BoR Secured Loans (in accordance with the Regulations No. 236-P and No. 312-P) (archive)

Laws and Regulations

In execution of clause 3 of the Federal law «On the Central Bank of the Russian Federation (Bank of Russia») and under clauses 4, 35, 36, 37, 40, 43, 46 and 47 of the mentioned Federal Law, Bank of Russia, as the lender of last resort, organizes the system of refinancing (lending) of credit institutions, establishing the procedure and conditions of refinancing by carrying out operations of refinancing of credit institutions, regulates liquidity of banking system and the right of credit institutions to apply to the Bank of Russia for loans gained to provide credits to clients and fulfill their commitments in conditions of lack of liquidity under the cause 28 of the Federal law «On Banks and Banking Activities». The refinancing operations are conducted under the agreements concluded between the Bank of Russia and the credit institutions in compliance with sections 23, 28 42 and 45 (clause 850) of the Civil Code of the Russian Federation and the Federal Law «On Banks and Banking Activities». The refinancing procedure is described in two documents: The Bank of Russia Regulation No. 236-P, dated August 4, 2003, «On the Procedure for Extending Bank of Russia Loans on securities to Credit Institutions» (hereinafter — Regulation No. 236-P) and the Bank of Russia Regulation No. 312-P, dated November 12, 2007, «On the Procedure for Extending Bank of Russia Loans to Credit Institutions Secured by Assets or Guarantees» (hereinafter — Regulation No. 312-P).

General Description of the Bank of Russia Refinancing (Lending) System

Bank of Russia Secured Loans can be divided into two groups depending on a type of collateral: loans secured by marketable assets (eligible securities for the Bank of Russia Lombard List, loans secured by non-marketable assets (promissory notes issued by the companies from the real sector or their credit claims) or credit institutions’ guaranties.

Types of the Bank of Russia loans and conditions of lending as of 30 September 2018

Loan Term Interest rate, % p.a. Collateral Date of loan extension Regulation
Intraday loans 0 Securities from the Lombard List During a day (T + 0) Regulation No. 236-P;
Promissory notes, credit claims Regulation No. 312-P
Overnight loans 1 calendar day 8.25 Securities from the Lombard List At the end of a day (T+0) Regulation No. 236-P;
Promissory notes, credit claims Regulation No. 312-P
Lombard loans 1 calendar day 8.25 Securities from the Lombard List T+0 Regulation No. 236-P
Loans secured by non-marketable assets or gurantees 1 calendar day 8.25 Promissory notes, credit claims or guarantees T+0 Regulation No. 312-P
From 2 to 549 calendar days 9.00 Promissory notes, credit claims or guarantees T+0 Regulation No. 312-P
3 months Set by auction Credit claims T+2 Regulation No. 312-P

Loans on securities eligible for the Bank of Russia Lombard list (intraday, overnight and lombard loans)

The Bank of Russia extends loans on securities in compliance with the Bank of Russia Regulation No. 236-P.

The Bank of Russia extends intraday and overnight loans to credit institutions automatically and Lombard loans on request (an application for a loan at a fixed rate or an application for participation in a Lombard loan auction).

Intraday loans are extended to credit institutions free of charge, while overnight loans for the purpose of repaying the debt on intraday loan that remains unrepaid by the end of the day are extended at the Bank of Russia overnight interest rate. At present the Bank of Russia guarantees credit institutions the transfer of intraday and overnight loans to their correspondent accounts or sub accounts opened in the settlement system of the Bank of Russia divisions of all Regional Branches and National Banks of the Bank of Russia that process payments electronically.

Bank of Russia Lombard loans may be extended at a fixed rate or by auction and transferred to any bank accounts (correspondent account and/or sub accounts) of a credit institution opened in any Regional Branches or National Banks of the Bank of Russia or in authorized non-bank credit institutions.

Lombard loan auctions are held on schedule. Lombard loans are extended at the following day after the auction. Credit institutions may make both competitive and non-competitive bids for an auction, although the share of non-competitive bids in total bids is limited by the Auction Rules.

The Bank of Russia extends Lombard loans at fixed rates to enable credit institutions efficiently manage their liquidity when using the averaging mechanism to required reserve. A Lombard loan is extended to a credit institution at the day it asks.

For extending Lombard loans the correspondent account opened in authorized non-bank credit institution, the credit institutions submit application forms for participation in Lombard credit auction/application on raising the Lombard loan at a fixed interest rate by using electronic trading system of Joint-Stock Company of the Moscow Interbank Stock Exchange (hereinafter — MICEX electronic trading system) according to the Rules of making transactions with credit institution with use of electronic trading system MICEX concerning deposit and credit operations by the Bank of Russia (approved by Board of directors of MICEX dated 12 of May 2006, coordinated with the Bank of Russia 29.05.2006).

Lombard loans’ extension at a fixed rate depends on MICEX trading sessions, at submission of applications to MICEX electronic trading system in the first session (till 12-00 Moscow time) credits are extended — by 15-00 Moscow time, at submission of applications to MICEX electronic trading system in the second session (till 17-00 Moscow time) — credits are extended by 20-00 Moscow time.

Notices of extending the Bank of Russia loan on securities to the correspondent account opened in authorized non-bank credit institution are represented to the credit institutions by the Regional Branches and National Banks of the Bank of Russia at the place of keeping the correspondent account of the credit institution-borrower.

The collateral of intraday credits, overnights and Lombard credits is pledging (blocking) of securities meeting the following requirements:

1. Issue is included to the Bank of Russia Lombard List;

2. Issue has Bank of Russia scaling factors to calculate cost of securities as collateral against the Bank of Russia loans;

3. Issue is admitted to the MICEX;

4. not less then 7 working days is needed till the maturity date. Maturity date is the nearest of the following dates: date when bonds’ owners are defined to receive par value payment (part of par value) of securities, date when bonds’ owner are defined to receive coupon payments of securities (if from the specified date till the date of coupon payment custody transactions with corresponding securities in authorized depositary were not carried out); repurchase date of the issue by the Bank of Russia.

The account of maintenance is carried out by authorized depositary («National Settlement Depositary» and Dealers at the market of state treasury bills — federal loan bond).

After the conclusion of the agreement on the Bank of Russia loans on securities extension concerning transactions made on MICEX by using MICEX electronic trading system with the purpose of raising credits of Bank of Russia according to the mentioned agreement the credit institution should transfer in advance the securities from the Bank of Russia Lombard List to the section «Is blocked by the Bank of Russia» of the custodian account of the credit institution opened in authorized depositary which corresponds to the account of credit institution, opened in authorized non-bank credit institution. The securities in other sections «Is blocked by the Bank of Russia», corresponding other accounts of the credit institution, cannot be used by the credit organization for raising credits of Bank of Russia on a corresponding account opened in authorized non-bank credit institution.

Requirements for credit institutions — Bank of Russia counterparties

1. belong to the first or the second classification groups under Bank of Russia standard acts (for non-bank credit institutions — Bank of Russia Ordinance No. 766-U, dated March 31, 2000, with amendments; for banks — Bank of Russia Ordinance No. 2005-U, dated April 30, 2008);

2. don’t have shortfall in the required reserves or unpaid finds and should present its calculation of the required reserves;

3. don’t have overdue pecuniary obligations to the Bank of Russia;

4. grant to the Bank of Russia the right under the correspondent account agreement or correspondent sub account agreements to write off funds from its correspondent account and correspondent sub accounts opened in the Bank of Russia (or in authorized non-bank credit institutions) within the amount of the Bank of Russia claims under the loan agreements with the Bank of Russia on the basis of the Bank of Russia collection orders without the account-holding bank’s order.

5. grant to the Bank of Russia the right under the bank account agreement, concluded with authorized non-bank credit institution to get information about account transactions of authorized non-bank credit institution (to raise lombard loans to correspondent account opened in authorized non-bank credit institution).

To raise an intraday, overnight or lombard loans to correspondent account opened in the Bank of Russia, credit institution should conclude a General Loan Agreement for the Bank of Russia loans on securities extension (the form of the agreement is shown in Annex 2 to the Bank of Russia Regulation No. 236-P).

To raise an intraday, overnight or Lombard loans to correspondent account opened in the authorized non-bank credit institution, credit institution should conclude an Agreement for the Bank of Russia loans on securities extension concerning deals on MICEX by using MICEX Electronic trading system (the form of the agreement is set by the Bank of Russia Letter dated 25 of August 2006 No. 113-T).

The conclusion of the General credit agreement, and also the Agreement on behalf of Bank of Russia is carried out by a Regional Branch or National Bank of the Bank of Russia at the place of keeping a corresponding account of the credit institution.

After the conclusion of the agreement on the Bank of Russia loans on securities extension concerning transactions made on MICEX by using MICEX electronic trading system with the purpose of raising credits of Bank of Russia according to the mentioned agreement the credit institution should transfer in advance the securities from the Bank of Russia Lombard List to the section «Is blocked by the Bank of Russia» of the custodian account of the credit institution opened in authorized depositary which corresponds to the account of credit institution, opened in MICEX. The securities in other sections «Is blocked by the Bank of Russia», corresponding other accounts of the credit institution, cannot be used by the credit organization for raising credits of Bank of Russia on a corresponding account opened in MICEX.

Loans secured by non-marketable assets and guarantees

(From March 1, 2011 maximal total sum of credit institutions’ liabilities of the Bank of Russia loans secured by guarantees as borrower and guarantor established by the Bank of Russia in amount of zero)

Loans secured by non-marketable assets and Guarantees are extended according to the Regulation No. 312-P and the Bank of Russia Order No. OD-101 dated February 14, 2008 «On extension of loans secured by assets by the Bank of Russia to credit institutions».

This mechanism of refinancing together with lending mechanism according to the Bank of Russia Regulation No. 236-P will exist till the creation of new consistent mechanism of refinancing.

Types of loans

According to the Regulation No. 312-P credit institutions may raise intraday, overnight loanss and loans at a fixed rate.

Intraday and overnight loans have close meaning except collateral with the intraday and overnight loans, extended under the Bank of Russia Regulation No. 236-P.

Currently it’s impossible for credit institutions to raise the intraday and overnight credits to corresponding account (sub account) if credit institution receives intraday and overnight credits in compliance with the Bank of Russia Regulation No. 236-P to the same corresponding account (sub account) till the creation of new consistent mechanism of refinancing.

Credits’ extension at a fixed rate is carried out at a day of reference of credit institution to the Bank of Russia (Regional Branch or National Bank of the Bank of Russia on the location of the account on which credit institution planes to receive a credit) providing an application to extend Bank of Russia loan at a fixed rate under the form of appendix 6 of the Regulation No. 312-P.

Conditions of the Bank of Russia loan extension except intraday loan are fixed in the Letter of advice of the Bank of Russia loan extension, under the form of appendix 2 of the Regulation No. 312-P, which Regional Branch or National Bank of the Bank of Russia sends to credit institution on the location of the corresponding account (sub account) on which the credit was extended.

When the Bank of Russia extends credits secured by guarantees it sends a copy of guarantee agreement to credit institutions - guarantors and the Letter of advice of Bank of Russia loan extension to credit institution — borrower.

The Bank of Russia loan repayment (except intraday credits) is carried out by the Bank of Russia production of collection order to correspondent account (sub account) of credit institution on which the Bank of Russia loan was extended.

Accounts eligible for the Bank of Russia loans extension

«According to the Regulation No. 312-P credits are extended to correspondent accounts of credit institutions and correspondent sub accounts of credit institutions meeting the requirements of the Bank of Russia Order No. OD-251 dated March 23, 2009 opened in Regional Branches and National Banks of the Bank of Russia which were granted a right to carry out transactions under the Regulation No. 312-P».

Credits at a fixed rate are extended to the correspondent accounts of credit institutions opened in the Regional Branch of the Bank of Russia for the Moscow Region according to the Regulation No. 312-P.

Requirements for credit institution to conduct credit operations

To get an access to conduct credit operations with the Bank of Russia according to the Regulation No. 312-P credit institution should:

1) meet standard requirement of the Bank of Russia to credit institutions — counterparties concerning monetary policy transactions (credit institution should belong to the first or the second classification groups, satisfy reserve requirements, should have no overdue money liabilities to the Bank of Russia, including debt on Bank of Russia loans and interest on them);

2) conclude the General credit agreement for credits extension secured by assets or guarantees according to the form of Annex 1 of the Regulation No. 312-P (hereinafter — General credit agreement);

3) provide the rights to the Bank of Russia for acceptance-free writing-off of cash in amount of overdue Bank of Russia credit liabilities in the agreement of corresponding account and in all agreements of corresponding sub accounts and also the right of the Bank of Russia for acceptance-free writing-off of cash in amount of Bank of Russia credit liabilities in the agreement of corresponding account.

To conclude the General credit agreement credit institution has to petition in any form to Regional Branch or National Bank of the Bank of Russia for the location of its corresponding account. Required credit limit has to be specified in the petition in case when credit institution plans to use intraday and overnight credits.

Credit limits

In the General credit agreement credit limit is fixed concerning every credit account, on which credit institution has the right to raise intraday and overnight credits.

Credit limit is a maximum nonrecurring liability for intraday credits of a credit institution to the Bank of Russia.

Credit limit doesn’t limit the amount of the Bank of Russia credits at a fixed rate, which credit institution can raise. Credit limit doesn’t depend on other mechanism of refinancing limits for credit institution (unsecured credits, loans on securities eligible for the Bank of Russia Lombard List, repo operations) and doesn’t decrease the amount of the said limits.

Credit limit rate is determined by the Bank of Russia taking into account credit institution’s offers about this given limit, which are specified in petition of the General credit agreement conclusion. Limit change is carried out on the initiative of credit institution or the Bank of Russia. The Bank of Russia has a right to refuse credit organization in credit limit change without assigning any reason. Credit limit change is fixed by sending corresponding notification to credit institution by the Bank of Russia.

The Bank of Russia loans collateral — non-marketable assets

Collateral for the Bank of Russia loans extended under the Regulation No. 312-P is non-marketable assets: promissory notes, credit claims and also credit institutions’ guaranties.

In order to use assets as a collateral for the Bank of Russia loans a credit institution has to provide promissory notes and (or) credit claims as well as all the necessary documents to the Regional Branch of the Bank of Russia (at the location of the account on which credit institution is planning to raise the Bank of Russia loans secured by corresponding assets) for verification. All the documents should be provided in advance (before applying for a Bank of Russia loan) for the assets to be verified as eligible. The procedure of non-marketable assets acceptance as eligible collateral for the Bank of Russia loans is described in the point 3 of Annex 3 to the Regulation No. 312-P. In accordance with the most simplified procedure of non-marketable asset acceptance as eligible collateral for Bank of Russia credit operations, the asset must comply with the following criteria:

1) An asset is a liability of the Russian Federation, or a regional government of the Russian Federation or a municipal entity. Hereby a regional government or a municipal entity must be in the List of regional governments of the Russian Federation and municipal entities, which can act as debtors (guarantors), liable for promissory notes (credit claims) used as collateral for the Bank of Russia loans.

2) An asset is a liability of an organization (for a promissory note – drawer or backer of a bill, for a credit claim – borrower or guarantor), which is included in the list of organizations mentioned in the point 3.6.1 of the Regulation No. 312-P (The List of the Bank of Russia). The List of the Bank of Russia includes Russian (residents) non-financial organizations with annual turnover over 1 billion rub and which are the major borrowers of credit institutions. In order to be included in the List of the Bank of Russia mentioned non-financial institutions must meet the criteria of creditworthiness required by the Bank of Russia. The List of the Bank of Russia is approved by the Bank of Russia Board of Directors.

The most comprehensive inspection of an organization obliged for an asset is made in case the organization is not in The List of the Bank of Russia and the asset belongs to the II category of quality. In this case the Bank of Russia checks financial statement performance of the organization according to the Bank of Russia Ordinance No. 2541-U, dated December 17, 2010 «On the Bank of Russia claims to credit institution’s financial statement performance and other information about organizations, obliged for promissory notes (credit claims) eligible as collateral for the Bank of Russia loans».

Any working day a credit institution has a right to make a request to the Regional Branch of the Bank of Russia to return the assets, which were provided to for the purpose of obtaining Bank of Russia loans according to the Regulation No. 312-P. The Regional Branch of the Bank of Russia returns the required assets in case the loans, provided by the Bank of Russia, are properly secured.

Bank of Russia loan is considered secured if the value of the assets (pledged as collateral for Bank of Russia loan) adjusted for haircuts is no less than the value of the requested loan including interest payments accrued during the time to maturity of the Bank of Russia loan. The value of a promissory note is defined as credit institution’s purchase price (not exceeding its principal amount), whereas the value of a credit claim is defined as minimal outstanding principal amount of the corresponding loan during the time to maturity of the Bank of Russia loan plus 60 calendar days. Foreign-exchange assets revaluation is not carried out when they are used as collateral for Bank of Russia loans.

The Bank of Russia loans collateral — Credit institutions’ Guarantees

(From March 1, 2011 maximal total sum of credit institutions’ liabilities of the Bank of Russia loans secured by guarantees as borrower and guarantor established by the Bank of Russia in amount of zero)

The Bank of Russia loans at a fixed price might be secured by Credit institutions’ Guarantees. Credit institution — guarantor should meet the following requirements:

1) meet standard requirement of the Bank of Russia to credit institutions — counterparties concerning monetary policy transactions (credit institution should belong to the first or the second classification groups, satisfy reserve requirements, should have no overdue money liabilities to the Bank of Russia, including debt on Bank of Russia loans and interest on them);

2) be rated by one of the international rating agencies at least equal to «B+» rated by «Standart&Poor’s», «Fitch Ratings», or «B1» rated by «Moody’s Investors Service»;

3) conclude with the Bank of Russia an Agreement about Bank of Russia loans’ collateral by guarantees (the Agreement) according to the Annex 3 of the Regulation No. 312-P.

To conclude the Agreement credit institution — potential guarantor has to petition in any form to Regional Branch or National Bank of the Bank of Russia for the location of corresponding account. The name of credit institution is contained in the petition which credit institution-potential guarantor is planning to guaranty.

When concluding the Agreement the Bank of Russia (Regional Branch or National Bank of the Bank of Russia at the location of credit institution-borrower and credit institution-guarantor) provides to that credit institution information about maximal total sum of credit institutions’ liabilities of the Bank of Russia loans secured by guarantees as borrower and guarantor (further- maximal total sum of liabilities)
(From March 1, 2011 maximal total sum of credit institutions’ liabilities of the Bank of Russia loans secured by guarantees as borrower and guarantor established by the Bank of Russia in amount of zero).

Maximal total sum of liabilities is limit concerning only the Bank of Russia loans secured by guarantees and doesn’t take into account other operations’ limits set by the Bank of Russia to credit institution (Bank of Russia loans secured by marketable and non-marketable assets, Bank of Russia credits without collateral, REPO operations, «foreign-exchange swap» operations etc.)

Example: maximal total sum of liabilities for credit institution is 10 mln. rubles and it guaranties for other credit institution in amount of 7 mln. rubles. Thus the said credit institution can either raise Bank of Russia loan guaranteed by other credit institution in amount not more than 3 mln.rubles or guaranty for one more Bank of Russia loan for other credit institution in amount of not more than 3 mln. rubles.

Together with application for Bank of Russia loan secured by guarantee (the form is set by Annex 6 of the Regulation No. 312-P) credit institution-borrower or credit institution—guarantor should provide to the Bank of Russia (Regional Branch or National Bank of the Bank of Russia at the location of credit institution-borrower or credit institution-guarantor by mutual agreement among credit institution-borrower, guarantor and also Regional Branch or National Bank of the Bank of Russia at the location of credit institution-borrower and credit institution-guarantor) 2 copies of guarantee agreement signed by credit institution-guarantor (the form of agreement is set by Annex 9 of the Regulation No. 312-P).

Bank of Russian loan is secured if total responsibility of credit institutions-guarantors corresponding to the Bank of Russia requirements, according to guarantee agreements concluded among the said credit institutions and the Bank of Russia, covers loan amount with accrued interest in full.

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