Press Service

The Central Bank of the Russian Federation (Bank of Russia)

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;

On required reserves of credit institutions

On 25 November 2016, the Bank of Russia decided to update the structure of credit institutions’ reservable liabilities included in the calculation of required reserves. This decision implies that reservable liabilities will not include liabilities under subordinated instruments, and also issued noncallable bonds with maturities over three years. Due to amendments introduced to the compilation of daily balance sheets by credit institutions, the required reserve calculation methodology was also updated. Additionally, a decision was made to ease measures applied to credit institutions for the violation of required reserve ratios.

The updated structure of reservable liabilities will replace the inefficient measure designed to exempt from creating reserves corporate deposits and bonded loans with over-three-year maturities, but subject to early redemption. This decision will enhance the transparency of the calculation of required reserves and will rule out any chance for credit institutions to show the structure of reservable liabilities incorrectly. Given the banking sector’s transition to the structural liquidity surplus, the decision amending the structure of reservable liabilities will create a more stable demand among banks for funds in correspondent accounts with the Bank of Russia. Additionally, this decision will allow to partly absorb the inflow of liquidity generated by using the Reserve Fund to finance the federal budget deficit.

The possibility to ease measures applied to credit institutions for under-created required reserves or for failure to average required reserves will stimulate banks to notify the Bank Russia on their own initiative about the non-observance of required reserve ratios.

The Bank of Russia Board of Directors approved a respective Bank of Russia Ordinance ‘On Amending Bank of Russia Regulation No. 507-P, Dated 1 December 2015, ‘On Credit Institutions’ Required Reserves’ (hereinafter, the Ordinance). From 1 January 2017, required reserve ratios for long-term liabilities will equal the currently existing required reserve ratios for respective liabilities (the introduced ratios will be in effect to regulate required reserves for January 2017); the required reserve averaging ratio used by banks and non-bank credit institutions remains unchanged

The Ordinance is subject to state registration by the Ministry of Justice of the Russian Federation. Amendments stipulated by the Ordinance will be effective starting the calculation of required reserves for January 2017.

The Bank of Russia Board of Directors has approved the required reserves averaging schedule for 2017 which is available on the Bank of Russia website.

25 November 2016

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