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- Accounting request: The Central Bank is ready to give banks time to finalize the NNCL
Accounting request: The Central Bank is ready to give banks time to finalize the NNCL
The central Bank and the banks are discussing the introduction of a national short-term liquidity ratio (NCL) from October 1 or at the end of 2025, Alexander Danilov, director of the Central Bank's Banking Regulation and Analytics department, told reporters. Izvestia investigated how the innovation will affect domestic banking and what consequences it will have for customers.
The essence of the changes
The new standard is planned to be applied primarily to systemically important credit institutions (NWCS), the press service of the Central Bank told Izvestia. It will replace the Basel Short-term Liquidity Ratio (NCL).
It is assumed that the introduced standard will take into account the national specifics of the domestic financial sector. This is important for more precise regulation of banks' liquidity risk.
According to the regulator's calculations, the transition to new requirements will have a positive effect on the actual values of the standard for most NWFCS. Key differences between the new standard and the Basel one:
- expansion of the composition of highly liquid assets due to a wider list of assets used by Russian banks to attract liquidity;
- the use of outflow coefficients reflecting the behavioral characteristics of Russian clients under stress without the extreme scenario of a global liquidity crisis provided for by the Basel III standard;
- the appearance of an "orange zone" in the standard, falling into which will lead to increased bank contributions, for example, to the Mandatory Deposit Insurance Fund, but not to violation of the standard and the application of measures of influence.
At the same time, Russia will expand the list of highly liquid assets. In particular, they include securitization instruments, bonds issued under projects of technological sovereignty, structural adaptation of the economy and sustainable development.
Evaluation of participants
At the moment, the specific configuration of the national NCL has not yet been approved, Ivan Uklein, Senior Director for Bank Ratings at Expert RA, noted in an interview with Izvestia. The idea is mainly promoted by individual players, but not all major credit institutions support it.
"De facto, now, taking into account the benefits, systemically important banks are allowed to maintain the ratio at the level of 80% with the use of a paid credit line from the Bank of Russia," he stressed. — The draft national standard provides for its minimum value at a higher level (100%). In this regard, for players who are not currently experiencing problems with regulatory liquidity, a change in approach will mean stricter requirements for the liquidity buffer.
Given the lack of a unified position even among the largest banks, according to the expert, it may not be easy to reach a consensus by October 1, 2025. To speed up the process, the positive effect of changing the methodology should cover the increase in the minimum value of the standard, but in this, in turn, the Bank of Russia is not very interested.
The number of assets that can be classified as highly liquid will be expanded. Due to this, the regulatory balance of liquid assets and short-term liabilities of Russian banks will take into account the instruments available to Russian banks, Valery Piven, Managing Director and head of the ACRA Financial Institutions Ratings Group, told Izvestia.
The innovation should not cause concern among bank customers, as it is aimed at increasing the resilience of credit institutions to the manifestations of crisis phenomena, Vladimir Eremkin, senior researcher at the IPEI Structural Research Laboratory at the Presidential Academy, told Izvestia.
"In fact, the proposed changes are only an adaptation of international short—term liquidity standards (Basel III) to Russian conditions," the expert noted. — According to the Central Bank's report, the national short-term liquidity ratio has been properly calibrated, which will allow banks to increase liquidity and, in the context of the global financial crisis, to be less dependent on government assistance.
Separation of banks
The most stable banks will be happy to consider the liquidity of real assets taking into account Russian realities and will benefit from the transition, since the new standard assumes an expanded list of asset nomenclature compared to the outdated Basel standard, says Fyodor Sidorov, founder of the School of Practical Investment.
"The customers of these banks will either not feel the changes, or they will see improvements in the offer of financial products," the expert told Izvestia. — However, banks that have trapped themselves in liquidity will suffer the most. They use short-term transactions with other banks or with the Federal Treasury. In order to comply with the new standard, their management will need to review the balance sheet in the direction of reducing the volume of short transactions and a more balanced diversification of assets. For them, the transition is less profitable.
In his opinion, the clients of this group of banks may feel the tightening of policies on some short-term products or their withdrawal from the product line altogether. Nevertheless, postponing the implementation is more than justified, since the restructuring of IT systems for the correct calculation of liquidity will take time.
The introduction of NCL will oblige banks to form more significant liquidity reserves to cover short-term crises, Denis Astafyev, founder of the SharesPro investment company, added in an interview with Izvestia. This will increase their financial stability and ability to withstand stressful situations. At the same time, banks will have to tighten control over the balance of assets and liabilities in the short term, which may lead to an increase in operating costs for internal control and compliance.
"The need to maintain a high volume of liquid assets may force banks to reduce short—term lending or raise interest rates to compensate for lower yields," he stressed.
In his opinion, this is a positive factor for depositors and borrowers: increased stability of the banking system will reduce the risks of a liquidity crisis and make the financial sector more resilient.
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