Russian Banks Are Sitting On A Financial "time Bomb"

A financial bubble could burst, triggering a major crisis in the country.

A huge volume of non-performing loans has accumulated on the balance sheets of Russian banks. And this could pose a serious threat to the Russian financial system. This was reported by The Bell.

According to data from the Central Bank of Russia, as of early September, 13.3 trillion rubles in loans had become nonperforming. This represents nearly 13% of the total corporate loan portfolio of Russian banks.

These are loans to companies facing serious financial difficulties and unable to service their debts properly. Furthermore, loans totaling 7.2 trillion rubles lack sufficient collateral. There are no necessary reserves set aside for them, nor is there collateral that banks could sell to at least partially offset their losses.

Potential losses on these loans amount to about 70% of the free capital of Russia’s entire banking system. If a significant portion of these debts ultimately becomes irrecoverable, this financial bubble could burst, triggering a major banking crisis in the country.

Government bonds have become another hidden problem. Russian banks hold securities on their balance sheets whose value has declined, but these losses are not fully reflected in their financial statements. According to expert estimates, unrecognized revaluation losses could amount to approximately 600–700 billion rubles.

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