Russian foreign currency loans become a problem for European banks

The depreciation of the ruble creates difficulties in repaying loans taken in foreign currency. In Moscow, there were recent demonstrations in the branches of the bank. In some European countries, banks have already been expropriated to protect domestic borrowers. The exchange rate of the ruble against the euro has lost more than 50 percent of its value over the past three years, thereby increasing the debt burden for borrowers.

At the same time, the Austrian Raiffeisen Bank stressed that Raiffeisen's problem with foreign currency loans in Russia is rather insignificant. Of the 3 million customers in Russia, only 1,500 were affected. However, the actions of some banks have been effective as they have shown flexibility in terms of repayment arrangements. They give their clients the opportunity to repay the loan at 60 rubles per dollar by the end of the year. For comparison, an average of about 75 rubles is given per dollar, and this level is subject to sharp fluctuations.

The longer the price of the ruble is under pressure from oil prices, the more likely it is that the Russian state will have to intervene to avoid unrest. In theory, the approach of European countries could be taken to orient banks.

In Hungary in 2014, the Orban government forced the country's banks to reduce interest rates and fees on loans that were issued in foreign currencies, and the Swiss franc was valued as before the financial crisis. However, this meant that the loan agreements in Hungary were violated, and the affected banks were de facto expropriated.

Poland also recently announced that it is allowing mortgages in francs to be converted into Polish zlotys to ease the plight of Polish borrowers. Over the years, the franc has become more expensive by about 80 percent compared to the national currency and, therefore, about 500,000 Poles were in trouble. This move led to sharp criticism from Polish banks and the ECB - then the investors sold the shares of the respective institutions. Nonetheless, the Russian government is holding on to the situation for now.