Bank of Russia improves approaches to calculating ratios

New rules require all banks with a universal licence to transition to a finalised (more risk-sensitive) approach to calculating CARs. Banks with a basic licence and non-bank credit institutions will continue to calculate their CARs using the standard approach.

Other key changes include the following:

— The criteria for classifying borrowers as investment grade have been refined (specifically, a new requirement to have a credit rating no less than ‘A’ has been introduced), with lower risk weights applied to this category.

– Differentiated risk weights have been introduced for loans to the constituent entities and municipalities of the Russian Federation depending on credit ratings assigned by Russian credit rating agencies or, in their absence, on the level of debt sustainability as assessed by the Russian Ministry of Finance (it is planned to fully transition to credit ratings in the future).

– Risk weights for mortgages for housing under construction have been made equal to those applied to mortgage loans for existing housing, which are calibrated based on default statistics.

– A unified multiplicative approach will be applied when calculating macroprudential add-ons by both banks using internal ratings-based approaches and other banks.

– Additional important steps have been taken to address the problem of credit concentration. First, for repos, the risk will be assessed based on the issuer of securities accepted as collateral if the borrower’s rating is below ‘AA’. Second, banks will be able to transfer the concentration risk from borrowers to reliable guarantors / sureties / issuers of securities accepted as collateral.

These changes will help assess risks more accurately, equalise competitive conditions, and support balanced growth of lending to the economy.

To make it easier for banks to adapt to the new regulation, a number of the new rules will be applied only to loans issued after 18 August 2025.