Structure of credit institutions’ reservable liabilities updated and required reserve ratios reduced

Aiming to increase transparency and unify the method of calculating required reserve ratios, the Bank of Russia has decided¹ that, effective from 1 April 2019, the structure of reservable liabilities of credit institutions is updated to include all their long-term liabilities (except for those under subordinated instruments), their liabilities to international financial organisations and liabilities to State Development Corporation VEB.RF.

To offset the increased amount of required reserves this update entails, the Bank of Russia has decided² that, effective from 1 April 2019, the following required reserve ratios will be concurrently reduced by 0.25 percentage points to 4.75%:

those on liabilities to non-resident legal entities, individuals and other Russian ruble-denominated liabilities — for banks with a universal licence and non-bank credit institutions;

those on Russian ruble-denominated liabilities to non-resident legal entities — for banks with a basic licence.

Required reserve ratios on Russian ruble-denominated liabilities to individuals and other Russian ruble-denominated liabilities — for banks with a basic licence — are unchanged at 1.00%.

Required reserve ratios on credit institutions’ liabilities in foreign currency are also unchanged:

required reserve ratios on liabilities to individuals are 7.0%;

required reserve ratios on liabilities to non-resident legal entities and on other liabilities are 8.0%.

The required reserves averaging ratios for credit institutions to calculate the averaged amount of required reserves are also unchanged:

• for banks with a universal or basic licence — 0.8%;
• for non-bank credit institutions — 1.0%.

To streamline the required reserves compliance procedure, credit institutions failing to comply with required reserves averaging will longer need to deposit monetary funds in a separate balanced-based account. Also, after the coming into force of the new regulations, required reserves will be kept in the single balance-based account with the Bank of Russia regardless of the currency of reservable liabilities. Other regulatory updates include the method of calculating credit institutions’ required reserve amounts.

¹ Bank of Russia Ordinance No. 5036-U, dated 25 December 2018 ‘On Amending Bank of Russia Regulation No. 507-P, Dated 1 December 2015 ‘On Credit Institutions’ Required Reserves’, registered with the Ministry of Justice of the Russian Federation on 24 January 2019, becomes effective from 1 April 2019 and will apply beginning with credit institutions’ required reserve amounts calculated for April 2019.

² Bank of Russia Ordinance No. 5068-U, dated 8 February 2019, ‘On Mandatory Reserve Requirements’. Required reserve ratios in line with Ordinance No. 5068-U will begin to apply beginning with credit institutions’ required reserve amounts calculated for April 2019.

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