New for banks: insurance of small enterprises’ funds and increased risk ratios for mortgages with a low down payment
Starting from January 2019, the deposit insurance system will cover small enterprises’ funds in rubles and foreign currency deposited with Russian banks that are licensed as retail credit institutions and have joined the deposit insurance system. The insurance indemnity equals 100% of the amount of funds in accounts (deposits) but does not exceed a total of 1.4 million rubles per bank. The single SME register should contain information about small enterprises as of the date of the insured event occurrence.
The risk ratio for mortgage loans with a down payment of 10-20% issued from 1 January 2019 will be increased from 150% to 200%. The buffer will only be effective as long as the loan-to-value ratio exceeds 80%.
From 1 January 2019, the minimum LCR requirements for systemically important banks will be raised from 90% to 100% in accordance with the Basel III implementation schedule adopted in late 2015. LCR is calculated as the ratio of high-quality liquid assets to net cash outflow during a 30 calendar day liquidity stress scenario. Therefore, the period of Basel III implementation with regard to this ratio has been completed.
In compliance with Basel III, the capital conservation buffer (applied to all banks with universal licences) will also be increased. It will be raised in accordance with the schedule approved by the Bank of Russia. The buffer will stand at 1.875% from 1 January 2019, 2.0% from 1 April 2019, 2.125% from 1 July 2019, 2.25% from 1 October 2019, and 2.5% from 1 January 2020. The systemic importance capital buffer (applied to 11 systemically important Russian banks) will remain at 0.65% throughout 2019.
Systemically important banks are currently calculating the maximum exposure per borrower or group of related borrowers. After monitoring this indicator, the Bank of Russia will make a decision regarding the terms and specifics for establishing it as a required risk concentration ratio.