In this note we review Russia’s consumer lenders’ ‘new,’ that is, issued after 1 Apr 2013, subordinate bonds. We look at those of Russian Standard, Renaissance Credit, and Home Credit & Finance Bank, and for comparative purposes, we include Tinkoff Bank, although its subordinate bond issues are not ‘new’ as per the aforementioned definition. To be included as ‘additional’ (i.e. Tier II) capital under Russian regulatory standards and thus be Basel III-compliant, new subordinate bonds must have a loss-absorption clause in case the bank’s Core Tier I capital ratio N1.1 falls under 2%. We examine how consumer lenders’ loan book quality has been faring recently and estimate the losses these banks would have to tolerate to ensure that their N1.1 ratios fell below the 2% level. All our calculations and estimates are based on the banks’ financial reports under Russian Accounting Standards (RAS, the local GAAP).

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