Russian banks could get option of being recapitalized in 'friendly' currencies

MOSCOW. Dec 1 (Interfax) - The Central Bank of Russia wants additional powers to determine foreign currencies that could be used to recapitalize lenders and non-banking financial institutions, which should help attract foreign investors from friendly countries.

The regulator unveiled plans to obtain relevant powers in the draft document on the main areas of financial market development for 2023-2025.

Currently, Russian legislation stipulates a number of restrictions for most socially important financial organizations with regard to the form in which their charter capital may be paid, a CBR press officer told Interfax.

For instance, the law permits for insurance companies to have foreign investors in their shares (stakes in the charter capital) pay for those solely in cash in the Russian currency.

Banks may allow investors in their charter capital pay in currencies other than the ruble but the list of eligible currencies is limited. Under regulatory documents issued by CBR, only the euro or the national currency of an enlisted country may be used in payments for shares (stakes in the charter capital) in a Russian bank. The list of countries issuing eligible currencies includes Australia, Austria, Belgium, Britain, Germany, Greece, Denmark, Ireland, Spain, Italy, Canada, Luxembourg, Netherlands, New Zealand, Norway, Portugal, the U.S., Finland, France, Sweden, Switzerland, and Japan. All of these countries are now designated as 'unfriendly' in Russia, as they introduced anti-Russian sanctions after the beginning of the special military operation in Ukraine.

"Empowering the Bank of Russia to determine the list of types of currency that may be used to pay for shares in, or stakes in the charter capital of, a financial institution will help market players get more opportunities for improving their capitalization and attract more foreign investors from friendly countries," CBR said.