1. Choose a Russian bank that is not sanctioned
Let the customer choose a bank that is not banned by SWIFT, continue to make normal payments, and ask the customer the name of the bank to which the payment is made. After checking whether it is sanctioned, the customer can receive the payment. Russian sanction bank query website:
If the product is not sensitive, the exporting company has not been sanctioned and the Russian bank has not been sanctioned, then mainstream domestic banks such as Bank of China, China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, China Merchants Bank and CITIC Bank will still accept remittances from Russia.
2. Choose a Sino-Russian border bank
Jilin Province: Hunchun, Suifenhe, Dongning, Dunhua, Changchun and other cities that accept rubles can open accounts in other places, refund taxes, and return to the company’s location to refund taxes. As for Hunchun, it is predicted that it will be opened soon.
Heilongjiang: Harbin Bank, Longjiang Bank, Heihe Rural Commercial Bank, etc.
Inner Mongolia: Bank of Manchuria, etc.
How to determine whether a border bank can accept rubles? It depends on whether it has had cooperation projects with Russian banks in the past. There may be some niche banks that have been missed. In the final analysis, it is necessary to open a border port bank with low maintenance costs as soon as possible. Regarding border banks, it is currently possible to open an account in about two weeks.
Regarding the timeliness of receiving rubles: the speed of receiving rubles is very fast. Basically, the receiving bank will notify the account of the receipt one working day after the remittance from the Russian remittance bank. After completing the account entry review, you can operate the foreign exchange settlement. The foreign exchange settlement is done manually offline. Basically, within 1-2 working days, the rubles in the account will complete the settlement procedures according to the bank’s current exchange rate. After the settlement, the RMB will be directly transferred to the online banking. The enterprise can transfer out normally, but if the online banking limit is low, it may need to be transferred in batches. Although there is exchange loss, the speed is still fast.
If your customs declaration is still receiving the final payment, even if you submit the customs declaration in RMB, in principle the border bank will be OK with it and will collect the payment in equal proportion.
3. Russian and Chinese banks that choose to join CIPS
Boris Titov, the Russian chairman of the Russian-Chinese Friendship, Peace and Development Committee, said that it is possible to solve the settlement between Russian and Chinese banks, and many Russian local banks have turned to China’s cross-border RMB payment system (CIPS). He said during the 9th International Forum “Russia and China: Cooperation in a New Era”: “As for the most pressing issue – the problem of inter-bank settlement, there is a chance to solve it. The most important thing here is to get rid of settlement through the SWIFT system. Many local banks have already replaced it with China’s similar system CIPS. For RMB payments, its use will only expand.”
There are 32 participating banks in my country, namely: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Hua Xia Bank, China Minsheng Bank, China Merchants Bank, Industrial Bank, Ping An Bank, Shanghai Pudong Development Bank, HSBC Bank (China), Citibank (China), Standard Chartered Bank (China), DBS Bank (China), Deutsche Bank (China), BNP Paribas (China), Australia and New Zealand Bank (China) and Bank of East Asia (China), etc.
The specific banks and the specific supported businesses are different, and even the subdivisions are different for each branch. In other words, the banks listed above may not all support receiving RMB remitted by Russian customers. Chinese commercial banks, as long as the products are not 0 tariff or prohibited export products. Now the speed is still faster than others. In addition, it should be noted that it must be to a public account, not a personal account, and personal accounts cannot support cross-border RMB business.
4. Choose a third party to make payment or receive payment
Payment and collection on behalf of others, as a long-standing business model in the field of foreign trade, does provide a solution for companies that find it difficult to collect payments directly under certain circumstances.
On the premise that the product is not sensitive, if the goods are exported directly to Russia and the funds are remitted from a third country (non-sanctioned) to China, many banks will accept and can record the funds. Therefore, if the Russian payer can arrange for the third country’s own company or a third-party company to pay, this approach is feasible. For example, Russian customers can pay China through Central Asia/Dubai/Hong Kong, etc., and the shipper can export to Russia normally.
When reviewing the entry or tax refund, you only need to sign a three-party trade contract, which specifies the terms: the Chinese exporter as the Shipper/Seller, the third-country payer as the Buyer, and the Russian consignee as the Consignee. It should be noted that this operation mode requires customer cooperation on the one hand, and involves multiple currency exchanges on the other hand, which is costly. The currently known financial cost is about 3-5%.
Opening a new bank account may be complicated and time-consuming for some companies. As an alternative, companies can consider third-party collection. For example, some platforms (such as Ali One-Touch), freight forwarding companies or export companies have already solved the problem of opening accounts and collecting payments in Russia. Then, for a certain fee, you can let these companies help you collect payments quickly. Of course, the fees and services of different companies are different.
However, the biggest problem with this method is that it requires the use of an agent export method. Exporting companies cannot export on their own and will no longer have these export business data. For medium and large foreign trade companies, this is unacceptable. Small and medium-sized enterprises do not consider export data, and there is no problem considering convenience and speed. In addition, there is another problem that some freight forwarders may not be able to handle export tax rebates. For example, they may adopt the market procurement model (1039) and open a self-employed household for settlement. In this case, it is impossible to handle export tax rebates because invoices cannot be issued. These need to be communicated in advance.
5. Choose a currency swap between two countries
Without the support of the SWIFT system and one-time settlement in US dollars, the only way is to exchange rubles and RMB directly. For our export companies, we need to collect RMB in the end, while Russian customers generally pay in rubles. Therefore, to complete the whole process, banks need to have the qualifications and channels to operate both rubles and RMB and be able to open accounts in both currencies. At present, the most popular banks to adopt this method are Russia’s VTB Bank and Hunchun Bank.
1. VTB Bank, Russia
VTB Bank was established in 1990 and is one of the major commercial banks in Russia. Its headquarters is located in Moscow. VTB Bank mainly provides services to central and state-owned enterprises, and does not usually involve private enterprises. VTB Bank uses the Russian self-settlement system, which may become the most stable and reliable channel for Russian payment in the future. It is also a bank with better policies for Chinese people to open accounts.
As a Russian bank, VTB has no problem accepting rubles. Russian customers can easily remit rubles to VTB Bank from any bank in the country, and settle through the Russian cross-border payment system (SPFS) and VTB branches in Beijing/Shanghai. In addition, VTB can open NRA accounts with offshore companies and domestic accounts with domestic companies at the same time. (Add WeChat to receive VTB docking process and precautions as well as FAQs).
In addition, if the above sensitive products are involved, most banks cannot enter the account. At present, it seems that only VTB Bank does not have this restriction. Therefore, VTB Shanghai Branch is the bank that has been asked the most recently. At present, VTB’s account opening application is full, but VTB only serves central enterprises and state-owned enterprises, and does not serve general small and medium-sized enterprises. Therefore, for some small and medium-sized foreign trade enterprises, it may not be able to solve the urgent need. Now the high-priced VTB account opening in the group should not be very reliable. Everyone should still be careful.
It should also be noted that even if you receive rubles through VTB Bank, you will encounter difficulties in transferring them to your own RMB bank account in China. There are many restrictions on transfers, and currently many domestic banks do not accept RMB transfers from VTB.
2. Hunchun Bank
First of all, it should be emphasized that the collection mechanism of Hunchun Bank is completely different from that of VTB Bank. Before the sanctions, Hunchun Bank actively established cooperative relations with Russian financial institutions out of the needs of Sino-Russian border banks. In particular, on the basis of the traditional SWIFT cross-border payment channel, it also established a direct connection with the Russian banking system, so that it can also conduct Sino-Russian cross-border payment settlements in the event of SWIFT failure.
In addition, Hunchun Bank can open RMB and ruble accounts and exchange them with each other. Of course, this exchange still needs to be converted according to the US dollar exchange rate. The problem is that Hunchun Bank’s RMB position is not unlimited, so when receiving a large amount of rubles, Hunchun Bank must lack RMB positions. This requires cooperation or borrowing with other banks to meet the sharply growing demand.
Generally speaking, most banks, especially the four major domestic banks, have huge dollar businesses and global financial networks and cooperation. Therefore, under the US sanctions, banks will not give up their dollar businesses. It is definitely not worth the loss to circumvent the US sanctions and conduct ruble business privately. For example, in February this year, Chouzhou Bank announced the suspension of its Russian business. It is said that Chouzhou Bank once occupied more than 80% of the Russian collection business share in the Chinese market.
Only local banks in border areas can conduct ruble business at the expense of dollar business. For Hunchun Bank, it is an opportunity in the short term, but in the long term, it is not conducive to conducting dollar business and internationalization. But the situation is always changing, and perhaps sanctions will change after the Russian-Ukrainian conflict. Therefore, it is also a good choice for Hunchun Bank to conduct ruble business at present.
This article comes from Baijiahao Cross-border Trade JACKY