9 Jan 2024 11:08

Russian Central Bank plans to increase premium for maintaining capital adequacy

MOSCOW. Jan 9 (Interfax) - The Russian Central Bank is planning to increase the premium for maintaining capital adequacy as of January 1, 2024.

Since 2020, Russian banks have had to comply with a 2.5% premium for maintaining capital adequacy; for the largest players, an additional 1% premium was established based on systemic importance. Therefore, banks with a universal license were required to maintain a surcharge of 2.5%, while systemically important players maintained one of 3.5%.

The Central Bank reset these premiums to zero for all of 2023 and established a 5-year schedule for their gradual restoration. As a measure of protection against a significant reduction in the capital of banks, the Central Bank established a maximum amount of profit distribution depending on compliance with the established values of the surcharges. Thus, if a systemically important bank maintains surcharges of at least 3.5%, and a bank with a universal license keeps surcharges of at least 2.5%, they can distribute 100% of all profits, as long as the same surcharge levels are maintained following distribution. A reduction of these allowances below 3.5% and 2.5%, respectively, limits the distribution of profits to a maximum of 50% of the current year's profits and 0% of the retained profits from previous years.

Meanwhile, compensation and incentive payments to top managers will not be taken into consideration when determining the maximum profit for the payment of dividends.

The Central Bank, starting in 2024, will gradually increase the minimum values of premiums over 5 years. The premium for maintaining capital adequacy in 2024 will be 0.25%, in 2025 - 0.5%, in 2026 - 0.75%, in 2027 - 1.5%, and in 2028 - 2.5%. Systemically important bank premiums will remain at zero in 2024, rise to 0.25% in 2025, 0.5% in 2026, 0.75% in 2027, and then return to 1% in 2028.