EU intelligence says Russia's banks face crisis risk in 2026

A classified European intelligence report warns that Russia's banking system faces an "explosive" risk of crisis in 2026, as lenders buckle under the financial strain of financing the country's four-year war in Ukraine. The assessment, prepared in recent weeks and seen by Reuters, arrives as the European Union finalizes a new package of sanctions explicitly targeting Russian financial institutions.

The two-page document, titled "Note on the probability of a banking crisis in Russia in 2026," concludes that while Russian banks have absorbed the shock of sanctions imposed since the 2022 invasion, mounting bad loans and surging household debt have created a dangerous vulnerability. The report warns that state-backed lending schemes and loan restructurings are papering over cracks, creating an illusion of a dynamic economy that a serious external shock could unravel.

That shock could arrive imminently. The EU is preparing its 21st sanctions package, which it hopes to finalize in July. The new measures are expected to target banks and cryptocurrency networks directly, with plans to add nearly 90 lenders to the sanctions list. This would bring the total number of blacklisted Russian...