Russia's understated asset quality problem...again

Russia's understated asset quality problem...again

Russian banks have been under-reporting their bad debt and together may need to make another 2.7 trillion rubles ($48 billion) of provisions.

It appears that at more than 10 of Russia’s top 100 lenders, one-third of their portfolio is not generating income.

The shortfall appears at both state and private lenders, which will probably lead to the central bank demanding that the lenders create additional provisions.

The central bank has already nationalized three of the main 10 lenders in the last six months that were at risk of sinking under the weight of their bad assets. The central bank has added 460 billion rubles in provisions to their books.

This though hasn’t stopped the rot. At some nationalised entities, bad debt has ballooned since the government stepped in.