Russia external corporate debt

Russian banks, and through them Russian companies in general, traditionally relied on Western capital markets for financing, having accumulated a total US$659 billion in foreign debt by June 2014 (Figure 4). EU and US sanctions heavily restricted this practice, with a ban on Western loans to five state-owned banks representing over half of total assets held by the Russian banking sector. Unable to get foreign loans extended, banks and their corporate clients were forced to pay back US$150 billion during the 12 months following June 2014, at a time when they could least afford to do so (Figure 4). Combined with the economic downturn, the devaluation of the rouble, and a financial situation that had been precarious even before 2014, sanctions pushed Russia’s banking sector to the brink of collapse. In January 2015, the government was forced to intervene, digging deep into its international reserves with a 1 trillion rouble (€12 billion) bail out.