Russia will issue $14.7bn in bonds to recapitalise its banking system this year and next, said Alexei Kudrin, finance minister, a sum bankers said fell far short of the amount needed to reverse the country’s steep economic decline.

In the first comments by a government official on recapitalisation plans to help the sector brace against a surge in bad loans, Mr Kudrin said the government would raise 250bn roubles ($8.05bn, €5.72bn, £4.87bn) this year by issuing OFZ treasury bills and an additional 210bn roubles in 2010. The bills would be exchanged for preferred shares in banks. Mr Kudrin said the government could also issue more subordinated loans.