Russian firms turn to Chinese Banks as Conflict continues to Rise

Following the recent attacks on Ukraine, a Moscow branch of a Chinese state bank saw a surge in inquiries from Russian firms.

“Over the past few days, 200 to 300 companies have approached us, wanting to open new accounts,” the person, who works at the Moscow branch of a Chinese state bank and has direct knowledge of its operations, told Reuters.

The source has declined to be named or have his bank identified as he is unauthorized to speak to the press.

It is currently unclear as to how widespread the Russian demand for new Chinese bank accounts is. However, according to Reuters’ source, many of the companies that seek new accounts do business with China as he suspects yuan transactions to increase.

In response to Russia’s attacks, western governments have been shutting off Russia’s connections to the world economy. With global financial systems pushing international companies to halt sales, cut ties, and dump tens of billions of dollars worth of investments.

However, China has voiced opposition to the sanctions, noting that they are ineffective as it insists that it will maintain normal economic and trade exchanges with Russia.

Several Chinese state banks are operating in Moscow, including the Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank.

A Chinese businessman with long-term ties with Russia reports to Reuters that Russian companies are now opening yuan accounts.

“It’s pretty simple logic. If you cannot use US dollars, or euros, and [the] US and Europe stop selling you many products, you have no other options but to turn to China. The trend is inevitable,” the source told Reuters.

“It’s natural for Russian companies to be willing to accept yuan,” said Shen Muhui, head of a trade body that promotes links between Russia and China.

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

Source: Rappler