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Yuan in the bank

The demand for Chinese currency is growing in the Far East

Yuan in the bank

Recently, the PRC has been strengthening its position as a significant trading partner of Russia. Far Eastern enterprises carry out transactions in the currency of their neighbors, while the population prefers to procure yuan "for future use."

The branch of VTB Bank in Shanghai fell into the stream of dynamic development of Russian-Chinese relations. This is the only Russian bank in China that has a financial license, which means it has a priority right to work with the national currencies of the Russian Federation and the PRC.

The VTB branch in Shanghai has been a conductor of Russian business in China since 2008. It so happened that the internationalization of the ruble in China, VTB began almost simultaneously with the active actions of China to promote its own currency in international payments. More than half of Chinese clients have opened accounts in rubles at the branch, financial institutions of the PRC are actively using ruble correspondent accounts. Market launch of this product has been prepared since the opening of the branch within three years. And now its relative maturity is visible, it becomes a conscious choice for many clients and partners of the bank in the PRC.

“Opening the branch, the bank set the goal of servicing the dynamically developing trade and economic ties between the two countries, as well as accompanying Russian business in China,” said in the press service of VTB Bank. - For example, the possibility of cross-border operations in RMB allows Russian and Chinese clients of the VTB Group to carry out trade calculations directly in the national currency of China, avoiding the need to use the dollar or the euro. The use of national currencies in trade calculations allows you to avoid the risks of fluctuations in foreign currencies, as well as the costs of converting them. In order to conduct cross-border transactions in yuan, Russian and Chinese companies must be clients of the VTB Group. ”

Since the launch of direct quotations of the ruble-yuan on the domestic foreign exchange market of China in 2010, VTB has received the status of a market-maker for the ruble-yuan pair on the Chinese Currency Exchange and is leading in terms of amounts and volumes of currency trading. For 2013, 1047 operations were performed for a total of 19,4 billion rubles. At the same time, for the first four months of the 2014 of the year, 448 operations totaling 23,2 billion rubles were already carried out. In August, 2013 was obtained a license to conduct business with residents of the PRC in the national currency of China, which made it possible to expand the branch product line. In April, the branch 2014 received permission to conduct international operations in the Chinese yuan, and this allows the branch to fully serve the trade and economic relations of Russia and China in national currencies.

"Currently, the branch in Shanghai has the ability to provide comprehensive services to corporate clients operating in China, both in international and national currencies in Russia and China. The most popular services of the branch are trade finance, conversion operations, lending, as well as settlement and cash services for legal entities. Customers throughout China have access to the services of the branch through the function of an Internet bank. Individuals are not served by a branch due to the lack of an appropriate license, "the press service explained.

The operational goals of VTB Group's business in China for the next 3 year are the development of international settlements in the national currencies of China and Russia, the start of the investment business in Shanghai and the expansion of the client base.

Interest in the yuan is growing among Russians in the Far East.

"So, the volume of payments in RMB in Khabarovsk branch of VTB for 2013. Amounted to 80,6 million yuan (equivalent to 13,3 million dollars), growth for the year - 43%. Calculations in RMB are carried out by forest exporters, importers of spare parts, consumer goods, building materials, as well as travel companies. This is a small share in the total volume of payments for foreign trade contracts (less than a percent), but the dynamics of such calculations are impressive, "commented managing director of Khabarovsk branch of VTB Evgeny Orlov.

He said that for the 5 months of the current year, the enterprises serviced at the Khabarovsk branch conducted operations of almost 40 million yuan, which is more than two times higher than the same period last year. Currently, 55 of yuan accounts of regional enterprises is operating in the Khabarovsk branch of VTB.

“The next step in the development of settlements in yuan is complex operations: letters of credit, hedging. There is interest in these instruments, we have implemented two transactions with letters of credit in yuan, in the elaboration of a hedging transaction, ”E. Orlov continued.

"In our region, focused on cooperation with the PRC, there is always an active demand for Chinese currency from individuals - for shopping tours and tourist trips. According to our data, the sales of cash currency we see,then the demand for the yuan is also subject to the influence of volatility - in particular, in the 1 quarter of this year, sales of yuan increased threefold compared with the previous, 4 quarter of the year 2013. During this period, people bought the yuan “for the future” - just like a dollar, ”summed E. Orlov.

As VTB Senior Vice President Mikhail Yakunin said earlier, in the year 2013, 194 letters of credit were conducted with China for the total amount of US $ million 271. This is more than half of all such transactions of the subsidiary banks of the group on the practically “home” market of the CIS. “So, China for VTB has also become not only a key, but also a home market,” M. Yakunin concluded. 

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