Russian Banks Ready to Help Russian Railways Manage Its Heavy Debt

Post by : Saif Nasser

Russian banks have signaled that they are willing to help Russian Railways manage its growing financial troubles. According to VTB Bank CEO Andrei Kostin, the banks are prepared to restructure some of the company’s massive debt load, but only if the central bank keeps its reserve rules unchanged.

Russian Railways, the country’s largest commercial employer, is facing a heavy debt burden of nearly 4 trillion roubles. The government has been holding weekly discussions with major banks, including VTB, to find a solution that can keep the company stable without putting pressure on the financial system.

Kostin explained that banks can delay interest payments and adjust repayment schedules, but only if the central bank allows them to keep reserves at the current level. In 2025, banks were allowed to restructure corporate loans without increasing their reserves, as long as borrowers stayed current on payments and submitted a three-year financial plan. Creditors want this rule extended to next year so they can help Russian Railways without facing extra financial strain.

Kostin also revealed that one proposal discussed earlier — converting 400 billion roubles of debt into company shares — was rejected. He said that the central bank does not want banks investing in assets outside their core business. For large banks, turning debt into shares would also create capital and regulatory challenges, making the idea impractical.

The troubled financial state of Russian Railways comes from a mix of high interest rates and costly government obligations. The company must continue investing in the rail network, especially in the Far East, and operate some routes that lose money. One example is transporting Russian coal to China by rail. Kostin argued that sending coal at a loss makes little sense when it could instead be used inside Russia to power data centers and support activities such as cryptocurrency mining.

Banks are currently waiting for Russian Railways to present a clear financial plan. The key question is whether the company can repay its huge debt over the next three to five years. Discussions between the government, the banks, and the central bank will continue as they try to prevent financial stress in one of Russia’s most important state-owned companies.