The Central Bank of Russia is implementing additional measures to support credit institutions against the backdrop of sanctions imposed by Western countries. This was stated on February 28 in the message of the regulator.
“The Bank of Russia provides credit institutions with the opportunity to make a decision on the non-deterioration of the assessment of the financial position of the borrower for the purpose of forming reserves for losses. The ability to not worsen the assessment of the quality of debt service, regardless of the assessment of the financial position of the borrower on restructured loans.
It is noted that support measures can be implemented if the deterioration in the financial situation of the borrower occurred after February 18, 2022 and is due to Western sanctions. In addition, the Central Bank will make it possible to use the valuation carried out as of February 18 for the property on the balance sheet of banks, as well as for the purposes of calculating reserves for possible losses on loans, if the collateral belongs to quality categories I and II.
Additional support measures will be valid until December 31 of this year.
Also, from February 28, the Bank of Russia dissolves for an indefinite period the accumulated macroprudential capital buffer for unsecured consumer loans and mortgage loans in rubles and foreign currency. It is noted that as of February 1, the amount of capital reached 733 billion rubles.
“The level of allowances for risk ratios under the new requirements will be reviewed later, if necessary,” the message says.
On the morning of February 28, it became known that the European Union allowed transactions with the Central Bank of the Russian Federation, if it is “strictly necessary” for the financial stability of the Union or an individual country. Earlier, the EU banned operations related to the management of reserves and assets of the Central Bank of the Russian Federation.
Also on Monday, the Central Bank ordered to stop brokerage trading in securities owned by foreign entities on the Russian market. It is noted that this requirement does not apply to transactions concluded before the time specified in the document.
On February 27, the Central Bank of the Russian Federation reported that the Bank of Russia has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector in the country. It is noted that today all banking services operate as usual. On the same day, the Central Bank announced the introduction of a temporary easing in relation to the obligatory observance by credit institutions of limits on open foreign exchange positions. According to the regulator, this is necessary to facilitate the adaptation of banks to the sanctions applied against them.
On February 26, Bloomberg announced US intentions to impose sanctions against the Central Bank of Russia. It was noted that the final decision has not yet been made. The day before, the press secretary of the President of the Russian Federation Dmitry Peskov said that the Western sanctions are very serious, but, according to him, Russia was preparing for them in advance.
The day before, the United States imposed sanctions on a number of companies with state participation or organizations important to the economy and on “two companies dominated by private capital.” The list includes Gazprombank, Alfa-Bank, Sberbank, Otkritie Bank, Sovcombank, VTB, Rosselkhozbank, Moscow Credit Bank (MKB) and Novikombank. Following the United States, other countries have imposed sanctions against Russian banks.
Western sanctions followed in response to the Russian-led operation to protect the Donbass, the beginning of which Russian President Vladimir Putin announced on February 24. After that, President of Ukraine Volodymyr Zelensky accused the Russian Federation of hitting the country’s military infrastructure and introduced martial law throughout the country. He later severed diplomatic relations with Russia.
On February 21, Putin signed decrees recognizing the independence of the DNR and LNR. Also, the Russian leader signed agreements on friendship, cooperation and mutual assistance with the republics. The treaties were ratified the next day.
The situation in Donbass escalated on February 17, 2022. In the Donetsk and Lugansk People’s Republics, heavy shelling by Ukrainian security forces was reported, including from heavy weapons. The republics announced a general mobilization and evacuation of civilians to the territory of Russia.
Since 2014, the Ukrainian authorities have been conducting a military operation against the inhabitants of Donbass, who refused to recognize the results of the coup d’état and the new government in Ukraine. At the same time, Kyiv blames Moscow for the current situation. Russia has repeatedly stated that it is not a party to the conflict.
For more up-to-date videos and details about the situation in Donbass, watch the Izvestia TV channel.