On 27 September 2009, the President signed Federal Law No. 227-FZ suspending certain rules of Federal Law No. 177-FZ "On the Insurance of Individual Bank Deposits in the Russian Federation," dated 23 December 2003.

The Law entered into force on 29 September 2009.

Law No. 177-FZ lists instances when a bank will not be eligible to participate in the system of mandatory insurance of individual bank deposits. The Central Bank must ban such banks from attracting deposits.

The Law has suspended certain rules which set out the ineligibility criteria (for example, the bank's failure to comply with mandatory economic ratios, its "unsatisfactory" profitability, and so on) until 31 December 2010.

On 5 August 2009 the Central Bank issued Directive No. 2267-U amending its Directive No. 2005-U "On the Evaluation of Banks' Economic Position," dated 30 April 2008. The Directive entered into force on 2 October 2009.

According to Directive No. 2005-U, the Central Bank's territorial departments regularly evaluate the economic position of banks, following which an evaluated bank is assigned one of five classification categories.

The amendments provide that banks having unsatisfactory profitability will be assigned the third classification category (rather than the fourth as previously).

Note, however, that according to Central Bank Directive No. 2226-U, dated 24 April 2009, effective until 31 December 2010, a bank's profitability is not to be taken into account for that bank's classification.

On 7 August 2009 the Central Bank adopted Regulation No. 342-P "On Mandatory Reserves of Credit Organizations." The Regulation will enter into force on 1 November 2009 and invalidate Regulation No. 255-P, dated 29 March 2004 on the same matter.

Regulation No. 342-P represents an amended version of the current Regulation No. 255-P, dated 29 March 2004.

Currently, Russian credit organisations are required to deposit certain reserve funds in non-interest bearing accounts with the Central Bank. The reserves are required for the credit organisation's:

Regulation No. 342-P changes the above categories to requiring reserves for the credit organisation's:

The Regulation also expands the list of obligations that do not require such reserves, including:

It also extends deadlines for submission of monthly reports on calculation of mandatory reserves by banks to respective Central Bank departments.

On 17 September 2009 the Central Bank issued Directive No. 2295-U regarding mandatory reserves required for various obligations of credit organisations. The Directive will enter into force on 1 November 2009.

The Directive provides that the mandatory reserves for a credit organisation's obligations under each category (that is, obligations to non-resident legal entities and individuals, and other obligations in rubles or foreign currencies) will be 2.5% as of 1 November 2009, being the same as the current amount.

As of 1 November 2009, the so-called averaging co-efficient is set at 0.6 (and is 1 for non-banking credit organisations), which is also unchanged from the current co-efficients.

On 14 September 2009 and 29 September 2009 the Central Bank issued Directives Nos. 2287-U and 2299-U, decreasing the refinancing rate. The Directives entered into force on 14 September and 29 September 2009, respectively.

The refinancing rate has been changed several times this year and, in particular, twice in September 2009.

Most recently, the Central Bank decreased the refinancing rate from 10.5% (which was effective from 15 September 2009) to 10% per annum. The new rate applies as of 30 September 2009.

The Central Bank sets the refinancing rate for its financing of commercial banks. The rate is also used for calculating interest on commercial loans (if the rate is not specified in an agreement), tax payments and in other cases provided by law.

On 18 September 2009, the State Duma adopted in the first reading Draft Law No. 217109-5 on the possibility to convert debt into equity.

The Draft Law amends, in particular, the:

It seeks to establish the possibility to convert debt into equity (that is, a company will be able to discharge its debt by increasing its charter capital). However, this will not be possible for credit organisations.

Further, the Draft Law seeks to amend rules regarding the decrease of charter capital of a company and a decrease in its net assets below the charter capital. In particular, the company's creditors' rights to claim early performance of obligations by the company or compensation of damages (in connection with the decrease of its charter capital or decrease in its net assets) will be limited. The amended rules will not apply to credit organisations.

The law also seeks to lift some current limits on the issue of bonds for certain types of bonds and issuers. In particular, the rule stating that the nominal value of all bonds issued by a company should not exceed the amount of its charter capital and (or) the amount of respective security granted by third parties, will not apply to the bonds of credit organisations.

On 23 September 2009 the State Duma adopted in the first reading Draft Law No. 217225-5 on amendments to the Anti-Money Laundering Law.

The Draft Law seeks to strengthen the Anti-Money Laundering Law in line with the recommendations of the Financial Action Task Force (FATF).

In particular, it provides that the Anti-Money Laundering Law extends to foreign subsidiaries of Russian "controlling" organisations (that is, organisations, carrying out operations with their clients' monetary funds and other assets, that are obliged to perform a number of anti-money laundering duties).

It also allows controlling organisations to refuse carrying out an operation if they have grounds to believe that the operation may serve money-laundering purposes.