1 Apr 2019 13:34

CBR boosting capital requirements for banks under Basel III

MOSCOW. April 1 (Interfax) - The Central Bank of Russia (CBR) is launching an incremental increase of capital requirements for banks under Basel III.

Beginning in 2016, consistent with Basel III standards, the CBR introduced a capital adequacy surcharge, or a capital conservation buffer, and a surcharge for systemic importance. It was envisaged that the capital conservation buffer would rise by 0.625 percentage points annually until it reaches 2.5% on January 1, 2019, while the systemic importance surcharge, applied to 11 systemically important banks, would increase every year until it reached 1% as of early 2019.

Last year, however, the CBR made a decision to postpone the nonrecurring increase in surcharges due in 2019.

"Last autumn, we saw no grounds or need to review this schedule, even though initially, this procedure was envisaged: every year, we consider whether we will maintain the announced schedule or make some changes. This year, the results of the qualitative assessment indicate changes in the schedule of the capital conservative buffer," CBR deputy chairman Vasily Pozdyshev said.

The CBR is replacing the nonrecurring increase in the capital conservation buffer with an incremental increase: 2% starting with April 1, 2019, 2.215% starting on July 1, 2019, 2.25% starting with October 1, 2019 and 2.5% starting on January 1, 2020.

Furthermore, the CBR is holding the surcharge for systemic importance at 0.65% in 2019 and will only raise it to the maximum 1% only in 2020.