Russia: additional bank reserves for COVID-19 loss 2020-2021

In view of the coronavirus (COVID-19) pandemic expansion along with the drastic fall of oil prices, Russian banks were expected to incur unexpected losses, for which additional reserves would be needed. According to experts, if the critical phase of the crisis lasted till the end of the first half of the year and the negative trend remained for another year in the economy (a negative scenario), banks would need extra reserves of 1.47 trillion Russian rubles. This was 0.25 trillion Russian rubles greater than the additional reserves value in 2019.

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Additional reserves for possible losses of Russian banks in view of coronavirus (COVID-19) for 2020 and 2021, by stress scenario* (in trillion Russian rubles)

Characteristic	Additional reserves in trillion Russian rubles
2019 data	1.22
Moderate	0.93
Negative	1.47
Severe	2.02

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Release date

March 2020

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Region

Russia

Survey time period

March 2020

Supplementary notes

* According to the source, the severe scenario estimates that the critical phase of the crisis to last through the whole 2020, with the negative trend continuing until the end of 2021. Under such setting, the losses of the banking sector can be comparable to that of 2008.

The negative scenario implies that the critical phase of the crisis will end after the first half of 2020, with the negative trend continuing for another year,

The moderate scenario will not lead to losses in the banking sector, but it will still require significant efforts from the players to maintain the quality of the portfolios. According to this scenario, the critical phase of the crisis and the negative manifestations will affect only 2020.

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