Table 6 Comparison of the original minimum capital requirements of Basel III against similar requirements with regard to Russia

Date: 2015-10-07; view: 476.

* Prior to January 1, 2015 - 5.5%.

** In Russia, there are no banks relating to the G-SIFI

*** Set by national regulator

**** Not including the buffer for SIFI

***** Not including the buffer for SIFI

We can see from the Table 5 that requirements of Basel III in Russia are striker than in the original documents. For example requirements to the minimum Tier I capital (5% versus 4.5% of total assets, risk-weighted) and a total capital of banks (10% versus 8%). So far, however, it is not clear, if the Bank of Russia follows Western regulators on the gradual formation of capital conservation buffer already in 2016. Anyway the Russian requirements remain more stringent than global.

As was mentioned previously Russia hasn't yet implemented standards of Basel II. This can now create certain problems for Russian banks in the implementation of Basel III. More precisely, not the standard itself, but the advanced approaches related to the implementation of banks own risk assessment systems.

"The extent of the impact of the new requirements of the Basel Agreement on the activities of a bank depends on several factors such as the business model and business strategy, capital structure, and liquid assets, current indicators of capital adequacy and liquidity, counterparty creditworthiness and the amount of off-balance sheet operations. It can be expected that the increase in the cost of the costs associated with maintaining an adequate level of capital adequacy and liquidity, as well as ensuring compliance with regulatory requirements will have a negative impact on the profitability of the banking system as a whole"[31].

In regard to SME Basel III won't have any direct tangible effect.