Exclusive: Russian companies rush to open Chinese bank accounts
Exclusive: Russian companies rush to open Chinese bank accounts

Exclusive: Russian companies rush to open Chinese bank accounts

Coins and banknotes of China’s yuan are seen in this illustration taken February 24, 2022. REUTERS / Florence Lo / Illustration / File Photo

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SHANGHAI, March 3 (Reuters) – The Moscow branch of a Chinese state bank has seen an increase in inquiries from Russian companies looking to open new accounts, a person familiar with the matter said as the country’s companies struggled international sanctions following its invasion of Ukraine.

“Over the last few days, 200-300 companies have approached us who want to open new accounts,” says the person who works in the Moscow branch of a Chinese state bank and has direct knowledge of its operations, to Reuters.

He refused to be named or to have his bank identified as he is not authorized to speak to the media.

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It was not clear how widespread Russian demand for new accounts in Chinese banks was, but the bank source told Reuters that many of the companies seeking new accounts do business with China and that he expected such companies’ transactions in yuan to increase.

Western governments are shutting down Russia’s economy from the global financial system, forcing international companies to halt sales, cut ties and dump investments worth tens of thousands of dollars. Read more

China has repeatedly expressed opposition to the sanctions, calling them ineffective and insisting that it will maintain normal economic and trade exchanges with Russia. Read more

A handful of Chinese state banks operate in Moscow, including the Industrial & Commercial Bank of China (601398.SS)Agricultural Bank of China (601288.SS)Bank of China and China Construction Bank (601939.SS).

China Construction Bank declined to comment. The three other Chinese state banks did not respond to Reuters’ request for comment.

A Chinese businessman with long-standing ties to Russia, who also did not want to be identified, said several Russian companies he works with are now planning to open yuan accounts.

“It’s pretty simple logic. If you can not use US dollars, or euros, and the United States and Europe stop selling you many products, you have no choice but to turn to China. The trend is inevitable,” the source said. to Reuters.

As an increasing number of Western companies leave Russia, the willingness of emerging market giants like China to maintain business relations with Moscow highlights a deep divide over Europe’s biggest crisis since World War II. This trend may threaten to remove US dollar dominance in global trade. Read more

FESCO Transportation Group, a major Russian transportation and logistics company, said this week that it will accept Chinese yuan from customers after some Russian banks were thrown out of the global financial messaging system SWIFT. Read more

“It is natural for Russian companies to be willing to accept the yuan,” said Shen Muhui, head of a trade body promoting relations between Russia and China.

But small Chinese exporters are suffering from a fall in the ruble, and many are suspending supplies to avoid potential losses, he said.

The Russian currency dipped to a record low of more than 17 rubles to the yuan on Wednesday, after losing almost 40% of its value against the Chinese unit over the past week.

“Companies will switch to yuan-ruble business, but in any case, things will be two, three or four times more expensive for Russians because the exchange rate between yuan and ruble is also changing,” said Konstantin Popov, a Russian entrepreneur in Shanghai.

Shen said Russian demand for Chinese goods will nevertheless grow in the long run. “The key is to solve trade settlement problems” in the face of sanctions, he said.

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Reporting by Samuel Shen and Andrew Galbraith Editing by Vidya Ranganathan and Sam Holmes

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