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AIPROPX ReportFortune · 4h ago
Russia is suffering from a slow-motion bank run as the Kremlin scavenges for war funding—and it may start seizing recruits for…
A financial crisis that has long been predicted by Russia experts and Kremlin insiders appears to have finally arrived as banks see depositors scramble to pull out their money amid fears it may be seized.
In the first half of August, Russians withdrew $3.4 billion (286.4 billion rubles), according to central bank data cited by the Washington Post . That’s after $7.3 billion was withdrawn in July and $4.5 billion in June.
“Drones are flying. Things are burning down. Nervousness is growing. And people’s everyday wisdom may be kicking in that they need to have cash under their pillow and not somewhere in banks where it may never be returned,” a former finance official told the Post , adding that banks have much of their capital tied in loans elsewhere.
The situation echoes the iconic scene from the movie It’s a Wonderful Life , when panicked depositors show up at the Bailey Bros. Building & Loan demanding their cash, only to learn that it’s not all there.
The bank run in Russia may not be as dramatic or precipitous. But the stampede out of lenders this year is on track to nearly double the $24.7 billion pace that was seen in 2022, when Vladimir Putin launched his invasion of Ukraine.
Back then, Russia was flush with cash and expected to pay for a short war. But more than four years later, the invasion has turned into a quagmire that has crushed the Kremlin’s finances.
The budget is sinking into deeper deficits, the sovereign wealth fund has been nearly depleted, and tax hikes are straining consumers who are already struggling with high inflation.
Moscow has directed banks to offer capital to the defense industry, but many of those loans turned into bad debts. Now, the financial sector’s loss of deposits has created a liquidity crunch so severe that it’s threatening Russia’s ability to fund its war.
Taras Skvortsov, a senior executive at top retail lender Sberbank , told Russian radio that many banks don’t have cash on hand to buy government bonds.
In fact, the finance ministry halted bond auctions indefinitely last month amid higher borrowing costs and weak investor demand. The auctions are the Kremlin’s main source of domestic borrowing to fill its budget deficit, which hit $76 billion at the end of July.
As the government’s sources of funding dry up, ordinary Russians fear their money may be next. The leader of Russia’s Communist Party told parliament recently that 130 trillion rubles held in bank accounts should be “mobilized” to address the country’s economic and budget woes.
Meanwhile, the finance ministry is preparing legislation that could let it gain access to $40 billion in pension savings held in privately managed funds.
That’s after Russian oligarchs have seen their businesses nationalized, with $51.5 billion in assets seized for the state last year.
“If the government needs cash, Putin will just do a grab for assets. He doesn’t care,” an associate of a Russian billionaire told the Post . “And that’s where I think it’s heading.”
Warnings about Russia’s finances have been building for months. In June 2025, Russian banks raised red flags on a potential debt crisis as high interest rates weighed on borrowers’ ability to pay off loans. Also that month, the head of the Russian Union of Industrialists and Entrepreneurs warned many companies were in “a pre-default situation.”
The Center for Macroeconomic Analysis and Short-Term Forecasting, a state-backed Russian think tank, said in December the country could face a banking crisis by October if loan troubles worsen and depositors pull out their funds.
Earlier this year, Russian officials told Putin that a financial crisis could hit by the summer amid spiraling inflation.
In May, sources told the Russian newspaper Izvestia that nearly 25% of the bond market is now at risk of default as businesses that borrowed at low rates must refinance at much higher ones. The volume of debt that needs to be rolled over this year is about double from last year, adding pressure on cash flows and raising competition for liquidity.
And according to a European intelligence report this past June , Russian lenders are vulnerable due to soaring indebtedness and deteriorating loans. It said the number of Russians who declared bankruptcy last year jumped by almost a third to more than 500,000.
“The situation creates the illusion of a dynamic economy that, in reality, conceals an explosive situation which an economic shock, such as an ambitious package of sanctions against banks … could trigger,” the report added, according to Reuters .
The worsening state of Russia’s financial sector mirrors its performance on the battlefield. New Ukrainian tactics and drones have halted Russia’s advance, decimated the country’s oil infrastructure, and pushed casualties above the replacement rate.
And just like Russia’s search for money to seize, reports indicate the military is preparing to ramp up the number of men it seizes to fill the ranks.
Authorities have already been using coercive tactics to find fresh troops. Now, sources told the Wall Street Journal that the military is preparing plans and procedures for a wider mobilization.
But because of an expected political backlash, the Kremlin may wait until after parliamentary elections next month to announce it.
An earlier mobilization in September 2022 set off a mass exodus of hundreds of thousands of men, who fled to neighboring countries like Georgia and Kazakhstan.
Rumors of a new one have already sent cross-border traffic soaring. In addition, property prices have jumped recently in Georgia and Armenia in anticipation of another exodus, real estate agents told the Journal .
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