Regulator stimulates bank lending for medium-sized businesses

The Bank of Russia is exploring the possibility of allowing banks to apply a reduced risk ratio of 75% to calculate their required ratios, as well as to credit claims on medium-sized businesses pooled in the portfolios of homogeneous loans and meeting certain criteria for risk diversification. The corresponding provision is included in draft Ordinance No. 180-I, dated 28 June 2017, ‘On Banks’ Required Ratios’ published on the federal portal of draft regulatory documents.

The document also stipulates that from 1 January 2018, the financial leverage ratio will become N1.4 ratio which will be mandatory for all banks operating under the universal licence. The minimum numerical value of the new ratio will be set at 3%.

The financial leverage ratio is calculated by dividing a bank's Tier 1 capital by total assets, contingent credit liability exposure, exposure to derivative transactions, and also exposure to reverse transactions with securities transferred without derecognition. The calculation procedure for this ratio is defined by Basel Committee on Banking Supervision standards (Basel III leverage ratio framework and disclosure requirements, January 2014).