Following discussions with market participants, the Bank of Russia has finalized certain provisions regarding the regulation of credit concentration risks. This development comes as part of ongoing efforts to reform these regulations.
The regulator has decided to maintain a decreased risk weight of 50% for state-owned companies with revenues exceeding 2% of GDP when calculating concentration ratios. This will remain effective until January 1, 2029. By then, the concentration limit for such companies will be determined by the N30 ratio, which will be calculated by systemically important banks.
Adjustments have also been made to the criteria for operational independence in identifying a group of related borrowers (GRB). Specifically, requirements for the composition of the board of directors have been eased. Additionally, if mutual financial obligations among companies within one GRB are minor, they will be considered operationally independent.
Further specifications have been introduced regarding subsidiaries and dependent companies of a bank that may be excluded from calculating the maximum risk ratio for related parties (N25). Financial subsidiaries providing insignificant financing for bank owners’ businesses will be excluded from this calculation.
The Bank of Russia continues to work on introducing regulations aimed at reducing concentration risks. It is anticipated that some changes, including the gradual introduction of calculations per securities issuer under reverse repo agreements and inclusion of claims for accrued income on loans in calculations, along with criteria for operational independence, will be implemented as early as 2025.
