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Intelligence from one of the European countries predicts that Russia’s banking system risks facing a large-scale crisis, as banks are increasingly taking on the financing of the country’s wartime economy.
This is stated in a confidential report reviewed by Reuters, UATV English reports.
The two-page document, prepared in recent weeks to brief European officials on the state of Russia’s banking sector, highlights its vulnerability to further restrictions.
According to the authors of the report, the quality of Russian banks’ loan portfolios is deteriorating, while state lending programs are merely concealing the accumulation of risks.
The report also notes that banks are being forced to actively finance defense enterprises, regional projects, the housing sector, and other areas on preferential terms, increasing the share of potentially non-performing loans.
“This situation creates the illusion of a dynamic economy that, in reality, conceals an explosive situation that could be triggered by an economic shock, such as an ambitious package of sanctions against the banking sector,” the report states.
According to the report, about 10% of corporate loans in Russia are already considered questionable, while some major banks reported non-performing retail loan levels of up to 15% in 2025.
In addition, the report says that more than 500,000 Russians were declared bankrupt last year, while more than 13 million citizens are simultaneously servicing at least three loans.
The report warns that any serious economic shock, including a new sanctions package, could become the catalyst for a banking crisis.
The EU intends to approve its 21st package of sanctions against Russia by July 15, ahead of the deadline for renewing the price cap on Russian oil.
Among other measures, the package is expected to include a ban on former Russian combatants who fought against Ukraine from entering the European Union.
It is also known that Italy and Bulgaria have expressed concerns over plans to impose sanctions on Patriarch Kirill of the Russian Orthodox Church as part of the 21st sanctions package.
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