Russia's 'systematically important' banks discussing bailout within next year, Bloomberg reports
Senior executives in at least three of Russia's "systematically important" banks have privately discussed asking for a state bailout within the next year if the quality of loans continues to deteriorate, Bloomberg reported on July 17, citing undisclosed official sources and documents.
Behind closed doors, some of Russia's biggest banks worry that far more of their loans could go sour than official figures indicate. If those fears materialize, the resulting losses could force them to raise the issue with the central bank and seek government support, Bloomberg wrote.
The Russian economy has been facing headwinds amid surging inflation driven by record defense spending and massive interest rates. The Kremlin has sought to downplay the concerns, despite mounting warnings from its own economists.
Elvira Nabiullina, the head of Russia's central bank, has maintained that the country's banking sector is "well capitalized," with official data from the central bank portraying a system in stable and healthy condition.
The central bank slashed the key interest rate from 21% to 20% on June 6 amid political pressure, the first time the rate was decreased since Moscow launched its full-scale invasion of Ukraine in 2022.
Experts nevertheless warn that Russia's wartime drive could cause its economy to overheat, with Western sanctions and fluctuating oil prices presenting an additional challenge.
George Barros, Russia team lead at the Institute for the Study of War (ISW), told the Kyiv Independent last month that Russian banks going into default could spark a broader financial crash.
"I suspect what will happen one day at the current rate is a Russian bank will have to default on its debt and that will trigger some sort of financial meltdown," he said.
Ukraine has urged its international partners to increase economic pressure on Russia through harsher sanctions, forcing it to accept a negotiated settlement.
Though long reluctant to adopt additional sanctions on Russia, U.S. President Donald Trump warned on July 14 that Washington would impose 100% "secondary" tariffs unless Russian President Vladimir Putin agrees to a deal within 50 days.
