Central Bank drops plans to designate territory for regional banks
SOCHI. Sept 8 (Interfax) - The Central Bank of Russia has decided against restricting the operations of regional banks to a specific territory, Central Bank Deputy Governor Mikhail Sukhov told journalists on the sidelines of a banking forum in Sochi.
Initial plans were to assign regional bank status to banks with capital of at least 300 million rubles and assets of up to 7 billion rubles operating in a specific region. They will be subject to simplified regulation, such as only having to meet five mandatory standards. Banks wishing to operate with federal status must have at least 1 billion rubles in capital and meet the Basel standards that are in effect.
Instead of limiting operations on a territorial basis, the Central Bank will provide for a system of functional limitations, Sukhov said.
If the new Central Bank's adjustments are approved, two types of banks might be in operation beginning in 2018: banks with full-service licenses and banks with limited licenses (there will be no division into regional and federal banks), he said.
"Such banks might be called regional, the name might be kept, maybe some other designation will be proposed - 'limited-service bank' or something like that," he said.
"Right now our starting position is that such banks will be limited to providing loans to small and medium enterprises, entrepreneurs that aren't big business, individuals. We will listen to what banks think on this score and then think about how to take all this into account," he said.
The Central Bank is planning for now to limit forex operations at such banks. They will be able to conduct them via banks with full-service licenses with which they have concluded agreements.
"We do in fact consider operations with nonresidents to be excessive, incomprehensible for a bank of that scale. We do not plan to allow these banks to do this (provide loans to nonresidents, acquire foreign securities, open correspondent accounts at foreign banks)," he said.
Another innovation will be introduction of a capital threshold of 3 billion rubles, above which any bank, regardless of its license, is subject to full regulation.
"After receiving limited licenses, banks might grow their capital, but perhaps they do not want to be subject to more complex regulation, because they want to retain simple operations. We are not going to require banks with capital below 3 billion rubles to switch to full-service status, which stipulates a tougher regulatory regime. They can keep their status, but will have the corresponding limitations. That said those banks will not be able to grow into big ones, because capital will hold them back. Therefore, among banks with capital between 1 billion and 3 billion rubles there will be full-service banks and limited-service banks," Sukhov said.
If a limited-service banks increases capital to 3 billion rubles or more, it will have to comply with the same regulations that full-service banks do, but retain the limitations.
"Most likely, in that case they will apply to receive full-service licenses," Sukhov said.
The Central Bank will also drop the criterion for regional bank assets (no more than 7 billion rubles).
Over 100 banks might receive limited licenses, Sukhov said.
The Central Bank is maintaining for now the original set of regulatory exemptions planned for the regional banks (limited-service banks under the updated concept).