The Bank of Russia has announced changes to its banking regulations, impacting systemically important credit institutions (SICIs) and large corporate borrowers. The amendments aim to provide more liquidity management opportunities for banks and address credit risks associated with highly leveraged companies.
In a recent decision, the Bank of Russia adjusted the timeline for SICIs to comply with the liquidity coverage ratio (LCR) using their own highly liquid assets. Originally set to begin at 60% on January 1, 2025, and increase to 70% by July 1, 2025, the new schedule extends the current level of 50% through June 30, 2025. The LCR will then rise to 60% starting July 1, 2025. This adjustment is expected to reduce regulatory pressure on SICIs' lending policies and product pricing.
Additionally, discussions are underway regarding the potential early introduction of a national LCR from July 1, 2025, instead of January 1, 2026.
To manage corporate debt burdens and credit risks better, the Bank of Russia's Board of Directors has approved a revised regulation on macroprudential add-ons. These add-ons will apply to increases in banks' claims on highly leveraged large corporate borrowers. The tool aims to limit bank financing for these companies while helping banks build capital buffers against corporate credit risks.
Once registered by the Russian Ministry of Justice, the Board will determine the levels for these macroprudential add-ons. Implementation could occur no earlier than April 1, 2025. In setting parameters for these add-ons, factors such as corporate lending dynamics and systemic risks will be considered.
Recent data indicates a slowdown in bank lending growth rates; outstanding corporate loans grew by only 0.8% in November compared to October's rate of 2.3%. The Bank of Russia plans to monitor this trend closely over the coming months and may adjust target dates for countercyclical capital buffer formation if necessary.
"Making a decision on the parameters...the Bank of Russia will take into account corporate lending dynamics," states an official release from the institution.
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