Amid Ukraine's drone attacks: Russian citizens emptying their bank accounts

Against the backdrop of escalating Ukrainian drone attacks on Russia, the rate of cash withdrawals from banks in the country has climbed to a new record high due to fears that the Kremlin will nationalize deposits to finance the war. Nearly $3.4 billion was withdrawn in the first two weeks of August, in addition to $7.3 billion in July and $4.5 billion in June. Former senior officials in the Russian financial system warn of liquidity difficulties and a worsening bad debt situation.

Against the backdrop of the escalation in Ukrainian drone attacks on Russian soil, Russian citizens have begun withdrawing their savings from banks at a record pace. The main concern is that the Kremlin will nationalize private deposits to finance the ongoing war. According to data from the Central Bank of Russia, nearly $3.4 billion was withdrawn in the first two weeks of August, in addition to $7.3 billion in July and over $4.5 billion in June. Taras Skvortsov, a senior manager at Sberbank, Russia's largest retail bank, estimated that at the current rate, the total annual withdrawals could be twice as high as those in the first year of the war. The mass withdrawals are causing liquidity difficulties for banks, exacerbated by high levels of bad debts resulting from the government's requirement to issue loans for military maintenance. A former senior official in the Russian financial system noted that "common sense tells people it's better to have cash under the mattress than in banks." Large businesses are also moving their money out of Russia: $9.4 billion was taken out of the country in the second quarter. The finance minister was forced last month to cancel a planned bond issuance, against the backdrop of a budget deficit that soared to 6.46 trillion rubles ($76 billion) in January-July, compared to an annual forecast of 3.8 trillion rubles. Last year, assets of Russian billionaires worth $51.5 billion were seized, and an associate of a Russian billionaire said he believes Putin will seize more assets if he needs cash.