Why have half a million Russians gone bankrupt amid Ukraine war?
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- More than 500,000 Russians declared bankruptcy last year, a year-on-year increase of nearly one-third, according to a European intelligence report seen by Reuters, while 13 million Russians now carry three or more loans simultaneously.
- Russia's Ministry of Economic Development cut its 2026 GDP forecast from 1.3% to 0.4%, down from 1% growth in 2024, as the economy increasingly runs on defense production and state spending.
- Ten percent of Russia's corporate loans are now classified as doubtful, with overdue corporate loans totaling roughly 7 trillion rubles ($91 billion), though over half are tied to defense-industry firms the state is expected to bail out.
- Russian banks earned roughly $80–90 billion in profit across 2024 and 2025, with net profit for the first five months of this year exceeding 1.9 trillion rubles ($24.8 billion) and the full-year forecast at 3.9 trillion rubles ($51 billion), an all-time record.
- Chatham House associate fellow Vladislav Inozemtsev argues the structure of Russia's banking system — a few large, heavily supervised banks — prevents a crisis resembling 2012–14, even if smaller banks fail and individuals go bankrupt.
- The EU is preparing a 21st package of sanctions targeting Russian banks and cryptocurrency networks, expected to be finalized in July, which the intelligence report warns could act as the economic shock that exposes hidden vulnerabilities.
- A Gallup poll found 60% of Russians believe economic conditions are worsening — the first time in two decades a majority has held that view — while 56% say living standards are deteriorating and 58% call it a bad time to find a job.
Why it matters: Half a million personal bankruptcies and a first-in-two-decades 60% majority saying the economy is worsening show the Ukraine war's cost is landing on Russian households, yet Inozemtsev insists concentrated state-supervised banks and projected record $51 billion in 2026 profits make systemic collapse unlikely. The bigger threat to the Kremlin's war effort is not bank failure but a long-term drag from brain drain, collapsing investment, and an innovation-starved economy — a drag Inozemtsev calls far more damaging than Western sanctions themselves.
