Russian overdue loans hit record high

by   CIJ News iDesk V
2020-10-20   11:29
/uploads/posts/b2281f309dfe42bc80dbb688f02e1024e55c8a0c/images/764052452.jpg

Because of the coronavirus pandemic, the number of overdue loans in Russia hit record high. More than 12.5 million loans issued are currently non-performing, meaning the borrower is more than 90 days behind on repayments, according to the National Association of Professional Collection Agencies and credit bureau Equifax. The National Ratings Agency considers the sector will have to keep around 40% of its $75 billion in capital buffers on the balance sheet into 2021 in order to meet minimum regulatory requirements. Current reserves almost match the entire value of loans restructured throughout the crisis, meaning covering even a significant increase in bad debts “will not have a negative impact on the stability of the banking system,” it said. However, the individual banks may not be so well protected. “Capital in the banking sector is unevenly distributed. Therefore, the financial stability of individual credit institutions during 2021-2022 may come under pressure.” For example, state-owned Sberbank accounts for 35% of all Russian loans, but holds almost 47% of the sector’s tier 1 capital, a measurement of a bank’s capital reserves and financial strength.