Russia faces looming banking crisis as war economy strains banks, EU report says

A European state intelligence report warns that Russia is approaching an “explosive” banking crisis. Lenders are shouldering much of the war economy’s burden, and deteriorating loan quality combined with rising household debt have heightened systemic risk. The report notes that 10% of corporate loans are now doubtful and retail non‑performing loan ratios have reached as high as 15% at some large banks.

Bankruptcies have surged, with more than 500,000 Russians filing for bankruptcy in 2025 – a rise of nearly one‑third from the previous year – while state programmes have encouraged over 13 million people to hold at least three loans simultaneously. Meanwhile, the Russian economy’s outlook has been cut dramatically, with the Ministry of Economy lowering the 2026 GDP growth forecast to 0.4% (from 1.3%) and the 2027 forecast to 1.4% (from 2.8%).

The assessment arrives as the European Union prepares its 21st sanctions package, targeting banks and cryptocurrency networks, which could further stress the financial system if implemented. Russian central bank officials downplay the danger, citing high capital buffers, but analysts caution that the combination of war spending, subsidised lending to defence firms and mounting private debt leaves the system vulnerable to a shock.