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Russian banks are facing the most pressure out of the major emerging markets, as the end of US quantitative easing leaves financing in those countries facing a new reality, according to a new report by credit rating agency Standard & Poor's. 

"We have a negative view on the banking industry in Russia," the report says, noting that almost 70% of S&P rating outlooks for Russian banks are now negative.

S&P sees all the banking sectors of major emerging markets under pressure, but Russian banks have been hit hardest of all for "idiosyncratic reasons". "Russian banks remain the most vulnerable [out of major emerging markets] due to the current operating difficulties created by Western sanctions and lower economic growth," write S&P analysts in the report.   

According to S&P, Western sanctions on Russia, in response to its aggression in Ukraine, directly affects more than 50% of Russia's banking sector assets, by restricting state banks' access to US and EU capital markets.

But sanctions will only have a limited direct effect on the state banks Sberbank, VTB, and VEB that are targeted by sanctions, because they have only a limited need for external financing, S&P believes. "Our analysis suggests the sector has enough liquidity to refinance its international debt falling due until the end of 2015," S&P says. "Still, the longer the sanctions last, the more challenging funding and liquidity conditions will become for banks as a whole, both in terms of access and cost."

But the indirect effects of sanctions will be more serious: "erosion in investor confidence, a general perception of higher risk of financing Russian banks, plus the possibility of increased capital flight and weaker economic growth."

"The main risks we see for 2015 are capital erosion on the back of rising risk costs and funding pressures," the report argues. According to S&P, a significant part of the banks' excess liquidity currently derives from large corporate deposits, which may dwindle, given that major corporate depositors - such as energy giants Gazprom and Rosneft - are under sanctions themselves with restricted access to foreign funding. At the same time, retail deposits are stagnating, as depositors are buying durable goods in response to the plunging ruble.

Worryingly, central bank funding already makes up 10% of total banks' liabilities, not far from the 13% mark reached at the peak of the global credit crunch in 2009. "We believe weak economic prospects will result in more bad loans and will pressure banks' capital and profitability," concludes S&P.