VTB CEO proposes calling Russia's national banking regulations Voronezh 1
MOSCOW. May 26 (Interfax) - The international Basel standards that Russia has been obligated to put into practice in banking regulation do not work under the current conditions, VTB head Andrei Kostin said during a regular meeting between bankers and the management of the Central Bank organized by the Association of Banks of Russia.
"That which is valuable in Basel needs to be taken, but Basel on its own, if its many principles are followed, becomes absurd. Let's say that according to Basel, the easiest thing for me would be to buy US Treasuries. Well, what am I going to do with them? What risk am I taking on this? It's clear that many of these things simply don't work," Kostin, whose bank was one of the first to be sanctioned by the West after the start of the military operation in Ukraine, said.
VTB calculated that waiving the capital adequacy ratio buffers required by Basel standards will free up 3.3 trillion rubles in capital across the entire sector and 550 billion rubles for VTB alone.
Banks, however, ought to engage certain Basel approaches, for example, its advanced approach to assessing credit risks, the Internal Ratings-Based Approach, Kostin said.
Kostin also called attention to the redundant reporting of banks. "Why do we need three kinds of reports under the current conditions? It's a great deal of work, by the way. RAS, RAS 9, IFRS. Why IFRS? Why do we, banks that are under all sanctions, need IFRS? There's RAS 9, a great model, let's perfect it, add something from IFRS. We'll make one model," he said.
"There's a ban today on rating agencies and auditing companies working in Russia, although many auditors remain, are still working here. I think that the form that this has been in is simply impossible. I propose calling it Voronezh 1 instead, why do we need Basel? Basel is so boring... [Vasily] Pozdyshev [former Central Bank deputy governor in charge of bank rehabilitation, regulation, and supervision who became a senior advisor at the Basel-based Bank of International Settlements in 2020] left, and now he calls and says that it's impossible to live there. Voronezh is a fun city," Kostin said.
State Duma Financial Markets Committee head Anatoly Aksakov also made a joke in response. "I thought that Vasily Pozdyshev only calls me. It turns out that he misses the country, misses conversing with Russian people," Aksakov said.
Central Bank Governor Elvira Nabiullina, who also participated in the conference, said that the Central Bank is not planning to give up Basel standards, which are based on many years of experience and regulatory practice. However, Nabiullina promised to take national specifics into account and improve the regulatory approaches of the Central Bank.