The Bank of Russia is taking steps to address the issue of over-indebtedness among large companies. The regulator plans to implement macroprudential add-ons for banks concerning new loans and bonds issued by heavily indebted corporate borrowers. This move is outlined in a draft revision of Bank of Russia Ordinance No. 6411-U, initially dated April 17, 2023.
According to the proposed criteria, companies will be classified as large if their gross debt surpasses 2% of the banking sector’s capital. Additionally, they will be considered heavily indebted if their interest coverage ratio falls below 3.0.
These add-ons will come into effect when both criteria are met and the total debt owed by a borrower and its related parties to a bank exceeds ₽100 billion. The measures aim to curb the over-indebtedness of large corporations while managing credit risks faced by banks.
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