Banks set up the yuan

On the first day of February, several Russian banks raised rates on yuan deposits at once. Now, when opening a deposit in Chinese currency, you can count on a rate of almost 3%. However, while the demand for deposits in yuan is small, they mainly attract wealthy clients. The activity of banks in the segment is constrained by the fact that the demand for borrowings in yuan remains limited.

Major banks have started raising rates on yuan deposits. So, on February 1, Bank Saint Petersburg increased them by 0.5 percentage points, up to 1.5% per annum, Gazprombank – by 1 percentage point, up to 1.5% per annum, Alfa-Bank – by 0 .63 p.p., up to 2.63% per annum. Sberbank also offers a rate of almost 3% on a deposit in yuan, 2% can be obtained at SDM Bank, 2.6% at Dom.RF Bank. The minimum amount of deposits in yuan starts from 500 yuan (equivalent to 5 thousand rubles), the minimum term is three months.

Russian banks began opening deposits in Chinese currency in March 2022, after the outbreak of hostilities in Ukraine and the imposition of Western sanctions against Russian financial organizations (see Kommersant dated March 9, 2022). So, for example, VTB, which was under US sanctions, began to open deposits in yuan on March 9th. The rate was offered at the level of 8% per annum, although after a few days it dropped to 2%, and now it is only 0.75%.

According to information on the Banki.ru marketplace, in general, the rates on deposits in yuan in the Russian market are now in the range of 0.01-2.63% per annum, but are gradually increasing. Back in November 2022, the maximum offered rate for this product did not exceed 2% per annum.

In fact, for citizens, the yuan remains the only serious alternative to “unfriendly” currencies, making it possible to diversify savings, explains Bogdan Zvarich, chief analyst at Banki.ru.

“The desire of depositors to invest their savings in yuan as an alternative to dollars and euros is just beginning to take shape,” believes Frank RG analyst Kristina Kuznetsova. amounts in currency.

Banks seek to reduce risks and offer more favorable terms for yuan than for deposits in “unfriendly” currencies, Ms. Kuznetsova said. However, she believes that it is too early to talk about a steady increase in rates on deposits in Chinese currency. “The increase in rates on deposits in yuan is unlikely to become a long-term trend,” agrees Konstantin Borodulin, director of NRA banking ratings. “It depends on the possibility of investing the funds raised in the relevant foreign exchange assets that can cover the attraction rate, and on the volume of trading operations in it.”

In the context of classified reporting, it is impossible to reliably assess the dynamics of deposits in yuan, but in general, the share of household funds in foreign currency in bank accounts decreased throughout 2022. Deposits in yuan are unlikely to become massive and reverse the trend, says Yuri Belikov, managing director of Expert RA. “Demand for deposits in Chinese currency is presented by a limited circle of wealthy clients,” explains Mr. Belikov. “The increase in rates is rather the ongoing exploration of this segment by banks, as well as a reaction to a further reduction in foreign exchange liabilities.”

It’s not that banks need long-term yuan funding right now, but in a scenario for a more effective reorientation to the east, one needs to understand the potential for domestic demand for yuan, the timing and sustainability of the corresponding funding, Yuri Belikov adds. Therefore, the expert believes, this is not a matter of large-scale cash flows, but “small bonuses aimed at retaining customers with an above-average check.”

Polina Trifonova