"This is a huge pool of poorly regulated shadow debt that sits at the very center of the banking system."
The government considers the threat of a banking crisis in Russia to be real as loan defaults increase, the economy slows down, and Western sanctions intensify, hitting the country's largest oil companies. This was reported by The Washington Post, citing an anonymous official from the Russian cabinet.
According to the WaPo source, both a banking crisis and a payment crisis are possible, where companies cannot settle payments with each other. "A banking crisis is possible. A payment crisis is possible. I don’t even want to think about the continuation of the war or escalation," the source told the publication.
A "ticking time bomb" for the banking system could be a giant pool of loans to defense factories, which were issued in 2022-24 to finance production expansion. Their volume could reach $202 billion, WaPo reports, citing Central Bank statistics.
"This is a huge pool of poorly regulated shadow debt that sits at the very center of the banking system," notes Craig Kennedy, former vice president of Bank of America and now an expert at the Harvard Center for Russian and Eurasian Studies. According to Kennedy, this essentially represents a second, secret military budget that has been spent on the war in addition to the 42 trillion rubles (or $542 billion) officially allocated by the treasury.
So far, the Central Bank statistics do not show problems: the share of overdue corporate loans is estimated at only 5%. However, a broader measure of troubled debt exceeds 11% and reaches 10.4 trillion rubles in monetary terms — two annual budgets of Moscow. This amount includes loans for which banks are forced to ease terms due to borrowers' inability to pay on time.
This year, restructuring was required for mining and metallurgical companies and the oil and gas sector, which were hit by sanctions and falling oil prices, the Central Bank reported. Payment issues have arisen for major state corporations, such as Russian Railways, which are recording the steepest decline in cargo transportation in 15 years. This year, the monopoly reported a net loss for the first time in 5 years and requested banks for debt restructuring, with a total amount reaching 4 trillion rubles.
The slowdown in economic growth and high interest rates have turned into a volatile cocktail for the economy. In 2024, companies paid 11.5 trillion rubles in interest to banks — 83% more than the previous year. And in 2025, their interest expenses soared another 54%, reaching 7.5 trillion rubles in the first half of the year. Meanwhile, the net profit in the economy (profit minus losses) has decreased for the second consecutive year — by 7.7%, to 19.2 trillion rubles, according to Rosstat data for January–September.
By the end of the third quarter, according to analysts from Expert RA, one in four companies with loans had overdue payments, and this share has become a record high over the 6 years of available statistics. In total, 165,000 legal entities had overdue payments — 41,000 more than at the beginning of the year and 100,000 more than before the war.
The financial situation of several companies is deteriorating, and export sectors are losing revenue due to declining external demand and prices, lists Renat Akhmetov, a leading expert at the Center for Macroeconomic Analysis and Short-Term Forecasting. According to him, banking statistics do not show the full scale of the problems, as a significant portion of bad debts is hidden under the guise of restructurings.
In the corporate segment, by the end of the third quarter of 2025, one-fifth of the small and medium-sized business loan portfolio had been revised, while banks restructured 2.4 trillion rubles of loans to the population, or 6% of the portfolio, Akhmetov points out. According to his estimates, the crisis of "bad debts" in the corporate segment may begin in the III–IV quarters of next year.
