In the Russian market, the value of bank debt offered on online trading platforms in the second quarter fell by 37% compared with the first quarter, while the debt attributed to microfinance institutions (MFIs) dropped by 18%. Online auction activities connected to overdue Debex were part of the dynamic described in recent market observations.
Research indicates that the cost of selling retail bank debt declined from 12.7% in the first quarter of 2022 to 7.9% in the second quarter. In contrast, the expense level for MFIs decreased from 16.9% to 4.2%. Notably, the volumes of auctioned delinquencies did not show a corresponding decrease, signaling that supply remained steady even as pricing weakened.
Market analysts note that the absence of bankruptcy proceedings in certain periods has pushed banks to liquidate questionable debts at a higher rate. However, the concurrent drop in default prices could pressure the collections market, with potential implications for the timing of future sales. If prices continue to slide, owners may pause or suspend further sales until market conditions improve, creating a potential bottleneck in debt turnover.
Analysts also warn about the elevated risk of a gray market for debt sales. Limited visibility into who is buying what, coupled with the possibility of abuse across sequential debt auctions, raises concerns. Such practices could result in debts being removed from official collector registries, complicating oversight and recovery efforts.
According to the data from August 20, reported by RIA Novosti and citing Equifax, the total household debt in Russia held on credit cards rose by 2% in July, surpassing 1.5 trillion rubles for the first time. This uptick suggests growing consumer leverage even as banks and MFIs renegotiate and repurpose portfolios. The combination of rising consumer indebtedness and falling purchase prices in secondary markets paints a nuanced picture of a sector in transition, where regulatory actions, market sentiment, and credit quality all intertwine to influence future trajectories.