Central Bank of Russia to significantly update methodology for assigning supervisory ratings to banks, make it more risk-sensitive

MOSCOW. June 25 (Interfax) - The Central Bank of Russia will substantially revise its methodology for assessing banks' financial standing, which it uses to classify credit institutions by risk level and determine contributions to the deposit insurance fund.

The corresponding consultation report has been published on the CBR's website.

The current assessment methodology was developed in 2008 and hasn't undergone significant changes since then, the Central Bank said. During this period, the banking business has evolved and become considerably more complex, while banks' risk profiles have changed markedly. Consequently, the current methodology has lost the required risk sensitivity, and its value in the supervisory dialogue with banks about risk management has diminished.

"The insufficient reliability of bank risk ranking is evidenced by the fact that most credit institutions fall into one classification group characterized by medium risk, despite having significantly different risk profiles," it said.