Page 78 - RusRPTApr20

Tier 1 capital was a negative RUB1.3 trillion at end-1M20) improved about 20bp in January.
Fitch says this was largely driven by lower risk weights on certain asset classes since January 2020, with the largest effect from the 65% weight (compared with 100% in 2019) of high-quality corporate exposures. Excluding Sberbank and Raiffeisenbank (which both use CBR-approved internal risk- based models rather than standard risk weights for certain asset classes, including corporate loans), the effect was higher, at about 35bp for core Tier 1 and Tier 1 ratios, and about 45bp for total capital ratios. The sector average core Tier 1 ratio at end-1M20 was 10.2%, Tier 1 10.9% and total 14%, all excluding the bad bank.
Ruble interest rates (judging by MosPrime rates from 1 day to six months) were stable in January and decreased about 15bp-20bp in February after a 25bp key rate cut (to 6%) by the CBR. Longer-term MosPrime ratios (from one to six months) grew 15bp-25bp during the week commencing 9 March, probably reflecting the market sentiment of increased probability that the CBR may be approaching the end of its easing cycle given the weaker ruble, lower oil prices and increased global financial market volatility. To soften the pressure on the ruble exchange rate, the CBR recently suspended FX purchases, brought FX sales forward under the "budget rule" and increased the limit of FX-swap operations to $5bn (albeit demand from banks remained low).
8.1.7 Banks specific issues
Several large non-state pension funds (NPFs) plan to merger to form the consolidated NPF Evolution (Evolutsia), Kommersant daily reported on March 3 citing unnamed market sources. Reportedly, the new NPF will include the funds of Region group, and the NPF Soglasye of Rossium consortium. As analysed by bne IntelliNews, the Central Bank of Russia has toughened the regulations for NPFs and allowed the sector to consolidate around several major state-affiliated financial groups for easier control. Soglasye would become the largest of merged funds with RUB29bn of pension savings, with other funds adding another RUB13bn of savings, according to Kommersant. After the consolidation NPF Evolution will be the eight largest NPF with assets of RUB255bn, beating the VTB Pension Fund of Russia's second-largest bank VTB.
78 RUSSIA Country Report April 2020 www.intellinews.com