Experts warn Russians about the risks of keeping savings abroad

According to the results of November, the deposits of compatriots in foreign banks increased by 2.7 times compared to the beginning of 2022 and reached a record $81.7 billion. This is evidenced by the data of the Central Bank of the Russian Federation. For comparison, in January last year, this figure was only $30.6 billion. At the same time, the share of foreign currency deposits of individuals in Russian banks in November last year fell to a historic low of 9.7%. Banks are very willing to get rid of accounts in “toxic” currencies, and citizens, judging by the statistics, have found where to send it. What caused the rise in money transfers abroad and how risky it is for depositors, experts told MK.

Maxim Osadchiy, head of the analytical department of BKF-Bank:

“The first wave of the outflow of funds from the population abroad, including to the deposits of non-resident banks, arose in February, immediately after the start of the SVO. By May, it weakened (as the Central Bank of the Russian Federation sharply raised the key rate; in addition, restrictions were imposed on the transfer of funds abroad), but a second wave arose in June, reaching a maximum in September, which was primarily due to partial mobilization . In addition, semi-annual deposits with high rates (above 20% per annum) opened in March ended in September. In October-November, the second wave also weakened, but, nevertheless, the active outflow of funds from the population, which was an order of magnitude higher than the outflow in the period before the NWO, continued. There are no statistics for December yet, but we can expect that in December the outflow will continue at the level of October-November. The financial outflow abroad, in particular, is associated with the “physical” outflow due to partial mobilization. Among the main beneficiaries of this outflow were Kazakhstan, Georgia and Armenia. We see this, in particular, in the significantly increased volume of money transfers from Russia to these countries. While the economy of our country is plunging into recession, the forecast for Armenia’s GDP growth in 2022 has been raised by the Central Bank of Armenia from 1.6% to 13%.

The key problem of deposits in foreign banks is the threat of the “Iron Curtain”. A situation may arise when the depositor is located in Russia, and his bank deposit, for example, in Switzerland. But the border is closed. And nothing will connect it with money abroad. In addition, the Russians in the banks of developed countries often turn into persons “non grata”, they are asked “with money to go out.” Well, the third threat: today the country is friendly, and tomorrow – unfriendly. With China, we had such an experience half a century ago: under Stalin they sang “Russian and Chinese – brothers forever”, and under Brezhnev in 1969 there was an armed conflict on Damansky Island.

Basic advice: if you live in Russia, keep your money inside the country. Unless there is a significant change in the geopolitical situation, there will be no significant change in the outflow of funds from the population from Russia. Where money is good, there they have a homeland.

Valery Emelyanov, stock market expert at BCS Mir Investments:

“The outflow of funds is mostly associated with the February events: sanctions against the largest banks of the Russian Federation, freezing of foreign exchange reserves, a ban on the import of banknotes and retaliatory measures by the Central Bank in the form of restrictions on withdrawing deposits in cash, transfers abroad and the subsequent easing of the currency regime.

People who have foreign currency deposits in the Russian Federation and at the same time accounts abroad (and these are mostly wealthy citizens), as soon as the transfer limits were raised, hurried to withdraw a significant part of their savings outside our country according to the principle “it is necessary to withdraw, as long as they give it.” The main flows of non-cash currency went abroad long before the partial mobilization, back in the summer, as soon as the Central Bank allowed individuals to make transfers within certain amounts. At first, it was possible to transfer up to $150,000 abroad, later up to $1 million.

The main risk for Russians sending money to their accounts abroad is related to the restrictions of foreign financial institutions. All banks are required to verify the origin of funds and the presence or absence of a person in the sanctions lists. Now Russians are often denied acceptance of transfers, even if they are honestly earned money, there are statements about the presence of a large salary, the sale of real estate, a car or their own business. In Europe, in general, there are restrictions for Russians: no more than 100 thousand euros on one account in one bank. Correspondent banks may refuse transfers if they do not have a partner bank in the country of destination. Most banks are not ready to work with Russians. Everyone is afraid of accidentally violating some sanctions and eventually getting fined. If a Russian does not have a residence permit, then it is extremely difficult for him to even open an account, let alone replenish it.

As long as Russia’s financial borders are open, the currency will flow away. The Central Bank of the Russian Federation does not see this as a problem, because it is more important for it to ensure the stability of banks than to try to keep the ruble from falling. Moreover, the ruble has a fairly strong support in the form of sanctions: restrictions on imports automatically weaken the demand for the currency within the country.

As long as a significant share of deposits in dollars, euros and other “unfriendly” currencies remains inside Russia, most likely, they will be allowed to withdraw them relatively freely abroad. The Central Bank is on the position that it is necessary to clear the balance sheets of banks from “toxic” currencies in order not to have problems with them in the future.