The CBR Has Modified the Methodology of Calculation of Commercial Banks’ Compulsory Standards

In compliance with the ruling, first, the public corporations’ participation in legal entities’ authorized capital is not viewed as a justification for unification of these entities under the group of affiliated borrowers for the purpose of calculation of the ratio of the maximum amount of risk per one borrower or a group of affiliated borrowers (Н6). This standard is computed as the ratio of the bank’s requirements to the group of affiliated borrowers to the bank’s capital. In all likelihood, because of the financial crisis and the public corporations entering numerous companies’ capital, some banks have found it hard to comply with Н6 standard. So, this decision can be regarded as a softening of the regulation for such banks. We believe that this measure should be temporary, as the failure to meet the credit risk ratio with regard to the group of affiliated borrowers may result in banks suffering substantial losses.

Second, the CBR decided that as far as credit requirements to open-end joint-stock companies that match the natural monopolist criteria, provided their inclusion in Section 2 of the list of strategic enterprises and strategic joint-stock companies, as well as provided their papers have been included in the CBR’s Lombard List, the risk coefficient for such borrowers is to be set at the level of 50%. This measure is likewise aimed at softening of restrictions for banks with regard to crediting such enterprises from the perspective of the credit risk ratio.

P. Trounin, Head, Department for Monetary and Credit Policy