Financial Sector Overview

Bank of Russia FINANCIAL SECTOR OVERVIEW The Central Bank of the Russian Federation BANKING SECTOR: PROPORTIONAL REGULATION Differentiating regulatory burden for banks depending on their size Regulatory burden depending on license type . • . Minimum size of capital (own funds) - RUB 300 mln Only 5 mandatory requirements, including H1.0, H1.2, H3, H6, H25 ratios • Limitations on international operations Simplified disclosure rules - not required to disclose information on accepted risks, their assessment or management procedures, or any information on financial instruments included in the calculation of their own funds (capital) Technically complicated international standards are non applicable Minimum size of capital (own funds) - RUB 1 bln May carry out all banking operations set forth by the law All mandatory requirements set by the Bank of Russia must be met Must be compliant with all international standards Financial reporting fully compliant with RAS and IFRS 866 Systemically important financial institutions (SIFI) are subject to: Higher capital adequacy requirements • Advanced risk management approach BASIC LICENSE UNIVERSAL LICENSE On 1 June 2017, Federal Law No. 92-FZ dated 1 May 2017 came into force. It envisages the introduction of proportional regulation designed to set up a regulatory balance for banks differing in scale and in the nature of operations. 149 banks hold basic license, as of December 2018. 23

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