Economic Crisis Hits Kremlin's Core: Bank Managing 38 Million Pensions Enters Austerity

Russia's economic crisis is now impacting core state institutions, with Vnesheconombank (VEB), the nation's primary development bank and a crucial financial entity controlled by the Kremlin, announcing drastic austerity measures. These include substantial layoffs and spending cuts, signaling deepening financial difficulties.

VEB's chairman, Igor Shuvalov, revealed plans to reduce the bank's workforce by 15% starting in 2027. This decision is part of a broader strategy to lower costs amid a slowdown in economic lending activities. Shuvalov stated that the order for these reductions was issued 10 days prior, marking the beginning of the process to cut both staff and the organization's budget.

The bank plays a strategic role in the Russian economy, overseeing pension savings for approximately 38 million citizens and funding numerous national projects promoted by the Kremlin. Analysts view the announcement of staff reductions as another indicator of the economic hardships Russia is facing. Data suggests that these problems extend beyond the banking sector, with at least a quarter of Russian companies expected to resort to collective layoffs by 2025.

Other sectors are also experiencing significant job losses. The metallurgical industry, hit by decreased demand, has shed around 3,000 jobs. Truck manufacturer KamAZ, facing financial losses, has laid off approximately 2,000 employees. VEB is not alone among financial institutions implementing cost-saving measures. Russia's largest bank, Sberbank, has reportedly reduced its staff by about 20%, while 13 other Russian banks have seen layoffs ranging up to 40% of their workforce in some instances.

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We have already adopted an order 10 days ago, we have started the process. This time we are reducing by 15%, while also reducing the budget of our organization.