Putin Faces Fresh Setback as Russia’s Banking System Edges Toward Crisis

A European state intelligence report seen by Reuters warns that Russia’s heavy bank lending, under Western sanctions, has created an ‘explosive’ risk of a banking crisis in 2026, with Russia’s growth forecast slashed to about 0.4% for 2026 and 1.4% for 2027. Banks have been subsidizing loans to defense firms and buyers, masking vulnerabilities that could erupt if sanctions broaden or a shock hits the economy, all as Moscow pursues optics and diplomacy— including a staged video and outreach to Donald Trump—to shore up support amid the Ukraine war.