Top managers of the Bank of Russia went to strengthen interbank relations with China

A representative delegation of the Central Bank went to China to strengthen ties with the local regulator and infrastructure organizations. The relevance of uninterrupted cross-border payments between the two countries is increasing: a number of Russian banks are under strict sanctions from Western countries, which limits transactions by Chinese counterparties.

In the second half of September, the Bank of Russia sent a representative delegation to China, two Kommersant sources in the financial market know. It is headed by the first deputy chairman of the Central Bank, Vladimir Chistyukhin, who is also responsible for the development of international cooperation and public communications. Also, according to Kommersant’s sources, the delegation included heads of departments for organizing international payments, the national payment system, financial market infrastructure, IT department, etc. The Bank of Russia did not respond to Kommersant’s request.

In March 2017, the Bank of Russia opened its representative office in China. As another Kommersant interlocutor in the financial market clarifies, previously such trips took place with some regularity, but now their relevance has only increased. The purpose of such visits is to strengthen ties not only with the People’s Bank of China, but also with representatives of other infrastructure organizations.

Russian banks have begun to more actively develop correspondent relations with Chinese banks since March last year. In particular, according to the Central Bank, the index of correspondent relations in non-toxic currencies showed an increase of 1.6 times by the beginning of April 2023 (see “Kommersant” dated June 14). This is partly due to the Central Bank: the regulator did not hide that it would help Russian banks strengthen new ties abroad. In particular, in February of this year, a new department was created within the structure of the Central Bank for the organization of international payments. Among its tasks are the development of “correspondent relations of Russian banks with counterparties from friendly countries, the transition to settlements in national currencies and expanding opportunities for cross-border transactions.” Russian banks are actively expanding their presence in China. VTB, Sberbank, GPB and PSB have already opened representative offices in this country. At the same time, VTB has a local branch, and Sberbank and Alfa Bank are preparing to open them.

Enterprises engaged in foreign economic activity and having revenue in yuan, largely retain this revenue abroad in accounts in non-resident banks and cover yuan expenses from it, notes Managing Director of Expert RA Yuri Belikov. “Therefore, the demand for loans in yuan from Russian banks is unlikely to be stable,” he believes. According to him, the potential of such services is limited, “and surges in certain months may be associated, in particular, with the conversion of corporate obligations in dollars and euros into ruble and yuan obligations.”

However, in general, there is a demand in the market for uninterrupted transactions in CNY. And representatives of the Bank of Russia still have something to discuss in this area with the Chinese side, Russian bankers believe. As Kommersant’s interlocutors in a number of banks note, there are no particular problems with payments in yuan if the bank is not sanctioned. “Chinese banks continue to build relationships with Russian ones, but they do so with some caution,” says Nikolai Belov, partner in financial risk management at Trust Technologies.

“Chinese counterparty banks very carefully observe all sanctions and closely monitor compliance, which may affect the speed of payments,” points out one of the bankers.

The fear of falling under secondary sanctions from Chinese partners “does exist and seems logical,” Nikolai Belov also admits. Chinese banks also view payments to third countries, so-called transit cases, with caution, Russian bankers note. In particular, one of Kommersant’s interlocutors explains, if a payment in yuan from Russia is sent to accounts in the USA or UAE. “There is no such situation with friendly countries,” says a Kommersant source.

Olga Sherunkova