S&P Viewpoint

Analysis of the findings of this study shows that the level of disclosure of information of the 30 largest Ukrainian banks is relatively low, and is about 42% on average. This figure exceeded 50% for just eight banks, and the highest figure was 62% (see table 2). Of the three study blocks, the "ownership and corporate structure" and "financial and operational information" blocks were disclosed to a comparatively greater extent than the "supervisory board and management structure and processes" block, which has a notably lower disclosure score of 24%.

The results obtained cause particular concern, heightened by the dominant role that the banking system plays in Ukraine's financial system. This situation has developed as a consequence of both purely economic and regulatory factors.

The principal economic cause is that Ukrainian banks (in particular, the 30 banks examined) are characterized by a high ownership concentration, (2) which does not stimulate them to disclose information in the absence of a large number of small shareholders who would demand this kind of information from them, and who might, in the aggregate, affect decisions (at least through scandals leading to a fall in stock prices on an exchange). Many private banks, owned by a few owners, select some typical model of behavior. Privatbank, the largest Ukrainian bank in terms of assets, which is controlled by two individuals, and did not publish an annual report for 2005, can be cited as an example. On the other hand, the overwhelming majority of banks that have entered, or are preparing to enter, the bond or portfolio investments markets have prepared and published annual reports. This corresponds to our general hypothesis that the need for capital is a powerful economic stimulus to raise the level of transparency, because that level may be perceived by investors as one of the factors in determining the cost of capital for a bank (risk premium).

Table 2

Information Transparency Scores Of Ukrainian Banks, 2006
Rank	Bank	Total score (%)	Ownership and corporate structure (%)	Financial and operational information (%)	Supervisory board and management structure and processes (%)
1	Ukreximbank	62.0	74.2	65.3	42.1
2	Kreschatik	61.6	61.7	69.5	40.2
3	TAS-Kommerzbank	61.5	76.5	60.1	47.3
4	Kredobank	56.8	60.5	66.4	26.8
5	Vabank	54.0	52.6	62.5	32.7
6	Ukrsotsbank	53.6	62.2	55.1	37.7
7	Ukrsibbank	53.3	59.0	57.5	34.8
8	Forum	50.8	60.0	58.2	20.5
9	Nadra	49.2	53.3	51.7	37.5
10	First Ukrainian International Bank	48.9	54.8	53.6	28.5
11	Kreditprombank	46.8	48.1	53.2	28.3
12	Pivdenniy	46.7	48.7	55.0	22.1
13	Ukrgazbank	45.5	46.1	50.1	32.1
14	Index bank	44.5	45.4	53.0	20.7
15	Privatbank	42.7	45.5	53.3	10.7
16	Finance and Credit	40.4	36.2	54.8	6.4
17	Ukrprombank	36.9	21.8	53.2	9.6
18	Mriya	36.9	52.6	33.2	25.3
19	Oshchadbank	36.2	46.4	42.6	10.4
20	Rodovid	34.4	37.6	35.6	27.4
21	Industrialbank	34.0	38.4	34.2	28.3
22	Pravex bank	33.4	40.6	35.3	19.3
23	Brokbusinessbank	31.7	30.5	42.0	5.7
24	OTP (previously Raiffeisenbank Ukraine)	31.5	45.8	34.3	7.6
25	Alfa-bank	31.1	30.8	34.0	23.8
26	Raiffeisen bank Aval	30.6	55.4	17.9	33.3
27	ING Bank Ukraina	29.8	37.0	35.6	5.7
28	Dongorbank	26.7	5.1	43.6	7.6
29	Prominvestbank	22.9	4.0	34.3	14.9
30	Imexbank	21.2	20.6	23.2	16.4
	Mean	41.9	45.0	47.3	23.5
	Standard deviation	11.7	17.2	13.1	12.0

The restrictions imposed on the National Bank of Ukraine as the banking oversight authority, relative to its powers dealing with the transparency of information regarding particular banks, were the principal regulatory cause. The essence of the problem is that, according to the Law "On Banks and Banking," information collected by the National Bank of Ukraine within the framework of its oversight activity (including prudential reporting) is a banking secret and is not subject to public disclosure. In this connection, the National Bank publishes only consolidated quarterly information across all banks on its official Web site and in its monthly print publication, "Visnyk NBU" ("The Herald of the NBU"). This information comprises the structure of assets, liabilities, capital, and income and costs, without any notes or comments.

At the same time, the National Bank of Ukraine exercises quite strict after-the-fact monitoring of the reliability of information published by the banks. This process is not public, however, and investors, including private individuals, do not know about this monitoring system. The use of Standard & Poor's methodology, which assumes that one of the sources of information must be the regulatory bodies themselves (which in the case of the National Bank of Ukraine was not observed in relation to any bank), within the framework of this study, reduced both the transparency subscore for that source and the total score. Although the majority of the banks voluntarily published on their own Web sites annual financial reports in accordance with the National Bank of Ukraine's requirements, this could not, according to our methodology, be regarded as filling up the information vacuum by the central bank itself. This is because the National Bank does not formally impose demands on the banks regarding publication of complete reporting, and only imposes the requirement for this information to be filed with it and for the simultaneous publication of a brief extract of the reporting, but with the opinion of an independent auditor. (3) The resolution of this problem belongs to the sphere of legislative change.

That information placed on the sites of agencies empowered by the SSMSC is not always complete and timely is a second regulatory reason for the low value of the transparency score for this source. In particular, on the date the study was done, information was lacking on banks registered as limited liability companies, (4) and information on some banks registered as closed joint stock companies was incomplete or out of date. In practice, the most potent factor acting to increase transparency was not requirements for the publication of an annual report or financials, but the conditions for the registration of public bond issues. According to SSMSC requirements, (5) issuers must include in the bond issue prospectus a substantial amount of diverse information that is important to a potential investor in the bonds and to shareholders and clients of the bank. Such issue prospectuses often can be accessed by the public on the sites of securities exchanges or sites of structures associated with the exchanges equated within the framework of this study to regulatory bodies.

Three banks: Ukreximbank (62.0%), Kreschatik (61.6%), and TAS-Kommerzbank (61.5%) demonstrated the best information transparency results.

The first of these, the Ukreximbank, is a public joint stock company, 100% of whose shares belong to the state represented by the Cabinet of Ministers of Ukraine. The bank specializes in import-export operations. This specialization has driven the high standards of transparency required for working with foreign partners. The bank publishes annual financials, including consolidated ones, in Ukrainian and English, according to National Bank of Ukraine standards and IFRS with all the required forms and notes. Ernst & Young Ukraine audited the financials, and rendered an unqualified positive opinion. The reporting is accessible on the bank's site and as a printed booklet. The bank's annual report is prepared in English and contains information on achievements and plans. The bank publishes information quarterly on its financial condition (balance sheet) and the results of activities (profit and loss statement), as well as relevant notes on interim reporting, with indication of the adequacy of regulatory capital and return on assets. Semiannual reporting is also accessible on the bank's site in accordance with IFRS and with the opinion of an independent auditor. In addition, the bank has been issuing bonds since 2004, and the state, interested in reducing the risk premium, has been monitoring the corporate governance standards required for obtaining a high credit rating as well as for the appropriate level of transparency. Ukreximbank's information transparency score could have been even higher if the state regulatory bodies had published information on the bank. As of the date the study was done, information on the bank on the SSMSC site was limited. This reduced the bank's overall score.

The Kiev City Council is a shareholder owning 51.2% of the shares of the Kreschatik Bank. The bank has high scores across all of the blocks of the study. The bank's annual report, which meets all the highest standards, both in Ukrainian and English, was published in electronic (online) form and in print. The report contains financial statements with all required appendices and an unqualified auditor's opinion (Ernst & Young Ukraine in accordance with IFRS, and the APiK Co. in accordance with the National Bank of Ukraine's standards), and in addition, information on the bank's plans of operation for the following year. Information on the bank's owners, its managers, risks, observance of prudential requirements, and other important factors was presented fully. In addition, in 2006 the bank was preparing for the issuance of Eurobonds. This was conducive to improvement of the bank's transparency. The Kreschatik Bank's transparency score, as in the case of Ukreximbank's, could have been higher had the state regulatory bodies published information about the institution.

TAS-Kommerzbank's high score was determined by its appropriate corporate policy, and because the bank was the first participant in the International Finance Corporation (IFC) project to upgrade corporate governance in Ukraine's banking sector. This refers not just to the information transparency of TAS-Kommerzbank, but also to the transparency of the TAS financial and investment group. Along with Taz-Kommerzbank, this group includes TAS-Investbank (33rd place by volume of assets), TAS-Businessbank (132nd place by volume of assets), and three TAS insurance companies. The bank has filed an annual report that contains information on the entire financial and investment group, including consolidated financial statements confirmed by an independent auditor (PricewaterhouseCoopers Ukraine). In addition, the bank furnishes annual financial statements in the form of mandatory forms and notes (but without an auditor's opinion). The annual report contains information on the structure of the bank, its mission, objectives, and aims, operating prospects for the following year, its risks and principles of its management, observance of economic ratios, and other important aspects. Like Ukreximbank, TAS-Kommerzbank has attracted foreign financing through the placement of loan participation notes (LPNs), in connection with which it prepared an investment memorandum containing information required for an understanding of the bank's activities and the risks associated with them. In addition, the bank regularly publishes interim (quarterly) reporting in the scope called for by the National Bank of Ukraine, placing it on its own site.

It is not just how many corporate banks have disclosed data about themselves to a sufficient degree that is important for investors, but the aggregate weight of the assets of these banks as well. The study's conclusions in this area have proven to be disappointing: Banks whose overall transparency score exceeds 50% account for only 28% of the total assets of the banks investigated. This means that investors do not have sufficient information about more than 72% of the assets of the banks included in the study. The cause of this phenomenon is that the largest banks, which control the lion's share of the total net assets, proved to have a below-average transparency score, in some cases substantially below.

The 50% transparency threshold was set at the level minimally required to create investor confidence. If the transparency threshold value is set at the empirical average of 41.9%, which is the relative weight of the assets of the banks, the portion of the list that exceeds this threshold increases to nearly 57%.

The study demonstrated the absence of a correlation between the size of a bank (amount of its total net assets) and the level of its information transparency (total transparency score). This refutes the hypothesis of the presence of an association between the size of a bank and the level of its transparency (see chart 1).

 Chart 1

The hypothesis of the presence of a correlation between a bank's "retail level," represented by the amount of both, funds of individuals deposited in the bank and the loans made to them, and the total information transparency score, also was not confirmed by this study. Unfortunately, it also was not possible to test the correctness of the hypothesis of the presence of an association between the level of a bank's transparency and the size of its credit spread (the risk premium for placement of the bank's debt securities on the open market), due to the insufficient sample size. Of the 30 banks studied, only five placed bonds in external markets. Nevertheless, there is a relationship between the level of transparency and the very fact of bond borrowing on the market. This relationship is expressed in the fact that the average transparency level for banks that issue bonds (domestic or foreign) is 8-9 p.p. higher. For banks that have Eurobonds, it is an additional 2-3 p.p. higher. In addition, the increase in transparency level takes place across all information disclosure blocks (see table 3).

Table 3

Increase In Transparency With the Issuance Of Bonds
Group of banks	Total score (%)	Ownership and corporate structure (%)	Financial and operational information (%)	Supervisory board and management structure and processes (%)
Entire sample	41.9	45	47.3	23.5
Banks from the sample that issued bonds in 2005 and Q1 2006	49.5	54	54.4	31.2
Including banks issuing Eurobonds*	52.1	58.8	56.6	32.6
*In the calculations made in the table, LPNs were considered, and not CLNs.

The issues most disclosed in this block are those related to the number of shares issued and ownership structure, as well as detailed press releases devoted to the latest bank events.

The rather high level of disclosure of beneficial owners of banks merits particular attention. This was the result of trends in the Ukrainian banking system in recent years. First of all, under conditions of high ownership concentration, the actual owners of large banks become well known, and do not have any reason not to formally name themselves (for example, Privatbank, Brokbusinessbank, and TAS-Kommerzbank). The next factor responsible for the high level of disclosure of owners is the sale of large numbers of shares to non-Ukrainians. This renders the ownership structure transparent (for example, Raiffeisenbank Aval, Ukrsotsbank, OTP, ING Bank Ukraina, and Mriya). Regulatory requirements also act as a stimulus, in particular, the National Bank of Ukraine's instructions for the preparation of bank annual statements, (6) according to which banks must disclose the owners of all substantial stakes (the so-called "first level of ownership"). These requirements "nudge" the banks to disclose the actual owners, though they do not ensure such disclosure. The National Bank of Ukraine is setting a consistent policy of introducing changes into national legislation with the aim of obliging banks to disclose beneficial owners as well (the so-called "ultimate level of ownership". These comprise both individuals and public companies. It should be noted that the oversight body itself most likely does have this information, (7) but may not be able to disclose it publicly. This resulted in a reduction in the total score for this block across the three sources of information used in this study.

The transparency of the ownership structure of certain Ukrainian banks still remains a pressing problem. The most opaque in the context of ownership structure are Dongorbank and Prominvestbank. All that is known about them is that their owners are some individuals.

The degree of disclosure of affiliated structures and their ownership is not high enough. There are differences in terminology among IFRS, bank accounting standards, and the requirements of prudential oversight, involving the interpretation of the concepts "subsidiary company," "associated company," and "affiliated company." This complicates both the disclosure and understanding of information.

Issues related to the a bank's articles of association, the presence or absence of a corporate governance code, ownership of other assets by the bank's shareholders, and cross ownership are the least-disclosed information in this block. The disclosure of these issues is not regulated by the regulatory bodies, and therefore the level of disclosure is governed by the overall level of corporate culture in the banks. In addition, of the number of banks included in this group, the shares of only nine are quoted on Ukraine's securities market. (8) Taking into account the developing character of the corporate governance system in Ukraine and its relatively short history, the rapid incorporation of better models of worldwide experience should not be expected at this point.

Information on bank products and services is the issue most disclosed in this block. This is not at all surprising. Information on bank strategy also is relatively well represented. Issues relating to annual statements prepared according to the National Bank of Ukraine's requirements and annual statements prepared in accordance with IFRS also are those most disclosed. Of the 30 banks studied, 14 prepared and published statements in accordance with IFRS, and 23 furnished financials according to National Bank of Ukraine standards in open (Web site) access. Thus, many of the banks did not include a complete financial statement in the annual report or publish an annual report as a separate brochure for presentation to all interested parties. At the same time, it should be noted that all the banks did furnish a complete package of statements (with notes and auditor's opinion) to the National Bank of Ukraine. They also published the four reporting forms mentioned (without notes) in official publications, and the "Holos Ukrainy" (Voice of Ukraine) and "The Uriadoviy Kurier" newspapers before July 1, 2006, fulfilling the requirements of article 70 of the Law of Ukraine "On Banks and Banking." However, an important point is that just a selected portion of the financial information is subject to publication in these venues. In addition, these newspapers do not have Web sites, so the investor inevitably has a problem seeking such information after the date of its publication.

The National Bank of Ukraine's annual financial reporting requirements are based on IFRS, but have a number of special features. The National Bank requires from a bank a mandatory preface to the financials, including quite extensive information: its name, its form of legal organizational, its non-Ukrainian investors, management's share in the charter capital, owners with substantial participation in the bank, its specialization, its management structure, the responsibility and functions of the Supervisory Board and Management Board, its strategic aim, types of activities to be carried out, planned, and those which have been terminated, structural reorganizations (mergers, acquisitions, etc.), a description of each segment of its activities, its accounting policy broken down by balance sheet and profit and loss statement items, its risk management policy, its fulfillment of prudential ratios, restrictions on ownerships of assets, and number of employees.

The reporting forms themselves, as required by the National Bank of Ukraine, are standard for IFRS: balance sheet, profit and loss statement, cash flow statement (indirect method), and statement of equity and changes in equity. The accounting policy for preparing these forms also coincides for the most part, including the methods of consolidating assets and results. The most positive factor for the investor is that the National Bank of Ukraine has codified the mandatory notes to the financials. This enhances the comparability of the reporting of different banks. (9) Full annual statements must contain 33 notes. The National Bank of Ukraine requires even greater disclosure in some of these notes than does IFRS.

Practically all banks provide information on the auditing firm that has done the mandatory annual audit of the bank. As a rule, banks engage two different auditing firms to render an opinion on reporting prepared according to different standards (Ukreximbank, which engages the same Big Four firm to audit the all its financials, is an exception). The majority of the banks provide the opinion of both auditors in the annual reports and on Web sites.

The banks' accounting policy and the methods of evaluating assets are quite fully disclosed. The level of disclosure of the structure of the banks' revenues and expenditures is high.

The high transparency score for information regarding a bank's reserves and the quality of its assets should be noted in particular. This is entirely to the credit of the National Bank of Ukraine, which included these issues in the list of information to be disclosed obligatorily, and in a volume exceeding the similar requirements of IFRS.

The capital adequacy ratios and data on observance of the prudential ratios established by the National Bank of Ukraine are somewhat more poorly disclosed. (10) Risk policy, which often includes a more or less comprehensive analysis of the banks' risks and policy for managing them, is presented fully and in considerable detail. In this light, the influence of the prudential oversight authority, which published the methodological document on risk management, should also be noted affirmatively. (11) The majority of the banks adhere to the National Bank of Ukraine's classification of risks, consisting of six financial and three nonfinancial risks. This adherence promotes unification of information about the level of risks.

The group of issues relating to detailed information concerning investment plans and future revenue forecasts are least disclosed in this block. To all appearances, this a result of the notion that these issues are a commercial secret, especially when such information is included in business plans. This is related to the reluctance of banks to give competitors and the state a complete picture of their business, which, in the view of banks, can have negative consequences, especially in the light of the Ukrainian corporate wars in recent years.

Full information on related-party deals also is poorly disclosed. This is because the National Bank of Ukraine requires the disclosure of aggregated, blind information, such as the weighted average interest rate on loans and deposits of related parties. The study methodology rewards the presence of detailed terms and amounts as well as documentary formulated policies for the credit transaction with affiliate persons.

This block is characterized by a low level of disclosure. The level of information transparency is nearly twice as low as for the first and second blocks. This block includes issues not disclosed by any of the banks represented in the sample.

The information most disclosed in this block is the compositions of members of the supervisory boards, and information on the chair of the supervisory board, as well as biographical data on senior management. Issues with a middle level of disclosure are those touching on more detailed information on members of Supervisory Boards, as well as those concerning the role of the supervisory board in the bank. Issues touching on remuneration of bank management (individually for each manager) also fell within this group. Information on remuneration is generally disclosed in issue prospectuses; however, it is not contained in annual reports or on the banks' sites.

None of the banks discloses information on the following issues:

• Regulatory documents, regulating the work of internal audit divisions, distinct from the audit committee;
• The contract with the chief manager;
• A brief or detailed review of supervisory board meetings (minutes indicating the voting results on each agenda question);
• How decisions are made regarding remunerations of the bank's executives (not members of the Supervisory Board); and
• The extent to which remuneration of management is tied to the bank's financial indicators.

Overall for this block, as well as for the ownership and corporate structure block, changes in the transparency index should not be expected in the near future. This is because the process of working out the operational structure and mechanisms of the top corporate governance bodies is a long and laborious one. Chart 2 lists the most- and least-disclosed issues by block.

 Chart 2

Analysis of the disclosure of information according to the three sources of information examined in the study: annual reports, Web sites, and regulatory filings, showed that the level of information disclosure by the various sources is not uniform (see table 4).

Table 4

Informativeness Of Various Sources
Sources of information disclosure	Total score (%)	Ownership and corporate structure (%)	Financial and operational information (%)	Supervisory board and management structure and processes (%)
Annual reports	23.5	14.7	33.0	5.9
Web sites	40.9	41.7	50.3	13.2
Regulatory filings	21.6	37.5	15.8	24.3

Bank Web sites are the most informative source of information, both as a whole and in particular for the "ownership and corporate structure" and "financial and operational information" blocks. Bank Web sites also were found to be the most convenient sources of information for users from the language environment point of view. The majority of the banks present information in two languages (Ukrainian/Russian, Ukrainian/English, or Russian/English), and some, in three. This is a substantial difference between the sites and other sources of information, which are presented either exclusively in Ukrainian (the "regulatory filings" source) or in Ukrainian and English (the "annual report" source (12) ).

Considering the fact that the annual report (if available), annual financial statements, and information on the current state of affairs at the bank are often placed on Web sites, it can be stated with confidence that Web sites are a principal channel through which banks provide information to investors and clients.

The study results indicate that the variability of the level of transparency is greatest in the annual report. In addition, the information disclosure score for the "ownership and corporate structure" block in annual reports was zero in 20 out of the 30 banks studied. This means that two out of three banks either failed to furnish an annual report at all, or that information irrelevant for investors was published in the annual report. The high standard deviation of the informativeness score for this source is an indicator that Ukrainian banks have no uniform understanding of what an annual report should be.

Further analysis showed that one of the causes of such a situation was the confusion of the concepts "annual report" and "annual statements" on the part of some of the banks included in the sample. The National Bank of Ukraine's requirements relating to the previously mentioned annual financial and consolidated statements are quite detailed. The National Bank requires the banks to provide a preface to the annual statements, four standard reporting forms, and 33 special notes. The unification of these requirements on the whole has a positive influence on the transparency of banking activities, as the investor receives comparable information from different banks and for different periods. (13) However, the other side of the coin of this requirement is that banks publishing annual financial reporting have often failed to publish an annual report, because the obligatory part of the preface to the reporting already contains the bulk of the information from the list of information traditionally included in the annual report. This strategy was chosen by Privatbank, Prominvestbank, Oshchadniy, Pivdenniy, Brokbusinessbank, ING Bank Ukraina, and a number of others.

In addition, some banks--Rodovid, Finance and Credit, and Imexbank in particular--have published annual financial statements under the name "annual report" or "annual financial report" without disclosing other information blocks of importance to investors. Because of this national peculiarity only information contained specifically in a bank's annual report was accepted as an "annual report" source in this study. Annual statements, with all the required notes and preface, were classified as a "bank Web site" or "regulatory filings" source of information. (14) This approach to the processing of the information was selected in order to achieve comparability of the results of similar studies relating to different countries, and certainly had an effect on the value of both the individual and the total transparency index.

It should be noted that the banks making up the troika of information transparency leaders of this study furnished comprehensive annual reports. This resulted in the considerable separation of 5 percentage points between them and their "pursuers." Genuine annual reports can be expected to appear only when the information of such reports are demanded by investors, and not just by a regulatory body.

As was already mentioned in the "Principal Findings" section, the lowest transparency score was recorded for the "regulatory filings" information source.

It should be noted that the fact that quarterly and annual financial statements published in accordance with the Law "On Banks and Banking" in the official publications "The Uriadoviy Kurier" and "Holos Ukrainy," were not considered within the framework of the "regulatory filings" source did affect the results of the study. This form of publication was taken into account within the framework of the "bank Web sites" source when it was disclosed on a site. The mechanism of publication of these statements is the reason for this treatment. These statements are published as a promotion without an indication that they are monitored by the National Bank of Ukraine. As already noted, such monitoring does exist; however, it is not public. In this context, the fact of disclosure of information does not translate into increased trust in a bank.

In addition, the National Bank of Ukraine itself, which receives the most complete information from the banks and monitors its reliability quite rigorously, does not disclose most of the information of significance for investors. The reason for this is the requirement of article 60 of the Law of Ukraine "On Banks and Banking," which classifies information about banks and their clients obtained by the National Bank of Ukraine within the framework of the implementation of oversight activities as a banking secret and prohibits its further dissemination.

However, it should be noted that for the "Supervisory Board and management structure and processes" block, publications in the SSMSC editions and on the sites of its authorized agencies, as well as bond issue prospectuses placed on the sites of exchanges and the portals of the trade information systems localized to that source in particular, are the most informative.

The best international practice presumes the uniformity of information disclosure in all sources used by banks' investors and clients. For example, according to Standard & Poor's study of Russian banks, the 10 largest foreign banks had an average transparency score of 78.5%, essentially equal to the means across the three blocks (see table 5).

Table 5

Scores Of Information Transparency Of Largest Foreign Banks Selected For Comparison
Bank	Total (%)	Ownership and corporate structure (%)	Financial and operational information (%)	Board of directors and management makeup and operating procedures (%)
Deutsche Bank	88	79	92	85
ING	81	90	77	79
ABN Amro	80	88	76	81
HSBC	78	79	78	78
Bank of America	78	84	74	82
Citigroup Inc.	78	78	78	79
JPMorgan Chase	78	72	76	86
UBS	78	74	78	79
Royal Bank of Scotland	76	75	75	79
Credit Suisse Group	71	63	75	68
Average	78.5	78	78	79
Note: Scores given as of Aug. 12, 2005, but based on the 2006 list of questions.

There is still substantial room for improvement among Ukraine's banks in the area of information disclosure. This improvement will occur only when there is awareness of the benefits brought by this kind of disclosure; benefits associated with the possibility of attracting a wider circle of investors and clients, and thus reducing the cost of the financial resources attracted.

Disclosure of:

1. The number and par value of issued ordinary shares.

2. The number and par value of other types of issued shares (e.g., preferred, nonvoting).

3. The number and par value of authorized but unissued shares of all types.

4. The identity of the largest shareholder.

5. The number and identity of all shareholders holding more than 10%.

6. The identity of holders of all large stakes (blocking: > 25%; controlling: > 50%).

7. The identity of shareholders holding at least 25% of voting shares in total.

8. The identity of shareholders holding at least 50% of voting shares in total.

9. The identity of shareholders holding at least 75% of voting shares in total.

10. A list of external assets held by the blockholders.

11. Shareholding in the bank by individual senior managers.

12. Shareholding in the bank by individual directors.

13. The description of share classes.

14. A review of shareholders by type.

15. The percentage of cross-ownership.

16. Information about indirect ownership (e.g., convertible instruments).

17. A list of subsidiaries.

Disclosure of:

18. The contents of corporate governance charter/guidelines.

19. The contents of a code of business conduct and ethics.

20. The provision of details about the bank's articles of association, such as changes.

21. A formalized dividend policy.

22. The existence of a review of last shareholders meeting (e.g., general presentation of voting results).

23. Detailed press releases covering last corporate events.

24. Policy on information disclosure.

Disclosure of:

25. The bank's accounting policy.

26. Annual filings to the National Bank of Ukraine for the last year.

27. Quarterly profit and loss statements.

28. Monthly balance sheet statements.

29. Annual financial statements according to an internationally recognized accounting standard (IFRS/U.S. GAAP) without notes.

30. Notes to annual financial statements according to IFRS/U.S. GAAP.

31. An independent auditor's report with regard to annual financial statements according to IFRS/U.S. GAAP.

32. An unqualified (clean) audit opinion with regard to annual financial statements according to IFRS/U.S. GAAP.

33. Formalized policy on related-party lending.

34. Disclosure of related-party transactions (RPTs): sales to/purchases from, payables to/receivables from related parties.

35. Transactions with the companies with the same group.

36. Indication that RPTs are made on market or nonmarket terms.

37. Exact terms of RPTs.

38. Interim (quarterly or semiannual) financial statements according to an internationally recognized accounting standard (IFRS/U.S. GAAP).

39. Notes to such financial statements.

40. Whether these financial statements are audited or at least reviewed.

41. A basic earnings forecast of any kind.

42. A detailed earnings forecast.

43. A segment analysis (results broken down by business line).

44. Revenue structure (detailed breakdown).

45. Cost structure (high degree of detail).

46. The name of the bank's auditing firm.

47. Whether the audit firm is a top-tier auditor.

48. Auditor rotation policy.

49. How much the bank pays in audit fees to the auditor.

50. Whether or not the auditor renders any nonaudit services.

51. Nonaudit fees paid to the auditor.

52. Whether there are consolidated financial statements or whether only the parent or holding company is audited.

53. Methods of asset valuation (including depreciation).

54. Information about reserves.

55. Information about average interest rates on loans, deposits, and promissory notes.

56. Capital adequacy ratios.

57. Information about observing norm ratios states by the National Bank of Ukraine.

58. Liquidity indicators (immediate, current, general, and liquidity gaps).

59. Indicators of concentration (industry, client/shareholder, insider, and so on).

Disclosure of:

60. Details of the products/services provided.

61. Output in physical terms (e.g., number of clients).

62. Efficiency indicators, such as ROCE, ROTA, net interest margin, and so on.

63. A discussion of the bank's strategy.

64. Analysis of the bank's risks (list of risks, their description, and the way they may affect the bank).

65. Risk management policy.

66. Any plans for investment in the coming years.

67. Detailed information about investment plans in the coming year.

68. Asset/capital forecast.

69. An overview of regulatory environment with regard to the industry.

70. The market share for any or all of the bank's businesses.

71. Social reporting (e.g., global reporting initiative).

72. Principles of corporate citizenship.

73. The list of top-five providers of funds (creditors).

74. The list of top-five receivers of funds (borrowers).

75. Information on interbank limits and their availability.

76. Reservation policy.

77. Information about asset quality.

78. Information about creditors with unsatisfied claims.

79. Information about internal controls.

Disclosure of:

80. The list of board members (names/titles).

81. Details about the current employment and position of directors.

82. Other details (previous employment, positions, and education).

83. When each director joined the board.

84. A named chairman listed.

85. Details about role of the supervisory board.

86. List of matters reserved for the board.

87. List of board committees.

88. Names of all members of each existing committee disclosed.

89. The bylaws on internal audit functions besides the audit committee.

90. Information about the ratio of in-person and in absentia board meetings.

91. Attendance record for board meetings.

92. An overview of the last board meeting.

93. A detailed review of board meetings (minutes, including voting results on each item of the agenda).

94. The list of senior managers not on the board of directors.

95. The backgrounds of senior managers.

96. Details of the CEO's contract.

97. The number of shares held in affiliated companies by managers.

Disclosure of:

98. The decision-making process for directors' pay.

99. The specifics of directors' pay, including the salary levels.

100. The form of directors' salaries, such as whether they are in cash or shares.

101. The specifics of pay for directors.

102. The decision-making process for determining managerial (not board) pay.

103. The specifics of managers' (not board) pay, such as salary levels and bonuses.

104. The form of managers' (not board) pay.

105. The specifics of performance-related pay for managers.