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On countercyclical buffer to capital adequacy ratio

28 December 2016
Press release

The Bank of Russia Board of Directors decided to retain the countercyclical capital buffer (CCB) rate for Russian credit institutions at zero per cent of risk weighted assets.

Lending activity in the economy remains moderate. In the banking sector, redistribution of loans is being observed towards ruble-denominated loans, mainly driven by bank revaluating foreign currency loan risks. As of 1 December 2016, the increment in lending receivables in the ruble portfolio of loans to non-credit institutions and households has totalled 3.5% since the start of the year. Adjusted for exchange rate valuation, the foreign currency portfolio of loans to non-credit institutions and households dropped by 11.1% in the same period. The negative values of credit gaps (the credit-to-GDP gap is defined as the difference between the actual ratio of loans adjusted by FX revaluation to GDP and its long-term trend), as well as the performance of other indicators considered in making a decision on the countercyclical buffer, suggest that a declining phase of the credit cycle holds. Given this situation, the Bank of Russia deems it expedient to leave the countercyclical capital buffer unchanged at zero per cent.

The Bank of Russia considers changes to the CCB rate on a quarterly basis. Should the Bank of Russia Board of Directors decide to set the CCB rate at a mark above zero per cent of risk weighted assets, the relevant requirements will become effective no sooner than six months and no later than 12 months from the decision announcement. This will allow the banking sector to timely plan its capital management including the policy of dividends and compensations.

The countercyclical capital buffer has been applied since 1 January 2016 as part of reporting for the first quarter of 2016 in compliance with Basel III approaches stipulated by Article 67 of the Federal Law ‘On the Central Bank of the Russian Federation’ and Bank of Russia Ordinance No. 3855-U, dated 30 November 2015, ‘On Amending Bank of Russia Instruction No. 139-I, Dated 3 December 2012, ‘On Banks’ Required Ratios’.

The Bank of Russia Board of Directors will hold its next CCB rate review meeting in March 2017.

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