Russia will need to tighten corporate loan policies

Significance

Debt restructuring was offered to good and bad companies alike. This indiscriminate approach delayed insolvency that would otherwise have overtaken 'zombie' companies.

Impacts

• Permanent shifts in demand, value chains and consumer preferences will make it more difficult for banks to assess companies' credit quality.
• After last year's 2020 lending and restructuring spree, smaller banks may roll over rather than write off bad loans.
• The low number of new company registrations will, among other factors, deter recovery in the labour market this year.