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Report: VTB asks Russian central bank, government to relax Basel III conditions

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Report: VTB asks Russian central bank, government to relax Basel III conditions

VTB Bank PJSC has asked the Russian government and central bank to soften Basel III capital requirements for local lenders, pointing to problems with accessing the capital market due to Western sanctions, Reuters reported, citing VTB Bank CEO Andrey Kostin.

VTB, PAO Sberbank of Russia and other Russian state-owned banks have not been able to access foreign financial markets since 2014, after the West imposed sanctions over Russia's annexation of the Crimean peninsula from Ukraine.

Kostin said five of Russia's 10 biggest banks have been unable to raise funding abroad due to sanctions, and added that he had asked the central bank and the finance ministry to revise the capital requirements and possibly give lenders two or three additional years to align with Basel III standards.

VTB already increased its capital by 300 billion Russian rubles, but needs an additional 150 billion rubles in 2019 to comply with the requirements, the executive said, noting that the total translates into 4.5 trillion rubles of unissued loans to the local economy.

Russian Finance Minister Anton Siluanov said that "it makes sense" to consider relaxing Basel requirements for local banks operating under sanctions or having limited possibilities to attract funding. He also noted that the finance ministry wanted to discuss potential changes to the way Basel III rules are implemented in Russia with the central bank.

Meanwhile, Kostin said VTB expects to complete the sale of its insurance business to JSC Sogaz by the end of 2018. The Russian Federal Antimonopoly Service is yet to approve the transaction, but unofficial discussions on the matter with the regulator indicate that there should not be any problems with securing the approval, the executive said.

Kostin also said that the lender plans to acquire two small regional banks by the end of 2018.

As of Sept. 6, US$1 was equivalent to 69.48 Russian rubles.