Lombard Loan Agreement

Currently, credit institutions involved in credit transactions can only file documents with the Bank of Russia electronically as part of the e-mail agreement on the transfer of funds under the Bank of Russia`s payment system. A loan is the extension of money from one party to another on a repayable basis for a fixed period and generally for certain interest based on a loan contract. A Lombard loan allows you to borrow against assets deposited with a lender up to a certain percentage of their respective market values. These percentages of credit value – which ultimately affect the maximum amount of loans you can get from the lender – depend on the level of risk associated with the financing agreement and the nature of the securities you advance as collateral. The LTV (loan-to-value) ratio affects whether or not you can borrow Lombard and, if so, how much you can borrow. Your own custom LTV will be awarded based on your financial history, the extent of your asset portfolio and the volatility of your assets. The incentive agreement should provide only one type of assets transferred to a key account as an intraday and overnight loan guarantee. This restriction does not apply to other credits, i.e. a participation agreement may provide for one or two types of assets eligible as collateral for other credits transferred to a key account. Guarantees on Bank of Russia loans are considered appropriate if the cost of collateral-adjusted and adjusted provisioning rates is equal to or greater than principal and interest accrued during the loan period.

In order to include securities that can be included in the pool as collateral, a credit institution should classify them as „Blocked by the Bank of Russia“ in its deposit account with a custodian authorized to register securities eligible for bank of Russia loans. The Bank of Russia also provides secured loans for other purposes not related to bank liquidity management and day-to-day market interest rates or to monetary policy as a whole. Basically, this type of loan is secured by assets – which are also called „guarantees“ in the sector. Bank of Russia`s loan auctions are mainly used to manage all of the banking sector`s liquidity. In the event of a structural liquidity deficit, the Bank of Russia uses these operations to meet medium-term demand for bank reserves, even though credit institutions do not have negotiable guarantees. If the Bank of Russia requests early repayment of the loans, it may submit collection orders at any time. If the value of the securities held as collateral decreases, you may, as a borrower, be asked to charge your assets to meet the lender`s criteria. If you cannot do so, the lender may be allowed to sell some of the original assets in order to reduce the amount of the loan. To obtain credits, a credit institution would have to create one or two collateral pools for each key account (depending on the type of assets listed in a participation agreement). Each collateral pool includes either securities or non-negotiable assets. Chapter 8 of the Terms and Conditions sets out the procedure for creating collateral pools.