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Russia’s finance ministry ‘seeks delay of Basel III reforms’

Russia’s finance minister Anton Siluanov has asked the country’s central bank to postpone reforms requiring banks to increase capital buffers under the “Basel III” international financial rules, claims Reuters.

Citing a letter that it has seen, the news agency says the request for the delay focuses on disagreement about how the banks’ risks are assessed. The Central Bank of Russia favours an in-house assessment and the finance ministry argues that it should be based on ratings by domestic agencies.

Siluanov’s request comes at a time of broader tension between the Russian government and central bank over the banking sector and tools for aiding economic growth. The central bank’s priority is stability of the financial system, but ministers are worried that economic growth - and households’ real disposable incomes - is stagnating, hitting the Russian leadership’s ratings.

The report notes that some ministers have urged the central bank to change the way it supervises banks to encourage more lending, which will in turn contribute to growth.

Increase underway

The move to increase banks’ capital buffers as part of the Basel III rules developed after the 2008-09 financial crisis - is likely to have the effect of holding down lending, the chief executive of Russia’s second bank has said.

In his letter dated July 17 to central bank governor Elvira Nabiullina, Siluanov suggests the introduction of the higher capital buffers in line with the Basel III changes should be tied to the introduction of domestic ratings for the banks.

“We have in mind a postponement of the increase in additions to the requirements of the banks’ capital adequacy,” Siluanov wrote.

Under the central bank’s proposals, Russia’s banks are already increasing capital buffers as part of the Basel III process and should fully comply by 2021. No government officials have said how long it would take before domestic ratings can be used as the basis for Basel III changes.

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