With friendly calculation – Newspaper Kommersant No. 204 (7405) dated 11/02/2022
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The Central Bank plans to make it easier for Russian banks to settle with counterparties from friendly countries by lowering the risk ratios for cross-border interbank loans, including for organizations with a low international rating. According to experts, this will simplify settlements with friendly countries in national currencies, and primarily with China and the Arab Emirates, which are specifically mentioned in the document. However, the experts do not expect a pronounced one-time effect from the innovations, considering the document rather “a reserve for the reorientation of foreign economic relations to the East.”
The Bank of Russia has published a draft instruction, according to which it is supposed to reduce the current risk weights for short-term (up to 90 days) interbank loans (MBK) in rubles and the currency of countries that are not hostile. The approach will also apply to balances on correspondent accounts with these banks. According to the requirements for banks of countries with a long-term credit rating of international rating agencies in the range from BBB + to BBB-, they are reduced from 50% to 20%. According to the requirements for banks of countries with a rating in the range from BB + to B- – from 100% to 50%. Such a significant reduction in risk ratios, according to experts, will help reduce the burden on the capital of banks involved in cross-border operations.
“Changes will apply only to the most stable banks-residents of the Russian Federation and countries that are not unfriendly, which are classified in terms of their reliability as classes A * and A (timely repaying their obligations and complying with the standards, taking into account allowances.— “b”),” the explanatory note to the document says.
As Mikhail Matovnikov, chief analyst at Sberbank, explained to Kommersant, settlements in national currencies with counterparties from friendly countries are growing, and the requirements for banks in these countries are also increasing accordingly.
“Many banks from neighboring countries have low ratings, so we need some relief in order to develop settlements in friendly currencies,” he notes.
Separately, in the draft instruction of the Central Bank, it is noted that a reduced risk weight of 20% will be applied to the requirements for resident banks of the PRC and the UAE with a placement period of up to 90 days, denominated in national currencies. According to Yuri Belikov, Managing Director of Expert RA, a reduction in the risk weights of requirements for banks in China and the United Arab Emirates is necessary so that Russian banks have somewhere to place client funds in yuan and dirhams, because in the current conditions, with respect to deposits denominated in these currencies, banks often have negative interest margins.
“The possibility of placing funds in Chinese and Arab banks could stimulate the domestic market of alternative currencies, but, of course, the process cannot be one-sided, and non-residents must be ready for correspondent relations (see Kommersant of October 21.— “b”),” the expert explains. At the same time, in his opinion, the easing will not have a pronounced one-time effect, they are rather designed “for the prospective reorientation of external operations to a range of friendly jurisdictions in the Middle East and East Asia.”
According to Anna Avakimyan, chief analyst at RegBlock, the share of the dollar and the euro in the assets and liabilities of the banking sector has decreased by two to three times since the beginning of the year. “In order to dispose of the rest of the currency of unfriendly countries, we decided to follow the path of the transfer, but not in rubles, but in other currencies,” she said.
Lower risk ratios will allow banks to allocate less capital for transactions.
It will be possible to replace 5-10% of the balance of the foreign exchange balance, Anna Avakimyan believes. In particular, this will work with great success for non-sanctioned banks, while SDN banks can use a bridge scheme. According to the expert, it is necessary to form a market within Russia with some non-sanctioned bank, which, in turn, will be able to more freely place and raise funds abroad.
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