Banking regulation: 2020 Q1 bulletin released

In the first quarter, a number of temporary regulatory and supervisory relaxations for credit institutions were introduced, related to the spread of the coronavirus infection. The relaxations were intended to ensure banks retain their potential to lend to the real sector and minimise the negative impact of restrictive anti-pandemic measures.

Also, the Bank of Russia has published a new ordinance outlining the composition of information contained in credit institutions’ reporting and a procedure for its disclosure by the regulator. Released was also an information letter clarifying a procedure and timeframe for submitting information on arrangements regarding the Internal Capital Adequacy Assessment Process (ICAAP) and their outputs. Finally, the regulator elucidated how banks can choose not to apply the enhanced 130% risk ratio to loans for construction, reconstruction and purchases of land for construction.

A number of draft regulations were published in the course of the first quarter:

• implementation of the new Basel III standardised approach to operational exposure to be included into calculated capital adequacy ratios;
• changes to the procedure for calculating credit exposure based on internal ratings under the new standardised Basel III approach;
• specified approaches to the build-up of loss reserves under receivables and contingent loan liabilities; specified elements used to calculate the reserve base, i.e. assets to be recognised following the introduction of IFRS 16 requirements;
• changes to the procedure for calculating capital of credit institutions based on new accounting rules for rental agreements under IFRS 16 (updated and re-issued).