Sanctions against Russia are resulting in growing interdependence between banks and companies in the country, intensifying concentration and credit risks in the Russian economy, S&P Global Ratings said Dec. 4.
External credit to Russian companies is drying up on account of the sanctions against the country, resulting in corporates relying on local banks and Russian banks' lending profiles becoming more concentrated on Russian firms, according to the agency.
"If a large bank experienced difficulties, it could affect a broad group of corporates, both via potential cash losses and by further reducing their investor bases," S&P said in a report.
The agency also noted that the extent of interdependence is not fully captured by regulatory reporting due to complex risk weighting in the Russian central bank's calculation of maximum risk exposures that banks are allowed to hold, among other factors.
S&P also sees uncertainties related to how the U.S. plans to implement secondary sanctions passed earlier in 2017.
The U.S. and the European Union in July 2014 launched a package of sanctions against Russia in response to its actions in Ukraine. The measures were reinforced about two months later.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
