Russia will consider creating a “bad bank” for troubled assets as part of a package of measures worth at least Rbs2.3tn ($35bn) to combat the country’s looming economic crisis.
The announcement was part of a package of 60 measures unveiled on Wednesday to support the economy and stimulate structural reform in Russia, including a Rbs1tn recapitalisation of the banking system and a Rbs300bn injection of capital into Vnesheconombank (VEB), the state development bank, to allow it to boost lending to the real economy.
The Russian banking system has been badly damaged by the rouble’s collapse and western sanctions that have squeezed foreign currency funding. According to Standard & Poor’s, which downgraded Russia’s sovereign credit rating to junk this week, “asset quality in the financial system will deteriorate given the weaker rouble; restricted access of key areas of the economy to international capital markets due to sanctions; and economic recession in 2015”.