Russia’s leading banks are likely to
feel the force of the economic downturn in the shape of as much as
$213 billion in bad assets on their books, ratings agency Standard
& Poor’s (S&P) has cautioned.

Sberbank and VTB are likely to be particularly
badly affected because of their dominance of the Russian banking
landscape, S&P warned.

The two institutions account for “almost half
of domestic credit to the private sector,” according to

By the end of 2011 as much as 14 percent of
all loans at Russian banks may have to be written off, with 38
percent of loans potentially falling into S&P’s “troubled
assets” category over the same period.

The agency said such concerns would have
“significant” consequences for Russian bank ratings and implied it
may shortly downgrade such institutions.

“The extent of the damage and its impact on
the Russian banking industry will depend, in our view, on
government policies to support banks and shore up troubled
industrial enterprises, including state-owned companies,” said
S&P credit analyst Scott Bugie.