Page 70 - RPTRusFeb17

8.1.5 NIMs & CARs
8.1.7 Banks specific issues
First Deputy Prime Minister Igor Shuvalov said that Russia’s mortgage subsidies programme is not going to be prolonged in 2017. The mortgage subsidies programme was introduced on March 1 2015 and subsequently prolonged to 2016. The latest mechanism assumed refunding to banks the difference between the key rate plus 2.5% and 12% (50bp at the current key rate of 10%). The programme covered 25mn sqm of sales while the liabilities, as estimated by the government, are no more than RUB17bn. The government is ending the programme as market interest rates are approaching 12%, which was consider the cut off. Cancelling the subsidies is unlikely to trigger any material uplift in blended mortgage rates, as the product remains one of the prime growth drivers of banks’ retail portfolios, which have generally seen an easing cost of funding of late. VTB forecasts the key rate to decline from 10% at present to 8.5% by end of 2017. The target of 12% for mortgage borrowers now broadly corresponds to the latest CBR statistics (12.21% for newly issued mortgages in November 2016).
The Central Bank of Russia (CBR) intends to implement a three-tier system in the domestic banking sector from January 1, 2018, and complete the system set-up by early 2019, TASS reports . "We plan to introduce the three-tier system from January 1, 2018. A one-year transitional period will then start, when the banks should determine the category they want to work in," CBR governor Elvira Nabiullina said. The three categories are: systemic credit institutions, which will continue working under existing rules; universal banks, which can perform all kinds of operations, including international ones, but are regulated in full scope in line with Basel standards. Minimal requirements to the
70 RUSSIA Country Report February 2017 www.intellinews.com