Russia’s
VTB and Bank of China agree on domestic currency settlements
May 21, 2014
VTB, Russia’s
second biggest lender, has signed a deal with Bank of China, which includes an
agreement to pay each other in domestic currencies.
“Under the agreement, the banks
plan to develop their partnership in a number of areas, including cooperation
on ruble and renminbi settlements, investment banking, inter-bank lending,
trade finance and capital-markets transactions,” says the official VTB statement.
The deal
underlines VTB Group’s growing interest in Asian markets and will help grow
trade between Russia and China that are already close trading partners, said
VTB Bank Management Board Vasily Titov.
An Agreement
on Cooperation was signed by Titov and Bank of China President Chen Siqing in
Shanghai on Tuesday in the presence of Russian President Vladimir Putin and
Chinese President Xi Jinping.
VTB Group is
Russia’s second biggest financial institution with more than 30 banks and
financial firms in more than 20 countries. Its assets were estimated at 8.8
billion rubles as of 2013, with a profit of 100.5 billion rubles.
The
agreement comes as a part of Russia’s larger scale pivot to Asia, as Western
economies threaten sanctions over the turmoil in Ukraine. Sanctions by the US
and the EU have been mostly limited to visa bans and asset freezes on some
leading Russian officials, and so far only threatening a so-called third round
of real economic sanctions against Russian businesses.
In the first
day of a two-day trip to China Russia’s President Vladimir Putin said the two
countries will be increasing their bilateral trade to reach a new level.
“Our countries have done a huge
job to reach a new historic landmark…. China has firmly settled in a position
of our key trade partner,” Putin said.
Putin also
said that trade turnover between Russia and China grew almost 2 percent during
2013 to reach about $90 billion.
“If we sustain this pace the level
of bilateral trade of $100
billion will be reached by 2015 and we’ll confidently move on,”
Putin said.
Increasing
investment cooperation is crucial, Putin added. Holding the first Russia-China
EXPO in Harbin this summer help towards that, he said.
In Shanghai
Russia and China also agreed to set up a Committee on Investment Cooperation
that will enable consultations between the countries’ first vice premiers and
representatives of state and private companies.
Together
it’ll be possible to discuss investment in various projects much more
efficiently and clearly,” as Interfax quotes Kirill Dmitriyev the head of Russia’s Direct
Investment Fund.
In terms of
concrete deals the Russia-China Investment Fund (RCIF) and Vcanland, a leading
Chinese tourism developer, have agreed to invest $800 million in development of
tourism and social projects.
"Most of the money (60 - 70%)
will be spent on tourism development. The geographical focus will be on
destinations such as Hainan Island, Lake Baikal, the cities of Vladivostok and
Sochi,"
Dmitriyev said.
China is the
second most popular destination for Russian tourists, and Russia - the third
most popular destination for Chinese, and in the next 10 years the Russian
tourism sector will be growing, according to forecasts by the RCIF.
In 2013, the
volume of Chinese direct investments in the Russian economy grew five-fold to
$4 billion. By the start of 2013, the total amount of Russia's direct
investments in China was valued at $847.7 million. Forty projects with
investment of 20 billion dollars are on the drawing board. The power sector is
the driving force behind Sino-Russian cooperation, although agriculture and
agribusiness also have huge cooperation potential.
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