Support measures for banks in 2025: cancellations, temporary extensions, and incorporation into regulation

The Bank of Russia has decided not to extend a number of support measures expiring in 2024, as they have fulfilled their anti-crisis role. The Bank of Russia will continue to incorporate into regulation those solutions that are based on the lessons of the crisis and the national specifics of the banking sector.

Measures to be cancelled:

• The option to calculate concentration ratios¹ using a reduced risk weight (50%) for sanctioned borrowers and not to put them in groups of related borrowers.² Being in effect since 2018, this measure has made it possible for the banks willing to cooperate with sanctioned borrowers to give loans to these borrowers despite the risk of secondary sanctions. Now, the situation has changed. When making their credit decisions, banks are no longer guided by the fact whether a borrower is under sanctions or not.
  
  To adapt to the cancellation of this measure from 1 January 2025, banks will be allowed to do the following:
  • not to calculate N6, N7, and N25 ratios for subsidiary consolidated leasing and factoring organisations when complying with the requirements for the transparency of financing and assessing the risks of ultimate borrowers;
  • with regard to concentration ratios, to calculate risks of the secured part of a credit claim not for a borrower but for a guarantor or a surety, if the risk weight for such security is lower than or equal to the risk weight of loans issued to the borrower;
  • not to calculate the concentration risk for ruble-denominated claims if there is a guarantee (surety) provided by VEB.RF,³ JSC DOM.RF,⁴ in this case banks will continue to include direct claims on VEB.RF and JSC DOM.RU in the calculation of concentration ratios.
• The option not to downgrade loans, other assets, and contingent credit liabilities (CCLs) if the financial position, the quality of debt servicing and collateral of sanctioned corporate borrowers (counterparties) have deteriorated due to the imposed sanctions. This measure was introduced in 2018 to make it easier for sanctioned borrowers to have their external debt refinanced and allowed them to adapt to changed conditions. Its cancellation will not have a considerable effect on the required ratios of credit institutions (CIs).
• The option for CIs to include in their capital the subordinated substitute bonds issued before 31 December 2024 to replace equivalent subordinated Eurobonds.⁵ The measure has been in effect for more than one year and has allowed CIs to exchange their subordinated Eurobonds for local issues, if needed, without prejudice to their capital and capital adequacy ratios.
• The option to use the creditworthiness ratings assigned by international credit rating agencies (CRAs) as of 1 February 2022 to calculate liquidity coverage ratios,⁶ since the procedure of their calculation permits⁷ using the ratings of domestic CRAs.

Measures planned⁸ to be extended temporarily, including in a modified form:

• Through 31 December 2025 — the right not to disclose information that is sensitive to sanctions risks,⁹ including about CIs’ ownership structures, members of their management bodies and other officials, important conditions of reorganisation, material facts affecting financial and business operations of a CI to be reorganised through merger, acquisition, or transformation.
• Through 31 December 2025 — CIs’ obligation¹⁰ to disclose financial statements excluding the information that is sensitive to sanctions risks. The similar approach will remain in force with regard to banks’ financial statements to be posted on the Bank of Russia website. Concurrently, to improve the capital market transparency, it is planned to terminate the right of issuing CIs not to disclose IFRS statements in full (the exclusion of the information that is sensitive to sanctions risks remains in effect). This approach will help maintain a balance of interest between the market participants’ need for information and the need to limit risks caused by sanctions pressures for banks and their clients.
• Through 31 December 2025 — the option for CIs to omit individual statutory requirements¹¹ when lending to businesses in the new constituent territories of the Russian Federation provided CIs have proper risk control policies in place and to maintain for certain loans¹² and CCLs minimum provisions of 1% and also to reduce them down to zero if there is reliable collateral.¹³ This will help ensure the affordability of lending for borrowers operating in the new constituent territories. The Bank of Russia will continue to analyse lending practices in the new constituent territories and assess the need for further regulatory adjustments.
• Through 31 December 2025 — the option of early termination of CIs’ obligations under subordinated instruments to entities from unfriendly states if such instruments are booked with a special purpose vehicle together with blocked assets.
• Through 31 December 2026 — the effective period of the procedure under which the Bank of Russia approves the list of property and liabilities for sanctioned banks to spin off its unit(s) as part of reorganisation.¹⁴

Measures to be incorporated into regulation and possibly extended before the incorporation, including in a modified form:

• Through 2032, CIs (BGs¹⁵)¹⁶ will have the option to make provisions by instalments for blocked unrecoverable assets¹⁷ (BUA). BUA provisions should be at least 20% and 30% by the end of 2024 and 2025, respectively. By 2032, these provisions should be 100%. For CIs—SDs and NCIs—CCPs, the approaches to provisioning are being incorporated into the regulation which will be in effect from 1 January 2025.¹⁸
• When assessing the risks of borrowers—servicemen and their family members as well as the risks of SMEs¹⁹ founded by servicemen, the option of CIs not to downgrade the financial position, the quality of debt servicing, the quality category of collaterals and loans, other assets, and CCLs of these borrowers.
• Application of the list of offshore zones approved by the Bank of Russia Board of Directors²⁰ for the purpose of assessing transparency of CIs’ ownership structures.²¹ In the future, the Bank of Russia intends to include a list of jurisdictions in its regulation in order to be able, among other things, to assess the transparency of CIs’ ownership structures, establish procedures for maintaining correspondent relationships with foreign banks, and for creating loan loss provisions. The Bank of Russia’s competence to incorporate such a list into a relevant regulation shall be determined by law.
• The option to apply the 75% risk weight when calculating capital adequacy and concentration ratios for claims on corporate borrowers registered in the Republic of Crimea / the city of Sevastopol. In the future, this decision will be included in the new version of the Instruction for the calculation of ratios²² and synchronised with the validity term of the easing for borrowers registered in the new constituent territories of the Russian Federation — through 30 June 2028.
• The option to include SME loans (claims, CCLs) of up to ₽100 million (previously, up to ₽50 million²³) in the portfolio of homogeneous loans (claims, CCLs) when a borrower’s financial position is assessed as medium, and when such loans are evaluated using banks’ internal credit scores to support SME lending and simplify the assessment of portfolios of such loans (claims, CCLs).
• Differentiation of sureties and independent guarantees of regional guarantee organisations (RGOs) based on the quality categories of collateral taken into account to minimise the amount of provisions to be made according to Order of the Ministry of Economic Development of the Russian Federation No. 763.²⁴ This will help maintain the affordability of SME lending.

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