Banking regulation: the regulatory acts issued in the fourth quarter of 2019

Published a newsletter with the list published in the last quarter of 2019 statutory acts of Bank of Russia, according to which the regulation of activities of credit institutions was implemented the following innovations:

– introduced a new approach to the assessment of credit risk requirements for banks and corporate borrowers for the calculation of capital adequacy ratios of banks as part of the phased introduction of a new standardised approach to assessing credit risk under the standard Basel Committee on banking supervision, “Basel III: completion of work on post-crisis reforms”;

– changes in the method of determination of own funds (capital) of credit organizations (Basel III);

– changes in the procedure of formation by credit organizations of reserves for possible losses on loans, loan and similar debt;

– changes to the procedure for drawing up credit organizations plan recovery value of own funds (capital) and its coordination with the Bank of Russia;

– includes a list of measures that can be applied to credit organizations for infringement of requirements of Federal law No. 115-FZ and adopted in accordance with it regulations.

Additionally, during the fourth quarter of 2019, the Bank of Russia issued an information letter informing the credit institution that the state (municipal) guarantees, the terms of which allowed their opinion for any reason before the fulfillment of the obligations by the principal, may not be considered for the formation of reserves for possible losses, and also for calculation of mandatory capital adequacy ratios of banks. Other published information letter recommends that banks eliminate the possibility of a decision on the classification of loans, accept credit-impaired in accordance with IFRS 9, in the higher quality category than is provided by Regulation No. 590-P.

The newsletter also contains information about projects of normative acts, published on the website of the Bank of Russia in the fourth quarter of 2019 to assess their regulatory impact. These projects are envisaged:

– the credit crunch of mergers and acquisitions by establishing for loans used for investments in authorized capitals of other legal entities, the minimum reserve of 5% with a possibility of its gradual formation;

– the introduction of provisions that the banks obtained guarantees (Bank guarantees), guarantees of constituent entities of the Russian Federation and guarantees of the Russian Federation cannot be taken into account when forming provisions for possible losses in the case that the terms of such guarantees include the possibility of withdrawal by the guarantor;

– changes in the methodology of determining own funds (capital) of the banks associated with the introduction of the accounting rules of credit institutions of a new order of reflection in the accounts of the leases in accordance with IAS 16 “rent”;

– clarification of reporting necessary for the implementation of the supervision of credit institutions on a consolidated basis, as well as bring this order in conformity with international financial reporting standards.

6 Feb 2020