Devaluation on the march: banks are forcing Russians to empty their dollar accounts

Ekaterina Maksimova

The Tariff Monitoring team of Frank RG names six financial and credit organizations: Raiffeisenbank, Tinkoff Bank, Citibank, Bank St. Petersburg, Uralsib and RNKB. Banks outside the top 20 have also begun reporting similar fees. In particular, this was stated by Avangard Bank.

Customers have already been notified that a commission is being introduced for servicing foreign currency accounts. Thus, Tinkoff Bank promises to write off the commission daily from June 23 if the balance of the foreign currency account exceeds 1,000 conventional units. The commission applies not only to dollars and euros, but also to Swiss francs and pounds sterling. From June 30, Raiffeisenbank will start taking a commission of 0.2% per month on amounts over 5,000 USD.

Analysts explain that banks that are overflowing with foreign currency are not currently benefiting from clients with dollars and euros.

“Western sanctions and domestic countermeasures to block the cross-border movement of capital lead to the formation of excess foreign exchange liquidity. Money should work, but nowhere. In the context of falling exchange rates, banks incur at least infrastructure costs on foreign currency accounts and try to make up for the costs through commissions. The total amount of foreign currency in the accounts of citizens in February was estimated at $ 90 billion, explains Mikhail Zeltser, an expert at BCS World of Investments . “As long as the imbalance of supply and demand persists on the market, and foreign exchange liabilities are considered, in fact, “dead weight”, the devaluation trend will develop.”

Analyst FG "Finam" Igor Dodonov does not exclude that over time the commission will "get" to brokerage accounts. Also, the banks of the Russian Federation, which are not yet legally able to set negative rates on foreign currency deposits, are waiting for relief in this matter as well. This, clarifies Igor Dodonov, is only about deposits of legal entities, this measure is not discussed for deposits of individuals.

“At the same time, some banks are already refusing to open deposits in foreign currency, so this option may soon be unavailable. In general, it can be stated that the attractiveness of holding funds in foreign currency, apparently, will decrease. This, by the way, corresponds to the informal course of the Central Bank of the Russian Federation on the “de-dollarization” of the banking system. So over time, foreign currency savings will probably become an increasingly “toxic” asset, and they should be disposed of as much as possible,” Igor Dodonov commented to Novye Izvestia.

BCS Express experts give some advice on what the population should do with the currency, which today has nowhere to spend and which has become “toxic” for banks. There are several options:

-Transfer funds to those banks where there is no commission for servicing foreign currency accounts. True, there is no guarantee that it will not be introduced in the near future.

- Transfer currency from current accounts with a commission to deposits at least at a zero, but non-negative rate.

-Use currency to purchase foreign securities on the St. Petersburg Exchange. With the right choice of assets, such investments will bring income much higher than a bank deposit.

- Move out of the currency into Russian ruble shares/bonds.

Meanwhile, the Central Bank issued an official statement on June 10. As Novye Izvestia reported, although the regulator "understands the banks' concerns about the risks of dealing with foreign exchange," it believes that the banking sector should not worsen the terms of service for existing customers. The Bank of Russia promised to study contracts with clients, and if financial institutions violated the conditions, the regulator will send a corresponding information letter to the offenders. At the same time, the Central Bank explicitly states that "banks will continue to reduce the volume of their foreign exchange transactions."