Capital flees from Russia: what is the attraction of foreign banks

Named the consequences of reducing foreign currency deposits of citizens within the country

The volume of foreign currency deposits of Russians abroad exceeded their size in Russia, the Central Bank said. In the first six months of 2022 alone, Russians transferred more than 1 trillion rubles to deposits abroad. This is due to the mass relocation of Russians, which took place almost throughout 2022. Many wealthy citizens purchased property in Turkey, the United Arab Emirates, Thailand and other countries. It is logical that they also transported their financial savings with them. Experts spoke about the consequences of the outflow of funds: purchasing power will fall, GDP growth will slow down.

The growth of foreign currency deposits of Russians in foreign jurisdictions is part of the outflow of capital. Last year, there were two periods of departure of citizens from Russia – in the spring and autumn of 2022.

These Russians closed deposits in domestic banks and opened them in other countries, says Artem Deev, head of the analytical department at AMarkets. In addition, Russians located in the territory of the Russian Federation also began to open deposits in foreign countries.

“This was a means of protecting their savings from restrictions by the Central Bank (after all, since March last year, the decision of the Central Bank has been in effect that no more than $10,000 can be withdrawn from a deposit,” he notes. “On the other hand, citizens who emigrated also transferred their funds to the states where they left.”

Now foreign currency deposits are extremely unpopular with Russian banks when it comes to dollars and euros, an expert from the Intercession company emphasizes. Andrey Popelnyukh.

“Banks of the second and third tiers can offer from 0.01 to 1% per annum, but these are huge risks. Of the systemically important banks, almost no one opens foreign currency deposits, – continues the interlocutor of MK. “Deposits in yuan are gaining popularity, among Russians, the rate on such deposits can reach up to 2.5% per annum.”

According to Artem Deevarather, it is worth talking about the reduction of foreign currency deposits of citizens in Russia.

“As a consequence, one can point to a reduction in purchasing power – people have less stocks of funds to make large purchases. For the economy, the result is a stagnation of consumer demand and a slowdown in GDP growth,” the expert concludes.

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