December 27, 2019 / 8:18 AM / 24 days ago

Russian c.bank to assess corporate debt burden to curb systemic risks -senior official

MOSCOW, Dec 26 (Reuters) - The Russian central bank is developing new criteria for a maximum debt level for domestic companies to prevent any possible systemic risk at an early stage, Elizaveta Danilova, head of the bank’s financial stability department, told Reuters.

The central bank is bolstering financial sector stability after Western sanctions and a sharp drop in oil prices in 2014 triggered a rapid rouble fall, something that increased the corporate sector’s debt burden since many loans were denominated in foreign currencies.

“There should be systemic criteria, for example, a ratio of a company’s debt to gross domestic product in order to identify not only large borrowers for banks but to spot problems in large firms that can trigger systemic risks,” Danilova said.

Next year, the central bank together with commercial banks it regulates, will continue working on a specific template for such criteria, Danilova said. (Reporting by Elena Fabrichnaya, Andrey Ostroukh and Katya Golubkova Editing by Andrew Osborn)

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