In June, the Bank of Russia published a consultation paper on regulating concentration risks that have considerably grown in certain banks over the past few years. The document proposes to amend the regulation gradually, from 2025 to 2030, and to provide banks with concentration risk management tools to help them achieve the ratio targets.
A draft regulation on the extended timeframe for recognition of losses associated with frozen assets has been finalized and discussed with market participants. The regulation is scheduled to become effective by the end of 2024 (a temporary decision is currently in force).
The Banking Standards Committee has been established. These standards will facilitate the dissemination of best practices in provision of financial services. The mortgage lending standard is expected to be adopted this year to help counter misconduct in the market.
As foreign exchange risk became a source of substantial losses for certain banks in 2022, new approaches to its regulation were introduced in July 2024. The changes will help reduce the excessive dependency of banks on forward transactions used to lower foreign exchange risk (as they may be unavailable or very expensive in stress conditions). The regulations to prevent underestimations of foreign exchange and market risks through scheme-based and ‘low-quality’ forward transactions will come into effect in October.
The Bank of Russia’s plans for the near future include putting forward changes in provisioning for retail loans and factoring for public discussion. These changes have been finalized taking into account the opinion of market participants. In addition, the regulator will publish the results of the assessment of the actual impact of the regulation of internal capital adequacy assessment processes. The document will highlight strategic areas for developing requirements for these processes and supervisory assessment of their quality.
More details are available in the Banking Regulation Review for 2024 Q2.
Preview photo: Igor Akimov / Shutterstock / Fotodom