A quarter of Russian banks refused deposits in unfriendly currencies

A quarter of Russian banks have refused deposits in unfriendly currencies. This is explained not only by regulatory pressure, but also by low demand: customers are increasingly choosing deposits in rubles or yuan. Nevertheless, the market does not expect a complete rejection of deposits in dollars and euros.

The number of banks offering deposits in the currencies of unfriendly countries fell by a quarter over the year, according to Frank RG data. So, at the end of June, only 12 banks out of the top 30 largest players in the deposit market retained deposits in dollars and 11 in euros in the product line, while a year ago, 16 banks offered deposits in dollars, and 12 in euros. Deposits in unfriendly currencies stopped offer Sberbank, VTB, Gazprombank, MTS Bank and Renaissance Credit. Rosselkhozbank reduced the line from four deposits to one.

VTB observes “a trend towards de-dollarization of the liabilities of individuals.” The investment attractiveness of unfriendly currencies has fallen due to restrictions that sharply reduce the ability of a retail client to use dollars or euros for payments, adds Lidia Kashirina, Deputy Director of the Department of Retail Client Solutions and Digital Business at Rosbank.

“Sanction risks have significantly reduced the depth of the maneuver for setting up correspondent accounts in US dollars and euros,” explains Andriy Barkhota, an independent expert. According to Yury Belikov, Managing Director for Validation at Expert RA, the preservation of such deposits in the product lines of banks was due to frozen assets and, accordingly, the need to close the currency position, as well as some movement towards clients in order to retain them.

“These factors have not lost their relevance completely, nevertheless, some frozen assets were simply written off, some were repackaged into ruble claims,” notes Mr. Belikov. “Clients are less and less likely to look towards the dollar and euro when choosing a deposit. Citizens converted a significant part of foreign currency savings into rubles due to rising costs against the backdrop of inflation, and also trying to gain something from the sharp depreciation of the ruble.

However, a complete rejection of deposits in unfriendly currencies should not be expected in the near future, experts say. According to Mr. Barhota, the absolute refusal of the Russian banking sector from liabilities in US dollars and euros does not look like a strategic line for the development of the domestic financial sector, but rather as a forced tactical measure aimed at leveling the sanctions and the volatility of the foreign exchange market.

“There will be no one-time rejection of such products by all banks due to the same frozen assets,” adds Yuri Belikov. “Their distribution across banks is uneven, so some large players, in terms of their currency position, will completely abandon a certain share of liabilities in dollars and euros it is forbidden”. In addition, there remain individual clients, mainly VIPs, who will hold non-cash dollars and euros without experiencing an urgent need to convert them to cover growing costs, so technically complete devaluation, even in the context of unfriendly currencies, is unlikely to occur in the foreseeable horizon, the expert clarifies.

However, the founder of Anderida Financial Group, Alexey Tarapovsky, believes that it has become unsafe to make savings in dollars and euros, especially for wealthy citizens due to sanctions pressure. Moreover, the expert believes that in the short and medium term, it becomes pointless to keep money in the currencies of unfriendly countries in Russia, since it is impossible to withdraw more than $10,000 from banks, SWIFT transfers, and cash currency exchange is difficult.

VTB expects that their depositors will be able to almost completely abandon their savings in dollars and euros over the next 2-2.5 years. According to them, in 2023 the share of the dollar and the euro in VTB’s retail portfolio will decrease over the year from 10% to 7%. Clients are increasingly converting them into rubles and yuan, the total share of which by the end of the year may increase in the bank’s savings portfolio up to 93%. Of these, 90% will be occupied by the domestic currency. “Those who used to make savings on the principle of “not only rubles” turned their attention to the yuan,” Mr. Tarapovsky concludes.

Julia Poslavskaya, Polina Trifonova