A man stands next to a building under a board showing currency exchange rates in Moscow, Dec. 16, 2014. Russian banks are struggling in the face of a recession. Reuters

Russia's banks are under tremendous stress amid a plunging currency and ongoing Western sanctions over Russian involvement in the Ukraine crisis, and they will likely need more government bailouts to survive, according to analysts. Russian banks have responded to the ongoing financial crisis by cutting off loans to local businesses. Overnight rates have grown to 18 percent, indicating that financial institutions are anxious about even lending to each other.

Russia's Trust Bank collapsed last week, forcing authorities to step in with a $1.7 billion loan bailout. Russian Finance Minister Anton Siluanov said the government would also provide cash to state-owned banks VTB and Gazprombank, according to CNN Money. "Banks need to provide finance to companies that are under sanctions or are unable to go to capital markets," Sergey Voronenko, associate director at Standard & Poor's, said.

The Russian ruble has lost about 40 percent of its value against the U.S. dollar this year after the European Union and the United States imposed a variety of sanctions targeting Russia's major industries in response to its involvement in the political and military crisis in Ukraine.

Russian banks are now bracing for mass withdrawals. In all, the Russian central bank has accessed more than $110 billion in foreign currency reserves to help shore up the ruble in recent months.

“In general, the ruble keeps following the oil price,” Dmitry Savchenko, an analyst at Nordea Bank in Moscow, told the Globe and Mail. “Volatility like this is likely to remain in the beginning of the next year, as a consequence of both the central bank letting the ruble float freely and speculators reacting in a more emotional way to everything that’s taking place.”

The Russian economy could retract by as much as 4.7 percent in 2015 if oil prices remain low, the central bank said this month. Russian markets were scheduled to close for an annual New Year’s break from Wednesday through Sunday and for Christmas holidays on Jan. 7.