Despite authorities’ actions, key risks (including mismanagement of foreign currency) have materialized in different CIS banking markets, Fitch said in the April report.

“CIS banking systems have experienced various stresses over the last 12 years, with some significant common causes such as mismanagement of foreign currency (FC) and generally high dollarisation of liabilities. That is the reason that in 2014-2015 many regional currencies depreciated sharply,” said Fitch.

According to the agency, FC lending is particularly high in Azerbaijan (40%), Ukraine (48%), Belarus (49%), Uzbekistan (55%), Georgia (56%) and Armenia (58%).

Fitch noted that another common source of problems has been poor corporate governance, coupled with weak supervision, which resulted in sizable amounts of state money being required to resolve failed banks.

“In Russia we estimate total clean-up costs to date at about USD80 billion, and we believe the Central Bank of Russia (CBR) could spend about another USD10 billion in the next two-to-three years, as it finalizes the clean-up,” reads the report.

Retail overheating is another major risk, which already materialized in Russia in 2014-2015 when credit losses on high-margin consumer loans reached 25%, compared with an annual rate of 5%-8% previously, Fitch said.

“Overall, we see some tightening of supervision across CIS markets, which is a positive development. However, given the significant issues in some countries it may take some time to address them, while some risks, such as dollarisation of balance sheets, will be very difficult to reduce or mitigate,” concludes the report.