Not to Basel, but to Voronezh: How Russia Is Rewriting the Capital Rulebook for Its Banks

For more than a decade, the rulebook governing Russia's banks read like a careful translation: Basel Committee on Banking Supervision standards, adapted paragraph by paragraph into the Bank of Russia's instructions. The sanctions of 2022 ended that arrangement almost overnight. Frozen correspondent accounts, severed market infrastructure and a financial system forced into self-sufficiency turned what had been an import exercise into a design exercise, and the regulator now describes its route with a wry domestic metaphor — a special path "not to Basel, but to Voronezh." In March 2025, Alexander Danilov, director of the Central Bank of Russia (CBR)'s Banking Regulation and Analytics Department, set out the full architecture of that path in an exclusive interview with Interfax, from a 4 trillion rouble overhang of immobilized assets to a national liquidity ratio built to replace the Basel original.

The agenda Danilov described is unusually broad for a single regulatory department: a risk-sensitive cap on non-core assets, a rebuilt hierarchy of systemically important banks, a countercyclical capital buffer that began rising in February 2025, a staged replacement of the Basel short-term liquidity ratio with a national one, new rules for blocked foreign assets, a consolidated concentration limit that will keep tightening until 2031, and a redesign of subordinated debt so that it finally absorbs losses when a bank fails. Read together, the pieces form a coherent programme — restoring the capital discipline that the lending boom of 2023–2024 consumed, without strangling credit in an economy the central bank is simultaneously cooling with its key rate.

The road not to Basel

The starting point of the interview is candid about how much has changed. Banking regulation, Danilov notes, is the mandate that keeps the financial system stable and banks resilient to shocks, "be it a pandemic or sanctions." For years the CBR's approaches rested mainly on Basel Committee recommendations; unprecedented restrictions altered the course, and the central bank is now adapting regulation to a new reality in which foreign standards no longer travel freely into Russian law. The consequence is methodological as much as political: limits, buffers and ratios have to be recalibrated on domestic data — the actual liquidity of Russian assets, the actual behaviour of Russian depositors — rather than inherited from a committee whose members have sanctioned the country's banks.

That recalculation is slow by design. Danilov's defence of the pace is the folk principle of measuring seven times before cutting once: every tightening innovation is calibrated so as not to create excessive pressure on banks that are still digesting sanctions, war-economy growth and a double-digit key rate. The price of that caution is a regulatory calendar that stretches to 2031, and a recurring complaint from bankers that the central bank moves too slowly — a complaint Danilov accepts "positively as a whole" while refusing to let banks cherry-pick: comprehensive regulation, he says, cannot be applied à la carte, you cannot fulfil what you like and ignore the rest.

The 4 trillion rouble hangover: immobilized assets

The largest single number in the interview is also the least familiar to most readers of Russian bank results. Immobilized assets — holdings that tie up capital without behaving like banking business — have reached 4 trillion roubles on the sector's balance sheets, more than 20% of the entire banking sector's capital. The growth of the past three years, Danilov explains, came mainly from investments in non-core businesses: both ecosystem ventures and stakes in non-financial companies unrelated to a bank's core activity. The revised concept of ecosystem regulation, delayed by the sanctions shock, is to be published in the near future with a clarified perimeter.

What will count as immobilized

• Perpetual bonds, newly added to the list: in substance they resemble equity, carry fundamentally similar risks and belong in the immobilized category.
• Long-term loans a bank grants to its own non-financial subsidiaries without clear repayment sources — a structure in which the bank has every incentive never to demand repayment, though not every intra-group loan will qualify.
• Fixed assets above 10% of a bank's capital. The 10% benchmark reflects what the regulator observed domestically and abroad: property genuinely needed for banking activity rarely exceeds that share, so anything above it is treated as ecosystem investment to close an arbitrage route.

Against that perimeter stands the risk-sensitive limit (RSL). The target remains 30% of a bank's capital, but the glide path has been softened: the limit starts at 100% and steps down over five years, with a smoother transition than originally planned to cushion the first three years. Banks get a genuine choice — sell excess assets or hold capital against the ones they consider essential to their ecosystems. The rules are to take effect in October 2026, after this year's discussions. Banks that sit inside ecosystems without being their core — subsidiaries of marketplaces or telecom groups, for instance — will not feel the RSL at all: their risk runs the other way, dependence on a larger non-financial parent.

Systemic importance, version two

The second pillar revives an idea the CBR first floated in a 2020 report and then shelved: differentiated capital surcharges according to a bank's significance. The revived version is more ambitious. Significance will no longer be read off asset size alone; the regulator will weigh the scale of a bank's ecosystem business and its impact on the deposit insurance system and other market participants should the group run into trouble. Systemically important credit institutions (SICIs) will then be sorted into groups, each carrying its own surcharge — the larger the bank and the deeper its footprint, the thicker the capital protection it must hold. Danilov points out that the approach is standard practice in China, the United States, India, Japan and Brazil, among others, with some jurisdictions running as many as ten groups.

The concept is to be published for market discussion by the end of the first half of 2025, but implementation waits on a prior repair job: banks must first restore their overall capital adequacy surcharges, cut during the sanctions stress, by 2028. Where the 2020 draft touched two banks, the new one will reach further, though Danilov declines to name names or surcharge sizes before the criteria are settled with the market.

The countercyclical buffer: paying for the lending boom

The most immediate change is already in force. From February 1, 2025, banks had to meet their capital adequacy ratios including a 0.25 percentage point countercyclical buffer, with a step to 0.5 pp scheduled for July 1 and a long-term level of 1% of risk-weighted assets in view. The unusual mid-quarter start date was a deliberate compromise: January 1 was considered and rejected as too harsh, since banks need time to redraw growth and capital plans.

The buffer's purpose, in Danilov's telling, is preservation rather than punishment. Lending overheated in the past couple of years; banks grew so fast that they partially consumed capital reserves because profits could not replenish them quickly enough. The buffer both cools the pace of new lending and keeps part of the capital intact should credit risks from that rapid growth materialize. The schedule is not dogma: the CBR has said it stands ready to adjust the timing if lending slows enough to threaten credit supply, and Danilov confirms the pace of loan growth will decide both the steps after July 1 and the route to the 1% destination.

From SLR to NSLR: the liquidity pivot

Liquidity regulation is where the "Voronezh path" becomes most concrete. In 2024 the Basel short-term liquidity ratio (SLR) turned into a market force: banks struggling to meet the restoration schedule bid aggressively for deposits, pushing rates up and feeding into the central bank's key-rate calculus. To ease the pressure, the CBR shifted the compliance calendar — from January 1, 2025, the ratio excluding irrevocable credit lines (ICLs) was kept at 50% instead of the planned 60%, and from July 1 it rises to 60% instead of the planned 70%, on the way to a target 80% from January 1, 2026.

The destination, however, is a national short-term liquidity ratio (NSLR) built on Russian market realities: actual liquidity of domestic assets and a more moderate stress on client outflows than the Basel template assumes. Because of that calibration, a bank's NSLR reading sits 15–20 percentage points above its Basel SLR value, which is why the regulator guided banks to hold 80% under the old ratio — the level that should correspond to 100% under the new one, making the switch seamless. The benefit is not universal: banks funded by short interbank loans or short federal treasury money gain less, and Danilov concedes that while most SICIs will comply, some will have to restructure liabilities, cut dependence on government and central bank funds and diversify high-liquid assets. An early launch from mid-2025 is under discussion, but it cannot be selective — the ratio arrives for everyone or for no one, and half the sector's IT systems are not ready.

Redrawing the liquid-asset basket

• A single-issuer cap inside the liquidity buffer: a bank's high-liquid assets must be spread across different companies' bonds, so that one issuer's distress cannot hollow out the buffer.
• An issuance-share test: if a bank holds too large a slice of a bond issue, the package is not truly sellable, and therefore not truly liquid.
• A phase-out schedule for securities that lose high-liquid status, giving banks time to adapt to the tighter criteria.
• Two easements: a higher threshold before large individual deposits attract punitive outflow coefficients, and permission to count excess liquidity of foreign branches when it is available to cover outflows at the parent bank.

Currency risk gets its own, still embryonic, chapter. Rather than a foreign exchange liquidity ratio, the CBR is thinking about the structure of open currency positions across maturities: a position closed today can spring open tomorrow when a currency deposit walks out and is paid in roubles while the matching currency asset stays on the books. Danilov calls the discussion initial, but the direction — regulating the "future" currency risk — is now on the table.

Blocked assets: netting, not reserve arbitrage

Three years into the sanctions era, blocked assets and liabilities remain a frozen layer on bank balance sheets, and the end-2024 rules on transferring them to a separate legal entity were designed with a narrow purpose: to create an independent company through which foreign creditors can settle and mutually offset what sanctions have immobilized. Sanctioned banks themselves cannot be contacted for this, because counterparties are legally barred from dealing with organizations on the SDN list.

The regulator's worry is abuse. If mutual offsetting has not happened within two years, reserves must be created as though the assets never left the balance sheet — a rule meant to stop banks using allocation purely to save on provisions. Danilov is equally blunt about attempts to park assets with no real value at all, such as shares in liquidated companies, in the new entity: those cannot be exchanged for anything and belong on a loss-recognition path, not a netting one. Against a backdrop of banks hunting every route to minimize reserves after the 2023–2024 balance-sheet sprint, the CBR rejects what it calls "creative" approaches, from offloading worthless claims to writing off obligations as formally unclaimed. So far, few banks have moved to create the separate entities.

Concentration: the N30 marathon

On concentration risk the first step was negative in form but significant in substance: the easing granted to sanctioned companies was not extended, and the overwhelming majority of banks complied without violations; the few with elevated exposures are handled individually, with long-term reduction plans. The structural novelty is the consolidated concentration ratio N30 for systemically important banks — stricter than the familiar N6 because it ignores lower risk weights and is calculated on core capital rather than total capital. A bill is being discussed with the Finance Ministry, with the expected arguments about timing, feasibility and the effect on lending to the largest corporates.

The phase-in is a six-year march: 65% from 2026, tightening to 25% from 2031. To keep the rule from punishing genuinely independent businesses that merely share an owner, the CBR is drafting operational-independence criteria — a company would escape the related-borrower group if its own creditworthiness grade is A or higher, it publishes separate IFRS reporting, independent directors hold at least 25% of its board, and mutual revenue and cost shares with group members stay below 20%. Banks should be able to apply the criteria from early 2026.

Subordinated debt that actually absorbs losses

The final block of the reform targets an instrument that has repeatedly disappointed regulators worldwide: subordinated debt that refuses to behave like loss-absorbing capital. In theory, when a bank hits trouble the debt is written off and core capital is replenished. In Russian practice, Danilov observes, banks refuse the write-off to protect client trust and reputation; investors lose their money irrevocably while the bank recovers, and shareholders — who should bear losses first — keep control and may even see their shares revalue. The trigger compounds the problem: it fires when the bank is already nearly insolvent, for example when core capital adequacy drops below 2%.

The redesign raises that trigger and splits the instrument into two types, most likely one with a higher trigger and conversion into shares, the other with a lower trigger and restoration of par value once conditions are met. Floating-rate subordinated debt is temporarily permitted but capped at seven years so that it exits circulation quickly. The concept goes to market discussion in the first half of 2025, enters regulation in 2026 and is expected in force in 2027 — a long road made longer by the need to amend statutes as well as CBR norms, in a system where banks have few capital sources beyond retained profit.

Nine months per rule: why the rulebook moves slowly

Bankers' impatience meets a process Danilov describes in assembly-line terms. A complex regulation travels through a fixed sequence:

1. drafting the concept;
2. collecting data from banks and running comprehensive analysis;
3. publishing an advisory report;
4. discussing it with the market and refining the concept;
5. drafting the regulatory act or acts and obtaining Justice Ministry endorsement.

On average the cycle takes about nine months, and only if data arrive on time — banks are not always quick, sometimes submit incorrect figures, and concepts sometimes have to be revised. Where speed matters, the CBR uses temporary board decisions to start a schedule immediately and codify it later, the technique already applied to blocked-asset reserving and to the restoration of capital surcharges through Instruction No. 199-I. On staffing, Danilov is relaxed: some rules must be built from scratch for a reality Basel never contemplated, no large hiring is planned — and experienced candidates are welcome to apply.

What to watch next

The interview leaves a clear calendar for anyone tracking Russian banking regulation through the rest of the decade:

• First half of 2025: publication of the refined immobilized-assets concept, the tiered SICI surcharge concept and the subordinated-debt concept; the decision on NSLR timing.
• July 1, 2025: the countercyclical buffer steps to 0.5 pp and the SLR-without-ICLs requirement to 60%.
• Early 2026: operational-independence criteria for concentration groups become usable.
• 2026: the NSLR replaces the Basel SLR, N30 starts at 65%, and the immobilized-assets RSL rules take effect in October.
• 2027–2028: new subordinated-debt rules enter into force; banks complete restoration of capital adequacy surcharges.
• 2031: N30 reaches its final 25% level.

None of these steps is dramatic on its own; together they amount to the construction of a national prudential system where an imported one used to stand. The "Voronezh path" is not deregulation — on almost every axis Danilov describes, requirements tighten — but it is regulation built from domestic evidence, phased to keep credit flowing while the sector rebuilds the buffers the boom years spent. For investors and counterparties of Russian banks, the practical message of the Interfax interview is that the capital and liquidity numbers reported today will be measured against a different, home-grown yardstick by the end of the decade.