Four Russian banks plan to issue dim sum bonds in Hong Kong
Four Russian lenders plan dim sum bonds in Hong Kong as Western sanctions on Moscow accelerate move away from dollar settlements
Toh Han Shih
hanshih.toh@scmp.com
PUBLISHED : Monday, 29 September, 2014, 3:58am
UPDATED : Monday, 29 September, 2014, 3:58am
Russia is the fourth-largest trading partner of China. Photo: AFP
At least four Russian banks will issue up to 2.5 billion yuan (HK$3.1 billion) in dim sum bonds in Hong Kong by early next year, as Western sanctions against Russia accelerate a switch by the country's lenders from US dollars to the mainland and Russian currencies.
International financing has tightened for Russian banks, after the US government announced on September 12 restrictions on six Russian state-owned banks including the largest, Sberbank.
Three Russian banks plan to issue 2 billion yuan of dim sum bonds in Hong Kong early next year, said Elena Trofimova, chief executive of International Bridge for Cooperation, Development & Investments (ICDI), declining to name them. A fourth, RosinterBank, has announced similar plans.
ICDI, a Russian partly state-owned firm that connects Russian companies with international firms, is advising the banks on their Hong Kong bond issue.
RosinterBank, the first mid-sized Russian lender to issue dim sum bonds, hopes to make a private placement worth 500 million yuan by early November, said its deputy chairman Konstantin Vorobiev.
Although the 500 million yuan bond was not a large amount, it was part of RosinterBank's strategy to explore Asia's financial markets, Vorobiev added. "Other Russian banks are keeping an eye on this deal. If this deal is successful … it will become a trend."
RosinterBank also hopes to list in Hong Kong in three years and raise possibly US$100 million, Vorobiev added.
More than 90 per cent of the settlement between Russia and China is conducted in US dollars, but in five to 10 years, most of it will be in yuan and roubles, Vorobiev predicted.
This could mean US$100 billion of US dollar transactions may switch to the two currencies in the coming years, given that Xinhua reported trade between China and Russia is expected to rise to US$100 billion this year from US$88.16 billion in 2012.
As China and Russia switched from the US dollar to the yuan and rouble, the US dollar would depreciate, Vorobiev said. "This is why we urge our clients to move from US dollars to RMB."
Most of RosinterBank's clients are Russian companies, some of which do business in China.
This currency shift will be globally significant only if the settlement between Russia and China is mostly in yuan and it becomes convertible, said Charles Dumas, chairman of Lombard Street Research, a London economic research firm.
Xu Chenggang, an economics professor at Hong Kong University, said the shift from US dollars to the rouble and the yuan will help the bilateral trade between China and Russia.
"The major impact of this bilateral trade is to reduce the effect of the economic sanctions against Russia. Other than this, its general impact to world trade will be limited," Xu said.
China is Russia's top trade partner while Russia is the fourth-largest trading partner of China, and economic ties between both nations "will become closer", Vorobiev said.