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Russian regulator ups risk ratios for foreign currency loans

The Central Bank of the Russian Federation decided to introduce additional measures to restrict foreign currency lending to legal entities in order to reduce systemic risks related to foreign currency debt.

As part of the measures, risk ratios applied by banks on foreign currency loans issued for the purchase of real estate will be increased from 130% to 150%, while the risk ratio on forex loans to exporters will be raised to 110% from 100%, the regulator said May 23. In addition, risk ratios on other forex loans provided to legal entities will go up to 130% from 110%. The ratios will not affect foreign currency loans guaranteed by the state.

The increased ratios will apply to new loans issued from July 1. The central bank said it could introduce additional measures to curb foreign currency lending in the future, if it sees "increasing risks of dollarization of banking assets and liabilities."