The EU predicts a banking crisis in Russia due to new sanctions

Russia’s banking system is under serious threat from a backlog of bad loans and possible tightening of Western sanctions, with European intelligence warning that the new restrictions could trigger an “explosive” banking crisis.

Reuters reports this, citing an analytical report by EU intelligence.

The document notes that Russian banks have so far withstood sanctions pressure following the full-scale invasion of Ukraine, but their resilience largely rests on state support and subsidized lending.

According to European intelligence, Russian banks are forced to actively lend to defense-industrial complex enterprises, home buyers, and other categories of borrowers under government programs. This hides the real financial state of the system.

The report emphasizes that such a model only creates the illusion of economic stability, while any serious external shock, in particular a large-scale package of sanctions against the banking sector, could provoke a systemic crisis.

An additional risk factor has become problem loans. According to EU intelligence, about 10% of corporate loans are already considered doubtful.

Also in 2025, more than 500,000 Russians declared themselves bankrupt – almost a third more than the year before. At the same time, state lending programs have led to more than 13 million Russian citizens having at least three loans at the same time.

It is separately noted that the Russian Ministry of Economy has already worsened the GDP growth forecast: in 2026, the economy should grow by only 0.4% instead of the previously expected 1.3%, and in 2027 – by 1.4% instead of 2.8%.

Despite this, Deputy Chairman of the Central Bank of the Russian Federation Philip Gabunia denies the existence of critical risks for the financial system and claims that banks’ capital reserves are at their highest level in the last three years.

Meanwhile, European Union countries are discussing a new sanctions package that could cover about 90 Russian banks, as well as cryptocurrency networks, drone manufacturers, oil traders and refineries.