Training on sovereign risk credit analysis, October 24

2016 Transparency Report of ACRA (JSC)

“We are committed to providing the Russian rating services market with high-quality product by building up a highly professional, technologically advanced and transparent business, consistently vested with confidence by the investment community.”

The Analytical Credit Rating Agency team

The Transparency Report contains information on operations of the Analytical Credit Rating Agency over the period from August 251, 2016, to December 31, 2016.

The Transparency Report has been prepared in accordance with requirements of Section 4 of Article 13 of Federal Law No 222-FZ. This document is subject to publication in the Compliance section of ACRA’s website.

1 The date when the Analytical Credit Rating Agency was included into the Register of Credit Rating Agencies of the Bank of Russia.

CEO Address

Dear partners, clients, and shareholders!

We are happy to present to you the first ever transparency report of the Analytical Credit Rating Agency (Joint-Stock Company).

The year 2016 was very important for the Agency. It was the period of formation, evolvement and first achievements, the time when ACRA proved its full compliance with regulatory requirements for the rating sector and was hence rewarded by being the first rating agency to be put on the Bank of Russia register. Last year saw the Agency proudly start its success story by assigning first credit ratings, releasing an impressive number of research materials, and launching the Financial Stress Index (ACRA FSI) for Russia.

In 2016, the Agency carried out a tremendous amount of work preparing and updating methodologies. Thus, the Methodology Committee approved methodologies for rating assignment to banks and bank groups, corporates, insurance companies, regional and municipal authorities, asset management entities, and individual issues of financial instruments. Moreover, a draft methodology for assigning credit ratings to holding companies and a draft methodology for assigning credit ratings to international credit organizations and other supranational development institutions have been published to collect feedback from the market. In addition, a brand new methodology for rating assignment to structured finance products is being prepared for release at the moment.

ACRA sees its mission in offering high-quality research products to Russian issuers, fully in line with the legislation and professional criteria set out in the Agency’s Code of Ethics and Professional Conduct. The pivotal principles of integrity, quality and transparency of the rating process, coupled with uncompromised commitment to independence and prevention of conflicts of interest, are the guidelines ACRA follows in its strive for leading positions on the Russian rating services market. And we do hope that this report will be regarded as yet another confirmation of our adherence to the highest possible quality standards.

Ekaterina Trofimova,

1. About ACRA

1.1. Shareholder Structure

The Analytical Credit Rating Agency (Joint-Stock Company), ACRA (JSC) was founded on November 20, 2015, with its 27 shareholders being Russian corporate and financial institutions each contributing a 3.7037% stake to its charter capital (RUB 111’112 thousand), which totals RUB 3’000’024 thousand.

ACRA (JSC) shareholders are:

  • VTB Bank (PJSC)
  • “Bank “Saint-Petersburg” PJSC
  • Bank GPB (JSC)
  • Renova Group (CJSC)
  • ONEXIM Group (LLC)
  • Kommersant (JSC)
  • Leader AM (CJSC)
  • PJSC “Moscow Exchange MICEX-RTS”
  • Credit Bank of Moscow (PJSC)
  • Blagosostoyanie NSPF
  • Otkritie Holding (OJSC)
  • Promsvyazbank PJSC
  • Industrial Investors Group (LLC)
  • AO Raiffeisenbank
  • Rosgosstrakh Insurance Company (PJSC)
  • JSC Russian Agricultural Bank
  • PJSC Future FG
  • Sberbank of Russia (PJSC)
  • PAO Severstal
  • PJSC Sovcombank
  • TMK (PJSC)
  • AO UniCredit Bank

1.2. Governing Bodies and Management

The General Meeting of Shareholders, the Board of Directors and the CEO serve as the governing bodies of ACRA (JSC), hereinafter — ACRA. Clause 1.1 of the Report contains information on the ACRA’s shareholding structure.

The Board of Directors comprises five members, with four of them being independent directors. The fifth board member is the CEO of ACRA.

The Board of Directors includes:

  • Karl Johansson (USA), Chairman of the Board of Directors, independent director;
  • Thomas Missong (Austria), independent director;
  • Anouar Hassoune (Luxembourg), independent director;
  • Vincent Truglia (USA), independent director;
  • Ekaterina Trofimova (Russia), Member of the Board of Directors, Chief executive officer.

The Board of Directors has general management of ACRA. The only exception are issues considered to be above the competence of the Board of Directors in compliance with ACRA’s charter and the Federal Law “On joint stock companies”. The CEO, who is a sole executive body of ACRA (JSC) and accountable to the Board of Directors, is held responsible for managing daily operations at ACRA.  

1.3. Company Structure

Structurally, ACRA consists of the following business units:

  • Analytical Unit;
  • Methodology Group;
  • Compliance and Internal Control Service;
  • Operational Unit;
  • Business Development Directorate.

The Analytical Unit is made up by research groups focusing on specific types of rated objects:

  • Corporate Ratings Group;
  • Financial Institutions Ratings Group;
  • Sovereign and Regional Ratings Group;
  • Structured Financial Instruments Ratings Group.

The Analytical Unit also includes the Research and Forecasting Group, which, among other things, is responsible for preparation of analytical research materials on macroeconomics and individual industries.

2. Internal Control

Internal control at ACRA is carried out by the governing bodies, Compliance and Internal Control Service, rating committees, methodology committees, heads of departments, and ACRA employees within the scope of their competences and in line with ACRA internal documents.

The governing bodies and all ACRA employees are subject to the Federal Law No 222-FZ2, other statutory acts of the Russian Federation, the Charter of ACRA, and ACRA internal documents.

ACRA’s internal control pursues the following objectives:

  • Ensuring credibility of assigned credit ratings and independence of credit rating activities from any political and/or economic influence;
  • Identifying and preventing conflicts of interest, as well as managing them;
  • Ensuring the completeness, reliability and timeliness of compiling and providing reports to internal and external users;
  • Risk management in the course of ACRA activities, including the regulatory risk;
  • Ensuring the effectiveness of ACRA activities.

2 Federal Law of 13 July 2015 No 222-FZ On the Activities of Credit Rating Agencies in the Russian Federation, On the Amendment to Article 76.1 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and the invalidation of certain provisions of legal acts of the Russian Federation

2.1. Code of Ethics and Professional Conduct, and documentation supporting ACRA activities

ACRA’s Board of Directors approved the Code of Ethics and Professional Conduct, which outlines the fundamental principles the Agency’s employees adhere to while performing rating activities and providing additional services.

The requirements of the Code of Ethics and Professional Conduct are taken into account in the course of preparing internal policies, regulations and procedures at ACRA.

All ACRA employees are required to familiarize themselves at the moment of hiring and on an annual basis with the Code of Ethics and Professional Conduct (, and applicable policies and regulations.

2.2. Board of Directors

In terms of internal control, the Board of Directors has been vested with the following powers:

  1. Evaluation of effectiveness of systems controlling credibility of assigned credit ratings;

  2. Evaluation of effectiveness of measures and procedures established to prevent, identify, manage, and disclose conflicts of interests;

  3. Control over compliance with the Federal Law No 222-FZ and the regulations of the Bank of Russia adopted in accordance with this Federal Law, and the documents of the credit rating agency, including effectiveness of the methodology review function;

  4. Approving the plans for the Compliance and Internal Control Service;

  5. Studying the reports presented by the Compliance and Internal Control Service;

  6. Making decisions on measures to be taken in order to minimize discovered risks, approves plans of elimination of deficiencies and observations revealed during inspections;

  7. Approving ACRA’s internal documents aimed at setting up internal control at ACRA and aimed at increase in its effectiveness.

2.3. Compliance and Internal Control Service

The Compliance and Internal Control Service is an ACRA structural unit organizationally subordinate to the CEO and functionally subordinate and accountable for its activities to ACRA’s Board of Directors. The Service is headed by the Director for Compliance.

The Service is an internal control body in accordance with the requirements of the Federal Law No. 222-FZ.

ACRA’s CEO provides the conditions for unimpeded and efficient performance of the Compliance and Internal Control Service. The Service operates based on several principles, which include:

1. Independence and impartiality

  • ACRA makes sure that the Compliance and Internal Control Service is able to perform its functions without bias and without interference by ACRA employees who are not Service officers, governance bodies, as well as shareholders and persons who exercise control over or have a significant influence on ACRA;
  • The Compliance and Internal Control Service officers may not combine their activities with work in other ACRA units that may affect their independence, nor can such employees be employed in the governance bodies. The Service officers shall not be allowed any part-time employment in other organizations;
  • The Director for Compliance has the right to freely interact with the Board of Directors (or independent members of the Board, if necessary) and to report on his/her own initiative to the Board of Directors (or independent members of the Board, if necessary) about issues and problems arising in the course of Service functioning, coupled with proposals for their solution;
  • The Compliance and Internal Control Service controls the effectiveness of measures taken by business units and governance bodies of ACRA as a result of inspections and aimed at reducing identified risks;
  • The Compliance and Internal Control Service does not perform activities subject to inspections, except an independent inspection by an audit organization or an inspection by the Board of Directors;
  • ACRA ensures that the Compliance and Internal Control Service performs its duties without interference by the governance bodies, business units and employees of ACRA who are not Service officers, as well by shareholders and persons exercising control over or having significant influence on ACRA;
  • The remuneration of the Compliance and Internal Control Service officers shall not depend on ACRA’s financial results;
  • The Compliance and Internal Control Service develops internal documents, plans, methods and processes for carrying out verification activities independently and shall not coordinate them with inspected units.

2. Objectivity and ethical standards

  • The Compliance and Internal Control Service officers carry out their activities based on the Code of Ethics and Professional Conduct of ACRA and should avoid any influence that a potential conflict of interest may have on objectivity of their professional judgment in the course of internal control implementation.

3. Continuity of activities

  • The Compliance and Internal Control Service operates on a permanent basis and is part of ACRA’s organizational structure;
  • The Compliance and Internal Control Service has permanent personnel only and includes only full-time employees;
  • The number of officers working for the Compliance and Internal Control Service and the latter’s technological support and structure must be in line with the scale of ACRA’s business.

4. Professional competence

  • Upon the appointment and during the entire tenure the Director for Compliance must comply with business reputation requirements established by Part 1 of Article 7 of the Federal Law No. 222-FZ;
  • Professional competence of the Compliance and Internal Control Service officers is maintained at a proper level by means of regular mandatory training in accordance with the training plan for employees at ACRA.

The Compliance and Internal Control Service reports to the Board of Directors on a regular basis on the results of inspections and identified risks and violations requiring appropriate measures.

2.4. The Rating Committee

The Rating Committee is a group of Rating Analysts, including the Chairman of the Rating Committee, who collectively decide on Rating Actions.

An employee of the Analytical unit, with the required skills and professional background, certified under the requirements of the internal documents and having worked at ACRA for a defined period, can serve as the Rating Committee Member.

A Rating Committee is formed with due regard for requirement of non-involvement of the members of the Rating Committee in actual or potential Conflict of Interests. Control over non-involvement of the members of the Rating Committee in actual or potential Conflict of Interests is imposed on the Chairman of the Rating Committee and the Compliance and Internal Control Service.

2.5. Methodology Group and Methodology Committee

The Methodology Group is an ACRA permanent structural unit responsible for development, testing, validation and updating of methodologies, as well as for supervision over application of methodologies in the course of rating activities, and for assessment of accuracy of such implementation. The Methodology Group is organizationally subordinate to the CEO and functionally subordinate and accountable for its activities to the Board of Directors.

Approvals and revisions of methodologies are subject to decisions taken by the Methodology Committee, a permanent collegial body formed by members of the Methodology Group.

Validation and testing of methodologies are performed by a Methodology Group member, who is not part of the Methodology Committee and does not participate in development of methodologies.

The Methodology Group regularly reports on its activities to the Board of Directors.

3. Results of annual inspection of ACRA carried out by the internal control body

The rating activities performed by ACRA are in line with the Russian legislation and ACRA’s own internal documents.

The rating process is subject to control procedures aimed at identifying conflicts of interest and independence of rating activities from political or economic influence, as required by the Federal Law No. 222-FZ, the Bank of Russia regulations, and ACRA internal documents. The control procedures currently in place are assessed as adequate. No conflicts of interest have been discovered in the course of the rating process.

The inspection revealed certain deficiencies in terms of composition and structure of control procedures, with these deficiencies being related to the fact that operating and analytical processes at the Agency are still at the development stage. A relevant plan aimed at elimination of those deficiencies has been approved by the Board of Directors and is being implemented.

4. Rating analysts allocation statistics

Table 1. Number of rating analysts grouped by rated entity types by end-2016 (all analysts employed full-time)

Corporates 6
Financial institutions 9
Sovereign, regional and municipal authorities 4
Structures finance products 4
Total 23

Table 2. Number of rating analysts grouped by rating actions (credit ratings assignment and revision) over the reporting period

  Corporate Ratings Group Financial Institutions Ratings Group Sovereign and Regional Ratings Group Structured Finance Instrument Ratings Group
Credit rating assignment 3 6 3 1
Credit rating revision - - - -


All rating analysts at ACRA (except the Structured Financial Instruments Ratings Group) may participate in the assignment and revision of credit ratings. No ratings were revised during the reporting period, as ACRA launched rating activities in August 2016.

5. Rating analysts rotation

5.1. Requirements to rotation of lead rating analysts

ACRA ensures a procedure of rotation (replacement of lead rating analysts who participate in preparation of a credit rating or credit rating outlook with regard to one rated entity).

Lead rating analysts are not allowed to participate in rating actions pertaining to a given rated entity for more than four consecutive years and for more than five consecutive years in relation to sovereign credit ratings.

Lead rating analysts who have terminated their participation in rating actions related to one rated entity due to rotation are not allowed to participate in rating actions related to this rated entity for two years following the rotation.

5.2. Data on rotation of lead rating analysts in 2016

There was no rotation of lead rating analysts in 2016.

6. Documentation storage policy

ACRA stores internal data and documents used in the course of credit rating assignment as long as required by the Bank of Russia, but not less than 5 years, ensuring integrity, accuracy, and reliability of these documents in order to provide for verifiability of rating actions accuracy. All internal data and documents are kept on file to ensure objectivity of ACRA’s rating activities, as well as to back up the processes of internal audit, compliance control, and quality control.

ACRA ensures storage of information within the timeframes defined by the Bank of Russia’s requirements, including the following information and data:

  • Information on composition of rating committees, sets of documents and data related to the resolution on implementation of a rating action, as well as rating committees’ meeting minutes;
  • All initial information which lay the basis for rating analysis, including documents and information provided by rated entities, emails, rating meeting minutes, other information;
  • All versions of methodologies, models, validation reports;
  • Data related to interaction with clients in the framework of concluding agreements, as well as agreements on rating actions, and agreements on additional services;
  • Communications with regulatory bodies;
  • Documentation of governing bodies;
  • ACRA internal documents.

Any information and data, pertaining to the analytical activities, development and validation of ACRA methodologies, are to be stored on the dedicated IT resources separated from those used for holding information on agreements and on sums of compensations for the ratings assigned.  ACRA IT resources can only be accessed, subject to the “Chinese Wall” and “Need-to-know” principles3.

ACRA has an Information Security Manager who is responsible for the implementation of information security measures, for ensuring information confidentiality within ACRA, as well as for compliance with requirements of the legislation of the Russian Federation and Bank of Russia requirements to securing and protecting information obtained in the course of activities of ACRA .

3 Please refer to the Policy on handling Confidential Information at

7. Information on revenues

Table 3. Information on revenues for the period from August 25, 2016, to December 31, 2016

ACRA revenues from rating activities, RUB th 14,763
ACRA revenues from additional services4 1, RUB th 450
ACRA 2016 revenues (total), RUB th 15,213


4The List of Additional Services is available at

8. Mandatory training of rating analysts

To ensure the necessary competence level, rating analysts completed the required number of mandatory training hours in 2016, as outlined in ACRA internal documents.

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