endorsements

granted (euros)

Net banking reve-nue or turnover (in

foreign currency)

Net profit or loss (in foreign

currency)

Dividends received during the year

(euros) ObservationsGross Net

1. Subsidiaries

(More than 50% of Capital owned) - - - - - - - - - - - -

2. Affiliates

- - - - - - - - - - -SCI VTBF IMMO

closed down in 2015

(10 to 50% of Capital owned) - - - - - - - - - - - -

General information on other shareholdings ( 10%).

1. French holdings

BPI FranceMaisons-Alfort (94) EUR 759 916 1 995 384 0.003 19 19 - - 549 500 99 100 0.2

As of 31.12.2014

2. Foreign holdings

VTB Capital plc.London USD 566 212 136 546 0.1 548 548 - - 169 279 (92 200) -

As of 31.12.2014

SWIFT EUR - - - 3 3 - - - - - -

ÉVROFINANCE- MOSNARBANK (IFRS) RUB 3 510 255 6 397 781 7.97 30 014 30 014 - - 2 494 636 716 180 924

As of 31.12.2014

Subsidiaries & affiliates (in thousands)

* Capital = paid in capital + issuance premium Depositors’ guarantees not included (KEUR 56).

51

Financial information subsidiaries & affiliates

Reference currency of

capital

Capital* (in foreign currency)

Reserves & retained

earnings before profit allocation

Percentage of Capital

owned

Book value of shares heldLoans & advances

granted not yet reimbursed

(euros)

Guarantees & endorsements

granted (euros)

Net banking reve-nue or turnover (in

foreign currency)

Net profit or loss (in foreign

currency)

Dividends received during the year

(euros) ObservationsGross Net

1. Subsidiaries

(More than 50% of Capital owned) - - - - - - - - - - - -

2. Affiliates

- - - - - - - - - - -SCI VTBF IMMO

closed down in 2015

(10 to 50% of Capital owned) - - - - - - - - - - - -

General information on other shareholdings ( 10%).

1. French holdings

BPI FranceMaisons-Alfort (94) EUR 759 916 1 995 384 0.003 19 19 - - 549 500 99 100 0.2

As of 31.12.2014

2. Foreign holdings

VTB Capital plc.London USD 566 212 136 546 0.1 548 548 - - 169 279 (92 200) -

As of 31.12.2014

SWIFT EUR - - - 3 3 - - - - - -

ÉVROFINANCE- MOSNARBANK (IFRS) RUB 3 510 255 6 397 781 7.97 30 014 30 014 - - 2 494 636 716 180 924

As of 31.12.2014

52

Value as of31.12.2014

Purchases2015

Disposals2015

Revaluation2015

Depreciation2015

Value as of 31.12.2015

Intangible fixed assets

Software 10 654 546 (1 118) - - 10 082

Depreciation (8 151) - 110 - (737) (8 778)

Total Intangible assets 2 503 546 (1 008) - (737) 1 304

Tangible assets

Land & buildings used for Bank’s own activity 0 - - - - 0

Depreciation 0 - - - - 0

Other land & buildings 987 - 0 - 0 987

Depreciation (32) - 0 - (6) (38)

Miscellaneous, fixture, installations 182 826 (47) - - 961

Depreciation (178) - 48 - (7) (137)

Furniture, tooling, vehicles, IT 9 069 1 356 (6 870) - - 3 555

Depreciation (8 378) - 5 901 - (80) (2 557)

Total tangible assets 1 650 2 182 (968) - (93) 2 771

3.10. Fixed assets

53

Stock as of31.12.2014

Allocations 2015

Reversals2015

FX variations2015

Stock as of31.12.2015

Depreciations deducted from assets

Financial institutions 77 630 7 336 (4 030) 3 299 84 235

Customers 55 680 47 368 (3 576) 5 695 105 166

Securities 47 947 303 (34 371) 5 004 18 883

Investment & long-term securities 0 16 904 - 0 16 904

Off-balance sheet provisions

Financial institutions 8 0 (8) 0 0

Customers 0 6 049 0 0 6 049

Provisions set up to cover healthy debt country risk

Financial institutions 22 073 1 102 (13 591) 763 10 347

Customers 14 879 5 281 (1 357) 1 319 20 121

3.11. Variation in provisions allocated for counterparty risk (assets / liabilities)

543.12. Debt materialised by security

As of September 2013, the Bank has not issued any new negotiable debt securities.

* Country risk provisions on off balance-sheet commitments

3.13. Provisions*

2015 2014

Debt materialised by security 0 0

Interest bearing notes

Less than 3 months - -

from 3 months to 1 year - -

from 1 to 5 years - -

more than 5 years - -

Interbank market securities & negotiable debt instruments - -

Bond issues - -

Other debt represented by security 0 0

Book value as of 31.12.2014 Allocations 2015 Used in 2015 Reversals 2015 FX variations

Book value as of 31.12.2015

8 6 049 - (8) 0 6 049*

553.14. Subordinated assets & liabilities

Subordinated loan

On February 14th, 1992, a subordinated loan agree-ment was signed between the Central Bank of Russia and VTB Bank (France) SA, taken over iden-tically by the new shareholder, JSC VTB Bank, on December 28th, 2005. This loan is broken down in foreign currency as follows:

USD 664 824 022,54 CHF 192 135 328,69 EUR 233 985 668,24

On December 7th, 1993, the agreement was modified by an endorsement which provided for an additional amount of 530 million French francs, converted into 80 412 156.51 euros and then by a second endorse-ment dated December 31st, 1998 granting to the Bank a new subordinated loan of 120 million dollars.

On January 25th, 2002, this fraction of 120 000 000 USD was transformed into debt due to financial institutions.

The subordinated loan is granted for the lifetime of the Bank.

On a contractual level, the Bank has the option to reimburse the loan by the issuance of additional shares in favour of the lender in order to increase its capital share.

On November 18th, 1992, an agreement has been signed by the contracting parties with a clawback clause. By virtue of this clause, surplus profits over expenses as of the close-off date of the financial statements are reallocated to the subordinated loan, whereas in the reverse situation, the lender will write off sums due in respect of all or part of the deficit posted for country risk coverage purposes.

Variation of the outstanding (in thousands of euros)

3.15. Share capital

2015 2014

Composed of 165 789 ordinary shares Nominal value 1 117.95 euros 185 344 185 344

Outstanding as of31.12.2014

Reinstatement 2015

Reimbursement 2015

Outstanding as of31.12.2015

Outstanding in c/v EUR as of

31.12.2015

USD 664 824 - - 664 824 610 659

EURO 198 138 - - 198 138 198 138

CHF 92 147 10 782 - 102 929 94 997

563.16. Permanent funds

3.17. Variations in shareholder’s equity

(1) Including 328.853 million euros for prudential risk coverage as of December 31st 2015. (2) This balance sheet item covers general banking risks; allocations & reversals are made in accordance with prevailing rules. (3) See article 3.16 (4) In accordance with clawback clause of November 18th, 1992, 2015 net profits were allocated to subordinated loan reinstatement.

* This variation is consecutive to the disposal of a private apartment and the Bank’s headquaters that had the effect to switch from the associated revaluation reserves to return earning.

2015 2014

Capital 185 344 185 344

Subordinated debt (subordinated loan) (1) (4) 903 793 822 359

FRBG (2) 13 613 13 613

Legal reserve 7 227 7 227

Revaluation difference 898 898

Other reserves 28 754 28 754

Retained losses (3) (59 400) (59 400)

Net profit (4) - -

Balance as of 31/12/2014 Net profit 2014 Other variations

Balance as of 31/12/2015

Other shareholder’s equity

Revaluation difference - - - -

Tax-regulated provision 1 - - 1

Tax-regulated reserve - - - -

General banking risks fund 13 613 - - 13 613

Reserves

Legal Reserve 7 227 - - 7 227

Other reserves 28 754 - - 28 754

TOTAL 35 981 - - 35 981

Capital 185 344 - - 185 344

Retained losses (59 400) - - (59 400)

Net profit - - - -

TOTAL EQUITY 175 538 - - 175 538

574. Off-balance sheet information (in thousands of euros)

4.1. Breakdown of off-balance sheet commitments

FUNDING COMMITMENTS 2015 2014

In favour of financial institutions 0 0

Associated companies 0 0

Other companies 0 0

In favour of customers 25 565 19 512

Other companies 25 565 19 512

Received from financial institutions 0 164 731

Associated companies 0 164 731

Other companies 0 0

GUARANTEE COMMITMENTS 2015 2014

In favour of financial institutions 6 550 5 322

Associated companies 6 550 5 322

Other companies 0 0

Received from financial institutions 94 85

Associated companies 0 0

Other companies 94 85

In favour of customers 17 479 121 461

Other companies 17 479 121 461

Received from customers 509 810 425 486

Other companies 509 810 425 486

584.2. Information on forward transactions & financial instruments

Main information relating to forward transactions & financial instruments with respect to CRBF 88-02 and 89-01 modified by Regulations 90-01, 95-04 & by Regulations CRC 2000-02, 2002-01, 2005-01, 2008-07, 2008-17.

Forward financial instruments

2015 2014

FORWARD CURRENCY TRANSACTIONS 191 528 385 531

Euros receivable against delivery of foreign currencies 50 994 200 909

Foreign currencies receivable against delivery of euros 77 527 0

Foreign currencies receivable against delivery of foreign currencies 31 380 91 617

Foreign currencies deliverable against receipt of foreign currencies 31 627 93 005

2014

Over the counter market Organised market

Rate Exchange Rate Exchange

Hedging transactions

micro-hedging 0 0 0 0

macro-hedging 0 0 0 0

Position management transactions

interest rate swaps 0 0 0 0

Up to 1 year 0 0 0 0

From 1 to 5 years 0 0 0 0

over 5 years 0 0 0 0

2015

Over the counter market Organised market

Rate Exchange Rate Exchange

Hedging transactions

micro-hedging 0 0 0 0

macro-hedging 0 0 0 0

Position management transactions

interest rate swaps 0 0 0 0

Up to 1 year 0 0 0 0

From 1 to 5 years 0 0 0 0

over 5 years 0 0 0 0

595. Information on income statement (in thousands of euros)

5.1. Interest

5.2. Income from variable-yield securities

5.3. Commissions

2015 2014

Listed shares 0 0

Investment securities 924 1 321

2015 2014

Income 59 755 60 688

On interbank transactions 5 911 8 585

On customer transactions 35 868 38 395

On securities transactions 17 976 13 708

On subordinated loan - -

Expenses 5 253 5 477

On interbank transactions 1 979 1 057

On customer transactions 3 149 4 247

On securities transactions 125 173

2015 2014

Income 2 847 7 749

On interbank transactions 20 79

On customer transactions 429 1 669

On foreign exchange 21 15

On securities transactions - -

On financial services 2 377 5 986

Expenses 402 492

On interbank transactions 16 13

On customer transactions 2 50

On foreign exchange - -

On securities transactions 108 51

On financial services 276 378

605.4. Breakdown of gains or losses on trading portfolio

5.6. Other income / expenses from banking transactions

2015 2014

Trading portfolio (2 046) 400

On trading securities - -

On foreign exchange (2 046) 400

On forward financial instruments - -

2015 2014

Income from banking transactions 46 44

Re-invoiced expenses 2 0

Sundry revenue - -

Additional revenue 44 44

2015 2014

Expensed on banking transactions - -

Reassigned revenue - -

Sundry expenses - -

5.5. Breakdown of gains or losses on short-term investment securities

2015 2014

Investment securities 36 439 (42 860)

Capital gains 3 227

Reversals from depreciation 38 327 721

Capital losses (1 585) (1 358)

Allocations to depreciation (303) (45 450)

61

5.8. Cost of risk

5.7. General operating expenses

2015 2014

Personnel expenses (8 498) (11 744)

Salaries 5 160 (7 732)

Social contributions 2 792 (3 533)

Staff profit-sharing - (85)

Taxes & similar 545 (394)

Other operational expenses (9 688) (6 414)

Fees (1 688) (1 546)

Leasing charges (1 839) (60)

Taxes and similar (1 736) (1 375)

Sundry (4 426) (3 433)

2015 2014

Cost of risk (42 487) (21 987)

On financial institutions

Allocations to depreciation of debt (6 585) -

Reversals from depreciation of debt 4 029 -

On customers

Allocations to depreciation of debt (42 096) (18 904)

Reversals from depreciation of debt 3 493 15 520

On securities

Allocations to depreciation of debt - -

Reversals from depreciation of debt - -

Losses on unrecoverable debt (3 664) (9 910)

Recoveries on depreciated debt - 10

Net allocation / reversals country risk provisions (balance sheet / off-balance sheet)

On financial institutions 12 239 (9 603)

On customers (9 903) 900

625.9. Gains or losses on fixed assets

5.10. Extraordinary expenses & gains – Breakdown by category

6. Other information

6.1. Staff

6.2. Remuneration (in thousands of euros)

2015 2014

Fixed assets (16 955) 11 447

Gains or losses on intangible fixed assets - -

Gains or losses on tangible fixed assets (51) 11 447

Gains or losses on investment securities (16 904) -

Gains or losses on holdings in associated companies - -

2015 2014

Remuneration & benefits allocated to Members of the Executive Board & Supervisory Board for the financial yearSocial costs included 2 026 1 857

Amount of loans granted during financial year NÉANT NÉANT

2015 2014

Average staff number 60 60

2015 2014

Income 74 8 978

From previous years 70 477

From current period 4 1

Reinstatement of subordinated loan

Taken over from FRBG - 8 500

Expenses 13 923 440

From previous years 14 0

Correction of 2014 error 3 957 -

From current period 1 1

Reinstatement of subordinated loan 9 951 439

After undertaking an in-depth review of a structured note term sheet, we revalued a note as of 31.12.2014, which resulted in a depreciation by EUR -3,957K. The adjustment is taken into the 2015 accounts, in compli-ance with French accounting principles. The adjustment has no impact in the final 2015 result, since the note is value at 100% as of 31.12.2015.

636.3. Audit fees (in euros)

Statutory audit, certification, inspection of Individual accounts

6.4. Income statement analysis

Numbers presented for 2015 take account of the clawback clause.

VTB Bank (France) SA presents an analysis of the grand totals of the income statement by sector and geographic area.

The analysis covers two years and shows a break-down of the NBR by sector and geographic area, the evolution of performance and gross operating income/loss.

Description of the Sectors:

· CORPORATES: non-bank third parties, excluding market activities. · BANKS: bank third parties, excluding market activities. · MARKET ACTIVITIES: foreign exchange, cash positions and securities.

Net Banking Revenue (NBR)

Net Banking Revenue is composed of banking income less banking expense, including refinancing costs. The latter are calculated in a conventional manner on the basis of an internal transfer rate according to the “unique pool” principle, according to resources of the bank.

Management cost

The Management cost corresponds to all personnel expenses and overheads, as well as fixed asset depre-ciation expense. Expenses linked to profit centres are posted directly. Structure and support expenses are allocated according to a cost-sharing scale in relation to headcount, surface areas occupied and other items according to the volumes of dossiers managed.

Gains or losses on fixed assets

In 2014, the EUR 11 447K gain refers to the disposal of an apartment and of the headquarters.

In 2015, the total at EUR 51K consisted in the divest-ment of properties in relation with the relocation, as well as the sale of a vehicle.

Extraordinary expense and income and income tax

Extraordinary expense and income and income tax partly include the expense amount linked to applica-tion of the subordinated loan clawback clause.

2015 2014

Ernst & Young 67 250 67 250

Deloitte et Associés 67 250 67 250

64

Breakdown by geographic zone & sector Corporates Banks Market activities TOTAL

2014 2015 2014 2015 2014 2015 2014 2015

Other countries 4 825 3 757 -26 -24 -3 872 -46 927 3 687

CIS 14 725 9 206 7 291 3 559 -1 985 1 320 20 031 14 085

France 3 933 2 921 -35 -8 -1 942 3 896 3 854

OECD 17 374 13 711 1 615 1 404 -22 471 51 612 -3 481 66 727

Net Banking Revenue 40 857 29 595 8 845 4 930 -28 329 53 828 21 373 88 353

Management cost by sector -7 115 -7 391 -3 528 -2 781 -7 515 -8 017 -18 158 -18 188

Depreciation and amortization -404 -277 -404 -277 -404 -277 -1 212 -831

Management cost by sector -7 519 -7 668 -3 932 -3 058 -7 919 -8 294 -19 370 -19 019

Cost of risk -12 384 -58 741 -9 603 16 254 0 0 -21 987 -42 487

Gross operating income 20 954 -36 814 -4 690 18 126 -36 248 45 534 -19 984 26 846

Gains or losses On fixed assets 3 816 -5 652 3 816 -5 652 3 816 -5 652 11 447 -16 955

Extraordinary income & expense (including taking over from FRBG) & income tax -24 770 42 466 875 -12 475 32 432 -39 883 8 537 -9 891

Net profit 0 0 0 0 0 0 0 0

Income statement analysis (in thousands of euros)

65

Breakdown by geographic zone & sector Corporates Banks Market activities TOTAL

2014 2015 2014 2015 2014 2015 2014 2015

Other countries 4 825 3 757 -26 -24 -3 872 -46 927 3 687

CIS 14 725 9 206 7 291 3 559 -1 985 1 320 20 031 14 085

France 3 933 2 921 -35 -8 -1 942 3 896 3 854

OECD 17 374 13 711 1 615 1 404 -22 471 51 612 -3 481 66 727

Net Banking Revenue 40 857 29 595 8 845 4 930 -28 329 53 828 21 373 88 353

Management cost by sector -7 115 -7 391 -3 528 -2 781 -7 515 -8 017 -18 158 -18 188

Depreciation and amortization -404 -277 -404 -277 -404 -277 -1 212 -831

Management cost by sector -7 519 -7 668 -3 932 -3 058 -7 919 -8 294 -19 370 -19 019

Cost of risk -12 384 -58 741 -9 603 16 254 0 0 -21 987 -42 487

Gross operating income 20 954 -36 814 -4 690 18 126 -36 248 45 534 -19 984 26 846

Gains or losses On fixed assets 3 816 -5 652 3 816 -5 652 3 816 -5 652 11 447 -16 955

Extraordinary income & expense (including taking over from FRBG) & income tax -24 770 42 466 875 -12 475 32 432 -39 883 8 537 -9 891

Net profit 0 0 0 0 0 0 0 0

66

To the Shareholders,

In compliance with the assignment entrusted to us by your annual general meeting, we have issued on February 23rd, 2016, a deficiency report (‘rapport de carence’) in which we have indicated the impossi-bility to proceed to management report and annual accounts verification; these documents were not provided within the statutory time.

As documents have been provided on March 10th, 2016, we are now able to report to you our report relating to the year ended December 31st, 2015, on:

· the audit of the accompanying financial statements of VTB Bank (France) SA; · the justification of our assessments; · the specific verifications and information required by law.

These financial statements have been approved by Supervisory Board. Our role is to express an opinion on these financial statements based on our audit.

I. Opinion on the financial statements

We conducted our audit in accordance with profes-sional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the finan-cial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31st, 2015 and of the results of its operations for the year then ended in accordance with French accounting principles. Without qualifying the opinion expressed above we draw your attention on the Note 5.10 of the financial statements which details the error correction relating to 2014 exercise and the impacts on Financial State-ments as at December 31st, 2015.

II. Justification of our assessments

In accordance with the requirements of article L. 823-9 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we bring to your attention the following matter:

Statutory auditors’ report on the financial statements

67Provisions for credit losses

As disclosed in the Note 2.6 of the financial state-ments, your company records impairment provisions to cover the credit risk inherent to its activities.

We reviewed the internal control system related to credit risk monitoring, impairment procedures, as-sessment of the level of risk of non-collection and the coverage of credit risk through specific provisions.

These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.

III. Specific verifications and information

We have also performed, in accordance with profes-sional standards applicable in France, the specific verifications required by French law.

We have no matters to report as to the fair presenta-tion and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the documents ad-dressed to shareholders with respect to the financial position and the financial statements.

In accordance with French law, we inform you that the possible observations to be made by Supervisory Board regarding Financial Statements or information given in the management report as of December 31st, 2014 were not released within the time allowed by French law.

Paris-La-Défense and Neuilly-sur-Seine, March 10th, 2016

The statutory auditors

Deloitte & Associés

Jean-Marc Mickeler

Ernst & Young Audit

Vincent Roty

68

To the Shareholders,

In our capacity as statutory auditors of your company, we hereby report on certain related party agreements.

The terms of our engagement require us to commu-nicate to you, on the basis of information provided to us, the principal terms and conditions of those agreements brought to our attention or which we may have discovered during the course of our audit, without expressing an opinion on their usefulness and appropriateness or identifying such other agree-ments, if any. It is your responsibility, pursuant to Article R. 225-58 of the French Commercial Code, to evaluate the benefits resulting from these agreements prior to their approval.

In addition, we are required, where applicable, to inform you in accordance with Article R. 225 58 of the French commercial code (Code de commerce) con-cerning the implementation, during the year, of the agreements already approved by the General Meeting of Shareholders;

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of Statutory Auditors (Com-pagnie Nationale des Commissaires aux comptes) relating to this type of engagement. These proce-dures consisted in verifying the consistency of the information that was provided to us with the relevant source documents.

Agreements submitted to the approval of the general meeting of shareholders

We hereby inform you that we have not been advised of any agreement authorised during the year to be

submitted to the approval of the General Meeting of Shareholder pursuant to Article L. 225-86 of the French Commercial Code.

Agreements already approved by the general meeting of shareholders

Agreements approved in previous years with continu-ing effect during the past fiscal year

In accordance with Article R. 225-57 of the French Commercial Code, we have been advised that the following agreements which were approved in pre-vious years by the General Meeting of Shareholders continued during the year.

With VTB, Moscow

The agreements governing the participating loan and the debt waiver with a financial recovery clause were assumed by JSC VTB Bank on 28 December 2005.

A participating loan agreement was entered into on 14 February 1992 between the Central Bank of Russia and your Company. This financial support with an initial counter-value of USD 1,080,189,713.11 breaks down by currency as follows:

USD 664 824 022.54 CHF 192 135 328.69 EUR 233 985 668.24

This agreement was subject to an initial amendment on 7 December 1993, which set up additional financial support in the amount of FRF 530 million, converted into EUR 80,412,156.51 and a second amendment on 31 December 1998, which granted your Company a new participating loan of USD 120 million.

Statutory auditors’ report on related party agreements

69On 25 January 2002, this last portion of the par-ticipating loan was converted into inter-bank debt (USD 120 million), upon approval by the General Secretariat of the Banking Commission.

A debt waiver agreement with a financial recovery clause was entered into on 18 November 1992 between the Central Bank of Russia and your Company.

For the year ended 31st December 2015, and pursuant to the financial recovery clause, a total of EUR 9 951 147.29 was allocated to recapitalise the participating loan.

Considering this recapitalisation, the principal amount of the participating loan was as follows:

USD 664 824 022.54 CHF 102 929 015.44 EUR 198 137 811.94

i.e. a counter-value of EUR 903 793 200.26 as at 31 December 2015.

The participating loan amounts still to be recapita-lised are as follows:

USD 0 EUR 35 847 856.30 CHF 89 206 313.25

i.e. a counter-value of EUR 118 179 479.05 as at 31 December 2015.

Paris-La-Défense and Neuilly-sur-Seine, March 10th, 2016

The statutory auditors

Deloitte & Associés

Jean-Marc Mickeler

Ernst & Young Audit

Vincent Roty

72

Contact information

VTB Bank (France) SA

Address:86, boulevard Haussmann 75008 Paris France

Telephone: +33 (1) 40 06 43 21 Fax: +33 (1) 40 06 48 48

Telex:280 200 F

Internet:http://france.vtb.com

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