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ATON - Daily Dashboard, Financials - Oct 18, 2012.

Financials

CBR Mulling Additional Measures to Constrain Consumer Lending Growth

The Central Bank of Russia may introduce higher risk weights for unsecured consumer loans when calculating capital adequacy ratios, Vedomosti reports today (18 Oct). This is the CBR's second proposed initiative aimed at containing exceptionally rapid growth in unsecured consumer loans (around 60% YoY).

(To view the original document, please click on the link below:

http://reports.aiidatapro.com/brokers/AtonEN/2012_10_18.pdf)

The CBR's First Deputy Chairman Mikhail Sukhov told a banking conference yesterday that the new higher weights could be introduced starting from 1 Mar 2013. The weights would depend on the loan rate, starting with 1.1x for a 25%-rate rouble-denominated loan and up to 2.5x for loans charging more than 60%. For FX-denominated loans, new weights might start as high as 1.7x for a 20-25% loan. The new weights would only be applied to newly issued loans starting from 1 Mar 2013.

Bottom line

The CB R is clearly concerned over the rapid expansion of unsecured consumer lending and the increase in risk weights is their second attempt to constrain this growth (recently, the CBR said it might double the RAS reserve requirements for overdue unsecured consumer loans). The effect of this measure on banks' capital has yet to be quantified, but at first glance we believe it will be more effective than the CBR's earlier initiative.

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Publication:Russian Banks and Brokers Reports
Date:Oct 18, 2012
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