GENERAL MEETING OF SHAREHOLDERSGENERAL MEETING OF SHAREHOLDERS

The General Meeting of Shareholders is the supreme governing body of VTB Bank. Any holder of ordinary shares may exercise the right to participate directly in the management of the Bank by voting on the agenda of the General Meeting of Shareholders. Preference shares carry voting rights only in special cases, as stipulated by law.

We treat the organisation and conduct of the General Meeting of Shareholders very seriously, and we use every available communication channel to inform all of our shareholders about when the meeting is to be held and about the procedure for participating in it. Shareholders may take part in a meeting of shareholders either in person (in the event that an in-person meeting is held) or through absentee voting. All shareholders of VTB Bank have access to the convenient e-voting system developed by the Bank’s registrar, VTB Registrar.

The decision to convene a General Meeting of Shareholders is taken by the Supervisory Council. In accordance with applicable Russian laws and the Bank’s Charter, information about the date and venue of the General Meeting of Shareholders, as well as the record date for shareholders eligible to participate, is published on VTB’s website and is also distributed through the VTB Shareholder application. During the time frame specified by law, shareholders can review materials for the General Meeting of Shareholders on the Bank’s website or in person at Shareholder Liaison Centres in Moscow, St. Petersburg and Yekaterinburg. When voting electronically, the materials for meetings are also available through the mobile application and in each user’s personal account on VTB Registrar’s website.

In 2020, the General Meeting of Shareholders was held in the form of absentee voting in accordance with the recommendations of the Bank of Russia; despite this, however, the number of meeting participants increased by 78% compared with the year before.

2020 ANNUAL GENERAL MEETING OF SHAREHOLDERS (AGM)

Due to the COVID-19 pandemic in 2020, the procedure for regulating corporate relations and the timing of shareholder meetings changed. In 2020, joint-stock companies were permitted to hold annual general meetings of shareholders in the form of absentee voting; in addition, the deadline for holding meetings was extended until 30 September.

At the same time, the Bank of Russia, in its letter No. IN-06-28/54 dated 9 April 2020 on Holding Annual General Meetings and the Distribution of Profits in 2020, recommended that financial institutions hold their annual general meetings at the end of August or in September 2020, and that those companies that had already decided to hold their meeting by 30 June 2020 consider the feasibility of changing the date of their annual general meeting.

Guided by the recommendations of the Bank of Russia and the growing health risk, the Supervisory Council decided on 14 April 2020 to annul its earlier decision to hold the Annual General Meeting of Shareholders in the form of an in-person meeting on 3 June 2020 in St. Petersburg. By decision of the Supervisory Council, the Annual General Meeting of VTB Shareholders was held by absentee voting on 24 September 2020.

CHANGING THE TIMING OF THE AGM

Shortly before the Annual General Meeting of Shareholders, VTB developed and launched a special website. The site presented materials on the agenda that were subject to mandatory disclosure as well as a considerable amount of additional information: management statements, videos, presentations, an interactive annual report and a sustainability report, a guide for shareholders, a dividend calculator and a quiz. The website also published daily information on the number of shareholders who took part in the voting. More than 9 thousand users visited the site during the meeting.

During the voting period, the Shareholder Liaison Centres in Moscow, St. Petersburg and Yekaterinburg were available for shareholders for in-person visits and consultations. The centres enabled shareholders to study the materials for the meeting and to use terminals to take part in electronic voting. In addition, the employees of the centres were available to elaborate on the agenda and the meeting’s draft decisions for shareholders. More than 30% of requests made during the preparation of the annual meeting were related to dividends.

In the event that shareholders were unable to take part in electronic voting, they could contact one of the branches or divisions of VTB Registrar, send instructions through a nominee holder or complete a paper ballot.

In preparation for the annual meeting, the Bank took a number of additional measures. In particular, online training was organised for more than 20 thousand front-line employees on interaction with shareholders and on the procedure for holding a shareholders meeting. This made it possible to provide qualified explanations to all shareholders who contacted VTB branches.

The annual report on the work of the Shareholders Consultative Council, which is usually included in the list of reports provided at in-person annual meetings, was presented in the format of a webinar in 2020, with some 4.5 thousand users viewing the presentation online.

NUMBER OF PARTICIPANTS OF THE ANNUAL GENERAL MEETING
SHARE OF SHAREHOLDERS WHO VOTED ELECTRONICALLY AT THE ANNUAL MEETING

Absentee voting on agenda items for the annual meeting took place from 1 to 24 September 2020. A total of 4,191 VTB shareholders took part in the meeting, 98% of whom used electronic voting through the mobile app or on the VTB Registrar website. The number of participants increased by 78% from the previous year.

Shareholders who participated in the Annual General Meeting of Shareholders took part in absentee voting on 18 agenda items:

  1. Approval of VTB Bank’s Annual Report;
  2. Approval of VTB Bank’s annual financial statements;
  3. Approval of VTB Bank’s profit allocation for 2019;
  4. Approval of the allocation of VTB Bank’s retained earnings from previous years;
  5. The amount, terms and form of the 2019 dividend payment and the record date to determine eligibility to receive dividends;
  6. The payment (declaration) of dividends for Type 1 preference shares; the amount, terms and form of the dividend payment; and the establishment of the record date to determine eligibility to receive dividends;
  7. The remuneration of Supervisory Council members who are not state employees, in accordance with VTB Bank’s bylaws;
  8. The remuneration of Statutory Audit Commission members who are not state employees, in accordance with VTB Bank’s bylaws;
  9. The number of VTB Bank Supervisory Council members;
  10. The election of VTB Bank Supervisory Council members;
  11. The number of VTB Bank Statutory Audit Commission members;
  12. The election of VTB Bank Statutory Audit Commission members;
  13. Approval of the VTB Bank auditor;
  14. Approval of a new edition of VTB Bank’s Charter;
  15. Approval of a new edition of the Regulation on VTB Bank’s Supervisory Council;
  16. Approval of a new edition of the Regulation on VTB Bank’s Management Board;
  17. Approval of a new edition of the Regulation on VTB Bank’s Statutory Audit Commission;
  18. VTB Bank’s participation in the Big Data Association.

The meeting elected a new Supervisory Council and a new Statutory Audit Commission. As in the previous year, the members of both bodies included two representatives of the Shareholders Consultative Council as well as representatives of minority shareholders (Otkritie Group and the State Oil Fund of the Republic of Azerbaijan).

Shareholders agreed to the following distribution of the Bank’s profit for 2019:

DISTRIBUTION OF THE BANK’S PROFIT FOR 2019, RUB BILLION

Grounds for the distribution of VTB Bank’s profit for 2019

Upon adopting a decision on the distribution of the Bank’s net profit, the Annual General Meeting of Shareholders voted for the payment of regular dividends in the amount of 10.0% of the Bank’s IFRS consolidated net profit (10.2% of the Bank’s RAS net profit). The amount of dividend payments on the Bank’s outstanding shares for 2019 amounted to RUB 20.12 billion, which per share amounted to the following:

  • RUB 0.00077345337561138 per ordinary share with a par value of RUB 0.01;
  • RUB 0.000193614774199896 per Type 1 registered preference share with a par value of RUB 0.01;
  • RUB 0.00193614774199896 per Type 2 registered preference share with a par value of RUB 0.1.

The decrease in the dividend payout ratio was a necessary measure that enabled the Bank to make it through the economic downturn in 2020 while retaining the potential for further growth and the achievement of strategic goals. Plans to generate capital, which depends on the Bank’s net profit, were complicated in 2020 due to the situation in the Russian economy and the banking sector caused by the COVID-19 pandemic. When approving recommendations for the Annual General Meeting of Shareholders on the payment of dividends, the Bank’s Supervisory Council took into account the Bank’s capital requirements to comply with the regulations of the Bank of Russia, as well as for sustainable business development and strategy implementation.

The amount of dividend payment for each type of Bank shares for 2019 was calculated based on the principle of equalising returns on all three types of shares. For ordinary shares, the average annual market value of the Bank’s shares on Moscow Exchange for 2019 was used; for Type 1 and Type 2 preference shares, the par value of the shares was used. The dividend yield for each type of shares was 1.94%.

By decision of the Annual General Meeting of Shareholders, part of the Bank’s net profit was transferred to the Bank’s reserve fund, since in accordance with Article 35 of the Federal Law on Joint-Stock Companies, the Bank must make annual contributions to the reserve fund in the amount of at least 5% of the net profit from the reporting year until the fund reaches 5% of the charter capital. Due to the fact that, as of 31 December 2019, the size of the reserve fund was less than 5% of the charter capital, the Bank allocated RUB 2.6 billion, or 1.3% of RAS net profit, to the reserve fund at the end of 2019, bringing the fund to 5% of the Bank’s charter capital.

Part of the net profit earned in 2019 – in the amount of RUB 7.7 billion, or 3.9% of net profit for distribution – was used to cover the loss in balance sheet account 10901 (Uncovered Loss) that arose as a result of the transition from RAS to accounting in accordance with International Financial Reporting Standards (IFRS) 9 Financial Instruments. By decision of the Annual General Meeting of Shareholders, the majority of this loss was covered by retained earnings from previous years.

The Annual General Meeting of Shareholders decided to distribute the Bank’s retained earnings from previous years as follows:

  • VTB Bank’s retained earnings from previous years, total RUB 349,300,947,164.24
  • Deductions for the payment of dividends on Type 1 registered preference shares RUB 4,376,602,353.66
  • Deductions to cover losses incurred by VTB Bank in 2019 as a result of the transition, in accordance with the regulations of the Bank of Russia, to accounting using International Financial Reporting Standards (IFRS) 9 Financial Instruments RUB 344,924,344,810.58

The Bank’s retained earnings, which, following the distribution of net profit for 2019, amounted to RUB 166.7 billion, or 84.6% of the net profit for distribution, will be used, by decision of the Annual General Meeting of Shareholders, to ensure business growth and to maintain the Bank’s capital adequacy in accordance with the requirements of the Bank of Russia.

Ernst & Young was approved as the auditor of the Bank’s 2020 financial statements. The shareholders also approved new editions of bylaws, including the Bank’s Charter. Pursuant to a decision of the General Meeting of Shareholders, the Bank’s legal address was changed to 11a Degtyarnyy Pereulok, St. Petersburg, 191144, Russia.