Copyright Page
IMF Country Report No. 21/78
REPUBLIC OF BELARUS
TECHNICAL ASSISTANCE REPORT—ASSET CLASSIFICATION AND NONPERFORMING LOAN REGULATION
April 2021
This Technical Assistance Report paper on Republic of Belarus was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in August 2020.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623–7430 • Fax: (202) 623–7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2021 International Monetary Fund
Title Page
TECHNICAL REPORT
REPUBLIC OF BELARUS
Asset Classification and Nonperforming Loan Regulation
August 2020
Prepared By
Javier de la Cruz González
Authoring Department:
Monetary and Capital Markets Department
DISCLAIMER
The contents of this report constitute technical advice provided by the staff of the International Monetary Fund (IMF) to the authorities of the Republic of Belarus (the “TA recipient”) in response to their request for technical assistance. This report (in whole or in part) or summaries thereof may be disclosed by the IMF to IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the TA recipient, and upon their request, to World Bank staff, and other technical assistance providers and donors with legitimate interest, including members of the Steering Committee of PFTAC, unless the TA recipient specifically objects to such disclosure (see Operational Guidelines for the Dissemination of Technical Assistance Information). Publication or Disclosure of this report (in whole or in part) or summaries thereof to parties outside the IMF other than agencies or instrumentalities of the TA recipient, World Bank staff, other technical assistance providers and donors with legitimate interest, including members of the Steering Committee of PFTAC, shall require the explicit consent of the TA recipient and the IMF’s Monetary and Capital Markets Department.
Contents
Glossary
Preface
Executive Summary
I. Introduction
II. Methodology and Scope
A. Current Regulation
B. International Prudential Benchmarks
C. Scope of the Evaluation
III. Alignment of the Regulation to the BCBS Guidelines on NPLs
A. Scope
B. Harmonized Recognition Criteria
C. Role of Collateralization
D. Level of Application
E. Upgrading NPLs to Performing
F. Interaction with Forbearance
G. Evaluation Summary of NPLs
IV. Alignment of the Regulation with the BCBS Guidelines on Forbearance
A. Scope
B. Level of Application
C. Concept of Forbearance
D. Examples of Concessions and Financial Difficulty
E. Classification of Forborne Exposures
F. Discontinuation of the Forbearance Classification
G. Interaction of Forbearance with NPLs
H. Evaluation Summary of Forbearance
V. Qualitative Comparison to the Previous Regulation
A. Main Changes Regarding the Current Regulation
B. Analysis of the Changes to the Detailed RGs Definitions
VI. Quantitative Comparison to the Previous Regulation
A. Composition in Terms of RGs
B. Problem Assets Versus NPLs
C. Provisions
Table
1. Key Recommendations
Appendixes
I. Additional Recommendations
II. Alignment to the BCBS Guidelines on NPLs
III. Alignment to the BCBS Guidelines on Forbearance
IV. Qualitative Comparison with the Previous Regulation
V. Quantitative Comparison with the Previous Regulation
Glossary
| Basel II | International Convergence of Capital Measurement and Capital Standards (BCBS, June 2006) |
| BCBS | Basel Committee on Banking Supervision |
| BYN | Belarusian Ruble |
| CL | Contingent Liabilities |
| CS | Concessions |
| DPD | Days Past Due |
| FD | Financial Difficulty |
| FI | Financial Imbalance |
| FSI | Financial Soundness Indicators |
| IMF | International Monetary Fund |
| LLP | Loan Loss Provisioning |
| LTV | Loan-to-Value |
| MCM | Monetary and Capital Markets Department, IMF |
| NBRB | National Bank of the Republic of Belarus |
| NI | Negative Information |
| NPL | Nonperforming Loan (nonperforming exposures in a broader sense) |
| Regulation | NBRB Instruction 138 on the Procedure for Building Up and Use of Special Reserves for Covering Probable Losses on Assets and Transactions Not Reported on the Balance Sheet by the Banks, Development Bank of the Republic of Belarus JSC, and Nonbank Financial Institutions |
| RG | Risk Group |
| RR | Right of Recourse |
| TA | Technical Assistance |
| UFR | Unlikely Full Repayment |
Preface
At the request of the National Bank of the Republic of Belarus (NBRB), the IMF Monetary and Capital Markets Department (MCM) evaluated the latest revision of NBRB’s regulation on asset classification and provisioning, Instruction 138, against international prudential benchmarks. The evaluation included a qualitative discussion of the current version of Instruction 138 in comparison with the previous one and produced quantitative estimates of the impact of the regulatory changes and potential shortcomings that need to be addressed. Particular attention was paid to the former category of “problem assets” versus the newly introduced category of nonperforming loans (NPLs).
The work was conducted by Mr. Javier de la Cruz, MCM short-term expert, who visited Minsk during November 4–6, 2019, to discuss onsite the conclusions of the report. He met with Ms. Alena Mashnina, member of the NBRB Board and Head of Banking Supervision, and her senior staff. He presented the conclusions to Governor Kallaur and discussed with him the way forward. During this closing visit, Mr. de la Cruz also met with private sector participants.
The mission wishes to thank the NBRB management and staff for their cooperation during the evaluation.
