Russia – Liquidity of banking system improved slightly in September, with only one bank falling below the regulatory minimum for the instant liquidity ratio N2

On 9 November the Russian rating agency RIA Rating published an analysis of the liquidity situation of the Russian banking system in the third quarter of 2012.  The analysis indicated that on the whole liquidity in 3Q improved both for the Central Bank and for commercial banks in general.  RIA Rating appended to the analysis a report on the liquidity ratios of 859 banks as of 1 October 2012, based on the banks’ monthly Form 135 filings as made public by the Central Bank of the Russian Federation.  The report considered only the quick liquidity ratio (N2) and the current liquidity ratio (N3) of the banks.  According to RIA Rating’s analysis, in 3Q 2012 only four banks violated at any time the mandatory liquidity ratios N2 or N3, considerably fewer banks than were in violation in the second quarter.  In September only one bank violated at any time either N2 or N3, the bank “Russian Financial Alliance” (“RFA”, or in Russian ОАО Акционерный коммерческий Банк «Русский Финансовый Альянс»), a small bank in Moscow which for 10 days during September violated the instant liquidity ratio (N2).

Sources:

RIA Rating analysis: Банки приспособились к нехватке ликвидности, но прогноз негативный (2012-11-09 18:38)

RIA Rating appended report: Ликвидность российских банков по состоянию на 1 октября 2012 года (2012-11-09)

Additional analysis: The instant liquidity ratio N2 (норматив мгновенной ликвидности Н2), which is defined by the Central Bank of the Russian Federation as the sum of a bank’s highly liquid assets divided by the sum of its liabilities on demand accounts, has a regulatory minimum of 15%. 

According to RFA bank’s Form 135 for September 2012, available at the website of the Central Bank, the bank began September 2012 with its N2 situation as follows:

Highly liquid assets (Лам) = 11,456,000 rubles

Liabilities on demand accounts (Овм) = 66,006,000 rubles

Instant liquidity ratio (Н2): 17.356%

During the month of September the bank’s N2 ratio frequently fell below the regulatory minimum: on 3 September the ratio had already fallen to 10.56%, and on 5 September it bottomed out at 9.13%, but even as late as 27 September the ratio was still as low as 10.20%.  But by the end of the month the ratio had returned above the mandated minimum, and on 1 October the bank’s N2 situation was as follows:

Highly liquid assets (Лам) = 18,391,000 rubles

Liabilities on demand accounts (Овм) = 91,245,000 rubles

Instant liquidity ratio (Н2): 20.156%

Sources:

RFA Form 135 for 1 September 2012: Сокращённое фирменное наименование кредитной организации: ОАО АКБ "РФА"

RFA Form 135 for 1 October 2012: Сокращённое фирменное наименование кредитной организации: ОАО АКБ "РФА"

Mark Pleas

Eastern Europe Banking & Deposits Consultant

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