Yuan raised rates – Newspaper Kommersant No. 215 (7416) of 11/21/2022

Banks are ready to pay extra for the transfer of funds from dollars to yuan – in particular, the other day, rates on deposits in this currency, following competitors, were adjusted by Sberbank. According to experts, this step means that the bank has found a tool that is beneficial for investing yuan. But for citizens, even the current already increased rates on deposits in yuan remain far from the most profitable way to deposit funds in Chinese currency.

On November 18, Sberbank sharply increased the yield of deposits in yuan – immediately by 1.3 percentage points, up to 1.5% per annum, bringing them to the market level. Comparable rates are now in effect in Tinkoff Bank, RRDB, Novikombank, the maximum level is slightly higher in SDM Bank, ICBC Bank, Dom.RF Bank, Alfa Bank (2.0–1.6%). But all of them are much lower than the first spring offers, which reached 4-8% per annum (see Kommersant of March 31).

According to independent expert Olga Ulyanova, the offer of favorable conditions for deposits in yuan aims primarily to attract and retain depositors who continue to gravitate towards foreign currency savings, but due to geopolitical reasons are cut off from traditional instruments. “RMB savers are trying to get out of the low-yield scissors by flowing to more generous banks or by testing the option of investing in yuan bonds,” she explains. “It is clear that Sberbank is not ready to lose this category of customers.”

As a rule, opening a deposit in yuan is possible only non-cash by converting from rubles or dollars. However, despite the growth in the number of offers for deposits in yuan, for many banks these products are unprofitable, notes the interlocutor of Kommersant in one of the credit institutions. By themselves, there are investment instruments, but not all and not always allow you to compensate for the cost of the deposit, the Kommersant source explains. In his opinion, the reason for Sbarbank’s step is precisely that he found a profitable instrument for placing yuan funds.

The increase in rates suggests that the bank is in need of attracting additional liquidity in yuan to balance the growth in lending in this currency, said financial expert Nadezhda Gromova. The bank started lending to corporate clients in yuan in September. If Sberbank can form a portion of relatively stable balances of individuals in yuan, it will hedge the growing volume of loans in Chinese currency, the expert believes.

But most banks currently do not have active operations in yuan and other alternative currencies, so it is too early to say that they can earn on these liabilities, says Alexander Sychkov, director of the private banking department at Novikombank. “First of all, this product appeared on the market in response to a request from customers who need deposits not only in rubles. Of all the alternative currencies available today, the yuan is the most promising,” says Mr. Sychkov.

Since the market has actually negative dollar rates, customers do not like it, and the banks themselves are afraid of freezing funds, says Vladimir Pribytkin, chairman of the board of directors of PSCB. At the same time, he clarifies, the need for dollars and euros is objectively falling – Russia cannot buy some goods, against this background, the volume of transactions in yuan is growing. “In addition, now the speed of passing dollars (settlements in them and transfers) is not so high, unlike yuan,” adds Mr. Pribytkin. “Therefore, if customers need to transfer a foreign currency payment, yuan is most often used.”

At the same time, yuan deposits themselves, due to the fact that the rates are still low, are hardly considered by clients as a profitable investment, the maximum percentage compensates for the costs of a currency transfer, Mr. Pribytkin notes. “Now it’s more important for clients not to pay a rate, but to make settlements fast, so that the bank has a reserve of foreign currency, including yuan,” he said. It would be unprofitable for clients to freeze money for a year at a rate of 1.5%, Nadezhda Gromova objects. From the point of view of the possibility of closing a position and withdrawing money, she believes, the corporate bond market in yuan is more profitable.

Olga Sherunkova