Russian banks are trying to save the country's largest employer, which has amassed $51 billion in debt
Russian banks are ready to restructure some of the debt of Russian Railways, provided the central bank does not increase the reserve requirements for these loans, VTB CEO Andrei Kostin said in an interview with Reuters.
The statement comes as the Russian government is discussing different ways to support Russian Railways, the country's largest commercial employer, which has amassed 4 trillion rubles ($50.8 billion) in debt, according to the news agency.
VTB, Russia's second-largest bank, is Russian Railways' biggest creditor, and the bank's executives attend weekly government talks on how to manage the debt. Representatives of the central bank also participate in these meetings.
“Banks are ready to restructure loans and defer payments, provided the central bank does not raise reserve requirements for these loans,” Kostin said.
Russia is trying to save its railways
State-owned Russian Railways, which employs about 700,000 people, has suffered a drop in revenue amid a sharp slowdown in Russia's war economy, while debt costs have skyrocketed, driven by the highest interest rates in two decades.
According to two people who spoke to Reuters on condition of anonymity because of the sensitivity of the subject, Moscow discussed ways to help the railway company manage its debt, much of it to state banks.
The increase in tariffs for freight transport, the increase of subsidies, the reduction of taxes or even the use of money from the National Wealth Fund are taken into account, the sources said.
Russian officials met to discuss the situation in late November and plan to meet again in December, one of the sources said. Russian Railways, the Russian government and the Ministry of Transport did not respond to requests for comment.
Some ideas that have yet to be discussed at the government level include capping interest rates paid by Russian Railways at 9 percent or converting its debt into shares — essentially giving state-owned banks a piece of the company.
One of the sources said one of the proposals was to convert 400 billion rubles of Russian Railways debt into shares.
The sources presented the measures as an attempt to “save” Russian Railways, which operates the world's third-longest rail network after the United States and China.
Debts increased by 9 billion dollars in just half a year
For 2024, Russian Railways reported revenues of 3.3 trillion rubles and expenses of 2.8 trillion rubles, according to international standards.
In its financial statement for the first six months of 2025, the company reported net debt of 3.3 trillion rubles as of June 30, including 1.8 trillion rubles of short-term debt.
It is not clear why the debt has increased by about 700 billion rubles (about $9 billion) in just half a year.
Russian Railways, which carries passengers, oil and cargo across the world's largest country from the Pacific to the Black and Baltic Seas, has long been considered an indicator of the health of the Russian economy.
Its difficulties reveal the problems facing the war economy: companies too big to fail, indebted to state-owned banks, putting the state in a difficult position as Russia spends record sums on its military.
During Vladimir Putin's first two terms as president, from 2000 to 2008, Russia's economy grew from less than $200 billion in 1999 to $1.7 trillion. Now, however, Russia's nominal gross domestic product of $2.2 trillion is about the same as it was in 2013, the year before Russia annexed Crimea, and the economy is set to slow sharply this year.
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