re: Hat's off to Putin - he knows what he is doing

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An increasingly toxic mixture of high interest rates, spiraling inflation and plunging oil means Russian banks will probably need a lot more than the $18 billion set aside last year to protect against bad loans.

Russia is facing an “extremely widespread” banking crisis in 2015, and lenders may need to boost provisions for souring debts to $50 billion should oil stay in the mid-$40s, according to Herman Gref, the head of the nation’s biggest lender, OAO Sberbank. That’s after banks increased reserves by 42 percent last year, compared with 27 percent in Turkey and 7.5 percent in Poland in the first 11 months, official figures show.

Seven of Russia’s 10 worst-performing bonds this year are from banks as policy makers raised rates by the most since 1998 to shore up the ruble, whose 47 percent slide over the past 12 months deepened the burden of loan payments for consumers and businesses. With the economy foundering after crude’s decline and sanctions over Ukraine, the ratio of bad debt will double from the third quarter of 2014 to as much as 13 percent by year-end, according to Liza Ermolenko at Capital Economics in London.

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