Bank Requirements

The selection criteria cited below apply to bans, including those providing factoring and microfinancing services to SMEs, an to non-banking deposit and credit institutions (NDCIs).

To apply for participation in the SME Lending Program credit institutions must meet the following requirements.

The final decision on the participation of a credit institution in the Program is taken by the OJSC SME Bank on the basis of a comprehensive assessment of the financial status of the potential partner in compliance with the Bank’s internal documents to be performed in case the credit institution meets the designated criteria.

The OJSC SME Bank reserves the right to deny the credit institution participation in the SME Lending Program, or suspend its participation in the said Program in the event additional financial or non-financial circumstances are discovered, which in the opinion of the OJSC SME Bank may either affect financial stability of the credit institution, or bear reputational risks for the State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank).

1. General Terms for the Selection of Potential Partners under the SME Lending Program

1.1. The Bank of Russia banking license or license for non-banking credit institutions.

1.2. Current long-term credit ratings awarded by a Russian or foreign rating agency, not lower than the following (does not apply to NDCIs):

Rating agency
(name of the rating)

Rating

Rating in the event the bank provides collateral in the form of the state guarantee of the subject of the Russian Federation

FitchRatings
(international scale, long-term credit rating in foreign currency)

B-

ССС

Standard&Poor’s
(international scale, long-term credit rating in foreign currency)

B-

ССС+

Moody’sInvestorsServices
(international scale, long-term deposit rating in foreign currency)

B3

Саа1

FitchRatings
(national scale)

BBB-(rus)

ВВ+(rus)

Standard&Poor’s
(national scale)

ruBBB-

ruВВ+

Moody’sInterfaхRatingAgency

Baa3.ru

Ва1.ru

Expert RA

В++

В+

National Rating Agency
(individual credit rating)

ВВВ-

ВВ+

RusRating
(international scale)

BBB-

ВВ+

AK&M

В++

В+


In case the bank has several ratings awarded by different rating agencies, the highest rating is taken into consideration.

1.3. A positive previous year audit report.

Prior to the designated deadline for the presentation of audit/ accounting report, the audit/ accounting report for the year preceding the last reference year may be taken into consideration.

1.4. Absence of the Bank of Russia sanctions in the form of the prohibition to perform certain banking operations and open branches, as well as in the form of suspending of the license to certain banking operations, absence of unfulfilled orders of the Bank of Russia.

This requirement does not involve the revocation/ suspension of the license of a securities trader.

1.5. Experience in lending to SMEs and a ready portfolio of SME subjects as of the date of the application; specialized technologies/ programs for operations involving SMEs.

2. Non-Financial Criteria for Potential Partners Selection

2.1. Positive business reputation (absence of negative data related to reputation).

The business reputation is defined as the sum total of assessments by parties concerned (investors, creditors, analysts, authorities, media, employees etc) with respect to the services quality, integrity and professionalism of the directors and owners, level of motivation towards ongoing development, personnel policy, the responsibility regarding third parties, participation in regional public and social programs etc.

2.2. Absence of unfinished trials where the potential partner is the defendant, involving authorities, state organizations, taxation and supervisory agencies.

2.3. Absence of bad credit history with the OJSC SME Bank.

3. Financial Criteria for Potential Partners Selection

The designated financial indicators shall be determined in compliance with Instruction of the Bank of Russia dated November 12, 2009, № 2332-U On the List, Forms and the Procedure for the Compilation and Presentation of Financial Reports by Credit Institutions to the Central Bank of the Russian Federation (reporting forms 0409101, 0409123, 0409135, 0409115).

3.1. The size of the partner’s equity capital in compliance with the regulatory framework of the Bank of Russia not lower than 230.0 mln. RUB (for NDCIs - not lower than 18 mln. RUB).

3.2. The capital adequacy ratio (requirement H1.0)

  • above 10.2% (the norm - 10%);
  • for banks with equity capital under 300 mln. RUB - above 15%;
  • for NDCIs - above 15.2% (the norm - 15%).

3.3. Absence of unfinished client payment due to insufficient funds on correspondent accounts of the credit institution.

In accordance with the 0409101 form (secondary accounts 47418, 90903, 90904).

3.4. Observance of compulsory requirements set by the Bank of Russia.

3.5. The partner’s credit portfolio arrears - under 12%.

This indicator shall be determined in compliance with Regulation of the Bank of Russia dated March 26, 2007, № 302-P On Accounting Rules for Credit Institutions Based in the RА (Section 4 of the Chart of Accounts, Awarded Loans, Other Allocated Funds).

3.6. The share of 3-5 quality category loans shall not exceed 60% of the partner’s total credit portfolio; in case this value exceeds 40% the partner shall provide additional information on the credit portfolio structure with respect to quality categories.

This indicator shall be determined in accordance with Instruction of the Bank of Russia dated November 12, 2009, № 2332-U On the List, Forms and the Procedure for the Compilation and Presentation of Financial Reports by Credit Institutions to the Central Bank of the Russian Federation (reporting forms 0409115).

3.7. The share of non-state securities in the partner’s operating assets shall not exceed 30%.

The size of non-state securities investment is determined in compliance with Regulation of the Bank of Russia dated March 26, 2007, № 302-P On Accounting Rules for Credit Institutions Based in the RА (Section 5 of the Chart of Accounts, Investment in Debt and Equity Securities (exclusive of revaluation and preliminary cost of purchase) with the exception of securities issued by the Russian Federation, subjects of the Russian Federation, local authorities and the Bank of Russia).

In case the partner presents detailed information on the non-state securities portfolio and holds securities included in the Bank of Russia Lombard list, this indicator shall be calculated after deduction of their share. The Lombard list is available on the Bank of Russia official website.

The size of the operating assets shall be determined in compliance with the algorithm for the aggregate balance calculation employed by the Bank of Russia, including credits and other loans, correspondent accounts in credit institutions, securities purchased by credit institutions.

3.8. For NDCIs

3.8.1. Capital immobilization ratio - under 70%.

3.8.2. Positive financial result after taxation.

4. Optional Criteria (for Partner Banks)

These criteria do not form compulsory requirements, however a comprehensive analysis of the partner bank against these optional criteria shall be used to determine partner banks to provide priority lending to SMEs in case of high demand for resources in a particular region (RF subject).

The order in which these criteria are cited does not affect the weight of a criterion in the comprehensive analysis.

4.1. Considerable SME lending potential of the partner bank:

4.1.1. a significant competitive edge in RF regions (top 10 in an RF region with regards to SME lending), or an extensive branch network and subsidiary offices in RF regions where the bank conducts its business;

4.1.2. competitive SME lending terms;

4.1.3. partnership experience with international financial institutions with respect to SME lending programs;

4.2. Support on the federal and regional levels:

4.2.1. partnership experience with authorities of RF subjects related to SME support matters, as well as participation in federal/ regional SME support programs;

4.2.2. participation of an RF subject in the capital of the partner bank.

4.3. Successful partnership experience with the OJSC SME Bank and/ or Vnesheconombank in various areas of activity.

4.4. Controlled risk of reputation loss to the OJSC SME Bank:

4.4.1. information transparency of the partner bank with respect to the OJSC SME Bank (regarding official owners, ultimate beneficiaries, creditors and debtors);

4.4.2. absence of information (including the media) regarding participation of the bank, its owners and beneficiaries in money laundering or other unlawful activity.

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