CONTENTS Development...Bank BelVEB’s PROFILE 1.1. General Information 1.2. Governing Bodies 1.3. Organizational Structure 1.4. Principal Economic and Monetary Trends in Belarus in

2017 SUSTAINABILITY REPORT

6

8

89

11121316181920

21

212122252729

303030303233

38383940

41

424243

4648

OPENING ADDRESS OF THE CHAIRWOMAN OF THE SUPERVISORY BOARD AND THE CHAIRMAN OF THE MANAGEMENT BOARD OF BANK BELVEB OJSC

1. Bank BelVEB’s PROFILE1.1. General Information1.2. Governing Bodies1.3. Organizational Structure1.4. Principal Economic and Monetary Trends in Belarus in 20171.5. Major Events within Bank BelVEB OJSC in 20171.6. Summary of Bank BelVEB OJSC for 20171.7. Implementation of Bank BelVEB’s Development Strategy in 20171.8. Development of Internal Control System1.9. Fraud and Corruption Combating Measures

2. INVESTING INTO SUSTAINABILITY2.1. Interaction with General Public on the Issues of Sustainability2.1.1. Policy of Corporate and Social Responsibility2.1.2. Interaction with Stakeholders2.1.3. Assessment of Customer and Partner Satisfaction2.1.4. Information for Stakeholders2.1.5. Cooperation with Financial Institutions

2.2. Responsible Business Practices2.2.1. Corporate Ethics2.2.2. Participation in State Policy Formulation2.2.3. Anti-Money Laundering and the Combating of Terrorism Financing2.2.4. Procurement of Goods and Services2.2.5. Access to Financial Products and Services

2.3. Investments2.3.1. Methodology for and Guidelines on Implementing Investment Projects2.3.2. Business Relations with Investment Project Participants2.3.3. Assessment of Compliance with Environmental Protection Requirements, Environmental Efficiency

Standards and Social Significance Criteria2.3.4. Regional Investment Project

2.4. Support to Small and Medium Enterprises2.4.1. Results of SME Support2.4.2. Investment Projects in SME Sector

2.5. Russia-Belarus Projects2.6. Patronage and Charity

CONTENTS

3

CONTENTS

2017 SUSTAINABILITY REPORT 2017 SUSTAINABILITY REPORT

51

515152535455

57

585858

59

60606161

626262636464

66

66

666667686869

696969707070

71

717171717171

71

72

3. CORPORATE LIFE3.1. Personnel Policy3.1.1. HR Management Milestones3.1.2. Recruitment and Job Allocation3.1.3. Staff Reserve and Retirees Adaptation3.1.4. Social Support3.1.5. Trade Union Organisation

3.2. Staff Parameters

3.3. Staff Education3.3.1. Objectives and Major Lines of Education3.3.2. Modes and Scope of Skills Upgrading

3.4. Remuneration and Incentives

3.5. Health and Labour Safety3.5.1. Major Risk Factors3.5.2. Labour Safety Measures3.5.3. Civil Defence and Emergency Situations

3.6. Environmental Literacy3.6.1. Environmental Protection3.6.2. Raising of Energy Efficiency3.6.3. Responsible Resources Consumption3.6.4. Car Park Kilometrage and Fuel Consumption3.6.5. Waste Management and Environment-Friendly Practices

4. SUBSIDIARIES4.1. Principles and Mechanisms of Interaction with Subsidiaries

4.2. USP Belvneshstrakh Unitary Insurance Enterprise4.2.1. USP Belvneshstrakh’s Performance in 20174.2.2. Interaction with Stakeholders4.2.3. Remuneration and Social Support4.2.4. Labour Safety and Accident Prevention4.2.5. Consumption of Energy and Resources

4.3. Vnesheconomstroy Commercial Joint Venture4.3.1. Performance of Vnesheconomstroy Commercial Joint Venture in 20174.3.2. Interaction with Stakeholders4.3.3. Remuneration and Social Support4.3.4. Labour Safety and Accident Prevention4.3.5. Energy and Resources Consumption and Environmental Impact

5. ABOUT REPORT5.1. Report Parameters5.2. Preparation of the Report5.3. Scope5.4. Principles5.5. Limitations5.6. GRI Application Level

CONTACT INFORMATION

GRI GUIDANCE COMPLIANCE

4 5

CONTENTS CONTENTS


OPENING ADDRESS OF THE CHAIRWOMAN OF THE SUPERVISORY BOARD AND THE CHAIRMAN OF THE MANAGEMENT BOARD OF BANK BELVEB OJSC OPENING ADDRESS OF THE CHAIRWOMAN OF THE SUPERVISORY BOARD AND THE CHAIRMAN OF THE MANAGEMENT BOARD OF BANK BELVEB OJSC

Dear colleagues and business partners!

OPENING ADDRESS OF THE CHAIRWOMANOF THE SUPERVISORY BOARD AND THE CHAIRMAN

OF THE MANAGEMENT BOARD OF Bank BelVEB OJSC

It is a great honour to submit to you this Sustainability Report of Bank BelVEB OJSC for the year 2017, which sums up the Bank’s track record on the way to sustainable development, while reflecting our deep commitment to the principles of corporate social responsibility.

Notwithstanding tough macroeconomic environment, Bank BelVEB OJSC managed to retain its strong position and duly met all obligations before its shareholders and customers.

Our key performance indicators as at year-end were as follows: the Bank registered BYN 68.4 million in net profit, while its equity made up BYN 525.7 million, and the corporate loan book accounted for BYN 2.6 billion.

Pursuant to our 2017 operation results, the Bank succeeded in attracting financial resources to increase its market share from 5.7% to 6.3%, thereby gaining in stature among local banks, which is indicative of our clientele’s growing confidence. This, in turn, bolstered financial support for the real sector of economy and boosted the share of loans issued to customers from 6.2% to 6.5% system-wide. In terms of this indicator, the Bank managed to shift from the 4th to 3rd position in the ranking of Belarusian banks.

Mikalai U. LuzginChairman of the Management Board

Nadezhda A. ErmakovaChairwoman of the Supervisory Board

Chairman of the Management Board

Mikalai U. Luzgin

Chairwoman of the Supervisory Board

Nadezhda A. Ermakova

In pursuit of its strategic goals of fostering Russia-Belarus integration ties, the Bank moved along two major business lines:• financial support with respect to integration projects; and• the development of legal acts and business initiatives with a

view to streamlining and fine-tuning the trade finance toolkit for the integration development platform.

As at year-end 2017, without taking into account the construction of the Belarusian Nuclear Power Plant, the funds allocated for integration project purposes, including, inter alia, Vnesheconombank Group’s participation, made up an equivalent of RUB 106.7 billion in total.

Striving for flagship positions in digital banking country-wide and being compliant with its strategic goals, Bank BelVEB is focused on shaping high-tech banking through introducing latter-day customer-tailored technologies.

Strongly committed to implementing innovative ideas of Vnesheconombank, which is actively involved in promoting blockchain technologies across the public administration of the Russian Federation, the Bank is focused on adjusting the same to the needs of Belarus. In November 2017, in close cooperation with its parent company Bank BelVEB successfully tested the pilot system of electronic L/Cs as part of blockchain technology. On 14 September 2017, Bank BelVEB became the first among Belarusian banks to join the Council of Owners of Verifying Nodes of the Blockchain-Based Network (hereinafter – the ‘Council of Nodes’). A node owner certificate was issued to the Bank at the extended meeting of the Council of Nodes held by Belarusian Currency and Stock Exchange OJSC.

In the period under review, the Bank consolidated its standing as a universal credit and financial company, thereby promoting its brand name and improving its status in the small- and medium-sized business segment of lending. Keeping abreast of the current market trends, the Bank expanded its product line, introduced state-of-the-art services and fine-tuned its sales techniques.

The Bank continued to implement and made available new customer-centric products channelled to its clients through electronic means of remote servicing.

The Bank undertakes to further commit its efforts to the cultivation of corporate culture and social responsibility by financing socially important causes and undertakings.

To this end, in 2017, Bank BelVEB finalized a large-scale national project of printing complete works by Francysk Scaryna – the Belarusian and East Slavic printing pioneer. This undertaking was timed to coincide with the 500th anniversary of East Slavs book-printing and was implemented as part of the State Programme ‘The Culture of Belarus’. The project had been underway over a period of five years and was crowned with awarding the team of the National Library of Belarus a special prize of the President of the Republic of Belarus for spiritual revival in January 2018.

Success in attaining the Bank’s strategic goals was underpinned by well-coordinated teamwork. In an effort to ensure a high level of motivation and professional development of the Bank’s staff members, in the reporting year, Bank BelVEB OJSC continued to provide social support to its employees and their families, maintain safe working conditions, and create conditions for recreation, education, career development and decent living.

With due regard to the Bank’s relevance for the national economy, in 2018, Bank BelVEB OJSC will act in the capacity of a systematically important bank (1st group of relevance) pursuant to the decision of the National Bank.

Speaking on behalf of the Supervisory Board and the Management Board, we express gratitude to all our colleagues and partners for confidence and reliable cooperation in promoting the principles of corporate social responsibility.

6 7

BYN 2.6 billioncorporate loan book

BYN 525.7 millionequity

BYN 68.4 millionnet profit


1. Bank BelVEB’s Profi le / 1.1. General Information 1. Bank BelVEB’s Profi le / 1.2. Governing Bodies

1. Bank BelVEB’S PROFILE

1.1. General Information

Historically Joint Stock Commercial Bank for Foreign Economic Aff airs of the Republic of Belarus was incorporated in the form of a closed joint stock company on 12 December 1991 to succeed the Belarus-based branch of Vnesheconombank of the USSR.

On 25 March 1994, Bank BelVEB went public and became an open joint stock company.

Pursuant to the amendments made to the Civil Code of the Republic of Belarus back on 2 November 1999, Bank BelVEB acquired a new legal name of Belvnesheconombank Open Joint Stock Company.

As registered in its Articles of Association by the National Bank of the Republic of Belarus on 29 March 2012, Bank BelVEB’s abbreviated name became Bank BelVEB OJSC, while the Bank retained its full name – Belvnesheconombank Open Joint Stock Company. Our legal form is open joint stock company. The holdingof State Corporation ‘Bank for Development and Foreign Economic Aff airs (Vnesheconombank)’, Moscow (hereinafter –‘Vnesheconombank’) in Bank BelVEB’s share capital makesup 97.52 %.

In 2017, Bank BelVEB OJSC operated under the following licenses:

• General License No. 6 by the National Bank of the Republic of Belarus dd. 27 December 2013.

• Special Permit (License) No. 02200/5200-1246-918 by the Ministry of Finance of the Republic of Belarus to perform professional and stock exchange operations with securities, issued for a fi ve-year period subject to Decision dd.29 July 2002 and later extended for a fi ve-year period subject to Decision No. 243 dd.13 July 2007 and for a ten-year period subject to Decision No. 155 dd. 24 May 2012.

• Special Permit (License) No. 02200/21-00884 to perform transactions with precious metals and stones, issued for a fi ve-year term by the Ministry of Finance of the Republic of Belarus subject to Decision No.132 dd. 23 June 2010 and later extended for a ten-year term by virtue of Decision 165 dd.4 May 2015.

The information on the Bank’s core activities is available on our offi cial web-site (www.belveb.by) in the section ‘About Us’ (the subsection – ‘General Information and Contacts’).

Bank BelVEB is one of the largest credit and fi nancial institutions country-wide to service the real sector of economy as well as to conduct cross-border transactions of business entities and the state.

The Bank is a member of the following international organizations:

As at 31 December 2017, the Bank’s subsidiaries comprise

Belvneshstrakh (the Bank holds 100% of the equity) is a universal insurance company off ering a comprehensive range of classic insurance services to its customers from corporate entities to individuals.

Vnesheconomstroy LLC (equity holding – 51%) is a commercial joint venture company implementing real estate investment projects.

Sivelga CJSC (equity holding – 25.002%) is a shoemaking company and vendor.

1.2. Governing Bodies

Pursuant to the Bank’s Articles of Association, management functions are vested in the following bodies:

• General Meeting of Shareholders – the highest management body;• Supervisory Board – a collegiate management body, executing general guidance function; and• Management Board – a collegiate executive body. The CEO of the Bank is the Chairman of the Management Board, while the monitoring body of the Bank is the Internal Auditing Commission.

As at 31 December 2017, the Bank’s shareholders comprise 385 corporate entities and around 43.4 thousand individuals.

The Bank’s registered share capital stands at BYN 117.4 million.

8 9

International payments systems: MasterCard Worldwide and

Visa International.

International instant money transfer company: Western Union Financial Services Inc.

Belvneshstrakh Insurance Company

Affi liated CompanySivelga CJSCVnesheconomstroy

17 including 5 regional branches in regional centres,3 Minsk-based branches, 9 branchesin large towns across the country

152112

cash and settlement offi cesbranches,

retail spots

currency exchange offi ces


Artem Sergeevich DOVLATOVDeputy Chairman of State Corporation ‘Bank for Developmentand Foreign Economic Affairs (Vnesheconombank)’ (Moscow);

Daniyil ValeryevichALGULYAN

Senior Vice-President, Head of International Activities, Export and Financial Institutions of State Corporation ‘Bank for Development and

Foreign Economic Affairs (Vnesheconombank)’ (Moscow), Member of the Supervisory Board

of Bank BelVEB OJSC

Alexei ViktorovichAFANASYEV

Head of the Central Financial Administration of Minsk Municipal Executive Committee,

Member of the Supervisory Board of Bank BelVEB OJSC, representative of the state

Igor SergeevichKRASNOV

Senior Vice-President, Head of the Legal Directorate of State Corporation ‘Bank for

Development and Foreign Economic Affairs (Vnesheconombank)’ (Moscow), Member of the Supervisory Board of Bank BelVEB OJSC

Serguey NikolaevichANOKHIN

Vice-President, Head of the Department of Implementation of Strategic Projects on

Subsidiary and Affiliated Companies of State Corporation ‘Bank for Development and

Foreign Economic Affairs (Vnesheconombank)’ (Moscow), Member of the Supervisory Board

of Bank BelVEB OJSC

Aleksandr GennadyevichBURYA

Senior Managing Director, Head of the Integrated Risk-Management Department,

Risks Directorate, State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ (Moscow), Member of the Supervisory Board of Bank BelVEB OJSC

Tatyana IvanovnaPOLEGOSHKO

Member of the Supervisory Board of Bank BelVEB OJSC, Independent Director,

Chairwoman of the Audit Committee of the Supervisory Board of Bank BelVEB OJSC

Andrey MikhailovichARSHINOV

Chairman of the Board of Directors of OJSC Specialized Depository INFINITUM,

Member of the Supervisory Board of Bank BelVEB OJSC, Independent Director,

Chairman of the Committee on Risks of the Supervisory Board of Bank BelVEB OJSC

Valery NikolaevichIVANOV

Chairman of the Board, Belarusian Republican Union of Consumer Societies, Member of the

Supervisory Board of Bank BelVEB OJSC

Alexandr SergeevichROMANOV

Senior Managing Director, Head of the Planning and Reporting Department,

Directorate of Finances, State Corporation ‘Bank for Development and Foreign Economic

Affairs (Vnesheconombank)’ (Moscow), Member of the Supervisory Board of

Bank BelVEB OJSC

1. Bank BelVEB’s Profile / 1.2. Governing Bodies 1. Bank BelVEB’s Profile / 1.3. Organizational Structure

10 11

Nadezhda Andreevna ERMAKOVAIndependent Director

Mikalai U. LUZGIN

Siarhei P. ZELIANKO

Aleh I. KAROBYIN

Dzmitry M. LEUDANSKI

Vasily I. KORNEVDirector of the Corporate Governance Department

Anatol A.PAULOVICH

Vasil U.PALONSKI

Alexei A. MOZZHUKHIN

CHAIRWOMAN OF THE SUPERVISORY BOARD

CHAIRMAN OF THE MANAGEMENT BOARD

DEPUTY CHAIRMEN OF THE MANAGEMENT BOARD

MEMBERS OF THE MANAGEMENT BOARD

DEPUTY CHAIRMAN OF THE SUPERVISORY BOARD

MEMBERS OF THE SUPERVISORY BOARD

SUPERVISORY BOARD OF Bank BelVEB OJSC (as of 31 December 2017)

MANAGEMENT BOARD OF Bank BelVEB OJSC (as of 31 December 2017)

1.3. Organizational Structure

In 2017, the Bank’s collegiate bodies under the Management Board comprised the following: Higher Credit Committee, Small Credit Committee, Assets and Liabilities Management Committee, Finance Committee, Fees and Commissions Committee, Marketing Committee, Project Management and Strategic Innovation Committee, and Problem Assets Management Committee.

The Auditing Committee and Risk Management Committee established by the resolution of the Supervisory Board were also functional within the Bank.

The main function of the internal collegiate bodies is to facilitate strategic decision-making of management bodies.

* – Department Director is in charge of risk management within the Bank** – Department Director is in charge of the Bank’s internal control, AML, terrorism financing prevention, combating the financing of WMD proliferation.*** – subordinated to the Management Board Chairman


1. Bank BelVEB’s Profile / 1.4.Principal Economic and Monetary Trends in Belarus in 2017 1. Bank BelVEB’s Profile / 1.5. Major Events within Bank BelVEB OJSC in 2017

12 13

1.4. Principal Economic and Monetary Trends in Belarus in 2017

The year 2017 witnessed the transition to an economic upturn following the adjustment to the unfavourable market environment over the previous years. The upward trend was mainly underpinned

by a positive growth rate, stable currency exchange rates, an increment in gold and foreign currency reserves, as well as the historic and country-wide lowest inflation rate. In many respects, such a situation was owing to external factors, inclusive of the recovery of oil prices and an accelerated growth in the global economy.

Pursuant to customs statistics, the deficit of foreign goods trade in 2017 made up USD 5.0 billion against USD 4.1 billion as of 2016.

In 2017, net currency sales amounted to USD 1.2 billion vs. USD 2.1 billion in 2016. Individuals and non-resident legal entities sold USD 1.8 billion and USD 313.9 million on a net basis respectively, whereas resident legal entities’ demand for foreign currencies reached USD 880.0 million.

In 2017, the gold and foreign currency reserves of Belarus rose by USD 2.4 billion, i.e. 48.5%, (as compared to USD 751.4 million, i.e. 18.0%, in 2016) to make up USD 7.3 billion as at 1 January 2018,

which was mainly due to the funds attracted by the National Bank and the Ministry of Finance of the Republic of Belarus through the sale of bonds denominated in foreign currencies, budget revenues in foreign currencies, inclusive of receipts from export duties on crude oil and refined products, the sale of foreign currencies by the National Bank during trading sessions of Belarusian Currency and Stock Exchange OJSC, tranches released by the Eurasian Fund for Stabilization and Development, funds provided under loan facilities with the Government of the Russian Federation, and an increase in monetary gold value. On top of that, the Government and the National Bank of the Republic of Belarus timely and entirely met their external and internal liabilities in foreign currencies.

During the year under review, the National Bank of the Republic of Belarus reduced the key interest rates: the refinancing rate went down from 18.0 % to 11.0 % p.a., while the rates applied to open market liquidity withdrawal transactions and overnight deposit rates decreased from 23.0 % to 12.0 % and from

11.0 % to 8.0 % respectively. The bank reserve requirements grew from 7.5 % to 17.0% with respect to funds attracted in foreign currencies and diminished from 7.5 % to 4.0 % as regards BYN-denominated borrowings.

1.5. Major Events within Bank BelVEB OJSC in 2017

Bank Life

Throughout 2017, Bank BelVEB had been an active participant in coordinating activities of the Exports Promotion Project Agency and implementing the Memorandum of Intentions to Create an Integration Promotion Platform dd. 8 December 2016 between the Government of the Republic of Belarus, State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’, Eximbank of Russia, the Development Bank of the Republic of Belarus and Bank BelVEB OJSC.

Having a pivotal role in designing the Conception of Developing the Financing of Exports to Third Countries, on 23 August 2017, the Bank partook in the meeting of Exports Promotion Project Agency held with a view to adopting the aforementioned document setting forth the extension of capacities of financial support for Belarusian exports to third country markets, including goods and services with a high share of the Russian component in the value.

We were the first to develop and put in place a payment technology via bank payment cards and the seller’s QR code.

In 2017, Bank BelVEB OJSC joined the Council of Nodes to become the owner of a verifying node of the blockchain-based network. A node owner certificate was issued to the Bank at the extended meeting of the Council of Nodes held by Belarusian Currency and Stock Exchange OJSC on 14 September 2017.

Within the framework of the annual audit, the Bank successfully qualified as fully compliant with PCI DSS v.3.2 (Payment Card Industry Data Security Standard – PCI DSS), and another certificate was conferred on the Bank in recognition of its high security standards applicable to payment card transactions.

The Bank introduced a state-of-the-art service enabling to withdraw money from ATMs of the Self-Service Banking System (SBS) without using bank payment cards.

We became the first among local banks to issue virtual private credit cards linked to the ‘Internet-Bank’ service. The possibility to take out a loan, inclusive of the signing of a loan agreement, via the ‘Internet-Bank’ service makes this technology second-to-none.

In the reporting year, our efforts were particularly centred on enhancing the quality of assets. To this effect, the Bank continued to put into life breakthrough methods for and approaches to dealing with problem and potentially toxic assets. As a result, Bank BelVEB OJSC succeeded in harnessing a rapid growth in overdue loans and loans with extended maturity.

In 2017, we went on cooperating with the Development Bank of the Republic of Belarus in providing financial support to small- and medium-sized enterprises implementing investment projects. On 1 February 2017, we signed the General Agreement on Procedures for Cooperation in Financing Small Enterprises for BYN 6.0 million followed by the additional agreement on increasing the amount to BYN 29.0 million dd. 16 October 2017. During the period under review, we entered into 122 loan agreements for a total of BYN 19.2 million with small- and medium-sized enterprises (hereinafter – ‘SME’). At year-end 2017, the Bank became one of the three best partner banks cooperating with Bank for Development of the Republic of Belarus OJSC and was awarded a prize for its contributions to a rapid growth in SME lending.

On 11 October 2017, the Bank held a promotional event for its corporate customers cooperative in developing trade and economic integration ties between Belarus and Russia. At the ceremony Bank BelVEB’s customers received awards for their efforts to develop trading relations, mutual investment flows, infrastructure systems, industrial and technical cooperation, as well as private initiatives in terms of integration between Belarus and Russia.

In the year under review, Bank BelVEB OJSC redeemed its own bonds of the 4th and 5th issue for a total of BYN 20.0 million timely and in full. The Bank’s bonds of the 6th and 7th issue worth a total of BYN 100.0 million and USD 30.0 million respectively were entered into the State Register of Securities of the Republic of Belarus. On 21 December 2017, the same bonds were placed on the market.

As at year-end 2017, the consumer prices index amounted to 104.6 %: services, food commodities and non-food goods rose in price by 9.5 %, 4.2 % and 2.0 % respectively. The major driver behind such an increase in consumer prices was represented by growing housing and public utilities tariffs and prices for fruit and vegetable products.

The recovery was characteristic of the key sectors of economy. In 2017, the GDP made up 102.4 % year-on-year (as compared to 97.5 %in 2016, y-o-y). Gross value added showed a year-on-year increase in the sectors as follows:

The downward trend was typical, on the one hand, of water supply and waste management, and, on the other hand, of construction, where the year-on-year GVA accounted for 99.8 % and 97.6 % respectively.

In the course of 2017, the foreign currency basket value went up by 6.0 % (as compared to 14.7 % in 2016) against the Belarusian rouble: the euro, Russian rouble and US dollar gained 15.2 % (vs. 0.7 % in 2016), 5.7% (vs. 27.1 % in 2016) and 0.7 % (vs. 5.5 % in 2016) respectively.


1. Bank BelVEB’s Profile / 1.5. Major Events within Bank BelVEB OJSC in 2017 1. Bank BelVEB’s Profile / 1.5. Major Events within Bank BelVEB OJSC in 2017

14 15

Facilitating integration processes between Belarus and Russia and being compliant with the Strategic Plan of Bank BelVEB OJSC for the period of 2016-2019 (adopted by the Supervisory Board of the Bank on 20 October 2015, Minutes No. 25; as amended and revised by the Supervisory Board of the Bank on 26 July 2017, Minutes No. 25), the Bank undertook a number of steps to enter into agreements for the purpose of financing Russia-Belarus projects out of VEB Group’s funds. In harness with Eximbank of Russia, we concluded nine agreements on extending credit lines to finance contracts for the purchase of Russian goods for RUB 822.2 million. Aiming to finance our clientele’s deals, we also made nine agreements for a total of USD 31.9 million, RUB 1.4 billion and EUR 16.0 million with State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’.

On 15 November 2017, in addition to the Credit Line Agreement dd. 15 November 2012, State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ and Bank BelVEB OJSC signed a supplementary agreement setting forth the extension of the effective period of the revolving multicurrency credit line with a limit of USD 145.0 million to 2020.

In an attempt to facilitate mutually beneficial business relations with Russian counterparty banks, we entered into a general agreement on short-term loans with Russian Agricultural Bank (Moscow).

Within the context of international ratings assigned to Bank BelVEB OJSC, in 2017, we held meetings with the representatives of Fitch Ratings and Standard&Poor’s international rating agencies. As a result, on 31 July 2017, Fitch Ratings changed the outlook from ‘stable’ to ‘positive’ and affirmed the long-term IDR at ‘B–’.

In October 2017, S&P Global Ratings upgraded our long-term rating from ‘B–’ to ‘B’ with the ‘stable’ outlook, which was instigated by an improvement in Belarus’s sovereign rating in October 2017.

During the period under review, we continued to concentrate our efforts on increasing the capabilities and improving the quality of remote banking service channels.

Positive performance indicators were in place owing to the implementation of the project aimed at streamlining the web design of the ‘Internet-Bank’ system, extending the functionality and unifying remote banking service systems (hereinafter – ‘RBSS’) of individuals (remote link-up to a service, including via the interbank identification system, on-line repayment of retail loans, customer-bank communication functionality, personal finance management etc).

In March 2017, the Bank set in operation an upgraded RBSS web-version of BelVEB24 for individuals as well as BelVEB24 mobile, introduced such bank products as ‘Svoyechasovaya’ (Eng.: ‘In Good Time’) and ‘Khutki Anlain’ (Eng.: ‘Swift Online’) loans, extended the loan amount to BYN 8.0 thousand with respect to ‘Klikni Groshy’ (Eng.: ‘Click Money’) online consumer loan for payroll card holders, and put into life a new service to withdraw money via a code.

For the purpose of attracting new customers by means of interbank identification system services, we created an infrastructure enabling to link up the ‘Internet-Bank’ service, to open a current (settlement) account and to issue a virtual card.

Corporate and Social Responsibility

As a socially-conscious institution, the Bank partook in implementing a large-scale national project of facsimile printing of complete works by Francisk Scaryna – the first Slavonic and Belarusian book printer. This undertaking was timed to coincide with the 500th anniversary of East Slavs book-printing and was realized as part of the State Programme ‘The Culture of Belarus’.

In the course of five years, the National Library of the Republic of Belarus and Bank BelVEB OJSC had been applying their potential and capabilities to achieve a common goal. To this end, BYN 1.4 million were allocated out of the Bank’s funds.

In 2017, the project was finalized, and the last 21st volume of the complete works came out. The fruitful cooperation resulted in publishing a full 25-book collection of works by Francisk Skaryna, initially printed in Prague (1517 – 1519) and Vilnya (1522 – 1525), in one edition. The books were issued in 1,000 copies, inclusive of 100 leather-covered copies.

The books were granted to educational institutions, libraries, museums, archives, diplomatic missions accredited in Belarus, the Vatican Library, and the University of Padua.

The aforementioned project was highly appreciated nationwide. In January 2018, the team of the National Library was awarded a special prize of the President of the Republic of Belarus for spiritual revival.

In February 2017, at the Minsk International Book Fair the joint project of Bank BelVEB and the National Library ‘Francisk Skaryna Book Legacy: Facsimile Edition’ was recognized with a ‘Triumph’ grand prize of the 56th nationwide contest ‘The Art of Book’.

Bank BelVEB actively participated in the Global Money Week which was held from 27 March to 2 April 2017 and traditionally embraces various events worldwide aimed at raising financial awareness among the younger generation.

As at 1 January 2018, the number of mobile applet installations increased three-fold year-on-year to make up 26,796 times, whereas the number of Bank BelVEB’s corporate customers amounted to 22,184.

As at year-end 2018, active users of the ‘Internet-Bank’ RBSS accounted for 5,804 to register a year-on-year increase of 2,466, while active users of the ‘Customer-Bank’ system made up 7,825. The number of clients decreased by 1,340 due to the migration to the ‘Internet-Bank’ system.

In 2017, 3.8 and 0.8 million requests were made through the ‘Customer-Bank’ system and ‘Internet-Bank’ system respectively.

BYN 1.4 million

USD 31.9 millionRUB 1.4 billionEUR 16.0 million

USD 145.0 million

26,796 times3.8 million requests Customer-Bank

0.8 million requests Internet-Bank


1. Bank BelVEB’s Profile / 1.6. Summary of Bank BelVEB OJSC for 2017 1. Bank BelVEB’s Profile / 1.6. Summary of Bank BelVEB OJSC for 2017

16 17

2017 became the 5th year in a row when the Bank organized and sponsored ‘Jazz Evenings at Town Hall with Bank BelVEB’ – an open-air jazz event held on three Saturdays in June.

On 16 September 2017, traditionally under the Bank’s auspices the ninth ‘Kamyanitsa’ Folk Music Festival was held in the open air of a beauty spot near Ozertso Village close to the City of Minsk on the territory of the Belarusian State Museum of Traditional Architecture. This music and folk arts and crafts event is intended to maintain national traditions and Belarusian culture and also to support the Museum.

On 15-22 December, the 2017 Minsk International Christmas Opera Forum took place, and the Bank committed to its traditions of a culture patron remained the general sponsor of the event.

In 2017, the Bank donated a total of BYN 828.0 thousand to charity causes including free of charge support to individuals, children support, healthcare, educational organizations, sports and culture.

In the reporting year, the Bank prepared its sixth non-financial Sustainability Report comprising five major sections including ‘Bank’s Profile’, ‘Investing into Sustainability’, ‘In-House Activities’, ‘Subsidiaries’, ‘Entire Report’ and covering the key issues of the Bank Holding’s influence on the economy, environment and community.

1.6. Summary of Bank BelVEB OJSC for 2017

In 2017, the Bank ensured its efficient, reliable and secure operation, improved the quality of its services, introduced new innovative banking products, and timely fulfilled all its obligations before customers.

As at year-end 2017, the Bank moved from the 4th to 3rd position in terms of loans issued (its market share increased from 6.2 % to 6.5 %),

remained 4th in terms of capital (its market share upgraded from 5.5 % to 5.7 %)

as well as 6th in terms of funds attracted from customers (its market share changed from 5.7 % to 6.3 %),

and shifted from the 4th to 5th place with regard to assets (its market share remained to stand at 6.4 %).

6,2 %

5,7 %

5,5 %

2016

2016

2016

6,5 %

6,3 %

5,7 %

2017

2017

2017

In 2017, the Bank stayed one of the major creditors of the national enterprises, offering a wide range of financial tools as well as applying a customer-tailored approach with due regard to business features. Taking into account Bank BelVEB’s scope of business, its cooperation with both resident and non-resident banks as well as relevance for the national economy, in 2018, the Bank will act in the capacity of a systematically important bank (1st group of relevance) pursuant to the decision of the National Bank of the Republic of Belarus.

As at 1 January 2018, Bank BelVEB’s gross loan portfolio forming 66.1 % of its assets increased by BYN 227.4 million (i.e. 9.0 %) to make up an equivalent of BYN 2.8 billion, where corporate loans and retail loans grew by BYN 192.3 (i.e. 8.1 %) and BYN 75.4 million (i.e. 83.8 %) to account for BYN 2.6 billion and BYN 165.4 million respectively. Meanwhile, the Bank’s problem loans went down by BYN 40.3 million (i.e. 50.9 %) to equal BYN 38.8 million.

The Bank registered BYN 68.43 million in profits (i.e. 101.9 % of its pre-scheduled value), having increased it by BYN 4.1 million (i.e. 6.4 %) on the previous year.

As at 1 January 2018, the Bank remained fully compliant with all prudential requirements of the regulator.

International Credit Ratings of Bank BelVEB OJSC

Standard & Poor’s• Long-Term (Foreign Currency) ‘B’;• Short-Term (Foreign Currency) ‘B’;• Long-Term (National Currency) ‘B’;• Short-Term (National Currency) ‘B’;• Outlook – ‘Stable’.

Fitch Ratings• Long-Term IDR ‘B–’;• Outlook ‘Positive’;• Short-Term IDR ‘B’;• Viability Rating ‘b–’;• Support Rating ‘5’.

Awards of the Bank during 2017

• The Ministry of Culture of Belarus awarded the Bank a ‘2016 Belarus Culture Patron’ prize for its support to cultural organizations.

• Bank BelVEB OJSC was placed 1st and received a ‘Best Self-Service Terminal’ nomination as part of Consumer Experience 2016 – an independent competition held by Infobank.by.

• Based on the results of the Bank of the Year 2016 Competition, Bank BelVEB received a ‘Bank of the Year 2016 in Belarus. Best among Big Banks’ nomination (3rd position) and ‘Choice of Depositors 2016’ nomination (3rd position).

• The joint project ‘Francisk Skaryna Book Legacy: Facsimile Edition’ was recognized with a ‘Triumph’ grand prize of the 56th Nationwide Contest ‘The Art of Book’.

• Development Bank of the Republic of Belarus OJSC awarded Bank BelVEB a prize for its contributions to a rapid growth in SME lending.

• For the implementation of the project ‘The Integration of the HR Management System through a Comprehensive Personnel Assessment’, we received a ‘Republic’ nomination and were placed 3rd in the national contest ‘Belarus 2017 HR Brand Award’.

• Bank BelVEB OJSC was awarded for introducing ‘Verified by Visa’ technology (e-commerce in terms of acquiring).


1. Bank BelVEB’s Profile / 1.7. Implementation of Bank BelVEB’s Development Strategy in 2017 1. Bank BelVEB’s Profile / 1.8. Development of Internal Control System

18 19

1.7. Implementation of Bank BelVEB’s Development Strategy in 2017

The Bank’s major strategic goals are outlined in Bank BelVEB’s Strategic Development Plan for 2016-2019 (hereinafter – the ‘Development Strategy’):

• an increment in the portion of financing Russia-Belarus integration deals;

• to transform the Bank into a highly technical financial institution by introducing state-of-the-art and customer-centric banking technologies with a view to taking strong leadership positions among local banks in terms of digital business; and

• to maintain the Bank’s equity at the level ensuring the safety of the shareholders’ stock in the Bank’s share capital, while complying with capital adequacy requirements.

The amendments made to the Development Strategy (dd. 26 July 2017, Minutes No. 25 of the Supervisory Board) were required to update it in conformity with Vnesheconombank’s strategic goals outlined in the Development Strategy until 2021 and VEB’s business model as well as to fine-tune approaches applicable to SME servicing, digital banking development, interbank and currency market transactions, and securities transactions.

The new Development Strategy was worked out with due regard to forecast parameters set forth in state documents

regarding the socio-economic development of the Republic of Belarus, the development of the banking sector, the monetary policy, and in line with the Memorandum of Intentions to Create an Integration Promotion Platform dd. 8 December 2016 between the Government of the Republic of Belarus, State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’, Eximbank of Russia, Development Bank of the Republic of Belarus OJSC and Bank BelVEB OJSC. On top of that, the Development Strategy specifies the Bank’s goals and objectives aimed at streamlining Russia-Belarus integration projects for the forthcoming three years, while covering the major lines of financial support for Russian non-resource and high-technology exports to the Republic of Belarus, Belarusian exports to the Russian Federation, as well as Russia-Belarus exports to third countries.

Pursuant to the Development Strategy, it is scheduled to increase the financing under Russia-Belarus integration projects to RUB 77.0 billion in 2019, which outstrips the level of 2016 by 13.0%.

Priority is given to fine-tuning business processes by applying state-of-the-art digital banking technologies

As a result of implementing the Development Strategy, the portion of funds attracted via remote banking services is expected to rise to 40 % and 25 % in terms of bodies corporate and individuals respectively.

1.8. Development of Internal Control System

Internal controls across the Bank Holding headed by Bank BelVEB OJSC (hereinafter - the ‘Holding’) are exercised on a consolidated basis to ensure smooth information flow and timely feedback to assess the efficiency of the Holding’s participants and their compliance with the local legislation and internal by-laws.

To further streamline the Holding’s internal control system, in 2017, the Bank updated its Internal Control Policy (adopted by the Supervisory Board on 23 January 2018, Minutes No. 1).

The Holding’s internal control system is based upon conventional principles and coherent approaches including:

• efficient control environment;• the identification and assessment of risks as well as the

undertaking of measures aimed at decreasing (restricting) the level of risks;

• the formalization of internal controls procedures;• responsive information environment and information flows

management; and• monitoring procedures and independent assessment.

The Holding’s internal control system functions with due regard to the below-listed principles:

• comprehensive approach;• the embedding of controls at every level of management and

in every business-process;• integrity, consistency and continuity;• documentation;• expediency;• independent evaluation and assessment;• methodological unification;• the evasion of the conflict of interests; and• skilled and experienced internal control personnel.

The Holding’s internal control system was designed to fulfil the following major tasks:

• to ensure the shareholders’, customers’ and counterparties’ confidence;

• to comply with the national legislation, the Bank’s local by-laws and best practices;

• to facilitate the attainment of strategic goals and fulfilment of statutory obligations by the most efficient and economically expedient way;

• to ensure the Bank’s control over the Holding’s participants;• to ensure information safety and efficient information flow

management;• to harness risks of the Holding’s involvement into fraudulent

and unlawful activities, to facilitate anti-money laundering procedures and procedures for combating the financing of terrorist activities and WMD proliferation;

• to monitor both internal and external factors, as well as to help the Bank to timely adjust to changes; and

• to ensure timely presentation of true and accurate reporting for internal and external use.

With a view to ensuring both the accuracy and completeness of the information on the internal control system across the Bank and Holding, which is reported to the Bank’s management bodies and officials, in 2017, we put into life a new version of the Methodology for Management Reporting across Bank BelVEB OJSC and the Holding Headed by Bank BelVEB OJSC on a Consolidated Basis (adopted by the Supervisory Board on 5 July 2017, Minutes No. 21). The same Methodology outlines the calculation of the efficiency of the internal control system on the basis of the weighted scoring method. Assessment of the Bank’s and Holding’s internal control system is carried out with respect to over 200 subcomponents. The new approach enables to analyze and reveal shortcomings as well as to work out solutions.

2017 Strategic Goals

BYN million

Indicator Planned for 1 January 2018Actual as at

1 January 2018

Corporate loan portfolio 2,719.7 2,592.0

Portion of financing of Russia-Belarus integration projects 2,305.0 3,657.6

Problem assets in total risk weighted assets, % 16.0 13.0

Tier I capital1 524.9 525.7

Net profit 67.3 68.4

ROE (calculated at balance sheet profit), % 14.8 20.1

Balance between Vnesheconombank’s capital injections and Tier I capital, RUB billion 2.62 3.27

CIR, % 38.7 37.7

Funds from corporate customers attracted via remote channels in total corporate funding, % 15.0 37.3

Funds from individuals attracted via remote channels in total funding from individuals, % 15.0 18.1

1 Equity.


1. Bank BelVEB’s Profile / 1.9. Fraud and Corruption Combating Measures 2. Investing into Sustainability / 2.1. Interaction with General Public on the Issues of Sustainability

20 21

1.9. Fraud and Corruption Combating Measures

The Bank stays committed to ethical norms and principles of the transparent business conduct, a constant improvement in business culture and the implementation of best international practices in corporate management for the benefit of its track record and brand name.

To implement a comprehensive approach to preventing corruption and fraud as well as to ensure the Bank’s financial stability and robust operation in a long-term perspective, Bank BelVEB OJSC adopted its own Fraud and Corruption Combating Policy (Minutes No. 9 dd. 21 March 2017).

The goals and objectives of the corruption combating system are established to efficiently prevent and to timely reveal and respond to any exposure to corruption as well as external and internal fraudulent practices. As a result, a number of the Bank’s local bylaws were amended and supplemented to make our officials and staff members more accountable for corruption risks.

All the Bank’s structural units, officials and staff members are engaged in implementing corruption and fraud combating measures within the scope of competence as evidenced by the personnel’s job descriptions and structural units’ regulations.

Guided by the best practices of establishing a corruption and fraud combating system, in 2017, our Management Board adopted the regulations for the Trust Line across Bank BelVEB OJSC (Resolution No. 614 dd. 27 September 2017).

The Trust Line is a special anti-corruption procedure enabling the Bank’s officials, staff members as well as any third parties to inform the Bank’s management of corruption schemes and/or any frauds towards the persons furnishing such information and/or the Bank’s officials and/or staff members and/or any third parties. The information on the channels of the Trust Line is available on our official website (www.belveb.by).

In 2017, six employees (0.3% of the total staff number) underwent skills upgrading, from among them there were five key staff members (making up 1.1% of the total number of staff of this category) and one officer (0.1% of the total number of staff of this category).

2. INVESTING INTO SUSTAINABILITY2.1. Interaction with General Public on the Issues of Sustainability

2.1.1. Policy of Corporate and Social Responsibility

The corporate and social responsibility (hereinafter – the ‘CSR) represents the Bank’s voluntary contribution to developing both society and business as it pertains to social, economic and ecological issues, which is related to the Bank’s core activities and is discharged in addition to the obligations set forth in the national legislation.

In implementing its CSR policy, as from 2011, the Bank has been publishing Sustainability Reports covering its major attainments in economic sustainability, interaction with the general public on the matters of sustainable development, investment, charity, SME support, and personnel policy.

The goals and objectives of the Bank as well as priorities in corporate responsibility are outlined in the Bank’s 2016-2018 Corporate and Social Responsibility Strategy (approved by Resolution of the Bank’s Management Board No. 602 dated 23 December 2015) (hereinafter – the ‘CSR Strategy’).

Bank BelVEB’s CSR Strategy covering the period from 2016 to 2018 is consistent with Bank BelVEB’s 2016-2018 Development Strategy.

In conjunction with the new wording of the Development Strategy adopted by the Supervisory Board in 2017 as well as the amendments made to the Regulations for CSR and Non-Financial Reports within Bank BelVEB OJSC (adopted by Resolution No. 501 dd. 21 December 2011), we prepared a new version of the CSR Strategy.

The new CSR Strategy, being in conformity with the Bank’s goals and objectives stipulated by the Development Strategy, was implemented to maximize the customers’ satisfaction, to enhance the clientele’s loyalty through upgrading the Bank’s business model, to embed latter-day digital banking technologies and advanced management methods, to facilitate Russia-Belarus projects, as well as to participate in establishing a Russia-Belarus integration platform.

Pursuant to the updated CSR Strategy, the strategic target period is extended to 2019, while the mission and goals of Bank BelVEB OJSC as well as certain terms are reworded.

The document also implies the possibility of preparing non-financial reports in the context of the transition from GRI Sustainability Reporting Guidelines to GRI Standards developed by the Global

Reporting Initiative and containing a list of economic, ecological and social indicators characterizing the Bank’s contribution to sustainable development.

The principles of the Bank’s CSR policy are fully integrated into the Bank’s day-to-day operation and find their reflection in:

• responsible behaviour towards shareholders, customers and business partners;

• responsible practices in human resources management;• bona fide business practices;• environmental protection measures and control over the

Bank’s ecological impact; and• support of charity causes and corporate volunteering.

With respect to each and every line, the Bank developed initiatives being currently under implementation and established goals to be reached pursuant to the CSR Strategy.

Further integration of CSR principles into the Bank’s day-to-day operation will enable:

• to enhance the Bank’s image as well as its investment attractiveness;

• to boost the efficiency of its control system; • to facilitate the interaction with shareholders and other

stakeholders as well as to raise their confidence in the Bank;• to stimulate the management to embed up-to-date

management technologies and innovations, which will positively affect the Bank’s competitiveness;

• to raise the efficacy of control over the Bank’s impact on both the general public and environment;

• to cement the Bank’s corporate culture and to increase the personnel’s loyalty; and

• to widespread CSR principles within the business community across Belarus.

In its effort to raise social responsibility, the Bank yearly informs its stakeholders of the publication of Sustainability Reports including Vnesheconombank, the Ministry of Finance of the Republic of Belarus, the Ministry of the Economy of the Republic of Belarus, the Ministry of Natural Resources and Environment Protection of the Republic of Belarus, the Energy Efficiency Department under the State Committee on Standards of the Republic of Belarus, state governmental authorities, UNO/UNDP Representation to the Republic of Belarus, the National Bank, Development Bank of the Republic of Belarus OJSC, Bank Processing Centre OJSC, M.S. Kunyavsky Business Union of Entrepreneurs and Employers, and major customers. Electronic versions of all Sustainability Reports are available on the Bank’s web-site.


2. Investing into Sustainability / 2.1. Interaction with General Public on the Issues of Sustainability 2. Investing into Sustainability / 2.1. Interaction with General Public on the Issues of Sustainability

22 23

2.1.2. Interaction with Stakeholders

Implementing the core CSR principle of openness and transparency, the Bank informs a wide range of stakeholders of the main aspects of its operation and its future plans on a regular basis.

While making decisions and putting into life its CSR Strategy, the Bank closely interacts with a great number of stakeholders, including state and governing bodies, shareholders and clients, employees of the Bank and investors. In dealing with its customers the Bank is guided by the core principles of stable partnership, mutual benefit and customer-tailored approach, thus seeking to strike a balance between

services quality, business processes and maximum benefit to a particular customer.

The Bank’s customer base comprises leading national and overseas companies acting in different economic sectors, such as the manufacturing of end products, export of raw materials, transport, energy sector, agriculture, construction, and trade.

As at 1 January 2018, our customer base was comprised of 22,184 customers. Throughout 2017, we attracted 686 bodies corporate and 1,289 self-employed entrepreneurs.

In 2017, there was a growth in funds attracted from bodies corporate and self-employed entrepreneurs owing to funding growth targets met by corporate business divisions, efforts applied throughout the year to enhance customer servicing standards and the efficiency of product sales in corporate banking, as well as constant work aimed at refining and expanding the Bank’s corporate product line. The shrinking funding denominated in foreign currencies stems from the regulator’s de-dollarization measures.

As at 1 January 2018, with a 7.9 % market share Bank BelVEB OJSC became the 3rd largest among Belarusian banks to provide lending to bodies corporate following Belarusbank (41.4 %) and Belagroprombank (15.5 %). We were placed 4th in terms of our corporate loan book as at 1 January 2017.

Throughout 2017, the Bank’s corporate customers grew by 61 in number to make up 1,247. In 2017, we entered into 1,880 agreements to carry out assets-related transactions with our corporate clients and extended funds for an equivalent of BYN 2.6 billion (excluding contingent liabilities), i.e. 98.2 % of Bank BelVEB’s corporate loan portfolio as of 1 January 2018.

During the period under review, the Bank gave priority to the quality of its assets. To this end, we introduced breakthrough approaches to NPL management, established the Bank’s Problem Assets Management Committee, which has been operating since 1 November 2017, and applied efforts to curb a sharp rise in overdue and extended loans.

The structure of the customer base is represented by 176 large businesses (i.e. 0.8 %) and 22,008 SMEs (i.e. 99.2 %), inclusive of 11,799 self-employed entrepreneurs (i.e. 53.2 %).

1,247corporate customers

BYN 2.6 billion



24 25

As at year-end 2017, the overall total financed by the Bank under Russia-Belarus integration projects overstepped the level of 2016 by RUB 38.8 billion and the pre-scheduled value for 2017 and equalled RUB 106.7 billion, while the target value stood at RUB 68.6 billion. The portion of such transactions made up 55.8 % of the corporate portfolio. Russian exports to Belarus were financed out of the Bank’s own funds as well as loans provided by State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’, Eximbank of Russia and other Russian banks under Russian exports facilitation programmes.

For the purpose of financing Russian exports to Belarus, we attracted an equivalent of USD 272.7 million, inclusive of USD 47.2 million provided by Sviaz-Bank and Eximbank of Russia and USD 76.4 million from Vnesheconombank. In 2017, the overall total of Russian exports financed by State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased by 3.2 times year-on-year.

Close cooperation with the SME segment remained on the Bank’s list of priorities. In 2017, we continued to broaden our SME product line.

As a result, Bank BelVEB’s SME loan portfolio increased by BYN 77.0 million (i.e. 10.5 %) and totalled an equivalent of BYN 809.8 million as at 1 January 2018. The SME portion in the Bank’s corporate loan book rose by 1.16 % year-on-year to account for 31.2 %.

Throughout the reporting period, the Bank offered its customers RMB-loans out of the funds provided by the People’s Bank of China under the loan agreement concluded between Bank BelVEB OJSC and the National Bank of the Republic of Belarus. Based on the targeted funds attracted by the National Bank, during 2017, the Bank issued loans for a total of RMB 44.7 million for the purpose of financing intermediary and capital goods from the People’s Republic of China.

In the course of the year under review, the Bank continued its cooperation with the Development Bank of the Republic of Belarus in support of SME businesses implementing investment projects. As at 1 February 2017, we signed the general agreement on the procedures for SME financing for

BYN 6.0 million followed by the additional agreement dd. 16 October 2017 on increasing the amount to BYN 29.0 million. Under the aforementioned agreement we entered into 122 loan

agreements for a total of BYN 19.2 million. As at year-end 2017, Bank BelVEB on-lent funds totalling BYN 20.3 million, became one of the best three partner banks of the Development Bank of the Republic of Belarus and was awarded a prize for a substantial increase in SME business lending.

2.1.3. Assessment of Customer and Partner Satisfaction

Aiming to increase the level of our customers’ satisfaction with the Bank’s services and to establish a customer-centric business model, Bank BelVEB carries out an assessment of customer satisfaction on a yearly basis.

Assessment procedures are compliant with the Bank’s by-laws, including the Guidelines on Corporate Customer Satisfaction Assessment (approved by the Management Board on 8 June 2016 under No. 289) and the Guidelines on Individual Customer Satisfaction Assessment (approved by the Management Board on 15 April 2016 under No. 210).

In this context, throughout 2017, the Bank had been undertaking the activities as follows:

• corporate customer satisfaction assessment;• individual customer satisfaction assessment;• marketing research into the perception of Bank BelVEB’s brand

as well as the brands of Belgazprombank and BPS-Sberbank;• personnel assessment via ‘Mysterious Visitor’ method;• weekly polls of individual customers; and• analysis of complaints, suggestions and requests.

Corporate Customer Satisfaction AssessmentIn September-October 2017, a corporate customer poll was conducted (390 corporate customers, including 264 companies and 126 self-employed entrepreneurs, using our services, such as the receipt of revenues via the Bank’s teller offices, the receipt of revenues via an automatic safe, bank payment transfers, corporate bank payment cards, the ‘Internet-Bank’ service, and lending operations, were polled).

The average index of satisfaction across the Bank’s services and products made up 90.05 % (in 2016 – 92.10 %; in 2015 – 91.82 %).

As laid down in the Business Repute Risk Management Policy (adopted by Resolution of the Management Board No. 196 dated 18 April 2012), the corporate customer satisfaction indicator is one of the key indices included in the computation of reputational risk. The above-mentioned poll showed a low (acceptable) level of risk (raging from 81 % to 100 %).

During the poll, several proposals and comments were received as to the provision of services which enabled the Bank to make due account of them in the future.

The feedback received from the Bank’s corporate clientele enabled to make conclusions with reference to the level of corporate customer satisfaction and take further steps to eliminate shortcomings.

Individual Customer Satisfaction Assessment

In July-September 2017, an individual customer poll was conducted among 905 individuals in Minsk and regional centres. The following coefficients were calculated:

• Index of overall satisfaction with the Bank amounted to 4.27 points (as compared to 4.27 in 2016) out of 5 possible.

• Index of satisfaction with the Bank’s services equalled 0 points (as compared to 0.22 in 2016). A decrease of the index is due to a substantial increment in the level of the Bank’s customers’ minimum expectations. The result is deemed satisfactory provided the value is zero or positive.

• Net Promoter Score made up 24.4 %, showing a substantial 35.2 percentage point rise on the previous year. In addition to the Bank’s customers’ growing loyalty, there is an increase in their readiness to give the Bank good references to their friends and acquaintances. The outcome is indicative of the fact that the psychological and economic reasons having brought about a significant and disproportionate NPS fall in 2016 no longer exert their negative impact.

• Loyalty index accounted for 8.01 points out of 10, demonstrating a 0.62 point rise year-on-year.

In accordance with the Business Repute Risk Management Policy of Bank BelVEB, the overall individual customer satisfaction indicator and the individual customer service quality rate fall under the key indices included in the computation of reputational risk. The values of the overall individual customer satisfaction indicator and the individual customer service quality rate showed a low and medium level of risk respectively.

Marketing Research into the Perception of Bank BelVEB’s Brand as well as the Brands of Belgazprombank and BPS-Sberbank

The similar research was carried out back in 2014.

In the course of the research, the customers of Bank BelVEB, Belgazprombank and BPS-Sberbank were interviewed on the basis of structured questionnaire forms in the vicinity of the above banks’ offices (sales outlets). The sample was comprised of individuals between the ages of 20 to 65 using the major products of the banks (deposits, loans, bank payment cards).

The geographical area of the research covered Minsk, Grodno, Brest, Vitebsk, Mogilev, and Gomel. The total number of interviewees made up 900 of whom 360 respondents (i.e. 40.0 %) were represented by Bank BelVEB’s customers, 270 (i.e. 30 %) were from among BPS-Sberbank’s clientele and 270 (i.e. 30 %) were Belgazprombank’s clients.

The goals and objectives of the research were to identify the Bank’s and its business rivals’ strengths and weaknesses, to identify



26 27

The Bank replied to all complaints in writing and in the prescribed manner established by Law of the Republic of Belarus No. 300-Z dd. 18 July 2011 ‘On Requests of Citizens and Legal Entities’ and the following internal by-laws:

• Rules on the Rendering of Services by the Contact Centre of Bank BelVEB OJSC adopted by the Bank’s CEO Resolution No. 952 dated 12 October 2015;

• Regulations on the Interaction between the Structural Units When Processing Phone Calls of Corporate Customers

by the Contact Centre of Bank BelVEB OJSC (adopted by Resolution of the Bank’s Management Board No. 131 dd. 1 March 2017);

• Regulations on the Processing of Requests of Citizens and Individuals at Bank BelVEB OJSC adopted by Resolution No. 183 dd. 10 April 2012 as amended and revised by Management Board Resolution No. 549 dd. 25 November 2013.

2.1.4. Information for Stakeholders

One of the main tasks of the Bank is to pursue a well-balanced prudent information policy.

The Bank’s external policy is outlined in the Development Strategy, the Professional Ethics Code of Bank BelVEB OJSC, adopted by Protocol No. 23 of the Supervisory Board dated 29 November 2013, as amended and revised by Protocol No. 26 of the Supervisory Board dated 13 November 2015, the Instruction on Disclosing Information on Bank BelVEB’s Business, adopted by Resolution No. 307 of the Management Board dated 4 July 2013, as amended and revised by Resolution No. 221 dated 5 April 2017, the Procedures for Interaction with Mass Media adopted by CEO’s Resolution No. 1436 dated 29 December 2014, the Procedures for Bank BelVEB’s Presence in Social Networks and Internet-Platforms, adopted by Resolution No. 327 of the Management Board dated 15 July 2015, as well as the Bank’s management’s bylaws.

The documents lay down the rules and regulations on disclosing the information on the Bank’s and its Holding’s business, procedures for the interaction of the Bank’s structural units with mass media, procedures for providing and agreeing the information to be published in mass media and placed in social networks, as well as forms of feedback with users (customers and potential customers) within the Bank’s community. The Bank makes use of all available communication channels to convey particular information intended for different user groups. The key communication channels are the Bank’s website (www.bveb.by) and national as well as regional mass media.

In 2017, a new version of Bank BelVEB’s web-site was developed, placed on the Bank’s host platform and commissioned. The basic principles underpinning the new web-site are as follows: customization (unique patterns for key pages, banners, background visuals) and adaptivity (convenient displaying of the web-site via all types of equipment while maintaining the complete functionality). Strongly committed to an innovative approach to developing our web-site (www.belveb.by), we put into application vertical dashboards.

In 2017, the Bank’s site registered 778,326 visits, showing a 26.78 % year-on-year increase. The most popular sections included ‘Offices’ and ‘Information to Individuals’.

The Bank continued to promote its brand, products and services in social networks. In 2017, we focused our efforts on digital marketing. To this effect, the Bank monitored the online activity of banks, made a careful study of and embedded new possibilities for promoting products and services.

In 2017, the customer reach in social networks such as Facebook, Vkontakte, Twitter, Instagram, Google+, Odnoklassniki, Youtube, Foursquare, Linkedln made up over 3 million people.

In the course of 2017, the Bank placed its promotional materials on specialized financial Internet portals (select.by, myfin.by and infobank.by) and TUT.BY web portal as well as carried out promotional campaigns in social networks and on the Internet, including the promotion of the Bank’s corporate web site and targeted, contextual and banner advertising etc.

With a view to creating the Bank’s positive image as a socially oriented financial institution, inspiring loyalty towards the Bank’s business and promoting its brand, during the period from July to November 2017, along with TUT.BY we had been putting into implementation two image projects, such as ‘History of the Belarusian Book in Illustrations, Texts and Destinies’ and ‘Kamyanitsa’, as well as a partnership project on ‘Svoyechasovaya’ virtual credit card (Eng.: ‘In Time’ virtual credit card). The total number of views with respect to all materials accounted for 316,340, while the total number of click-throughs made up 1,937. In terms of partnership materials on ‘Svoyechasovaya’ virtual credit card, the number of views totalled 21,841, while the total number of click-throughs made up 423.

In 2017, we made use of a lot of instruments of digital marketing and created a wide structured network of efficient web channels. An increase in the level of the Bank’s brand recognition became one of the major indicators of our work.

The Bank interacted with mass media by engaging the formats as follows:

whether the Bank retains strong positions according to the target group’s perception, to assess the features of such positions, to evaluate the Bank’s attributes (characteristics) being the most essential for the target group, to range the same in line with their relevance etc.

Pursuant to the outcome of the research, Bank BelVEB’s major strength is a high level of customer service. While responding to the question regarding the Bank’s perceivable features, 21 % of customers selected characteristics of the category ‘Services and Servicing’. 35.1 % of the interviewees that characterize Bank BelVEB as their favourite have gone for one of the characteristics from the category ‘Servicing and Services’ (‘high quality of services and professionalism of the personnel’ – 21.6 %, ‘high culture of servicing’ – 13.5 %). With respect to such characteristics as ‘politeness of the personnel’, ‘high level of qualification and professionalism of the personnel’ and ‘high quality of current banking services’, Bank BelVEB was assigned 4.70 (+0.46 as compared to 2014), 4.56 (+0,33) and 4.48 (+0,47) out of 5 points respectively.

Responding to the question regarding the ‘best’ bank according to a particular criterion, 43.9 of interviewees marked Bank BelVEB out as the bank ‘with the best servicing’ (+11.0 percentage points as compared to 2014), while 43.9 % (+8.9 percentage points as compared to 2014) and 28.1 % (–2.2 percentage points as compared to 2014) of customers called the Bank ‘the most polite and friendly’ and ‘the most customer-centred’ respectively.

Bank BelVEB’s other strong points are a high speed of servicing and a high level of reliability.

The three strengths of Bank BelVEB OJSC in 2017 correspond to those in 2014.

According to the 5-point-scale, the lowest grades were assigned to the characteristics as follows: ‘a huge number of ATMs and self-service terminals’ (3.44 points, i.e. +0.7 points as compared to 2014), ‘a huge number of branches’ (3.50 points, i.e. +0.7 points as compared to 2014), ‘an active involvement in sponsorship and charity undertakings’ (3.91 points, i.e. +1.43 points as compared to 2014), ‘convenient working hours’ (4.03 points; this characteristic was not included in the questionnaire form in 2014), and ‘simplicity of taking out a loan’ (4.13 points, i.e. +0.86 points as compared to 2014).

As back in 2014, in line with the respondents’ perception, the Bank may well be ‘one of the leaders’ or ‘the bank placed on the top five/ten list’.

Personnel Assessment via ‘Mysterious Visitor’ Method

A series of one-off visits were undertaken from 6 May 2017 to 22 December 2017 to assess skills of the Bank’s officers attending to individual, corporate and cash-desk customers, as well as the observance of the Bank’s corporate style.

Recommendations received during the checks were taken into account to make necessary corrections.

Weekly Polls of Individual Customers

With a view to receiving information on customers’ satisfaction with service quality, revealing service strengths and weaknesses, clarifying customers’ opinion on possible solutions to the enhancement of service standards, the Bank conducts public opinion polls among the Bank’s private customers on a weekly basis.

Opinion polls are carried out with respect to 50 private customers who have initiated transactions with the Bank’s structural units within 3 business days preceding the interview. In 2017, over 2,265 of the Bank’s customers were interviewed. 98 % of the respondents expressed their satisfaction with the servicing. The customers’ opinion on the reasons for choosing the Bank for the execution of transactions looks as follows: favourable conditions for the Bank’s products came into focus of 75 % of customers. Priority was given to conditions for products (services), the Bank’s location, the background of interaction with the Bank, and acquaintances’ recommendations.

Analysis of Complaints, Suggestions and Requests

The Bank analyses suggestions and complaints from individuals and corporate customers on a quarterly basis.

In the year under review, we received 629 requests: 571 requests submitted by individuals plus 58 submitted by organizations including:

• 150 written requests (except for requests entered into the customer comment book);

• 456 entries in the customer comment book; and• 23 electronic requests.

The overall number of requests went up by 19.4 % year-on-year. The breakdown of requests was as follows: 198 complaints, 166 applications, 84 suggestions, and 181 commendations. The number of complaints went down by 17.8, while there is a 49.6 % increase in commendations.

The most frequent issues evoking requests are represented by lending, teller services, and currency exchange transactions.



28 29

• press-releases and other information messages;• press-conferences, press-visits, briefings, interviews,

meetings with the Bank’s management and other officials;• the public speaking of the Bank’s management at open public

events (forums, conferences, seminars, round tables etc.);• the preparation of expert opinions and reports on the

relevant issues of the state of economy in Belarus for mass media; and

• the organization of joint projects with periodicals and Internet portals.

The Bank communicates with mass media only via its Press Secretary.

The Members of the Bank’s Supervisory Board, Management Board, and persons authorized by the Chairman of the Management Board in accordance with the established procedures are entitled to make a public appearance in mass media on the Bank’s behalf.

The Bank interacts with mass media on a permanent basis through holding press-conferences and interviews as well as making comments.

During the reporting period, 209 press releases on the Bank’s major events, large-scale deals, new customer services, new technologies and instruments of the Bank, new locations of retail business spots in districts and regions, and other issues were published on the Bank’s website.

Press-releases on the Bank’s major issues were sent to leading information agencies and portals, including, inter alia, BelTA, BelaPAN, Interfax, Sputnik Belarus, Prime TASS, BUSINESS NEWS, TUT.BY, Onliner, Myfin.by, Select.by, Infobank.by.

The interview under the title ‘Bank BelVEB’s Philosophy: Universality and Successful Implementation of the Customers’ Business Initiatives’ given by Chairman of the Management Board Mikalai U. Luzgin to the Russian magazine ‘Economic Strategies’, the interview referred to as ‘Being Part of the Nation’ and given by Deputy Chairman of the Management Board Oleg G. Prohortchik to the newspaper ‘Litaratura i mastatsva’ (Eng.: Literature and Art), comments made by Deputy Chairman of the Management Board Anatol A. Paulovich to BelTA on Bank BelVEB’s response to a decrease in the refinancing rate, as well as other interviews and statements of the Bank’s management serve as vivid examples of the Bank’s openness.

In 2017, the Bank’s activities received coverage in Belarusian and foreign mass media. One of the main topics was the fifth season of ‘Jazz Evenings at Town Hall with Bank BelVEB’ which drew a wide response among the general public. The number of publications on the project, including those referring to the Bank, outstripped 100.

Another topic in focus of media coverage became the joint project of Bank BelVEB and the National Library ‘Francisk Skaryna Book Legacy: Facsimile Edition’.

Since August 2017, aiming to assess its reputational risk, the Bank has been monitoring and analyzing publications in mass media via ‘Medialogia’ automated information system. On the whole, during the period under review, the references to the Bank in mass media were either positive or neutral, while the level of negative publications on the Bank’s business could be evaluated as low.

The Bank aims its internal information policy at developing corporate culture, keeping its employees up-to-date with current events, maintaining corporate loyalty and providing information which the management wishes to message to the employees.

The main instrument of the internal information policy of the Bank is its internal corporate website. In 2017, the Bank’s website hosted over 610 news items, 22 polls and a number of major interbank competitions. Our staff members expressed their deepest interest in 3 quizzes timed to coincide with the 26th anniversary of the Bank’s establishment (‘Let Us Remember Our History’, ‘Try to Guess Our Bank’s Office on the Picture’, and ‘Bank BelVEB Today’). In its ‘Interesting Life’ section the website dwells upon hobbies of the employees.

In making the Bank’s internal web site more elaborate, we upgraded our ‘Work with Us’ service, created a news archive, developed a ‘News Search’ module, as well as added ‘Figure of the Week’ and ‘Quotation of the Week’ sections.

The daily visits to the internal website accounted for around 1,400 – 1,450 unique visits, while the total number of visits made up 1,600.

Pursuant to Resolution of the Chairman of the Management Board No. 625r dd. 25 August 2017, since September 2017, the Bank has been preparing messages on the Bank’s life to further post the same on VEB Group’s unified corporate portal (http://www.veb.life/).

2.1.5. Cooperation with Financial Institutions

Cooperating with local and overseas banks in 2017, the Bank was centred on strengthening its standing and reputation in the local and foreign financial markets. The Bank streamlined its services to financial institutions (hereinafter – ‘FIs’) by rendering most competitive and cost-efficient international settlements services and optimizing its correspondent network.

Presently the Bank’s correspondent network comprises both national and foreign banks in 73 countries across the globe. Correspondent relations were established with respect to customer needs and interests of their foreign counterparts as well as business operation of its own.

The Bank has different contractual commitments with about 140 resident and non-resident banks under such instruments as interbank loans, FOREX operations, banknote business and trade finance transactions. The limits established with partner-banks from Russia let the Bank be an active participant in terms of interbank operations and trade finance transactions.

In an effort to develop promising business ties with partners from Asia and to create a solid platform for implementing its clientele’s foreign trade contracts, Bank BelVEB, employing direct correspondent relations with Chinese banks, continued to put into life projects aimed at financing imports from the People’s Republic of China out of the funds from the People’s Bank of China and with the support of the National Bank of the Republic of Belarus.

In terms of cooperation with international FIs, the European Bank for Reconstruction and Development and the Eurasian Development Bank remain the major partner-banks of Bank BelVEB. At present, we actively maintain business relations under the previously signed agreements.

As at year-end 2017, the Bank remained second largest local bank in trade finance business in terms of the volume of documentary transactions.

The Letters of Credit opened for the purpose of further financing our customers’ trade contracts made up 58.0 % of the overall value. Approximately 26.0 % of the overall L/C value was backed by State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’.

During the period under review, Bank BelVEB put into use various trade finance tools, including, but not limited to, L/C post-financing and discounting, reimbursement undertakings of third-party banks, the attraction of foreign loans under export credit agency coverage, VEB Group’s support etc. Traditionally, the core of the Bank’s documentary business was represented by its customers’ import transactions.

In 2017, Bank BelVEB attracted an equivalent of

USD 323.2 million worth of financial resources for trade finance purposes. Aiming to develop and extend Russia-Belarus integration ties, including the financing of Russian exports to Belarus, the Bank attracted an equivalent of

USD 272.7 million. In the reporting period, transactions under Russia-Belarus trade contracts, including under the coverage provided by EXIAR and European export credit agencies, were on the Bank’s list of priorities.


In rendering services to clients the Bank applies its AML/CFT/WMDPC procedures at every level and stage of a financial transaction.

In 2017, for the purpose of AML/CFT/WMDPC, the Bank continued to put into life the major ICS principles laid down with due regard to:

• the national AML/CFT/WMDPC legislation;• the best AML/CFT/WMDPC practices of Belarusian and

overseas banks;• the uniform ICS principles of AML/CFT/WMDPC established

across Vnesheconombank Group; and• the features of the Bank’s organizational structure, clientele,

as well as software applied with a view to automating financial services and implementing ICS principles in terms of AML/CFT/WMDPC.

Pursuant to the laws of the Republic of Belarus, the key ICS principle established in the field of AML/CFT/WMDPC across the Bank is its staff members’ participation in the identification of customers and their representatives, customer profiling and the detection of financial transactions subject to special control within the scope of their competence.

The AML/CFT/WMDPC structure as well as training of the Bank’s personnel forms the basis of the efficient ICS operation in terms of AML/CFT/WMDPC.

Pursuant to the Bank Staff Training and Instruction Programme, approved by the Bank’s Chief Compliance Officer, training and instruction shall be conducted in the form of orientation (introductory) instruction, off-schedule (special-purpose) training and scheduled instruction sessions or competency upgrading training. Competency checks are conducted in the form of an electronic test.

In the reporting period, the Bank organized AML/CFT/WMDPC

training events attended by 1,039 staff members, including 237 chief officers (53% of the total number of staff of this category) and 802 officers (46% of the total number of staff of this category).

Complying with the regulations of the US Foreign Account Tax Compliance Act (hereinafter – ‘FATCA’), in 2017, we put into place preparatory measures for making reports on 2016 FATCA relevant customers for further submission to the Internal Revenue Service. Under the Agreement between the Government of the Republic of Belarus and the United States of America to Improve International Tax Compliance and to Implement FATCA, on 6 September 2017, the Bank prepared and submitted its 2016 FATCA Report to the Ministry of Taxation of the Republic of Belarus. In conformity with the above Agreement, the Ministry of Taxation facilitated the submission of a consolidated report on financial institutions fulfilling FATCA requirements in the Republic of Belarus to the Internal Revenue Service.

2. Investing into Sustainability / 2.2. Responsible Business Practices 2. Investing into Sustainability / 2.2. Responsible Business Practices

30 31

2.2. Responsible Business Practices

2.2.1. Corporate Ethics

The Bank builds its relationships with stakeholders in strict conformity with the best business standards and professional ethics principles.

The issues of corporate ethics are governed by:

• Corporate Code of Conduct of Bank BelVEB OJSC adopted by Resolution of the Supervisory Board No. 23 dd. 29 November 2013, as amended and revised by Protocol of the Supervisory Board No. 26 dated 13 November 2015;

• Regulations on Retail Service Quality Management in Bank BelVEB OJSC adopted by Resolution of the Management Board No. 106 dated 18 March 2015, as amended and revised; and

• Standards of Servicing of Corporate Customers adopted by Resolution of the Management Board No. 30 dated 27 January 2016.

The introduction of norms and traditions of corporate-conscious behaviour as well as corporate values, which comply with the best world practices based on unconditional law obedience and ethical norms of business conduct, into the Bank’s daily practice enables to maintain the Bank’s positive image as well as to ensure efficient operation and high-quality services.

2.2.2. Participation in State Policy Formulation

The Bank is guided by the legislation of the Republic of Belarus setting out the guidelines on the monetary and lending policy within the state.

Being members of committees, i.e. collegiate bodies founded with the Association of the Banks of Belarus, the Bank’s representatives take part in working out state programmes, participate in drafting normative legal acts regulating banking transactions, and put forward proposals on the implementation of the monetary and lending policy, the operation of financial and lending markets as well as the improvement of the tax policy.

Acting in the capacity of a member of various non-profit organizations, inclusive of Kunyavskiy Business Union of Entrepreneurs and Employers, Belarusian Chamber of Commerce and Industry, Mogilev Association of Manufacturers and Entrepreneurs etc, the Bank participates in drafting and

implementing social and economic policies, improving the credit and finance system, and developing the banking segment within the Republic of Belarus. The Bank’s Management Board Chairman together with managers of the country’s leading banks, representatives of the Administration of the President, Executive Office of the Council of Ministers, National Assembly, Ministry of Finance, Ministry of Economy, World Bank Representative Office in Belarus, business associations, as well as prominent national scientists and experts took part in the meeting of the Advisory Council under the National Bank of the Republic of Belarus, a consultative body established to provide expert information and consulting services to the central bank while developing and implementing the monetary policy and resolving matters on banking and payment system transactions. In implementing investment projects, we are actively engaged in developing regions and places where the Bank conducts its business.

2.2.3. Anti-Money Laundering and the Combating of Terrorism Financing

The Bank’s Internal Control System (hereinafter – the ‘ICS’) ensures minimal risk to the Bank to be involved in the laundering of proceeds of crime, terrorism financing and proliferation of weapo

Documents

CONTENTS Development...Bank BelVEB’s PROFILE 1.1. General Information 1.2. Governing Bodies 1.3. Organizational Structure 1.4. Principal Economic and Monetary Trends in Belarus in