Bank of Russia clarifies requirements for reliability of credits institutions’ capital sources
The Bank of Russia has issued a Regulation which establishes a capital calculation procedure by credit institutions (a new version of Regulation No.
Now the credit institution will have to get from the Bank of Russia confirmation of a proper quality of the contribution in the property of the credit institution, financing without quid pro quo and subordinated instruments to include them in capital calculation. At the same time, recognition of the contribution in credit institution’s property, financing without quid pro quo in the form of real estate, as well as the increase in the value of fixed assets will be possible only after the state registration of the transfer of rights to this property to the credit institution. A number of sources (including income from deferred payment agreements) may be included in the capital only to the portion paid by the counterparty.
In the meantime, to protect citizens from high-risk investments in subordinated bonds of banks, a ban is imposed on recognising in banks’ capital the funds raised from the placement of subordinated bonds in favour of individuals who are not qualified investors (this ban applies to newly issued subordinated bonds).
The list of grounds for refusal to agree on early termination of subordinated instruments agreements has also been extended. In addition, the event related to the conversion of preference shares, as well as the write-off/conversion of subordinated instruments to ordinary shares of banks with a basic licence and non-bank credit institutions was clarified.