“The coming quarters will not be easy, while the economy will adapt, it will be difficult for both companies and citizens.”
The Bank of Russia was able to protect financial stability and prevent the “inflationary spiral” from unwinding, but it’s too early to breathe out. This was stated by the head of the regulator Elvira Nabiullina at a meeting with the Association of Banks of Russia.
Our measures were aimed at combating the problems that arose, as they say, here and now. As a result, we managed to protect financial stability and prevent an inflationary spiral from unwinding.
The economy is entering a period of structural transformation and will be in dire need of financial resources. At the same time, the banks themselves need support under the sanctions: this is capital, time, and more flexibility to determine a new business model.
What else did the Central Bank say
- The regulator does not expect a drop in consumer lending in 2022: in the mortgage segment, it expects an increase of 10-15%, in the corporate segment – by 5%. But in the future, the quality of loans is likely to deteriorate “due to restrictions in the economy.”
- Most of the short-term anti-crisis measures that were introduced for banks after the start of the “military operation” in terms of easing their regulation for six months will be extended.
- The Central Bank suggested that market participants create banking associations without the exchange of assets or shares on the basis of business partnerships between large and small players.
The banking system needs mechanisms to allocate customers, risks and resources between sanctioned and non-sanctioned banks.
- The regulator proposed to raise the threshold for mandatory control of operations from the current 600 thousand to 1 million rubles, for real estate – from 3 million to 5 million rubles. The Bank of Russia, together with Rosfinmonitoring, will also audit operations subject to mandatory control – a lot can be waived.
- The Central Bank urged banks to convert the balance of foreign currency mortgages into rubles.
- At a meeting on May 26, the Central Bank considered two options for lowering the rate – to 11% and to 12%. A return to the standard step (25, 50, 75 bp) will be possible when the rate “goes away from double-digit values”. The Central Bank lowered the key rate from 14% to 11% per annum.