The Central Bank weakened systemic ties – Newspaper Kommersant No. 233 (7434) dated 12/15/2022

The Bank of Russia announced new measures to support the banking sector in the face of sanctions. Typically, market participants have a positive attitude towards such initiatives, well, in extreme cases, they are neutral: they don’t look a gift horse in the mouth. However, one of the measures, which will come into force next year, namely the temporary zeroing of the requirements for capital adequacy allowances, caused a mixed reaction among bankers.

From 2020, Russian banks must maintain a 2.5% capital surcharge. For the largest players, there is an additional 1% premium for systemic importance. That is, the permissible level of capital adequacy, taking into account allowances, should be 10.5% for banks with a universal license and 11.5% for systemically important credit institutions.

In 2022, in case of non-compliance with the standards, banks received a ban on paying dividends. From 2023, the Central Bank will cancel capital adequacy ratios in exchange for restrictions, but not a ban on dividends. Five years will be given to restore the surcharges, and the schedule will be the same for all banks that decide to use the option.

The regulator does not make a difference between the banks that have fallen under sanctions and not – this is precisely what caused the questions of market participants. For players under blocking sanctions, benefits only give the opportunity to comply with the requirements of the Central Bank in terms of capital adequacy. Meanwhile, banks that have not been sanctioned can use the incentives to grow their business by buying loan portfolios or even competitors. And we see examples of those who successfully implement these opportunities, for example, Expobank, Uralsib, Tinkoff.

Meanwhile, it was precisely the division of the banking sector on the basis of sanctions that the Central Bank wanted to avoid. Back on May 26, speaking at a meeting of the Association of Banks of Russia, the head of the regulator, Elvira Nabiullina, pointed out that it is necessary to develop approaches to combat what many have already begun to call “sanction arbitrage.” “It is very important that the banking system does not split into two isolated segments (sanctioned and not.— “b”)… One of the priority tasks is to keep our banking system unified,” stressed the head of the Central Bank.

However, according to representatives of the sanctioned banks, by changing the format of the easing, the Central Bank will widen the gap. Perhaps because, first of all, the regulator was concerned about maintaining the growth of lending in difficult times, this is how they explained the zeroing of surcharges in the Central Bank. Or because transactions that are significant for the Central Bank and the state (purchase of VTB Otkritie or PSB SMP Bank) will take place regardless of the capital adequacy of the players.