Sberbank, Russia’s largest lender, will be the first bank in the country to start issuing credit guarantees denominated in Chinese yuan. The new yuan-based letters of credit ensure payments between buyers and sellers, with the bank acting as a router.
This will make payments for import contracts settled in yuan more seamless, the bank said in astatement Tuesday.
“An important aspect of these transactions is that post-import financing was attracted in Chinese yuan, which is especially relevant given the existing market environment,” the statement says. “Starting transitions in RMB will allow customers to not only meet current funding requirements and settlements, but also to continue active cooperation with Chinese suppliers.”
Letters of credit are considered secure and convenient in international trade, as they are designed to protect both buyers and suppliers, and offer a good alternative to advance payment. This can overall help expedite the entire payment and shipping processes.
“This is a complex transition in which the letters of credit in Chinese yuan (RMB) have been opened on behalf of one of our most major corporate clients,” the statement said.
The decision is part of an overall surge in Chinese issuance of letters of credit since 2012, as Chinese investors themselves are partial to using letters of credit in transactions.
“We recognize the positive trend of strengthening partnerships with Chinese banks, especially after the signing of several agreements at the APEC summit, held this November in Beijing. At the moment we are seeing a growing interests in Russian companies in local currency settlements, in particular the Chinese yuan, and of course, rubles,” Andrey Ivanov, director of trade finance and correspondence relations at Sberbank CIB, said, Vesti reported.
Source:
http://rt.com/business/206583-sberbank-finance-chinese-yuan/
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