The RF CB introduced some alterations into the Guidelines “On the mandatory normatives for banks”

On 30 June, the Bank of Russia announced that on 19 June its Board of Directors had introduced a number of alterations into the Guidelines “On the mandatory normatives for banks”. The Guidelines represent one of the key documents for Russian credit institutions, because any failure to comply with the mandatory normatives formulated therein may result in a bank’s license being recalled.


The principal alterations are as follows:
  1. The lower threshold for a credit institution’s internal funds (or capital proper) is raised significantly – from 500 thousand euro to 180 million rubles.
  2. For purposes of estimating the sufficiency normative (N1) for a bank’s internal funds (or capital proper) and the maximum risk per borrower of group of related borrowers (N6), a risk coefficient of 70 % is established for those housing mortgage credits which satisfy the approved set of relevant terms.
  3. For the credit claims under the housing mortgage credits (or loans) issued to the military servicemen participating in the funded housing mortgage system, a downward risk coefficient of 10% is established.
  4. The upward risk coefficient (1.3), formerly applied for calculating N1 value for the claims presented to the credit institutions belonging to the same banking group as the creditor bank, is now abolished.
  5. The approaches to estimating risks (credit and liquidity risks) applied to banks – residents of the Russian Federation are now extended also to Vneshekonombank –which, in accordance with the Federal Law “On the Bank for Development”, is a state corporation carrying banking operations as part of its functions.
  6. The credit claims to banks – residents of the Russian Federation, which arise with regard to the transactions concluded in the period from 14 October 2008 through 31 December 2009, in the part refundable by the Bank of Russia are placed in the category of risk-free assets.
  7. The calculation of the instant liquidity normative (N2) includes the funds deposited with banks – residents of the Russian Federation for the period of one day or at short notice and kept on the balance sheet for a period of no more than 10 calendar days, the fulfillment of obligations against which under the agreements is envisaged to occur no later than on the day following the day of notice, and on condition that these assets are recognized as Category I loans.
  8. For purposes of estimating the current liquidity normative (N3), the debt liabilities of international banks for development are to be classified as liquid assets.
  9. For purposes of estimating normatives N2 and N3, the claims for interest on Category II assets are placed in the category of ‘highly liquid’ and ‘liquid’, in accordance with Provision of the Bank of Russia of 26 March 2004, No 254-P, and those for Category I and II assets – in accordance with Provision of the Bank of Russia of 20 March 2006, No 283-P.
On the whole, these alteration are of a specifying character, and they are designed to bring existing legislation in conformity with the real circumstances of the current crisis. In our opinion, these amendments are aimed, on the one hand, at promoting concentration within Russia’s banking system, and on the other – at a certain softening of the established normatives during the period of crisis.

P. V. Trunin – Candidate of Economic Sciences, Head of the Department for Monetary Policy

Wednesday, 01.07.2009