Russian economy meltdown as major bank faces 'collapse' and elites horde gold

Vladimir Putin is facing a growing economic crisis (Image: Getty)

A major Russian bank is holding a record number of bad loans that could lead to its collapse, according to new accounting data. High interest rates have had a major impact on businesses across the country, as the Central Bank tries to bring spiralling inflation under control.

The key rate peaked at 21% towards the end of last year, before falling back down to 16.5% in November - still prohibitively high. Russian media reports that the share of companies with overdue loans has reached a record one in four. High debt burdens, falling profits due to lower demand and rising costs of servicing old loans, were listed as the main reasons for firms' inability to repay the banks.

Credit Bank of Moscow is 6th largest in country (Image: Wikimedia Commons)

Many face bankruptcy and are in a fight for their very survival, as the economic crisis shows no sign of abating.

Now the threat of bankruptcy is potentially stalking one of Russia's biggest banks. Credit Bank of Moscow is the sixth largest in Russia by asset size, with 5.45 trillion rubles.

It has recently filed accounts compiled in accordance with International Financial Reporting Standards (IFRS).

These show the bank is holding a staggering 668 billion rubles in overdue loans, which reportedly represent 12.3% of its overall asset portfolio.

Maria Drutska - a former Ukrainian diplomat - noted that by comparison, when Washington Mutual collapsed in the 2008 financial crisis, non-performing loans made up just 3.8% of its assets.

Bloomberg recently reported that at least three of Russia's largest financial institutions were poised to ask the Central Bank for a bailout, as bad loans surge and balance sheets buckle under growing stress.

Officially, overdue loans reached 10.5% for households and 4% for businesses in Q1 2025. However, executives at Kremlin-controlled Sberbank and VTB acknowledge that the size of the bad debts is significantly larger and is likely to continue rising.

Meanwhile, the Kremlin has been forced to sell off its gold reserves to cover its growing Budget deficit and prop up the economy.

However, the main buyers appear to be Russia's elite, who are growing ever more fearful about the state of the country's economy.

Pyotr Kurzin - a consultant at the World Bank - noted in a post to his X social media page: "For the first time in years, the Kremlin is selling its vast gold reserves to fund its unsustainable war economy and Budget deficit.

"But to make matters worse, the biggest buyers are its own oligarchs! Why? To protect their own wealth and hedge against the Government whose policy they no longer trust!"