Russian central bank to restrict some new corporate loans as debt burdens climb

MOSCOW (Reuters) – Russia’s central bank on Thursday said it planned to set a surcharge for banks when issuing new loans to large firms with a high debt burden, as the regulator looks to limit credit risks for Russian companies contending with interest rates at 21%.

A growing number of Russian companies and business leaders have criticised the central bank’s monetary policy. The central bank insists that stark labour shortages are a bigger drag on development than high borrowing costs.

Russian Railways, a key cog in Russia’s industrial machine, is one of several firms planning to reduce investments next year. The state-owned monopoly expects its interest payment costs to hit $7 billion next year, suggesting a rise of around $4 billion, a company document seen by Reuters showed last week.

The central bank said the measures would apply to companies with debt over 100 billion roubles ($987 million), an interest coverage ratio of less than 3% and whose consolidated debt exceeds 2% of the Russian banking sector’s capital.

It did not specify how much the surcharge would be.

“These measures will limit large companies’ debt burden and banks’ credit risks,” the central bank said in a statement.

The bank is under pressure to keep rising inflation in check. It is next due to set interest rates on Dec. 20 and some analysts are warning that an another aggressive rate hike may be on the cards.

($1 = 101.2955 roubles)