There are worrying signs in Russia’s banking sector, says Ivana Kottasova on CNN Money. The Russian central bank has nationalised B&N Bank, the country’s eighth-largest by assets. Only a few weeks ago it had to bail out the biggest private lender, Otkritie. Is a systemic crisis now in the offing?
The trouble in the sector stems from the oil-price collapse and recession of 2014, a downturn exacerbated by EU and US sanctions against Russian companies. The International Monetary Fund thinks up to 13.5% of all loans could be bad. The official figure is 10%.
The banking downturn is worst among the private banks, add Jake Rudnitsky and Anna Baraulina on Bloomberg. The central bank gave them carte blanche and cheap loans to take over struggling rivals when the recession hit, allowing non-state operators to build up strength while their government-backed counterparts dealt with sanctions. The Bank of Russia insists that a domino effect won’t occur – but given the financial authorities’ forecasting record during the global crisis, means investors should keep a very close eye on Russia’s banks.