Banking regulation: 2019 Q3 information bulletin

The released Bulletin contains information on the Bank of Russia’s regulatory acts issued in 2019 Q3 that introduce a number of amendments to the prudential regulation of credit institutions, including the following:

• amendments to the procedure for creating prudential provisions that are crucial for the development of small and medium-sized enterprises and borrowers–developers within housing construction;
• amendments to the procedure for calculating ratios of banks with a basic licence;
• amendments to the procedure for calculating credit risk using the internal ratings-based approach;
• amendments to the procedure for calculating the liquidity coverage indicator (ratio).

In 2019 Q3, the Bank of Russia also published a clarification to explain the procedure for measuring the value of balance sheet assets and liabilities for the purpose of calculating open currency positions, with account of the changes introduced to the procedure for accounting of such assets and liabilities in connection with the implementation of IFRS 9.

The Bulletin also contains information on the draft regulations published in 2019 Q3 on the Bank of Russia website for assessing their regulatory impact. Among other things, these drafts provide for the following:

• implementation of the new standardised approach required by Basel III to assessing credit risk associated with claims to corporate borrowers and banks;
• application of the approach to creating prudential provisions required for loans granted within the Project Finance Factory program in relation to other project financing;
• elaboration of the validation procedure within the consideration of banks’ applications for permits to apply the internal ratings-based (IRB) approach in calculating capital adequacy ratios.

In 2019 Q3, the Bank of Russia also published on its website the report ‘On improving the compulsory deposit insurance system in Russian banks’ to be discussed with the market community. The report covers the Bank of Russia’s view of the main development areas for the compulsory deposit insurance system in Russian banks.