Company funds are laid out in pairs – Newspaper Kommersant No. 185 (7386) dated 10/06/2022
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The largest credit organizations are actively promoting dual-currency deposits for corporate clients as part of the main trend now – reorientation from West to East. The most popular deposit pair is the ruble-yuan and vice versa. So far dual-currency deposits are a novelty for the market, and quite attractive due to their higher yield. However, experts urge to treat them in a balanced way: a dual-currency corporate deposit is more of a hybrid of a deposit and an option, which means that it is associated with currency and interest rate risks. But in conditions of demand, banks are ready to offer such an instrument even to wealthy citizens, although the regulator is unlikely to allow such a practice.
On Wednesday, October 5, Sberbank announced the launch of a dual-currency ruble-yuan deposit for businesses. “It is relevant for companies that conduct foreign economic activity in yuan or want to diversify their balance sheet currency,” they noted. Already, the volume of bi-currency deposits in the ruble-yuan pair in Sberbank is more than 3.5 billion rubles. VTB offers its customers bi-currency deposits in various currencies, they said. “Such a product allows the client to receive an increased interest rate on invested funds if it gives the bank the right to choose the currency for returning the deposit,” the bank noted. “In recent months, customer interest in deposits in the ruble-yuan pair has been growing noticeably.” Dual-currency deposits for legal entities are also in the line of Alfa-Bank, they said. “Currently, the ruble-yuan and yuan-ruble pairs are gaining more and more popularity, for pairs pegged to hard currencies – the dollar and the euro, transactions are not concluded due to high sanctions risks,” the bank explained. “If we see demand from customers to other currencies – Hong Kong dollars or dirhams, then the corresponding pairs can be added to the product line. There are bi-currency deposits in the corporate product line of Raiffeisenbank. The rest of the largest players did not respond to Kommersant’s request.
Dual-currency deposits are a relatively new product for legal entities and individual entrepreneurs, the popularization of which is associated with a reduction in the share of traditional foreign currencies (dollar, euro) in trade due to external sanctions, Vyacheslav Putilovsky, junior director for banking ratings at Expert RA, points out.
“This instrument is not a contribution / deposit in the truest sense of the word, it is rather a hybrid of a contribution and an option,” the expert explains. “It is associated with currency and interest rate risks.” For bi-currency deposits, the exchange rate of the alternative currency must be stable, adds Natalia Bogomolova, an analyst at NRA bank ratings. “If the exchange rate of the alternative currency turned out to be lower than the established conversion rate, then part of the income is lost, since the deposit will be converted into an alternative currency at a higher rate,” she continues. The financial result for such products is not guaranteed, in addition, the bank may additionally charge a commission for storing currency in accounts, Mr. Putilovsky draws attention.
The advantages of bi-currency deposits, according to experts, are potentially higher profitability in comparison with classic deposits of legal entities.
The rates on them in the yuan-ruble pair reached 30% per annum, Alfa-Bank indicated. In such instruments, “you can place free liquidity and, with a correct assessment of the possible future conversion rate, get a benefit,” Natalya Bogomolova points out.
There are no estimates of the volume of dual-currency deposits for the system as a whole. The Central Bank did not respond to Kommersant’s request. Banks generally do not disclose their data. According to Mr. Putilovsky, the volume of such products is still very small, but will grow in the medium term.
Despite the fact that bi-currency deposits are new in the corporate segment, some players are ready to go further and offer them to citizens. So, Alfa-Bank reported that “they do not exclude work in this area with large private clients.” However, experts believe that this is premature. Given that the Central Bank is actively pursuing a policy aimed at limiting citizens from currency risks and complex products, the introduction of dual-currency deposits for individuals who are not qualified investors is unlikely, Ms. Bogomolova concludes.
The Central Bank noted that in the current environment, banks offer new products to customers, and the regulator “will respond if it identifies increased risks for customers or the banks themselves.”
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