VTB CEO Warns New Capital Rules Will Force Major Russian Banks to Raise Funds in 2026

Andrei Kostin, CEO of VTB Bank, signals a pivotal inflection for the Russian banking sector in 2026: under renewed regulatory pressure, raising capital is likely to be a defining challenge. The Central Bank of Russia is reimposing stricter capital rules, including restoring elements of the Basel framework relaxed in 2022, and increasing requirements especially for systemically important banks and non-core asset exposures [1].

VTB estimates require ~1.7 trillion roubles over five years to comply with these requirements [1]. This capital demand follows a year where economic growth slumps (from ~4.3% in 2024 to ~1% in 2025), interest rates remain high, and loan quality begins to deteriorate. Combined, these factors increase the risk of a squeeze: capital needs rise while earning power is constrained [1].

Adding to the pressure, the domestic equity market is ill-equipped to absorb large-scale capital raising without Western investment—now largely absent due to sanctions. Retail banking suffers, particularly in the home loans segment, where losses accumulate. Meanwhile, proposed tax hikes for 2026 threaten to further erode profitability across sectors [1].

There are mitigating actions and strategic focuses already emerging. VTB plans to deliver 500 billion roubles net profit in 2025, commit 25–50% of that toward dividends [1], while also being willing to restructure large debts for key borrowers like Russian Railways—conditional on favorable regulatory treatment, especially around reserve requirements [3]. Also, in September 2025, VTB raised ~84.7 billion roubles (~$1 billion) via a secondary public offering (SPO) evidencing domestic capital markets can partially contribute [2].

From a strategic perspective, banks must weigh trade-offs: paying dividends vs. retaining earnings for capital; restructuring exposures (like Railway debt) vs. potential reserve cost penalties; pushing into new earnings sources vs managing regulatory risk. For investors, this dynamic raises attention to tier-1 capital ratios, reserve builds, loan quality, and the ability of banks to sustain profitability under heavier regulatory burdens.

Open questions remain: how aggressively will the CBR enforce Basel rules across non-core exposures? What policy or fiscal support can cushion the capital raise burden (e.g. state injections or guarantees)? Can domestic capital markets scale up liquidity and investor depth? What are the down-side risks if growth slows further or if tax/interest rate burdens worsen?