Russia’s largest lenders are gaming out a contingency few will acknowledge in public: asking the state to recapitalize them if bad loans keep swelling over the next year. Executives at at least three banks deemed systemically important have internally debated how to approach the central bank for support, according to people familiar and internal documents. Privately, their own assessments of asset quality are grimmer than official figures, reflecting mounting borrower stress under a near-record 20% policy rate.

For now, headline profitability remains solid and reported non-performing loans (NPLs) look contained—roughly 4% for corporate borrowers and 10.5% of unsecured retail debt 90+ days past due as of April 1. But supervisors have encouraged restructurings over outright NPL recognition, which pushes losses into the future and clouds true risk. Central bank governor Elvira Nabiullina insists the system is “well capitalized,” citing 8 trillion rubles in buffers and the option to release macroprudential capital cushions to absorb shocks. That tool could soften a moderate wave of defaults but would be strained by a larger credit-impairment cycle.

On the ground, signals are flashing yellow. Sberbank chief Herman Gref warned shareholders that portfolio quality is deteriorating and more firms need restructuring, while VTB reported retail NPLs at 5% in May—up 1.2 percentage points since January and projected 6–7% by 2026, still below the 2014–16 peak. Bank treasurers report clients rattled by rates and cash-flow squeezes; many loans are being reworked while reserve coverage remains ample for now.

The bigger risk is opacity: extensive data classification since wartime makes systemwide health harder to judge, even as industry chatter about contingency plans grows louder. Russia has a playbook for this: the 2017 rescues of Otkritie, Promsvyazbank, and B&N via the Banking Sector Consolidation Fund, which injected at least 1 trillion rubles to stabilize the core. If the current drip of restructurings turns into a wider asset-quality slide, a similar state-backed recapitalization framed as precautionary and temporary could return. Until then, the system balances on policy buffers, profitability, and time, hoping higher rates tame inflation faster than they erode loan books.