Russian Capital Flight Surpasses 2022 Levels Amid War Funding Fears

Russian citizens and corporations are withdrawing billions of dollars from the banking system, driven by fears that Vladimir Putin may freeze deposits or seize private assets to fund the military effort in Ukraine. Total withdrawals for 2026 have already surpassed the $24.7 billion recorded during the first year of the 2022 invasion, with nearly $3.4 billion withdrawn in the first two weeks of August alone.

This capital flight has created severe liquidity shortages across the financial sector. Major lenders including Gazprombank, Rosselkhozbank, Alfa-Bank, and Sovcombank reported significant losses in household deposits, with Rosselkhozbank losing more than 15%. In response, the Central Bank of the Russian Federation expanded lending to address the drained rouble liquidity. The Ministry of Finance of the Russian Federation was forced to cancel planned bond sales last month due to a lack of cash to cover a budget deficit that reached approximately $76.1 billion through July.

Finance Minister Anton Siluanov dismissed rumors of a potential savings raid as "fake news," but the instability is compounded by a slowing economy and a Ukrainian drone campaign. Since July 18, the Cabinet of Ministers of Ukraine has targeted Russian energy infrastructure and commercial facilities, including more than 20 Wildberries warehouses.