Half a million Russians declared bankruptcy last year as the country’s banking institutions bear the brunt of the cost of the war in Ukraine, a European intelligence report says this week.As the war in Ukraine continues into its fourth year, Russia’s Ministry of Economic Development has cut its GDP forecast for 2026 from 1.3 percent to 0.4 percent.Rising household debt is one of the things creating the conditions for an “explosive” banking crisis, according to the European intelligence report, seen by Reuters. But experts say that while individuals are facing a cost-of-living crisis – and many face bankruptcy – a full-blown banking crisis is unlikely.Here’s what we know about Russia’s financial woes and what this means for its war effort.What has happened?According to the European intelligence report seen by Reuters, as Russia’s government continues to pour money into its war against Ukraine, it is relying more on banks to support companies and everyday borrowers.To do this, Russia’s banks have extended a growing number of “risky” loans in recent years, the report says.While this has allowed Russia’s war machine to keep humming and helped many Russians make ends meet, including buying homes, it has also introduced heightened financial risk, including more people defaulting on their debt and ma …
