“The banking crisis previously predicted by our early warning system… has now been recorded according to formal criteria, and a little earlier… a bad debt crisis had already been recorded,” stated the CMACS analytical center, which is close to the government.

Its leading indicator also detects high risks of “depositor flight.” While this effect is not currently occurring due to the latent nature of the crisis, according to the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), “if the crisis intensifies, it could surface.”

The center defines a systemic banking crisis as a situation in which at least one of the following conditions is realized:

• the share of problem assets in the banking system exceeds 10%;
• clients are withdrawing a significant portion of funds from their accounts and deposits;
• To prevent the consequences, a forced reorganization/nationalization of a significant portion (more than 10%) of banks or large-scale recapitalization (in the amount of more than 2% of GDP) is carried out.

Both crises are “moderate in scale,” the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) reassures: just over 10% of banks’ total assets and loan portfolios are problematic. However, in certain areas, the “depth of damage” could be even greater: for loans to small and medium-sized businesses (SMEs), it averages 19%, CMASF cites as an example.

According to the Central Bank, at the end of October, 11.2% of corporate loans, worth 10.4 trillion rubles, and 6.1% of retail loans, worth 2.3 trillion rubles, were problematic.

The Central Bank is asking banks to grant companies’ loan restructuring requests if they are expected to overcome their difficulties. This is intended to prevent mass business bankruptcies. Last spring, the regulator issued such recommendations , agreeing not to increase provisions for such loans even retroactively, starting in mid-2024. At the end of last year, the Central Bank extended these easing measures and advised banks to accommodate borrowers at least through the first half of this year.

Due to the masking of problematic bank assets by intensive restructuring of overdue loans, as well as the dominance of state-owned banks (which helps prevent bank bankruptcies and banking “panics”), the crisis is proceeding in a latent form – just as it will in 2022, concludes the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF).

Some investments from the National Welfare Fund (NWF) are made through subordinated deposits in major banks—primarily state-owned, but not exclusively. Such funds can be counted as capital, and when 300 billion rubles from the NWF were placed in banks in June to finance the Moscow-St. Petersburg high-speed railway, the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) called this “emergency recapitalization of several major banks.” In December, 82.6 billion rubles of NWF funds were placed in a subordinated deposit at Gazprombank to “finance an infrastructure project.”

The Central Bank calls the quality of banks’ loan portfolios “acceptable,” but emphasizes growing risks. Two of the four main vulnerabilities it identified in the financial sector  are related  to corporate debt problems.

The economic slowdown, poor market conditions, and high interest rates have increased companies’ debt and interest burdens, and credit risk in the corporate sector is growing, according to the Central Bank: the share of so-called green zones (without signs of impairment) in the loan portfolio of large and medium-sized companies is gradually decreasing, while the number of companies defaulting in the SME segment is growing. Against the backdrop of the extreme ruble strengthening (by a quarter in real terms over the year) and high interest rates, the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) is recording a sharp deterioration in the quality of corporate portfolios, particularly for loans to export-oriented companies such as the oil and gas and mining and metals industries.

To contain risks, since last year the Central Bank has been making it more difficult for banks to lend to large companies with high debt burdens by increasing reserve requirements for such loans. This hasn’t been effective so far: according to the Central Bank, despite its measures, the liabilities of such borrowers to banks have grown by 15.5% over the past 11 months, while those of the entire corporate sector have grown by 11.3%. Starting in March, the Central Bank will again sharply increase reserve requirements for such loans, and if this doesn’t help, it threatens to increase them even further. Analysts at Gazprombank’s Center for Economic Forecasting consider this decision important given the accumulating risks.

(c)THE MOSCOW TIMES 2026