RUXX Board Will Not Add Tinkoff - Credit Systems to the Index Pending Review

 RUXX Board Will Not Add Tinkoff - Credit Systems to the Index Pending Review

PR Newswire

NEW YORK, Oct. 25, 2013

NEW YORK, Oct. 25, 2013 /PRNewswire/ --The board of RUXX, the financial index
that tracks Russian stocks traded on international exchanges, made a decision
today not to add Tinkoff – Credit Systems to the list of components pending
careful evaluation of the GDR's performance and financial soundness.

Russian online bank Tinkoff – Credit Systems (TCS) went public in London this
week at high valuations. TCS GDR was priced at 17.5, which is 4.8x the bank
equity at the moment. The price-to-book multiple of TCS was substantially
higher than that of the major Russian blue chips because of lack of
Russia-based financial stocks and smart marketing by the bank's owner,
eccentric businessman Oleg Tinkoff.

According to the RUXX statement, "TCS has many unresolved issues that can
affect the company's valuation and performance. According to the Index
criteria, we will not add Tinkoff until it's clear that the company is able to
hit its targets." Michael Thompson, senior analyst for RUXX, says: "Russian
regulators introduced more rigid requirements for consumer debt, citing
dangers of a debt crisis. Almost entire loan portfolio of TCS is comprised of
micro and small loans that are most sensitive to economic fluctuations."

Another issue that could affect the valuation and profitability of the
company, according to the RUXX research note, is increased competition in the
small loans marketplace. TCS imposes high effective interest rates – which can
be as high as 40% including commissions and fees, rising to 70% if a customer
misses one or more monthly payments. Once Russian state-owned banks with their
unlimited resources and access to the whole county will enter the small loans
market, TCS profitability is likely to decrease.

RUXX (^RUXX), a cap-weighted index launched in 2007, is comprised of over 30
Russian stocks traded on international exchanges and includes Gazprom, Norilsk
Nickel, CTC Media and other Russian equities. Its list of components is
reviewed monthly.

RUXX Index
John Foley
+1 347 708 0336


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