Page 66 - RusRPTNov18

8.1.4 NPLs
8.1.5 Banks specific issues
The CBR has published the banking sector statistics for September 2018. Asset quality moderately improved , with the share of overdue amounts in the loan portfolio declining m/m both in the retail (-17bp to 5.8%) and the corporate (-9bp to 6.6%) segments.
In y/y terms, the share of overdues in the retail portfolio declined 1.8pp, while in the corporate portfolio they stayed flat.
The board of the Central Bank of Russia (CBR) could adjust the additional capital requirements for banks under Basel III standards implementation , as well as prolong a financing regime for sanctioned banks, the deputy head of CBR Vasily Pozdyshev told the press on October 9. This week Russia's state-controlled VTB Bank and the government reportedly agreed to try and persuade President Vladimir Putin to postpone the central bank's implementation of Basel III capital standards scheduled for January 2019 . The central banker also added that such delay is possible, as the CBR wants to support the crediting of the economy that revived in the past months, as real sector loans grew by 1.8% in September. Reportedly it was VTB's head Andrei Kostin that urged the Kremlin to intervene amid increased sanctions risks, arguing that tough capital requirements for "systemic banks" could compromise dividends and crediting of the economy. Kostin previously estimated that negative effect from Basel III for his bank at RUB450bn from 2017 to 2019. As of January the CBR plans to increase the extra capital adequacy ratio for Russia's largest banks by 0.975pp. Bloomberg estimates that VTB would have to have a first-tier capital ratio of 11.5%. From January to August 2018 VTB's capital ratio declined by 0.5pp to 12.1%.
Debate in Moscow over foreign insurers' market access. According to WTO rules, Russia must admit foreign insurers to domestic markets by August 2021. The insurers will not need a license from the Central Bank, only accreditation, and they will be allowed to deal in all types of insurance other than state purchases. Presidential lawyers disagree specifically with one term in the law that limits disputes between individuals and foreign insurers to
66 RUSSIA Country Report November 2018 www.intellinews.com