OREANDA-NEWS  The debt obligations of the five largest companies to Russian banks account for 56% of the capital of the banking sector, the Bank of Russia plans to gradually modify banking regulation in order to introduce additional restrictions on concentration risk, according to the Central Bank's financial stability review.

The ratio of debt of the largest companies to the capital of the banking sector has been actively growing since the fourth quarter of 2022, the regulator notes. Over the past year and a half, the capital of banks has also increased, so the growth of the indicator is due to active lending to large businesses.

"The Russian banking sector has always been characterized by a high concentration risk, since the needs of the largest Russian companies in debt financing were significant compared to the capabilities of the largest Russian banks in terms of the size of their capital. Due to the introduction of restrictions on financing of Russian companies by unfriendly countries from 2022, the latter began to attract financing on the domestic market: although external debt was declining, companies took out loans to replace it, which led to an increase in the concentration of credit risk from the largest banks. At the same time, companies prefer to work with a small number of banks within the framework of bilateral agreements, without actively exploring alternative sources of debt attraction involving a wider distribution of risk (syndicated lending, bonds)," the Central Bank emphasizes.