The Adaptation of the New Capital Requirements (Basel 3) to Russian Conditions

<p>In 2010, in response to the challenges of the global financial crisis, the Basel Committee on Banking Supervision has issued new requirements, known as Basel III. The main aim of the requirements is to increase the stability of banking systems. All countries, who are members of the Committee, as well as other countries that are interested in strengthening the global financial system and enhancing the competitiveness of their banks, are currently implementing new standards. In Russia the Central Bank has already made the necessary changes on capital requirements.</p><p>New standards that meet the requirements of Basel III, are reflected in the legislation of the Bank of Russia: Regulation 395-P &quot;On the method of determining the value and evaluating the adequacy of own funds (capital) of credit institutions&quot;, the new edition of the Bank of Russia Instruction number 139-I &quot;On mandatory ratios of banks&quot;.</p><p>Russian banks from January 1, 2014 make calculations according to the new requirements. However, question about the requirements for the establishment of conservation buffer and a countercyclical buffer remain open.</p><p>Russia&#39;s accession to the Basel Agreement on basic principles of banking supervision and following the recommendations of the Basel Committee, undoubtedly contributes to the efficiency of the Russian banking system, it allows credit institutions to become full participants in international banking system, strengthens the confidence of foreign investors, which seems to be quite important in a globalizing world economy and financial markets.</p><p>However, most experts estimated that the transition to the new standards will have also a negative impact on the banking system. Among the negative aspects stand out: the decline in profits and profitability of banks, lack of sources of additional capital, rising prices of credit services, weakening banking competition due to mergers and acquisitions and other. All this will eventually lead to lower economic growth, which is highly undesirable in the existing state of the Russian economy.</p><p>All the positive and negative aspects of this transition should be analyzed, to mitigate possible negative effects.</p><p>Relevance of the work is:</p><p>- Russia&#39;s accession to the world banking community</p><p>- Strengthening the stability of the Russian banking system</p><p>- Lack of clear guidelines of the Bank of Russia on some aspects of the introduction of capital requirements of Basel III.</p><p>The aim of this work is to study the new requirements of Basel III, the impact of new requirements for the Russian banking system, as well as adaptation of the requirements to Russian conditions.</p><p>Scientific significance is analyzing methodological framework on the subject, including studies of the Basel Committee on Banking Supervision, the International Monetary Fund, works by Russian and foreign authors on the implementation of Basel recommendations.</p><p>The practical significance is to adapt the recommendations for the introduction of a countercyclical capital buffer, proposing an indicator to determine a countercyclical buffer and thresholds to determine its size.</p>