Bank concentration limits tightened, capital requirements to triple
The Central Bank of Russia has unveiled a major regulatory review outlining plans to triple minimum capital requirements for banks to 3 billion rubles and enforce strict 100 percent risk weights on large corporate loan concentration starting in 2028.
Overhauling concentration and capital bases
The Central Bank of Russia is reforming concentration risk rules by applying a fixed 100 percent risk weight for large corporate exposures under N6 and N21 ratios starting January 1, 2028.
Banks exceeding concentration limits face a 2 percent annual deposit insurance surcharge on excess exposure, while institutions complying with approved reduction plans receive temporary supervisory relief.
Concurrently, the regulator proposes tripling minimum capital requirements to 3 billion rubles for universal license banks and 1 billion rubles for basic license banks, phased in between 2028 and 2030.
Additional measures raise the AT1 sub-debt write-down trigger from 5.125 percent to 6.5 percent.
Subordinated debt and provisioning shifts
The regulatory package updates subordinated debt terms by raising floating rate yield caps to Key Rate plus 10 percentage points and setting a 10-year minimum maturity for AT1 debt.
Starting July 2029, banks must apply a 5 percentage point reserve add-on for corporate loans exceeding 50 billion rubles that lack annual IFRS reporting.
The framework restricts using sole residential properties as collateral for consumer loan reserves.
Central bank plans also include a short-term FX liquidity ratio and integrating ICAAP add-ons into capital adequacy ratios by 2027.
Necessary discipline with delayed impact
The overhaul targets persistent structural concentration risks in the Russian banking sector.
However, extended transition windows stretching to 2033 significantly dilute the immediate supervisory punch.
Tripling capital floors will inevitably drive widespread consolidation among smaller regional lenders.