While russia’s Banks Are Downsizing Their Networks, russians Are Downsizing Their Deposits

russia’s banking system is simultaneously reducing its physical presence and losing customers’ money. Banks are closing branches and shifting services online. In response, russians are withdrawing their savings in cash, while businesses are trying to move capital abroad. Both trends point to one thing: confidence in the state financial system is falling.

Since the beginning of the year, 1,370 bank branches have closed in russia. If this pace continues, the number could exceed 2,000 by the end of the year. On average, banks are closing 196 branches per day – twice as many as last year. “sberbank” has closed the most branches: about 540, or nearly 40% of the total.

Banks attribute the closures to digitalization and cost-cutting measures. But for customers, the result is simple: there are fewer physical locations where they can withdraw cash or conduct a transaction without using digital channels.

At the same time, depositors themselves are withdrawing money from banks. According to data from the central bank of the rf, 2.4 trillion rubles have been withdrawn in cash since the beginning of the year. In July, the outflow reached 643 billion rubles – the highest level in recent months. In the first half of August, another circa 300 billion rubles were withdrawn from banks.

For the general public, keeping some of their money in cash is no longer just a habit. The war, sanctions, and government intervention in the economy are eroding confidence that the money in an account belongs to the customer and is accessible at any time. In russia, fears are growing that bank assets could be used to finance the war or that, in case of a new financial crisis, the government will find a way to dip into citizens’ savings.

Large businesses are acting on a similar logic. Companies are trying to keep part of their capital outside russia, fearing confiscations, new restrictions, and losses due to the war.