The Bank of Russia has drafted changes to the procedure for calculating liquidity ratios under Basel III (the liquidity coverage and stable funding ratios), which apply to systemically important credit institutions.
The proposal will see an extended list of high quality liquid assets, which may now include mortgage-backed securities with a guarantee of the integrated housing development institution. The change is based on a Russian Government decision to approve a methodology for financial stability regulation of the integrated housing development institution; it aims to assist in the development of the market for mortgage-backed securities.
Among other changes are softer requirements for high quality liquid asset coverage of banks’ liabilities under precious metal accounts (depending on the method of discharging these liabilities), for a liquidity coverage ratio to be calculated and complied with. Requirements are now also eased for available stable funding in cases liabilities under loans and deposits in precious metals are satisfied in cash, for the net stable funding ratio to be calculated and complied with. The updates are based on the decision by the Basel Committee on Banking Supervision as regards a Bank of Russia question in follow-up to the Basel III Regulatory Consistency Assessment Programme.
The regulatory innovations are set to make a favourable effect on systemically important credit institutions’ capability for observing liquidity ratios and their continued lending to the economy.
See PDF here: https://www.cbr.ru/StaticHtml/File/41186/201201-41-1-3.pdf