Russia’s Sberbank Open to Issue Chinese Yuan Bonds From 2023

Paigambar Mohan Raj
Source: East Asia Forum

Russia-based Sberbank has said that it is open to issuing Chinese yuan bonds in 2023 if the opportunity presents itself. Additionally, the bank’s finance chief told Reuters that the bank would keep borrowing in roubles to support portfolio expansion.

The portfolio of yuan deposits held by Sberbank, according to its head of finance Taras Skvortsov, is currently more tempting than bond issuance. Bond issuance, according to Skvortsov, needs active demand, adequate liquidity, and alluring prices. Moreover, since the beginning of the year, the bank’s Chinese currency deposit has increased by 1 to 1.5 times.

Skvortsov said that “So far there is good demand for deposits in yuan, especially from private clients.” The bank executive further added that private clients were transferring their savings from dollars and euros to deposits in Chinese currency.

When will the Russia-based bank issue yuan bonds?

Skvortsov mentioned that “the situation is changing and it is possible that a window of opportunity will appear before the end of this year.”

After being hit with Western sanctions, the yuan has assumed a much larger role in Russia’s financial system and transactions. However, the yuan’s global reach is still limited by rigorous currency regulations, though. Additionally, the increase in the Chinese currency in Russia is not uniform, the central bank of Russia has cautioned. This has led to temporary imbalances and issues with foreign exchange liquidity.

Rusal, Polyus, and Rosneft are a few examples of Russian oil and commodities companies that have pioneered yuan-denominated issuance. In May, bonds worth 1.7 billion yuan ($237.5 million) were issued by Russian companies.

According to Skvortsov, the market’s volatility and low volume are impacting Sberbank’s goals. He asserted that the bank would continue to issue rouble-denominated bonds at the appropriate price after issuing 140 billion roubles ($1.7 billion) worth in 2023.

Sberbank projects that its earnings will surpass the all-time high of 1.25 trillion roubles ($14.9 billion) set in 2021. According to Skvortsov, this will be caused by Russia’s economy rising quicker than anticipated. Moreover, profits from the banking industry could top $23.75 billion, according to the central bank. Skvortsov stated that he did not anticipate any changes to Sberbank’s dividend payment schedule of once annually.