PricewaterhouseCoopers expects Russian bad debt to rise

Mar 3rd, 2009 | By | Category: Featured, Rouble News

Consultants at PricewaterhouseCoopers (PwC) have revealed that they expect the level of subordinate loans in Russia to spike in 2009.

The Russian government has earmarked 225 billion roubles, or US.15 billion, from the National Wealth Fund, for bad loans to private banks, but this may not be enough, warned Gordon Latimer at PwC, “The government is putting capital into VTB and Sberbank but getting capital into the private banks, as opposed to just providing liquidity, is going to be the challenge.”

In January 2009 alone, 300,000 additional Russians lost their jobs bringing unemployment up to 8.1%, increasing the number of people who will now struggle to pay back their loans. Additionally, the economy dropped 8.8% in January, leaving many enterprises in difficulties and unable to service their loans.

Latimer said consumer unsecured loans were the most risky for the banks, followed by corporate loans, with mortgages being the safest area at the moment.
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