Russian banks to be able to apply reduced risk ratio on requirements for banks from China, UAE - Central Bank draft instruction

MOSCOW. Nov 1 (Interfax) - Russian banks with universal licenses will be permitted to apply a reduced risk ratio of 20% on the requirements for resident credit institutions of China and the United Arab Emirates (UAE) when calculating ratios, the Central Bank of Russia (CBR) said in a published draft instruction.

The banks could apply the reduced risk ratio to interbank loans extended to banks from these countries for up to 90 days and denominated in the national currencies of China and the UAE, namely the yuan and the dirham, respectively.

The CBR is accepting proposals and comments on the draft instruction from November 1 to November 14, 2022. The regulatory act comes into force within 10 days from the date of its official publication.

The regulator would also like to reduce the current risk ratios for short-term (up to 90 calendar days) interbank loans in rubles and the currencies of "friendly" countries. Consequently, the risk ratio could be reduced by 50% to 20% for claims to banks of countries with long-term credit ratings, as assigned by an international rating agency, from "BBB+" to "BBB-" or similar. This would include to Russian resident banks in the currency of "friendly" countries by 100% to 50% on the requirements for banks of countries with ratings ranging from "BB+" to "B-".

The amendments will apply only to the most stable resident banks in Russia and "friendly" countries, including banks from Belarus, the explanatory note to the draft instruction indicates.