OREANDA-NEWS. September 29, 2010.  Non Performing Loans continue to be an issue for the Russian banking system but key industry players say the market should be left to handle the problem rather than the creation of a bank for bad assets.

According to the research conducted by Russian rating agency, RusRating, non performing loans in the banking system currently stand at USD 67 billion, or 9.9% of all credits in the system, with the number expected to increase to USD 70 billion, or 10.5%, by the end of 2010.

While Russia’s Central Bank has been publishing data on loans and overdue payments for several years already, it started to talk about loan quality and disclose NPLs’ volume only in the second half of 2009, and according to the RusRating study, based on official Central Bank data, the volume of NPL’s has been constantly growing since the beginning of the reporting period, from USD 48.4 billion posted in July 2009 to about USD 67 billion as of June 2010.

Speaking about NPLs in Russia’s banking system, RusRating CEO Richard Hainsworth notes the differences between the retail and corporate loans, as the first do already have a small market for bad assets, while the latter, so far, doesn’t. Currently about 80% of all bad loans are in the corporate sector, on the balance sheets of 30 Russia’s largest banks.