Russian Banks can withstand a 5% Shrinkage in Economy

The Russian banking system is stable enough to survive a worst-case economic crisis, central bank stress test showed on Tuesday, even after it assumed an even greater contraction than in previous tests.

Twice-yearly stress tests were introduced for Russia’s banks – the biggest of which are state-controlled Sberbank and VTB – after the central bank was forced to spend $200 billion to defend the ruble during the global crash, helping banks refinance their hefty foreign liabilities.

The financial sector is now in stronger health and has scaled back its international exposure.

“The Russian banking sector is relatively stable and can withstand even extreme crisis development scenarios,” the central bank said in the report, published on its web site.

Even under an extreme scenario in which the Russian economy contracts by 5 percent, the banking sector would survive having to shoulder losses of 2.6 trillion roubles or 42 percent of its total capital, the central bank said.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu