Over 98% of Chinese banks do not accept direct payments from Russia

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After local banks in China have refused to accept payments from Russia, the number of banks that do not accept Russian money has exceeded 98%.

Source: The Moscow Times

Details: Back in May-June, local credit institutions worked with Russian businesses, and payments were more or less stable, but since 20 July, payments have been practically suspended.

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It is reported that more than 98% of Chinese banks refuse to accept direct transactions from Russia. This could lead to problems with the supply of goods to Russia and a price rise.

China’s regional banks, primarily focused on the domestic market, have been a safe haven for Russian companies for several months in a row. Now Russian businesses are trying to make payments through third countries.

Over the past three weeks, the number of applications from existing payment agents conducting transactions through third countries has increased several times. According to Alexei Poroshin, the CEO of Pervaya Gruppa JSC, companies from Russia most often send payments to China through Hong Kong banks, but some Chinese credit institutions refuse to work with them.

It is also possible to transfer funds through branches of Russian banks in China, but they sell yuan to customers at the Central Bank’s exchange rate with a 5% surcharge. In addition, many Chinese companies do not accept money from branches of Russian financial institutions.

Background:

• Russia and China may switch to barter in their mutual trade in the autumn due to problems with bank payments caused by Western sanctions.
• VTB’s Shanghai-based subsidiary and small Chinese border banks, through which Russia and China were going to make payments without undue delay, have restricted the conversion of roubles into yuan.
• Banks in countries that trade with Russia are increasingly delaying or failing to make payments out of fear of secondary sanctions.
• Vladimir Putin’s visit to China last month helped provide both countries with payment alternatives to circumvent sanctions.
• The Russian subsidiary of the Bank of China has suspended all transactions with Russian banks since 24 June due to US sanctions.

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