Featured Product

    IMF Publishes Reports Under 2019 Article IV Consultation with Russia

    August 02, 2019

    IMF published its staff report and selected issues report in context of the 2019 Article IV consultation with the Russian Federation. IMF Directors encouraged the authorities to continue to enhance bank supervision and regulation, also welcoming the recent macro-prudential measures to curb unsecured consumer lending. However, they noted that additional macro-prudential measures may be needed if lending growth does not moderate. They also recommended continued efforts to complete the consolidation of the banking sector. Directors underscored the importance of having a credible strategy for returning rehabilitated banks to the private sector in a way that is consistent with increasing competition among banks.

    The staff report highlighted that the banking sector has been performing well, putting it in a position to support growth. The aggregate returns on assets and equity both increased in 2018, mainly driven by the largest banks. The system-wide capital adequacy ratio stayed close to 12%. NPLs remain high (at 10.3% in March) but are adequately provisioned. The Central Bank of Russia (CBR) has continued its cleanup of the banking sector, bringing the total number of credit institutions to 469, as of May 01, from over 900 in 2013. A bank for core and non-core assets (bad bank) has been set up to deal with the impaired assets of banks in open resolution, with a size (in book value) of nearly 2% of GDP. The authorities hope for a recovery rate of about 40% through actions, including asset sales to the market. The IMF staff emphasized the importance of having a strategy for returning rehabilitated banks to the private sector in a way consistent with increasing competition among banks. Staff also recommended that CBR should assess the viability of NPLs and ensure bank incentives to write off these loans.

    Rapid retail lending growth has spurred a regulatory response, but more action may be needed. To mitigate financial stability risks from the sector, CBR raised risk-weights several times in 2018 and once in April 2019. CBR, in 2018, made further changes to its supervisory and regulatory framework, which it should continue to develop. Capital adequacy requirements can now be augmented with risk-based buffers and CBR has set the Basel III net stable funding ratio (NSFR) for systemically important banks (SIBs). Additionally, a set of formal criteria were adopted to guide bank resolution decisions and 149 banks with capital of less than RUB 1 billion were switched to a restricted basic license, under which they will be subject to simplified regulation but prohibited from most overseas operations. Nevertheless, the legal framework for related party exposures and the draft law upgrading the framework for banks’ external auditors could be strengthened further. The final increase of the capital conservation buffer and capital surcharge for SIBs should be implemented as scheduled to enable banks to achieve fully loaded levels by January 2020. Supervision could be enhanced by enabling CBR to exercise professional judgment as part of an explicit early intervention mechanism.

     

    Related Links

    Keywords: Europe, Russia, Banking, Article IV, NPLs, Basel III, NSFR, Resolution, Financial Stability, CBR, Macro-Prudential Policy, IMF

    Featured Experts
    Related Articles
    News

    APRA Consults to Standardize Submission Date for Quarterly Reporting

    APRA proposed to standardize quarterly reporting due dates for authorized deposit-taking institutions. The proposed standardized due date is 35 calendar days after the last day of the reference quarter, which will create a 14-calendar-day extension for credit unions and building societies.

    November 08, 2019 WebPage Regulatory News
    News

    EBA Publishes Methodology and Draft Templates for Stress Tests in 2020

    EBA published a package for the 2020 EU-wide stress test exercise for banks.

    November 07, 2019 WebPage Regulatory News
    News

    EC Publishes Results of Fitness Check of Reporting Requirements in EU

    EC published results of the fitness check of supervisory reporting requirements in financial services legislation in EU.

    November 07, 2019 WebPage Regulatory News
    News

    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China.

    November 07, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of Plenary Meeting in Paris

    At the meeting, the Plenary reviewed vulnerabilities in the global financial system, fintech developments (including developments in the crypto-asset markets), ongoing work of FSB, and the work program for 2020.

    November 07, 2019 WebPage Regulatory News
    News

    HKMA Highlights Technology Initiatives at the Hong Kong FinTech Week

    HKMA co-organized, with InvestHK, the Hong Kong FinTech Week 2019, which was a five-day flagship fintech event that attracted thousands of attendees worldwide.

    November 06, 2019 WebPage Regulatory News
    News

    ECB Report on Fallback Provisions in Contracts Referencing EURIBOR

    ECB published a report, by private sector working group on euro risk-free rates, presenting recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR.

    November 06, 2019 WebPage Regulatory News
    News

    EC Regulation on Homogeneity of Underlying Exposures in Securitization

    EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization.

    November 06, 2019 WebPage Regulatory News
    News

    FSI Examines Regulatory Approaches on Climate Risk Assessment

    The Financial Stability Institute (FSI) of BIS published a paper that examines the regulatory approaches being used for climate risk assessment in the insurance sector, in particular through enterprise risk management (ERM) frameworks.

    November 06, 2019 WebPage Regulatory News
    News

    SRB Launches Q&A Process for Resolution Reporting

    SRB has setup a dedicated solution for raising questions on the resolution reporting.

    November 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4112