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The Central Bank of the Russian Federation (Bank of Russia)

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;

Information Notice

On Bank of Russia measures to maintain stability of Russian financial sector

1. The Bank of Russia will impose a temporary moratorium on recognition of negative revaluation of securities portfolios of credit institutions and non-bank financial organisations that will decrease market participants’ sensitivity to market risk.

2. In order to limit the impact of revaluation of assets and liabilities denominated in foreign currencies on prudential ratios of credit institutions, the Bank of Russia intends to grant credit institutions a temporary right to use the exchange rate computed for the previous quarter when calculating prudential requirements for operations in foreign currencies.

3. The Bank of Russia will improve the mechanism to provide foreign exchange funds to credit institutions. If required, additional various maturity auctions are planed under the FX repo mechanism. The mechanism to extend loans secured by non-marketable assets to credit institution (in compliance with Regulation 312-P) provides for extension of foreign exchange loans secured by foreign currency denominated credit claims on nonfinancial organisations to banks.

4. The Bank of Russia considers the central counterparty at the Moscow Exchange as an important institution of centralised liquidity allocation to all financial market participants, including both credit institutions and non-bank financial organisations. In order to ensure stable stock market functioning, if required, the Bank of Russia will provide support to the central counterparty at the Moscow Exchange for market participants to be convinced of the reliability of the centralised clearing and its uninterrupted functioning.

5. In order to enhance interest rate risk management, the Bank of Russia intends to take the following measures:

— to temporarily (till 1 July 2015) refrain from imposing restrictions on the values of effective interest rate on consumer loans (borrowings) when credit institutions and microfinance organisations, credit cooperatives and pawnshops enter into consumer loan (borrowing) agreements;

— to expand the range of standard market deviation of interest rates on household deposits with banks from calculated average market maximum interest rate to 3.5 percentage points (instead of current 2 percentage points).

6. In order to enhance credit risk management, the Bank of Russia intends to take the following measures:

— to enable credit institutions to refrain from decreasing debt service quality rating irrespective of the assessment of financial standing of a borrower regarding loans restructured due to, inter alia, loan currency change irrespective of the loan maturity (principal amount of debt and/or interests) and the interest rate;

— to enable credit institutions to take a decision not to decrease the rating of the borrower’s financial standing for the purpose of loan loss provision accumulation if the financial standing changes due to the impact of restrictive economic and/or political measures imposed by certain foreign states (supplement to Bank of Russia Letter No. 184-T, dated 21 October 2014);

— to expand the term during which the credit institution is entitled to refrain from increasing the actual provision on loans extended to borrowers whose financial standing and/or debt servicing quality and /or quality of collateral deteriorated due to emergencies from one year to two years.

— to expand the term during which the credit institution is entitled refrain from creating provision on loans extended for investment projects preserving other current minimum provision requirements depending on the maturity, default on payments on investment loans or their insufficiency;

— to cancel the increased risk weight in respect of loans extended to leasing and factoring companies participating in the banking group including the lender bank;

— to introduce a decreased risk weight in respect of ruble denominated loans to Russian exporters holding EXIAR insurance policies (Export Insurance Agency of Russia)

7. In order to maintain stability of the banking sector amid higher interest rate and credit risks accompanied with economic slowdown in Russia, the Bank of Russia and the Government of the Russian Federation develop measures for additional capitalisation of credit institutions in 2015.

17 December 2014

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