2014

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

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
John.Foley@ruxxindex.com 
www.ruxxindex.com
+1 347 708 0336

SOURCE RUXX Index



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