Loan auctions are mostly held in case of a stable structural liquidity deficit. They alleviate the load on main monetary policy operations (weekly repo auctions) and marketable collateral. Currently, the monetary policy framework only includes auctions to provide three-month loans secured by credit claims.
Should the Bank of Russia decide to hold a loan auction, information on its terms and conditions is posted in the What’s New section on the Bank of Russia website. Such information includes:
- loan auction date;
- loan settlement date;
- loan maturity date;
- deadline for the submission of bids;
- bidding parameters (including the minimum bid acceptable rate, the maximum allotment amount, etc.);
- auction manner (Dutch or American).
To participate in a loan auction, credit institutions submit their bids to the Bank of Russia in accordance with the document exchange procedure (ссылка на раздел основного текста). A credit institution shall have the right to withdraw its bid, if necessary, before the bidding deadline.
Competitive bids with an indicated interest rate (in % p.a.), as well as non-competitive bids without indicated interest rate can be accepted for a loan auction. Non-competitive bids are accepted if it is stipulated in the terms and conditions of a loan auction. That said, a cap might be set on the share of non-competitive bids placed by a credit institution.
The Bank of Russia checks that bids placed at a loan auction comply with requirements of Chapter 19 of the Terms and Conditions for the Issue and Redemption of Bank of Russia Loans Backed by Securities or Credit Claims.
The Bank of Russia relies on the forecast of liquidity factors when determining the maximum allotment amount. As a result of a valid loan auction, all non-competitive bids (if accepted under the terms and conditions of the loan auction) and competitive bids at the rate higher than or equal to the cut-off rate are closed. Should the demand indicated in the competitive cut-off rate bids exceed the available loans, these bids are closed pro rata. After the bidding is completed, the Bank of Russia determines the cut-off rate for the maximum allotment amount or recognises the loan auction as invalid.
Loans extended in the follow-up to a loan auction are issued at a floating interest rate, that is, the rate changes in accordance with the Bank of Russia key rate’s movements.
For the minimum bid acceptable interest rates on loan auctions refer to the Interest Rates section on the Bank of Russia website.
Information on the results of a loan auction or on the recognition of a loan auction as invalid is posted in the What’s New section of the Bank of Russia website.
On the loan settlement day the Bank of Russia checks the credit institution for eligibility. In the follow-up to the check the Bank of Russia may deny loans to a credit institution, reduce the number and/or volume of loans extended.
No later than the business day following the loan settlement day, the Bank of Russia sends the credit institution a Loan Issue Notification, which bears information about the main terms and conditions of the loan and collateral.
Statistics of loan auction announcements and results are available at: