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Russian banking sector remains stable despite recent failures, Fitch says

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Russian banking sector remains stable despite recent failures, Fitch says

The Russian banking sector remains stable as intervention by the Central Bank of the Russian Federation has prevented losses for senior creditors and limited contagion risk from the failures of several large privately owned lenders in the country, Fitch Ratings said March 2.

Any further high-profile failures in 2018 are unlikely to be larger in scale compared to those in 2017 and should not lead to broader risks for the sector, Fitch said. The rating agency anticipates short-term risks for the industry from increasing competition, relaxation of retail underwriting and increasing borrower leverage.

A possible drop in oil prices and its resulting economic decline would be negative for banks, while additional sanctions could, in an extreme scenario, weaken Russia's ability to support foreign creditors of government-owned lenders, Fitch said.