On the date of credit ratings assigned by international rating agencies when applying Bank of Russia regulations

In accordance with Bank of Russia Ordinance No. 3453-U, dated 25 November 2014, ‘On the Specifics of Using Credit Ratings for the Purpose of Applying Bank of Russia Regulations’, if a credit rating assigned by a foreign credit rating agency to the Russian Federation, credit institutions, other legal entities, constituent territories and municipalities of the Russian Federation, securities issued by them or other financial instruments, is used in a Bank of Russia regulation, the Bank of Russia Board of Directors may decide on the date, on which the said rating is assigned, in its respective regulation.

In order to mitigate the effect of international ratings on the activity of banks in case of high market volatility and sanction pressure, the Bank of Russia Board of Directors has decided to fix credit ratings assigned by rating agencies such as Standard & Poor's, Fitch Ratings и Moody's Investors Service, when applying Bank of Russia regulations as of 1 February 2022.

Despite the fact that the Bank of Russia has already begun using ratings assigned by Russian credit rating agencies on the national rating scale in many instances, requirements to international ratings are used in some aspects of banking regulations, e.g. when determining a quality category of collateral (Eurobonds) to minimise reserves (Bank of Russia Regulation No. 590-P, dated 28 June 2017), assessing the ability of collateral for repos that eventually affects their amount for the purpose of calculating required ratios (Bank of Russia Instruction No. 199-I, dated 29 November 2019), as well as when determining the value of highly liquid assets in order to adjust the liquidity coverage ratio (Bank of Russia Regulation No. 421-P, dated 30 April 2014). Due to such specifics of controlling these activities, today’s decision of the Bank of Russia Board of Directors mitigates risks for banks’ required ratios.

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