A systemic banking crisis could occur in Russia within 12 months, warn experts from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), founded by the current Minister of Defense, economist Andrei Belousov.
In the report “What do the leading indicators of systemic financial and macroeconomic risks show?” the analysts write that a crisis will occur if the share of non-performing assets in the banking system exceeds 10% or if customers begin to massively withdraw money from their accounts and deposits, writes “Izvestia”.
To prevent this scenario, the government will have to reorganize or nationalize more than 10% of banks or provide them with financial support in the amount of more than 2% of the country’s GDP.
Analysts assess the probability of a systemic banking crisis in 2026 as “medium,” but emphasize that the risks are increasing against the backdrop of growing non-performing loans.
As of October, the share of “bad” loans in the Russian financial system – those that have been outstanding for more than three months – reached 7%. A level of 10% is considered critical. Moreover, in the first nine months their volume increased 1.6 times, exceeding 2 trillion rubles.
The main factors are high interest rates and growing debt burden, a slowdown in consumer lending, and the deteriorating financial condition of companies.
The quality of the portfolio of unsecured consumer loans granted in the second half of 2023 and early 2024 at high interest rates is gradually deteriorating, Renat Akhmetov, a leading expert at the Center for Macroeconomic Analysis and Short-Term Forecasting (CMACS), explained to Izvestia. “A significant portion of bad debts are being hidden under the guise of restructuring,” he warned.
A systemic banking crisis occurs when many banks in a country simultaneously experience serious solvency or liquidity problems, or when the failure of one large bank spreads to other banks. It usually causes a deep economic recession, affecting the real economy, as well as consumer panic and a run on banks.
Illustrative Photo by Bia Limova: https://www.pexels.com/photo/hand-holding-russian-ruble-banknotes-close-up-33175664/
We acknowledge The European Times for the information.
