Russia's banks face mounting crisis as war loans pile up

About 10% of corporate loans in Russia were doubtful, while some major banks carried retail non-performing loan ratios as high as 15%. More than 500,000 Russians declared bankruptcy in 2025, and more than 13 million people took out at least three loans at the same time, as the Kremlin pushed to keep defense firms, homeowners and other borrowers funded even as growth slowed.

A European state intelligence note titled Note on the probability of a banking crisis in Russia in 2026 said the financial system had mostly weathered sanctions since the February 2022 invasion of Ukraine, but that strain from subsidized credit and restructurings was building into a dangerous fault line.

That lending boom has collided with a weaker macroeconomic outlook. Russia’s Economy Ministry cut its 2026 growth forecast to 0.4% from 1.3% and its 2027 forecast to 1.4% from 2.8%, a sharp downgrade from the pace implied by wartime spending. The International Monetary Fund projected 1.1% real GDP growth for Russia in 2026 in its April World Economic Outlook, still modest but above Moscow’s own updated 2026 estimate.

Filipp Gabunia, a deputy governor at the Bank of Russia, said on June 1 that vulnerabilities in the financial sector were not critical and that banks’ capital adequacy had reached almost 14% as of April 1, the highest level in three years. In its latest Financial Stability Review, the Bank of Russia said the financial sector remained highly resilient and was continuing to finance the economy, while risks in corporate credit, household debt and housing markets were relevant but not critical.

On June 9, the European Commission said it was working on a 21st sanctions package against Russia, with banks and cryptocurrency networks among the possible targets.