Russian Banks Are Facing Most Of The War’s Cost. A New Intelligence Report Says It Could Have ‘Explosive’ Consequences

Russia could face an “explosive” banking crisis if lenders, which have to take on a significant part of the country’s war economy, face further Western sanctions, according to a new report.

Citing an intelligence report from a European state, Reuters detailed that Moscow could be vulnerable to new measures of the kind given the precarious state of the country’s banks.

Concretely, deteriorating loans and larger levels of debt from households could push the institutions over the brink following a 21st package of sanctions that could be announced within weeks.

The document also noted that banks have been pushed to give subsidized loans to defense companies and homebuyers, among others. “The situation creates the illusion of a dynamic economy that, in reality, conceals an explosive situation which an economic shock, such as an ambitious package of ​sanctions against banks … could trigger,” reads a passage of the report. Many of those loans have a high risk of not being repaid, the outlet added.

Elsewhere, the report notes that over half a million Russians declared bankruptcy last year, a 33% increase compared to 2024. State programs encouraged millions of people to take out simultaneous loans.

The country is also grappling with fuel shortages as Ukraine increasingly targets the country’s energy infrastructure.

The most recent attacks took place on July 4 and struck the St. Petersburg Oil Terminal and facilities in Russia’s Leningrad region. Previous operations have targeted key energy sites in Yaroslavl, Tuapse, and Krasnodar Krai.

Russian President Vladimir Putin acknowledged on 28 June that fuel shortages had become a concern in some regions, underscoring the impact that repeated attacks are having on one of the country’s most important economic areas.

Ukrainian officials have argued that energy infrastructure is a legitimate target because oil revenues help fund Russia’s military operations. By striking refineries, storage facilities and export terminals, Kyiv hopes to raise the economic cost of the war while demonstrating that critical infrastructure remains vulnerable.

Several facilities have reportedly experienced temporary shutdowns or operational disruptions following drone strikes, complicating fuel distribution across parts of the country. Reports from affected regions have described supply bottlenecks, longer queues at petrol stations, and efforts by authorities to stabilize local fuel markets.

In this context, CNN noted last week that a new study shows that the amount of casualties sustained by Russia in the war has now surpassed 1.4 million, roughly 1% of the population. 450,000 people have died in the war.