The Central Bank notes a slowdown in the growth of assets in non-resident accounts with Russian brokers

Central Bank data indicate a slowdown in the growth of assets in non-resident accounts with Russian brokers at the end of last year. Their volume for the fourth quarter of 2023 increased by less than 6%, which is several times lower than the rate of previous quarters. The trend is partly due to the general slowdown in the growth of the Russian stock market. However, some jurisdictions that have recently enjoyed increased demand are already showing clear declines. Among them are the UAE, Belize and Saudi Arabia. The near abroad is still growing, but experts emphasize that for investors investing in Russia, the situation abroad is becoming increasingly volatile.

According to Kommersant’s estimates, based on data from the Central Bank, in the fourth quarter of 2023, the total number of non-resident accounts with Russian brokers increased by 6.6%, to 29.1 thousand, of which 27.7 thousand were with individuals, 1. 73 thousand – from legal entities. Client assets in these accounts increased more slowly: by 5.9%, to RUB 1.34 trillion. We are talking about a sharp slowdown in positive dynamics: in the previous three quarters, assets grew by 20–35%. This was facilitated by an increase in investments in securities and their revaluation. According to the results of the first three quarters of 2023, the Moscow Exchange index rose by 45%, to 3133 points, while in the fourth quarter it decreased by 1%, closing the year below 3100 points.

At the same time, there is a redistribution of assets between jurisdictions. In particular, during the fourth quarter, assets in the accounts of clients from the UAE decreased by 11%, to 120.7 billion rubles, although the number of legal entity clients increased by 18%, to 126 organizations. In the first quarter of 2023, the assets of such clients increased eightfold, and in the second and third quarters – another twofold.

A similar picture emerges with clients from Belize – a reduction in assets by 7%, to 62 billion rubles. (while maintaining the total number of clients). The assets of clients from Saudi Arabia turned out to be extremely volatile: in the third quarter they grew from almost zero to 13.5 billion rubles, and in the fourth quarter they returned to their previous values ​​(33.6 million rubles).

“Due to the fact that the Middle East is gradually becoming an increasingly complex jurisdiction for disputed money, investors prefer to leave there,” notes a Kommersant source in the financial market.

Thus, FATF from February 23, 2024 excluded The UAE is on the gray list, where the country entered in 2022. In anticipation of this event, explains Ruslan Klyshko, director of the wealth management department at Astero Falcon, large UAE banks strengthened their KYC (know your customer) and KYD (know your data) procedures to avoid the risk of secondary sanctions. “Interaction with Russia and the Russian financial market is a significant risk factor. Therefore, local banks can block or complicate such operations,” adds Alexander Nektorov, partner at AB NSP.

As a result, companies choose less scrupulous jurisdictions, including not only domestic offshores, but also neighboring countries.

Thus, assets in the accounts of clients from Uzbekistan almost quadrupled, to 87 billion rubles, the country moved from ninth to fifth place. Almost the entire increase came from legal entities, whose assets increased from 21.5 billion to 85.4 billion rubles. A similar picture is observed among clients from Armenia (22 times growth, up to 18.9 billion rubles), Turkey (five times, up to 5.3 billion rubles), Georgia (six times, up to 3.6 billion rubles .). In all cases, growth also occurred at the expense of legal entities.

In neighboring countries, banks remain more loyal to the Russian Federation. As Kommersant’s interlocutor on the stock market notes, “in Georgia or Kazakhstan it is much easier to interact with banks than in the Emirates.” “Russian investors also give preference to brokers and banks from neighboring countries in order to restore access to global markets with more flexible requirements for the minimum amount for opening an account compared, for example, with the UAE,” says Ruslan Klyshko.

Experts believe that in the near future the trend of assets flowing from jurisdictions where they could potentially be frozen to more reliable ones will continue. “Clients are constantly looking for new solutions, new jurisdictions,” explains managing partner of the Grad law firm, Maria Agranovskaya. When choosing a country, investors primarily take into account “friendliness, reliability, taxation.” However, the situation is constantly changing, Ms. Agranovskaya clarifies. “We opened a whole direction towards China, but even they have tightened their work with Russia. Therefore, we cannot rule out an outflow here in the fall,” she says.

Vitaly Gaidaev