RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF BELARUS

On March 30, 2011 No. 113

About entering of amendments and changes into some regulatory legal acts concerning standard rates of safe functioning and forming of special reserves

Based on Articles 34, of 39, the Board of National Bank of the Republic of Belarus DECIDES: 109 and 119 Bank codes of the Republic of Belarus

1. Bring in the Instruction about standard rates of safe functioning for banks and the non-bank credit and financial organizations approved by the resolution of Board of National Bank of the Republic of Belarus of September 28, 2006 No. 137 (The national register of legal acts of the Republic of Belarus, 2006, No. 186, 8/15213; 2007, No. 158, 8/16713; 2009, No. 55, 8/20511; No. 240, 8/21468), following amendments and changes:

1.1. third of Item 1 after words "National Bank" to add part with the words "The Republic of Belarus (Further — National Bank)";

1.2. in Item 2:

state subitem 2.7 in the following edition:

"2.7. the concepts "fair value", "hedging", "efficiency of hedging" and "hedging instrument" have the values determined by the National accounting standard 39 "Financial instruments: recognition and assessment" (NSFO 39) for banks approved by the resolution of the Board of directors of National Bank of the Republic of Belarus of December 29, 2005 No. 422;";

state subitem 2.8 in the following edition:

"2.8. trade portfolio - set of line items on the financial instruments withheld with sales objective or hedgings of change in value or future cash flows on these financial instruments. The trade portfolio can join line items on the financial instruments which are not containing any conditions limiting their purchase and (or) sale. The financial instruments sold according to repo transactions are included trade portfolio as long positions (the requirement to the issuer of financial instruments) at fair value if at the time of sale they were in structure of trade portfolio. If the financial instruments sold according to repo transactions at the time of sale were not in structure of trade portfolio, they are not included trade portfolio and on them the credit risk concerning the issuer is calculated. The financial instruments acquired according to repo transactions are not included trade portfolio;";

the tenth subitem 2.19 to state the paragraph in the following edition:

"derivative tools which underlying asset are the securities specified in this subitem, interest rates or percentage indexes;";

in subitem 2.21:

state part one in the following edition:

"2.21. the interconnected requirements and obligations - requirements and obligations (except for security deposit of money, other methods of ensuring obligation fulfillment of the client (partner), the guarantor (guarantor) which owing to terms of the contract (agreements) and (or) legislations are interconnected in such a way that need of return of the raised funds and (or) execution of other obligations comes for bank, the non-bank credit and financial organization only on condition of execution of his (her) relevant requirements in the amount sufficient for execution of the specified obligations, and correspond to the following conditions:

the possibility of agreement cancelation and (or) return of borrowed funds ahead of schedule at the initiative of the initial creditor is not provided in the agreements connected with attraction by bank, the non-bank credit and financial organization of money;

the term which remained before return by bank, non-bank credit and financial organization of borrowed funds exceeds repayment period (return) of assets and (or) residual effective period of contingent obligations;

the currency of the requirement matches with currency of the obligation or bank, the non-bank credit and financial organization performs hedging of risk of change in the exchange rate of currency of the requirement in relation to obligation currency;

the initial creditor according to the legislation of the country of its location (residence) performs risk assessment according to the corresponding transactions for the purpose of calculation of capital adequacy, large risks and creation of reserves on covering of possible losses (if similar requirements to it are established by the legislation) concerning the final debtor and does not perform concerning bank;

obligation fulfillment of bank, non-bank credit and financial organization before the initial creditor is not provided with security deposit of money, transfer into the initial creditor (or according to its order (order) on the third party) title on property, including on property rights, pledge of property, guarantee, the guarantee and (or) different ways of ensuring obligation fulfillment, except for transfers to providing requirements of bank, the non-bank credit and financial organization interconnected with these obligations;

in case of default the final debtor of requirements of bank, non-bank credit and financial organization within 90 days from the moment of maturity by agreements provides concession of these requirements to the initial creditor and (or) the procedure of the termination of the relevant interconnected requirements and obligations of bank, non-bank credit and financial organization during the next 90 days. At the same time the concession of the requirement shall not provide discount. For the purposes of this paragraph discount is understood as difference between the amount of requirements to the debtor and the amount of the transferred (yielded) requirements to the initial creditor;

the bank, the non-bank credit and financial organization have no obligations on return of borrowed funds, interest payment for use of them and other payments if only he (she) did not receive (did not receive) from the final debtor the corresponding payments in the amount sufficient for their execution;

the bank, the non-bank credit and financial organization have no obligations on compensation of losses (expenses) and (or) payment of penalty (penalty, penalty fee) to the initial creditor (or according to its order (order) to the third party) in case of non-execution, untimely or incomplete execution by the final debtor of requirements of bank, the non-bank credit and financial organization;

the final debtor and the initial creditor shall not match in one person.";

add the subitem with part four of the following content:

"For the purposes of this subitem the final debtor is understood as the party concerning which the bank has requirements interconnected with obligations of bank thus as it is provided by part one of this subitem. For the purposes of this subitem the initial creditor is understood as the party concerning which the bank has obligations interconnected with requirements of bank thus as it is provided by part one of this subitem;";

state subitem 2.23 in the following edition:

"2.23. the principle of conservatism - respect for care in case of application of the judgments necessary for the implementation of estimates of current status of the normative capital of bank, the non-bank credit and financial organization, his (her) risks, assets, obligations and transactions which are not reflected in balance in the conditions of uncertainty so that the indicators characterizing accomplishment of standard rates of safe functioning were estimated from line items of the greatest risk accepted by bank, the non-bank credit and financial organization;";

1.3. exclude Item 5;

1.4. state Item 7 in the following edition:

"7. Measure calculation, characterizing accomplishment by bank, non-bank credit and financial organization of standard rates of safe functioning, is performed according to the principle of conservatism.";

1.5. add the Instruction with Item 7-1 of the following content:

"7-1. In case of measure calculation, the standard rates of safe functioning characterizing accomplishment, the special reserves on covering of possible losses on the assets and transactions which are not reflected in balance created according to the technique established by the Instruction about procedure for forming and use by banks and non-bank credit and financial organizations of special reserves on covering of possible losses on the assets and transactions which are not reflected in balance, the Republic of Belarus approved by the resolution of Board of National Bank of September 28, 2006 No. 138 (The national register of legal acts of the Republic of Belarus, 2006, No. 184, 8/15214), and local regulatory legal acts of bank, non-bank credit and financial organization are taken into consideration (further - special reserves on covering of possible losses). Nedosozdanny special reserves on covering of possible losses on the assets and transactions which are not reflected in balance are taken into consideration of the normative capital in the amount of balance of variations on all risk groups.";

1.6. state Item 9 in the following edition:

"9. For the purpose of ensuring financial reliability of bank, the non-bank creditnofinansovy organization by governing bodies of bank, the non-bank credit and financial organization the local regulatory legal acts providing effective functioning of management system with bank risks shall be developed and approved. These local regulatory legal acts shall on the basis of the techniques of bank, non-bank credit and financial organization corresponding his (her) risk profile, provide effective management of the capital and risks (credit, country, percentage, share, currency, commodity, operational, liquidity risk and others), and also accomplishment of standard rates of safe functioning and to provide including:

organizational structure (providing with necessary information resources, qualified specialists and program technical means, accurate distribution of powers, procedure for their implementation, responsibility, interaction between structural divisions, procedure for decision making, exception of conflict of interest);

strategy, policy and control techniques bank risks;

procedures of identification (identification), assessment, analysis, monitoring, forming of the reporting, restriction (decrease), control of bank risks, approaches to high-quality and quantitative risks assessment;

the procedure of the analysis of resistance of bank, non-bank credit and financial organization to risks, including potential impact on financial condition of bank, non-bank credit and financial organization of possible shock situations (stress testing);

the procedure for use of the results received in risk management process and the analysis of stability of bank, the non-bank credit and financial organization, providing informing management of bank, non-bank creditnofinansovy organization, decision making including for exceptions concerning the established principles, procedures and restrictions, and also in strategic planning process, enhancement of strategy, the politician and procedures for risk management and development (review on regular basis) plans (actions) in adverse (crisis) conditions, including plans of crisis financing;

procedures of recurring and independent inspection of system effectiveness of risk management.";

1.7. to add Item 10 part one after the words "reflected by bank" with words ", the non-bank credit and financial organization";

1.8. to state part one of Item 11 in the following edition:

"11. Fixed capital (the capital of the I level) consists of the registered authorized fund; share premium; funds and profit of the last years confirmed with auditing organization (the auditor - the individual entrepreneur), except fund of dividends. Fixed capital decreases by the amount of own bonds of bank, non-bank credit and financial organization pledged to he (she); the redeemed own shares; losses of the current year and last years; intangible assets (less charged depreciation); investments in authorized capitals of subsidiary banks, non-bank credit and financial organizations and other affiliated legal entities; the equities constituting 20 percent and more in authorized fund of the legal entity; the relating to last years delayed, and also added and uncollected income. The investments subtracted from calculation in authorized capitals of subsidiary banks, non-bank credit and financial organizations and other affiliated legal entities, equities, the specified overdue and imputed incomes decrease by the amount of the reserves created on them according to the legislation and (or) local regulatory legal acts of bank, non-bank credit and financial organization.";

1.9. in Item 12 part one:

words", considered with the lowering percent" to exclude;

add part with offers the second or fourth the following content: "The positive amounts of revaluation of securities, available for sale, other balance sheet items join in calculation with the decreasing coefficient equal 0, of 70, the negative amounts of revaluation are excluded in full. The supplementary capital decreases by the overdue income and the income added relating to the current year and over 30 days which are not received in time from the date of their charge. The specified overdue and imputed incomes subtracted from calculation decrease by the amount of the reserves created on them according to the legislation and (or) local regulatory legal acts of bank, non-bank credit and financial organization.";

1.10. second and third Item 13 to state parts in the following edition:

"Sources of own means are calculated as depreciation amount of own fixed assets, including the fixed assets leased; depreciation of intangible assets; authorized fund; share premium; funds and profit of last years, except fund of dividends; profits of the current year taking into account use; the revaluation of fixed assets, construction in progress and the unspecified equipment made according to the legislation of the Republic of Belarus. The profit of last years and funds created by it do not join in calculation of sources of own means in case of lack of auditor confirmation after July 1 of the next year. Sources of own means decrease by the amount of the redeemed own shares, losses of last years and the current year, and also the amount of nedosozdanny special reserves on covering of possible losses.

Costs are calculated as the amount of the following investments: in authorized funds of the affiliated legal entities and equities constituting 20 percent and more in authorized fund of the legal entity (except for investments in authorized funds of legal entities which core activities are banking and (or) financial activities); own fixed assets, construction in progress, unspecified equipment and intangible assets of bank, non-bank credit and financial organization; investments in the fixed assets and intangible assets leased, received in finance lease (leasing); and also means in calculations for the above-stated costs and deferred expenses on the above-named purposes.";

1.11. in Item 14:

state subitem 14.1 in the following edition:

"14.1. the loan (loan) shall be granted by the legal entity one-timely for a period of 2 up to 5 years (the short-term subordinated loan (I will jam) or for the term of 5 and more years (the long-term subordinated loan (I will jam). At the same time in case of determination of loan term (loan) terms of the contract about possible automatic prolongation of the credit (loan) are not considered;";

add Item with subitems 14.1-1, 14.1-2 of the following content:

"14.1-1. the credit agreement (loan agreement) shall not contain conditions about target use;

14.1-2. registration of the subordinated credit (loan) in the form of bonded loan is not allowed;";

to add subitem 14.2 after the word of "loan provider" with the word of "(creditor)";

add subitem 14.4 with words ", except as specified, when return of means results from replacement of loan currency (loan) and (or) entering of the amount of the subordinated credit into authorized capital of bank borrower";

in subitem 14.5:

in word part one "rate of LIBOR plus 6 annual interest rates on 12-month interbank deposits in the corresponding foreign currency" shall be replaced with words "LIBOR rate size on 12-month interbank deposits in the corresponding foreign currency plus 6 annual interest rates";

the paragraph one of part two to add with words "the rate which is earlier established in the agreement or";

add the subitem with part three of the following content:

"At the same time capitalization of percent cannot be provided by the credit agreement (loan agreement); by the agreement it shall be determined that percent on the subordinated credit (loan) are not charged in the period as of which beginning at bank the loss by the accruing result since the beginning of year was formed;";

add Item with subitem 14.9-1 of the following content:

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