Officially in Crisis: russia’s Financial System Stress Index Off the Charts

The rf’s financial system has moved one step closer to a complete economic collapse. According to the rating agency ACRA, the financial stress index has come within striking distance of the critical threshold of 2.5 points, settling in the dangerous range of 2.52–2.69. Such a high level of alarm was last observed only after the announcement of mobilization in the autumn of 2022.

The main destructive factors have been catastrophic volatility in the stock market, the collapse in the value of government bonds, and the rapid devaluation of the ruble. The situation is exacerbated by a hidden crisis of liquidity and toxic debts. Experts from the pro-kremlin center for macroeconomic analysis and short-term forecasting note that a banking collapse in the rf is already underway, though it remains latent for now.

The share of problem and non-performing assets in financial institutions’ portfolios has exceeded the critical 10% threshold set by IMF standards for the third consecutive month. Against the background of an avalanche-like surge in delinquent auto loans and credit card debt, russians have begun withdrawing money from their accounts en masse. In the most recent reporting period alone, nearly half a trillion rubles “evaporated” from deposits, as people cashed out their savings due to fears of inflation – russians are withdrawing cash from banks at a rate of 13 billion rubles per day.

The kremlin’s financial giants are no longer able to hide their losses. In May, “vtb”, russia’s second-largest state-owned bank, reported a staggering 59.9% year-on-year drop in net profit. The rf central bank’s prolonged tight monetary policy has completely eroded business margins. And while the largest players are still holding on thanks to government infusions, about 20% of russia’s small and medium-sized regional banks have officially become unprofitable and are going bankrupt.