Crisis in Russia’s Banking Sector: One in Five Banks Operating at a Loss

While smaller banks in Russia’s banking sector struggle for survival, a very different trend is emerging among the larger players.

The biggest institutions continue to strengthen their dominant position in the market.

Fewer Banks Are Staying Afloat

Izvestia recently published findings that paint a bleak picture for Russia’s smallest banks. New data shows that the number of struggling small banks has reached its highest level since the beginning of the year, according to The Moscow Times.

In just a few months, the situation has deteriorated significantly. The data indicates that nearly 20 percent of Russian banks are now operating at a loss.

These financial losses could have serious consequences for many institutions. Regional banks and mid-sized lenders, in particular, may face increasing challenges to their survival.

Pressure From Interest Rates

However, this is far from the first time Russia’s economy has faced difficulties. Since the invasion of Ukraine, the Russian economy has experienced strong headwinds due to rising military spending and declining revenues from oil and natural gas exports, according to CNN.

Denis Sochney, managing partner at Refinance.ru, points to the country’s tighter monetary policy as a key factor behind the problems. The policy shift began after the war in Ukraine, The Moscow Times reports.

At the same time, the Central Bank of Russia has focused on reducing inflation, which has gradually fallen since the summer of 2025 and currently stands at 14.5 percent.

Fears of Monopolies

Even so, questions remain about the overall economic situation. Despite the Central Bank’s statement that smaller institutions are the most affected, data from several major banks also shows significantly larger losses.

Meanwhile, the sector as a whole continues to generate substantial profits. According to Dmitry Mikhailov from Kosmovizakom, it is clearly the largest banks that are driving these earnings, The Moscow Times reports.

Without opportunities to develop new business models or strengthen distribution channels, the future could become increasingly difficult for many banks, financial adviser Alexy Rodin told The Moscow Times.

Sources: The Moscow Times, Izvestia, CNN, Central Bank of Russia

This article is made and published by Christine Drews Sieger, who may have used AI in the preparation