Banks in Russia are reportedly struggling and considering asking for an emergency bailout from the nation’s Central Bank. The sector is continuing to struggle as Russia’s economy is hit with the costs of its war in Ukraine.
Reports suggest that at least three of the nation’s big banks have held discussions about approaching the Bank of Russia for a bailout. They are deemed critically important to Russia’s economy, and they could ask for urgent help within the next year. It comes despite official data suggesting the Russian economy is coping well with the ongoing war.
According to Business Insider, banks across Russia took in a record £37.75 billion (4 trillion rubles) in 2024. Meanwhile, monthly net profits increased by a third this June compared to the same time last year.
Russia’s Central Bank also said the country has a low share of bad debt overall. Data released last Friday showed that “problem loans” to corporate borrowers stood at around 4% as of October 2024.
The latest Bank of Russia Financial Stability Review said the corporate sector has faced slight decline due to “serious delinquencies seriously increasing” among small businesses. They added that consumers are falling behind on payments.
Banks are also concerned about their finances and the upcoming year. Herman Gref, the CEO Sberbank, previously told investors that the next year would “not be easy”, pointing towards the declining quality of loans.
He said: “I hope, as always, we will be able to find joint plans to get through these difficult times.” Last year, the Bank of Russia increased its interest rate to a record 21% before reducing it to 20% in June.
As the war in Ukraine continues through its third year, Russia is quickly running out of emergency money. Liquid assets in its national wealth fund has dropped around 71% from the levels at the start of the invasion.
Meanwhile, according to Russia’s federal statistics service, the nation’s economy shrank 0.6% in the first quarter of this year.