Russia’s Largest Bank Issues Guarantees in Yuan

The unipolar, dollar-dominated post-war world is apparently shifting. Leading the push towards multipolarity and de-dollarisation are Russia and the PRC, the rising superpower. Indeed Sberbank, Russia’s largest, issued on 5 June 2015, its first maiden letters of credit (LCs) with financing from The Export-Import Bank of China for Baikal Bank’s client JSC Pharmasyntez in yuan. 

JSC Pharmasyntez approached Sberbank about the possibility to finance letters of credit in yuan (CNY) for the import contract to supply pharmaceutical products worth more than 29 million yuan. The first LCs with financing from The Export-Import Bank of China have allowed the client to meet its current working capital needs while continuing to actively cooperate with Chinese suppliers. The development of cooperation with The Export-Import Bank of China expands Sberbank’s possibilities to finance clients’ foreign trade with Chinese counterparties. 

Sberbank is Russia’s largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, and is a key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the authorised capital plus one voting share, with the other half being owned by domestic and international investors. Sberbank has more than 135 million individual customers and 1 million corporate clients in 22 countries. 

Pharmasyntez on the other hand is a leading Russian drug manufacturer. Founded in 1997, the company develops and produces drugs to treat socially significant diseases such as tuberculosis, cancer, HIV, immune system disorders, etc. 

For some economists the issuance of LCs in yuan are a sign of global de-dollarisation which shall bring out the demise of the “Bretton Woods” world order. The latter is perhaps nowhere more apparent than in the launch of the BRICS bank and the establishment of the AIIB. These new structures are an attempt to move away from the US-dominated multilateral institutions. 

For more information

Sberbank: www.sberbank.ru/ru/person

The Export-Import Bank of China: http://english.eximbank.gov.cn/en/

Yuan currency: www.reuters.com/subjects/yuan

JSC Pharmasyntez: http://pharmasyntez.com/en/node/22

New Development Bank BRICS: http://ndbbrics.org/