Banks in friendly countries have sharply increased payment refusals. How can Russia solve the problem? VTB President Kostin: The number of payment refusals from friendly banks has increased sharply 04/12/2024, 00:12

VTB chairman Andrei Kostin told the congress of the Russian Banking Association that banks in friendly countries began to refuse transactions with the Russian side more often after the tightening of secondary sanctions at the end of 2023.

According to Kostin, the trend continues and the number of foreign banks willing to work with Russian organizations is decreasing day by day. At the same time, more than 40 domestic banks are also under sanction, accounting for nearly 90 percent of bank capital.

“The number of people refusing to pay through eligibility checks without explanation has increased sharply. This applies primarily to banks in friendly jurisdictions,” Kostin said.

Payment terms and fees have increased, and banks are demanding to provide additional supporting documentation, especially in relation to “critical product groups – electronics, computers, high-precision machines and equipment.”

Kostin noted that a year ago it was enough for Russians not to transfer money through sanctioned banks and not to use SWIFT. Now, if the country to be paid is Russia, problems arise.

“As soon as the goods are sent to Russia or from us, a “stop” light comes on, regardless of the loyalty of a particular bank or jurisdiction or the sanctions status of the Russian participant in the transaction,” the head of VTB said. .

How to solve a problem?

Kostin believes that the state, banks and business should act in three main joint working areas.

First of all, to develop the Russian payment infrastructure abroad, use agency programs and affiliated banks, and make payments both with regular money and with cryptocurrency. However, such agency models are not always fully transparent, as required by Russian legislation.

“There are two main types of such plans on the market today. Large exporters, as a rule, use a network of reliable traders; Others, including the largest banks, are turning to the services of independent companies and brokers,” he said.

Secondly, you can create your own platform for currency exchange between friendly countries, for example, within the framework of BRICS. According to Kostin, this is the most acceptable option, but it will take time.

“The complexity of implementing a multilateral financial platform is a significant political component, including a strong factor of external pressure on our partners. They are looking into the issue, but progress will be slow, the banker believes.

Third, Kostin recommends using digital assets. In his opinion, this option could quickly become “workable”, but it needs to be agreed upon at the multilateral political level. The State Duma has already adopted a bill allowing the use of digital assets for international payments.

Commenting on Kostin’s proposals, the head of the Central Bank, Elvira Nabiullina, said that the banking issue is a priority and the institution is ready to seek solutions.

In 2022, the largest Russian banks were subject to anti-Russian sanctions, including cutting off connections to the international SWIFT system, which helps transfer money between countries. The situation became even more complicated when American President Joe Biden signed the decree on secondary sanctions in 2023. Now a foreign organization may be subject to restrictions on transactions with the Russian side.

Russian media reported that Chinese and Turkish banks, which previously actively cooperated with Russia, stopped accepting payments. Moreover, foreign banks working with the Mir system also stopped accepting this system. Mir has stopped working in Armenia and Kyrgyzstan since the end of March; NSPK had previously established a partnership with local operators. The National Bank of Kazakhstan has not officially announced any bans, but almost all banks in the country have also stopped providing services to the Mir payment system.

What are you thinking?

VTB president Andrei Kostin noted that in the past few months, even banks in friendly countries have significantly reduced the number of transactions with Russia due to fear of secondary sanctions. Not only does it fail to disclose the reasons for the rejection, it also increases processing times, fees, and requires additional paperwork.

Source: Gazeta


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