CBR to introduce risk ratio buffers for loans to heavily indebted large cos in 2025

MOSCOW. Nov 11 (Interfax) - The Central Bank of Russia (CBR) limit banks' credit risks on big businesses by introducing buffers on risk ratios for loans to large companies with heavy debt burdens, the CBR said in a press release.

Large companies, whose demand for loans is less sensitive to higher interest rates, accounted for more than half of the growth of banks' corporate loan portfolio in 2024, the CBR said. This could lead to the growth of such companies' indebtedness and increase banks' credit risks.

In order to increase the banking sector's resilience to such risks, changes will be made to macroprudential regulation so buffers can be set on risk ratios for banks' credit claims against large companies with a high debt burden.

The CBR also plans to raise the minimum risk ratio for loans to large companies for banks that use the internal ratings-based approach.

The CBR proposes to introduce these measures in the first half of 2025.

The rapid growth of banks' corporate loan portfolio, which exceeds 20% year-on-year, worries the CBR because companies could end up with an excessive debt burden. Central Bank chief Elvira Nabiullina said earlier that the CBR was considering macroprudential regulation for corporate loans. The growth and structure of the corporate loan portfolio was discussed at a meeting President Vladimir Putin held with the government's economic team in October.

"In principle, if necessary, if we see accumulation of credit risks in corporate lending, we can revise our regulation and determine the criteria. If a company, for example, has a high debt burden, it's possible to set macroprudential buffers. But again, this decision has not been made, we're looking at the advisability, at various options, because another obvious option is to look more carefully in general at provisions that banks make for their borrowers and see how adequate they are for the situation," the CBR's director of financial stability, Yelizaveta Danilova said at the end of October.

She said the CBR does not plan to introduce macroprudential limits on issuing corporate loans like it did in retail lending.