Bank of Russia’s decisions on banking regulation
1. For banks to have more liquidity management opportunities, the Bank of Russia has amended the dates when systemically important banks should start complying with the liquidity coverage ratio using their own assets.
The Bank of Russia has changed the dates when systemically important credit institutions (SICIs) shall begin to comply with the liquidity coverage ratio (LCR) only using their own highly liquid assets.
This decision will decrease the regulatory pressure on SICIs’ lending policies and banking product pricing.
According to the earlier schedule, SICIs were to comply with the LCR on their own (without using the Bank of Russia irrevocable credit line (ICL) at the level of 60% from 1 January 2025 and 70% from 1 July 2025. The Bank of Russia’s decision has postponed for six months the date when the LCR (without using the ICL) shall reach 60%: the currently effective level of 50% will continue to apply from 1 January through 30 June 2025 and increase to 60% beginning on 1 July 2025.
Furthermore, the Bank of Russia will discuss with SICIs whether it is reasonable to introduce the national LCR (that will replace the currently effective LCR) earlier, namely from 1 July 2025 instead of 1 January 2026.
2. In order to limit large corporates’ debt burden and credit risks, the Bank of Russia Board of Directors has approved a new version of the regulation on macroprudential add-ons.
The new add-ons will be applicable to increases in banks’ claims on highly leveraged large corporate borrowers.1 This tool will limit bank financing to highly leveraged large companies and help banks accumulate capital buffers to cover corporate credit risks.
After the regulation is registered by the Russian Ministry of Justice, the Bank of Russia Board of Directors will decide on the levels of the macroprudential add-ons. This decision may become effective no earlier than 1 April 2025.
Making a decision on the parameters of the macroprudential add-ons, the Bank of Russia will take into account corporate lending dynamics and large businesses’ systemic risks. Recent statistics show a slower increase in bank lending: the growth rate of outstanding corporate loans dropped from 2.3% in October to 0.8% in November.
The Bank of Russia will closely monitor the pace of further deceleration in the next few months. As appropriate, the regulator is ready to adjust the target dates of the countercyclical capital buffer formation (0.25% from 1 February 2025 and 0.5% from 1 July 2025) if this is reasonable for banks to be able to maintain a balanced growth rate of lending to the economy.
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