Banks will be helped with risks – Newspaper Kommersant No. 22 (7467) dated 02/07/2023

The Bank of Russia has introduced temporary relief for loss-making banks – until the end of the year they are allowed to assess the amount of operational risk based on actual losses. This will help a number of banks free up capital, which will improve their regulatory performance. Experts note that after the announcement at the end of last year of the curtailment of easing for banks, the new step of the Central Bank looks unexpected, however, they do not expect a very serious effect from the announced measures.

CB announced on increasing the number of banks that have the right to use the calculation of the size of operational risk using the internal loss ratio. Under certain conditions, this can mitigate the pressure on equity. As noted in the Central Bank, banks will be able to send him a notification until December 31, 2023. So far, this right has concerned primarily banks classified in group 1 and subgroup 2.1. Now it extends to group 2.2.

According to the instructions of the Bank of Russia, group 1 includes banks that have not identified current difficulties, and the quality of capital management, assets, profitability, liquidity is assessed as “good”. Subgroup 2.1, said Ilya Zharsky, managing partner of the Veta expert group, includes banks whose main indicators are assessed as satisfactory, there are no losses, but one of the mandatory ratios may not be observed for five days a month. Group 2.2 includes similar banks, but only with losses or simply non-profit.

As Yury Belikov, managing director of the Expert RA rating agency, explained, as a result, the list of credit institutions is expanding, which already this year can switch “from a universal rough calculation of the size of operational risk (depending on the amount of cash flows and without taking into account the effectiveness of managing the corresponding risk) to its calculation on the basis of actual losses recorded in internal databases. As a result, “with adequate management of operational risk and the availability of detailed information on relevant events, the bank can count on some release of capital to cover losses or increase in income-bearing assets at risk,” he notes.

As Maksim Kondratenko, member of the VTB board, explains, the regulator’s decision “will remove excessive administrative restrictions on the use of advanced approaches to assessing operational risk by banks.” However, VTB itself, the top manager clarifies, will not be affected by the change, since the bank has been applying an advanced approach to assessing operational risk since 2021.

In general, experts call the step taken by the Central Bank “unexpected, given that at the end of November the regulator announced a partial cancellation of easing in 2023.”

In particular, since the beginning of the year, the easing in terms of fixing the exchange rate has ceased to apply, in terms of the formation of reserves for loans to companies, the Central Bank’s easing is valid until June 30, 2023, in terms of individuals and SMEs – until the end of 2023.

At the same time, new concessions do not look as significant as last year’s benefits. On average, according to Mr. Belikov, the effect “will not be comparable” to full-fledged additional capitalization or other regulatory support measures, such as the ability to temporarily not reflect losses on credit and market risks during periods of turbulence. At the same time, according to Maxim Kondratenko, “another important aspect is currently under discussion – the optimal procedure for exiting support measures without harming the economy.”

Maxim Builov, Ksenia Dementieva