LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
With the developing relationship between China and Russia, it was announced today that leading Russian financial group – VTB Group (MCX:VTBR) is seeing considerable increase in the number of RMB operations.
Specifically the bank saw 1H2016 vs. 1H2015 record an almost 70% increase in the number of RMB remittances processed, which accounted for more than 5,000 operations with the volume exceeding RMB 45bn.
The bank is boosting its financial services in the Asian region on all fronts. It relates, first of all, to structuring cross-border trade finance solutions and providing related services, like FX and hedging, and also covers sophisticated product offering in the spheres of investment banking, capital markets and commodities.
VTB has an extensive correspondent banking network in the mainland China (including Shanghai Free Trade Zone) and Hong Kong to facilitate direct settlements in RMB and in other currencies.
Being connected to Chinese local payment system CNAPS and international payment system CIPS, VTB services mutual correspondent accounts in local and 3rd country currencies with the largest financial institutions in the region to provide the most optimal payment routes for the clients.
VTB has traditionally been the top bank to facilitate Sino-Russian cross-border trade flow. To support bigger longer-term projects, VTB has signed a number of trade and export finance lines with major banks in China totaling more than RMB 17bn and also obtained SINOSURE coverage limit for the amount of USD 2bn equivalent. Part of this financing is aimed to promote the relevant cooperation in the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
On the back of increasing trade flows, VTB has also seen growing demand for global market products, e.g. FX, hedging instruments, money market lending etc. The volume of traded RMB swaps went up by more than 3.5x in 1H2016 vs. 1H2015.
VTB Bank is also taking a leading position among Russian banks in the Chinese gold market. The bank has obtained membership license at Shanghai Gold Exchange International Board and fully completed the related settlement infrastructure in Shanghai FTZ to get access to gold trading. In April 2016 VTB also dispatched its first batch of gold to China under the Consignment Agreement with one of the biggest Chinese banks, becoming the first Russian bank to start the direct supply of physical gold to the Chinese market.
VTB Bank has additional advantages in servicing trade between Russia and China, by virtue of its own licensed branch in Shanghai. VTB Shanghai is the only operational branch of a Russian bank with licenses to conduct RMB business in China.
VTB Shanghai is the leading market maker in the RUB-RMB FX space accounting for 86% of the local Chinese market — as of 1H 2016 the traded volume came close to RMB 7bn. The branch is also a top provider of RUB liquidity for Chinese financial institutions.
Apart from traditional banking services in China VTB Bank is pioneering new products — VTB Bank has become the first Russian bank to receive PBoC’s license to access secondary market trading on China Interbank Bond Market, allowing VTB’s clients to invest in local Chinese debt securities. The required operational infrastructure is now being tested.