Further changes to Russian Basel III rules on subordinated debt

After half a year of Basel III implementation experience that prompted numerous clarification requests from market participants, the Central Bank of Russia has published amendments to Regulation 395-P regulating Russian banks’ capital that revised certain of its current requirements for subordinated debt instruments. This draft is widely expected to be close to final. If adopted, the amendments will become effective on 1 January 2014.

In particular, the base capital ratio triggering write down of subordinated instruments has been reduced from 6.4 per cent to 5.5 per cent, which is a welcome change for Russian banks. Below, Allen & Overy summarises and comments on the key provisions of the draft amendments dealing with subordinated debt…

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