Updated August 29, 2008

   The stockholders of the Russian RosEvroGroup have found the buyer for its bank asset.

The largest bank of China – Industrial and Commercial Bank of China – will purchase 100% of RosEvroBank (former joint-stock bank Loubyanka). The investment of the Chinese bank becomes the first purchase in Russia made by the investors from the Asia-Pacific region.

   Three independent sources of the bank market told that the sale of 100% of RosEvroBank's stocks to the largest China's bank, Industrial and Commercial Bank of China (ICBC), is almost completed. "The parties have come to the understanding, and the required documents will be signed in the nearest future, and the calculations will be made at the end of this year or at the beginning of the next year", as the source close to

the stockholders of the Russian bank said. In RosEvroBank refused to confirm this information. In ICBC's Moscow office refused to comment as well saying that the negotiations are confidential.

   However, the Federal Antimonopoly Service (FAS) knows about the future deal with RosEvroBank.

"ICBC's representatives have already visited us and have learned the rules of submitting the application for the purchase of RosEvroBank's stocks", as in the FAS's press-service reported, but they didn't specify the stockholding size.

   RosEvroBank was established in 1994 (former name Loubyanka), and as of April, 1, 2008 the bank occupies the 53rd place by the net assets sum (RUR 46,8 billion) and the 62nd place by the capital size (RUR 5,5 billion). RosEvroGroup Managing Company owns 84% of the bank's stocks, the DEG fund owns 6%, and Renfin1 and Renfin2 funds own 10% of stocks. RosEvroGroup's stockholders are the chairman of RosEvroGroup directors' board Sergey Grishin (59,1% of stocks), the bank's chairman of the management board and the member of the directors' board Ilya Brodsky (14,5%), the members of the directors' board Andrey Suzdaltscev (14,7%) and Ernest Bisaev (9,7%), and the first bank's deputy chairman Dmitry Suzdaltscev and Oleg Vershinin own in 1%.

   Industrial and Commercial Bank of China is the largest state commercial bank of China.

It occupies the world's top position by the capitalization (over $225 billion). Almost 17 000 of the bank's branches in Ch

ina and in the other countries of the world offer services to 170 million private and 2,72 million corporate clients.

In October, 2006 ICBC held the largest IPO in the world and attracted $21,9 billion.

   RosEvroBank's stockholders started the bank's sale in 2006. Last summer they were holding talks with the Israel Hapoalim, but the parties didn't reach the agreement because of the discords in the price. According to the information of the source aware of the terms of the deal, the Chinese bank will pay about $800-850 million, and this sum is RosEvroBank' s quadrupled capital.

If this information is true, the coefficient of this deal will be one

of the highest at the market. The British Barclays purchased Expobank with the coefficient of about 4, Bank of Cyprus purchased 80% of Uiastrum Bank with the coefficient of 3,1, the sum Hapoalim paid for the control over SDM Bank equals the double capital of the latter. Moreover, ICBC's investment will be the first large investment made by the investors from the Asia-Pacific region in the bank sector of the Russian Federation.

    Lately, the eastern investors are actively using the price drop of the financial assets in the USA and Europe.

The Swiss bank UBS declared that it would sell 9% of its stocks for $9,7 billion to Singapore Investment Corporation, and Citigroup declared that it would sale 4% of its stocks to GIC for $6,9 billion. The US Merrill Lynch reported that it had received $6,6 billion from investors, among which were the state investment funds from South Korea and Kuwait.

Recently, the fifth large South Korean bank, Korea Development Bank, reported that it didn't eliminate the investments into Lehman Bro

thers.

   There is less risks at the Russian market, since the world crisis has affected the Russian banks only to a certain degree. The investors are ready to pay more for smaller risks, as KIT Finance investment bank's analyst Maria Kalvarskaya explains. Moreover, RosEvroBank owns the widespread chain of divisions – 12 branches in Moscow, as well as 26 regional branches. "The high price is explained by the high interest the Chinese investors take in our market and the reluctance of the Russian stockholders to sell assets at low price", as Mrs. Kalvarskaya says. "Moreover, our banking system is growing quicker than the Chinese one. If the overall assets of the Russian banks grew by 54% last year, in China the growth totaled only 16%", as S&P's analyst Evgeny Tarzimanov adds

   When RosEvroGroup's stockholders sell the bank asset, they will concentrate on the development of the developer business that has higher potential for growth and profitability, as the Interfax CEA's chief executive Mikhail Matovnikov considers.

The owners of Absolute Group did the same, when in spring of the previous year they sold Absolute Bank to the Belgian KBC Group, he adds. RosEvroDevelopment invests into the construction of shopping malls and in the warehouse, office and residential real estate.