Russian bank VTB offers maximum interest rates for Chinese yuan despite Western sanctions

With Russia officially blocked from both the US dollar and the euro, the state-owned bank VTB offered its customers the possibility of opening Chinese yuan deposits in Russian banks’ savings accounts, which yield up to at 8% interest. Western sanctions aimed at Russia’s ultimate financial isolation for its war in Ukraine have hurt the country’s second-largest bank.

Existing customers can apparently use VTB Online to open yuan deposits in Russian banks with a minimum deposit of 100 yuan (Rs 1,210.75). They can deposit a minimum of 500 yuan at VTB branches. The latest offer, according to the bank, will be the most advantageous alternative to foreign currency deposits. A three-month deposit offers annual interest of 8% in dollars and 7% in euros.

Meanwhile, a six-month ruble deposit is currently yielding an annual percentage return of 21%. Customers have invested more than one trillion rubles (Rs 1,15,138.80 crore) in traditional savings products, according to VTB. Following the imposition of sanctions regarding Ukraine, Russian financial institutions have come under increasing pressure. After Visa and Mastercard announced the suspension of operations in China, banks were forced to look to China to start using its UnionPay system for credit cards.

The ruble plunges 38% against the Chinese yuan and the US dollar

Moreover, this year the ruble has plunged 38% against the Chinese yuan and the US dollar. According to a report published last week by ANZ, Russia’s central bank and sovereign wealth fund together hold $140 billion (Rs 10,74,628.80 crore) in Chinese bonds, and the country may seek to access the assets due to global sanctions. The sanctions have also drawn attention to China, which has a multi-billion dollar currency swap with Russia, to see if it can give Russia a financial lifeline to thwart Western efforts to exclude Russia of the global financial system.

In addition, VTB Bank is ready to end its European operations after being hit hard by Western sanctions, according to the FinancialTimes, which cites sources close to the internal deliberations. VTB has an investment banking operation in London and a retail bank in Germany with 160,000 customers, but determined it could not operate outside Russia after its assets were blocked by Western allies , according to sources.

(With agency contributions, Image: AP)

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