Central Bank revises mechanism for large banks to use irrevocable credit lines

MOSCOW. Oct 7 (Interfax) - The Central Bank of Russia (CBR) has cancelled the expiration date of irrevocable credit lines (ICL) with duration of one year due to systemically important banks' planned transition to compliance with the national liquidity coverage ratio (NLCR), the bank said on its website.

The CBR will also now charge a fee for the right to use an ICL, amounting to 1% per annum of the ICL limit used to calculate the NLCR. The size of the fee is currently differentiated and amounts to 1.5% when the ICL is used to increase the actual value of the NLCR to 80% and 0.1% on the portion used to increase the actual value of the NLCR from 80% to 100%.

The bank has also made changes to the ICL mechanism and revised the approach by which the instrument can be used to comply with the NLCR. Now the ICL will only cover a small proportion of the NLCR, up to 20 percentage points. The fee for using an ICL will depend on how many days and in what amount the bank actually used it to adhere to the NLCR.

"The Bank of Russia expects that banks will not be in great need of ICLs. The NLCR takes into account the specificities of the Russian market, first and foremost in terms of the structure of highly liquid assets. The goal of revising the ICL mechanism was to give banks more flexibility in managing their liquidity, softening it through temporary, short-term adjustments which do not put financial stability at risk. The procedure for calculating the fee should incentivize banks to comply with the regulation using market instruments," the CBR said in its statement.

Systemically important lenders will begin to comply with the national LCR instead of the Basel ratio now in effect starting October 30, 2025. The change will make it possible to more accurately access systemic banks' risks by factoring in the specifics of the Russian financial market. The main changes include expanding the composition of highly liquid assets and revising cash outflow ratios.

Banks will have to file reporting on the NLCR for the first time as of November 1, 2025. To ensure that the transition is smooth, the minimum ratio will be 80% in 2025 and it will only go up to 100% as of January 1, 2026.