Central Bank will make currency mortgages unprofitable for banks – RBC

Central Bank will make currency mortgages unprofitable for banks – RBC

All-Russian Meeting of currency borrowers in Gorky Park. Archival photo

Photo: TASS

Bank intends to make the issue of currency mortgage finance unprofitable for banks. On Thursday, the regulator issued a draft guidance which defines the measures to do with the April 1, 2015 lending in dollars and euros for the banks is very expensive.

Bank has proposed an increase on foreign currency loans hazard ratios (the ratio of possible losses to the expected profit) in the calculation of capital adequacy – from 150% to 300%. Risk ratio taken into account when calculating the capital adequacy ratio of the bank, the latter is the ratio of capital to assets weighted by risk level.

Deputy director of Interfax-CEA Alex Buzdalin explained RBC how to work the proposal of the Central Bank: each bank loans linked to a certain credit risk, the Central Bank requires that this risk is covered by the bank’s own capital (capital adequacy requirements of the bank). At the same time the bank to earn a profit on the equity. “If the Central Bank doubles the requirements for risk in the calculation of capital adequacy in order to earn the same profit, the bank must increase the rate on the loan is also doubled. Of course, none of the banks will not do. And if the banks will not change rates, the return on equity, which covers the mortgage, will fall by half – from 10 to 5% “- explains Buzdalin, adding that the level of 5% of the banks are not interested.

However, CBR will measure fence, if banks want to issue currency mortgages, says deputy chairman of Nordea Bank Andrey Maltsev.

As stated in the explanatory memorandum, the project is designed “to suppress the accumulation of excessive risk-taking by banks in the foreign exchange segment of mortgage lending, lower rates of mortgage loans in foreign currency ».

By the adoption of such a document controller pushes a situation in which borrowers were the currency mortgage in connection c devaluation of the ruble. Some amount of the monthly payment exceeds income, so they go to rallies and write access to the authorities.

In late January, speaking at the State Duma, the chairman of the Central Bank Nabiullina said that the regulator is ready to make currency mortgages prohibitive for banks. She acknowledged that “banks sometimes use the financial literacy of people.” However, she stressed that people are responsible for the decisions they make, and help borrowers who took mortgages in foreign currency shall be exclusively targeted based on their income.

Vice President Andrei Osipov VTB24 considers “defensive barrier” for the issuance of the currency mortgage is “absolutely untimely measure.” According to him, almost all the banks have already stopped issuing currency mortgages. “Such a measure should have been administered at least a year ago, when the Central Bank began to plan the transition to a floating exchange rate,” – said Osipov.

According to the Central Bank, last year only 750 banks issued currency mortgages totaling 10.83 billion rubles. (Statistics of the Central Bank provided in rubles). For comparison – in rubles banks issued in 2014, 1.01 million mortgage loans totaling 1.75 trillion rubles.