Dirhams entered the line – Newspaper Kommersant No. 24 (7469) dated 02/09/2023

A number of Russian banks have introduced deposit products in UAE dirhams. Several more banks are considering the introduction of such a deposit, Kommersant found out. Banks receive income from conversion transactions, as well as from the placement of currency in deposits on the local market. However, most banks are only assessing the potential demand for this stable but low-liquid currency, and are also waiting for the launch of exchange trading in the dirham.

The UAE dirham is no longer exotic on the Russian market, a Kommersant survey shows that some banks – BCS-bank, MTS-bank – have been opening deposits in this currency since the end of last year. At the same time, within a month, BCS-Bank attracted tens of millions of dirhams for term deposits, said Andrei Karyakin, director of retail business at the bank. Starting amounts – at least 15-25 thousand AED (about 300-500 thousand rubles at the exchange rate of the Central Bank). However, to get the maximum rate, 1% per annum, you will need to deposit significantly more funds. Thus, in MTS Bank, an increased percentage is charged on annual deposits from 500 thousand AED (9.7 million rubles). So far, in banks that open such deposits, they can only be replenished by bank transfer, although some (Sovcombank, see Kommersant dated September 9, 2022, Sberbank and FC Otkritie) already offer cash.

Several other banks are considering the introduction of such a deposit. VTB indicated that they record the interest of customers in the UAE currency and are working on savings instruments in alternative currencies, but so far “the potential for such attraction is relatively low.” Soyuz Bank does not exclude the launch of deposit products in dirhams, but “to make a final decision, a thorough analysis of the demand potential from customers will be required.” Valentin Fedchin, director of the retail lending department at Tsifra-Bank, said that the bank is “monitoring the market” and is considering introducing such deposits in the “medium term”. At the same time, a wider number of banks have the opportunity to open settlement accounts for customers in dirhams. Among them, for example, VTB, Tinkoff Bank, Ak Bars, Zenit, PSKB, Mir Business Bank.

The dirham is pegged to the dollar, which allows customers to be encouraged to switch from toxic currencies to the currencies of friendly countries, getting rid of the risks of the dollar infrastructure. In addition, part of the export-import operations of companies from third countries is also beginning to be carried out in the UAE currency. Reuters reported last week that Indian refineries have begun paying for Russian oil in dirhams.

The interlocutors of Kommersant in the banking market note that the commercial benefit of banks in this case comes from income from conversion transactions (since clients often go initially with savings in another currency, and then they convert it into AED), as well as by placing this currency in the local UAE market. For example, the holding company of the BCS Group has opened a subsidiary of BCS Capital in the UAE. The license of the local financial regulator DFSA was issued to this company in January 2020. From the presentation of the company (Kommersant got acquainted with it), it follows that it has a special permit for the storage of client assets, and banking operations are carried out through Emirates NBD Bank. This bank offers a return on deposits up to 2% per annum. In addition, the calculation and the increase in the client base. “We offered this deposit in conjunction with the launch of conversion operations in dirhams,” Andrey Karyakin explained.

As Vladimir Evstifeev, head of the analytical department of Zenit Bank, notes, “the development of savings and investment instruments in UAE dirhams will depend on funding sources in this currency.” At the same time, the growth of domestic interest in this currency could be facilitated by its introduction to exchange trading, he points out. The Moscow Exchange had such plans back in the middle of last year (see Kommersant dated July 26, 2022). Plans for this year were previously confirmed by the head of the exchange, Yuri Denisov.

Olga Sherunkova