Major Russian Banks Prepare for Potential Bailouts Amid Rising Bad Loans

At least three of the largest banks in Russia are discreetly making preparations to approach the Central Bank for financial assistance should more borrowers default on their loans over the coming year, according to a report from Bloomberg on Thursday, which cites unnamed former officials and internal documents from the banks.

The urgency of these discussions has reportedly increased across the banking sector as concerns grow over the rising number of non-performing loans, suggesting that some banks’ financial health may be weaker than what has been publicly acknowledged.

Data from the Russian Central Bank indicates that overdue loans accounted for 10.5% of household debt and 4% of business debt in the first quarter of 2025.

While these statistics point to a degree of resilience in the banking system, certain leaders in state-owned banks have publicly stated that the proportion of bad loans could increase in the near future.

VTB Bank, where the rate of non-performing loans within its retail portfolio hit 5% in May, has warned that this figure could rise to between 6% and 7% by 2026, just shy of the 8% to 10% levels experienced during Russia’s last significant banking crisis from 2014 to 2016.

In light of the anticipated pressures, some banks are reportedly considering reviving a bailout mechanism from 2017, known as the Banking Sector Consolidation Fund, which was established to support three major private lenders. Bloomberg noted that this fund might be utilized again to provide capital to struggling banks.

A confidential source informed Bloomberg that, for the time being, there is little indication of a financial crisis, primarily due to the government’s classification of essential financial data.

Simultaneously, the Central Bank of Russia is reportedly urging banks to restructure troubled loans instead of categorizing them as non-performing, thereby concealing the true extent of the issue.

Elvira Nabiullina, the Governor of the Central Bank, maintains that the financial system remains stable and adequately capitalized, despite escalating risks. Bloomberg reported that the Central Bank did not respond to its request for comments.

Although the report did not specify which banks are seeking bailout discussions, it mentioned that at least three institutions identified as «systemically important» are involved.