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2014 July: Information on current US-sanctions

Dear Client / Investment Professional,

Further to the recent actions by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) please be advised that:

General view (please refer to the Details section below)

  • Gazprombank and its subsidiaries (further “Group”) has not been added to the SDN list (Specially Designated Nationals);
  • Sanctions only restrict new equity and long-term debt (90+ days) financing from US persons: other transactions explicitly permitted;
  • Sanctions do not have any material impact on Group's operations and financial standing: in particular, no asset freeze has been imposed;
  • Sanctions do not impact Group’s existing debt: debt servicing and secondary market trading as usual;
  • Liquidity and funding position of the bank is comfortable and well manageable: wholesale redemptions for 2014 have been prefunded;
  • Gazprombank Group has never been reliant on US onshore investors: all Eurobond issuances in Reg S only format and Bonds issued by Gazprombank (Switzerland) Ltd in Swiss local format.

Details

In its new directives issued on 16 July 2014, the U.S. Department of Treasury imposed so-called “sectorial sanctions” in respect of two Russian energy companies and two Russian financial institutions. These sanctions relate to certain types of financial transactions that may be entered into by the relevant Russian entities in the future.

One of the financial institutions affected by this development is Gazprombank. It is important to stress that these restrictions have a substantially narrower scope and are distinctly different from the sanctions previously imposed by the US Treasury in respect of certain other Russian banks and companies. Gazprombank Group has not been added to the list of Specially Designated Nationals (SDNs), its property has not been subject to any blocking and the new restrictions primarily relate to the ability of US persons to participate in future long-term financing transactions of the Group.

We currently understand that, pursuant to the materials published by the U.S. Department of Treasury:

  • Any debt or equity instruments of Gazprombank Group issued prior to 16 July 2014 are not subject to any restrictions and may continue to be dealt in as previously by any persons.
  • With respect to debt or equity instruments issued on 16 July 2014 or thereafter, U.S. persons are prohibited from transacting in, providing financing for or otherwise dealing in those instruments if they have maturity of longer than 90 days. New instruments with a maturity of 90 days or less are not subject to these restrictions.
  • For derivative transactions whose value is linked to the underlying asset constituting debt with a maturity of longer than 90 days or equity issued by Gazprombank Group on or after 16 July 2014, there is a general license issued which enables US persons to transact in those derivatives.

All other transactions, including settlements with Gazprombank Group or involving any property in which the Group has an interest are not affected by the new directives. It is also expressly clarified that the new measures do not represent a blocking action and do not require US persons to block Group’s property or interests in property.


Yours sincerely,

GPB International S.A.