Russian banks are set to lose 1 trillion rubles in 2015 The Russian central bank’s rate drop last week will not be enough to prevent the country’s banking system from posting heavy losses this year, which could run to as much as 1 trillion rubles ($14.5 billion; £9.6 billion). Research from the ratings agency Moody’s indicates that Russian banks are struggling to contain cost increases following the surprise 650 basis point interest rate hike by the central bank last month, to 17%. Although the Bank of Russia reduced rates to 15% last week in an effort to ease pressure on the banking system, these measures are unlikely to be enough to reverse the trend. Moody’s writes: “We estimate that the sector’s aggregate net loss will be around RUB1 trillion in 2015, compared with net profits of RUB600 billion in 2014 and net profits of RUB1 trillion in 2013.” Pushing interest rates up to 17% was designed to halt the collapsing value of the ruble, but in increasing the cost of borrowing money and servicing debt it also posed a risk to domestic spending. Though it was of limited success in achieving the former (as the crude oil price continued its slide pulling the ruble with it), the negative consequences were borne by Russia’s banking system. The government was forced to inject $2.4 billion into various financial institutions, including state-owned lenders VTB and Gazprombank. Interfax is now reporting that the ongoing troubles of the banks could well be behind the CBR’s reported decision to lower rates. The Russian news service quoted a letter from Anatoly Aksakov, the president of the Association of Regional Banks of Russia, to Russian central bank governor Elvira Nabiullina. It said: More