(Reuters) - Russia's banks will need a wider recapitalisation, Andrey Kostin, CEO of No.2 lender VTB, has told the TASS news agency, with the scale of it to be determined later this year once there is a clearer picture of the losses the sector faces.
"I don't know yet where the capital boost will come from but it will come for sure. Not only for VTB but for the wider banking sector, I think," Kostin said on Tuesday, as he expected the financial sector to post losses this year.
Western sanctions on Russia following its invasion of Ukraine in February have cut Moscow off from the global financial system and from nearly half of its $640 billion in gold and foreign exchange reserves.
Some of Russia's biggest banks, VTB included, were cut off from the SWIFT global banking messaging system, and international payment cards Visa (NYSE:V) and MasterCard stopped servicing Russian accounts abroad, adding pressure on banks.
Since major private banking bailouts in 2017 worth over 2 trillion roubles, the central bank has opted for removing banking licences over providing cash injections.
Previously, VTB was allowed to pay smaller dividends on preferred shares held by the state to boost the bank's capital, in a non-cash form of the support.
Russia's banks may need as much as 2.2 trillion roubles in state support, according to the Center for Macroeconomic Analysis and Short-term Forecasting, of which the bulk, or 1.5 trillion, would be needed for top lenders, private included.
The central bank did not immediately reply to a Reuters request for comment on Tuesday.