The National Depository Center (NDC), Russia's only settlement depository servicing the full range of debt and equity securities of Russian issuers, announced today the results of a general meeting of NDC members held Dec. 23. The participants unanimously approved the following approaches to the reorganization of NDC into a joint stock company:
- Type of a joint stock company in which NDC is to be reorganized: closed joint stock company (CJSC);
- Share distribution among NDC members: in proportion to the number of votes at an NDC general meeting as of the date of the decision on NDC’s reorganization into a joint stock company;
- The charter capital is to be established in accordance with the clause “Capital and Reserves” of NDC’s financial statement as of the last reporting date before the decision on NDC’s reorganization into a joint stock company. The charter capital will amount to RUR 1,505,920,000 and will be divided to 150,592 common inscribed shares with RUR10,000 nominal value each. Thirteen shares will represent one vote.
The terms of and procedure for carrying out an inventory and the preparation of a transfer protocol were approved. In accordance with this the transfer protocol will be prepared by March 31, 2009 in accordance with the results of the inventory. The methods of evaluation of the transferred property and liabilities will be specified.
The plan for NDC’s reorganization into a joint stock company for Q1 2009 was approved. NDC’s director has been authorized to take all measures included in the plan.
The meeting participants nominated Nikolay Egorov, Director, NDC, and Eddie Astanin, Deputy Director, NDC, as the candidates to the Board of Directors of Settlement Depository Company CJSC.
The general meeting reviewed a report by NDC’s director on preliminary results for 2008 and information on the course of implementation of NDC’s Technological Platform Modernization Program. NDC’s income and expense budget and NDC’s capital investment budget for 2009 were approved. The participants in the meeting reviewed corrected budgets of NDC Technological Platform Modernization Program.
Nikolay Egorov, NDC Director, commenting on NDC’s preliminary results for 2008 and parameters of upcoming reorganization, said: “Today’s decision on the basic terms of reorganization is not a decision on reorganization; that will be made in spring. The main result for 2008 is the fact that NDC confirmed its position as the largest depository, also holding a position of the leading settlement depository in Russia’s financial market. NDC’s share in aggregate volume of assets on deposit in all Russian settlement depositories for 1H 2008 amounted to 62%[i]. We expect that despite the complicated conditions of the current year, NDC will hit its target with regard to its net profit.In a situation in which competition is growing, NDC continues to pay special attention to improvement of its corporate governance and to development of new services, and to increase its influence in the Russian market for settlement and depository services.”
Extension of service range
NDC consistently implements strategic plans supporting extension of its range of services and improved quality of service.
As a settlement depository in the MICEX Group, NDC has implemented a unique new settlement technology. Since March 17, 2008, MICEX has offered a service which allows transactions to be conducted and obligations fulfilled on ordinary clearing deals through Delivery Versus Payment (DVP) settlements in real time. This means that traders can conclude settlements during a single trading session. On Aug. 6, 2008, NDC registered 29 gross settlement transactions with a value of RUR1.706 billion, a single-day record.
NDC, MICEX and MICEX Settlement House successfully launched a technology supporting the Bank of Russia’s direct REPO settlements on corporate Eurobonds on DVP terms on the OTC market. For 2008 NDC serviced 26 issues of corporate bonds by 16 major foreign issuers. Currently, NDC services 93 issues of Eurobonds by 43 foreign issuers which are held on deposit on NDC's account with Clearstream Banking including 52 issues which are included in the Bank of Russia's Lombard List.
NDC is working on improvement of interdepository interaction with DCC (NDC-DCC “Bridge”) extending the list of securities admitted to the NDC-DCC “Bridge”. The number of securities admitted to the “Bridge” has expanded five-fold within the year. Currently 133 issues of securities can be processed through the “Bridge”.
NDC actively uses the Speedy Settlement Scheme (SSS). The turnover of SSS settlements between NDC and ING Wholesale Banking reached RUR13.14 billion, a maximum monthly level reached in September 2008. Total market value of securities transferred by means of SSS for the period from November 6, 2007 to November 1, 2008 amounted to RUR73.28 billion.
In 2008 NDC expanded electronic documents interchange (EDI) having achieved agreements with 10 registrars to join EDI system. EDI operations with joint stock company registers for 11 months of 2008 amounted to 82.5% of all operations.
In December 2008 NDC presented eClearSettle, a new functional technological platform which has been evaluated positively by its customers. The company plans to provide its clients with trial access to the full range of inventory operations through eClearSettle system.
Independent qualified opinion on NDC’s risk level allows NDC customers, participants and other stakeholders to be confident in NDC internal controls and risk management procedures’ compliance with appropriate standards.
An audit conducted in 2008 by Thomas Murray, an international rating agency, specializing in risk assessment connected with central depositories and capital markets, affirmed NDC’s rating at AA-, which means very low risk. In 2008 NDC improved its indicators for financial and operational risks, and counterparty risk. Results of an independent operating audit of the company’s operations held by Deloitte & Touche CIS CJSC in April 2008 were also taken into consideration.
Thus with regard to risk assessment NDC has been included in a number of elite international central depositories and can be compared with the central depositories of Western Europe, Brasil, South Africa, Japan and the US.
NDC signed an insurance agreement for cover among the highest for Russian financial institutions, at US$50 million. Including NDC’s own self-insurance funds, the total value of NDC’s financial liabilities cover is more than US$110 million, the biggest sum among Russian settlement depositories and is comparable with the insurance covers of the biggest Russian banks.
Financial results and key operating indicators
It is expected that for 2008, NDC will hit its net profit target.
In 2008 NDC’s total equity according to Russian Accounting Standards exceeded its target sum of RUR1.5 billion. For the first nine months of 2008 it rose 27% to RUR1.722 billion (compared with RUR1.355 billion as of Jan. 1, 2008). Thus NDC’s target capitalization in the amount of RUR1.5 billion, approved by a decision of the company’s general meeting held Dec. 22, 2005 has been achieved ahead of schedule (according to the decision the target capitalization was to have been reached by Jan. 1, 2010).
NDC revenues for January-September 2008 reached RUR924.2 million. This is 11% more than for the first nine months of 2007 (RUR834.4 million). The company’s net profit reached RUR370.2 million or 18.4% more than for the comparable period of 2007 (RUR312.8 million).
Securities turnover (the market value of securities transferred in inventory operations) rose 13.6% for the first nine months of 2008, against the comparable period of 2007, to reach RUR45.8 trillion (RUR40.265 trillion in January-September 2007). Shares constituted 38.4% of securities involved in inventory operations, which is a significant part of NDC’s securities turnover.
The number of inventory operations conducted by NDC for January-September 2008 amounted to almost 2 million. This was 8.6% more than for the first nine months of 2007 (1,515,648 operations with shares or 78% of all inventory operations).
Not-for-Profit Partnership “The National Depository Center” is the largest settlement depository in Russia, servicing the full range of debt and equity securities of Russian issuers. NDC provides storage of global certificates and depository accounting for 99% of corporate bond issues, sub-federal and municipal bond issues. It services 100% of transactions conducted in the federal bond and the Bank of Russia bond markets, more than 99% of transactions conducted in the corporate and regional bond markets, and more than 99% of stock exchange transactions with equities and OTC trades. The international rating agency Thomas Murray has assigned NDC an АА- rating as a central depository. NDC is Russia's national numbering agency, and the substituting numbering agency for the CIS, authorized to assign the international ISIN and CFI codes.
Among NDC’s founders are MICEX and Bank of Russia (the founders’ shares in the property of NDC are 46.67% and 39.35% respectively, and in the votes 50.16% and 42.3% respectively). Members include GPB OJSC (Gazprombank), Evrofinans Mosnarbank, Rosbank, VTB Bank (Vneshtorgbank), Bank of Moscow, Rossiysky Credit Bank, Vnesheconombank, ING Bank Eurasia, JP Morgan Bank International LLC, UniCredit, Deutsche Bank, and Sberbank. The Partnership also has stakes in Depository Clearing Company CJSC (37.29%), in Settlement Depository Company CJSC (28.54%) and in Bank "National Clearing Centre" CJSC (0.27%).
For further information about NDC: www.ndc.ru, or NDC Public Affairs Department: +7 495 232 0910, .
[i] According to PARTAD Infrastructure Institute data