Russia Deposit Exodus Nears 25 bln Euros on Seizure Fears

Russians have pulled roughly 24.4 billion euros from the banking system in the first seven months of this year, data from Banks.ru show, as fears grow that the Kremlin could freeze or nationalise private deposits to help fund the war in Ukraine. The scale of the outflow surpasses the wave of withdrawals seen after the 2022 invasion, when the central bank raised rates to 20% and imposed capital controls.

Five of the country's seven largest banks have recorded net outflows of individual deposits. Gazprombank has been hit hardest, losing close to 3.04 billion euros, or 10.8% of its total deposits, over four months. Rosselkhozbank shed more than 15% of its deposit base. Alfa-Bank, Russia's largest private lender, lost around 1.82 billion euros, equivalent to 5.6% of deposits. Sovcombank and VTB recorded smaller outflows. Sberbank initially held steady but has since seen significant withdrawals. T-Bank was the exception, posting a deposit increase over the period.

The panic is rooted in concrete developments rather than speculation alone. Russian prosecutors transferred an estimated 44.3 billion euros in private assets to state control last year. Authorities seized roughly 6.5 billion euros in assets linked to agribusiness billionaire Vadim Moshkovich in June. At the same time, Putin has been extracting what officials describe as voluntary donations from oligarchs, funnelling hundreds of billions of roubles into the federal budget by mid-August, according to the Russian business daily Vedomosti. Large companies are also moving money beyond the reach of domestic regulators. More than 9.4 billion US dollars flowed out of Russia's banking system in the second quarter of this year alone, central bank data show.