(Bloomberg) -- VTB Bank PJSC is offering a Chinese yuan savings account with a maximum interest rate of 8% as the Russian lender faces strict sanctions from the U.S. and U.K. in a push to financially isolate Russia through widening penalties.
Deposits can be opened remotely through VTB Online with a minimum amount of 100 yuan ($16), the Moscow-based bank said in a press release Wednesday. At VTB branches, clients can deposit a minimum of 500 yuan.
VTB, Russia's No. 2 bank, said that in the light of the rising value of the U.S. dollar and the euro, the yuan is now “‘one of the most affordable and promising options.” The three-month deposit rate is 8% in dollars and 7% in euros, while the six-month rate for ruble deposits is 21%, according to VTB.
“Some Russian banks can't get access to other currencies, so yuan is probably the best other alternative,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “Still, the easiest way for Russia to raise yuan would be to receive yuan via trades. Russian banks' clients who are exporters could sell to China and receive renminbi as payment.”
Russian banks are under increasing pressure as sanctions are imposed after the invasion of Ukraine. The lenders are also looking to China to start using its UnionPay system for credit cards after Visa Inc. and Mastercard Inc. suspended operations.
Read more: Russia's Top Banks Fall From Grace in Blow to Putin's War Plans
The ruble has plunged 38% against both the Chinese yuan and the U.S. dollar this year.
VTB also said that over the past week customers have placed more than 2 trillion rubles ($15 billion) in traditional savings products.
Russia's central bank and sovereign wealth fund probably own a combined $140 billion worth of Chinese bonds, ANZ estimated in a report last week, adding the country may seek to access the assets given global sanctions.
The sanctions also put a focus on China, which has a multi-billion dollar currency swap with Russia, on whether it could provide a financial lifeline to the latter to buck western efforts to cut Russia out of the global financial system.
©2022 Bloomberg L.P.
With assistance from Bloomberg
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