Russia’s banking system is “on the brink of crisis” as customers queued up outside branches to withdraw cash.
Experts have warned that banks will struggle to sell assets to stay afloat after sanctions sent markets into freefall this week.
The chaos comes after Russia’s central bank was blocked from accessing large chunks of its foreign reserves.
Britain and its allies have targeted a number of Russia’s biggest banks with sanctions, including the largest state-owned lender, Sberbank.
The Foreign Secretary, Liz Truss, is poised to introduce a total asset freeze on the sector.
Russians were seen queuing outside bank branches in images shared on Twitter.
Russian banks in Europe have also been hit by the panic. Sberbank Europe, a subsidiary of the state-owned bank, warned it has faced “significant outflows of deposits in a very short time”.
Liam Peach, a Russian expert at Capital Economics, said: “It looks like the Russian banking sector is on the brink of crisis in one form or another. The banking sector is facing a huge liquidity issue.
“What usually happens when we have a run on the banks like this, it forces banks to sell their liquid assets.
“But because these banks don’t have very much in liquid assets – particularly foreign exchange assets – they may be forced to sell other assets at depressed prices.
“Given how much Russian markets have been hit in recent days, those prices are likely to be quite depressed. This will cause bank balance sheets to shrink, credit conditions to tighten, and corrode banks’ capital conditions. It looks like the banking sector is going to be hit really hard and any crisis there could feed into the broader economy.”
Sberbank has been forced to restrict withdrawals from some European subsidiaries. The European Central Bank has warned some of Sberbank’s continental divisions could collapse completely.
Mr Peach added: “It’s not clear that there will be restrictions on withdrawals in Russia. But I think it’s very likely those restrictions will come in the coming days or weeks depending on how much pressure there is on the system.”